NTN Report 2020

1-3-17, Kyomachibori, Nishi-ku, Osaka 550-0003, Japan
https://www.ntnglobal.com/en/
ZX01 CAT. No.1000-2/E 20.10.160 TK/TK

NTN Report 2020
For the fiscal year ended March 31, 2020

M a k e t h e W o r l d “ N A M E R A K A* ”
The Founders’ Spirit that NTN has embraced since its foundation in 1918 is the “Frontier Spirit,” which encourages us to keep
taking on challenges, and the “Coexistence and Co-prosperity Spirit,” which encourages us to develop together with society.
The Founders’ Spirit is incorporated into the corporate philosophy as NTN’s DNA, and has been passed down to the employees
for over 100 years.
In order to put the corporate philosophy into practice, NTN Group employees are working based on the “NTN SPIRIT,” themindset and actions they should aim for. Through putting our corporate philosophy into practice, we aim to help solve global
social issues, and achieve a sustainable “NAMERAKA Society.”

CONTENTS

About Us

3 A History of Building Strengths
5 Nurtured Business7 Value Creation Process
9 Risks and Opportunities Surrounding NTN
11 Value Chain that Creates Value
13 Financial/Non-Financial Highlights

NTN
Revitalization
Story

15 NTN's Future Vision
17 Business Operating Policy for NTN Revitalization
19 Management Commitment
23 CFO Message

Business
Strategies

27 Aftermarket
29 Industrial machinery market
31 Automotive market
33 Research & Development
35 Monozukuri

ESG
Strategies

37 Initiatives for Sustainability
39 Engagement with Stakeholders
41 Stakeholder Dialog
45 Contributing to Climate Change Measures through Technologies
47 Environment
53 Activities to disseminate the corporate philosophy
55 Creating a Comfortable Workplace
57 To promote and maximize the diversity of employees
59 Supply chain CSR
61 Coexisting with Local communities
63 Outside Director Dialog
67 Officer Profiles
69 Directors/Executive Officers
71 Corporate Governance
77 Compliance
79 Internal Control/Internal Audit
80 Risk Management

Financial
Report81 Financial and Non-Financial Summary (Past 11 Years)
83 Management Performance/Financial Analysis
85 Risk Factors
86 Consolidated Financial Statements
112 Independent Auditors' Report*A society where people can easily lead a secure and fulfilling life in harmony with nature.

Corporate Philosophy
Bearing technology is used to smoothen the rotating

We shall contribute to international society through creating
new technologies and developing new products.
12
3
4

parts of any type of machine.

For New Technology Network
Creation of original technologies.
Offering the technologies for additional values and service that are suitable for eachcustomer and end user.
Improvement of employees’ standard of living, distribution of fair returns to stockholders,and contribution to society based on the steady growth of our business.
Promotion of globalization, and formation of management systems/corporate organization
which are essential for NTN, as an international leading company.

With more precise bearing technology, shafts canrotate more smoothly, minimizing energy loss asmuch as possible.
Bearings are thus a technology for saving energy.
The technology developed with bearings will help
make electric vehicles, robots and even a naturalenergy-based society function more smoothly.

NTN SPIRIT
CredosGuidelines

Challenge

Buds appear when
we challengewith frontier spirit

We challenge passionately without being satisfied with the current situation.
We respond quickly to any changes, emphasizing on-site verification.
We enrich our lives by thinking, acting with initiative and continuing to grow.

Collaboration

Leaves grow throughthe spirit of collaboration
with coexistence andco-prosperity

We accept and respect differences in each other.
We help each other, treating all associates honestly.
We take care of the natural environment and maintain coexistence with local community.

Commitment

Flowers bloom and fruits
grow through fulfilling
our commitments

We maximize the quality of work aiming for first-class quality under safety-first policy.
We intend to be the strongest partner delivering customer delight beyond satisfaction.
We support improving lives of people around the world through our work.

Corporate Data/ 113 Global Network
115 Third-Party Opinion
Investor
Information
116 Investor Information

Achieving a NAMERAKA society

Editorial Policy

Concepts behind the Production of “NTN Report 2020”

The NTN Group believes that building trusting
relationships with shareholders and investors,
customers, business partners, the international society,local communities, and employees and contribution to
the global environment will lead to enhancement ofcorporate value. In order to report our businessactivities and sustainability activities to ourstakeholders, we have published the “NTN Report(Integrated Report)” since the fiscal year ended March
31, 2010. We will use this report as a means ofcommunicating with our stakeholders to deepen theirunderstanding of us, thereby contributing to theachievement of a “NAMERAKA Society.”

The spread of the new coronavirus has caused global economic activity to shrink, and the NTN Groupis also seriously affected. Amid this environment, we have positioned the fiscal year ending March 31,
2021 as the "Crisis Response Period" for dealing with the new coronavirus problems, and we haveestablished the Business Operation Policy to "ensure the health and safety of employees" by
thoroughly implementing measures to prevent infection as well as to "secure cash and continue
business" and "prepare for future growth" in the event of emergencies.
With regard to the corporate governance, we shifted to a Company with a Nominating Committee,
etc. from the General Meeting of Shareholders held in June 2019, and in July 2020 we added two new
Outside Directors to strengthen our corporate governance structure. We also established theSustainability Committee in November 2019 with the aim of accelerating sustainable management.
The committee, which is made up from a cross-organizational perspective, plays a key role inidentifying important issues (materiality) in discussions with management for the sustainable growthof the NTN Group. This report describes these topics.

01 NTN Report 2020

* About product photos: some photos are of cross-sectional models of products

Organization Covered
and Reporting Period
Reporting Period:
Fiscal year ended March 31, 2020
(April 1, 2019-March 31, 2020)
Includes some activities for the
fiscal year ending March 31,
2021.
Organization Covered:
NTN Group
Includes some reports for NTN
only.

Reference Guidelines
We are enhancing disclosures with reference to the following
guidelines and others.

Types of Information Provided by NTN
More general

NTN Report

International Integrated Reporting Council (IIRC)
International <IR> Framework
Ministry of Economy, Trade and Industry
Guidance for Integrated Corporate Disclosure andCompany-Investor Dialogues for Collaborative Value Creation

Disclaimer
This report contains future results and forecasts regarding
NTN's future plans, strategies, and business results. Please
understand that actual business results may vary from theforecasts made herein by the Company.

More detailed

Business Report (to shareholders)

Report on Corporate Governance

Financial Report

CSR Activities Information (on website)

Securities Report

Financial Information

Non-financial Information

This report presents both financial and non-financial information, focusing on especially important topics. More detailed
information is available in the Securities Reports and Financial Reports. Detailed information on the Company’s CSR activities isalso available on our website.
https://www.ntnglobal.com/en/index.html

NTN Report 202002

About Us

A History of Building Strengths

1963

Since its founding, NTN has maintained the quality-first approach, and built up reputation
and achievements with its high level of technological expertise.
We will continue to contribute to international society through creating new technologies
and developing new products.

NTN becomes the first Japanesemachinery manufacturer to win the
Deming Prize*
The Deming Prize is one of the world’s mostprestigious awards for TQM (total quality
management). NTN is not only the first bearing
manufacturer, but also the first Japanese machinery
manufacturer to win the award. The Company was
one of the first machinery manufacturers to adopt
statistical quality control, and the quality
control was applied throughout the Company. Thiseffort was recognized, resulting in this honor.
*Deming Prize: A prize created by theJapanese Union of Scientists andEngineers to honor the achievements of
W. Edwards Deming, a U.S. engineer,statistician, professor, author, lecturer, andmanagement consultant who
popularized statistical quality control inpostwar Japan and built the foundationneeded to raise the quality of Japanese
products to world standards.

Noboru Niwa

Jiro Nishizono

Establishment of NTN Mfg. Co., Ltd. withcapital of 50,000 yen

1937* Tribology Heritage: Tribologyrelated technology and things
recognized by the JapaneseSociety of Tribologists as having aparticularly important contribution
to the development of science andtechnology.

Spherical plain bearing adopted
for Hayabusa 2
Jet engine
cross-section

2000Technical service units driving worldwide

The late

1970S

Evolution of hub bearings
The latter half of the 1970s saw NTN release its axle
bearings (GEN1) that were the forerunners of our hub
bearings that now have the world’s No.1 market
share. In the 1980s, these products evolved into hub
bearings (GEN2) by combining the axle bearings with
peripheral components such as knuckles in a single
unit. The evolution into GEN3 was subsequently
accomplished by packaging additional parts such as
hub bolts, flanges and knuckles into a single unit toimprove ease of assembly on automobile assemblylines. The GEN3 began mass-production in Japan for
the first time in the mid-1980s.
The lineup has continued to evolve. Refinements
are still being made today, such as by adding sensors
and improving ease of assembly.

At our sales bases around the world, we visit
customers by technical service units. Technicalservice units are completely custom-mademultifunctional vans equipped with product samples
and maintenance tools. We provide technicaldiagnostics and technical workshops as well as
detailed support for resolving customer issues.
Even after our products are delivered, we use
technical service units to support enhancement inproductivity and safe operation of our customers'
facilities. Through direct dialog with customers, we
are working to learn the problems of “customers
around the world” to resolve problems in society.

Original Technologies

2018
Company’s 100th anniversary
On March 1, 2018, NTN celebrated its 100th
anniversary and adopted a communication key
phrase: “Make the World NAMERAKA, NTN.”
We are putting out products including bearings on
the market that move machines smoothly. We willcontinue our efforts to achieve a “NAMERAKA
Society” by making the lives of people and society
around us a bit smoother. In order to achievesustainable growth over the next 100 years, we alsoestablished our long-term vision, and to realize it,created a Medium-term Management Plan “DRIVE
NTN100.”Services

Bearings are eco-products that reduce energy consumption by supporting
various rotating mechanical parts and reducing friction.
The coefficient of friction of a smoothly rotating bearing is 0.001. Thismeans that you can move a 1,000kg object placed on the ground with aforce of pulling an approximately 1kg object. Use of bearings makes it
possible to move things with light force, contributing to reduction ofenergy consumption.
Bearings are mounted inside machinery and are usually hidden fromview. But they play a key role in improving the safety and reliability ofmachinery, helping contribute to a “NAMERAKA Society.”
General-purpose bearings are composed of four types of components:
inner rings, outer rings, rolling elements (balls/rollers) and retainers. While
the structure seems simple, any irregularities or cracks in the rings or rolling
elements will prevent the bearings from turning smoothly. Every ball used
in bearings must be manufactured with a high degree of technologicalexpertise and enough precision to ensure that surface roughness is lessthan one ten thousandth of a millimeter.

GEN2

GEN3

1960-1970S
Overseas sales and production
strengthening/expansion
Since 1950, we have enjoyed more opportunities toexpand exports of bearings. In 1961, NTN establishedits first overseas sales company in Dusseldorf,
Germany, to create a system that can respond flexibly
to local demand. In terms of production, NTN
established a manufacturing subsidiary in Germany
in 1971. It was the first Japanese manufacturer inEurope. In the same year, we established a bearing
manufacturing subsidiary in the U.S. Subsequently,
we strengthened the local production system by
establishing not only plants for finished products, butalso plants for the pre-production process.
Through these overseas expansions, we havepromoted the local
production to
manufacture products forcustomers around theworld in places where
they need our products. Germany Mettmann Plant

1989
Name changes to NTN Corporation
In line with the company
name change, we alsochanged the meaning of NTN
to represent “For New
Technology Network,” andadopted it as a new direction
moving into the future.

2008
SNR ROULEMENTS acquisition
Seeking to expand business in the European market,
NTN invested in French bearing manufacturer SNR
ROULEMENTS in 2007, making it a consolidated
subsidiary the following year.
The addition of SNR ROULEMENTS to the NTN Grouphas boosted our European sales, making our businessdevelopment more geographically balanced, withsales from Japan, the Americas, Europe, and Asia andother regions each accounting for approximately
25% of the total

Company/Stock Information

03 NTN Report 2020

NTN has helped enable faster and lighter rollingstocks by developing technology tailored to theevolution of high-speed rail and providing highquality, high-reliability products. NTN’s products havebeen adopted for the first 0 Series Shinkansen as wellas the latest model Shinkansen. Our journal bearings
for 0 Series Shinkansen were recognized as Tribology
Heritage* by the Japanese Society of Tribologists.

Financial Data

Retainer
Rolling elements (ball/roller)

Jet engine main shaft bearings

NTN supplies journal bearings for the first
0 Series Shinkansen

GEN1

Inner ring

The H-IIA Launch Vehicle No. 26 with the Asteroid
Explorer Hayabusa 2 onboard was launched from theTanegashima Space Center.
Our spherical plain bearings are used in the hinges
that open the solar panels on the Hayabusa 2 in outerspace, contributing to the successful completion ofits mission in outer space.

Old head office building

About Bearings
Outer ring

NTN has been producing bearings for aerospace
applications with high function and high quality. We
are a certified supplier of main shaft bearings to theworld’s four major jet engine manufacturers, acurrently unrivaled achievement among Japanesemanufacturers.

ESG Strategies

1927

Name changes to the
Toyo Bearing Mfg.
Co., Ltd.
Bearings at thetime of the startof the business

Provide bearings to the Hayabusa 2
asteroid probe

Business Strategies

NTN's Founders’ Spirit, which has been valued since
its founding in 1918, consists of two elements:"Frontier Spirit" that leads us to always take onchallenges and "Coexistence and Co-prosperity
Spirit" that leads us to develop together with society.
The Founders' Spirit has been incorporated into
NTN's corporate philosophy as DNA, and it has been
inherited over 100 years.
Young engineer Jiro Nishizono started the
Nishizono Ironworks in Kuwana, Mie Prefecture in
1918 when he was 21 years old. Noboru Niwa (later
the Company’s first President) was running amachinery and tool trading company called Tomoe
Trading Co. that he had started in Osaka at the age of
22. In 1922, Tomoe Trading Co. successfully bid forcargo of bearings that had been loaded in a Swedish
vessel that sank off the coast of Japan. Niwa hadtransactions with Nishizono Ironworks before, andasked Nishizono Ironworks to refurbish the bearings.
Niwa sold the bearings and bought grinders with theproceeds from the sale. Thus, bearing manufacturing
got fully underway. The Company’s products havecarried the NTN logo, which stands for Niwa, Tomoe
and Nishizono, since the start of the production.

2014

Construction of Japan’s first aerospace
bearing plant(Competitive Advantages)

NTN Revitalization Story"Frontier Spirit" and "Coexistence andCo-prosperity Spirit" inherited since its
foundation
Start of ball bearing research andmanufacturing at Nishizono Ironworks

First driveshaft
model produced

Uniqueness of NTN

1986

1964

1954

1918

Technology partnership was formed with UK
manufacturer Hardy Spicer to produce driveshafts(constant velocity joints), a promising productexpected to enjoy rapid future growth indemand for automotive applications, andproduction started at the Kuwana Plant.

About Us

Start of driveshaft manufacturing

Globalization

Current head office building

Current head office building of
NTN-SNR ROULEMENTS

NTN Report 202004

About Us

Nurtured Business
About UsNet Sales

651.5

billion yen

Operating Income

7.1

Industrial machinery applications
billion yen

Fiscal year ended March 31, 2020

437.0

billionyen

Aftermarket applications( 67% )

109.4

billionyen( 17% )

Asia and Others

138.4

billionyenJapan( 21% )

198.0

billionyen

Gearboxes

Net sales byregion105.1

billionyen( 16% )

Europe140.8

billionyen

Helping ensurehigh robot
productivity

Machine tools

Americas( 22% )

174.3

billionyen( 27% )

Metal industry
equipment

P.27-28
Paper-making
machinery

Food processing
machinery

Rolling stock

Helping ensurestable foodproduction

Used for worldwide jet engine
applications

Meeting growing
renewable energy
demandOfficeequipment

Electronic devices

Medicalequipment

Cement equipment

Helping
ensure safetyof worldwide
high-speed
railways

Helping ensurehigh machining
precision

Helping ensure
precision operationof copier/multifunctional
printer

Used for hard discdrive and thin fan
motor applications

CT scanner andartificial heart
applications

Automotive applications
Split needle roller
bearings (for camshafts)[Engines]

ESG Strategies

Aftermarket applications
Mining machinery

Aerospace

Business Strategies

Industrial machinery
applications

Wind turbines( 30% )
Applications
for resource
mining and civilengineering

Net sales bybusiness sector

Agricultural
machinery

NTN Revitalization Story

Automotive applications

Construction
machinery

P.29-30

P.31-32
Auto tensioner with thevariable damper
mechanism for
ISG-equipped engine

High-density, high-strength
sintered gears for starter motors
Pulley bearings forhigh-speed rotation

Mechanical clutch units fornext-generation steeringsystems[Accessories]

Financial Data

[Steering components]

ULTAGE sphericalroller bearings
with highstrength cage
EMA Type

ULTAGE sealed
four-row
tapered roller
bearings
CROU..LL

Auto parts
Part kits with combinations ofseveral bearings

ULTAGE sphericalroller bearings
Type EA,
Type EM

PolyLube sealed
bearings forfood processing
machinery

PlummerblocksNeedle roller bearings
for rocker arms

[Seats]Clutches forseat lifters

World’s

Long-life series
TAB bearingsNo.

1

market share

Technical training / maintenance tools

World’s

Induction heater[Axle/Drivetrain]

Self-centering hydraulicpuller with arms

[Brakes]
Ball screw drive
modules for electric
hydraulic brakes

Technical service units

2market share
Company/Stock Information[Automatic /manual transmissions]No.

Hub bearings

Driveshafts[Transmissions] CVTs
ULTAGE tapered
roller bearings
for automotive
applications

05 NTN Report 2020

BEAREE
seal rings

Thrust needle roller
bearings

Needle roller and cageassembly bearings forplanetary gear

NTN Report 202006

About Us

Value Creation Process
About Us

Taking advantage of NTN’s uniqueness, which we have cultivated over our history, we have been devoting our resources developed overthe past 100 years to the value chain of "R&D," "Procurement," "Monozukuri," and "Sales," and conducting business activities based on our
corporate philosophy.
By providing bearings, driveshafts and other products and services, we will contribute to the resolution of social issues, provide value toour stakeholders, and reinvest invested resources to increase corporate value.
We will continue to realize a "NAMERAKA society" by proposing solutions for a sustainable society.

NTN’s
Business ModelIntellectual
Capital

R&D

Environmental
Pollution

P.35

Sustainable Society Using
Natural Energy
Safety and Comfort

Original
Technologies

P.38

Human CapitalIndustrial
MachineryBusiness

Corporate
Philosophy

Human
Resources

Services

Sales

P.57

We shall contribute to internationalsociety through creating
new technologies and developing
new products.

Social and
Relationship Capital

NTN SPIRIT(Challenge/Collaboration/
Commitment)

Achieving a
Smooth Society
Automotive
Business

Procurement/
Local Communities

Financial Data

Technological Innovation
and Changes inIndustrial Structure

Aftermarket
Business

ESG Strategies

Changes in
Demographics

Reducing Energy Loss

Procurement

Rising Human
Rights Awareness

R &D

Uniqueness to NTN(Competitive Advantages)

Monozukuri

Climate Change
Growth ofEmerging Countries

P.27

11

Values Offered
to Society(Outcome)

Business Strategies

Social Issues
Anticipated in Future

Business Activities
to Create Values

Value Chain P.

P.33

Manufacturing
CapitalNTN Revitalization Story

Management Capital (Input)

Providing Solutions toSocial Issues

P.59,61

Trade Issues

Value Creation
Risks and Opportunities

P.9

Globalization
Natural Capital

New Businesses
Green Energy
Products Business

Environment

M o n o zu k u r i

P.45

Financial Capital

Finance

Lower thebreak-even point

570.0～580.0 billion yen

yen
700.0 billion
or moreyen
Operating Income 42.0 billion
or moreNet Sales

SocialContributions

P.23,81Growth Strategies
Medium-term Management Plan “DRIVE NTN100”

07 NTN Report 2020

P.15

Foundation for Business Activities P.71
Corporate Governance

Expansion ofBusiness Activities

NTN Report 2020

08

Company/Stock Information

Fostering the
Next Generation
Environmental
Conservation
Contributions to
Local Communities

Increased Corporate
Value (Output)
TargetAbout Us

Risks and Opportunities Surrounding NTN
About Us

The NTN Group recognizes expected future social issues, such as climate change, growth of emerging countries, rising human rightawareness, changes in demographics, environment pollution, technological innovations and changes in industrial structure and tradeissues, as well as the Sustainable Development Goals (SDGs). We are strengthening the foundations that support our business activities
and operations so that we can respond to the risks and opportunities surrounding our business. Through these measures, we willcontribute not only to the sustainable growth of our group's businesses, but also to the resolution of social issues.
NTN Revitalization Story

NTN’s Efforts
Risks and Opportunities Associated with NTN’s Management
Strengthen the Businesses

Strengthen the Foundation

Relationship to SDGs

Response to paradigm shifts• Spread of electric vehicles(EVs)• Electrification of industrial
machinery•E xpansion of the sharing
economy• Acquire the latest technologies using NTN Next Generation• Soaring material costs• Cyber threats• Spread of infectious diseases•

technologies

Research Alliance Laboratory, conduct R&D in anticipationof customer needs, and shorten development time byutilizing CAE• Improve IT governance and strengthen information

 rovide new added value such as sensing technology, inPaddition to further development of products for EVs andimprovement of performance of core products• Strictly manage intellectual property• Reduce cost through variable cost reformation and reduce• Propose products for advanced medical treatment such as

property• Changes in end-user needs

security by introducing a new core IT system

Business Strategies• Infringement of intellectual• Spread of AI/IoT• Advances in medical

materials by advanced Monozukuri

microscopic coating applicators

Response to Environmental Issues• Demands for energy-saving products for various
machinery types

impact•energy industry• Water shortage• Laws and regulations

associated with the climatechange• Further improve performance of the products• Provide CMS technologies to prevent opportunity loss for• Reduce water consumption by analyzing water risks andresponding to them, and advanced Monozukuri

Provide natural energy products such as “N3 N-CUBE”• Strictly prohibit the use of regulated substances• Further promote energy saving activities in businesses• Provide products that meet the growing demand formachinery to support infrastructure and for robots
associated with labor savings in manufacturing processes• Support business continuity through dialog with suppliers,

application in renewable energy such as wind turbines•

ESG Strategies• Reduction in CO2 emissions• Reduction in environmental• The rise of the renewableResponse to natural disasters

Changes in demographicsIssues

Globalization of the Businessfrom emerging countries• Global governance• Foreign exchange
fluctuations•• Expansion of internet sales
Trade frictions and tariffs• Violations of antimonopoly
and competition laws

• Sustainable procurement• Quality assurance systems
that conform to the same
standards worldwide• BCP/BCM• Response to child labor andconflict minerals

09 NTN Report 2020

• Focus on high value-added products, such as byoutsourcing standard products• Develop a system that enables timely delivery as requiredby customers, such as by securing products for immediatedelivery• Reduce foreign exchange sensitivity by expansion of local
production and local procurement, and pass expenses
incurred on to customers

and find new business partners• Develop a quality assurance system with “Made by NTN”
• Globalize internal control and compliance, offer various

Company/Stock Information• The rise of low-cost products• Achieve high productivity even with a decrease in humanresources by utilizing CAE technologies and RPA

Financial Data

• Medium- to long-term labor shortage• Growth of emerging countries (improvement of QOL)• Issue of business succession

seminars in accordance with local laws and circumstances,
prepare BCP, and conduct training• Promote CSR (Corporate Social Responsibility)

procurement, which prioritizes procurement from business
partners that proactively take CSR initiatives, promote
green procurement, and find new suppliers

NTN Report 202010

About Us

Value Chain that Creates Value
About Us

The Company’s corporate philosophy is "We shall contribute to international society through creating new technologies and developing
new product." Based on this philosophy, we are investing the capital cultivated over the 100 years since our foundation in the value chain
and are conducting R&D, procurement, Monozukuri, and sales activities to contribute to international society.
We create value in each process and conduct business activities to lead a sustainable growth.

P.35,59-60

P.35-36

P.27-32

Strengths that create
added value

Strengths that create
added value

Strengths that create
added value

Strengths that create
added value

We conduct R&D in four regions throughout the world,
taking advantage of tribology which is our core technology.
In R&D bases in Japan and Europe, we conduct basic
research, including fundamental technologies, and researchon cutting-edge technologies. At the same time, we aredeveloping technical services such as each productdevelopment, certification assessment, surveys, and analysis
in a manner that completes all processes locally, so that we
can quickly respond to customers’ needs in each region. We
share information on design, prototyping, experiments,
production engineering, and customer projects among our
regional business sites to create value-added products that
respond quickly to the needs of our customers.
In our core businesses, we have begun developing sensing
and module products in response to CASE and aredeveloping hub bearings aimed at further low friction. In
addition, we have positioned industries such as wind turbine
business which is expected to grow, and robots which require
advanced technology, aircraft, machine tools, rolling stock,construction machinery, and agricultural machinery, as
important industries, and are developing new products thatmeet market demands. Meanwhile, in April 2020, weestablished the New Business Search and Development
Department under the New Product and Business Strategic
Planning Headquarter as an organization that realizes
integrated development that anticipates changes in businessformats. This organization will serve as the foundation for
new businesses that will support NTN in the future.

In the Japanese market, we are increasingly procuring fromoverseas business partners such as those in China and
ASEAN, and our business is expanding globally. From a
global perspective, we endeavor to promote local
procurement and procurement in optimal locations with
our focus on not only domestic business partners but also awide range of business partners worldwide, and emphasize
the superiority of quality/price and the certainty of delivery
date in pursuit of stable procurement that is responsive tochanges in the marketplace. In addition, by complying withlegal and ethical standards and conducting fair andimpartial transactions, we will not only ensure theconfidence of our customers and society, but also enhance
the competitiveness of our business partners, thereby
continuing to achieve “sustainable growth” together withour business partners.
We will contribute to the creation of a “sustainable
society and environment” by pursuing transactions thattake full account of environment conservation and resource
conservation through our efforts to conserve the global
environment and to promote “green procurement,” whichprioritizes business partners with superior environmental
quality. Through these transactions, we will deepen mutual
understanding with business partners and build andstrengthen cooperative relationships.

Amid the rapidly changing business environment, speeding
up from marketing and product planning to prototyping
and mass-production is the key to improving customers’satisfaction. Under these circumstances, we will strengthen
the linkage between the innovation process of productplanning and development, and the supply chain process ofmarketing, production, and sales with the aim of building a
manufacturing system that is resilient to changes. Throughthe promotion of digitization, we aim to further accelerate
operations by linking all kinds of information.Through thepromotion of digitization, we aim to further accelerate
operations by linking all kinds of information. Through thepromotion of digitization, we aim to further accelerate
operations by linking all kinds of information.
At overseas manufacturing sites, we are reinforcing ourdata management during risk analysis and prototyping by
thoroughly implementing our rules for model transfers andprocess changes in order to ensure stable quality from theproduction startup and establish a quality assurance systemthat meets the worldwide uniform standards. Supportersfrom the mother plant and quality control divisions aretemporarily sent to local sites to conduct audits, verify
previous problems, improve processes, and provide quality
guidance to local employees. We are also actively engaged
in human resource development activities aimed atenhancing and passing on NTN's proprietary know-how,such as developing and producing our manufacturing
equipment in-house.

Sales representatives regularly provide opportunities forface-to-face or online meetings with customers to propose
our products that meet the needs of new products being
developed by customers and to provide consultation on
how to solve problems. Our sales representatives also
conduct consulting-based sales activities to respond closely
to problems with customers’ existing models that are in the
mass-production phase by liaising between customers andrelevant divisions within the Company. Sales engineers
provide technical services necessary to solve problems byquickly grasping the technical needs of customers.
With regard to products for which mass-production anddelivery are started, we ensure the optimal inventory andenhance our product lineup in line with our customers'
production plans. In the aftermarket business, we provide
technical services such as training regarding how to handle
our products by visiting customers who actually bought
and are using our products. We are also working to further
improve customer satisfaction by constantly securing
inventory and enhancing supply capabilities for our popularcatalog products.
The needs of customers, such as lightweight, quietness,
low torque that leads to energy conservation, and longer
operating life, are changing with the times. We are working
to improve customers’ confidence in the NTN brand andtheir satisfaction by responding swiftly to these needs andchanges in the external environment and delivering highquality products to customers at appropriate prices. We
conduct annual customers satisfaction surveys to listen
directly to our customers' opinions, such as their satisfactionlevels and requests.

Results Achieved

Results Achieved

Results Achieved

Results Achieved

Number of patent awards

Ratio of local procurement

Ratio of overseas production

Number of visits with technicalservice units

R&D bases

87 %CSR questionnaires to suppliers

9 locations

240 business partners(5 laboratories, 4 technical centers)* In order to promote CSR procurement, a survey was conducted of business
partners whose level of achievement was low in the previous fiscal year andnew business partners.

11 NTN Report 2020

48 %Quality management system
certifications at consolidated
subsidiaries

100 %

419

Company/Stock Information

195 cases

Financial Data

P.33-34

ESG Strategies

Sales

Business Strategies

Monozukuri

NTN Revitalization Story

Procurement

Lead to new R&D themes

R&D

Customers satisfaction survey
Ratio of "Excellent" and "Good"91 %NTN Report 202012

About Us

Financial and Non-Financial Highlights
About Us

Financial Capital* The forecast is the content announced at the end of the first quarter of the fiscal year ending March 31, 2021. At the same time, "royalty," which was previously
included in "non-operating income," has been changed to be included in "net sales."Net Sales

Operating Income/Operating Margin

7.1

billion yen(Billions of yen)

800.0

717.0

Operating Margin

1.1

billion yen

Operating income(Billions of yen)

683.3

60.0

744.4 733.6
651.5

600.0

6.7%
5.2% 5.3%
47.8

40.0

540.0

35.6

39.6

-44.0

%
Operating margin26.9(Billions of yen)(Billions of yen)

30.0

30.0
20.4
15.0

-3.7%

2.8

0

-20.0

0

(Fiscal years
ended/ending(Forecast) March 31)

–50.0

%

R&D expenditures
Ratio of R&D expenditures to sales

3.1%
2.8% 3.0%

2.8%

25.0

2.6%

20.0

18.5 19.2

3.4%

64

19

%

(%)

(%)

100

35

20.0

66

18.5

-44.0 -33.0

66

67

65

64

32

25

64

60

19

19

20

14

15

40

16

10
20

0

(Fiscal years
ended/ending(Forecast) March 31)

%

30

80

21.0 21.7

5.0

-7.0

2016 2017 2018 2019 2020 2021

3.1

Percentage of Hired Female
Graduates*1(Fiscal years
ended/ending(Forecast) March 31)

2016 2017 2018 2019 2020 2021

2016 2017 2018 2019 2020 2021

5

5

0

years
2016 2017 2018 2019 2020 2021 (Fiscal
ended/ending0

2016 2017 2018 2019 2020 2021

(Forecast) March 31)(Fiscal years
ended/ending(Forecast) March 31)*1 Organization covered: NTN only

Net Income (Loss)/
Average Shareholders’ Equity (ROE)-22.8

Equity to Capital Ratio

20.6

%

Cash Dividends

5

%

(%)

(yen)

15

40

18

10

30

8.4

29.2

28.7

30.2

12
20.6
20

10

10

17.0

1.2

6

0

87

27.4

-22.3

-22.8

0

(Fiscal years
ended/ending(Forecast) March 31)

2016 2017 2018 2019 2020 2021

Inventories /Inventory Turnover Ratio

Capital Expenditures /Depreciation and Amortization

Inventories

Capital Expenditures

182.9

Inventory Turnover Ratio

billion yen

3.6

Inventories(Billions of yen)

Inventory turnover ratio

180.0

4.1

178.2 171.5 179.7

3.8
194.5

182.9

3.1

3.0

35.4 36.6

37.6 37.5

38.9

20.0

60.0

(Fiscal years
ended/ending(Forecast) March 31)

13 NTN Report 2020

0

60

60

9%

40

40

20

20

0

0

45

times

1.87

1.11
1.0

Japan Scope 2

226

50

1.05

1.16

30

0.93

20

thousandtons

Overseas Scope 2

thousandtons

thousand
tons

46

60.6

62.0

65.3

289

Japan Scope 2
Overseas Scope 2

67.4
60.6

(Fiscal years
ended/ending(Forecast) March 31)

0

51

49

48

48

21%

2016 2017 2018 2019 2020 2021

(Fiscal years
ended/ending(Forecast) March 31)‘Good’

0(Fiscal years
ended/ending(Forecast) March 31)

2016 2017 2018 2019 2020 2021

70%

*Number of respondents: 104

0

Japan

Overseas

3

28.3

31.1

32.7

28.9

3

Japan

(10,000 m3)

320
124

29.4

323

326

128

132

122

4.8

5.5

5.7

4.6

4.7

22.5

22.9

23.8

24.2

22.6

21.7

5.2

4.9

4.9

4.8

4.5

4.3

2016

2017

2018

2019

2020

2021

100

(Fiscal years
ended/ending(Forecast) March 31)

0

Generated waste

281

282

104

106

(10,000
tons)

195

194

213

177

Generated waste
Generated waste(Japan)(Overseas)
Recycling rate (Japan and Overseas)

98.2% 98.0% 97.8% 97.4% 96.9% 97.4%
15.9

16.3

9.3

10.0

6.6

6.3

17.7

17.7

15
10

196

Recycling rate

155 thousand tons 96.9%
20

335

200
4.6

Overseas

400

300
29.4

Waste Quantities and Recycling Rates(Japan/Overseas)

1,770 thousand m 1,041 thousand m

60.1

10
2016 2017 2018 2019 2020 2021

51

Water Consumption (Japan/Overseas)

Overseas Scope 1

Japan Scope 1
Overseas Scope 1

70

2.62

40
20.0

thousandtons(10,000
tons)

2.0

35.5

50

‘Excellent’*2 Survey period: From October 2018 to September 2019

60
37.3

(Fiscal years
ended/ending(Forecast) March 31)

2016 2017 2018 2019 2020 2021

(Fiscal years
ended/ending(Forecast) March 31)

10.02016 2017 2018 2019 2020 2021

‘Needs some
improvement’2016 2017 2018 2019 2020 2021

45.2

30.0

120.0

0

57.7

38.3

80

1.87

60.0

36.3

80

Japan Scope 1(times)

0%

88

87

CO2 Emissions [Scopes 1 and 2](Billions of yen)

40.0

174.0

billion yen‘Needs much improvement’

100

90

Net D/E Ratio

Capital expenditures
Depreciation and amortization

50.0

3.6

37.3

88

5

176

2016 2017 2018 2019 2020 2021

(Fiscal years
ended/ending(Forecast) March 31)

0

10.9

10.9

6.8

6.8

15.5

15.7

9.3

9.6

6.2

6.1

2016 2017 2018 2019 2020 2021

Company/Stock Information

240.0

4.0

57.7

billion yen

300.0
4.0

Depreciation and Amortization

088

Financial Data

(Fiscal years
ended/ending(Forecast) March 31)

2016 2017 2018 2019 2020 2021

%

5

10
-2.9

–25

91

%

(%)

100
15

Either ‘Excellent’ or ‘Good’

48

%

(%)

15

6.3
5

87

yen

Customer Satisfaction Survey
Responses*2

Ratio of Overseas Production

ESG Strategies(%)

Ratio of Local Procurement

Business Strategies(Fiscal years
ended/ending(Forecast) March 31)

2016 2017 2018 2019 2020 2021

billion yen

10.0

-20.0
0

Ratio of R&D expenditures to sales

Percentage of Employees Overseas

15.0

10.0
7.1

200.0

20.0

billion yen

20.0

20.0

400.0

R&D expenditures

3.7%
1.1%

R&D Expenditures;
Ratio of R&D Expenditures to Sales

Net Income (Loss) Attributable to
Shareholders (parent company)

NTN Revitalization Story

651.5

Operating income

Non-financial Capital(Fiscal years
ended/ending(Forecast) March 31)

NTN Report 2020

14

NTN Revitalization Story

NTN's Future Vision
About Us

Our Vision

Management Policy

To enable sustainable growth over the next 100 years, we have created a long-term vision.
In order to realize “Our Vision,” we will pursue competitive advantages by strengthening our core technologies and products, whiledeveloping businesses in new areas by harnessing our core technologies and R&D achievements.
We are also stepping up our development speed by proactively collaborating with outside partnerships, while enabling sustainablegrowth by creating a more robust business bases to support these new business areas.

In December 2019, we established a Management Policy of the NTN Group. This represents the NTN Group's management philosophy andstance, and is based on the founders’ spirit consisting of the "Frontier Spirit" and "Coexistence and Co-prosperity Spirit" and on our
corporate philosophy that incorporates these spirits. In addition, the NTN Group has clearly stated its stance toward all stakeholders
involved in the NTN Group. By steadily implementing initiatives based on the above, we aim to realize a NAMERAKA society.
NTN Revitalization Story

Founders’ Spirit

Our vision toward a
new 100 years

Our VisionCorporate Philosophy

1 A company where its corporate philosophy isunderstood by all employees around the world
and where all employees think and act forthemselves

P.01

NTN SPIRIT

2 A company with original new products andservices, appreciated for its high quality andfunctions, and has a global presence

1

2

SustainablegrowthStrengthen coretechnologies andproducts
Pursue competitive
advantages

Develop businesses in
new areas
Utilize core competence
and cooperation withexternal organizations

Management bases that support
our businesses

Management Policy
Business Strategies

3 A company where everyone involved with NTN
will be able to be proud of the “NTN” brand

NTN Group aims to realize a “NAMERAKA Society" through practicing its corporate philosophy. As a company that is trusted
and needed by communities including stakeholders, we engage in business activities with an emphasis on respect of humanrights and compliance.
NAMERAKA Society : A society where people can easily lead a secure and fulfilling life in harmony with nature.

• ESG• Profit creation• Pursue high productivity and quality• Improve efficiency in asset management

Stance to Stakeholders

Corporate Philosophy

Employees

NTN Group respects diversity, individuality and a safe and healthy workplaceenvironment where employees can work successfully.

Customers

NTN Group seeks to maximize customer satisfaction and trust by providing
products and services of superior quality, safety and reliability.

Business partners

NTN Group, in a fair and free environment, builds good partnerships with its
business partners and works together for mutual growth and development.

Local communities

NTN Group respects cultures and customs in the local communities and builds
long-term trust relationships by meeting their expectations through its businessactivities.

Shareholders

NTN Group focuses on return for shareholders by sustainable profitable growthand builds long-term trust relationships with shareholders through active
communications.

Environment

NTN Group harmonizes its business activities with nature and contributes topreserve the global environment by providing its technologies, products andservices.

10 year targets
Before starting the "DRIVE NTN100" medium-term management plan in April 2018, we had set targets to be achieved in the 10 years after
the plan.
We aim to transform ourselves from a “Manufacturing Company” into a “Company that Delivers Value to Customers through Products
and Services.”

Changes in external
environment

Numerical targets

Automotive industry
A change that occurs only
once a century (CASE)

Net sales

Social Issues
Population increase,climate change, resource
depletion, poverty,
starvation, etc. (SDGs)

800

600

Industrial
machinery
Aftermarket

Operatingmargin

10% or more

Total asset
turnover1.0 or more

400

200

Exchangeratesensitivity

To be halved
from thecurrent level

The target for fiscal year ending March 31, 2028 is the goal set at the beginning of planning.

15 NTN Report 2020

(Billions of yen)0

Automotive

2018

Transform ourbusiness structure
to achieve the10-year goals
Respond to newmarket needs createdby changes in external
environment
Strengthen coretechnologies andproducts

New businesses(natural energy, etc.)

Industrial
machinery

Robotization and IoT
needs
Expand corebusinesses

Aftermarke

Expand the scope ofservices

Automotive

Respond to vehicle
electrification
Expand corebusinesses

Company/Stock Information

Industrywide
IoT, robotization, and AI

1 trillion yen ormore

1 trillion yen

Financial Data

Transform from a “Manufacturing Company” into a “Company that
Delivers Value to Customers through Products and Services”

ESG Strategies“We shall contribute to international society through creating
new technologies and developing new products”

2028(Fiscal years ended/ending
March 31)

NTN Report 2020

16

NTN Revitalization Story

Business Operating Policy for NTN Revitalization
About Us

The business environment surrounding the NTN Group is facing unprecedented challenges, including a sharp deterioration in businessperformance due to the impact of the new coronavirus and uncertainty about the outlook for the future. Against this backdrop, we haveestablished a Business Operating Policy for the fiscal year ending March 31, 2021 and beyond while continuing the basic policy of the"DRIVENTN100" Medium-term Management Plan. In the fiscal year ending March 31, 2021, which is regarded as the Crisis Response Period,
we will promote priority measures and link them to a new Medium-term Management Plan. In doing so, we will strive to improve ourcorporate structure for NTN Revitalization.

Basic Policy

Main Strategy

Drive Forward Transformation of Business Structure for the new 100 years*Detail plan to be published by March 2021

Ensure the health and safety of employees

Improve profitability and investment efficiency of
existing products and businesses

1. Manage employee health and control the spread of
infections
2. Respond to requests from the national and local
governments and constructing a global safety support
systemDigitalization (latest digital technology) X Resources (management resources that NTN has developed)

3. Promotion of telework for the purpose of 3Cs (Closed
spaces, Crowded places, Close-contact settings)
prevention and social distancing

Innovation (development of innovative technologies, products and services)

4. Maintenance of employees' livelihoods

2019 to 2020*

Business
Management
Policies

Ensure the healthand safety of
employees2022 to 2024*

Improve profitability andinvestment efficiency of
existing products and businesses

Secure cash and continue businessAccelerate new business expansion
1. Concentrate management resources on new
businesses that are close to be commercialized anddevelop them into profitable businesses in a shortperiod of time

1. Reduce and minimize working capital
2. Secure business funds
Secure ¥100.0 billion of business funds including
conclusion of commitment line contract
3. Suppress capital investment (cut the investment by half)

Prepare for future growthMaterialize new
businesses by creating
new products andbusinesses

Prepare for
future growth

Selection of new businesses
and review the allocation of
resources

Management systemenhancement

Continue business, Internal reform(Increase added value and Reduce costs)

Management system enhancement, etc.

1. Freeze investment in capacity expansion andconcentrate on investment for efficiency improvement
and maintenance
2. Work style reforms centered on indirect departments
3. Withdrawal from unprofitable part numbers andexpansion of aftermarket
4. Selection of new business and review the allocation of
resources
5. Start and establish new IT core system, and create
benefits at an early stage
6. Respond to SDGs

1. Establish strategic organization to implement measuresthat anticipate changes in the business environment
2. Strengthen further corporate governance and promote
active dialog with stakeholders
3. Aim to achieve a work-life balance of each employee
and create better work environment, promote reformsof personnel system to improve engagement

Financial Data

Establish a management
system to facilitate reformof business structure

Secure cash andcontinue business

2. Work on natural energy product business that
contributes to environmentally friendly society

ESG Strategies

Improve profitability andinvestment efficiency of
existing products andbusinesses

Crisis Response Period2020*

2. Promote improvements in productivity and operational
efficiency through cutting-edge digital technologies,
such as the new factory (Wakayama) established under
the new concept (smart factory), the utilization of the
new IT core system, and the introduction of RPA

Business Strategies

Efficiency improvement (achievement of the world's No.1 productivity and quality)

Mid-Term Plan II

1. Outsource existing products and businesses,
concentrate management resources on products andprocesses where NTN can take advantage of ourtechnological strengths

3. Strengthen financial framework by reducing
inventories by shortening production LT throughproduction reforms, etc., thinking in a different way

Variable cost reformation (procurement reformation)

Mid-Term Plan I

Basic Policy in New Medium-term Management Plan
(Fiscal year ending March 31, 2022 to March 31, 2024)

NTN Revitalization Story

DRIVE NTN100

Important Measures in Crisis Response Period(Fiscal year ending March 31, 2021)

4. Have awareness of Sustainable Development Goals(SDGs) and contribute to solve social issues as a global
Company

NTN Revitalization Scenario pp.23-26*Fiscal years ended/ending March 31

17 NTN Report 2020

Businesses
3.Increase prices for or withdraw from unprofitableprojects
4.Break away from self-sufficiency

Reduce costs

Improve cash flow

1.Reduce procurement and logistics
costs
2.Reduce fixed costs

1.Decrease inventories
2.Promote production reforms and make a shift to "Monozukuri"
that generates cash

NTN Report 2020

Company/Stock Information

Increase added value

1.Shift to fields (business, region) with high profit
margins
2.Expand aftermarket Business through collaboration
between industrial machinery and aftermarket

18

Management Commitment

NTN Revitalization Story

About Us

Overcoming the Crisis Response Period
For Future Growth
NTN Revitalization Story

The global economy contracted due to the spread of the new coronavirus (COVID-19),
and the NTN Group has also been severely affected.
We are facing an extremely difficult situation due to deterioration in our businessDirector
Representative Executive Officer, President
CEO (Chief Executive Officer)

performance. However, I believe this is a good opportunity to accelerate our transformation,and I will work toward the revitalization of NTN with the resolve to surely carry it out.

Business Strategies

Toward NTN's Revitalization
In the fiscal year ended March 31, 2020, net sales amounted to651.5 billion yen, down 11.2%, or 82.1 billion yen, from theprevious fiscal year. This is due mainly to the impact of the
spread of new coronavirus from the beginning of 2020 as wellas the sluggish global demand environment caused by theintensified U.S.-China trade friction and other factors.
Operating income was 7.1 billion yen, down 73.8% or 19.9
billion yen, from the previous fiscal year. Although we moved
forward with lowering variable costs and reducing fixed costs
such as personnel costs and expenses, we were unable to covera significant drop in sales. In addition, we booked an
extraordinary loss of 34.2 billion yen including an impairment
loss of 29.0 billion yen and as a result, a net loss attributable toshareholders of the parent company amounted to 44.0 billion
yen, our largest loss ever.
In the previous fiscal year (ended March 31, 2019), we
recorded an impairment loss of 17.0 billion yen for fixed assets
such as equipment in manufacturing divisions in Japan. In thefiscal year under review, we did not anticipate any impairment
losses, but with regard to plants and manufacturing equipmentthat we considered incapable of recovering the investment
amounts due to the unexpected impact of new coronavirus, werecorded impairment losses.
It is truly regrettable that we were not able to distributeyear-end dividends, and we paid 5.0 yen per share in annual
dividends including the interim dividends of 5.0 yen. This isbecause our business performance has rapidly deteriorated dueto the spread of the new coronavirus infections and the outlook
for the future is uncertain.

In this tough business environment, the fiscal year ending
March 31, 2021 is positioned as a “Crisis Response Period” in thecoronavirus pandemic and we will take initiatives to “ensure thehealth and safety of employees” by thoroughly implementing
measures to prevent infections. At the same time, we areworking to “secure cash and continue business” in the event ofan emergency, and to “prepare for future growth.”
Ensure the health and safety of employees
Employees are our most important source of strength, andtherefore we will implement measures to ensure the health andsafety of employees and their families. In addition toestablishing a safety support system on a global scale, we areworking to prevent infections and promote teleworking.
Secure cash and continue businessWe will focus on business continuity by reducing andminimizing working capital, including inventory assets, andsecuring 100.0 billion yen of business funds, including throughconclusion of commitment line agreements.
Prepare for future growth
Regarding capital investment, we have decided to freeze
investment for capacity expansion and concentrate on
investment for efficiency improvement and maintenance. With
regard to business operations, we will review the work itself that
we have done so far and consider establishing a teleworking
system, for example by developing a personnel evaluation
system for teleworking. As for the new IT core system, which wehave been switching over to as a foundation to support ourbusiness, we will put it into operation and firmly establish it,
thereby producing results at an early stage.
(See pp.17-18 for more details)

Accelerating transformation of business structure
A New Medium-term Management Plan will begin in the fiscal
year ending March 31, 2022. In “DRIVE NTN100,” a 3-year
medium-term management plan that began in the fiscal year
ended March 31, 2019, the NTN Group has been working on“developing innovative technologies, products and services,”“variable cost reformation,” “achieving the world’s highest
productivity and quality,” and “improved efficiency in asset
management,” by combining the latest digital technologies withthe management resources we have cultivated. In response to
major changes in the marketplace, we will acceleratetransformation of our business structure as set forth in “DRIVE
NTN 100” under the New Medium-term Management Plan.
Details of the New Medium-term Management Plan arescheduled to be announced by March 2021, and we will
implement measures for ensuring business continuity andlowering the break-even point, with the aim of realizing thefollowing three transformations.

19 NTN Report 2020

Increase added value
1. Shift to fields (business, region) with high profit margins
2. Expand aftermarket business through collaboration
between industrial machinery and aftermarket
businesses
3. Increase prices for or withdraw from unprofitable projects
4. Break away from self-sufficiency
Going forward, we will shift our focus to highly profitable
fields, businesses and regions, and endeavor to expand profits

through collaboration between aftermarket and industrial
machinery businesses. While working to provide high valueadded products and expand new business areas, we will also
raise prices for and withdraw from unprofitable projects.
We will break away from self-sufficiency, or our integrated
production system that covers everything from premanufacturing processes (such as forging and turning) toassembly, and expand outsourcing of the pre-manufacturing
processes. In the area of finished products, we will work to
expand technical assistance and outsourcing of production
through alliances with partner companies.
Reduce costs
1. Reduce procurement and logistics costs
2. Reduce fixed costs
We will accelerate variable cost reformation that supports ourglobal procurement system. Although the procurement ofmaterials was not greatly affected by the new coronavirus
pandemic, we will look ahead to the post-corona world andpromote stable procurement that is not affected by the external
environment, as well as optimal procurement in terms of cost,function, and quality.
In addition to performing centralized purchasing bystrengthening cooperation with major suppliers, we will change
the composition of our suppliers while adding new suppliers.
We will work with our partner manufacturers to promote
structural reforms, build WIN-WIN relationships, and reducepurchasing costs. In terms of logistics, we will endeavor to
improve efficiency by analyzing the flow of goods in Japan, andwill review the transportation of goods to overseas areas,
thereby reducing logistics costs.
NTN Report 2020

Company/Stock Information

New Medium-term Management Plan startingfrom the fiscal year ending March 31, 2022

Financial Data

Priority measures for the Crisis Response Period
in the fiscal year ending March 31, 2021

ESG Strategies

Overview of the fiscal year ended
March 31, 2020

20

NTN Revitalization Story

Management Commitment
About Us

Improve cash flow
1. Decrease inventories
2.Promote production reforms and make a shift to"Monozukuri" that generates cash

Responding to climate change

Developing human resources that can play anactive role on the global stage

Strengthening
ESG management
ESG initiatives

21 NTN Report 2020

* “NAMERAKA” means “smooth” in Japanese.

Employees
Customers

Putting corporate philosophy into practiceTwo spirits passed down from the founders of NTN are embodied
in its corporate philosophy, "We shall contribute to internationalsociety through creating new technologies and developing new
products." Noboru Niwa and Jiro Nishizono, the founders of NTN
paved the way for the domestic production of bearings that wassought in Japan at the time. This Frontier Spirit is linked to ourbusiness activities in the second half of our corporate philosophy,"through creating new technologies and developing new
products." The Coexistence and Co-prosperity Spirit cherished by
our founders who hoped to contribute to the development of avariety of industries through the domestic production of
bearings, remains in the first half of our corporate philosophy,"We shall contribute to international society."
In December 2019, we established a Management Policy of
the NTN Group to express our management philosophy andstance on putting into practice the corporate philosophy thatincorporates our founders' ideals. We also clearly stated ourstance toward stakeholders in order to become a company thatis trusted and needed by stakeholders. (See p.16 for moredetails) To ensure that the more than 24,000 employees of the
NTN Group worldwide promote the corporate philosophy, wehold a NTN PROUD AWARD, which serves as an opportunity tocommend our employees who put the corporate philosophy

Business Contributing toEnvironment
Partners“NAMERAKA
Society”

Local
Communities

NTN SPIRIT

Shareholders

NTN SPIRIT(Credos & Guidelines)

Corporate
Philosophy

VALUES
Company/Stock Information

In July 2020, we have newly established a Human Rights Policy
and a Safety and Health Basic Policy. The Human Rights Policy
has been established as a basis for day-to-day activities andbusiness execution to ensure that all employees of the NTNGroup share a unified sense of values, as the NTN Group further
strengthens and promotes initiatives for human rights. The NTNGroup contributes to international society through creating
new technologies and developing new products, and supports
the realization of a society in which human rights are respected.
To achieve this, the NTN Group will continue its efforts to fulfill
its responsibilities in respect of human rights, including theestablishment and ongoing implementation of a human rights
due diligence system.
The Safety and Health Basic Policy was established with the

NTN's role

For more than 100 years, we have been providing bearings thatare indispensable in a variety of industries. Bearings areimportant precision parts that support rotating parts ofmachines, and are eco-friendly products that contribute to
reducing energy loss. Our strength lies in our originaltechnologies and services that we have cultivated over many
years, as well as our global network that spans 33 countries
around the world. We provide safety and comfort while
supporting people's lives globally. In addition, amid the urgent
need to realize a low-carbon society on a global scale, we arecontributing to a sustainable society that generates energy byapplying our proprietary technologies and providing productsthat utilize natural energy.
Through the provision of these products and services, theNTN Group aims to realize a "NAMERAKA* society." A
NAMERAKA society is a society where people can easily lead asecure and fulfilling life in harmony with nature. The NTN Groupwill contribute to the development of a sustainable society by
resolving social issues through the creation of new technologies
and the development of new products.

Financial Data

Establishing basic policies for human rights,
safety and health

In June 2019, NTN has made a transition from a Company with
Board of Company Auditors to a Company with Nominating
Committee, etc. with the aim of establishing a prompt decisionmaking structure and an operational execution organization,
strengthening the supervision of management, and improving
management transparency and fairness. At the same time, thenumber of Outside Directors was increased from 2 to 5, with theNominating Committee, the Compensation Committee, and the
Audit Committee all chaired by Outside Directors. In July 2020, a
female Director (Outside Director) was newly appointed for the
first time at the Company. We have always worked to promote
diversity, and going forward, the female Director withexperience in a different industry than ours will supervise
management. This will enable us to integrate diverse values andaccelerate transformation aimed at achieving sustainablegrowth.

Contributing to solving social issues throughbusiness

ESG Strategies

We held our first ESG Meeting in 2018 and communicated withinstitutional investors about our ESG initiatives, which helped
strengthen our activities. In October 2019, we held our second
ESG Meeting, as well as the first ESG Meeting for employees inorder to inform them about the importance of ESG initiatives
and SDG measures. We will not only use the opinions from ourinstitutional investors to improve our activities, but will also
work to deepen the understanding of our employees andstrengthen our ESG-related efforts.
The Sustainability Committee was established in November
2019 and started to identify important issues (materiality) to beresolved by the NTN Group through its business activities.
Responding to SDGs, sustainable development goals, means
identifying business activities that are socially and economicallyvaluable.
In 2015, we endorsed the United Nations Global Compact

We do not currently have any non-Japanese Directors or
Executive Officers, but we have two foreign Operating Officers.
In addition, our overseas employees account for more than 60%
of our workforce, and many of the employees recruited locally ineach country are working at the management level including
top management and executives at our overseas affiliates
around the world.
Since January 2019, a French Executive Officer has beenleading the procurement division in strengthening global
procurement. In the technical, administrative and otherdivisions, excellent human resources from overseas subsidiaries
have demonstrated their abilities in dealing with global
projects, and we will continue to expand the assignment of
human resources from overseas. We will also promote diversity
by strengthening the recruitment of non-Japanese employees
in Japan, and promote transformation based on flexible ideas
created by the fusion of diverse values.
Human resources are the foundation of our growth, and wewill strengthen our business foundation by cultivating humanresources that can play an active role globally.

Strengthening corporate governanceinto practice. Through these activities, we endeavor to promoteawareness of the corporate philosophy among our employees
globally. (See pp.53-54 for more details)

Business Strategies

In order to respond to climate change, we have started toquantify our contributions to climate change in the fiscal year
ended March 31, 2019. (See pp.45-46 for more details) This not
only visualizes the value NTN provides to society, but also helps
raise employee motivation in the development process. In the
future, we will increase the proportion of products with a higher
degree of environmental contribution and expand ourcontribution to CO2 reduction. On the other hand, we recognizethat we are not able to set clear medium- and long-term targets
for the environment, and we will consider numerical targets inconjunction with identifying materiality.

aim of raising awareness of safety among NTN Group employees
and organizations, and further enhancing corporate value. It
respects safety and health policies and approaches that havebeen fostered by each business site and country. We havedemonstrated that the realization of a work environment that
ensures the safety, health and active performance of everyone
working in the NTN Group is the foundation of management
and the most important value that takes precedence overeverything. (See p.55 for more details)

NTN Revitalization Story

Until now, we have been pursuing partial optimization that
improves each process (equipment), such as reduction of cycle
times. In the future, we will introduce a total optimization
system that covers all areas of supply chain management, frommaterial procurement to product sales, and produces just whatis needed, only when needed, only in the quantity needed(just-in-time manufacturing). Under the leadership of the
Production Reform Department established in June 2019, weare promoting company-wide production reforms. In doing so,
we will construct new production processes to reduce leadtimes and inventories, thereby creating cash flow.
(See p.35 for more details)

and support ten principles in four areas: human rights, labour,
the environment, and anti-corruption. We will work to increase
the corporate value of the NTN Group by promoting our
response to SDGs. (See p.37 for more details)

MISSION
Founder’s
Spirits

DNA

Corporate Philosophy System

NTN Report 2020

22

NTN Revitalization Story

CFO Message
About Us

Breakdown of impairment loss

Executive Officer
CFO (Chief Financial Officer)

Tetsuya Sogo

Financial results for the fiscal year ended March 2020

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Net sales

733.6

651.5

Operating income
Operating margin

26.9(3.7%)

7.1(1.1%)

22.2-1.7

Extraordinary income or loss

-19.3

-32.3

Net income attributable toshareholder (parent com-pany)

-7.0

-44.0

US$

110.9

108.7

EURO

128.4

120.8

Exchange rates

Impairment loss
Regarding our manufacturing business units, plants andaffiliated companies (CGU: Cash Generating Unit) that are
expected to experience a significant deterioration in
profitability in the future, we make it a rule to explain, discussand agree with the auditing firm on our business plan for the

23 NTN Report 2020

11.7 billion yen

Impairment loss in fiscal year
ended March 31, 2020:

29.0 billion yen• Japan 22.0 billion yen

NTN (non-consolidated)

12.7 billion yen

Affiliated company (8 companies)

9.3 billion yen

Americas (1 company)

5.5 billion yen

Europe (1 company)

1.5 billion yen• Overseas 7.0 billion yen

Remaining issues to improve our financial structure
In the fiscal year ended March 31, 2020, we reduced fixed costs
by 6.9 billion in personnel costs, 9.2 billion yen in expenses, aswell as variable costs by 3.1 billion yen, including 3.6 billion yen
in our general continuous cost reduction. However, the negative
impact of the scale reduction of 33.9 billion yen was extremely
significant, and operating income decreased significantly. The
first issue is how much variable costs can be reduced throughpromotion of global procurement, as the amount of cost
reduction is declining year by year. Furthermore, as for the
impact of the scale reduction effect, decreased sales volume
was 62.4 billion yen excluding the impact of exchange rates andsales price fluctuations. On the other hand, for the entire NTNGroup, the ratio of variable costs to sales is about 55%, andtherefore our consolidated marginal profit ratio is 45%. Due tothis, the scale reduction effect on operating income will be 28.0
billion yen. However, as we have decreased inventories
drastically in line with a decrease in sales in the fiscal year ended
March 31, 2020, production volume dropped by 87.0 billion yen,resulting in minus 33.9 billion yen due to the scale reduction
effect causing an additional reduction in the production
volume. The second issue is how to further reduce fixed costs
such as personnel costs and expenses, assuming that thenegative impact on operating income will be extremely
significant because of a further reduction of inventories toensure cash flow in the fiscal year ending March 31, 2021, assales will decrease more drastically in that fiscal year. In
particular, head office expenses need to be thoroughly
reviewed in order to concentrate on improving strategic
capabilities and shared service functions in the future. The sales
price level was down 2.5 billion yen year on year, and this camemainly from a decrease of 5.8 billion yen in the sales price level
for automotive OEM business only. The third issue therefore is
how to differentiate ourselves from competitors in terms oftechnology and services to move away from intensified pricecompetition, thereby reducing discounts and raising prices,
particularly in our OEM businesses, where operating margin is
noticeably declining.
Along with addressing the above issues, Finance HQ willcontinue to support and follow our “Global Value Creation
Activities” through our new “Decision Making System of
Investments” and “Evaluation System of Business Performances”
based on the shared concept of “Cost of Capital” for eachbusiness location, which we introduced in the fiscal year ended
March 31, 2020.

Analysis of Operating Income*All figures are in billion yen

Positive factors(19.2)

Negative factors(39.1)

Expenses etc. 9.2(Depreciation 0.7, Other 8.5)
Decrease in
Decrease in variable
personnel costs 3.1
costs 6.9
Sales effects
33.9
Fiscal year
ended
March 31,2019
Operatingincome26.9-19.9

Sales pricelevel 2.5

Exchange
rates 2.7

Fiscal year
ended
March 31,2020
Operatingincome 7.1

Fiscal year ended March 31, 2019 vs Fiscal year ended March 31, 2020

Major actions during the Crisis Response Period
In the fiscal year ending March 31, 2021, which is regarded as the
Crisis Respond Period, we will ensure the safety of employees,
endeavor to survive on a sharply falling sales scale, and prepare
for recovery from the fiscal year ending March 31, 2022.
Securing sufficient cash
We explained our Revitalization Scenario to our main financing
bank and secured 100.0 billion yen of funds, including undercommitment line agreements with our main financing banks.
Obtaining a commitment line means that we can borrow from abank at any time within the amount and period of thecommitment line. It is roughly estimated that the amount of
100.0 billion yen is an additional amount, which is sufficient tosustain ourselves in the event of a 30% decline in annual sales.
At the same time, we will consider and promote the utilizationof factoring (liquidation of receivables) not only in Japan but
also at overseas locations, and aim to collect and utilize surplus
funds globally.

Company/Stock Information

Ordinary income

5.3 billion yen

Affiliated company (5 companies)

Financial Data

(Billions of yen)

NTN (non-consolidated)

ESG Strategies

Consolidated financial results

average remaining depreciation periods (about 7 to 8 years) of
production machinery we have in each of our CGU mentioned
above for our impairment examination and calculation. We
calculate the business value (net present value of free cash flow
generated and net realizable value of the land and building) for
each CGU, and if it is lower than its respective current bookvalue of tangible fixed assets, we will write off the difference
between them. Consequently, impairment loss means that thevalue of such business is less than the book value of property,
plant and equipment for its business activities, and we recorded
impairment loss of 17.0 billion yen at NTN Corporation and five
affiliated companies in Japan in the fiscal year ended March 31,
2019. In addition to external factors such as declining sales due
to changes in economic conditions, exchange-rates, steel
material prices and tariffs, as the competitive environment ischanging and becoming more intense globally, our competitive
advantage as a whole has gradually deteriorated particularly inJapan, making us unable to create sufficient business value. We
did not estimate major impairment loss in the fiscal year ended
March 31, 2020 as in the previous year by promoting measures,
aimed at enhancing each business value, primarily at our CGUs
in Japan, such as normalizing the burden of expenses withoverseas operations, raising prices of unprofitable products,
withdrawing from unprofitable business lines, andstrengthening aftermarket business. However, after discussions
with the auditing firm, we determined that the measurement of
impairment loss would have to reflect the impact of COVID-19.
As a result, impairment loss of 29.0 billion yen was recorded, of
which 22.0 billion yen was in Japan and 7.0 billion yen was inoverseas business sites. The impairment loss of 29.0 billion yen
in the fiscal year ended March 31, 2020 was calculated on thebasis of a very conservative assumption that net sales in thefiscal year ending March 31, 2021 would decline 20% from net
sales in the business plan prior to the impact of COVID-19, thelevel of net sales in the fiscal year ending March 31, 2022 would
still not recover to 100%, and the level of net sales would notincrease and would stay flat in the remaining years ofdepreciation. As a result of this impairment loss, the amount ofdepreciation will be reduced by 3.5 billion yen per year in the
future.

• Japan 17.0 billion yen

follow-up of major investments that directly lead to
improvement of corporate value through thoroughimplementation of our new valuation standard forinvestments based on NPV and IRR
2 Monitor the status of corporate value creation in each business,region, and company by thoroughly evaluating businessperformance using EVA and ROIC, and strengthen theorganizational system to clarify issues and respond to them3 Through the measures listed in 1 and 2 above, establish thebase of “Global Learning Organization” that implements themost effective measures autonomously and promptly tomaximize the value in each business, region, and company
while they communicate closely with each other

Business Strategies

Summary
As for the fiscal year ended March 31, 2020, we announced theoutlook for net sales of 680.0 billion yen and operating incomeof 10.0 billion yen at our Financial Settlement Briefing Meetingfor the third quarter that was held in February prior to theimpact of the new coronavirus (COVID-19). However, the result
was that net sales was 651.5 billion yen, substantially below
expectations, largely due to the spread of COVID-19 in the
fourth quarter.
Meanwhile, we tried to increase operating income as much as
possible by thoroughly reducing fixed costs such as expenses
and personnel costs in particular, thereby maintaining a level of
7.1 billion yen. Although we maintained a positive level ofoperating income, we posted a net loss of 44.0 billion yen, theworst figure in NTN's history. This was mainly due to therecording of extraordinary losses of 34.2 billion yen in particular,
including an impairment loss of 29.0 billion yen as well as therecording of a loss of 1.8 billion yen on dissolution of
unprofitable joint ventures in China and South Korea that haveno prospect of recovery as non-operating expenses.

17.0 billion yen

NTN Revitalization Story

Toward Establishing a Management Baseto Realize Sustainable Growth
as a Global Company

1 Strengthen global management capabilities for decision andImpairment loss in fiscal year
ended March 31, 2019:

Restraining outflow of funds
While securing sufficient funds, we will thoroughly restrain theoutflow of funds. To achieve this, we will first limit capital
expenditures to 20.0 billion yen. Within this scope, we thoroughly
examine the minimum investments required, but in principle, wewill freeze new investments to expand capacity and prioritize the

NTN Report 2020

24

NTN Revitalization Story

A Message from the CFO
About UsNTN Revitalization Scenario

Transformation of mindset toward Revitalization
Prior to the Lehman Crisis, even though NTN's asset turnoverrate was much lower than that of its domestic competitors,
NTN's profitability was higher due to its superiority in selfsufficiency from the pre-process, and both its ROIC and stock
price were at higher levels. We need a “Structural Reform” basedon a new mindset that will allow us to break away from our

NTN Revitalization Scenario - Toward Corporate Value Creation [ROIC 5% or More]Net DE Ratio

3.0

Fiscal year ended March 31, 2018 (Results)
Net sales: 744.4 billion yen
Operating income: 39.6 billion yen

Net DE Ratio

ROIC

Fiscal year ending March 31, 2024 (new mid-term plan)
Net sales: 700.0 billion yen (700.0-750.0 billion yen)
Operating income: 42.0 billion yen (6% or more)

(%)
ROIC

2.5

5.0

2.0

0.0

"Selection andConcentration"

1.0
Fiscal year ended March 31, 2019 (Results)
Net sales: 651.5 billion yen
Operating income: 7.1 billion yen

0.5
0

2018

2019

2020

1. Sales of assets
2. Business integrationand closure

Fundamental review of marketing and pricing strategy"Structural 1.
2. Strengthen production control and inventory control
Reform" 3. Break away from self-sufficiency

2021
Crisis Response Period

2022

2023

2024

(Fiscal years ended/ending March 31)

New Mid-term Management Plan

Achieve ROIC 5% or more, maintain ROE 8% or more, return 4% to shareholders, and allocate the remaining 4% to sustainable growth in the future.
25 NTN Report 2020

Company/Stock Information

-5.0

1.5

Since the fiscal year ended March 31, 2020, we have been
explaining overview of our Revitalization Scenario throughinterviews with analysts and rating agencies and other means.
At the Financial Settlement Briefing Meeting for 2019, we wereasked the reasons why the implementation of the plan was
delayed and the extent of the feasibility of the plan. Basically,
this scenario is a prerequisite for the commitment line of 100.0
billion yen. It is not a matter of whether it is feasible or
impossible to implement the plan, but this scenario should berecognized as the minimum requirement. The biggest factor
affecting the feasibility and the speed of implementation is howeach Executive Officer can take advantage of the current
environment of COVID-19 as an opportunity for ourfundamental change, by breaking down this scenario by eachbusiness functional field using his/her own words, andthoroughly implementing each field's reform story throughinspired Middle Management people in each field.
The outlook is becoming increasingly difficult after the spreadof COVID-19. As a vision for the future, under such extreme
uncertainty, we will accelerate the establishment of a corporate
culture, or a Global Learning Organization, that will
autonomously pursue total optimization to ensure that all
regions and divisions survive with a shared view to maximizing
the total value of NTN Group.
This is because, even if the clear strategies and directions of
top management toward maximizing corporate value arebroken down into specific tasks by function, we believe that notransformation will be achieved without the strong networkingof middle management that measures, manages, andmaximizes the results of value creation while coordinating
between related divisions in order to resolve the contradictions
between ideals of top management to aim for and realities at
each working place in each business functional field.
Therefore, I myself make every effort to repeatedly explain,discuss, and exchange opinions and views on the strategies anddirections that each company should take through direct dialog(including web meetings and discussions) with the leaders of alldivisions in Japan and overseas.

Financial Data

Definition of Revitalization
NTN Revitalization means making it possible for us to create
corporate value. Since the fiscal year ended March 31, 2020, we
have introduced the concept of “Cost of Capital (WACC)” in ourinvestment decisions and business evaluations in each country
globally. Assuming that the return expected by ourshareholders from the Company in the Japanese stock market is
8% at present, we have designed our consolidated WACC at 5%,
so our mandatory target for consolidated ROIC (Return on

too heavily on a KAIZEN spirit at manufacturing sites that
responds to the demand of “All” OEM customers throughcontinuous improvement of productivity and cost
reduction:
 In the face of changes in the business environment caused
by low-price competition driven by Korean and Chinesecompanies in the industrial and automotive OEM market, weneed to strengthen our marketing and cost quotation
functions, as well as investigation, planning, execution andfollow-up functions of our pricing strategies in the sales
division to secure our new competitive advantage.
 In addition to selecting customers and cultivating new
target customers, we aim to improve the profitability of theOEM business by withdrawing from extremely unprofitablebusinesses, restraining price reductions, and thoroughly
negotiating price increases. (Withdraw from large lossmaking products in terms of gross profit margin andthoroughly implement strategic precision pricing)2 Break away from our current corporate culture that has not
implemented drastic measures while inventory asset
turnover is extremely low compared to our competitors inJapan:
 In the midst of a significant deterioration in NTN’s
profitability, which once surpassed competitors in Japan, we
need to promote manufacturing reforms based on KPIs
centered on GMROI (Gross Margin Return On Inventory
Investment) in order to maximize throughput to secure a newcompetitive advantage in the face of environmental changes,
in which our low inventory asset turnover is a major
impediment to competition. In addition to reducing invested
capital by reducing inventory assets, we aim to expand
aftermarket business and improve profitability by realizing
flexible manufacturing for aftermarket services in our OEM
production lines. (Break away from prioritization for OEM andensure efficient production of profitable products foraftermarket services)
3 Break away from our current corporate culture that
attempts to internally accumulate added value as well as
technological know-how by carrying out the entire processof development, manufacturing, and sales on its own:
 In order to secure a new competitive advantage, we needto build and strengthen WIN-WIN partnerships based on
mutual trust and respect with partners that havecomplementary capabilities to succeed together and withwhich synergy is expected to be created in each of ourbusiness areas and markets. This is because the burden ofinvestment costs has increased and we have insufficienthuman, financial, and technological resources due todiversified customer requirements and increasingly
sophisticated requirements in the global market. Throughstrategic partnerships, we aim to significantly reduceinvestments and supplement human and technical resources.

Future Vision

ESG Strategies

Basic assumptions for the creation of corporate value
In order to achieve ROIC of 5%, we do not rely on measures toincrease net sales by expanding production capacity to increase
production, and we aim to create a financial structure that cancreate corporate value with net sales of 700.0 billion yen.
Specifically, the minimum targets of net sales and operating
income are 700.0 billion yen and 42.0 billion yen (operating
margin of 6%), respectively. To achieve this target, we will
reduce the current variable cost rate of 55% by 3% pts (netreduction) through our efforts such as raising selling prices andreducing procurement costs. At the same time, we will further
review and reduce fixed costs, which we had drastically reducedin the fiscal year ended March 31, 2020. Through thesemeasures, we will minimize any increase in personnel costs andexpenses in response to a rebound in sales from fiscal year
ending March 31, 2022, and lower our break-even point. For the
fiscal year ending March 2024, we will lower the break-evenpoint to 80% of net sales, or 560.0 billion yen relative to net
sales of 700.0 billion yen.

1 Break away from our current corporate culture that relies(Break away from self-sufficiency and drastically reduce
capital expenditure)

Business Strategies

Preparing for Revitalization
Within the Group as a whole, we will clarify the businessstrategies for unprofitable companies and clearly determine thedirection such as reconstruction, downsizing or closure. EachBusiness Headquarters will play a central role for domestic
operations and the Office of General Managers for overseas
businesses, while these headquarters and office work together
with Corporate Strategy Headquarters, Finance Headquarters,
and Production Headquarters to formulate concrete plans,
including consideration of asset sales and businessconsolidation. The progress of these plans will be tracked in the
New Mid-term Management Plan. At the same time, we will
accelerate the implementation and promotion of measures tostrengthen the “Product Portfolio” by withdrawing from thedeficit products and concentrating on the profitable products in
the industrial and automotive OEM business, and measures tostrengthen the “Business Portfolio” by expanding andstrengthening aftermarket business.

successful experiences in the past and secure a new competitive
advantage. Based on this direction, we will consider andpromote "Selection and Concentration" in the areas of asset
sales, business integration and closure. The following section
shows three reforms aimed at NTN Revitalization (corporate
value creation) through an increase in free cash flows.

NTN Revitalization Story

Invested Capital) is 5% in the fiscal year ending March 31, 2024,
to create corporate value under New Mid-term Management
Plan, which is scheduled to start in the fiscal year ending March
31, 2022. In terms of management stability, our final target for
Net D/E ratio is less than 1.0, and we have set the net D/E ratioof 1.5 as a mandatory target for the fiscal year ending March 31,
2024. We aim to become a company that can steadily improve
corporate value in the future by achieving the abovementioned mandatory targets, maintaining ROE of 8% or more,
returning 4% to shareholders (DOE of 4%), and allocating theremaining 4% to sustainable growth in the future.

following: investments in production reforms to improve current
situations such as throughput; overhaul of existing facilities; andflexible setup response. Furthermore, regarding inventory assets,
we will strategically increase inventories for aftermarket services
with the aim of increasing sales in aftermarket business. At thesame time, we will reduce OEM inventories and aim to achieve
the Group-wide inventory asset turnover ratio of 3.6 as in thefiscal year ended March 31, 2020.

Active online discussion with overseas sites

NTN Report 202026

Business Strategies

Aftermarket
Trend in business performance
Sales (left axis)• High branding power and• Networks of major• Expansion of needs for• Broad product lineup• Experience and know-how

presence of Europeanand U.S. competitors in
the overseas aftermarket
business

service & solution businessand increase in roles that
customers expect fromsuppliersin supplying products for
MRO* in the global market

billion yen

17.7• Sales network that covers• Sophistication of• Providing detailed

Strengthen systems
and organizations• Awareness andtechnological capabilities
for OEM
technical services

AchieveOUR VISION
Strengthen
supply capacity

Achieve OUR VISION Transform from a "Manufacturing Company" into a "Company that Delivers Value toCustomers through Products and Services.”

27 NTN Report 2020

14.0

15.0

15.2

2017

2018

2019

12.7

2020

30.0
15.0

2021

(Forecast)

0(Fiscal year ended /ending March 31)

Results for the fiscal year ended March 31, 2020 and forecast for the fiscal year ending March 31, 2021
In the fiscal year ended March 31, 2020, net sales fell to 109.4
billion yen, down from the previous fiscal year. This was due to a
year-on-year decline in sales from both the industrial machinery
aftermarket and automotive aftermarket in Japan, the Americas,
and Europe as a result of the sluggish economy. In addition, in
the fourth quarter, demand declined and sales activities wererestricted in some regions due to the spread of the newcoronavirus. Operating income was 12.7 billion yen due to thesignificant impact of a decline in demand, despite efforts to
reduce variable costs and fixed costs such as personnel costs
and expenses.
For the fiscal year ending March 31, 2021, net sales was19.6
billion yen and operating income was 800 million yen in the firstquarter. Although we cannot foresee the impact of the spreadof the new coronavirus, we expect the net annual sales to be 91
billion yen.

Initiatives for the NTN revitalization

comprehensive maintenance services for equipment andperipheral components.
In order for the Company to achieve the best customer
satisfaction in the aftermarket, besides surveying the needs of
distributors and end-users and offering bearing repair services,
we will further enhance our brand value by proposing a new
business model that provides services such as monitoring ofoperating conditions and prediction of bearing replacementtiming by utilizing our expertise for sensing technology anddigital technology including AI, and IoT with an offer of the“NTN PORTABLE VIBROSCOPE” etc.

Initiatives to improve profitability
Focus on core products and profitableproducts in aftermarket
We assume that our global share is approximately
10% in the aftermarket, but that number differs
according to region and product. By strategicallyintroducing products that match thecharacteristics of each sales region and the pricerange of each market, we will strive to increase
profits from regions and products where sales are
expected to continue to grow in the future. For
example, bearing units, one of our main products
for the aftermarket, have lower market shares in
the U.S. than in other sales regions, so we will
strengthen product strategies for each region andwork to increase the market share.
Promoting the use of outsourced products
We will also actively utilize outsourced production
to build a structure that can supply products thatmeet the quality and price ranges demanded byeach region.

Establishing a system for the
post-coronavirus world
Establishing a prompt delivery structure for the aftermarket
business
Products for the aftermarket, which contribute to the stable
operation of customers' facilities and improvements in theirproductivity, must be delivered at the timing required by customers.
In order to realize just-in-time supply, we will organize inventories ofbest-selling products and establish a structure for prompt delivery.
In this way, we will work to establish a system that can provide stablesupply even when demand fluctuates.
Creating a business model with future potential
By using devices such as the NTN PORTABLE VIBROSCOPE, whichenables measurement of equipment vibrations, detection of bearing
abnormalities, and estimation of damaged areas and can be used bysimply installing the device on facilities, we will not only sellbearings, but also expand MRO business, which covers including
maintenance, to create a business model with future potential. In
addition, while assessing the situation, we will provide technicalservices in a way that is different from the previous one, such as
aggressively utilizing on-line technical workshops in Japan andoverseas that we carry out froma perspective of preventing the
spread of the new coronavirus,
even after the pandemic has
ended.

Company/Stock Information

The business environment such as the development of AI, IoT,
and other digital technologies, environmental issues, anddemographic shifts has been changing continually andcompanies are required to be flexible in accommodating newmarket needs to ensure sustained growth. In the aftermarket
business of bearings, suppliers are faced with new expectationsin addition to traditional requirements, including high-quality
products, broad product lineups and prompt delivery. The roleof suppliers, particularly those in the equipment aftermarket
business for steel, paper and other industries, is graduallychanging from a bearing supplier into a provider of

91.0

global markets

Strengthen
service & support

Increase thevalue of the
NTN brand

109.4

Financial Data

Strengthen
product appeal

2016

118.8

* MRO :Maintenance, Repair
and Overhaul

bearings, especiallygeneral-purpose products,
and the inflow of lowpriced products due tothe globalization of themarketcounterfeit bearings

104.5

100.0

116.7

ESG Strategies• Commoditization ofdomestic and overseas
distributors, and strong
partnership with major
distributors(Billions of yen)

Business Strategies

One of the issues in our aftermarket business is that our brandrecognition is lower in some overseas regions than in Japan.
Compared to our competitors, we have actually not been able tosecure our superiority not only in supplying individual products,
but also in terms of overall capabilities including provision of
peripheral components and after-sales service.
The challenge for us is how to increase our shares of products
dealt in by overseas distributors, which sell competitors’ brand as
well, unlike the Japanese distributors which handle our products
exclusively. To that end, it is necessary to enhance the overall
attractiveness of our products and improve the value of the NTN
brand by strengthening our service & support programs,
improving product quality as well as packaging quality, andreinforcing countermeasures against counterfeit products.
In addition, in order to increase competitiveness in overseas
markets, it is extremely important to establish a system forprompt delivery of top-selling products.
Until last year, demand was high and we lost sales
opportunities due to insufficiencies in our supply capacity.
However, as global demand declined sharply due to the spread of
new coronavirus infections, we will focus on maintaining
inventory of top-selling products that are necessary for a prompt
delivery system in this fiscal year so that we can avoid losing sales
opportunities when the economy becomes stronger again.
Additionally, an increasing influx of low-priced products
produced in emerging countries is one of the threats. We arepromoting strategies to secure advantages, such as identifying theneeds of each market and using different brands appropriately.

11.6%

45.0
113.6

Eiichi Ukai
NTN's Strengths

12.8%

150.0

50.0

Changes in market
environment

12.9%

NTN Revitalization Story

Business environment

13.4%

Operating income margin(Billions of yen)0Managing Executive Officer

Operating income (right axis)

15.6%

17%

109.4

About Us

Percentage of total sales

NTN provides various products for industrial machinery and automotive maintenanceneeds. In industrial aftermarket applications, we provide bearings for general machineryand bearings used to repair equipment used in industries such as mining, paper, steel,cement, and food manufacturing. In automotive aftermarket applications, we satisfy
customer needs with a product lineup of repair parts (auto parts) composed of bearingsand peripheral components.
In addition to delivering products, we also provide technical services such as byholding the “NTN Aftermarket Academy” to help customers learn about bearings
through lectures and practical training, and by holding technical workshops at
customers' manufacturing sites using technical service units. Also, we support
customers improving productivity and ensuring stable operation of their facilities, forexample, by providing the NTN PORTABLE VIBROSCOPE, which makes daily
maintenance of production facilities easier.

NTN PORTABLE VIBROSCOPENTN Report 202028

Business Strategies

Industrial machinery market

100.0
50.0

For core sectors (construction machinery, agricultural
machinery, and machine tools)• NAbility to develop high-speed, high-rigidity and highprecision products• Ability to respond to new needs in fields and parts for which
we have not entered the market• Strong relationships with manufacturers with the top sharesin the industries

105.1

15.0
93.5

10.0

5.6
2.8

5.0

3.1

0

0
2017

2018

2019

-2.0
2020

2021

(Forecast)(Fiscal year ended /ending March 31)

Net sales was 105.1 billion yen due to the following factors:
decreased sales in main industries such as construction
machinery, agricultural machinery, machine tools, andreduction gears following a decline in demand caused by the
impact of the US-China trade friction; and the impact ofcustomer shutdowns and supply chain turbulence following the
spread of the new coronavirus in the fourth quarter andonward. Consequently, we posted operating loss of 2 billion yen

despite reduced variable costs and a decrease in fixed cost suchas personnel costs and expenses.
For the first quarter of the fiscal year ending March 31, 2021,
net sales was 22.6 billion yen and operating loss was 900 million
yen. Although we cannot foresee the impact of spread of the
new coronavirus, the full-year net sales is expected to be 93.5
billion yen.

ESG Strategies

Initiatives for the NTN revitalization
Construction machinery

Agricultural machinery

Machine tools

For our growth sectors (gearbox, rolling stock, aerospace,
and wind turbines)• Ability to develop products tailored to customer needs• Experience in doing business with major customers aroundthe world• Ability to produce products of the sizes that other companies
cannot respond toWindturbineGearboxAerospace

Initiatives to improve profitability
Selection of industries
We will propose better solutions to customers throughsynergies between industrial machinery business andaftermarket business and establish profitable businessmodels. In addition, by strengthening profit control of eachproject, we will identify any unprofitable business and work
to improve profitability of our entire business. We will also
distinguish between "businesses we will focus on" and"businesses we will withdraw from" according to theregions and industries, and select industry sectors in orderto optimize the profitability of the entire business.

Acquire highly profitable businesses by developing highperformance products such as bearings with IoT sensors
In addition to bearing sensing technologies we haveaccumulated over many years, we have also developed a"Sensor Integrated Bearing Unit" for machine tool spindles,
which can prevent seizure through advanced condition
monitoring using the industry's first's heat flux sensor. In
the future, in addition to advanced condition monitoring
and control technologies, we will develop and propose ahigh-performance product that meets the needs ofcustomers, such as bearings with sensors that enable
manufacturing sites to be unmanned and achieve laborsaving by utilizing IoT and AI.
Establishing a fabless system in the new field ofmaterials (i-WRISTTM, Wind DoctorTM)

Company/Stock Information

respond to a variety of market needs. In recent years, the external
environment has been constantly changing due to factors suchas increasing awareness of the global environment issue andchanges in population dynamics, and changes in the industrial
structure can also be seen as a result of a rapid progress in
IT-related technologies including IoT and AI. Under thesecircumstances, we will utilize digital technology based on bearing
technology in the industrial machinery business, thereby
continuing to be an indispensable company in the industry, andwill support the development of the world industry.

Reducing cost through optimal procurement ofmaterials and parts
As an initiative to improve profitability other than selling
prices, we will actively utilize materials from China andIndia. At the same time, we will implement centralizedpurchasing of materials and components at an appropriate
price, regardless of local procurement, and strive toimprove profitability by reducing costs throughprocurement at the most appropriate locations with theaim of distributing materials and parts to manufacturing
sites that need them.

Establishing a system for the
post-coronavirus world

Financial Data

Rolling
stock

OUR VISION NTN will become a company that customers in the industrial machinery market rely on mostfor its exceptional technological competence

29 NTN Report 2020

123.4

98.6

1.6

on demand

The industrial machinery market is comprised of a variety ofindustries, and bearings are used in a wide range of machinery.
We supply bearings with a wide range of sizes, from miniaturesizes of several millimeters in outer diameter used in electronic
machinery to ultra-large sizes of several meters used in windturbines and large mining equipment. In addition, products usedin aircraft and high-speed railways require extremely highreliability because the stoppage of machinery affects human
lives. We have accumulated product and manufacturing
technologies for many years, and we utilize these technologies to(Billions of yen)

-1.9%
119.1

104.1

2.5%

Results for the fiscal year ended March 31, 2020 and forecast for the fiscal year ending March 31, 2021

NTN's Strengths• Competition in development of high value-added products• Impact o of policies, trade issues, and the global economy, etc.
• Intensified competition due to the influx of low-priced products

2.4%

Operating income margin

Business Strategies

sensing technologies

1.6%

150.0

Eiichi Ukai

Changes in market environment• Rising needs for autonomous machinery operations andbillion yen

5.4%(Billions of yen)

2016

Business environment
A recent trend is that, in addition to customers of construction
machinery, agricultural machinery, and machine tools, which
are the foundation of the industrial machinery business,
demand from social infrastructure customers such as rollingstock and wind power generation has increased against the
backdrop of changes in social structure and increased
environmental awareness, and we have been promoting theestablishment of technology and production systems. In the
future, the business environment surrounding industrial
machinery is expected to change dramatically due to theprogress of IoT and the development of AI technologies. Basedon this understanding, we are developing condition monitoring
services for predictive maintenance that apply IoT and sensing
technologies to address issues shared by customers, such as
saving energy, stable long-term operation, and reduced lifetime
costs. For wind turbines customers, we have already proposed
the Wind DoctorTM condition monitoring system for windturbine, which has been evaluated favorably, and we havebegun offering concrete suggestions for other industries, suchas construction machinery, machine tools, and rolling stock.

105.1

Operating income (right axis)

NTN Revitalization Story

Managing Executive Officer

Trend in business performance
Sales (left axis)

16%

About Us

Percentage of total sales

We are responding to the demands of our customers for long operating life, improved
loading capacity, and higher speed, all of which are required by all types of industrial
machinery, with the world's highest standard new-generation bearings, ULTAGE Series. In
addition, through constant R&D efforts, we will launch bearings with even lower torque,more compactness and lighter weight to the marketplace, enabling environmental impact
reduction in a variety of industrial machinery fields.
Looking ahead to the next generation, we will promote modularizations andintelligentization by deepening bearing technologies and integrating sensors and precisionequipment technologies. In addition to developing high value-added products, we willdevelop new products and services by utilizing the abnormality detection technology,
condition monitoring system (CMS), and IoT. Specifically, we launched sales of the Wind
DoctorTM condition monitoring system for wind turbine and i-WRISTTM, a Wrist Joint Modulethat contributes to automation and labor saving at manufacturing sites.
By providing these products and services, we will contribute to the development ofindustry and the creation of a sustainable society.

With regard to Wrist Joint Module "i-WRISTTM" andCondition Monitoring System (CMS) for wind turbines(Wind DoctorTM), we will flexibly expand our new businessdomains through a fablesssystem in which we do not own
these manufacturing plants
and conduct outsourced
production.
Wind DoctorTM

NTN Report 202030

Business Strategies

Automotive market
Trend in business performance
Sales (left axis)

Operating income (right axis)

4.9%

67%

4.2%

4.3%

(Billions of yen)

600.0

499.3

480.2

508.6

Operating income margin

1.8%
491.3

355.5
24.4

200.0

20.0

21.8

Hideaki Miyazawa

commoditization of vehicles as a tool may lead to intensified
price competition.
On the other hand, markets related to needs for EV-specificquietness, low vibration, and high-speed rotation as well as
markets related to sensor technologies and abnormality
detection functions (CMSs, etc.) which are indispensable forautonomous driving are expected to grow. In addition, the needs
to increase durability of components and demands foraftermarket components are expected to grow as car sharing
increases the operating rate of vehicles. We recognize that theever-changing automotive industry is now in a situation where
suppliers face both the chance of breakthroughs and the risk of
shakeout.
NTN's Strengths• Quality and reliability backed by the high market shares of hub• Reduction in the total number of bearings used per vehicle due• Development of high value-added products by modularization• Growing demand for driveshafts due to transition to front-• Global production system that supports optimal supply at

wheel drive (FF) vehicles in emerging countries

bearings and driveshafts used for axles/drivetrains

and systematization

customer demand locations*1 xConnected, Autonomous, Shared/Service, Electric

OUR VISION As an indispensable presence for the automotive market, NTN will become a company thatoffers products and services for vehicles all over the world2021(Forecast)(Fiscal year ended /ending March 31)

driving, turning, and stopping vehicles. Carmakers are shifting
the focus and resource of their development work from thetangible (vehicle performance) to the intangible (services),
creating an expanding range of areas in which NTN cancontribute to vehicle safety, reliability and comfort.
By capturing these dynamic changes in the businessenvironment as opportunities, we will provide values thatexceeds customer expectations through product development
and advanced technical services that are ahead of market
needs. By doing so, we aim to become the leading manufacturer
in the drivetrain component segment essential to theautomotive market.

In the midst of a global downturn in automotive sales, net sales
declined to 437.0 billion yen in the fiscal year ended March 31,
2020 due to a significant drop in demand associated with the
shutdown of automotive production in China and other regions
as a result of the spread of the new coronavirus from the fourth
quarter. We posted operating loss of 3.7 billion yen, which waslargely attributable to a shrinking sales volume caused by a

sharp drop in demand along with decline in selling prices, andwe were unable to offset the negative impact through cost
reduction initiatives. In the first quarter of the fiscal year ending
March 31, 2021, net sales was 49.7 billion yen and operating loss
was 9.6 billion yen. Although we cannot foresee the impact of
the spread of the new coronavirus, the full-year net sales is
expected to be 355.5 billion yen.

Initiatives for the NTN revitalization

Initiatives to improve profitability
without relying on scale

Establishing a system for the
post-coronavirus world

The impact of the new coronavirus has greatly reduced theamount of automotive production and we expect thatrecovery to the level before the new coronavirus will occur at
a moderate pace and take several years. In the automotive
business, we will move forward with transformations to anearnings structure that does not rely on scale so that we cangenerate profits even in an environment in which the car
production scale does not recover. In the future, we will
endeavor to secure profits by further promoting thedevelopment of higher-value-added and higher-performance
products such as size and weight reduction, higher rotation,
lower-torque, and lower vibration in response toelectrification as well as to promote optimization of scale byrestructuring and withdrawing from low profit businesses.
In addition, we will strive to reduce manufacturing costs bypromoting local procurement and optimal procurement. At
the same time, we will work to reduce fixed costs bystrengthening collaboration with alliance partners. so that we
can improve in profitability.

For hub bearings and driveshafts with the world's No. 1 andNo. 2 market shares, respectively, we will concentrate
resources on areas where we can leverage our strengths intechnology and product functions based on our
accumulated technology and global production
experience, thereby ensuring that our competitiveness will
improve. Meanwhile, for low-profit part numbers, we will
drastically improve profitability by promoting further cost
reductions, requesting price increases, and withdrawing
from the market.
In order to respond to the accelerating changes in themarket structure for EVs and electric motors, we will
promote the mass production and commercialization ofelectric module product by combining bearing and ballscrews technologies and motor electronic control
technologies. We will also work to swiftly expand ourbusiness in new areas.

Hub bearings

Driveshafts

Company/Stock Information

The rise of electrified vehicles throughout the world’s
automotive markets calls for functional automotive
components with different characteristics or more rigorous
performance requirements than are required for conventional
internal combustion engine vehicles. We will accommodate
these needs by offering differentiated technical expertise andlineups of advanced products providing features such as size/
weight reduction, higher speed rotation, lower torques and lessnoise/vibrations in order to secure a competitive advantage
over our competitors.
Another major wave, Ride Sharing and Maas*2, is based on
the absolute reliability of the driving system responsible for2020

Financial Data

• In addition to increasing aftermarket opportunities dueto the electrification and EV- shift, in addition to reduction in
the total number of vehicles due to the shift from ownership tosharing of vehicles

2019

Results for the fiscal year ended March 31, 2020 and forecast for the fiscal year ending March 31, 2021

Changes in market environment
to accelerated car sharing, there is an increasing need for
longer operating life and increased reliability of functional
components

2018

ESG Strategies

In the automotive industry, due to the impact of the newcoronavirus, automotive production is seeing a significant decline
globally in 2020, and it may take several years for the industry torecover to the level before the new coronavirus. Even in thisenvironment, the electrification of vehicles, among four future trends
referred to as “CASE”*1, is steadily progressing, and we believe that
how to transform the risks associated with major changes into
growth opportunities will affect the company's rise and fall.
In the case of EV shifts, there is a risk that the transmission,
which uses many bearings, will be replaced by a reduction gearwith a simple structure, resulting in a decline in demand. In the
future, the transition from ownership to sharing may result in adecrease in the number of vehicles in the market, and2017

Business Strategies

Business environment

0

-3.7
2016

40.0
20.0

8.7

0

Senior Managing Executive Officer

60.0

437.0

400.0

billion yen(Billions of yen)

-0.8%

NTN Revitalization Story

437.0

About Us

Percentage of total sales

Our work in the automotive segment includes developing more advanced bearings, hub
bearings and driveshafts to create higher added value. We are also combining these coreproducts with core technologies to develop module products. To prepare for the coming
era of electrification of automobiles and autonomous driving, we have released “Electric
Motor and Actuators” composed of ball screws, motors and controllers. We are working
on expanding their range of applications and proposing them to customers. Throughcollaboration with alliance partners, we are expanding these products globally while
breaking away from self-sufficiency in order to meet the existing needs of theautomotive market, such as low fuel consumption and increased ride comfort, as well as
the rapidly increasing demand for electrification.

Electric module products*2 Mobility as a Service: A new concept of "Mobility" in which traffic is clouded through the use of information and communications technology, and transportation by all means of transport other than private
cars is seamlessly connected as a single service

31 NTN Report 2020

NTN Report 202032

Business Strategies

Research & Development
About Us

R&D trends and results

NTN's basic approach to research and development

Supporting CASE automobiles
A hub bearing is a unit product that supports the rotation oftires, and NTN has the largest market share of hub bearings in
the global market. NTN has developed hub bearings with multifunctions for Connected, Autonomous, Shared and Electric(CASE) automobiles.
These are the world's first high-performance module
products adapted to next-generation automobiles, such as"eHUB" which combines a hub bearing with a motor generator,and "sHUB" which integrates a mechanism that adjusts thesteering angle of the tires into a hub bearing. The products will

Executive Officer, CTO (Chief Technical Officer)

Masaki Egami

NTN Revitalization Story

We are committed to realizing a low-carbon society by contributing to energy saving of
all machinery through the development of core technologies and new products. We arealso actively developing natural energy-related products that can contribute to anenergy circulation society by applying core technologies that we have cultivated into
new areas. As a new initiative, we are also focusing on R&D by utilizing external
collaboration to support regenerative medicine and drug discovery that will lead toearly detection and treatment in a society where the birthrate is decreasing and the
population is aging.

contribute to safer and more comfortable driving of future CASE
automobiles, by improving fuel efficiency, automated driving,etc.
In addition to Low Friction Hub Bearing III, which aims toachieve low fuel consumption (reduces rotational friction by
62% compared to a conventional product), we have successively
received orders for mass-production of ULTAGE Tapered Roller
Bearings and Ultra-low Friction Sealed Bearings fortransmissions, and are contributing to solving issues in theautomotive field.

Organization Chart
New Product and Business Strategic Planning
Headquarters
Product and Business Strategic
Planning Department
Intellectual Property Strategic
Planning Department
New Business Search andDevelopment Department

Technological advancement through external collaboration
control technologies combined with eHUB and sHUB, as well as
research to predict the residual life of bearings by using AI. The
results were transferred to the Company. As we aim to be "acompany that delivers value to customers through products
and services," in the second step, we will shift to research thatemphasizes "services." Specifically, we will focus on upgrading
the condition monitoring system and CAE technology using AI.
While sharing the results with the research and engineering
divisions in NTN, we will build new core competencies related tothe utilization of AI technology and implement them in society.

Service solutions (Value creating)In 2012, we launched a condition monitoring system (CMS)“Wind DoctorTM” to detect abnormal signs of large windturbines at an early stage. This system is one of the services thatutilize the IoT to provide operational status information, and wehave received a lot of orders for that system.
The system acquires vibration data for mechanicalcomponents, such as bearings and gears, by a highly dustresistant and water-proof data collection device and conducts
diagnostics using the remote monitoring and analysis software
provided by us. Many power generation companies praise the

The first step

September 2017-

Software development focusing
on “services”
Prediction of bearing residual life
by AI

Wind turbine generator nacelle
Measurement
sensorApril 2020-

Efforts to develop and commercialize cell chips: Contributeto improving quality of life
In collaboration with Osaka University, we are working to create
an artificial three-dimensional structure using iPS-derived cells
by applying our precision positioning technology and themicroscopic coating technology we have cultivated throughrepair devices. We have found that the coating of high viscosity
solutions containing iPS-derived cells onto the chips, which has
not been achieved so far, can be achieved with our microscopic

33 NTN Report 2020

Power generator
bearings

The third step
Sophistication of AI algorithm,
utilization of next-generation ICT

April 2023-

coating technology.
In modern societies where human longevity is increasing,
there is a need to speed up and streamline the processes ofdrug discovery, and to reduce the invasiveness and duration of
disease assessment. Therefore, we are promoting research anddevelopment using cell chips to observe cell responses andchanges, and we intend to contribute to early detection andtreatment, which will become increasingly important in the
future.

system for its extensive analytical functions, and the number ofsubscribers has exceeded 200, winning the top market share in
Japan. Furthermore, we are working to roll out this system on a
global scale.
In the future, the development of offshore wind turbine
generators is greatly anticipated in Japan as well, and CMSs are
becoming increasingly important in offshore areas where
maintenance is very difficult. Therefore, we will actively propose
monitoring services using this system and contribute toimproving the operation rate of wind turbines.

Main shaft
bearings

Gearboxbearings

Data collection
deviceServerData management
softwareUse of CAE* Solution Technologies
In October 2018, we established the CAE R&D Center toaccelerate the use of CAE in our R&D and design activities.
In addition to optimizing product designs and enhancing
structural analysis, we eliminate rework in development by
simulating prototypes and various experiments, leading tomore efficient R&D and faster development within the Group.

Data

User or NTN
Monitoring and analysis
software"Wind DoctorTM" data collection device

Company/Stock Information

Strengthening core products
Prediction of bearing residuallife by AI

Low Friction Hub Bearing III

Layout of the Condition Monitoring System (CMS) for Wind Turbines

NTN Next Generation Research Alliance Laboratory
collaboration development steps
The second stepsHUB

Financial DataNTN Next Generation Research Alliance Laboratory: Shiftfrom "Products" to "Services"
In September 2017, NTN Next Generation Research Alliance
Laboratory was established in the Graduate School ofEngineering at the National University Corporation, Osaka
University with the aim of creating new business andaccelerating technical innovation. In April 2020, the laboratory
moved to the second step.
In the first step, we conducted research to develop
superiority in core products, such as sensor-integrated bearings
supporting machine tools that utilize the IoT, and motors andeHUB

ESG Strategies

In April 2020, we established the New Business Search and Development Department
within the New Product and Business Strategic Planning Headquarters in order toaccelerate the development of new products and promote transformation of thebusiness category for the next generation. The module and system products are notdeveloped individually by the existing engineering divisions, but are instead developed
and commercialized by the New Business Search and Development Department
through a totally integrated process.
Specifically, we will transfer the development of eHUB and sHUB supporting CASE
applications, as well as i-WRISTTM in the robots field from our R&D centers, promotemass-production of these products, and conduct R&D to meet market needs in new areas.

Business Strategies

Strengthening systems for future growth and transformation of business category

In addition, we have developed new common calculation
tools that can be used in the three regions including Japan,
Europe, and the Americas, and have realized our own global
design system. By providing reliable technical proposals basedon logical data in a timely manner, we will contribute to
speeding up the development process of our customers.

* Computer Aided Engineering, computer-based analysis

NTN Report 202034

Business Strategies

Monozukuri
About Us

Quality

Basic approach to quality and promotion system

Quality management system

In recent years, we have been facing a rapidly changing andunpredictable business environment, including large-scale
natural disasters and the cessation of global economic activities
due to the new coronavirus (COVID-19).
At the same time, business conditions are rapidly changing,including customer needs, and the speed of processes fromproduct planning, including marketing, to prototyping andmass production will be the key to improving customer
satisfaction in the future.
Under these circumstances, we will strengthen the linkage
between the innovation process of product planning anddevelopment and the supply chain process of marketing,production, and sales, with the aim of establishing a"Monozukuri" system that is resilient to changes.

NTN’s Basic Quality Policy specifies all the basic principles thatshape our manufacturing approach. We use it to work on
maintaining and improving product quality throughout theworld, working toward quality that satisfies all our customers.
Our products are used in many applications around us,
providing daily support. They are also found in equipment
where lives are at stake, such as aircraft, railway, automobile andmedical equipment, and therefore, require extreme precisionand durability.
Every single employee understands the importance of
Quality and works earnestly toward Quality to earn ourcustomer’s trust.

We are proactively acquiring ISO 9001 certification(international standard for quality management systems) atdomestic and overseas production sites, as well as IATF16949
certification (additional standard for the automobile industry).
We are also working to acquire certification for new businesses
and newly launched sites. Except for the sites which are still indevelopment, all our domestic and overseas consolidated
manufacturing subsidiaries have now received the proper
certification for their Quality Management System.
In addition, JIS Q9100 and Nadcap which are standards forthe aerospace industry, and IRIS (Europe) and CRCC (China)
which are standards for the railway industry are also obtainedby relevant sites.

Basic approach to Monozukuri

Product
designExpansion of areas coveredby production engineering

Prototyping
andevaluation
Preparation
beforeproduction

Supply-chain processes
Marketing

Production
control

Procurement

Manufacture

Innovation
process

Product
planning

Conventional productionengineering target area

Logistics

Sales

Areas covered by activities related to production engineering

Procurement

Organizational change of the Procurement
Headquarters

In the current world, a single day doesn’t pass without us
hearing the word “global,” and we are making efforts to build aglobal procurement system, which is the pillar of Variable Cost
Reformation and essential to our business. We believe that not
only organizational development but also human resource
development is essential for building the system, andwe have worked with Mr. Brelaud, Operating Officer,
transferred from NTN-SNR in France, to review the procurement
organization and to develop human resources that can play anactive role in the international arena. To build our foundation,
we will think from a global perspective about what is optimal
procurement for the Company, and will continue to promote
cost reductions, which are indispensable for generating income.

Production

35 NTN Report 2020

6 measures for NTN Digital
IoT
Solution
Robot
Application

3D Contactless
Measuring

MobileCommunication

DigitalIntelligent
MachineAutomated
Guided Vehicle

1. Connect information and eliminate waste
2. Robotization, automation, and intelligence technology to prepare for adecrease in the working population

NTK PRECISION AXLE CORP. (Frankfort Plant)

IATF16949 (38 production sites certified)
U.S.A.

NTK PRECISION AXLE CORP. (Frankfort Plant)* Applies to domestic and overseas consolidated manufacturing subsidiaries (excluding sitesthat have not started mass production)

TOPICS
New Wakayama Works
In October 2019, we completed the construction of a new base in Wakayama Prefecture that produces
radial bearings, our core products. The factory building has been constructed with a motif of“NAMERAKA” and a streamlined design of the roof. An arcade-like passageway named "Coroco-Road" isestablished as the central corridor of the building and serves as the main artery of transportation of
goods in the building. In addition, a forum, open meeting space and other areas for exchanging
information, which are designed as communication areas to create innovation, have been set up on thesecond floor of the building.
Coroco-Road
As of June 2020, the installation of new heat treatment facilities and ancillary facilities has been
completed, and installation of new grinding and assembly facilities has begun in order to commence
mass production in October. Over the next five years, we will completely transfer the facilities from the Kongo Works and restructure
the production of radial bearings centered on this new plant.

Specializing in high-performance, high-value-added
products
With the rapid progress of EVs and electrification in the automotive
market in recent years, the market for high-performance, high-valueadded products such as quietness, low vibration and high-speed
rotation is expected to expand with regard to radial bearings used in
motors and driving parts. At the New Wakayama Works, which serves
as the mother plant of high-performance products, we will adopt thelatest heat treatment facilities, FA facilities, inspection instruments,
and IoT, as well as the latest technologies, including miniaturized andmultistage facilities based on the manufacturing practices of the
Kongo Works in order to offer a wide variety of products from smalllots. Through these measures, we will work on new products thatmeet the needs of the market, halve the prototype delivery time, andshorten the production lead time to one-third of the previous one,
thereby promptly supplying high-quality products to the world. At
the same time, the Wakayama Works is aggressively pursuing energy
conservation and environmental impact reduction, aiming tobecome the mother plant of NTN Smart Factory.

"NAMERAKA Factory" that the New Wakayama
Works aims for
The New Wakayama Works calls a smart factory a"NAMERAKA factory" and aims to become a "NAMERAKA
factory" that delivers satisfaction to customers in a speedy
manner. The Wakayama Works aims to become a plantwith streamlined processes where goods and information
flow smoothly.

Company/Stock Information

We are promoting digitalization with the aim of realizing"Monozukuri" that determines our competitiveness. The pillar of
our policy is to eliminate waste by connecting information, andto prepare for a reduction in the working population throughrobotization, automation, and intelligence technology.
Until now, we have pursued partial optimization(streamlining by process). In order to apply digital technology
more effectively, we will introduce the overall optimization(streamlining of the entire supply chain) method to achieve
more streamlined production.
We will promote streamlining with the goal of reducing
production lead times and improving inventory turnover andproductivity. We are aiming to create a Monozukuri systemthrough digitalization and streamlining.

Promotion of Monozukuri Paradigm Shift"PRODUCTION REFORM"- Quality paves the way
for our future -U.S.A.

Financial Data

Promotion of Monozukuri Paradigm Shift"PRODUCTION REFORM"

Quality slogan

ISO9001 (34 production sites certified)

ESG Strategies

In order to strengthen global procurement and centralizedpurchasing and accelerate Variable Cost Reformation throughcentralized management led by the head office, theProcurement Headquarters was reorganized into 3
departments: the Global Procurement Supervising Department ,the Japan Region Procurement Department, and theProcurement/Logistics Administration Department.
We will establish regional headquarters in North America,
Europe, China, and ASEAN, and build an NTN global
procurement network, thereby promoting local procurement
and procurement in optimal locations with global suppliers. In
doing so, we will endeavor to ensure stable procurement andreduce costs.

Establishment of a Global Procurement System• Applicable quality
Our quality should immediately respond to the change of our customer’s requirements.
• Competitive quality
We have to win quality competition.
• Quality for economy
Quality should benefit our company.

Major certification achievement (Fiscal year ended March 31, 2020)
Business Strategies

Basic Quality Policy
Pursuing right quality to meet functions andspecifications requested by our customers.

Areas covered by production reform activities

NTN Revitalization Story

Building a change-resilient "Monozukuri" system that NTN aims for"NAMERAKA Factory" that the New Wakayama Works aims forT o realize production that is highly flexible andresponsive to customer needs and changes in demand
To enhance efficiency of manual work by using robots
and IoTTo reduce in-process inventories and shorten lead timethrough the "Automatic Transportation System" and"Production Reform"
To advance quality control by using IoT/AI

NTN Report 2020

36

ESG strategies

Initiatives for Sustainability

Establishment of the Sustainability Committee
chaired by the Executive Officer in charge of CSR Headquarters,
and consists of the general managers of ESG-related divisions.
The former CSR Committee deliberated on issues and measures
to effectively promote CSR activities. In addition to previous
activities, the Sustainability Committee clarifies key issues that
the Group must resolve through its business activities and sets
specific targets for addressing SDGs, and develops businessactivities based on resolutions made at Board of Directors.

SDGs

Development of "Low Friction Hub Bearing III" reducing rotational friction by 62%
In recent years, the fuel efficiency of automobiles has been improved, and regulations on CO2 emissions
have been strengthened globally. As a result, it has become increasingly important to reduce theenergy consumption when vehicles move. In order to further improve the fuel or electricity efficiency,
hub bearings that support wheel rotation are required to further reduce rotational friction in addition
to satisfying the basic performance such as operating life and strength. NTN has developed the “Low
Friction Hub Bearing III” that reduces rotational friction by 62% compared to conventional products byemploying a seal structure with labyrinth and improves the fuel efficiency by approximately 0.53%*1
The developed product has improved operating life and resistance to fretting so that it can prevent the
fretting wear*2 in low-temperature condition. We will contribute to improving fuel efficiency andenvironmental performance of automobiles through producing the developed product.

Low Friction
Hub Bearing III*1 Calculated based on NTN's method. Improvement in fuel efficiency by 0.53% will result in travel distance increasing by about 4.5 to 5.5 km per fueling(calculated on the basis of catalog values of 1,200 to 1,500 cc gasoline vehicles)*2 Wear caused by micro-vibration during transportation of vehicles

Value offered to society(outcome)

Sustainable Society Using Natural Energy

SDGs

Implementation of Long Distance Wireless Transmission Experiments between Bases forbuilding disaster mitigation and surveillance systems using renewable energy and IT

Organization Chart
Sustainability Committee

Organization

Chairperson: Executive Officer
Secretariat: Corporate Value Promotion Department
Members: Departments in charge of sustainability management

Major items to bedeliberated• Identifying Materiality• Amendment/Abolition of corporate philosophy system/CSR policy• Sustainability Activity Plan

Officers
Employees

Promoting Sustainability Activities
Initiate identification of materiality
In formulating our 3-Year Medium-Term Management Plan,
which will begin in fiscal 2021, we are identifying materiality infiscal 2020 as our preparation for future growth. In addition, we
will set targets for achieving SDGs and incorporate them in ourbusiness plans.

Value offered to society(outcome)

Safety and comfort

Financial Data

United Nations Global Compact
We endorsed the United Nations Global Compact (aninternational initiative for developing a global framework forsustainable worldwide growth) in 2015. Under the UN Global
Compact, we support ten principles in the four areas (hereafter,
GC10 principles) of human rights, labour, environment, andanti-corruption. We have also joined the Global Compact
Network Japan which is an organization of the United Nation
Global Compact, and are working to implement GC10 principles
and achieve SDGs.

On November 7th 2019, NTN conducted long distance wireless transmission experiments between bases at
the Suita Campus of the National University Corporation Osaka University (hereafter, Osaka University) as partof joint research on disaster prevention and monitoring using IT. We have installed three independent power
supply units, “NTN Green Power Stations,” which generate the electricity from wind and solar power, assuming
the area around the building of the Graduate School of Human Sciences in the Suita Campus of Osaka
University as a disaster area, and the Tsukumodai Elementary School of Suita City as a relief headquarters. We
used long a distance wireless system to transmit and receive information on an assumed disaster situation. In
the experiment, we communicated the disaster situation via application software by using independent
power supply units installed in front of the building of the Graduate School of Human Sciences. A message
was sent to the relief headquarters, which was about 2.5 km away from the campus, via two antennas and the NTN Green Power
Stationtwo independent power supply units in the campus, and we also checked the damage status by monitoring
footage from cameras.
In recent years, natural disasters have frequently occurred, causing power outages and communication interruptions in awide area over a long period of time, making it difficult to understand the situation of the disaster and conduct relief activities.
Establishment of a communication system that utilizes renewable energy is a solution to this kind of situation. The system will be
used not only in the event of a disaster, but also in daily life for monitoring local children by equipping surveillance cameras andother equipment with the system. NTN will continue to contribute to the safety and security of local communities by building asystem that will help to promote disaster prevention, disaster mitigation, and monitoring of the local community.

ESG Strategies

Board ofDirectors

Reducing energy loss

Business Strategies

Recently, due to factors such as the increasing damage causedby climate change, CSR (Corporate Social Responsibility)
activities have placed more emphasis on not only social fairness
but also measures for resolving social issues through businessactivities and contributing to the realization of a sustainable
society. Therefore, we developed the function of the former CSR
Committee (established in 2006) in November 2019 and newly
established the Sustainability Committee.The committee isValue offered to society(outcome)

NTN Revitalization Story

We have established the CSR policy in the spirit of our corporate philosophy. We define CSR as• Engaging in corporate activities that incorporate concern for the environment and initiatives to ensure social fairness and contribution to
the community• Fulfilling the duty of accountability to stakeholders• Working to improve corporate activities not only in the economic aspect, but also in environmental and social aspects.
In 2014, we established the CSR Headquarters to strengthen our groupwide CSR activities. In November 2019, we established the Rules
for Managing Sustainability Promotion Activities with the aim of promoting CSR activities (hereafter, sustainability activities) to meet the
expectations of society toward the realization of a sustainable society. At the same time, we developed the function of the former CSR
Committee and established the Sustainability Committee.

About Us

Contributing to SDGs through Business Activities

SDGs

Mass production of Wrist Joint Module "i-WRIST®"

37 NTN Report 2020

Company/Stock Information

We mass produce “i-WRIST™” wrist joint modules for use in appearance inspection. The “i-WRIST™”
modules use a special link mechanism that allows the associated device to be more compact andspace-efficient, and move over a wider range of movement. The modules enable minor changes inpositions (angles) to be made at high-speed like a human wrist. The operating range has been
expanded, which allows appearance inspections of complex shapes or hemispheric surfaces
conducted by humans to be replaced with “i-WRIST™.” Appearance inspections of 60 areas can becompleted in just 8 seconds, depending on the shape and size of the workpiece and the speed of theimage processing system. As the working population continues to decline in Japan, the demand forautomation is expected to grow with regard to appearance inspections that have so far relied on
manual work. NTN is focusing on automation and labor-saving technologies for such manufacturing
sites, and continues developing products that further increase productivity and quality. We will createa work environment in which people can enjoy their jobs, and will contribute to society.

Wrist Joint Module“i-WRIST™”

NTN Report 2020

38

ESG strategies

Engagement with Stakeholders
About Us

Stakeholders

Stance to
Stakeholders

NTN Group respects
diversity, individuality
and a safe and healthy
workplace environment
where employees canwork successfully.

Local communities

 lobal QC Circle Convention
G
We strive to improve safety, quality, and productivity on a
global basis, and with the convention as a forum forinternational exchange, we exchange information on avariety of activities.
 nder the fair operation of the personnel evaluationUsystem, which leads to revitalization, we promote theimprovement and development of employees' abilities andmotivation through discussions with evaluators, and further
invigorate our employees by treating them based on theirwork results and the degree to which they demonstrate
their abilities.

Shareholders

Technical service units
We run completely-tailored, multi-functional technicalservice units worldwide, equipped with teaching materials
and exhibits to introduce our products, and hold bearing
technical seminars for our customers.

NTN Group respects
cultures and customs in
the local communities
and builds long-term
trust relationships bymeeting their
expectations throughits business activities.

NTN Group focuses on
return for shareholders
by sustainableprofitable growth andbuilds long-term trust
relationships withshareholders throughactive communications.

Main Activities

Activities that contribute to the local community (family
tours, summer festivals, etc.)
We hold family tours and summer festivals at each businesssite as an opportunity to interact with employees' families
and neighboring residents.

NTN
Rotating School
As an environmental education program for children who
will lead the next generation, mobile-type schools havebeen opened in various places to deepen regional
development.
Conservationof biodiversity
In cooperation with local residents and NPOs, we areworking to protect the environment of Satoyama (village
forest) areas around our business sites and to protect
endangered species.

Shareholders’ Meeting
The Shareholders’ Meeting is a forum for communication tobuild long-term relationships of trust with shareholders.

ESG Strategies

Nationwide Distributors' Meeting
We invite distributors from across Japan to briefing sessions
on account settlement overview and aftermarket businessmeasures to strengthen our bond with distributors.

Stance to
Stakeholders

Business Strategies

NTN Group seeks tomaximize customer
satisfaction and trust byproviding products andservices of superior
quality, safety andreliability.

Stakeholders

NTN Revitalization Story ialogue between president and employeesDWe hold dialogues between president and employees atbusiness sites in Japan and overseas on the themes of"transformation," "sense of crisis," and "freely-expressed
opinions to improve the company."

Employees

Customers

Main Activities

ESG briefing
In addition to holding results briefings for investors, we also
hold ESG briefings to promote understanding of our ESG
initiatives. The opinions we receive at the briefing are used
to improve our sustainability activities.

Financial Data

Business partners

Briefing for suppliers
We share information on our globalization initiatives andthe business environment surrounding our company withour business partners and have external lecturers deliverlectures targeting the business partners.
Promotionof CSR procurement
Through CSR questionnaires based on the CSR Procurement
Guidelines, we promote activities with our business
partners to help them understand the importance of CSR
procurement.

Environment

NTN Group harmonizes
its business activities
with nature andcontributes to preserve
the global environment
by providing its
technologies, products
and services.

Sustainable resource use
We are striving for sustainable resource utilization by
reducing the use of resources such as raw materials andwater, and by thoroughly implementing the 3Rs (reduce,reuse, and recycle) of waste.

Company/Stock Information

39 NTN Report 2020

NTN Group, in a fair andfree environment,
builds good
partnerships with its
business partners andworks together formutual growth anddevelopment.

Reducing environmental impact in business activities
We are working to minimize harmful environmental
impacts by monitoring and reducing emissions of CO2 andregulated chemicals in our business activities.


Developing
environment-contributing products
We are contributing to the realization of a low-carbon
society by developing products that can help reduce CO2
emissions during product use and natural energy-related
products.

NTN Report 2020

40

ESG strategies

Stakeholder Dialog
About Us

6th

Stakeholder Dialog
NTN Revitalization Story

To incorporate stakeholders’ input into our sustainable corporate activities, we have annually held our Stakeholder Dialog since 2015 withacademics and experts representing a number of CSR-related fields. For this fiscal year, the 6th dialog was held in July 2020.
One of the "Prepare for future growth" measures in our Business Operating Policy for fiscal year 2020 is "Responding to SDGs." "SDG
Compass," a guide for business action on the SDGs emphasizes periodic reporting and communicating with stakeholders about SDGs.
Through this Stakeholder Dialog, we receive suggestions from experts on our initiatives, and based on these, we are working to determine
specific details of our “Responding to SDGs” measures and to promote company-wide initiatives aimed at resolving social issues throughour business activities.

Topics of the dialog
Sustainability Promotion Activities

Topic 2

Human Rights

Topic 3

Environment

Topic 4

How to Promote Business Activities in
the coronavirus pandemic

Experts

Business Strategies

Topic 1

Topic 1

Sustainability Promotion Activities

Vice President of Kobe University

Masaru Kaizaki

Hideki Matsuoka
Special Project Manager,
Asia-Pacific Human Rights
Information Center(HURIGHTS OSAKA)

Eriko Nashioka(Facilitator)

Representative Director of
Institute for Environmental
Management Accounting, CPA

NTNManaging Executive Officer in charge of Human Resources, CSR, Information Technology,
General Affairs, and EHS (Environment, Health & Safety) Integrated Management

Toshinori Shiratori
Executive Officer and Corporate General Manager of Corporate Strategy
Headquarters

Operating Officer in charge of Human Resources, General Affairs and EHS(Environment, Health & Safety) Integrated Management

Kenji Nono
Deputy Corporate General Manager of Corporate Strategy Headquarters andManager of Corporate Planning Department

Takanobu Ozawa
Manager of Corporate Communications Department, Corporate Strategy
Headquarters

Youichirou Mochida

41 NTN Report 2020

Masayuki Yamazaki
Manager of Personnel Department

Toshiyuki Kawaguchi
Corporate General Manager of CSR Headquarters

Masaaki Masumoto
Manager of Corporate Value Promotion Department, CSR Headquarters

Kouhei Iguchi

Kokubu: Identifying materiality is important, but every
company seems to find it extremely difficult to put it into
practice. This is because all items are important. If everything isimportant, it becomes meaningless to identify materiality.
Currently, NTN has set a large theme that is applicable to any
company, so why not focus on more detailed items for

NTN: We would also like to ask about activities to instill our
corporate philosophy. With the 100th anniversary celebrated in2018, the corporate philosophy system was revised to establish
NTN SPIRIT, which serves as the basis for employees’ activities,
and initiatives to put the corporate philosophy into practicewere launched. We are promoting activities to disseminate ourcorporate philosophy through the 3 steps of "Recognition,""Empathy & Understanding," and "Practice." In 2019, we held thesecond NTN PROUD AWARD, which is an initiative to "Practice"
our corporate philosophy. The number of employees who
support these activities is increasing, and we intend to continue

NTN Report 2020

Company/Stock Information

Masaaki Yamamoto

Manager of EHS (Environment, Health & Safety) Integrated Management Department

Kaizaki: OMRON also identifies its materiality. However, humanresources management and risk management are regarded as amatter of course, and there is an increase in cases wherecompanies are not evaluated favorably even if they conduct suchmanagement activities. We are making improvements to express
the uniqueness of OMRON more strongly. I think it would bebetter for NTN to consider expressing the "uniqueness of NTN" inthe same way. What is more important is the period subject tomateriality issues and the management system. I think it isnecessary to consider how and how long materiality issues aremanaged in the business management process and how external
evaluations are incorporated into the Company’s activities.

Financial Data

General Manager of Planning
Department, Sustainability Office
OMRON Corporation

ESG Strategies

Katsuhiko Kokubu

NTN: Through our business activities, we contribute to theresolution of social issues and aim to achieve a sustainable
NAMERAKA Society. The biggest initiative in the fiscal year
under review was a change in the management regulations forsustainability promotion activities. In 2006, we established rules
for managing CSR activities, but at that time the policy related
to "Responsibility" had a relative emphasis on compliance. Whilestrengthening compliance, we have reframed the significance of"Responsibility" based on the idea that we want to be acompany that meets the expectations of society, as stated in ourvalue creation process. We have changed the term from "CSR" to"Sustainability", established the "Sustainability Committee" lastyear, and have started activities.
At this Sustainability Committee, "identification of ourmateriality" is one of the issues to be discussed. Currently, we
have set up working teams centered on young employees andmid-career employees, referring to GRI standards andmegatrends, identifying and evaluating issues, and working tonarrow down our materiality. We would like to be able toannounce it in the next fiscal year.

discussion? When most Japanese companies plot their issues ona matrix, they use the 2 axes of "importance to society" and"relevance to business." However, GRI essentially wants
companies to pay attention to not "relevance to business" but"impact on stakeholders' decision-making." I think it would begood to verify such aspect again.

42

ESG strategies

Stakeholder Dialog
rights risks are also linked to management risks. It is necessary

same time, we believe that there are issues regarding thenot only to create a system but also to continue education inpositioning of the NTN PROUD AWARD in the corporate award

everyday life.

system, how to reflect the practice of our corporate philosophy
in our business goals and personnel assessment, and how topromote our corporate philosophy amid the coronavirus
pandemic.

that many companies actually ask Tier 1 suppliers to investigate
things.
Kaizaki: The scope of application of the Human Rights Policy isalso important. In the case of OMRON, a survey revealed that
regular employees of OMRON accounted for less than the
majority of all employees at some business sites. Based on theseexamples, we believe that we should not apply the policy only
to employees who are directly employed by OMRON, butshould also apply to temporary staff employees and contractors’
employees who work at the sites.
As for the boundary, we are implementing measures by
including surveys targeting Tier 2 and subsequent-tier suppliersin Tier 1 requirements.

Topic 3

Environment
NTN: In the fiscal year ended March 2020, production was
reduced due to the coronavirus pandemic, resulting in adecrease in CO2 emissions, but unit CO2 emissions wereemissions are reduced compared with the time when products
before the reduction were used), rather than indicating a
reduction of CO2 emissions. Therefore, since last year we havebeen quantifying environment-contributing products andconsider setting the goal of eliminating CO2 emissions in thelong run. Specifically, the total volume of CO2 generated

Topic 2

Matsuoka: I feel that a mechanism for human rights due
diligence is very difficult to operate, even though it is possible
to create a mechanism or report to outside parties that amechanism has been created. The main point of internaldissemination is that each and every employee understands
human rights in a way that links them to their work. Human

43 NTN Report 2020

emissions"?

and human-induced “absorption,” such as through thepromotion of tree planting. In this sense, it may be better tomove away from the concept of "net zero." As the bearings
industry has a fixed range of product types, we believe it will bedifficult to switch to businesses that emit less CO2 andKaizaki: OMRON announced in July 2018 that it will set sciencebased targets (SBT) for reduction of emissions of greenhousegases, and then the issue of TCFD emerged. Because companywide supervision is necessary for TCFD, the Sustainability Officeproposed to top management that TCFD should be endorsed.
The linkage of financial information has been planned, but I
believe that if you do not announce your efforts to tackle theissue of climate change, that will pose a problem.

drastically reduce CO2 emissions. In addition, because of theconcepts of SDGs and the circular economy, society as a wholeis progressing toward a low-carbon society, with the automotive
industry itself being targeted. Even if it is difficult for the
bearings industry to do something drastic, I think it is important
to consider the issue of climate change from the perspective ofwhat “our company” can do for society.

Kokubu: Japanese companies are lagging far behind in
disclosing how they manage climate change risks. Disclosure ofrisk information is thought to cause anxiety, but failure todisclose such information may cause more anxiety.
Responding to the new coronavirus is also an important
issue. I think that the overall direction is that the "weight ofKokubu: It is better to say that "net zero CO2 emissions" refers tomaintaining a balance between human-induced CO2 “emissions”

Matsuoka: As telework progressed, the situation in which
women worked at home while doing housework and raisingchildren, as well as the case in which they suffered fromdomestic violence, emerged as issues. I believe that companies
will be asked what they can do to address these issues and towhat extent they can address them in the future.
Kaizaki: I feel that this coronavirus pandemic has shortened thetime horizon for a vision we should aim for in the field ofsustainability. While OMRON has begun formulating plans forthe next decade, society may change at a faster pace. I think weneed to address the issue with that in mind.
Kokubu: NTN established the Corporate Value Promotion
Department two years ago. It is obvious that "Value" isimportant, but how about thinking about CSR as a whole with afocus on "Value" in the future? The point is to think about thevalue that can be provided to suppliers and the value that canbe provided in response to climate change. As I told you about apost-coronavirus world earlier, "co-creation" in which we create
something together will become more important than“competition,” which has been given higher priority until now. I
feel it is good to promote corporate activities from such a
viewpoint.

NTN Report 2020

Company/Stock Information

NTN: This year we formulated the Human Rights Policy. We
signed the United Nations Global Compact in 2015 and changed
our institutional designs to a Company with a Nominating
Committee, etc. last year. These measures further clarified ourManagement Policy, and because "Respect for human rights" wasincluded in the policy, we decided to formulate the Human Rights
Policy. In the future, we will examine the method of operating thisHuman Rights Policy, the scope of applicable suppliers and themethod of managing them.

NTN's business activities is offset by CO2 reduced as a result of
power generation with natural energy products, and this is animage of achieving the goal. Do you regard this as "net zero CO2

NTN: We have identified the year ending March 2021 as "Crisis
Response Period" and listed "Ensure the health and safety of
employees" and "Prepare for future growth" as the major
themes. Specifically, we intend to promote telework andrespond to SDGs. Following the Declaration of State ofEmergency, we have also been advancing telework withemphasis on the health and safety of our employees. In order tofurther promote telework in the future, issues such as the scopeof application, attendance management rules, and personnel
evaluation systems will emerge. In addition, with a focus on
responding to SDGs, particularly on addressing climate change,
an increasing number of parties endorse TCFD. We recognizethat how to hold discussions by involving management will be
an issue for the future, and we would like to hear your opinions
on what kind of system should be in place and how to proceed.

Financial Data

Human Rights(consumed) when products are used and CO2 generated by

How to Promote Business Activities
in the coronavirus pandemic

individuals" will increase. In society as a whole, focus will shift
from organizations to individuals and the working environment
will be changed to one in which employees can work more
comfortably. Also, it will be necessary to fundamentally change
the organization's work system and the method of reviewing
positions.

ESG Strategies

increased. In Stakeholder Dialog last year, it was pointed outthat we should indicate a change (what volume of CO2

Topic 4

Business Strategies

Kokubu: In recent years, our corporate philosophy has become
an extremely important part of our CSR activities. NTN's
founders’ "Frontier Spirit" and "Coexistence and co-prosperity
Spirit" have a significant impact. The "Frontier" recalls"Innovation" and "Co-existence and co-prosperity" recalls"Creating Shared Value," bringing home the fact that NTN reallywants to resolve social issues.

With regard to the scope (boundary) of suppliers, it seems

NTN Revitalization Story

Kaizaki: OMRON has also held TOGA(The OMRON Global
Awards) since 2012 to support the practice of the company
philosophy. The only team-based internal award system wehave is TOGA. When an employee wins the award, it is recordedin the employee’s personnel evaluation sheet. However, it isextremely difficult to reflect the practice of our corporate
philosophy in personnel evaluation, and we are currently
looking for ways to link the system to evaluation practices.
Regarding corporate philosophy activities amid thecoronavirus pandemic, we first place emphasis on the healthand safety of our employees, while at the same time fulfilling
our supply responsibilities as a manufacturer and contributing
to society through our business activities. Our employees
participated in ventilator development in Spain, but this was
not a top-level order, but a voluntary action. I think this is agood example of how our corporate philosophy has been
disseminated and put into practice.

About Us

to firmly establish them on a global scale in the future. At the44

In-house technologies for measures against climate change

ESG strategies

About Us

In-house technologies for measures against climate change

Definition of environment-contributing productContribution to CO2 reduction from driveshafts and hub
bearings
NTN calculates the amount of CO2 emissions that can be
reduced by the contribution of S to C-eco products throughout
the assumed life period of final goods in comparison to theamount of CO2 emissions in case D-eco products are continued
to be used in final goods instead. Such amount is defined as“Contribution to CO2 reduction” of the year the Company's
products are sold.
The contribution to CO2 reduction from environmentcontributing products of the Company for the fiscal year ended
March 31, 2020 was approximately 1,490,000 tons (equivalent toapproximately 640,000 thousands litters of gasoline).

Classification and grades of NTN products and their definition
Classification

148.5
120

99.3

104.1

2016

2017

121.3

127.5

2018

2019

60
0

0

1998

2020

(Fiscal years
ended March)[Calculation standard] JAPIA LCI Calculation Guidelines by Japan Auto Parts Industries
Association (Consumer Use-Phase LCI calculation tool)

Definitions

Contribution to CO2 reduction from green energy products

A-eco (Advanced eco)

As one of our new businesses, we are conducting a green
energy a business and developing products that can utilize
renewable energy.
Green energy products are environment-contributing
products that generate electricity using clean-energy sources
such as wind, water, and solar power that exist everywhere
to reduce CO2 emissions. They are expected to supply as anindependent power source for the mini-grid network, which canprovide efficient power supply in non-electrified areas of theworld, and as a regional power source that can utilize unusedenergy in the region.
In addition, they are used as a power source in the event ofa power failure at the time of a disaster to provide safety andsecurity to local communities. (For details, see page 51.)
Contribution to CO2 reduction from green energy products isshown in the table.

Classified according to environmental factor standards specified for different products in line with world’s
technology standards

B-eco (Brilliant eco)
C-eco (Creative eco)
D-eco (Diffused eco)

Products that help to reduce energy loss of final goods at the same performance level of around 1997

Calculation methods for environmental factors and eco-efficiency

To quantify products’ environmental friendliness, NTN adopted environmental factors and eco-efficiency that are defined in the formula
1 and 2 as follows.
Eco-efficiency of developed products
Eco-efficiency of benchmark products*1

Product value*2

1

Eco-efficiency

2

Environmental impact*3* 1. D-eco product* 2. Values are quantified by using the QFD method (including CO2 reduction contribution as final goods)* 3. From the perspective of evaluating contribution toward measures against climate change, environmental impact are calculated as CO2 emissions generated throughout the process of raw materials
mining to production (used the LCI calculation tool by the Japan Auto Parts Industries Association)

Contribution to CO2 reduction from green energy products*1 *2(tons)

1,000
765

750
500

390

250
0

129
7

24

10

2018

2019

2020

2021

2023

2026

ESG Strategies

S-eco (Super eco)

Environmental factors(million tons)

180

Business Strategies

Environmentcontributing
products

Grade

Contribution to CO2 reduction from driveshaft and hub bearings

NTN Revitalization Story

NTN develops business activities based on our corporate philosophy “We shall contribute to international society through creating newtechnologies and developing new products,” and the paragraph 1 of the NTN Environment Policy “Technologies to help prevent global
warming.”
As bearings and driveshafts, which are main products of NTN, contribute to the reduction of energy loss in final goods of our customers
equipped with them (hereinafter referred as “final goods”), all of these products can be considered as environmentally friendly products.
They include products which are already commonly used in society because of the achievement of predecessors, as well as those withenvironmental contributions further enhanced by NTN’s engineering and development capabilities.
NTN continues unwavering efforts to realize its corporate philosophy by developing and providing higher-grade products that
contribute to the environment while classifying the products according to environmental contribution levels based on our standards.

(Fiscal years
ended March)*1 As of February 2020
*2 Estimation based on our study

Green energy products
Financial Data

Trends in achievements
Environment-contributing product ratio of driveshaft and hub bearings
As in the previous year, driveshafts and hub bearings, our core products that account for about 70% of our net sales, were classified
according to the criteria for environment-contributing products. The sales ratio of S-B-eco grade environment-contributing products,
which are achievements of NTN’s development efforts in recent years, has reached 42.2% in the fiscal year ended March 31, 2020.
Trend in net sales
Net sales(100 million yen)

7,170

6,000
4,000

All businesses

3,479

Automotive business
6,833

7,444

Driveshafts and hub bearings

S-eco

7,336
6,515

4,993

4,802

5,086

4,913

3,939

3,801

4,065

3,940

A-eco

C-eco

0.1%

0.3%

D-eco

20%

19%

21%

15%

16%

15%

14.8%

17.2%

42%

43%

42%

40.3%

33.8%

23%

22%

22%

20.6%

24%

2016

2017

2018

2019

years
2020 (Fiscal
ended March)

4,370
100%

B-eco

24.2%

24.7%

Company/Stock Information

8,000

Trend in composition of environment-contributing products bygrade(driveshafts and hub bearings)

NTN Micro Hydro Turbine

42.2%

2,000
0

1998

45 NTN Report 2020

2016

2017

2018

2019

years
2020 (Fiscal
ended March)

1998

NTN Green Power Station

N3 N-CUBENTN Report 2020

46

ESG strategies

Environment

Basic environment policy

The NTN Group has acquired third-party certification globallyfor ISO 14001, the international standard for environmental
management systems. Our environmental management
framework is structured to promote the compliance withenvironmental laws and regulations of each country andcontinually improve environmental performance.
For business sites in Japan, multi-site certification is acquired,and all business sites work together to achieve environmental
targets under the top management led by directors in charge.
We also organize sectional subgroups to address individual
environmental issues. For example, the Energy-saving/
Resource-saving Sectional Meeting studies and promotes
energy-saving measures for reducing CO2 emissions as well as
measures to introduce renewable energy. In the fiscal year
ended March 31, 2020, the Company-wide Environmental
Management Committee met four times and the Energy-saving/
Resource-saving Sectional Meeting met twice.
To maintain or improve the management system, a “on-site
audit (annual)” by on-site auditors and a mutual “cross audit(every three years)” by business units are conducted.
A list of our ISO 14001 certified business sites and their environmental
performances can be viewed on our website.
https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html

Environmental Targets
Developing and releasing new technologies and products that help save and create energy

N3 N-CUBE
NTN micro hydro turbine

Compliance with laws andregulations

Ongoing rigorous management of hazardous materials

Thorough inventory control andmonthly self-audits

Japan

285,000 tons/year max.*

Overseas378,000 tons/year max.

335,000 tons/yearJapan

25.8% reduction compared to fiscal year
ended March 31, 1998*

23.1% reduction compared to fiscal
year ended March 31,1998

Overseas5.5% reduction compared to fiscal year
ended March 31, 2007

14.2% reduction compared to fiscal
year ended March 31, 2007

Reducing water
consumption
intensityJapan

17.3% reduction compared to fiscal year
ended March 31, 201124.0% reduction compared to fiscal
year ended March 31,2011

Overseas16.7% reduction compared to fiscal year
ended March 31, 2015

20.1% reduction compared to fiscal
year ended March 31,2015

Raising recycling
rates

Japan

98.1% or more

97.6%

Overseas

97% or more

96.4%

Reducing waste
intensityJapan

3.8% reduction compared to fiscal year
ended March 31, 2011

4.9% reduction compared to fiscal
year ended March 31, 2011

Reducing paper
purchase intensityJapan

4.9% increase compared to fiscal year
ended March 31, 2011

4.7% increase compared to fiscal
year ended March 31, 2011

Reducing Styrofoam

Japan

Maintaining 99% reduction compared to 99% reduction compared to fiscal
fiscal year ended March 31, 2000
year ended March 31,2000
1% reduction compared to fiscal year
ended March 31, 2019

Reducing CO2
emissions
Reducing environmental impact
from business activities

Reducing CO2
emissions

Reducing water
consumption

Sustainable resource use

Reducing waste,maintaining highrecycling rates

Reducing paper andStyrofoam

Selfevaluation

Results

Technologies to help prevent
global warming

Reducing CO2
emissions intensity

Not achieved

270,000 tons/year

1.8% reduction compared to fiscal
year ended March 2019

Rigorously management ofenvironmentally hazardous substances

Managing and reducing PRTR substanceJapan

Protecting biodiversity

Promoting activities to protect biodiversity,
such as “Corporate Forests”

Japan

17 or more participating business sites

20 participating business sites

Overseas

11 or more participating business sites

12 participating business sites

Continually improving environmental
management system

Acquiring revised ISO 14001 (ISO 14001:2015) certification

Certification of 6 business sites renewal
completed in fiscal year ended March
31, 2020

Business sites subject to company-wide environmental performance canbe viewed on our website.

* Calculated using a fixed CO2 emissions factor of 0.381 kg-CO2/kWh for electricity.

https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html

Company-wide environmental targets for the fiscal year ending March 2021
Environment Policy

Environmental Targets

Contribute to Prevention of Global Warming
through In-house Technologies

Developing and releasing new technologies and products that help save and create energy / Expanding the scope of calculation forenvironment-contributing products

Compliance with laws and regulations

Ongoing rigorous management of hazardous materials

Reducing environmental impact from businessactivities

Reducing CO2 emissions
Reducing CO2 emissions

Reducing water consumption

Sustainable resource use

Reducing waste, maintaining
high recycling rates

341,000 tons/year or less

Reducing CO2 emissions
intensityJapan

24.4% reduction compared to fiscal year ended March 31,1998*

Overseas1.6% reduction compared to fiscal year ended March 31,2007

Reducing water
consumption intensityJapan

22.9% reduction compared to fiscal year ended March 31,2011

Overseas23.3% reduction compared to the year ended March 31,2015

Improving recycling rates

Japan

97.7% or more

Overseas

97.2% or more

Reduction of generated
waste intensity

Japan

Reducing paper purchaseintensityJapan+4.3% increase compared to fiscal year ended March 31, 2011

Reducing styrofoam

Japan

Maintain 99% reduction compared to fiscal year ended March 2000

PRTR chemical substanceintensities

Japan

1% reduction compared to fiscal year ended March 31, 2020

Rigorously management of environmentallyhazardous substances

Managing and reducing PRTR
chemical substanceProtecting biodiversity

Promoting activities to protect biodiversity, such as “Corporate
Forests”

Continuously improving environment
management system

Acquiring ISO14001 revision:2015 certification* Calculated using a fixed CO2 emissions factor of 0.381 kg-CO2/kWh for electricity.

260,000 tons/year * or lessOverseas

4.7% compared to the year ended March 31,2011

Company/Stock Information

Reduction of paper andstyrofoam consumption

Japan

Financial Data

The NTN Group conducts rank-based and function-based
environmental education of various kinds. For example, ourrank-based education programs include basic education at new
employee induction training; practical education after
workplace assignment; and education for newly appointed
managers upon promotion in order to work on environmental
issues at each workplace from the perspective of risk-benefit
management. Our function-based education programs include
education for sales divisions and distributors serving as acontact point for customers on the survey regarding
environmentally hazardous substances that may be containedin our products. This program allows participants to learn about
how to respond to customers as well as about relevant laws andregulations. Another such program is a training session todevelop internal auditors for the environmental management
system. Moreover, during the Environment Month every year inJune, we rigorously train all employees on importantenvironmental measures of the year, and provide education for
raising their environmental awareness. In addition toconventional group training, we are also focusing on
environmental education using e-learning. During the fiscal
year ended March 31, 2020, under review, we launched theenvironment course (beginner course), which summarizes
environment issues that have a significant impact on us, as
teaching material for e-learning. We are focusing our efforts oncreating a mechanism that enables environmental issues to beeasily understood by employees who are not engaged inenvironmental management.

Environment Policy

Achieved

ESG Strategies

Environmental education

Company-wide environmental performance for the fiscal year ended March 31, 2020

Business Strategies

1. Technologies to help prevent global warming	The NTN Group will help prevent global warming
by developing and releasing new technologies andproducts that help save and create energy worldwide.
2. Compliance with laws and regulations
	The NTN Group will comply with all applicable
environmental laws and regulations, while proactively
addressing concerns expressed by customers, local
communities and other stakeholders.
3. Reducing environmental impact from businessactivities
	The NTN Group will minimize environmental impacts
such as emissions of CO2 and regulated substances fromall NTN Group business operations, while working to
identify and reduce environmental impact from both
upstream and downstream supply chain processes(from suppliers to customers).
4. Sustainable resource use
	The NTN Group will adhere closely to the three Rs
approach (Reduce, Reuse, Recycle) as we work on
reducing waste and resource inputs such as water andraw materials and other resources.
5. Rigorously managing environmentally hazardous
substances	The NTN Group will practice green procurement,
rigorously manage environmentally hazardous
substances used in products and manufacturing
processes, and work actively to replace highly
hazardous substances with alternatives.
6. Protecting biodiversity
	The NTN Group will work on protecting biodiversity,
playing an active role in forest preservation and otherenvironmental protection projects in partnership withlocal communities.
7. Communication
	The NTN Group will inform all NTN Group employees
about the NTN Environment Policy to raise
environmental awareness. We will disseminate
information on environmental initiatives widely to thegeneral public to promote active communication withthe general public.
8.Continually improving environmental management
system	The NTN Group will improve our environmental
performance by implementing and continually
improving our environmental management system.

Environmental management framework basedon the environmental management system

NTN Revitalization Story

Coexistence with the global environment is a toppriority for the NTN Group. Our business activities
are designed to prevent environmental pollution andpreserve natural capital, while our technologies reflect
our unwavering efforts to help ensure the sustainable
development of society.

About Us

Environment

Increasing in the number of participating business sites

Business sites subject to company-wide environmental performance canbe viewed on our website.
https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html

47 NTN Report 2020

NTN Report 2020

48

ESG strategies

Environment

Environment

About Us

Business Activities and environmental impact

Managing and reducing environmentally hazardous substances

Material flow chart (Japan and Overseas)

As part of efforts to reduce impacts on the global environment, the NTN Group practices green procurement while working tomanage and reduce environmentally hazardous substances.

INPUT

453

Atmospheric emissions

ktons

Manufacturing processes

437 ktons
16 ktons

Steel materials
Non-steel materials
Oils, other

Development/
DesignEnergy

LPG

Other

9.9 %

TolueneGenerated
waste*2 quantity 155,405 tons

3

Coal, coke
Heavy oil A
Kerosene
DieselGasoline

PRTR*1 substances

Tap waterIndustrial water

Recycling quantity

150,612 tons

Use ofrecycled
water

Grinding/
Polishing

4,793 tons

Final disposal quantity

12 1,000m

3

Wastewater
quantity

1,000m3

Logistics

920 1,000m
1,530 1,000m
360 1,000m

3

2,330

Sewers

326

335

323

320

3

3.83
282

281
124

128

132

122

200
100

Intensity(m³/million yen)

196

195

194

213

104

177

106

176

4

3

2016

2017

2018

2019

2020

15.9

1

5

years
2021 (Fiscal
ended/ending

98.0%
16.3

97.8%

97.4%

17.7

17.7

9.3

10.0

6.6

6.3

10.9

6.8

10.9

6.8

2017

2018

2019

82.5
80
2016

2017

2018

2019

(Fiscal year

2020 ended March)

Developed hazardous liquid waste treatment equipment

Protecting biodiversity
In collaboration with local residents and NPOs, we are engagedin activities to protect biodiversity, such as tree planting
through corporate forestation activities, protecting endangered
species in the surrounding areas of business sites, anddeveloping natural parks. In fiscal year ended March 31, 2020,
1,428 employees and their family members participated inthese activities.

Activities

96.9%

97.4%

15.5

15.7

9.3

9.6

6.2

6.1

2020

years
2021 (Fiscal
ended/ending(Target) March 31)

For AQUEDUCT water stress analyses and by region water consumption,
see the website.

Business sites subject to water consumption/consumption intensity,
Generated waste and recycling rates can be viewed on our website.

https://www.ntnglobal.com/en/csr/environment/v3.html

https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html

49 NTN Report 2020

92.3

Period: Fiscal year ended March 2020

0
2016

93.7

90

Generated waste(Overseas)

15
10(Target) March 31)

98.2%

20

2

0

0

(10,000
tons)

99.5

Initiatives for protecting of biodiversity

Waste Quantities and Recycling Rates(Japan/Overseas)
Generated waste (Japan)
Recycling rates

99.7

98.6

Regional businesses(number of participating sites)

Number ofparticipants

Forest management
through forest activities
by companies that plantendemic trees

Japan (12), Thailand (1), India (1),China (1)492

Protection of endangered
species

Japan (2)18

Protection of wild birds

Mexico (1), Germany (1)11Cleaning the waterfront

Japan (8), Thailand (1), U.S.A. (1)471

Maintenance of naturalparks, etc.

Japan (3), Mexico (1)

436

Total

NAGANO WORKS(Japan)
Protecting endangered species “Miyamasijimi”(butterflies)
Nagano Works and Nagano Prefecture have signed theagreement on biodiversity partnerships to protect
Miyamashijimi butterflies, an endangered species. The
butterflies are classified in the family Lycaenidae of the order
Lepidoptera and their adults are small, about 2-3 centimeters inlength and are designated as Class IB endangered species in the
Red List of the Ministry of the Environment. The reason for thedecrease in the number of butterflies was a decrease in thenumber of Komatsunagi (false indigo) which are both feeding
and spawning sites of the butterflies. Nagano Works succeededin testing Miyamasijimi egg production by planting
Komatsunagi inside the plant. In the future, we will continue topromote the growth of Komatsunagi, the reproduction of
Miyamasijimi and the conservation of the environment.

Company/Stock Information

300

3.87

(tons)

Financial Data

400

4.03

Methylnaphthalene

7.0 %1,000m3*1: NOx, SOx, PRTR and groundwater are applicable only in Japan.
*2: Industrial waste

3.96

24.2%

8.3 %

2011

3

3
3

22.9 tons

1,550 1,000m
780 1,000m

RiversWater Consumption (Japan)
Water Consumption (Overseas)
Water Consumption Intensity(right axis)

Xylene82.5 tons/year

Molybdenum and its compounds

100
PRTR substance release/transfer quantity

Assembly

Water Consumption and Water Consumption Intensity(Japan/Overseas)

4.29

10.1 %

28.9%

PRTR chemical
substance
handling quantity

110

To protect the water resource, the NTN Group is globally working on reducing water consumption and improve water consumption
intensity. We are also promoting mineral resource protection such as by reducing waste and maintaining/improving recycling rates.

4.27

Water-soluble zinc compounds(Amount of material recycled: 26,038 tons)

Resource protection(10,000 m3)

11.6

%

1,2,4trimethylbenzene

Reduction of hazardous waste through liquid waste
treatment equipment
NTN-BOWER Hamilton Plant strictly stored hazardous waste
liquid from the zinc phosphate coating treatment process andoutsourced the disposal of the liquid as a hazardous material toa waste disposal contractor. Recently, Hamilton Plant developed
the equipment that immediately neutralizes hazardous waste
generated in the plant into safe materials. This equipment
reduces the generation of hazardous waste by approximately 36
tons/year and improves the safety of employees when waste
liquid is stored and transported.

ESG Strategies

Ground water*1

Heat
treatment

82.5 tons

2,810

Water

56.3 tons

NTN-Bower Hamilton(U.S.A.)

Business Strategies

City gas

NOx*1

Forging/
Turning

1,279 GWh
8,992 tons
27,517 1,000m
0 ton
509 kL517 kL339 kL
96 kL

Electricity

SOx*1

605 ktons
12.2 tons

CO2 emissions

Reducing PRTR chemical substances
We are making efforts to reduce the use of substances subject
to PRTR Law in our manufacturing processes in Japan andreplace them with less hazardous substances. In particular, weare focusing on reducing and replacing the use of the six
substances listed in the figure below.

NTN Revitalization Story

Raw materials

OUTPUT

1,428

Miyamasijimi

Komatsunagi (false indigo)

NTN Report 2020

50

ESG strategies

Environment

Environment

About Us

NTN-Antriebstechnik G.m.b.H. (Germany)

Measures against climate change (CO2 Reduction)
We are committed to reduce CO2 emissions and emissions intensity throughout our business activities. We have undergone third-party
verification to ensure the reliability of the data. We are also promoting the introduction of renewable energies to accelerate our efforts to
reduce CO2 emissions.
CO2 Emissions/Emissions Intensities (Japan)
Scope 2: Indirect emissions*1

Emission intensity (right axis)(10,000 tons)

Intensity (tons/million yen)

27.0

0.69

0.69

27.5

27.7

0.8
0.66

0.65

28.5

28.9

0.67

0.66

27.0

26.0

0.6

21.1

Scope 2 (Europe)

Emissions intensity (right axis)
Intensity (tons/million yen)

50

0.94

0.97

32.9

34.2

40
28.6

30

22.4

22.8

23.6

24.1

22.5

1.03

0.99

0.93

1.00

38.4

36.6

5.9

5.1

4.9

4.9

4.8

4.5

0
1998*2

2016

2017

2018

2019

2020

(Benchmarks)

2021(Fiscal years
ended/ending(Target) March 31)*1 Calculated using a fixed CO2 emissions factor of 0.381 kg-CO2/kWh for electricity in Japan.
*2 For business sites that were established in the fiscal year ended March 31, 1998 or later, will
be set the data in the year of commencement of production is to be used as the benchmark.

24.2

28.3

29.4

31.1

32.7

28.9

0.4

29.4

0.2

0

4.4

4.6

2007*

2016

4.8

2017

5.5

2018

(Benchmarks)

5.7

2019

4.6

4.7

2020

Scope 1

0

2021

(Fiscal years
ended/ending(Target) March 31)* For business sites that were established in the fiscal year ended March 31, 2007 or later, theyear of commencement of production is to be used as the benchmark.

Third-Party Verification Statement of CO2 emissions can be viewed on
the website.

Business sites (Japan and Overseas) subject to CO2 emissions/emissions
intensities can be viewed on the website.

https://www.ntnglobal.com/en/csr/pdf/kensyouikensho.pdf

https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html

CO2 emissions and emissions intensity in logistics
CO2 emissions (Japan)

CO2 emission intensity (Japan)(tons/ million yen)

0.03490.03450.0353

12.9

12.8

12.9

0.03580.03520.0358

0.04

13.9

14.0

13.3

0.03

10

0.02

5

0.01

2015

51 NTN Report 2020

2016

2017

2018

2019

0
2020 (Fiscal year

Diagram of a heat pump system
Heat
pump

Endothermic side

Exhaust heat side

Reserve tank
Cooling
tower

22°C

Reserve tank
70°C

Process
Heat exchanger

Return hot water

75°C

BoilerHeaterHeat exchanger

Reducing plastic waste (elimination of disposable cups)
NTN Driveshaft do Brasil (Brazil)
Activities to improve the environment throughparticipation of employees
In 2018, the NTN Group established NTN PROUD AWARD, asystem that enables employees to take on new challenges andcreate solutions by setting up an action program based on their
day-to-day operations in line with its corporate philosophy. Asan action program related to the environment under thissystem, NTN Driveshaft do Brasil (NDB) has been working to
reduce the use of disposable plastic products, which haverecently been identified as a source of marine contamination.
After receiving an idea from employees, NDB decided to
distribute eco-cups that are foldable and easy to use ineveryday life and can be used repeatedly. As approximately 150
plastic cups per day were used at NDB, it succeeded ineliminating the use of such cups as a result of introduction of
the eco-cups. At NDB, many employees are involved in activities
focused on energy-saving and social contribution.

Company/Stock Information(thousand tons)

boilers, and have been implementing energy conservation
measures through the use of waste heat.
NTN-SNR was able to reduce fuel consumption by 2.7% byintroducing heat pumps that utilize waste heat from cooling
towers in boilers at the Seynod Plant (France), Argonay Plant(France) and the Sibiu Plant (Romania).

Financial Data

To reduce CO2 emissions in the supply chain, we are working tostreamline logistics. As important measures, we are reducing
transportation distances through round-use of export
containers and a review of transportation routes, thoroughly
implementing eco-driving during truck transportation, andreducing the use of packing materials through the use of
returnable steel containers. In the fiscal year ended March 2020,
CO2 emissions during shipment of products in Japan was 13,293
tons/year, and the target of 13,964 tons/year was achieved.
However, as a result of a deterioration in the loading ratio due toa sudden decrease in sales and other factors, our CO2 emissions
intensity was 0.0358 tons/million yen, and we were not able toachieve the target of 0.0345 tons/million yen target. In order tofurther reduce emissions intensity, the entire company will
strive to improve logistics efficiency by expanding the scope ofmeasures and reducing current inventories.

Development of products that respond to the intensificationof natural disasters
N3 N-CUBE, NTN Green Power Station
We have developed the N3 N-Cube that stores power generatorsand storage batteries utilizing three types of natural energy(wind, water and sunlight) and that can be used as urgent
power sources in the time of disasters that make it difficult to
supply electricity. The N3 N-CUBE can generate and supply
electricity in a short period of time. In September last year, theN3 N-CUBE was sent Kyonan-machi, Chiba Prefecture, where it
became difficult to supply electricity due to the Typhoon No. 15
disaster. The N3 N-CUBE was used to recharge approximately
1,000 mobile phones and provide free Wi-Fi spots. In addition,
we succeeded in implementing “Long Distance WirelessTransmission Experiments between Bases” with the National
University Corporation Osaka University, which uses NTN GreenPower Station to quickly ascertain the status of a disaster when
it occurs. Since this system can collect and transmit disaster
information safely and swiftly and can also be used as anindependent power source in the event of a power loss, we will
promote initiatives to bring this system into every local
government.

NTN-SNR (Europe)
Use of waste heat by heat pump
In 2016, NTN-SNR introduced an Energy Management System(ISO50001) at seven plants to improve energy performance.
Since 2016, we have been carrying out activities to identify
energy loss in production facilities that use electricity and fuel.
As a result, we have found that a large amount of heat loss has
been occurred in compressors, cooling tower systems, and

ESG Strategies

Reducing CO2 emissions in logistics

NTN Green Power Station (front) installed in NTN-AT and wind turbine facilityof the electric power company

0.6

10

4.3

0

0.8

34.1

33.5

Business Strategies

0.2

1.0

Scope 2

20

21.7

10

0

Scope 1 (Europe)

0.4

20

15

Scope 2 (Asia)

1.20

40

20

Scope 2 (Americas)

Scope 1 (Asia)(10,000 tons)

0.87

30

Scope 1 (Americas)

NTN Revitalization Story

Scope 1: Direct emissions

CO2 Emissions/Emissions Intensities (Overseas)

Switching to electricity from renewable energy sources
NTN-Antriebstechnik G.m.b.H.(NTN-AT) is located in the state ofSachsen Anhalt, Germany, where there are many wind turbine
facilities and where renewable electricity is easily procured. With
regard to electricity used on-site, NTN-AT has switched torenewable-energy-derived electricity since April 2020. This is
expected to reduce CO2 emissions by approximately 6,000 tons/
year.
The NTN Group is working to increase its renewable energy
procurement rate by not only introducing solar and wind power
generation facilities within business sites but also consideringswitching to renewable power sources.

Eco-Cupended March)"N3 N-CUBE " that was temporary staff to
Kyonan-machi, Chiba

NTN Green Power
StationNTN Report 2020

52

ESG strategies

Activities to instill the corporate philosophy
Phase 3

Enhancement of corporate value

What it means to practice the corporate philosophy

We see our corporate philosophy as a common value that strongly
connects each and every employee, not as words on paper. With thiscommon value in mind, we aim to become a "presence needed bysociety."
The NTN PROUD AWARD was established as an "opportunity to practiceour corporate philosophy" in 2018, when we celebrated our 100th
anniversary, with that year being regarded as an excellent opportunity todrive forward transformation for the next 100 years. During the NTN
PROUD AWARD 2 in 2019, 76 teams participated from around the world,and 8 teams that received the awards after the two-step selections werepraised at the ceremony in December.

NTN Revitalization Story

Today, companies are required to produce not only business results (economic value) but they are also required to be a presence neededby society (social value). If a company is not necessary for society, growth of the company cannot be expected. In order for us to continue
to be a company needed by society, it is necessary for us to face social issues and aim to realize a sustainable society by practicing ourcorporate philosophy.
In 2018, we established the corporate philosophy code of conduct "NTN SPIRIT" in order to instill our corporate philosophy, and NTN
SPIRIT clearly stipulates the attitudes and actions we want each and every employee to pursue. We have divided the process of instillation
into three steps: “recognition,” “empathy and understanding” and “practice.” We are pursuing measures that lead to the implementation of
those three steps.

Practice

About Us

SocialNTN PROUD AWARD 2 ceremony

Instillation Phase Map of Corporate Philosophy
Case Study

Phase 1 Recognition

Phase 3 PracticeWith regard to the huge Chinese market, economic growth is still expected in
the future. On the other hand, our sales activities in the region faced a variety ofissues unique to the region. By resolving these issues, we aimed to improve theNTN brand in the region.
First, we classified a series of sales activities into 4 phases: (i) new customer
acquisition, (ii) prospective customer acquisition, (iii) customer base expansion,and (iv) customer maintenance, and implemented concrete actions targeting.
Members of the Planning and Sales Headquarters,
NTN (CHINA) Investment Corporation
In order to grasp the current situation, such as issues that are identified at thesite, we made thorough efforts to identify problems in each phase at meetings with branch managers and through visits to
exhibitions. For example, in the (i) new customer acquisition phase, we once again analyze the reasons behind the low level ofawareness of the NTN brand in the Chinese market. As a countermeasure, we are reviewing the use of our website localized to
the Chinese area, improvement of our own website, and PR methods to disseminate our track records in a wide range ofindustries, and are restructuring sales activities and strengthening our sales system.
In the section of “Challenge,” one of credos in NTN SPIRIT, it is stipulated that “We passionately challenge ourselves without
being satisfied with the current situation.” As in this guideline, we were able to promote the establishment of a sales structure in
the Chinese market by pursuing innovations while thinking on our own without being satisfied with the current situation. In the
future, we will transform our business operations with the three credos of NTN SPIRIT as our guide: "Challenge", "Collaboration"and "Commitment."

Corporate Philosophy Dialog

Rank-specific education• For executives• For overseas executives• For division managers

NTN PROUD AWARD
ceremonye-learning

NTN SPIRIT BOOK,
card and poster

Follow-up on site activities
NTN PROUD AWARD

Recognition

Putting your thoughts into words; To each person’s SPIRIT

We issued the Japanese and English versions of NTN SPIRIT BOOK in orderto make our corporate philosophy system and its code of conduct “NTNSPIRIT” widely known to all employees working in the Group. This booklet

Phase 2

Sympathy & Understanding

Four Award Categories based on the Corporate
Philosophy

Japanese, English, and French versions of NTN SPIRIT BOOK

Corporate Philosophy Dialogs spreading to each business site

Criteria based on NTN SPIRIT
Credos

Evaluation
criteria

Challenge

1 High goal

Four Award Categories Based on the Corporate Philosophy

1
Corporate Philosophy Dialogs held at each business site

Field of Creation

Surprise and impress the world by willingly
taking on challenges and creating ideas thatlead to transformation

3

53 NTN Report 2020

The activities of each team are evaluated based on three credos(Challenge, Collaboration, and Commitment) that are includedin NTN SPIRIT. One of the characteristics of this process is toapprove and praise teams, in terms of not just results but also
processes. Participants commented, "By knowing the processes
in case examples from other companies, we were able toincorporate them into our own business activities, boosting our
motivation," and "With ‘Challenge’ incorporated in theevaluation criteria, we were able to overcome our inclination tofollow precedents."

Field of Contribution
to Society

Contribute to the stakeholders, including
employees and shareholders, in keeping withthe spirit of coexistence and co-prosperity

2

Field of Service
Solution

From the standpoint of customers, createtechnology, quality, and services that are
beyond expectations of customers

4

Field of Globalization

setting

2 Appropriate

recognitionof current
situation

Current
situation

CredosCommitment

Goal
achievement

Evaluation
criteria
1 Results
2 Commitment

to thenext task

Credos

Evaluation criteria

Collaboration

1 Activity processes

P

Plan

A
for achieving goals Action

2 Teamwork

D

Do

C

Check

Respect a wide variety of values andcontribute to resolving issues from the global
perspective

NTN Report 2020

54

Company/Stock Information

We hold Corporate Philosophy Dialogs as a venue for interactive
communications in order to help employees not only simply learn about
the corporate philosophy system and NTN SPIRIT but also deepen theirempathy and understanding for the system and spirit so that employees
can express such concepts by using their own words. In the fiscal year
ending March 2020, we held workshops at several business sites, andapproximately 250 employees deepened their understanding of NTN
SPIRIT and shared the values.

Employees are allowed to organize their team members on theirown, and freely set themes they are interested in. In addition, byletting employees participate in four award divisions based on
our corporate philosophy, we are strengthening the realizationof our philosophy and the linkage between our philosophy andthemes.
Participants in the NTN PROUD AWARD have expressed
opinions such as "through our own thoughts and actions, wehave started to implement our daily tasks proactively" and"because the team consists of members from various
departments, the interaction has been deepened, causing a
positive effect on our daily work."

Evaluation criteria based on NTN SPIRIT
Financial Dataencourages all employees to carry out the corporate philosophy with
their dreams and goals in mind in order to create a "NAMERAKA Society."
In 2019, voluntary activities aimed at disseminating our corporate
philosophy were extended to other countries, and we began preparing a
French version of NTN SPIRIT BOOK. Overseas employees (NTN BEARING
CORP. OF CANADA LTD. and NTN-SNR) played a central role in preparing
the booklet so that it is written using easy-to-understand expressions for
local employees.

ESG Strategies

Phase 1Business Strategies

Internal communication
journalPhase 2 Empathy/Understanding

Transformation for sales activity localized in
Chinese market

ESG strategies

Creating a Comfortable Workplace

Promotion of work style reform

In order to further promote human rights initiatives, we haveformulated a Human Rights Policy in which all Group employees
share a common sense of values related to human rights andwhich serves as the basis for their day-to-day activities andbusiness activities.
Based on the Human Rights Policy, we will address humanrights issues which are gaining more and more global attention,
as exemplified by the Sustainable Development Goals (SDGs)
and the UK's Modern Slavery Act, and fulfill our corporate
responsibility for respecting human rights.

We have promoted a work style reform which enables all
employees to find their work rewarding, fulfill operational
responsibilities, and comfortably lead their lives in society withharmony and peace of mind. We thoroughly manage working
hours and introduce no overtime days, flextime, and an interval
system to enable each employee to work efficiently. In addition,
we have also worked on the reform of personnel systems, such as
introducing systems responding to various types of career paths
and life events (e.g. childcare and long-term care), to provide
opportunities for many employees to take an active role.

Personnel training to improve safety

Our initiative to promote the taking of annual paid leave started
in the 1980s. Under the original keywords of “comfort andprosperity,” we have worked on the realization of work-lifebalance. We have maintained a high average utilization rate ofannual paid leave, exceeding over 80% for over 25 years. Now
we are aiming at a higher level, working to develop multi-skilledemployees, conduct proactive job rotation, and cultivate aworkplace atmosphere which encourages employees to takeannual paid leave.

We train several risk prediction trainers for each plant. They will
provide risk prediction training for the operators at every
workplace in their plants so that they will not take or allow
unsafe actions. In addition, we work to prevent human errors byproviding training designed to improve social skills in every
workplace, with the aim of developing human resources withsocial skills such as situational awareness, decision-making,communication, and leadership, which cannot be covered
through systems or knowledge alone.

Trend of annual paid leave utilization rate(%)
100

Safety and Health Basic Policy

Enhanced lineup of employee leave programs
We provide maternity, childcare, and long-term care leave
programs which are developed well beyond the legally
mandated standards. Such approach leads to a system whichallows many employees to continue their careers withoutsuspension.
For example, the system of shortened working hours forchildcare expands its scope to those who raise children who arein the third grade of elementary school or younger, andintroduces staggered working hours due to childcare in Tokyo
and Osaka. Such initiatives are far beyond the legally mandated
standards.
We are not only working to develop such a system, but also
putting our heart into making the system become vitalized andconvenient for employees. We are also trying to create an officeculture where employees can make full use of the system.

95

2016

2017

2018

2019

year
2020 (Fiscal
ended March)

Basic approach to occupational safety and health
Ensuring the safety and health of everyone working in the NTNGroup is the most important value. It takes priority over all ourbusiness activities and is the foundation of our management.
Based on this basic stance, we aim to create a workplaceenvironment where employees can work actively, safely andhealthily.

Development of framework supporting safety
and health
We work to further strengthen the management of the naturalenvironment, and occupational safety and health in order toimprove the effectiveness of the Group, by promoting
integrated management of the natural environment, health andsafety, which are gaining more and more attention globally.
We promote the development of a workplace with nooccupational accidents, under the global safety management
structure where President/CEO serves as chief director, theofficer in charge as general manager of corporate safety andhealth, and the corporate general manager of eachheadquarters in Japan and the general manager of eachoverseas region as managers.
Occupational accident data is shared by domestic andoverseas plants using a database. In particular, in the event of aserious accident, we implement measures throughout theGroup, including our overseas affiliates, to unify safety
standards.
By June 2019, we had acquired certification for occupationalsafety and health management systems (JISQ45100/ ISO45001*1)
at our main domestic plants. For our affiliated companies as well,
we have begun to acquire management systems according totheir sizes, and have completed the acquisition of OSHMS*2
certification for two companies. We will proceed with theacquisition of certification for other group companies.
Protecting the safety and well-being of not only our
employees but also everyone working in the Group, we strive tomaintain compliance with laws and regulations and tocontinuously improve our safety and health standards.
*1. JISQ45100 is a Japanese standard with Japanese requirements added to ISO45001, which isan international standard for occupational safety and health management systems*2. OSHMS is a Japanese standard in compliance with MHLW's "Guidelines on Occupational
Safety and Health Management Systems (OSHMS Guidelines)"

55 NTN Report 2020

Development of machines in pursuit offundamental safety
We conduct risk assessments (RA) and implement safetymeasures when equipment is first installed, when a certain
period of time has elapsed after the installation, whenequipment or operations are changed, when safety patrols
reveal problems, or when near-miss incidents occur.
We train RA trainers and raise the RA level in order to estimate
and assess risks appropriately. To deal with risks that haveemerged in RAs, we implement safety measures using
engineering measures, such as safety covers and interlocks, inaddition to intrinsic measures by reviewing operations.
Furthermore, we consider risk reduction by means of managerial
measures (procedures, rules, etc.) and protective equipment.
Remaining risks are recorded in the residual risk management
sheet in accordance with the unified company-wide residual risk
management operation. Based on this, stickers indicating
residual risk levels are affixed to the equipment for visualization.
Furthermore, training on the residual risk of the equipment isprovided to operators to make sure that they know where thehazardous risk lies.

Approach to Kenko Keiei (health management)*
In view of the fact that proactive efforts to maintain and promote
the health of employees are important management factors thatwill affect the sustainable growth of the Company, we promotevarious measures to realize an employee-friendly workplaceenvironment where each employee can perform at their fullpotential, in cooperation with the health insurance association.
Enhancement of healthy working atmosphere• Promotion of work-life balance, and avoidance of long working hours• Further promotion of active communication in the workplace• Initiatives to promote balancing work and treatment of disease
Enhancement of mental health• Improvement of workplace environment based on the results of stress checks• Prevention of mental illness with self-care and care by supervisors• Enhancement of a mental health consultation system

Company/Stock Information

Based on the following six basic principles, we haveformulated the Safety and Health Basic Policy pursuant toour Management Policy.
1. Compliance with laws and regulations
2. Promotion of continuous improvement through theoperation of an occupational safety and healthmanagement system
3. Elimination and reduction of hazardous/harmful risks
4. Promotion of employee education and training
5. Maintenance and promotion of mental and physicalhealth
6. Creating a safety culture

93

Financial Data

Outline of Safety and Health Basic Policy

NTN Job Return Scheme
We have a rehiring system for employees who left their jobs due
to life events, such as marriage, childbirth, childcare, long-termcare, career development opportunities (studying abroad, jobchange, etc.) and spouse's job relocation. Through thisapproach, we promote work-life balance as well as thedevelopment of an environment where employees can makethe most of their experience, knowledge, and expertise
acquired in the Company or other companies after leaving theCompany.
Thus far, three people have returned to work using the job
return scheme.

89

ESG Strategies

Creating a workplace environment where everyone in the NTNGroup can work actively, safely and healthily is the foundationof our management and the most important value that takes
priority over all business activities. In order to demonstrate thatto our employees, stockholders, customers, business partners
and others, thereby heightening safety awareness among eachone of our employees and throughout the entire organization,and further raising our corporate value, we have formulated the
Safety and Health Basic Policy.

Promotion of remote work
We participated in TELEWORK DAYS 2019, an initiative taken by
MIC, METI and other organizations to encourage companies
across Japan to conduct telework.
From April 2020, to prevent the spread of the newcoronavirus (COVID-19), we have promoted telecommuting
initiative and staggered working hours for employees, whichmainly uses public transportation, and are implementing
measures prioritizing ensure the health and safety of
employees.

92

Business Strategies

Based on the following three basic principles, we haveformulated the Human Rights Policy pursuant to ourManagement Policy:
1. NTN will respect internationally-recognized humanrights.
2. NTN will not violate the human rights of others.
3. NTN will respond appropriately to any negative impacts
its business activities may have on human rights.

Realize diverse work styles

89

50
0

Outline of Human Rights Policy

NTN Revitalization Story

Human Rights Policy

High rate of taking annual paid leave

About Us

SocialEnhancement of physical health• Appropriate health guidance and improvement of lifestyle based on the
results of medical checkups• Steady implementation of data health plans in cooperation with the healthinsurance association• Improvement of the participation rate of medical checkups for employees’
spouses* Kenko Keiei (health management) is a registered trademark of the NPO Health Management
Research Association.

NTN Report 202056

Development and utilization of diverse work force

ESG strategies

About Us

SocialBasic approach to diversity(Persons)

Female manager (belonging to NTN)

140
120
100
80
60
40
20
0

45
35

56
45

62
46

(As of April 1)

Female supervisor

69

75

81

49

53

55

94
64

106
75

114

82

123

92

127

96

32
31
31
31
30
26
22
20
16
11
10
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Next Generation Development Promotion
Seminar Targeting Male Employees Engaging
in Child-rearing

Promotion of employment of persons withdisabilities

In 2020, as part of our graduate recruitment campaign, we
conducted a screening interview online to prevent the spread of
the new coronavirus (COVID-19). All screening steps, including
briefings on the Company, were carried out on the internet. As aresult, we were able to secure the safety of selected students andour employees, as well as to reduce the burden on students who
participate in screening from a long distance away. We also strive
to secure opportunities for students to come into contact with
NTN in all situations by utilizing the Web system in interviews
with students before and after screening and in various
recruitment events. In the future also, we will continue to secure
human resources who support our business activities, throughrecruitment activities that take into account students
participating in the screening process, while effectively utilizing
the Web system in response to changes in the environment.

Online training programs
Graduate new employees participated in an introductory grouptraining program for about a week after joining the Company.
The training was held as an opportunity for new employees tointeract with each other in conjunction and develop a mindset
as a member of society and their ability to communicate inbusiness situations. However, amid the spread of the newcoronavirus, we stopped group training to prevent the risk ofinfection during travel and the 3 Cs, and implemented aconventional program in the form of online training. Our
training program incorporates a large number of group work
sessions, so it was initially uncertain whether the expected
benefits of online training could be achieved. However, we wereable to engage in active discussions and exchanges of opinions
through the use of online group work functions.
On this occasion, we will review our existing training
programs, divide them into online training programs and grouptraining programs, and promote an approach to conducting
training online.

NTN training system
In order to ensure that employees acquire the mindset,
knowledge, and techniques necessary to meet the level of skills(such as qualifications) required according to job grades andcan enhance their ability to perform their duties, we are
implementing human resource development programs at alllevels that enable employees to think and act for themselves. In
order to expand our business in the next 100 years, it is essential
to develop human resources capable of playing an active role
not only in Japan but also overseas. As a program to foster
outstanding human resources and international humanresources by raising the spirit of improvement, we are alsoutilizing overseas studies and scholarships.

Training structure
New recruits

As a workplace where people with disabilities can take the lead
and work safely, we have established three “Dream Workshops” at
Kuwana, Iwata and Okayama Works. In addition, we are working
to create a comfortable working environment for people withdisabilities, such as by promoting barrier-free workplaces.
“Collaboration” is being promoted in every workplace, as the
manufacturing sites and the administrative divisions also utilize
the strengths of a variety of people and encourage them to play
an active role.

OJT

Mid-career employee

Financial Data

rend of female managers and supervisors at NTN(employees belonging to NTN)

The "Kurumin"certification logo

Our human resource development is based on the basic policyof realizing the NTN Corporate Philosophy through activities ofhuman resources who grow as self-sustaining individuals, andaims to cultivate human resources who can achieve businessobjectives and swiftly respond to changes in the businessenvironment.
To achieve this goal, we have adopted a basic policy forhuman resource development that aims to develop three typesof human resources, namely: (i) Global, (ii) Self-support, and (iii)
Creative. Our human resource development is generally
explored through on-the-job training (OJT) based on the
self-development of individuals and daily business activities. In
addition to providing opportunities and various support
systems to promote the training, we continuously implement
systematic, well-planned and organizational training programsfor employees as off-the-job-training (Off-JT) on an as-neededbasis from a long-term perspective.

ESG Strategies

Promotion of female managers
In order for us to continue to grow, it is essential to create aworkplace that promotes diversity and generates innovativeideas. One of the themes for achieving this goal is to promote
the active participation of women and promote theappointment of female managers.
To prepare for the planned appointment of female managers,
we are working to develop skills of female manager candidates
through seminars. First, we hold "encouragement seminars" and"next-leader training" in order to make career upgrades easier toimagine for supervisor classes.

We were certified by the Ministry of Health, Labor and Welfare
as a company supporting child-rearing, and obtained thenext-generation certification mark Kurumin. Kurumin is granted
to companies that have formulated a general business
operator’s action plan based on the Act on Advancement of
Measures to Support Raising Next-Generation Children andhave achieved relevant targets and met certain criteria. We haveformulated an action plan that incorporates measures toestablish an in-house information system for employees onchildcare leave, encourage men to take childcare leave, andhave implemented childcare-supporting measures. In addition,
we promoted initiatives to achieve a work-life balance that
extend to employees who do not engage in child-rearing. For
example, promoting the use of paid leave, and establishing arehiring system for employees who left their job due to a life
event which is not limited to childbirth and childrearing. As aresult, we were able to obtain this certification.

Implementation of online recruitment

Business Strategies

Encouraging women in the workplace

Balancing work and childcare

Basic approach to human resource development

NTN Revitalization Story

The economic condition and social structure surrounding us
have drastically and rapidly changed, including the shrinkage ofthe labor force and the new normal with COVID-19.
We are working on transformation for sustainable growth,and one of the important strategies toward this transformation
is promotion of diversity.
By combining these diverse values and creating flexible ideas,
we will accelerate "transformation." It is necessary to create aworkplace environment in which a variety of people,
irrespective of nationality, culture, gender, age, or disability, cancreate better ideas based on open-minded thinking, and eachand every employee can be proud of the company anddemonstrate his or her abilities to the fullest. To support this, weare promoting work style reform, such as the introduction of
remote work and a job-return scheme, in response to thediversification of lifestyles and work styles.
We will realize our corporate philosophy, “We shall contributeto international society through creating new technologies anddeveloping new products” by promoting diversity.

In comprehensive consideration of their career experience,skills, workplaces, etc., employees of any of our domestic groupcompanies can continue to work. Under this system, 84% of all
the employees that reached the mandatory retirement age infiscal year 2019 were re-employed, and the re-employment rate
remained high as in the previous year.

Manager

Systematic and continuous training in operations
Introductory training
Training for employees
promoted to supervisors

Pre-assignment training

Stratified training
programs

First-year training
Newly appointed project
manager training

Second-year training
Third-year training

Management education

Company/Stock Information

Training for new employee trainers

Expansion of employment of elderly employees

Basic product education

Off-JT

Under the circumstances of the decreasing birthrate and aging
population in Japan, we are working to encourage experienced
employees to take an active role as important workers. After an
employee reaches the retirement age of 60, we are reviewing
our treatment of the employee so that we can create anenvironment where experienced employees can take advantageof their careers and raise their motivation.

Basic bearing technology education
Quality control education
Production engineering education

Education by
specialty and issue

Intellectual property education
Diversity education
Development of QC circle guidance supporters and leaders
Overseas trainee system
Study abroad and scholarship programs

57 NTN Report 2020

Work scene at the Dream Workshops
NTN Report 2020

58

ESG strategies

Supply Chain CSR
About Us

SocialConflict minerals survey

Risk management for suppliers

Based on the perspectives of “Globalization,” “Fairness/
Impartiality,” and “Environmental Preservation,” we have built
trusting relationships with our business partners and are
conducting procurement activities centered on our head officepurchasing divisions. Furthermore, based on the “NTN Group
Green Procurement Standards,” we are promoting green
procurement, which prioritizes environmental preservation
efforts and procurement from business partners with superior
environmental quality. We have also established “NTN CSR
Procurement Guidelines” and are requesting active promotionof CSR activities. We are also working to achieve local
procurement at all of our manufacturing sites, including thoseoutside Japan, and to procure materials from optimal locations
globally.

We conduct annual surveys of business partners to further raiseawareness of “NTN CSR Procurement Guidelines” and to confirm
compliance.
In the fiscal year ended March 31, 2020, we surveyed 240
suppliers, such as those who responded that they were notsuccessful in the last fiscal year's survey and those who have
newly begun business with us from FY2019.
In most of the items, the status of efforts has been improved
since the previous survey, and they have a better understandingof the importance of CSR procurement. However, with regard to
information security and business succession management,
some suppliers became aware of issues such as new threats
under their work systems which were introduced in line withthe state of emergency declaration in response to the spread of
the new coronavirus (COVID-19) infections. We will further
continue to work on raising awareness of the CSR procurement.

We periodically investigate whether or not certain minerals
contained in our materials or components are sources of fundsof armed groups in conflict areas, which leads to human rights
violations, illegal mining and smuggling.
In FY2019, we traced back through our supply chain of 297
business partners to identify the material smelters, and morethan 90% of such partners reported that they do not use any
conflict minerals.
We will continue to conduct this survey periodically tomonitor the inclusion of conflict minerals from conflict or
high-risk regions.
Companies listed on U.S. Stock Exchanges are required todisclose the use of conflict minerals under the U.S. Dodd-Frank
Act. Based on the results of the above survey, we respond toinquiries from our customers regarding conflict minerals.
As human rights issues are gaining attention globally, corporateawareness of such issues is growing. Regardless of the U.S.
Dodd-Frank Act, the number of companies voluntarily
eliminating the use of conflict minerals is increasing as shown inthe chart below.
NTN will continue to deal with conflict minerals as part of our
supply chain CSR.

From the perspective of management of risks associated withour business partners, before starting new transactions, wecheck the management status of business partners as well as
their management of quality and environmental issues.
We also conduct an annual survey for business partners,
which we have already conducted transactions with, tocontinuously monitor their business conditions.
In addition, for suppliers who are deemed to have hightransaction risks, we implement risk-reducing measurescommensurate with the impact they may have on us in terms ofprocurement parts, transaction amounts, etc., in an effort tominimize procurement risks and ensure stable procurement
activities at all times.
Recently, business continuity risks such as natural disasters
and infectious diseases have been increasing, and we havecreated a crisis management database to prepare for
unforeseen circumstances. In the event of an emergency, we
promptly confirm the safety of our business partners andmanage risks related to the stable supply of products
throughout the supply chain.

Green Procurement Standards

CSR questionnaire for suppliers
Questionnaire items
1

Compliance2

Human rights and labor

3

Environment

4

Quality, safety

5

Information security

6

Business Continuity Management (BCM)

7

Social Contribution

8

CSR Procurement Guidelines

Procurement complying with environmental
regulations

59 NTN Report 2020

400
300

CSR Procurement

Overseas

384

337

341

106

97

210

231

244

263

2017

2018

2019

year
2020 (Fiscal
ended March)

300
90

121

200

Degree of Achievement According to CSR Questionnaire Results
1 Compliance0100
8 CSR Procurement8060

2 Human rights
and labor

Compliance with Subcontracting Act

40
20
7 Social
Contribution

0

3 Environment

4 Quality, safety

6 Business Continuity
Management (BCM)
5 Information security

100

We are promoting supply chain BCP activities including logistics
and business partners in order to ensure stable procurement.
We are strengthening crisis-management in preparation for
natural disasters such as earthquakes and typhoons at ourbusiness partners and distribution bases. In addition, in awidespread crisis such as a pandemic, we will cooperate withour business partners to ensure the business continuity, andpromote infrastructure development such as on-line business
operations with our business partners, the safety confirmation
at the time of disaster, sharing the safety information and thecode of conduct.

We conduct self-audits of subcontract transactions with the aimof optimizing subcontract transactions. In order to voluntarily
audit the compliance status of the Subcontracting Act, eachbusiness site in Japan is responsible for implementing acertification system for “subcontracting self-auditor.” In
September 2019, we held a "Self-Auditor Training Course for
Subcontract Transactions" and newly certified 26 employees as
self-auditors. The total number of self-auditors reached 108. In
the fiscal year ended March 2020, self-audits were conducted atour 22 business sites in Japan, with the self-auditors playing aleading role in such audits. We will continue to conduct
activities aimed at optimizing subcontract transactions.

Company/Stock Information

In order to comply with environmentally-hazardous substances
regulations in Japan and overseas and customer standards, we
actively switch regulated substances regardless of applications,destinations, or manufacturing locations. To comply with the
RoHS Directive which was revised in July 2019 and prohibits
phthalates (DEHP, BBP, DBP and DIBP), we have established asystem for incoming inspection according to the risks involved.
We are promoting the switching from lead-containing procured
products that are currently used for applications exempted fromthe RoHS Directive, assuming future tightening of regulations.

Japan(Number of cases)

500

Supply chain BCP

Financial Data

We have established NTN CSR Procurement Guidelines topromote activities throughout the entire supply chain in
response to social issues such as human rights and labor
practices, environmental issues, the elimination of anti-social
forces, and anti-corruption. We request our business partners tofurther promote CSR procurement activities in areas such ascompliance and anti-corruption, human rights and labor,
environmental issues, quality and safety, information-security,business continuity, and social contribution.

Number of conflict mineral surveys (reports to our customers)

ESG Strategies

Failure to comply with environment laws and environmentallyhazardous substances regulations in the supply chain is amanagement risk that leads to shut-down and compensation
for damages to customers. We are promoting environmental
control throughout the supply chain by establishing green
procurement standards that require our business partners toestablish an environmental control system and define thestandards of environmentally-hazardous substances, whichconstitute the important quality characteristics of delivered
products.

Business Strategies

CSR questionnaire for suppliers

NTN Revitalization Story

Basic approach to procurement activities

NTN Report 2020

60

ESG strategies

Coexistence with the Local Communities
About Us

SocialBasic approach to contributing to local communities

Initiatives in Each Region

One of the credos of NTN SPIRIT “Collaboration” states that “We take care of the natural environment and maintain coexistence with thelocal community.” In addition to contributing to society through our business activities, we also work to help achieve the UN’s Sustainable
Development Goals (SDGs) through various activities tied closely to local communities around the world.

Japan

People and Regions connected by “NTN Rotating School”

October, 2019

Ehon(Picture Book) picnic(times)9

The number of events
held was 40, andthe total number ofparticipants was morethan 17,000 .

2017*Only events taken charge of by the
Corporate Value Promotion Department
are counted.

20

17
14

15
10
5
0

Jan. 2020

2018

2019

* Eva’s Place is a self-reliance support organization for young people that provides shelter andtransitional housing for young homeless people and various support programs to enable themto return to society.

Manufacturing site tour
with a lively question-andanswer session

Employee supporting the
setup of an event"LITALICO Junior" Tennoji Class*With a twinkle in their eyes, all the children listened hard to
the explanation of their "new teacher" while touching thebearings and musical instruments that they had never seen
before. Even after the class, they kept playing without
wanting to leave the classroom. We had each child spend agood deal of time working on a project according to his/her
personality and they were able to feel the joy of being able
to do something themselves.
* Child development support and after-school day services for children from young ages
up through high school students

A Message from LITALICO Junior teacher
We received many comments from parents such as, "It's the first time I've
seen our children enjoying themselves so much" and "I wonder if they can
get a job in the machinery field in the future." It was the first time not only
for children but also for instructors that a teacher not belonging to
LITALICO delivered a class. Therefore, we felt anxious about how the classwould be received that day. Thank you very much for letting us have sucha wonderful experience.

EuropeRelated SDGs

The Sibiu Plant of NTN-SNR Rulmenti S.R.L. has established theEnvironment, Health and Safety Week as one of the measures toraise the awareness of CSR among employees. Some of these
activities involve a measure to raise employees' awareness of
their health. For example, each employee team moves aroundby bicycle along the Cibin River, which runs through the city, toclean up areas around the river. As such, employees take theinitiative in resolving local community issues. The interaction
between employees, which goes beyond the boundaries ofnormal business operations and business divisions, helps toraise CSR awareness and reinforce teamwork.

Asia

Related SDGs

NTPT CO., LTD. (Thailand) worked with local elementary schools
to hydroponically cultivate vegetables for school lunch in order topromote the health of children who will play a leading role in the
future. Through repeated trial and error to enable children tocontinuously obtain vegetables, we created an environment inwhich children can nurture and eat vegetables on their own.
Through these activities, we were able to give children a chance
to experience the joy of Monozukuri and increase their interest infood safety and the natural environment. The employees who
saw the smiles of the children who happily ate the vegetables
they grew also felt a sense of fulfillment and joy, and also realized
anew the importance of contributing to the local community.

Financial Data

Many families visited the NTN booth throughout the day

NTN BEARING CORP. OF CANADA LTD. supports Eva’s Place* as avolunteer sponsor by helping constructing simple
accommodation facilities for youth and assisting the organization
in holding fundraising events. The funds raised were used to help
provide training, counseling and other programs to help
disassociated adolescents re-establish and maintain contact with
their families and communities. These activities allow employees
to feel proud and happy, and boost their motivation.

ESG Strategies

NTN Rotating School was held at a local exchange event in
Ustubo park near the head office. Many local visitors said, “I
didn’t know the business line of NTN although I have seen
NTN signboards for a long time,” but we were able to interact
with local residents through various hands-on workshops
using bearings, and participants could feel a warmer affinity
toward NTN as a local company.

Number of NTN Rotating School held

Related SDGs

Business Strategies

To promote a harmonious coexistence with local
communities, the Company organized NTN Rotating Schoolin 2017 as a way to facilitate community interactions for our
employees and education for the next-generation. This is a
mobile school based on the concept of having children thatwill help the next generation learn about the environment
and energy saving while having fun.
This year marks the fourth year of the school, and thenumber of programs is increasing year after year, deepening
ties with a variety of people in each region.

NTN Noto Corporation and NTN Houdatsushimizu Corporation
invited 11 Mexican trainees via the Japan International Corporate
Agency and held training sessions to tour the manufacturing
sites. This seminar aims to contribute to the promotion of quality
control and productivity of companies and industries in theirhome country by allowing trainees to acquire the knowledge andtechniques of Japanese Monozukuri (manufacturing). We areaiming to revitalize our global partnership in Monozukuri byletting the skills of experienced workers working at the site beutilized by Mexican trainees in their own country.

Americas

NTN Revitalization Story

TOPICS

Related SDGs

Participant's Feedback• I learned that bearings are used in various places and are all around us. I also learned
a lot of things that I can't learn at school. (Elementary school student)

Employees engaged incleaning activities• It was difficult to assemble the bearings, but I was able to fully understand themechanism. I was surprised at the high precision of a ball. (Adult)

Sales event held by people with disabilities
From a "Rotating Wallposter" in which
participants report what they haveexperienced as a reporter

NTN Rotating School is held in an increasing number of different places and requires flexible responses tailored to local
communities and participants. This is also a good opportunity for employees themselves to reflect upon their own company andcommunities. It is very rewarding seeing participants make new discoveries, learn something new, and return with a smile saying,"I'm glad I came!" We will continue to spread NTN Rotating School, which links people to local communities, worldwide.

61 NTN Report 2020

Company/Stock Information• Knowing that the earth is in danger now, I want to learn what I can do and try to doit. (Elementary school student)

Employees and local
children engaged inhydroponic cultivation

In collaboration with Pasona Heartful Inc., we held a sales event for Halloween in October 2019 and for
Christmas in December 2019 for the purpose of expanding the employment of people with disabilities andtheir participation in society. These events were held during lunch breaks. At Pasona Heartful Inc.,
employees with disabilities are active in a variety of fields, and they sold products and confectioneries they
made by themselves. Confectioneries made without any additives were particularly popular. Sales
representatives were very happy about how the day went, saying “We usually have a lot of sales within thegroup only, so it was a new experience to interact with NTN, and we were able to have a good opportunity
to learn customer service." We will continue to create such opportunities to promote diversity.

Selling all handmade Halloween
gifts, including baked
confectionery and candles

NTN Report 2020

62

ESG strategies

Outside Director Dialog
Awareness of Issues in the Fiscal Year
ended March 2020
What issues did you consider as the head of the Nominating
Committee and the Audit Committee in the previous fiscal
year?

Outside Director(Chairman of Audit Committee)

Noboru Tsuda

Kouji Kawahara

Jun. 2005 Operating Officer at Mitsubishi Chemical Industries Limited.
(currently Mitsubishi Chemical Corporation)
Apr. 2014 Member of the Board (Representative Director), Vice President
Executive Officer at Mitsubishi Chemical Holdings Corporation
Jun. 2016 Outside Director at NTN (current position)

Jun. 2010 Operating Officer at Bank of Tokyo-Mitsubishi UFJ, Ltd.
(currently The Bank of Mitsubishi UFJ, Ltd.)
Jun. 2015 Full-time statutory auditor at NTN
Jun. 2019 Outside Director at NTN (current position)

Achievements of Governance
Reforms
In June 2019, NTN obtained approval from an Annual
Shareholders’ Meeting and transitioned from a Company with
Board of Corporate Auditors to a Company with a Nominating
Committee, etc., but what has changed due to the transition?

63 NTN Report 2020

Kawahara: That's right. However, though we took time to discuss
the transition, the discussion remained as far apart as ever anddid not proceed very much. I also participate in a Management
Meeting and other events that are held before Board of Directors
meeting is held, but there were some cases in which an issue was
finally submitted to Board of Directors after many meetings were
held for such issue. After the system change, Directors are able toconcentrate on "supervision" tasks because executives give
answers themselves. Also, the number of meetings has been
reduced, and I feel the decision-making process has been
accelerated and streamlined. With regard to Global Management
Conference, Executive Officers have recently held active
discussions themselves in their respective capacity and have notnecessarily adopted resolutions unanimously.
Tsuda: Some employees still have an impression that becoming a
Director means becoming important, and I feel that some
employees still have an old mindset. Governance reform can’t
possibly be achieved overnight, but due to the change in thesystem, we are making steady progress toward the desired direction.

Tsuda: This may be a harsh comment, but in other respects too, I
feel that the speed at which a decision made by top
management is disseminated to local sites and is put into
practice is slow. For example, even though we decided to "curbcapital investment," the decision was not quickly put into
practice. I sometimes think it might be difficult to stop
operations. In such a situation, on the contrary, it would be
difficult to accelerate operations when it is necessary to do so.
The same is true with the inventory. Even if inventory reduction isdecided, it does not appear that the reduction proceeds quickly.
Though the production process is long and divided into multiple
sections, it takes time to “control” operations, because it takes
time to communicate, importance is not conveyed, or eachorganization is unable to think and act on its own.

Company/Stock Information

Kawahara: That's true. In order to speed up management, I think
it is appropriate that the Company has adopted a system where
Executive Officers focus on business execution and Directors arein charge of supervision. Now, President and Executive Officers
execute business quickly, and Directors can fulfill their intrinsicrole of “assessing personnel, compensation, and other matters, in
response to the Company's major policies and status ofexecution.” I had served as an Outside Audit & Supervisory Board

Tsuda: The transition to a Company with a Nominating
Committee, etc. provided a good opportunity to change thiscorporate culture.

Kawahara: In order to solve the issue, we are currently creating achannel through which the sections in charge of internal control
at overseas sites provide information to the Executive Officer incharge of overseas sites who works at NTN’s Head Office.

Kawahara: With regard to "trust," I would like to add something:when reporting the results of on-site audits to Board of Directors,
we do not present any complaints, but are trying tocommunicate the facts frankly. Also, at the end of the audit, I try
to ask, "What do you think of the current NTN? What does NTN
need?" The subjects of audits are general managers of businesssites and president of subsidiaries. They themselves have various
thoughts, and I have heard them voicing questions like "Whatdirection will NTN take?" Such voices are also reported andshared in Board of Directors and at other opportunities. This isbecause it is important to take follow-up measures to resolve
problems in some way, as long as we have people at the site talkabout their problems during the audit. Conversely, if we feel thatthe thoughts of Directors and Executive Officers are notcommunicated to people at the site, we may communicate themat the time of audit. Through these efforts, if we cancommunicate with each other and understand what trouble thework site has and what the NTN Head Office is thinking about, I
believe we have fulfilled the role of auditing. We believe thatrealizing a smooth organization is also an important role of theauditing team.

Financial Data

Tsuda: Traditional Japanese firms did not have a clear distinction
between execution and supervision, and their function ofsupervising execution, or so-called governance, was inadequate.
The same is true for NTN. Although NTN made a good decision to
introduce Outside Directors, Board of Directors decided on evenminor matters as before and the content of reports on suchdecisions was inadequate for Outside Directors. Thus, theimportant supervision function of Directors remained weak. We
have changed our corporate structure to a Company with aNominating Committee, etc. because we believe it would bebetter to drastically change our corporate governance structure
to move away from the traditional corporate structure. The
number of directors, who do not concurrently serve as Executive
Officer, has increased to six, accounting for the majority of Boardof Directors, and I think this and other factors indicate that theCompany is going in the right direction.

Member for four years, but after I took office, a senior statutory
auditor encouraged Outside Directors to attend every meeting ofBoard of Corporate Auditors as observers and as a result, suchmeetings served as a forum for sharing information andexchanging views among Outside Officers. This has been very
helpful. On the other hand, I also felt that “measures are often
taken to simply follow precedents." When I asked “Why do you do
this?” in an interview during an audit, I often received answers
like, "This is what we've been doing for a long time." Even if they
thought they needed to change those points, the actual situation
might not have allowed them to make a change easily.

Tsuda: I would like to use this kind of matrix to check the skills of
candidate successors and strengthen each person's skills, forexample, by training them if there is any skill imbalance.
However, it is not enough to have many "circles" in the checkbox,
and we would like those who become a Director or Executive
Officer to have a profound knowledge in at least one field. Inorder to gain the "trust" of people, which forms the basis of aleader, I think it is also important to acquire outstanding abilities
that make others think "this person is a leading expert" or "I can't
best this person."

ESG Strategies

Topic 1

Tsuda: As Mr. Kawahara has said, there are issues with internal
control of our overseas Group companies. Although we havebeen moving forward with initiatives such as recruiting Hervé
Brelaud from our French subsidiary and appointing him as
Operating Officer in charge of Procurement, there has been adelay in the globalization of headquarters functions. Nonbusiness information such as the helpline is not quickly provided
to Board of Directors from overseas sites. Regarding complianceat overseas sites, it is difficult to grasp problems because
information as to where a problem exists and what the situation
is like is not quickly provided to NTN’s Head Office.

Kawahara: The "Notice of Convocation" for the 121st
Shareholders’ Meeting (held in July 2020) also includes the skill
matrix of candidate Directors.

Business Strategies

Outside Director(Chairman of Nominating Committee)

Tsuda: By the way, the Nominating Committee believes that"fostering successors" is a major issue. The issue is not how wewill nurture the next generation, but our focus is on how tonurture the generation after the next and the generation after
such generation. Education on business skills is sufficiently
provided, but it is necessary to develop the ability to holddiscussions on major themes and to enhance education for
raising awareness of management issues. We are currently
reviewing what kind of skills are needed in Japan and globally,
and what kind of education should be provided to nurture suchskills, targeting people around the age of 50. In addition, we
created a skill matrix so that the skills of Directors can beunderstood by shareholders and third parties. (See p.73 for moredetails.)

NTN Revitalization Story

We will raise corporate value by steadily promoting reforms.

Kawahara: Let me talk from the viewpoint of an Audit
Committee member. Due to the frequent occurrence of improperaccounting incidents involving our overseas subsidiaries that arelisted companies, strengthening internal control globally was animportant theme in the previous fiscal year. In Japan, the Audit
Preparation and Support Office played a central role in holding
regular meetings with statutory auditors of our subsidiaries, andwe implemented initiatives such as sharing case studies. As aresult, practices are gradually being improved, and I feel that theinitiatives are producing good results. With regard to
appointment of directors and statutory auditors at our Group
companies in Japan, our senior management gives direct
instructions to recruit human resources that are really helpful andadvantageous to those companies. On the other hand, issues still
remain in our overseas Group companies. Cultures and otherfactors vary depending on the regions and problems are difficult
to identify. If we go to a local site for an audit and have aconnection, we will be able to speak frankly. However, we have
not yet established a relationship with all foreign subsidiaries andaffiliated companies.

build confidence between Directors and personnel at the site?

About Us

Topic 2

Topic 3What is required of Directors
What are you doing to foster a future Director who will be
responsible for management in the future? What is needed to
NTN Report 2020

64

ESG strategies

Outside Director Dialog

Toward the Revitalization of NTN
The NTN Revitalization Scenario was announced in June 2020.
Currently, a medium-term management plan is being
formulated with the fiscal year ended March 2024 as the plan’s
final year. How do you intend to revitalize NTN?

Kawahara: Governance reforms have enabled Executive Officer
in charge of the Production Headquarters to focus on his own
duties, and due partially to this, the production reforms havebeen facilitated.
Tsuda: In response to Executive Officer's advice, young
employees at our core plants have led the way in rationalizing
production, and have begun to expand this initiative to otherplants. As a Director, I would like to make sure that this kind ofeffort is not hindered and that they are fully supported. It is very
important to make investment decisions for production facilities.
Kawahara: It seems that, when requested by customers, ouremployees think "even if profit from this project is low, our futurebusiness will be expanded by working on the project" and as aresult, they make unprofitable investments.

Tsuda: Recently, the idea of
production reform has

Kawahara: My evaluation is similar to Mr. Tsuda’s. In the event ofa global pandemic, the Central Headquarters, headed by

65 NTN Report 2020

Messages from New Outside Directors

Tomonori Nishimura
Former Executive Vice Presidentof NEC Corporation,
Business Owner of NT Consul Biz.

Topic 5

Challenges for the Next Generation
What issues remain to be addressed in response to the newcoronavirus infections? What initiatives will you take inanticipation of the next era?
Tsuda: The risk management system has been in place, but if you
ask whether we have assumed the outbreak of infectious
diseases such as the new coronavirus, we made no detailed
assumption about such situation. Nevertheless, we believe that
NTN has been able to respond smoothly, including ensuring thesafety of its employees and promoting telework, by immediately
establishing the Central Headquarters. I would like to assign apassing score to our first-stage response to manage this crisis.

Tsuda and Kawahara: Despite challenging results in the fiscal
year ended March 2020, we intend to increase corporate value by
selecting and concentrating our businesses. As discussed in thistalk, NTN's revitalization is progressing steadily through thepromotion of governance reforms and other measures. We willcontinue to check management as Outside Directors and fully
support the progress of NTN.

Yuriya Komatsu
Director of DWANGO Co., Ltd.,
Adviser of Otsuka ChemicalCo., Ltd.

In my previous job, I shared goals with customers and created new value together with a variety of stakeholders as an
Executive Officer of the business division. Appointed as an Outside Director, I will commit to contribute to NTN's new"value creation" and "brand power enhancement" by sharing the goal of "sustainable growth" with our shareholders
and linking the diverse assets hidden in the Company with the desperate needs of society.
Japan is one of the world's most advanced countries in terms of decreasing birthrate and aging population. In
other words, Japan is a "developed country with various issues." In recent years, the environment surrounding society
has changed dramatically, such as large-scale disasters and the outbreak of new coronavirus infections. Rather thansimply streamlining operations and conducting immediate work style reform, we need to pass on techniques to thenext generation corresponding to aging of workers, and accelerate management by effectively using AI through theuse of IoT. These measures are essential for “sustainable growth." In addition, with a view to the global challenge of theaging society that each country will face in the future, I believe that the interests of our shareholders will be created by
identifying our own ways of value creation together with our business divisions and creating social value in new
business fields through industry-government-academia collaborations and cross-industry exchanges.

In the past, corporate governance had the same meaning as being "shareholder-oriented." However, reflecting on theharmful effects of being shareholder-oriented, the importance of ESG management has increased. I believe that thepresent corporate governance is to promote management by pursuing sustainable growth while considering balancesamong stakeholders (shareholders, employees, customers, society, etc.).
I have been analyzing, evaluating and investing in Japanese and Asian companies as a member of an institutional
investor for more than 20 years in Japan and the U.S. At the time, I felt that the overemphasis on shareholders’interests, which began in the U.S., would have a negative impact on long-term corporate growth, so I left the financial
sector. Subsequently, as an Executive Officer and Director in operating companies, I have been involved inmanagement by seeking a balance between the interests of stakeholders, as I have experienced difficulties inmaintaining the perspective of shareholders while satisfying the interests of other stakeholders. I would like toleverage my experience as an investor and Executive Officer/Director of operating companies to contribute toimproving the Company’s corporate governance and corporate value from a perspective that differs from that of
Inside Directors.
The global epidemic of new coronavirus infections is a major challenge for our business management, but it is also amajor opportunity. At an IT company where I serve as a Director, approximately 80% of the employees have shifted topermanent telework, and they are promoting the following measures: digitization of operations that had been
performed by using paper documents, such as contracts and expense settlements; review of operational procedures;and streamlining through the use of AI. NTN has also been tackling the same issue of transformation, so I will share theknowledge and work to promote its digital transformation (DX).

NTN Report 2020

Company/Stock Information

Tsuda: Weak cost competitiveness tends to lead to such ideas. If amanufacturer's requirements are not consistent with ourstrategy, we can reject them, can’t we? I believe it is mostimportant to overcome the weaknesses of our company and tobuild up strength that surpasses that of our competitors. To thisend, I believe that the ultimate issue is to what extent we canmake rationalization efforts, including production reform andsales reform.

Kawahara: Returning to the topic of capital investment, weshould allocate budgets to "investment for renewal of aging
facilities" and "investment for rationalization leading to reduced
fixed cost," which have not been sufficiently carried out until
now. Even if the scale of the budget for capital investments
shrinks, partly due to the impact of the new coronavirus, theseinvestments may contribute to lowering the break-even point. If
you use old equipment, it seems that the cost is kept down at afirst glance. However, problems arise, such as quality issues or
low productivity. I believe that we need to implement control
measures so that such problems do not occur.

Tsuda: With regard to materiality, it may be a good idea to startwith work with a rough design and update it according to thesituation, instead of trying to create well-designed work from the
beginning. Also, I believe that it is most important for top
management to understand the significance of the issue.
Materiality will also be factored into the medium-term
management plan.

Financial Data

Kawahara: Recently, investment is no longer permitted unless areasonable explanation is given, including estimates of revenues
and expenses and growth potential of the market. At last, wehave shifted our focus from scale to cash flow and profit. I believethat this is the result of effects exhibited by the "horizontal axis"
such as Finance Headquarters, Corporate Strategy Headquarters,
Production Headquarters, and CSR Headquarters. I feel that theidea of overall optimization is taking root with priorities based on
the “horizontal axis taken into account,” and the idea of individual
optimization at business divisions is being discarded. I myself
believe that the highest priority should be given to cash flow.
One of the major reasons why investment doesn't generate cash
is that inventories are notquickly reduced, as
mentioned earlier. I believethat the reason why
inventories do not decreaseis that the Company has its
own pre-manufacturing
processes. In principle,
having pre-manufacturing
processes should result in
the retention of income,but the problem is that aburden of investment andinventory is greater than
the income.

Tsuda: I think what position NTN will take in terms of the supply
chain is a very important issue in light of the turbulent social
situation. We need to consider the issue, considering theconfrontation between the U.S. and China, which has surfaced inrecent years.

Kawahara: From a longterm perspective, NTN isproceeding with theidentification ofmateriality. This is an
important task for NTN tocontinue to be a company
needed by society.

ESG Strategies

Tsuda: That's right. We (Directors) are also responsible fordeteriorating performance, and we have made strict evaluations
and assessments in terms of personnel affairs and compensation,
by taking measures such as reducing compensation. The issue iswhat direction to take in the future. How will you improve yourbusiness performance after you have overcome the impact of the
new coronavirus? Currently, we are formulating the next
medium-term management plan, and it does matter how
Outside Directors will commit to it.

Tsuda: With regard to the difficulty of “stopping operations” I
mentioned earlier, we already have a long manufacturing
process, and the Company clung to the idea of having allprocesses on its own and plunged into a situation where it had a
lot of inventory as intermediate goods. Even when operations
were stopped, because the entire production process is long,
inventories are accumulated in respective sub-processes. In orderto resolve this issue, we have begun efforts to reform production
so that we do not have intermediate goods.

Tsuda: If Executive Officer
provides in-depth
explanations to workers at
the site, I believe that wewill be able to respond
more quickly to the issues
that Mr. Kawahara
mentioned. We can saythat now is the time for
improvement.

Business Strategies

Kawahara: While sales did not grow in the previous fiscal year, aburden was imposed on us due to the establishment of a newplant in Wakayama Prefecture. However, this was for the purposeof anti-seismic measures and production restructuring, and must
be seen to the end. As Mr. Tsuda said earlier, the "vertical axis" ofthe vertically-divided system of business divisions exhibitedstrong effects, and the divisions’ idea of "investment must be
made because the project has been decided" took precedence,with the initial estimates being too optimistic and the ex-post
verification of returns being not properly carried out. In such acase, I think we were not able to discuss whether to continue thebusiness, whether to stop it, and how to control it. I would like toconfirm once again how to follow up on capital investment.

Kawahara: That's right. We certainly suffered a great deal of
losses, but these are due partially to reforms involving "bleeding,"
which we couldn't carry out in the past, and I feel confident
about our efforts in that respect. Rather than pursuing making
the “scale” larger, future investments should be made after
judging “whether or not you can reliably gain profit,” andinvestments that have already been made need to be verified
after the fact. As a full-time Outside Director, I will strongly
recommend such measures in the future.

President, has been able to collect information and manage
various measures in a unified manner, with the highest priority
promptly placed on the health and safety of employees. Our
measures to promote work style reform and introduce
telecommuting under the leadership of the Personnel
Department have also helped us respond to the pandemic
successfully. In the future, I think it is important to summarize theissues that have surfaced, such as overtime management andevaluation systems, and incorporate solutions to such issues into
our systems. In addition, while the Procurement Headquarters isfollowing up on the maintenance of the supply chain, it isnecessary to carefully determine the extent of impacts of the
new coronavirus. In addition, because our financial position
significantly worsened, we must be aware of the increasingly
unfavorable evaluation of our company by society, and fulfill our
accountability to explain our current situation and goals to all
stakeholders, as we strive to produce results in a reliable manner.

NTN Revitalization Story

Tsuda: The results for the fiscal year ended March 2020 were
extremely unfortunate. The cash flow from capital expenditures
was not in line with our expectations, causing a divergence
between our initial expectations and actual results. In addition,
we posted impairment losses due to the impact of the the newcoronavirus (COVID-19).

been accepted, and the idea of reducing and downsizing the premanufacturing processes through outsourcing and fablessmodels is being adopted.

About Us

Topic 466

ESG strategies

Officers(As of July 30, 2020)

About UsNTN Revitalization Story
Business Strategies
ESG Strategies
Financial Data
Company/Stock Information

From the left in the back row

Director

Director

Director

Director

Director

Director

Masaki Egami

Eiichi Ukai

Hiroshi Ohkubo

Hideaki Miyazawa

Toshinori Shiratori

Keiji Ohashi

Executive Officer

Representative Executive Officer,
Managing Executive Officer

Representative Executive Officer,
President, Executive Officer

Representative Executive Officer,
Senior Managing Executive Officer

Managing Executive Officer

Outside Director

Outside Director

Outside Director

Outside Director

Outside Director

Yuriya Komatsu

Noboru Tsuda

Kouji Kawahara

Ryo Kawakami

Tomonori Nishimura

67 NTN Report 2020

NTN Report 2020

68

ESG strategies

Officers (As of July 30, 2020)
About Us

Directors

Members of Nominating Committee

Name

DirectorAge

67 years old(born on May 14, 1953)

Hideaki Miyazawa

Director

59 years old(born on October 18, 1960)

Director

63 years old(born on February 1, 1957)

Toshinori Shiratori

Director

62 years old(born on July 13, 1958)

Masaki Egami

Director

62 years old(born on December 26, 1957)

Director

63 years old

Number of Company’s
Shares Held

(Fiscal year ended March 31, 2020)(As of March 31, 2020)

Board of Directors
14/14
Nominating Committee
5/ 5Compensation Committeee 4/ 4

6 years 100% Board of Directors

14/14

3 years 100% Board of Directors

14/14

5 years 100%

14/14
4/ 4

Board of Directors
Compensation CommitteeNew
appointment

113,600 shares

69,800 shares

54,100 shares

43,300 shares

15,900 sharesNewappointment

109,200 shares

Served as Director

7 years from(born on October 14, 1956) for
June 2012 to June
2019

Noboru Tsuda

Outside Director

70 years old(born on November 25, 1949)

4 years 100%

Board of Directors
Nominating Committee
Compensation Committee

Kouji Kawahara

Outside Director

59 years old(born on February 3, 1961)

Ryo Kawakami

Outside Director

52 years old(born on October 1, 1967)

5/ 5
10/10

Board of Directors

14/14(including attendance as
Audit & Supervisory Board
Member)1 years 100% Audit Committee

65 years old(born on November 5, 1954)

Yuriya Komatsu

Outside Director

57 years old(born on October 18, 1962)

69 NTN Report 2020

New
appointment

Newappointment

0 shares
10/10
4/ 4

Mr. Hideaki Miyazawa possesses operational experience in areas such as theBusiness Division for the automotive market and Overseas Division, and broad
knowledge based on these achievements, among others. The Company selects him
with an aim to continuously improve corporate value, utilizing his experience andknowledge, etc. for management.
Mr. Eiichi Ukai possesses operational experience in areas such as the Quality
Assurance Division and Overseas Division, and broad knowledge based on theseachievements, among others. The Company selects him with an aim tocontinuously improve corporate value, utilizing his experience and knowledge, etc.
for management.
Mr. Toshinori Shiratori possesses operational experience in areas such as the Human
Resources Division and Corporate Strategy Division, and broad knowledge basedon these achievements, among others. The Company selects him with an aim tocontinuously improve corporate value, utilizing his experience and knowledge, etc.
for management.

Mr. Noboru Tsuda possesses broad knowledge, etc. based on extensive experiencein the management of other companies. The Company selects him with an aim tosecure validity and legality of management and continuously improve corporate
value through appropriate advice and suggestions from an independent
standpoint, utilizing his experience and knowledge, etc.
Mr. Kouji Kawahara possesses extensive experience in banking over many years andbroad knowledge including finance, among others. The Company selects him withan aim to secure validity and legality of management and continuously improve
corporate value through appropriate advice and suggestions from an independent
standpoint, utilizing his experience and knowledge, etc.

Mr. Ryo Kawakami possesses broad knowledge, etc. based on extensive experience
as a lawyer familiar with corporate legal affairs. The Company selects him with an
aim to secure validity and legality of management and continuously improve
corporate value through appropriate advice and suggestions from an independent
standpoint, utilizing his experience and knowledge, etc.

0 sharesMr. Tomonori Nishimura possesses broad knowledge, etc. based on extensive
experience in the management of other companies. The Company selects him withan aim to secure validity and legality of management and continuously improve
corporate value through appropriate advice and suggestions from an independent
standpoint, utilizing his experience and knowledge, etc.

0 sharesMs. Yuriya Komatsu possesses extensive experience in financial institutions andother companies and broad knowledge including finance, among others. The
Company selects her with an aim to secure validity and legality of management
and continuously improve corporate value through appropriate advice andsuggestions from an independent standpoint, utilizing her experience andknowledge, etc.

Responsible

Hiroshi Ohkubo*

Representative
Executive Officer,
President, Executive
Officer

CEO (Chief Executive Officer)

Hideaki Miyazawa*

Representative
Executive Officer,
Senior Managing
Executive Officer

Corporate General Manager, Automotive
Business Headquarters
Procurement Headquarters

Yoshinori Terasaka

Senior Managing
Executive Officer

Europe & Africa Region
Americas Region

Eiichi Ukai*

Representative
Executive Officer,
Managing Executive
Officer

Aftermarket Business Headquarters
Industrial Business Headquarters
Quality Assurance HeadquartersNTN Korea Co., Ltd.
ASEAN, Oceania & West Asia Region
India Region

Managing Executive
Officer

Human Resources
CSR Headquarters
Information Technology Department
General Affairs Department
EHS (Environment, Health and Safety)
Integrated Management Department

Executive Officer

CTO (Chief Technology Officer)
Research Division
New Product and Business Strategic Planning
Headquarters
Green Energy Products Division

Isao Ozako

Executive Officer

Corporate General Manager, Production
Headquarters
Production Engineering R&D Center
Composite Material Product Division

Masayuki Kaimi

Executive Officer

Supply & Demand Center
Cost Planning Department
China Region

Koji Kametaka

Executive Officer

Deputy Corporate General Manager,
Automotive Business Headquarters
General Manager, Electric Module Products
Division
EV Module Division

Tetsuya Sogo

Executive Officer

CFO (Chief Financial Officer)
Corporate General Manager, Finance
Headquarters

Masaaki Yamamoto

Executive Officer

Corporate General Manager, Corporate
Strategy Headquarter

Toshinori Shiratori*

Mr. Masaki Egami possesses operational experience in areas such as theEngineering Division and Research Division, and broad knowledge based on theseachievements, among others. The Company selects him with an aim tocontinuously improve corporate value, utilizing his experience and knowledge, etc.
for management.
Mr. Keiji Ohashi possesses operational experience in areas such as the Finance
Division and General Affairs Division, and broad knowledge based on theseachievements, among others. The Company selects him with an aim tocontinuously improve corporate value, utilizing his experience and knowledge, etc.
for management.

Title

Masaki Egami*Company/Stock Information

Outside Director

32,500 shares

Audit Committee

Compensation Committee

Tomonori Nishimura

14/14(including attendance as
Audit & Supervisory Board
Member)1 years 100% Nominating Committee

21,100 shares

Mr. Hiroshi Ohkubo possesses operational experience in areas such as the Finance
Division and Overseas Division, and broad knowledge of the management of theCompany promoting business globally based on these achievements, among
others, and has served as President and Director of the Company since June 2014
and as President, Executive Officer of the Company since June 2019. The Company
selects him with an aim to continuously improve corporate value, utilizing his
experience and knowledge, etc. for management.

NameFinancial Data

Board of Directors

14/14
5/ 5
4/ 4

Reason for Selection

ESG Strategies

Keiji Ohashi

Number of Board of Directors andCommittee Attended

8 years 100%

Executive Officerss

Chairperson of each committee

Business Strategies

Eiichi Ukai

Years ofService as
Director

Members of Compensation Committee

NTN Revitalization Story

Hiroshi Ohkubo

Title

Members of Audit Committee* Executive Officers concurrently serving as Directors

NTN Report 2020

70

ESG strategies

Corporate Governance

GovernanceFiscal year ending March 31, 2021 (As of July 30, 2020)

Basic Approach

Nominating
Committee

Director
Hiroshi Ohkubo
Hideaki Miyazawa
Eiichi Ukai
Toshinori Shiratori
Masaki Egami
Keiji Ohashi
Noboru Tsuda(Non-standing)Kouji Kawahara
Ryo Kawakami(Non-standing)Tomonori Nishimura(Non-standing)

Yuriya Komatsu(Non-standing)* Please note that persons with are Outside Directors, persons with
with are members of committees.

Corporate governance structure (as of July 30, 2020)

Inside Director

5 Management Meeting

Appointment/
removalof Executive 0fficers

Advise5 Management

Delegate/supervise

Meeting(Decision-making
support)2 Nominating Committee

Report/propose1 Board of Directors(Supervise the execution of duties of Directors and Executive Officers)(Decide the management policy, etc.)

ReportExecutive
Officers

Appointment/removal ofmembers of committees

ReportReport2 Nominating Committee
Direct6 Executive

Officers Meeting

Sustainability Committee
Risk Management Committee
Compliance Committee

Basic information

Directors

11

1 yearExecutive Officers

11

 f those, Executive
O
Officers who have theauthority ofrepresentation

3

Executive Officers
concurrently serving as
Directors

5

Structure to support duties Available (Audit Preparationof Audit Committee
and Support Office)71 NTN Report 2020

Audit

5

Term of office of Directors

Audit Preparation
andSupport OfficeDirectReportInternal Audit
Divisions

DirectReportCooperate

The Audit Committee audits the execution ofduties of Directors and Executive Officers,
and decides on the content of a proposal
regarding appointment/removal of theaccounting auditor, which is submitted to
the General Meeting of Shareholders. The
majority of the members are Outside
Directors. Three out of the four members of
the committee are Outside Directors, andthe committee is chaired by an Outside
Director.
Also, the Audit Preparation and Support
Office is established as an organization
dedicated to support the duties of the Audit
Committee, including Secretariat of Audit
Committee. Regarding matters relating toappointment, personnel relocation,
disciplinary punishment, evaluation, etc. ofstaff of the Audit Preparation and Support
Office, the approval from the Audit
Committee shall be required for decision.

4 Compensation Committee

Company/Stock Information

Company with Nominating
Committee, etc.

Accounting auditor

3 Audit Committee

Audit

Fair Trade Monitoring Committee

Organizational design

 those, independentOf
Outside Directors

4 Compensation Committee(Sharing information)

3 Audit Committee

Financial Data

ReportAccounting auditor(audit firm)

Executive Officers
Executive Officers are elected by the
resolution of the Board of Directors, and arein charge of executional decision making
and execution of operations delegated by
the Board of Directors. Its term of office is
specified as a year by the Articles ofIncorporation. The number of Executive
Officers is 11 as of July 30, 2020.

The Nominating Committee decides on thecontent of a proposal regarding
appointment/ removal of Directors, which is
submitted to the General Meeting of
Shareholders. The majority of the members
are Outside Directors. Three out of the fivemembers of the committee are Outside
Directors, and the committee is chaired byan Outside Director.

ESG Strategies

The Executive Officers Meeting is held byPresident, Executive Officer under theattendance of all Executive Officers. Matters
resolved at the Board of Directors are
instructed, and each Executive Officer
reports about the status of operational
execution. This meeting is held once amonth in principle, to make operational
execution more efficient and effective bysharing information among Executive
Officers.

[Supervision Organization]

Representative
Executive Officer
President,
Executive Officer

Chairperson

Shareholders
Appointment/
removalof Directors[Execution Organization]

Outside Director

Appointment / removal

6 Executive Officers Meeting

General Meeting of

are Chairpersons of committees, and persons

Business Strategies

The Management Meeting discusses
important matters relating to operational
execution, as a supporting body for decisionmaking of President, Executive Officer. The
meeting is composed of President, Executive
Officer, and Executive Officers who aredesignated by him, and held twice a monthin principle.

Compensation
Committee

The Board of Directors decides the basic
management policies, and supervises theexecution of duties of Directors andExecutive Officers. Except matters
stipulated by laws and regulations or the
Articles of Incorporation to be resolved at
the Board of Directors, the Board of
Directors delegated substantial authority to
Executive Officers with the aim tostrengthen the supervision of management,
and make decisions more promptly.
The Board of Directors is held once amonth in principle, but it is also held
flexibly as needed.
The Articles of Incorporation specify thatthe term of office of Directors shall be one
year, and the number of Directors shall bewithin 15. The number of Directors is 11 asof July 30, 2020, and five of them are
Outside Directors. The Board of Directors ischaired by Director, President, Executive
Officer.

NTN Revitalization Story

Shareholders held on June 25, 2019 (for the fiscal year ended
March 31, 2019). The purpose of this transition is to establish
a prompt decision-making structure and operational execution
organization, strengthen the supervision of management, andimprove management transparency and fairness. Under thisstructure, we will work on further improvement of corporate
value over the medium- and long-term.

Strengthening and enhancing our corporate governance is
one of our top management priorities. We take steps to makemanagement more efficient and robust while working toincrease management transparency by disclosing information ina prompt and accurate manner to shareholders and investors.
We made a transition from a Company with Board ofCompany Auditors to a Company with Nominating Committee,
etc. upon the approval of the 120th General Meeting of

Audit
Committee

About Us

1 Board of Directors

Members composing Nominating Committee, Audit Committee,
and Compensation Committee

The Compensation Committee decides on
the policy for compensation for Directors
and Executive Officers, and details ofcompensation for individual persons. The
majority of the committee are Outside
Directors. Three out of the five members of
the committee are Outside Directors, andthe committee is chaired by an Outside
Director.

Audit

Ernst & Young ShinNihon LLC
NTN Report 2020

72

ESG strategies

Corporate Governance

Governance

About Us

Governance-strengthening transition

Nominating Committee

Start of Operating Officer SystemT he Board of Managing Directors is reviewed andrenamed as the Business Strategy Committee

2015

Compliance Committee is establishedTheeffectiveness of the Board of Directors is
assessed

Members, the number of meetings, and attendance

2006

CSR Committee is established2016

 ompensation Advisory Committee isCestablished

Noboru Tsuda

2008

Risk Management Committee is established n Outside Director is appointed for the first
A
time

2018

New corporate philosophy system is establishedT he number of Outside Directors is increased
from 1 to 2

2019T ransition to a Company with Nominating Committee,etc.
T he number of Outside Directors is increased from 2 to 5
Sustainability Committee is established

Fair Trade Monitoring Committee is established

2020

2011
2012

ours will supervise management. This will enable us to integrate
diverse values and accelerate transformation aimed at achieving
sustainable growth.

Hiroshi Ohkubo
Hideaki Miyazawa
Eiichi Ukai
Toshinori Shiratori

Manufacturing

Technology
and R&D

MarketingCorporate
and businessplanning

Outside Director

100%

5 times/5 times

Kouji Kawahara

Outside Director

100%

5 times/5 times

Akira Wada*

Outside Director

100%

5 times/5 times

Hiroshi Ohkubo

Director

100%

5 times/5 times

Hironori Inoue*

Director

100%

5 times/5 times

Chairperson* Retired at the conclusion of the General Meeting of Shareholders in the fiscal year ended March 31, 2020

Finance andadministration

Legal affairs,
internal
controls,
compliance

Globalexperience

Experienceof otherindustries,
diversity

Discussions on Nominating Committee
The Nominating Committee was established in conjunction withthe transition to a Company with a Nominating Committee, etc.
The committee was held five times in total in the fiscal year
ended March 31, 2020, with discussions held and resolutions
made mainly on the standards for selection of Directors, skill
matrix related to standards for selection and the standards
regarding the independence of Outside Directors.
About Outside Directors
We made a transition from a Company with a Board of Company
Auditors to a Company with a Nominating Committee, etc. upon
the approval of the General Meeting of Shareholders for the
fiscal year ended March 31, 2019. The Board of Directors consistsof 11 members, including six Inside Directors and five Outside
Directors, and the ratio of Outside Directors is 45%. The purposeof this transition is to strengthen the supervision ofmanagement and improve management transparency andfairness. In addition, in order to ensure appropriate corporate
governance, we have established our own standards regarding
the independence of Outside Directors, stipulating qualificationand independence standards for them. This standard is used forappointing Outside Directors. Also, all the Outside Directors aredesignated as independent Officers as defined by the rules ofTokyo Stock Exchange, Inc. (TSE), and are reported to TSE.
For Outside Directors, we have established an environment
where the secretariat or any other party explains the issues asappropriate prior to the Board of Directors so that active
discussions can be made at the Board of Directors. Moreover, we
continuously provide information necessary for Outside Directors
to effectively fulfill their roles and responsibilities by creating
opportunities to deepen their understanding of our businessthrough on-site tours of business sites and other means.
Background

Keiji Ohashi
Noboru Tsuda
Kouji Kawahara
Ryo Kawakami
Tomonori NishimuraManagement (2 persons)Outside Director

45%

Financial institutions (2 persons)Lawyer (1 person)

Standards for Selection of Directors• Must be in good condition both physically andmentally.
• Must have a high sense of ethics and a law-abiding
spirit.
• Must be able to engage in constructive discussion froman objective viewpoint.
• Must be highly motivated to improve their abilities.
• Must have excellent decision-making skills from acompany-wide and medium- to long-term perspective.
• Must have excellent insight and foresight concerningchanges to the overall environment and to society.
• Must have a sufficient record of performance andexpertise in relevant fields. (Corporate manager orexpertise)Company/Stock Information

Masaki Egami

Standards for Selection of Directors
The selection of candidates for Directors will be determinedbased on standards for selection of Directors described below,
considering the gender and international diversity and balanceof the Board of Directors as a whole, after careful deliberation in
the Nominating Committee. The appointment of an Executive
Officer shall be also determined after careful deliberation by the
Board of Directors, including Outside Directors,
comprehensively considering whether they possess
personalities, insights, capabilities, experience/performance, etc.
that are appropriate for fulfilling their duties. In addition, if it
becomes clear that an Executive Officer lacks the required
qualifications, he/she will be promptly dismissed by the Boardof Directors, including Outside Directors.

Financial Data

Main areas of experience required of Directors
Corporate
management

Number of attendances

ESG Strategies

Assessment of effectiveness of the Board of Directors
We conducted a self-assessment of the Board of Directors bysending out questionnaires to Directors from the viewpoints
such as role/structure/management of the Board of Directors
and management of committees. The result was generally
positive, but there were comments regarding a succession planof top management (CEO) and others. Based on those,
discussions were held on future actions and others at the Boardof Directors. We will continue to analyze and evaluate theeffectiveness of the Board of Directors on a regular basis tomake improvements.

The main areas of experience of Directors (Skill matrix)

Name

AttendanceBusiness Strategies

Appointment of the first female Director
Upon the approval of the General Meeting of Shareholders in
the fiscal year ended March 2020, a female Director (Outside
Director) was newly appointed for the first time at the Company.
The female Director with experience in a different industry than

Title

Woman appointed as an Outside Director

Board of Directors
Approach of Board of Directors
Directors other than Outside Directors are appointed from awide range of fields, including manufacturing, marketing,technology, and administrative divisions. In addition, Outside
Directors are appointed after considering diversity and balance,such as being a person with knowledge of finance, experienced
management, and being a lawyer. We believe that the current
number of Directors is an appropriate size for strengthening
corporate governance and expanding our global businesses.

Name

NTN Revitalization Story2004• Outside Directors must (1) have sufficient time toaccomplish their duties, (2) satisfy the standards
regarding the independence of Outside Directors,(3) ensure diversity between the Outside Directors, and(4) have the requisite abilities to accomplish duties as amember of any of the three Committees.

Yuriya Komatsu

73 NTN Report 2020

NTN Report 2020

74

ESG strategies

Corporate Governance

Governance

About Us

Audit Committee
Members, the number of meetings, and attendance
Name

Attendance

Number of attendances

Outside Director

100%

10 times/10 times

Tadao Kagono*

Outside Director

90%

9 times/10 times

Ryo Kawakami

Outside Director

100%

10 times/10 times

Hironori Inoue*

Director

100%

10 times/10 times

Compensation Committee
Kouji Kawahara

Members, the number of meetings, and attendance
Name

Number of attendances

Outside Director

100%

4 times/4 times

Noboru Tsuda

Outside Director

100%

4 times/4 times

Ryo Kawakami

Outside Director

100%

4 times/4 times

Hiroshi Ohkubo

Director

100%

4 times/4 times

Toshinori Shiratori

Director

100%

4 times/4 times

Chairperson

Chairperson

NTN Revitalization Story

Attendance

Akira Wada*

Title

Title

* Retired at the conclusion of the General Meeting of Shareholders in the fiscal year ended March 31, 2020

* Retired at the conclusion of the General Meeting of Shareholders in the fiscal year ended March 31, 2020

Compensation Advisory Committee (April 1, 2019 -June 24, 2019)
Performance of BIP Trust Results for compensation of Officers

2ndBonus for Directors
FY2019 summer bonus for Executive Officers
Discussion on composition and amount of compensation for Officers
Revision of stock issuance regulations and internal regulations
concerning BIP Trusts for compensation for Officers

Basic compensation
6

Performance-linked
compensation
Annualincentives

Medium- andlong-term incentives

4

Basic compensation

Basic compensation shall be determined based on a relevant
Executive Officer's role and increased in the case of, for example,
Executive Officers who have the right to represent.
Performance-linked compensation

Compensation Committee (June 25, 2019 - March 31, 2020)

2nd

Reduction of compensation for Directors and Executive Officers
Validation for level and structure of compensation for Directors, Executive
Officers, and Operating Officers
2019 winter bonus for Executive Officers

3rd

Performance targets of BIP Trust for compensation for Officers in line withrevision of Medium-Term Management Plan
Prerequisites for bonus payment for Executive Officers
Compensation for Directors and Executive Officers for the next fiscal year
Bonus for Executive Officers

4thCompensation for Directors and Executive Officers for the next fiscal year

75 NTN Report 2020

Medium- and long-term incentives
The Company’s shares shall be issued based on the achievementlevel of major target figures in the Medium-term Management
Plan (money equivalent to the converted amount of shares shallbe paid for a certain portion) as incentives to motivate them toachieve the targets in the Medium-term Management Plan andcontribute to raising shareholder value, and in order to promote
the holding of the Company’s shares.
Medium- to long-term performance targets include key
performance indicators (consolidated operating margin,consolidated net sales, etc.) that take into account theCompany's management policies.
Compensation for Directors
Compensation for Directors consists of basic compensation,
which is a fixed compensation. Basic compensation shall becalculated taking into account concurrent duties of an Executive
Officer, whether a Director works full-time or part-time, thecommittees to which a Director belongs, and his/her role.

Compliance Committee
The Compliance Committee, chaired by Executive Officer incharge of CSR Headquarters (Overall Control Administratorof Compliance Promotion Activities), handles global
compliance risks, excluding violation risks of the AntiMonopoly Act and the Subcontracting Act. The committee
members are comprised primarily of the heads of related
risk management divisions. The committee members
formulate and implement risk mitigation measures incooperation with the Compliance Promotion Activities
Supervisors appointed at each business unit in Japan andthe Internal Control Section established at each Office of
the General Manager in 5 overseas regions, and report tothe committee on action plans and the status of
implementation. The committee deliberates on thecontents of them and reports the findings to Board of
Directors.

Risk Management Committee
We have established the Risk Management Committee,
chaired by Executive Officer (Executive Officer in charge ofrisk management), who is responsible for the Global Risk
Management Department, as an advisory body on risk
management to prevent risks from occurring and minimize
damage in the event of a crisis. The committee consists ofthe general managers of the promotion department of risk
management, responsible departments in subsidiaries. The
committee regularly checks the situation of risks
surrounding the group, and formulates the group-wide risk
management plan and discusses matters such as the BCP/
BCM. The result of discussion at the Risk Management
Committee is reported to Board of Directors andinstructions are fed back to the relevant departments.
Fair Trade Monitoring Committee
The Fair Trade Monitoring Committee is chaired byPresident, Chief Executive Officer and consists of Executive
Officers in charge of sales and procurement divisions,
Outside Director, external lawyer and so on. In principle, thismeeting is held twice a year to discuss the implementationplans and the performance reports for compliance with the
Antimonopoly Act and the Subcontracting Act, and toprovide supervision and guidance on effective control for
fair trade practices along with education and awarenessraising activities. In addition, we have established the Fair
Trade Promoting Department in CSR Headquarters as an
overall supervisory department for antimonopoly
compliance. Under the direction of the Fair Trade
Monitoring Committee, the department conducts
education, instruction, audit and other activities for relevant
divisions. Furthermore, overseas subsidiaries are monitored
for the implementation status of antimonopoly compliancein cooperation with the Internal Control Section, within
Office of the General Manager in each region.

NTN Report 2020

Company/Stock Information

Policies for determining the amount, or method of calculation,of compensation, etc., for Officers
The system and level of compensation for Officers, compensation
specified for each individual, etc. are determined in theCompensation Committee chaired by an Outside Director using
objective information including the level and trends of othercompanies as reference. Compensation for Executive Officers
and compensation for Directors are determined separately, and if
a Director also serves as an Executive Officer, thosecompensations are added up.

Annual incentives
The payment amount shall be decided in consideration of thestatus of progress of measures for achieving key targets for each
Executive Officer, on the basis of the performance level in theapplicable fiscal year.

Sustainability Committee
The Sustainability Committee is chaired by Executive
Officer responsible for CSR Headquarters, and is vicechaired by corporate general manager, with members
consisting of the heads of ESG-related divisions. Each
employee in our group should promote sustainability
activities based on the 3 fundamental principles of our
Corporate Philosophy, CSR Basic Policy, and Action ofBusiness Conduct in our day-to-day business activities.
The committee is responsible for identifying key issues(materiality) and establishing targets for achieving SDGs inorder to examine initiatives related to sustainability.

Financial Data

1st

Decision of the order of substitution for the chairperson in the event ofan accident
Policy for determining the amount, or method of calculation, ofcompensation for Officers
Individual compensation for Directors and Executive Officers
Signing a memorandum concerning the revision of stock issuance
regulations, internal regulations and the trust contract
Notice regarding for the revision of the system of BIP Trust forcompensation for Officers
Compensation Committee's annual activity plan

Overview of the Committees

ESG Strategies

1stCompensation for Executive Officers
Compensation for Executive Officers consists of basic
compensation, which is a fixed compensation, and performancelinked compensation, which fluctuates according toperformance. The ratio of basic compensation to performancelinked compensation is approximately 6:4 as a standard.

Audit Status
The Audit Committee members attend meetings of the Board of
Directors and other major meetings based on auditing
standards, policies, and plans determined by the Audit
Committee. The Audit Committee receives reports or hears from
Directors, Executive Officers, employees, etc. on the status of theexecution of their duties, and audits the execution of duties byDirectors and Executive Officers. In addition to the Board of
Directors and Executive Officers Meeting, members of the Audit
Committee attend and monitor the Risk Management
Committee, the Compliance Committee, and the Fair Trade
Monitoring Committee, which operate internal control systems.

Business Strategies

Discussions at the Compensation Committee
Following the transition to a Company with a Nominating
Committee, etc., we held the Compensation Advisory
Committee from April to June 2019 and the Compensation
Committee from June 2019 to March 2020. The Compensation
Committee aims to improve fairness, transparency, andobjectivity of procedures regarding the decision making ofcompensation for Directors and Executive Officers and enhance
corporate governance. Also, the committee passed resolutions
regarding the details of compensation (such as compensation
specified for each individual) of Officers.

Discussions at the Audit Committee
Following the transition to a Company with a Nominating
Committee, etc., we held meetings of the Board of Corporate
Auditors from April to June 2019 and meetings of the Audit
Committee from June 2019 to March 2020. Major items to be
discussed at the Audit Committee include the formulation of
the Audit Committee’s auditing standards, the formulation ofauditing policies and auditing plans, the evaluation of thecontent of auditing plans of the independent auditors, theassessment of the selection of independent auditors, and theassessment of the status of development and operation ofinternal control systems.

76

ESG strategies

Compliance

Governance

Basic approach to compliance

Major actions to enhance compliance
Category

Developmentof Structures/
Policies/Rules

Compliance promotion structure

2015/04

Compliance Committee is held (twice a year)

2015/04“NTN CSR Procurement Guidelines” forbusiness partners, including compliance
contents are issued

2016/04

July 26 is designated as “Compliance Day” anda message from President is delivered to all
NTN Group employees (once a year).

2016/07

Topic-specific training for important
departments which especially need to be
familiar with compliance by the Legal Dept.,
the Fair Trade Promoting Dept., Etc. (asneeded)2012/01

Compliance training for Operating Officer isimplemented (as needed)

2012/08

Rank-based compliance training for new
managers, new employees, Etc. by the Legal
Dept. (as needed)

2015/04

Original compliance training for each business
unit by compliance promotion activities
supervisors is implemented (as needed)

2015/04

Mass training meeting for compliance promotion
activities supervisors, and persons in charge by
the Legal Dept. is implemented (once a year)

2015/04

A President's usual attitude
on complianceE

Compliance Committee

Compliance promotion
activities supervisor of
NTN business units /Domestic subsidiaries

NTN's Compliance, which is a database forsharing compliance related information,such as compliance-related incidents andintroduction of compliance promotion
structure is operated

2016/08

E-learning program about corruption
prevention and antimonopoly laws is
implemented (once a year)

2017/04

Audits on antimonopoly compliance are
implemented

2012/11

Audits on rules for corruption prevention are
implemented

2018/05

Domestic subsidiaries

77 NTN Report 2020

Overseas subsidiaries

20
0

President’s decision-making
style

C
Corporate culture which
may lead to potential scandals

Initiatives in Japan
We have established and have been practicing in-house rules andregulations based on domestic and overseas anti-corruption laws,
generally accepted standards, and practices. In our in-house
regulations, they not only prohibit bribery from and to domestic
and overseas public officials and business partners, but also
specify the rules and procedures regarding provision of property
or profit by our officers or employees, and rules and proceduresto prevent bribery via our business partners. In addition, under
the circumstance that some countries even impose restraints on
the transfer of property or profit between private companies, wehave established rules and procedures for the receipt of property
or profit in order to prevent bribery by officers and employees, tothoroughly ensure the conduct of fair trade, and to prevent
conflicts of interest with officers and employees. Furthermore, we
made it policy to decline the provision of gifts and entertainment
from our business partners in principle.
We conduct in-house training and e-learning programs to raiseawareness of the contents of our in-house rules and regulations,and conduct self-audits once a year to ensure thoroughawareness of the relevant rules and regulations. Domestic
subsidiaries have also established and have been practicing theirown internal regulations that are consistent with our company
policies.

Chief Management Officer
Executive officer in chargeof Legal Department

Chief Management Officer
Executive officer in chargeof Legal Department

Chief Management Officer
President, Executive Officer

Compliance Committee

Helpline
Management Department:
Legal Department

Fair Trade
Monitoring Committee

Internal Helpline

External Helpline

NTN Group company officers, employees, business partners, Etc.

Antimonopoly compliance initiatives
We think that all antimonopoly violations represent a potential
risk for the whole NTN Group. To ensure thorough antimonopoly
compliance, the Fair Trade Promoting Department and theInternal Control Section in each region conduct education andawareness-raising activities related to antimonopoly compliancein accordance with local laws and the environment.
In addition, officers and employees are obliged to submit
advance applications and follow-up reports when there is apossibility of contact with competitors in any event, such as at
exhibits or meetings. Furthermore, we strengthen thecompliance system by conducting self-audits and internal
audits. Based on those results, each department proactively
plans and implements improvement measures.
We work to put fair and free competition into practice bycontinuing to upgrade our educational activities and raising theawareness of officers and employees.
NTN Report 2020

Company/Stock Information

Chairperson: President, Executive Officer
Secretariat: Fair Trade Promoting Department

Internal Control Section,
Office ofGeneral Manager
in five overseas regions

President's responseat the time ofoccurrence of incident

Corruption prevention initiatives

Officers
Employees
Fair Trade
Monitoring Committee

B

60
40

* Percentage of employees evaluated positively

Each business unitof NTN

Board ofDirectors

100
80

D

Structure

Chairperson: Executive Officer in charge
Secretariat: Legal Department

Communication with
President

Fiscal year ended
March 31, 2020
Average of48 companies

In Japan, the whistle-blower system called Helpline has been
established and operated with both in-house and outsidecontact points to provide consultation services regarding
violations of laws, Business Code of Conduct, and in-house
regulations. Helpline provides counseling services for cases suchas suspected violations of labor-related laws, includingharassment, as well as violations of in-house regulations, andconducts investigation in line with Helpline Management Rules
that stipulate ensuring the confidentiality and prohibition of
detrimental treatment against the whistle-blower. Through theintroductions in various compliance trainings and in the Code of
Conduct Guidebook, we have established a structure where all
employees can utilize Helpline, not only as a tool to reportmisconduct, but also as a means of raising questions, opinions,and complaints regarding the Business Code of Conduct, andmaintaining satisfactory relations between the company,
officers, employees, and business partners.
Whistle-blower systems are being progressively created andoperated also in overseas regions, where they are tailored to
local needs and circumstances.

Financial Data

Audit/
Monitoring
activities

Rules for management of compliancepromotion activities are establishedESG Strategies

Educational /Awarenessraising
activities

Commencement(YYYY/MM)

Helpline (whistle-blower system) andeducational activities

Business Strategies

We have established and been operating the Compliance
Committee and the Fair Trade Monitoring Committee topromote compliance through the activities of both committees.
(See page 76 for details of the activities of the two committees.)
Aside from the efforts made by the two committees, the Legal
Department in CSR Headquarters conducts the rank-based
training and the topic-specific training for officers andemployees as part of compliance-related educational andawareness-raising activities. In addition, we hold mass training
meetings for Compliance Promotion Activities Supervisors inJapan once a year. By sharing information and exchanging
opinions on important issues, we are enhancing the promotion
activities at each business unit and providing support for the
initiatives at each business unit. Furthermore, with regard toactivities for global compliance risks such as corruption
prevention, we regularly exchange information and opinionswith the Internal Control section at each Office of the General
Manager in the 5 overseas regions and legal/compliancedepartments of overseas subsidiaries, confirming each other’s
ongoing activities and setting new issues.
In addition, we have established the Fair Trade Promoting
Department in CSR Headquarters as an overall supervisory

Actions

NTN Revitalization Story

We believe that earning the trust of society is essential for us
to contribute to the realization of a sustainable society and tocontinue to be a company needed by society. Accordingly, weare placing importance on compliance in our Management
Policy. We formulated the Business Code of Conduct to specify
the policy of actions which officers and employees shouldobserve to conduct business activities in accordance with laws
and regulations and generally accepted standards andpractices in each country, and our internal rules. We have alsoestablished and been operating the compliance promotion
structure that includes rules relating to compliance, a whistleblower system, the Compliance Committee, and the Fair Trade
Monitoring Committee.

department for antimonopoly compliance. Under the directionof the Fair Trade Monitoring Committee, the department
conducts education, instruction, audit and other activities forrelevant divisions. Additionally, overseas subsidiaries aremonitored for the implementation status of antimonopoly
compliance in cooperation with the Internal Control Section,
within Office of the General Manager in each region.

As part of our anticorruption efforts, we are examining
employees’ assessment of the compliance-related attitudes ofdivision heads, affiliated companies’ presidents and other senior
executives.
It is said that improprieties within a company will be more
likely to occur when motivations, pressures, opportunities, andjustification triangles are met. It is important to develop rules
and penalties, and at the same time, to develop an internal
corporate culture and environment.
This survey focuses on the corporate culture and environmentand discloses the results of the survey to senior executives,
aiming to create a corporate culture that "does not cause fraud"
based on the awareness that fraud is constantly seen within thecompany and at the head office, and to form a better
compliance environment with employees.
In the fiscal year ended March 2020, we conducted a surveyof 1,600 employees in our manufacturing divisions and 2,100
employees from 48 subsidiaries (12 in Japan and 36 outside
Japan).

Initiatives in Overseas
Our overseas subsidiaries have developed and have been operating
in-house rules and regulations that are localized to reflect relevantlaws, regulations, and generally accepted standards and practices
in each country. They also conduct audit activities related to theserules and regulations as needed. The Legal Department is regularly
sharing information and exchanging views with the Internal
Control Section at each Office of the General Manager in eachregion on related initiatives, and coordinating the systems toprevent bribery across the whole group.

About Us

Compliance attitude survey

78

ESG strategies

Internal Control/Internal Audit

ESG strategies

GovernanceRisk Management

Governance
About Us

Internal audit activities

Basic approach to risk management

We recognize risk management and compliance as one of ourmost important managerial issues, and have established theInternal Control Policy.
Regarding internal control (Internal Control Report System)
under the Financial Instruments and Exchange Act, 50 domestic
and overseas companies of the Group and the Internal Audit
Department made an evaluation of internal control for the fiscal
year ended March 31, 2020 in compliance with the basic
framework for internal control set forth in the BusinessAccounting Council’s “Standards for Management Assessment
and Audit concerning Internal Control over Financial Reporting”
and “Practice Standards for Management Assessment and Audit
concerning Internal Control over Financial Reporting.”
More than 10 years have passed since the introduction of theInternal Control Report System, and in order to rebuild theevaluation structure, we are reviewing the scope of evaluationof business sites and business processes, and conducting
education activities at domestic and overseas business sites.
We will continuously develop the internal controls and makean operational evaluation appropriately, in accordance with
relevant standards, in response to changes in the businessenvironment.

In our company, the Internal Audit Department is in charge ofthe internal audit operation and the overall management
operation of the internal control system.
The Internal Audit Department, as an organization that is
independent of the executive organization, conducts internal
audits of the status of the execution of operations by eachdivision of the company and domestic and overseas groupcompanies from the view point of compliance with laws andinternal regulations, appropriateness, and the effectiveness andefficiency of business activities.
Based on the results of internal audits, we provide advice andrecommendations on improvements to the departments
subject to audits. We also confirm the status of implementationof improvement measures and conduct follow-up audits.
The findings of the internal audits are reported to President,
Executive Officer and the Audit Committee as needed.
Outside Japan, an Office of the General Manager has been
established in each region to oversee and monitor operations, eachhaving an Internal Control Section within it. The Internal Control
Section works with the Internal Audit Department and CSR
Headquarters to implement policies specific to each local region
and country or in accordance with local needs and characteristics.
The Internal Audit Department, the Audit Committee, and the
Accounting Auditor work to improve efficiency andeffectiveness of audit by regularly holding meetings andexchanging information and opinions about the policies, plans,
and results of audit.

We have developed the Risk Management Policy that outlines our basic approach to prevention and handling of risks that may hamper
the execution of the group’s business, and the Risk Management Regulations that set forth risk management organizations and their roles.
Through these measures, we promote group-wide risk management and BCP/BCM (Business Continuity Planning/Business Continuity
Management).
We convene the Risk Management Committee as an advisory body for risk management twice a year, to regularly check the situation ofrisk surrounding the group’s business, including changes in domestic and overseas circumstances. The committee also formulates a groupwide risk management plan and discusses measures such as the promotion of BCP and BCM. The results of the discussion at the Risk
Management Committee are reported to Board of Directors.

Subsidiaries

Audit Committee

Divisions

Cooperate

Internal Audit
Department

CSR
Headquarters

North America
Office of General Manager,
Americas Region

Internal Control Section

Internal Control Section

Subsidiaries

China
Office of General Manager,
China Region

Internal Control Section

Internal Control Section

Subsidiaries

Subsidiaries

ASEAN

Internal Control Section
Subsidiaries

Board of Directors
Reporting

Promotion of global risk management

Promotion of BCP/BCM

To promote worldwide risk management for the entire NTNGroup, we selected nine risks as Global Risks that are common
to both domestic and overseas subsidiaries and are expected tocause major impacts on management if they occur.
The management status of nine risks of domestic and overseas
affiliated companies is regularly monitored via our database,and we assess the status according to the global common
standards we have developed. Based on the assessment results,
we identify the current status of risk management in the Group
as a whole, and push ahead with necessary measures including
support for development of the internal rules.
With regard to global risks identified, the Risk Management
Committee conducts periodic revisions and checks on the risks
identified, taking into account changes in the environment.

We have been developing a BCP/BCM structure designed torespond to major earthquakes in Japan and are working tostrengthen our disaster response systems, including those of ourgroup companies.
By the fiscal year ended March 31, 2020, we have completed
the formulation of BCP to enable early disaster recovery at all
domestic production sites. We have also implemented BCP
training to assess the effectiveness of the formulated action plans
and take necessary advance measures. In doing so, we are moving
ahead with development of BCM.
As part of our supply chain management, we are also working
to develop a natural disaster risk assessment system and an audit
system for suppliers, and to formulate BCP at our logistics bases.

Global risks
1 Leakage of confidential
information
2 Computer virus /cyberterrorism
3 Violation of
antimonopoly law /competition law

Office of General Manager,
India Region

Office of General Manager, ASEAN,
Oceania, West Asia Regions

79 NTN Report 2020

Subsidiaries

Main matters • Risk situation and measures surrounding our group• Policy to handle critical risks
to be• Management status of “global risks”
discussed • Policy to handle BCP/BCM issues

4 Natural disaster5 Fire disaster / explosion
6 Issue of human rights
7 Industrial accident
8 Complaint about productquality
9 Violation ofbribery-related laws

BCP training

Response to the new coronavirus (COVID-19)
In response to the spread of the new coronavirus , weestablished the Central Headquarters with President, Executive
Officer as chief of headquarters to respond to emergencies.
Based on the basic concept shown below, we are promoting thenecessary measures globally. We will continue to closely monitor
the future situation and take appropriate measures.
1. Give top priority to ensuring the safety of employees andtheir families
2. Thorough precautions should be taken to prevent anincrease of infected persons as much as possible
3. Efforts are made to ensure customer business continuity
NTN Report 2020

Company/Stock Information

India

Information
Exchange
Human
Resources
Interaction

Affiliatedcompanies

Chairman: Executive Officer in charge of Risk Management
Secretariat: Global Risk Management Department
Members: Departments in charge of promotion of risk management,
responsible departments of affiliated companies

Financial Data

Europe/South America
Office of General Manager,
Europe & Africa Region

Composition

ESG Strategies

Japan

Risk Management Committee

Business Strategies

Global compliance structure

Structural diagram

NTN Revitalization Story

Basic approach to internal control

80

Financial Report

Consolidated Financial Indicators (Past 11 Years)(Fiscal years ended March 31)

About Us

Thousands of U.S. dollars*1(Excluding per-share values)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2020

Financial Data452,746

530,056

543,468

539,595

638,971

701,900

716,997

683,329744,373733,569

651,496

6,041,040

Operating Income(Millions of yen)

1,399

24,56020,724

7,278

33,00443,85147,77035,62339,60926,946

7,057

65,437

Operating Margin

(%)

0.3

4.6

3.8

1.3

5.2

6.2

6.7

5.2

5.3

3.7

1.1

1.1

(Millions of yen)

(1,838)22,855

16,357(13,898)(2,451)37,063

26,943

14,89026,906

2,939(33,950)(314,803)

Net Income (Loss) Attributable to Shareholders (parent company) (Millions of yen)

(2,015)

14,3995,993(14,196)(14,648)

23,353

15,037

2,831

20,374(6,958)(43,993)(407,928)

Capital Expenditures(Millions of yen)

21,50429,70054,44048,97933,162

31,26636,30035,39837,58945,172

57,675534,795

Depreciation and Amortization(Millions of yen)

40,70235,93634,17534,841

39,31540,392

38,27836,62937,50638,92637,307345,932

R&D expenditures(Millions of yen)

14,687

15,697

17,157

16,174

17,821

18,08818,481

19,19621,007

21,661

19,962

185,099

Total Assets*2(Millions of yen)

618,802632,001

693,258

768,462

848,037

856,277

794,651

798,891

839,427

840,751

757,822

7,026,955

Net Assets(Millions of yen)

214,551

210,353

212,126

211,743

213,369

262,559

248,505

245,050

269,760

246,405

168,378

1,561,296

Inventories(Millions of yen)

126,663

136,985

155,107163,287

166,484

184,128

178,220

171,482

179,738

194,505

182,923

1,696,166

Interest-bearing Debt

(Millions of yen)

231,638

223,284

271,978

360,802381,767

359,105

325,174

320,170

320,832

350,345

362,416

3,360,535

Income (loss) before Income Taxes

Inventory Turnover Ratio(Times)

3.6

3.9

3.5

3.3

3.8

3.8

4.0

4.0

4.1

3.8

3.6

Net D/E Ratio(Times)

1.00

0.92

1.11

1.37

1.27

1.11

1.11

1.05

0.93

1.16

1.87

Net Income (loss)/Average Total Assets (ROA)

(%)

(0.3)

2.3

0.9

(1.9)

(1.8)

2.7

1.8

0.4

2.5

(0.8)

(5.8)

Net Income (loss)/ Average Shareholders’ Equity (ROE)

(%)

(1.1)

7.2

3.0

(7.2)

(7.3)

10.5

6.3

1.2

8.4

(2.9)

(22.8)

NTN-ROI*3

(%)

0.2

4.2

3.4

1.1

4.6

6.3

6.5

5.1

5.7

4.0

1.0

Equity to Capital Ratio

(%)

32.2

31.6

28.4

26.0

23.5

28.6

29.2

28.7

30.2

27.4

20.6

Net Assets(Yen)

374.19376.05370.19375.84374.68461.21436.97431.66477.17433.32294.002.73

Net Income (Loss)(Yen)(4.00)

27.08

11.27

(26.69)(27.54)

43.91

28.28

5.33

38.36

(13.10)(82.83)(0.77)Cash Dividends

(Yen)

8.00

10.00

10.00

0

2.00

6.00

10.00

10.00

15.00

15.00

5.00

0.05

17,961

19,174

20,793

21,39822,15623,36024,10924,66525,49324,98824,199

58

61

63

63

64

66

66

66

67

65

64

Business Strategies(Millions of yen)

NTN Revitalization StoryNet Sales

ESG Strategies

PER-SHARE DATA

Non-Financial Data
Number of employees (consolidated)(%)

Percentage of female employees (non-consolidated)

(%)

9

9

9

9

9

9

10

10

11

11

10

(Years)

19

19

19

19

18

18

18

18

19

19

19

11

12

13

12

11

11

14

14

14

14

11

1

1

2

2

2

2

2

2

2

2

5

Average years of continuous employment
Number of Directors
Number of Independent Outside Directors(10,000 tons)

42.3

53.1

53.9

56.7

59.3

61.7

60.5

62.0

65.3

67.4

60.6

Energy consumption

TJ/year

4,704

5,943

5,857

6,134

6,331

6,463

6,336

6,493

6,849

6,978

6,326

Water consumption*4(10,000 m3)

179.4

225.2

219.7

210.9

201.8

197.3

319.7

323.0

326.4

335.3

281.1

Generated waste(10,000 tons)

10.9

13.2

15.0

14.1

15.0

15.4

15.9

16.3

17.7

17.7

15.5

USD Average

92.89

85.74

79.08

82.91

100.17109.76120.15108.39110.85110.88108.73

EUR Average

131.18113.13109.02106.78134.21138.69132.60118.80129.64128.41120.84

USD at fiscal year end

93.04

83.15

82.19

94.05

102.92120.17112.68111.85106.49110.64107.85

EUR at fiscal year end

124.92117.57109.80120.73141.65130.32

127.70119.48131.00124.21

119.13CO2 emissions

Financial Data

Percentage of employees overseas

Company/Stock Information

Exchange Rate Data

*1: The translation of yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan and has been made at ¥107.845 = U.S. $1.00, the exchange
rate prevailing on March 31, 2020.
This translation should not be construed as a representation that yen can be converted into U.S. dollars at the above or any other rate.
*2: The figures for the fiscal year ended March 31, 2018 have been retroactively revised by "Partial Revision of the Accounting Standard for Tax Effect Accounting".Prior to the fiscal year
ended March 31, 2018, no retroactive application was made.
*3: nsN-ROI =Net operating income after tax/(tangible fixed assets + inventories)*4: Regarding water consumption (millions of m3), the data includes Japan only until the fiscal year ended March 31, 2015, and global data since the fiscal year ended March 31 2016.

81 NTN Report 2020

NTN Report 202082

Financial ReportManagement Performance/ Financial Analysis

Sales performance

R&D and capital expenditures
R&D expenditures

Financial position and cash flow
Current assets decreased by 49,480 million yen (down 10.9%)
from the end of the previous fiscal year and came to 405,800
million yen. This is mainly due to a decrease of 25,571 million
yen in notes and accounts receivable, a decrease of 12,676
million yen in cash and deposits, and a decrease of 6,492 million
yen of work in process. Fixed assets decreased by 33,449 million
yen (down 8.7%) and came to 352,022 million yen compared tothe end of the previous fiscal year. This is mainly due to adecrease of 17,406 million yen in investment securities,
decrease of 17,220 million yen in property, plant and an
equipment, and an increase of 6,091 million yen of intangible
fixed assets. As a result, total assets decreased by 82,929 million
yen (down 9.9%) from the end of the previous fiscal year andamounted to 757,822 million yen.
Current liabilities decreased by 2,734 million yen (down 0.9%)
from the previous fiscal year and came to 286,964 million yen.
This was mainly due to a decrease of 11,296 million yen in notes
and accounts payable, a decrease of 4,503 million yen inelectronically-recorded monetary claims, a decrease of 6,986
million yen in notes payable related to facility and an increase of
20,845 million yen in short-term loans. Fixed liabilities decreased
by 2,168 million yen (down 0.7%) from the previous fiscal year
and end to 302,480 million yen. This was mainly due to a

NTN Report 2020

Company/Stock Information

Groupwide R&D expenditures for the fiscal year under review
amounted to 19,962 million yen yen, (down 1,699 million yen
year on year) and the ratio of R & D expenditures to net sales
was 3.1%.
Based on our corporate philosophy "We shall contribute tointernational society through creating new technologies anddeveloping new products," New Medium-term Management
Plan "DRIVE NTN100," which started in April 2018, promotes
R&D activities focusing on strengthening core technologies andproducts supporting our product development and also
strengthening new business development as an expansion in
new areas over the next 100 years.

We and our consolidated subsidiaries primarily make a capital
investment in the improvement of production capacity,
rationalization by labor-saving, maintenance and upgrading ofexisting facilities, improvement of safety environment, and R&Dof new products.
In Japan, we invested 29,747 million yen, among otherpurposes, construct buildings and introduce bearing
manufacturing facilities of Wakayama Works. In the Americas,
capital expenditures was 17,627 million yen due to expansionof manufacturing facilities for constant velocity joints at NTN
DRIVESHAFT, INC., expansion of manufacturing facilities forconstant velocity joint parts at NTK PRECISION AXLE CORP., andexpansion of manufacturing facilities for bearings at NTNBOWER CORP. Capital expenditures in Europe was 6,034 million
yen due to expansion of manufacturing facilities for bearing at
NTN-SNR ROULEMENTS. In Asia and other regions, we invested
4,307 million yen for additional bearing manufacturing facilities
at SHANGHAI NTN CORP. After adding adjustments of -40
million yen, including inter-segment equipment transfers, theamount of capital expenditures in the consolidated fiscal year
under review was 57,675 million yen.
The required funds are self-financed and borrowed.
Depreciation and amortization for the fiscal year under review
was 37,307 million yen, a decrease of 1,619 million yen from theprevious fiscal year.

Financial Data

83 NTN Report 2020

IncomeAlthough there was a factor that increases the profit such as adecline in personnel expenses and valuable cost, there was alsoa factor that decreases the profit such as the scale effect, selling
price levels, and exchange rates. Consequently, operating
income for the fiscal year under review was 7,056 million yen,down 19,889 million yen (73.8%) from the previous fiscal year.
Ordinary profit margin was 1.1%, down 2.6 percentage points
from the previous fiscal year.
As for other revenues and expenses, 8,755 million yen of net
expense was recorded. This is roughly broken down to: 5,038
million yen of revenues including 1,084 million yen of dividend
income, 988 million yen of interest income; and 13,793 million
yen of expenses including 3,952 million yen of interest expenseand 3,826 million yen of exchange loss. As a result, the Company
recorded 1,698 million yen of ordinary loss, down 23,930million
yen from the previous fiscal year. Ordinary income margin was-0.3%, (down 3.3 percentage points year on year).
In addition to these amounts, we posted 1,353 million yen ofgain on sales of investment securities, 1,981 million yen of
extraordinary income, 34,232 million yen of extraordinary loss
(including 29,001 million yen of impairment loss), and the net
loss attributable to shareholders (parent company) was 43,992
million yen, up 37,035 million yen compared to the previous
fiscal year. Also, net loss per share was loss of 82.83 yen.
Regarding annual dividends for the fiscal year under review,
we set a year-end dividend at 0 yen per share, which, when
added to our interim dividend of 5 yen per share, totals 5 yen
per share for the full year.

Capital expenditures, etc.

ESG Strategies

Net sales by region
Regarding sales in the Japanese market, sales for aftermarket
applications decreased in the industrial machinery aftermarket
business Sales for industrial machinery applications decreased
due to decreased sales for construction machinery applications
and sales for automotive applications also decreased due todecreased customer demand and other factors. As a result, net
sales was 197,996 million yen (down 4.5% year on year).
Regarding sales in the Americas, sales for aftermarket
applications decreased in the industrial machinery aftermarket
business. Sales for industrial machinery market decreased
mainly in construction machinery and wind turbine applications
while sales for automotive applications also decreased due todecreased customer demand. Consequently, net sales was
174,308 million yen (down 13.5% year on year),
Regarding sales in Europe, sales for aftermarket applications
decreased both for industrial machinery and automotive
aftermarket. Sales for industrial machinery applications
decreased mainly in wind turbines, gearboxes and otherapplications. Also, sales for automotive applications decreased
mainly due to decreased customer demand. As a result, net
sales was 140,839 million yen (down 16.1% year on year).
Regarding sales in Asia and other countries, sales foraftermarket applications increased in industrial machinery
aftermarket applications. In industrial machinery applications,sales for wind turbines increased, but sales for construction

Cost of sales was 549,398 million yen for the year, and its ratio to
net sales was 84.3%, up 2.1 percentage points from the previous
consolidated fiscal year. The amount of selling general andadministrative expenses was 95,041 million yen, and its ratio to
net sales was 14.6%, up 0.5 percentage points from the previous
fiscal year.

decrease of 8,772 million yen in long-term loans and an increaseof 4,837 million yen in liability for retirement benefits.
Consequently, total liabilities decreased by 4,902 million yen(down 0.8%) from the previous fiscal year and amounted to589,444 million yen.
Total net assets decreased by 78,027 million yen (down
31.7%) from the end of the previous fiscal year to 168,378
million yen. This is mainly due to a 50,639 million yen decrease
in retained earnings and a 12,727 million yen decrease intranslation adjustments.
The equity ratio was 20.6% (down 6.8 percentage points fromthe end of the previous fiscal year), and net assets per sharebased on the total number of issued and outstanding shares at
the term-end was 294.00 yen (down 139.32 yen from the end of
the previous fiscal year). Interest-bearing debt increased by
12,073 million yen (up 3.4%) from the previous fiscal year andcame to 362,417 million yen. Taking into account the reduced
amount of 4,099 million yen due to the effects of exchange
rates, the actual increase was 16,171 million yen. The ratio ofinterest-bearing debt to total assets was 47.8% (up 6.1
percentage points from the end of the previous fiscal year).
Net working capital was 118,836 million yen, down 46,746
million yen from the end of the previous fiscal year. The current
ratio was 141.4% (down 15.8 percentage points from the end of
the previous fiscal year).
Inventories turnover ratio was 3.56 (down 0.21 from the endof the previous fiscal year) and total assets turnover ratio was
0.86 (down 0.01 from the end of the previous fiscal year).
Net cash from operating activities was 43,750 million yen (ayear-on-year increase of 526 million yen, or up 1.2%). This was
mainly due to proceeds of 37,307 million yen from depreciation
and amortization, 29,001 million yen of impairment loss, and25,144 million yen due to a decrease of notes and accounts
receivable-trade, and outflows of 33,950 million yen of net loss
before income taxes and 13,681 million yen due to a decrease of
trade payables.
Net cash used in investing activities was 61,808 million yen(down 3,807 million yen, or 5.8%, year on year). This was mainly
due to outflows of 59,009 million yen due to purchases oftangible fixed assets and 10,075 million yen due to purchases ofintangible fixed assets.
Net cash from financing activities was 7,413 million yen(down 13,333 million yen, or 64.3%). This was mainly due toproceeds of 29,795 million yen from borrowing of long-termloans, and 6,213 million yen of the net increase of short-termloans and outflows of 19,145 million yen due to repayment oflong-term loans and 6,645 million yen due to dividend payment.
As a result of including a 1,595 million yen decrease intranslation adjustments and a 68 million yen decrease in cash
and cash equivalents due to exclusion of subsidiaries fromconsolidation, cash and cash equivalents at the term-end was
71,165 million yen, down 12,309 million yen (14.7%) from theend of the previous fiscal year.
Free cash flow, which is net cash from operating activities lessnet cash from investing activities, was -18,058 million yen. The
cash flow return on sales ratio was 6.7%.

Business Strategies

Net sales and incomes by business sector
In aftermarket applications, net sales was 109,417 million yen(down 7.9% year on year) due to the decreased customer
demand and other factors. Despite a decline in fixed cost,
operating income was 12,738 million yen (down 16.1% year onyear) due to a decline in sales volume and other factors.
In industrial machinery applications, net sales was 105,072
million yen (down 14.9% year on year) due to a decreased salesof construction machinery and other factors. Despite a decline
in fixed cost, operating loss of 2,001 million yen (operating
income of 3,106 million yen in the previous fiscal year) wasrecorded due to a decline in sales volume and other factors.
In automotive applications, net sales was 437,007 million yen(down 11.1% year on year) to due to the decreased customer
demand and other factors. Despite a decline in fixed cost,
operating loss of 3,680 million yen (operating income of 8,655
million yen in the previous fiscal year) was recorded due to a
decline in sales volume and other factors.

Cost of sales, selling, general and administrative expenses

By developing high-performance, high-precision productsthat leverage our technological strengths, such as tribology,
heat treatment, precision machining, precision measurement,
and CAE, we will provide products adapted to a low-carbon
society, continuously improving customer satisfaction, andachieving sustainable growth.

NTN Revitalization Story

Net sales for the fiscal year ended March 31, 2020 was 651,495
million yen, a decrease of 82,073 million yen (down 11.2%) fromthe previous fiscal year. Considering the decrease of 17,150
million yen due to the effect of exchange rates there was an
actual decrease of 64,924 million yen. Net sales overseas was453,500 million yen, a decrease of 72.82 million yen (down
13.8%) from the previous fiscal year. Net sales overseas
accounted for 69.6% of net sales (Americas 26.8%, Europe
21.6%, and Asia and other regions 21.2%), down 2.1 points fromthe previous fiscal year.

machinery and other applications decreased, resulting in adecrease in overall sales. Sales for automotive applications also
decreased due to decreased customer demand and otherfactors. As a whole, net sales was 138,353 million yen (down
11.9% year on year).

About Us

Net sales and incomes84

Financial Report

Risk Factors(1) Risks Related to External Business Environment

2020

2019

Thousands of
U.S. dollars(Note 1)
2020

2020

Current liabilities:

Current assets:

Short-term bank loans (Notes 9 and 14)

Short-term investments (Note 14)

2020

2019

Liabilities and net assets

AssetsCash and cash equivalents (Note 14)

Thousands of
U.S. dollars(Note 1)Millions of yen¥

71,165¥83,474$ 659,882

6,770

59,3726,403

Trade receivables (Note 14):Current portion of long-term debt andlease obligations (Notes 9 and 14)

4,298

11,35639,853

Accounts

98,937

117,450

917,400E lectronically recorded monetaryclaims

4,788

9,505

44,397

Allowance for doubtful accounts(1,061)(1,126)(9,838)106,962

137,185

991,812Inventories (Note 6)

182,923

194,505

1,696,166

Other current assets (Note 14)

38,34733,346355,576

405,800

455,280

3,762,808

77,431
41,121¥

71,102$ 717,984

25,530381,297

Trade payables (Note 14):
Notes

Notes

¥

Accounts

836

1,601

7,752

47,84058,370443,600

68,68573,188636,886

117,361

133,159

1,088,238

Accrued income taxes(Notes 14 and 20)

1,828

2,504

16,950

Other current liabilities

49,22357,403

456,424

286,964

289,698

2,660,893

Long-term debt and lease obligations(Notes 9 and 14)

249,510

255,925

2,313,598

Liability for retirement benefits(Note 10)

46,72741,890433,279

 rovision for product defectPcompensation

1,118

1,108

10,367

276

169

2,559

4,849

5,556

44,963

302,480

304,6482,804,766

54,34754,347503,936

Electronically recorded obligations

Total current liabilities (Note 22)Long-term liabilities:
Total current assets

Property, plant and equipment, at cost
(Note 7):

Deferred income taxes (Note 20)

Land (Note 2(g))

32,37032,399300,153

Buildings and structures (Note 2(g))

214,621

207,862

1,990,088

Total long-term liabilities (Note 22)
Contingent liabilities (Note 12)

Machinery, equipment and vehicles(Note 2(g))

767,409793,455

7,115,851

Construction in progress

30,51830,422282,980

1,044,918

1,064,138

9,689,072

Less accumulated depreciation(782,274)(784,275)(7,253,688)

Property, plant and equipment, net(Note 22)262,644279,8632,435,384

Other long-term liabilities

Net assets:

Capital surplus

67,97067,970630,256

Retained earnings

62,139112,778

576,188

(788)

(789)

(7,306)

183,668

234,306

1,703,074

5,094

12,02047,234

Translation adjustments(19,998)(7,271)(185,433)

 etirement benefit liabilityR
adjustments (Note 10)(12,607)(8,900)(116,899)

T otal accumulated othercomprehensive loss, net(27,511)(4,151)(255,098)

Non-controlling interests

12,221

16,250113,320T reasury stock, at cost: 1,314,946
shares in 2020 and 1,320,628 shares in2019 (Note 5)

Investments and other assets:

Total shareholders’ equity

20,92334,242

194,010I nvestments in unconsolidated
subsidiaries and affiliates (Note 14)

20,862

24,949193,444

Deferred income taxes (Note 20)

6,036

10,241

55,969Other assets

41,55736,176385,340

89,378105,608

828,763 ccumulated other comprehensiveA
income (loss):
 et unrealized holding gain onNsecurities (Note 8)

Total net assets
Total assets (Note 22)¥ 757,822¥ 840,751$7,026,955

Total liabilities and net assets

168,378

246,405

1,561,296¥ 757,822¥ 840,751$7,026,955

Company/Stock Information

Investment securities(Notes 8 and 14)

Total investments and other assets

Shareholders’ equity (Note 11):
Common stock:
Authorized – 1,800,000,000 sharesIssued – 532,463,527 shares in 2020
and 2019:

Financial Data

85 NTN Report 2020

Millions of yen

ESG Strategies

1) Dependence on Specific Industries
The NTN Group’s bearing division derives approximately half of its sales
revenues from the automotive industry, which also accounts for more than halfof the sales of components that the constant velocity joint division produces forautomotive power transmission to the drive axle. Dependence on theautomotive industry is therefore high. Although the NTN Group works toexpand sales of bearings and precision equipment parts to the industrial
machinery sector and implements measures to achieve a balanced sales
structure, a rapid shift in demand in the automotive industry could potentiallyaffect the NTN Group’s financial position, business results, and cash flows.
2) Product Defects
To ensure product quality, the NTN Group works to satisfy customers’ requirements

Consolidated Balance Sheet

Business Strategies(2) Risks Related to Business Operations(March 31, 2020)

NTN Revitalization Story

1) Economy
The NTN Group operates global production and sales networks, and supplies
customers in various industrial sectors. The financial position, businessresults, and cash flows of the NTN Group may be affected by a change ineconomic conditions in a specific country or region and a change in businessconditions in industries to which our customers belong.
2) Foreign Exchange Fluctuations
Overseas sales of the NTN Group account for over 50% of consolidated sales.
This percentage is expected to increase further due to continued
acceleration in the global business development of the NTN Group.
Overseas subsidiaries’ foreign currency-denominated business results andfinancial positions are converted to yen for the preparation of consolidated
financial statements. Moreover, many export transactions of the Company
with overseas customers are conducted in foreign currencies. Although the
NTN Group hedges risks through forward foreign exchange contracts andexpansion of local procurement, effects of exchange rate fluctuations inforeign currency and yen exchange rates on the financial positions, businessresults, and cash flows cannot be fully eliminated.
3) Declines in Market Prices
The competitive environment surrounding production and sales activities of
the NTN Group is becoming harsher worldwide. As products from China andother emerging countries are gaining ground, bearings have been partiallyaffected by falling market prices. At the same time, against a backdrop of global
price competition, calls for price reductions are mounting in the automotive
industry, which accounts for over half of the NTN Group sales. Although the
NTN Group works continuously to reduce costs while developing new productsof high quality and high added value the financial position, business results,
and cash flows may be affected by downward pressure on market prices.
4) Rise in Raw Materials Prices
The NTN Group procures a wide range of raw materials from outside sources.
To deal with cost increases, especially of steel materials, which pose a highweighting in material costs, measures have been taken such as mark-ups on
selling prices to reflect higher material costs In addition, the Group is targeting
cost reductions through enhanced production yields and VA/VE methods.
Nevertheless, the financial positions, business results, and cash flows may beaffected by stronger than expected increases in raw material costs.
5) Risk of Disasters and Spread of Infectious Diseases
The business sites of the NTN Group and our business partners may beaffected by natural disasters such as earthquakes, flooding, fires, and the
spread of infectious diseases. In preparation for large-scale disasters, the NTNGroup has introduced a safety confirmation system and conductedemergency drills. In order to combat the spread of infectious diseases, wehave taken various measures, such as stockpiling masks. We are prepared tominimize damage by taking immediate action in the event of a crisis.
However, it is difficult to completely avoid risk, and as a result, the financial
position, business results and cash flows may be affected.
The NTN Group has been temporarily suspending production at someplants in Japan and abroad since April 2020 due to requests or orders fromgovernments in each country and declined demand from customers in
response to the global outbreak of new coronavirus infections. It is currently
difficult to reasonably calculate the impact of these effects on the Company's
financial position, business results and cash flows.
In response to new coronavirus infections, the NTN Group is striving toprevent infections by utilizing telework, staggered work, and prohibiting
business trips and visits in principle. We also promote telecommuting
overseas and take other measures in accordance with the circumstances ofeach country.
Under these circumstances, we have positioned fiscal year 2020 as the Crisis
Response Period and we will thoroughly implement anti-infectious measuresto achieve "ensure the health and safety of employees" while focusing on"secure cash and continue business" in the event of an emergency.

concerning product functions and specifications, and strives to provide
appropriate quality and product safety by enforcing quality assurance globally.
However, a substantial product defect leading to a serious accident, claim fordamages, or product recall could entail huge product warranty costs andpotentially affect the financial position, business results, and cash flows of the NTNGroup. Although the NTN Group has taken out global product liability insurance,complete coverage for loss (including compensation for damages) is not possible.
3) Intellectual Property
The NTN Group generates a lot of new technologies and know-how in the processof new product development and utilizes them as management resources.
However, there is a possibility that a third party may violate our intellectual
property rights, or that we unexpectedly violate a third party's intellectual property
rights. We are striving to thoroughly implement intellectual property rights
management, such as protecting rights through patent applications. However, theinfringement of intellectual property rights as described above could have an
impact on the Group’s financial position, business results, and cash flows.
4) Global Operations
The NTN Group develops its business operations worldwide with overseas
sales accounting for more than 50% of consolidated sales. Overseas businessdevelopment is associated with the following risks:a. Risks from an unforeseen change in tax systems of or between individual
countries
b. Risks from an unforeseen change in laws of individual countries
c. Difficulty in hiring and retaining appropriate staff
d. Evolving technology levels and unstable labor relations in emerging
economiese. Political instability in emerging economies
The NTN Group collects information on these risks within the Group andstrives to prevent and avoid them. However, if these risks occur, they may
affect the Group’s financial position, business results and cash flows.
5) Information Security
The NTN Group is taking action to ensure that our employees are thoroughly
aware of appropriate methods of managing information through conducting
trainings for our employees as well as establishing internal regulations.
However, in the event of information leakage the destruction or, alteration ofimportant data, or system shutdown of important data are occurred, etc. dueto a cyber attack, unauthorized access, and computer virus intrusion, thesey
may lead to a deterioration in the NTN Group's credibilityit loss, and cause
troubles in production and sales activities, and thereby affecting the Group's
financial position, business results, and cash flows.
6) Statutory Regulations
The NTN Group is subjected to the various laws and regulations (tax laws,
environmental laws, occupational safety and health laws, economic statues
such as Antimonopoly laws, anti-dumping laws and bribery-related laws,
trade and exchange laws, and stock listing regulations of a stock exchange ofthe countries and regions in which it does business.
The NTN Group strives to abide by these laws and regulations and conduct
fair business activities. However, if the NTN Group is ever be subjected tolitigation or involved in legal proceedings because of a violation of a law or
regulation, and if the decision of such litigation or legal proceedings goesagainst the Group, this may have an effect on the business performance or thefinancial position of the Group. As well, if these laws or regulations change, or if
new unforeseen laws or regulations are enacted, these also may have an effecton the financial position, business performance, and cash flows of the Group.
Some of NTN Group companies are subjected to the following actions.
[1] There are ongoing investigations by the competition authorities into ourconsolidated subsidiaries in Brazil and elsewhere in relation to overseas
sales of bearings, etc.
[2] The Company and its consolidated subsidiaries in the U.S. and and otherplaces are defendants in a number of class action suits in the U.S. forsuspected price-fixing of bearings at a higher level with other businesses[3] A lawsuit has been filed against the Company and its two consolidated
subsidiaries in Europe before the France Tribunal de Commerce de Lyon by
Renault S.A. and its group companies, 15 in total (hereafter, “Renault”), seeking
compensation of 66.7 million euros (provisional amount) for damages. In
addition, a lawsuit has been filed against the Company and its two
consolidated subsidiaries in Europe before the United Kingdom Commercial
Court by Fiat Chrysler Automobiles N. V. and its group companies, seven in total(hereafter, “FCA”), seeking compensation for damages.
These lawsuits were filed by Renault and FCA alleging that they suffereddamages in connection with the infringement of the European
competition laws, which was subjected to the decision adopted by theEuropean Commission dated March 19, 2014.
[4] The NTN Group may be subjected to claims for compensation fordamages in connection with the violation of competition laws andcontinue to appropriately address these claims. This may affect thebusiness results of the NTN Group. However, it is currently difficult tomake reasonable estimates of the future possible effects on the results ofoperations, financial position and cash flows of the NTN Group.

Consolidated Financial Statements

About Us

Business results and the financial position of the NTN Group are subject tothe following risks.

Financial Report

See accompanying notes to the consolidated financial statements.

NTN Report 202086

Financial Report

Consolidated Financial Statements (March 31, 2020)

Consolidated Statement of Changes in Net Assets
2020

2020

2019
733,569$ 6,041,040

Cost of sales (Note 16)549,398

603,082

5,094,329

Gross profit

102,098

130,487

946,711Net sales (Note 22)¥651,496

Millions of yen

Thousands of U.S. dollars(Note 1)Millions of yen¥

103,541

881,274

7,057

26,94665,437

Noncontrollinginterests

Total net
assets¥(4,681)¥(7,683)¥16,356¥269,760

–

–

–

–

(177)

(816)

16,380(4,681)(7,683)

16,356

269,583(7,974)

–

–

–

–

–

(7,974)–(6,958)

–

–

–

–

–

(6,958)

–

–

–

(1)

–

–

–

–

(1)

–

–

–

–

28

–

–

–

–

28

–

–

–

–

–

(4,360)(2,590)(1,217)(106)(8,273)

532,463,527

54,347

67,970112,778(789)

12,020(7,271)(8,900)

16,250246,405

–

–

–

(1)

–

–

–

–

–

(1)

532,463,527

54,347

67,970112,777(789)

12,020(7,271)(8,900)

16,250246,404

Net unrealized
Translation
holding gain
adjustmentson securities

Commonstock

CapitalsurplusRetainedearnings

532,463,527¥54,347¥67,970¥127,887¥(816)¥16,380

–

–

–

(177)

–

532,463,527

54,347

67,970127,710

Cash dividends paid

–

–

–

Loss attributable to ownersof parent––

Purchases of treasury stock–

Sales of treasury stock
Other changes

Balance at April 1, 2018

Restated balance at April 1,
2018

NTN Revitalization Story

Operating income (Note 22)

95,041Retirement
benefitliability
adjustments

Treasurystock,
at costNumber ofshares in issue

Cumulative effect of change inaccounting principle
Selling, general and administrative expenses (Note 16)

About Us

Consolidated Statement of Operations

Other income (expenses):
Interest and dividend income

2,072

1,965

19,213

Interest expense(3,952)(3,883)(36,645)

Equity in (losses) earnings of affiliates(1,210)73(11,220)

Foreign exchange loss, net(35,477)(3,032)

627

–

5,814

Gain on sales of investment securities (Note 8)

1,353

–

12,546

Loss on impairment of fixed assets (Notes 7 and 22)(29,001)(16,963)(268,914)

Loss on valuation of investment securities(2,389)–(22,152)

Loss resulting from low operating capacity (Note 18)(2,097)–(19,445)(745)(2,108)(6,908)

Restated balance at April 1, 2019

(1,839)(59)(17,053)

Cash dividends paid

–

–

–

(6,645)

–

–

–

–

–

(6,645)(41,007)(24,007)(380,241)(33,950)2,939(314,804)

Loss attributable to owners ofparent–––(43,993)

–

–

–

–

–

(43,993)

Purchases of treasury stock

–

–

–

–

(1)

–

–

–

–

(1)

Sales of treasury stock

–

–

–

–

2

–

–

–

–

2

Other changes

–

–

–

–

–

(6,926)(12,727)(3,707)(4,029)(27,389)

532,463,527¥54,347¥67,970¥62,139¥(788)¥5,094¥(19,998)¥(12,607)¥12,221¥168,378

Loss on surcharge payments under the Anti-Monopoly Act (Note 17)
Other, net(Loss) Profit before income taxes

Balance at April 1, 2019
Cumulative effect of change inaccounting principle (Note 3)

Business Strategies(3,826)

Gain on sales of property, plant and equipment

Current

3,220

5,750

29,858Deferredt

6,925

3,355

64,212

10,145

9,105

94,070(44,095)(6,166)(408,874)

102

(792)

946

Loss
Loss attributable to:Non-controlling interests
Owners of parent¥(43,993)¥(6,958)$

Balance at March 31, 2020

(407,928)

ESG Strategies

Income taxes (Note 20):

Thousands of U.S. dollars (Note 1)

See accompanying notes to the consolidated financial statements.

Thousands of U.S. dollars(Note 1)

2020
Loss

¥

(44,095)¥(6,166)$ (408,874)(4,360)(64,222)

Other comprehensive loss (Note 19):

$630,256$1,045,742$(7,316)$111,456$(67,421)$(82,526)$150,679$2,284,806

–

–

(10)

–

–

–

–

–

(10)

503,936

630,256

1,045,732(7,316)

111,456(67,421)(82,526)

150,679

2,284,796(6,926)

Cash dividends paid––

(61,616)

–

–

–

–

–

(61,616)

Translation adjustments(13,710)(1,841)(127,127)

Retirement benefit liability adjustments(3,749)(1,265)(34,763)

Loss attributable to ownersof parent––(407,928)

–

–

–

–

–

(407,928)

Share of other comprehensive loss of affiliates accounted for by the equity method
Other comprehensive loss, net
Comprehensive loss

¥

(44)

(999)

(407)

(24,429)(8,465)(226,519)

Purchases of treasury stock

–

–

–

(9)

–

–

–

–

(9)

(14,631)$ (635,393)(68,524)¥

Sales of treasury stock

–

–

–

19

–

–

–

–

19

Other changes

–

–

–

–

(64,222)(118,012)(34,373)(37,359)(253,966)

Total comprehensive loss attributable to:$503,936$630,256$576,188$(7,306)$47,234$(185,433)$(116,899)$113,320$1,561,296

Restated balance at April 1,
2019

Balance at March 31, 2020

Owners of parent¥(67,353)¥(15,124)

Non-controlling interests¥(1,171)¥493$ (624,535)$(10,858)

Total net
assetsCompany/Stock Information

Net unrealized holding loss on securities

Noncontrollinginterests$503,936

Balance at April 1, 2019
Cumulative effect of change inaccounting principle (Note 3)

2020

2019

Net unrealized
Retirement
Translation
holding gain on
benefit liability
adjustments
securities
adjustments

Retainedearnings

Consolidated Statement of Comprehensive Income
Millions of yen

Treasurystock,
at costCapitalsurplusFinancial Data

Commonstock

See accompanying notes to the consolidated financial statements.

See accompanying notes to the consolidated financial statements.

87 NTN Report 2020

NTN Report 202088

Financial Report

Consolidated Financial Statements (March 31, 2020)

Notes to Consolidated Financial Statements
Thousands of U.S. dollars(Note 1)Millions of yen
2020

2020

2019

Cash flows from operating activities:(Loss) profit before income taxes¥ (33,950)

¥

2,939

$ (314,804)

Adjustments for:37,30738,926345,932

Loss on impairment of fixed assets

29,001

16,963

268,914

Loss resulting from low operating capacity

2,097

–

19,445

Loss on surcharge payments under the Anti-Monopoly Act

745

2,108

6,908

(Decrease) increase in allowance for doubtful accounts

(22)

157

(204)

Decrease in provision for directors’ and audit & supervisory board members’ bonuses

(119)

(15)

(1,103)

22

(401)

204

Increase in liability for retirement benefits

1,754

600

16,264

Interest and dividend income(2,072)(1,965)(19,213)36,645

Increase (decrease) in provision for product defect compensation

3,952

3,883

1,040

1,363

9,643

Equity in (losses) earnings of affiliates

1,210

(73)

11,220Gain on sales of fixed assets

(627)

–

(5,814)(1,353)–(12,546)

Loss on valuation of investment securities

2,389

–

22,152

Decrease in trade receivables

25,144

10,534

233,149

Decrease (increase) in inventories

3,994(16,184)

37,035(Decrease) increase in trade payables(13,681)

198(126,858)

Other(6,288)687(58,306)

Subtotal

50,54359,720468,663Interest and dividend income received

2,586

2,471

23,979Interest paid

(3,955)(3,893)(36,673)

Surcharge payments under the Anti-Monopoly Act(1,233)(6,399)(11,433)

Payments for Loss resulting from low operating capacity(1,546)–(14,335)

Income taxes paid
Net cash provided by operating activities¥(24,526)(2,645)(8,675)43,750¥ 43,224$(142)¥ (4,265)$(59,009)(42,381)405,675

Cash flows from investing activities:
Increase in short-term investments, net¥

Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of other assets(1,317)(547,165)

–

7,947

(10,846)(93,421)
22,356

Proceeds from sales of investment securities

2,411

–

Purchase of investments in affiliated company(497)(9,180)(4,608)Proceeds from sales of investments in affiliated company

4,301

1,145

39,881

346

(87)

3,208

¥ (61,808)¥ (65,614)$ (573,119)

Other
Net cash used in investing activities

Cash flows from financing activities:

57,61074,297276,276

Repayment of long-term debt, including current portion(19,145)(58,360)(177,523)

Cash dividends paid

(6,645)(7,974)(61,616)

Repayment of lease obligations(1,370)(287)(12,703)

Other(1,435)

(573)

7,413

¥ 20,746

Effect of exchange rate changes on cash and cash equivalents(1,596)(970)(14,799)

Net decrease in cash and cash equivalents(12,241)(2,614)(113,505)

Cash and cash equivalents at beginning of the year

83,47486,088774,018

(68)

–

(631)

71,165¥ 83,474¥

Decrease in cash and cash equivalents resulting from exclusion of subsidiaries in
consolidation
Cash and cash equivalents at end of the year
See accompanying notes to the consolidated financial statements.

89 NTN Report 2020¥

(13,306)$$

68,738659,882(b) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the rates of exchange in effect at the balance sheet
date. Revenues and expenses are translated at the rates of exchange
prevailing when the transactions were made.
Assets and liabilities of overseas consolidated subsidiaries aretranslated into yen at the exchange rates in effect at the respectivebalance sheet dates, except for the components of net assets excluding
non-controlling interests which are translated at the respective historicalrates. Revenue and expenses are translated at the average rates of
exchange for the respective years. Differences arising from translation arereflected in “Translation adjustments” and “Non-controlling interests” inthe accompanying consolidated balance sheet and statement of changes
in net assets.
(c) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks
withdrawable on demand, and short-term investments which are readily
convertible to cash subject to an insignificant risk of any change in theirvalue and which were purchased with an original maturity of threemonths or less.
(d) Allowance for doubtful accounts
The allowance for doubtful accounts is computed based on the actual
historical percentage of bad debts and an estimate of uncollectible
amounts determined after an analysis of specific individual receivables.
(e) Short-term investments and investment securities
The accounting standard for financial instruments requires that securities
be classified into three categories: trading, held-to-maturity or othersecurities. Trading securities are carried at fair value and held-to-maturity
debt securities are carried at amortized cost. Marketable securities
classified as other securities are carried at fair value with any changes inContributions granted by national and municipal governments are
deducted directly from the acquisition costs of the related fixed assets as
stipulated in the Corporation Tax Law of Japan. The property, plant andequipment accounts on the consolidated balance sheet at March 31,
2020 and 2019 were reduced by the following amounts:
Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

¥ 799

¥ 799

$ 7,409

Buildings and structures

404

410

3,746

Machinery, equipment and vehicles

71

92

658

¥ 1,274¥ 1,301$ 11,813

Land(h) Liability for retirement benefits
Liability for retirement benefits has been provided principally at an
amount calculated based on the retirement benefit obligation after thefair value of the pension plan assets are deducted. The estimated benefit
is attributed to each period by the benefit formula method over theestimated years of service of the eligible employees.
Past service cost is amortized as incurred primarily by the straight-line
method over a period of principally 15 years, which is within theestimated average remaining years of service of the eligible employees.
Net unrecognized actuarial gain or loss is amortized commencing in
the year following the year in which the gain or loss was recognizedprimarily by the straight-line method over a period of principally 15
years, which is within the estimated average remaining years of service ofthe eligible employees.
(i) Provision for product defect compensation
Provision for product defect compensation is provided at an estimatedamount in order to cover the anticipated compensation.
(j) Leases
For lease transactions involving the transfer of ownership, the leased
assets are depreciated by the same methods used for owned fixed assets.
For lease transactions not involving the transfer of ownership, leased
assets are depreciated over the lease period using the straight-line
method with a nil residual value.

Company/Stock Information¥ 13,643

29,795

Net cash provided by financing activities

¥

$

6,213

Proceeds from long-term debt

Increase in short-term bank loans, net(a) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and the significant companies which it controls
directly or indirectly. Companies over which the Company exercises
significant influence in terms of their operating and financial policies
have been included in the accompanying consolidated financial
statements on an equity basis.
The financial statements of certain consolidated subsidiaries whose
fiscal year end is December 31 have been included in consolidation on
the basis of a full fiscal year closing on March 31 for consolidation
purposes.

The principal estimated useful lives are as follows:
Buildings and structures
10 to 50 years
5 to 12 years
Machinery, equipment and vehicles

Financial Data

857
(10,075)

2. Summary of Significant Accounting Policies(g) Property, plant and equipment (other than leased assets)
Property, plant and equipment are stated at cost. The Company and its
domestic consolidated subsidiaries calculate depreciation by thestraight-line method over the estimated useful lives of the respective
assets. The foreign consolidated subsidiaries principally calculated
depreciation by the straight-line method over the estimated useful livesof the respective assets.

ESG Strategies

Gain on sales of investment securities(f) Inventories
Inventories are principally stated at lower of cost, determined by theaverage method, or net selling value.

Business Strategies

Interest expense
Translation adjustments and foreign exchange loss, net

The accompanying consolidated financial statements of NTN Corporation(the “Company”) and consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as requiredby the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated financial
statements issued domestically in order to present them in a format
which is more familiar to readers outside Japan. In addition, certain notes
included herein are not required under accounting principles generally
accepted in Japan but are presented as additional information.
Certain amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation. Such
reclassification had no effect on consolidated profit or net assets.
The translation of yen amounts into U.S. dollar amounts is included
solely for the convenience of readers outside Japan and has been madeat ¥107.845 = U.S. $1.00, the exchange rate prevailing on March 31, 2020.
This translation should not be construed as a representation that yen canbe converted into U.S. dollars at the above or any other rate.

unrealized holding gain or loss, net of the applicable income taxes,
included directly in net assets. Cost of securities sold is determined by
the moving average method. Non-marketable securities classified asother securities are carried at cost based on the moving average method.

NTN Revitalization Story

Depreciation and amortization

1.Basis of Preparation

About Us

Consolidated Statement of Cash Flows(k) Research and development costs and computer software
Research and development costs are charged to income as incurred.
Expenditures relating to computer software developed for internal use
are charged to income when incurred, except if the software is expected
to contribute to the generation of income or to future cost savings. Suchexpenditures are capitalized as assets and are amortized by the straightline method over their respective estimated useful lives, generally a
5-year period.
NTN Report 2020

90

Financial Report

Consolidated Financial Statements (March 31, 2020)(o) Consolidated taxation system
The Company and certain domestic consolidated subsidiaries adopted
the consolidated taxation system, which allows companies to file tax
returns based on the combined profits or losses of the parent company
and its wholly owned domestic subsidiaries.

91 NTN Report 2020(i) Overview of transactions
The Scheme adopts a mechanism known as an officer remuneration BIP(Board Incentive Plan) trust (hereinafter referred to as the “BIP Trust”). The
BIP Trust is an incentive plan for officers based on the performance sharescheme and the restricted stock scheme in the U.S., and has a system inwhich the Company’s shares acquired by the BIP Trust and funds
equivalent to the proceeds received when converting into cash or
disposing of such shares are distributed and paid according to theofficers’ positions and the degree of achievement of performance targets
disclosed in the mid-term management plan, and other factors.

(ii) Schedule date of adoption
The Company expects to adopt the accounting standard from the end of
the fiscal year ending March 31, 2021.

Impact of the Spread of the Novel Coronavirus on Accounting
Estimates
With regard to the spread of the novel coronavirus, there is a high degreeof uncertainty regarding the future spread and the timing of its
containment. Therefore, the Company and its consolidated subsidiaries
have made accounting estimates related to impairment accounting, etc.,
based on the assumption that the spread of the novel coronavirus will
have an impact on the financial results of the Company and its
consolidated subsidiaries for a year during the fiscal year ending March
31, 2021.

Accounting Standard for Accounting Policy Disclosures, Accounting
Changes and Error Corrections(i) Overview
On March 31, 2020, the ASBJ issued “Accounting Standard for Accounting
Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ
Statement No.24). In response to a proposal to consider enriching theinformation in the notes on “principles and procedures for accounting
treatment adopted in cases where the provisions of relevant accounting
standards and regulations are not clear,” the ASBJ made the necessary
revisions in the standard and issued it as “Accounting Standard for
Accounting Policy Disclosures, Accounting Changes and Error
Corrections.”
Furthermore, when an entity attempts to enrich the information in thenotes on “principles and procedures for accounting treatments adopted
in cases where the provisions of relevant accounting standards andregulations are not clear” in order not to affect the conventional practices
in the case where the provisions of relevant accounting standards andregulations are clear, it is assumed the provisions of Annotations on the
Corporate Accounting Principles (Annotation No. 1-2) will apply.

(ii) The Company’s shares remaining in the trust
The Company’s shares remaining in the trust are recorded as treasury
stock in the net asset section, based on their book value (excluding theamount of incidental expenses) recorded in the accounts of the trust. The
book value and number of shares of such treasury stock at March 31,
2020 totaled ¥150 million ($1,391 thousand) and 472,666 shares, and at
March 31, 2019 totaled ¥152 million and 479,761 shares, respectively.

6. Inventories
Inventories at March 31, 2020 and 2019 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

Finished goods¥ 96,616¥ 102,677$ 895,879

Work in process

48,92855,419453,688

Raw materials and supplies

37,37936,409346,599¥ 182,923¥ 194,505$ 1,696,166(ii) Schedule date of adoption
The Company expects to adopt the accounting standard from the end of
the fiscal year ending March 31, 2021.

Company/Stock Information

Application of IFRS 16
A number of the Company’s overseas consolidated subsidiaries haveapplied IFRS 16, “Leases,” effective from April 1, 2019. The cumulative
effect of applying IFRS 16 was recognized by adjusting the amounts oftangible fixed assets, intangible fixed assets, lease liabilities and retained
earnings at the beginning of the fiscal year ended March 31, 2020, in
accordance with the transitional treatment provided in this standard.
However, the effects of applying IFRS 16 on the consolidated financial
statements were immaterial.

Accounting Standard and Implementation Guidance for Fair Value
Measurement(i) Overview
On July 4, 2019 the ASBJ issued “Accounting Standard for Fair Value
Measurement” (ASBJ Statement No.30), “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No.9), “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10),“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No.31) and “Implementation Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance
No.19). Based on the fact that the IASB and FASB have established almost
the same detailed guidance for fair value measurement (issued as IFRS 13“Fair Value Measurement” in IFRS and Topic 820 “Fair Value Measurement”
by the FASB), the ASBJ worked on ensuring consistency between
Japanese GAAP and IFRS regarding the guidance and disclosure on fairvalue of financial instruments and issued “Accounting Standard for Fair
Value Measurement” etc.
As the basic policy in developing accounting standards for Fair Value
Measurement, the ASBJ incorporates the rules of IFRS 13 from astandpoint of improving the comparability between financial statementsof Japanese companies and overseas companies by using the unified
calculation method. Furthermore, the ASBJ defined the other accounting
treatment for the particular matters without impairing comparability
considering accounting practice, etc. common in Japan.

Accounting Standard for Disclosure of Accounting Estimates(i) Overview
On March 31, 2020, the ASBJ issued “Accounting Standard for Disclosureof Accounting Estimates” (ASBJ Statement No. 31). As for the disclosure of“Sources of estimation uncertainty” required by paragraph 125 ofInternational Accounting Standard (IAS) 1 “Presentation of Financial
Statements” (hereinafter referred to as the “IAS 1”) issued in 2003 by the
IASB, because this information is valuable for users of the financial
statements, there were requests to consider disclosing this underJapanese GAAP as information in the notes and the ASBJ developed andissued the “Accounting Standard for Disclosure of Accounting Estimates”(hereinafter referred to as the “Standard”).
The basic approach taken by the ASBJ in the development of theStandard was, not to enrich individual notes, but to state the generalprinciple (purpose of disclosure) and to allow entities to determine thespecific contents to be disclosed in light of the purpose of disclosure. In
the developing the Standard, the ASBJ referred to the provisions ofparagraph 125 of IAS 1.

Financial Data

3. Accounting Changes(iii) Impact of the adoption of accounting standard and implementation
guidance
The Company is currently evaluating the effect of the adoption of theaccounting standard and the implementation guidance on its
consolidated financial statements.

Performance-linked stock compensation scheme
The Company introduced a performance-linked stock compensation
scheme (hereinafter referred to as the “Scheme”) for its executive officers(excluding executive officers who do not reside in Japan; the same
applies hereinafter), which serves as an officer remuneration system thatis closely linked to corporate performance targets in the mid-term
management plan and which is highly transparent and objective innature.

ESG Strategies(p) Adoption of tax effect accounting for transition fromconsolidated taxation system to group tax sharing system
The Company and certain domestic subsidiaries calculated the amountsof deferred tax assets and deferred tax liabilities based on the Japanese
Income Tax Act prior to amendment in accordance with the treatment
under Paragraph 3 “Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to
the Group Tax Sharing System” (Accounting Standards Board of Japan(hereinafter referred to as the “ASBJ”) Practical Issues Task Force No.39
March 31, 2020) instead of adopting the provision of Paragraph 44 of“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No.
28, February 16, 2018), regarding the transition to the group tax sharing
system established in the “Act for Partial Amendment of the Income Tax
Act, etc.” (Act No.8 of 2020), related to items for which the nonconsolidated taxation system has been reviewed in accordance with thetransition to the group tax sharing system.

(ii) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal year ending
March 31, 2022.

(iii) Impact of the adoption of accounting standard and implementation
guidance
The effect of the adoption of the accounting standard and theimplementation guidance on its consolidated financial statements is tobe decided.

5. Additional Information

Business Strategies(n) Distribution of retained earnings
Under the Corporation Law of Japan and the Company’s Articles ofIncorporation, the distribution of retained earnings with respect to agiven financial period is made by resolution of the shareholders at a
general meeting held subsequent to the close of the financial period. The
distribution of retained earnings with respect to the interim financial
period is made by resolution of the Board of Directors. The accounts forthe period do not reflect such distributions.

Accounting Standard and Implementation Guidance for Revenue
Recognition(i) Overview
On March 31, 2020, ASBJ issued “Accounting Standard for Revenue
Recognition” (ASBJ Statement No.29), “Implementation Guidance on
Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30)
and “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No.19). The International
Accounting Standards Board (hereinafter referred to as the “IASB”) andthe Financial Accounting Standards Board (hereinafter referred to as the“FASB”) in the United States co-developed comprehensive accounting
standards for revenue recognition and issued “Revenue from Contracts
with Customers” (issued as IFRS 15 by the IASB and Topic 606 by the FASB)
in May 2014. The ASBJ developed comprehensive accounting standards
on revenue recognition and issued them in conjunction with theimplementation guidance based on the fact that IFRS 15 was applied
from fiscal years starting on or after January 1, 2018 and Topic 606 wasapplied from fiscal years starting after December 15, 2017.
As the basic policy in developing accounting standards for revenue
recognition, the ASBJ defined the accounting standard starting withincorporating the basic principle of IFRS 15 from a standpoint ofcomparability between financial statements, which is one benefit ofensuring consistency with IFRS 15. Furthermore, the ASBJ added
alternative accounting treatment without impairing comparability when
there are matters to be considered related to accounting practices, etc.
common in Japan.

(ii) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal year ending
March 31, 2022.

NTN Revitalization Story(m) Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes in fair value
included in profit for the period in which they arise, except for derivatives
which meet the criteria for deferral hedge accounting under which
unrealized gain or loss, net of the applicable income taxes, is deferred as
a component of net assets. Receivables and payables hedged by forward
foreign exchange contracts which meet certain conditions are translated
at the corresponding foreign exchange contract rates. Interest-rate swaps
which meet certain conditions are accounted for as if the interest rates
applied to the interest-rate swaps had originally applied to theunderlying debt.
Interest-rate and cross currency swaps which meet certain conditions
are accounted for as if the interest rates and currencies applied to theinterest-rate and cross currency swaps had originally applied to theunderlying debt.

4. Standards Issued but Not Yet Effective

About Us( l ) Deferred income taxes
Deferred income taxes are provided for temporary differences between
the balances of assets and liabilities reported for financial reporting
purposes and the corresponding balances for tax reporting purposes.

NTN Report 202092

Financial Report

Consolidated Financial Statements (March 31, 2020)
9. Short-Term Bank Loans, Long-Term Debt and Lease Obligations

The Company and its consolidated subsidiaries group fixed assets used for manufacturing by management segment into minimum units which generate
identifiable cash flows (e.g., a factory). They also group fixed assets used at the head office or used for sales activities as shared assets, and group fixed assets
on an individual basis when they do not expect any future use.
The Company and its consolidated subsidiaries wrote down the following assets to their respective net recoverable values because the Company and its
consolidated subsidiaries do not expect them to be recoverable. Consequently, the Company and its consolidated subsidiaries recorded related losses on
impairment of fixed assets of ¥29,001 million ($268,914 thousand) and ¥16,963 million in the accompanying consolidated statement of operations for theyears ended March 31, 2020 and 2019, respectively:

Short-term bank loans principally represent short-term notes with average annual interest rates of 1.03% and 1.54% at March 31, 2020 and 2019, respectively.
Long-term debt and lease obligations at March 31, 2020 and 2019 consisted of the following:Thousands of
U.S. dollars

Millions of yen

JapanAmericas

Europe

Usage

Production equipment and other

Production equipment

Production equipment and other

Classification

2020

2019

2020

Buildings and structures¥ 4,360¥ 3,114$ 40,428

Machinery and equipment

16,355

12,851

151,653

Land

400

489

3,709

Construction in progress

249

167

2,309

Other

591

342

5,480

Machinery and equipment

5,518

–

51,166

Buildings and structures

273

–

2,531

Machinery and equipment

1,220

–

11,313

2020

2019

2020

¥ 254,986¥ 249,243$ 2,364,374

0.405% unsecured bonds due 2025

10,00010,00092,7260.490% unsecured bonds due 2027

10,00010,00092,7260.430% unsecured bonds due 2028

10,00010,00092,726

Lease obligations due through 2053

5,645

2,212

52,343

290,631

281,455

2,694,895(41,121)(25,530)(381,297)¥ 249,510¥ 255,925$ 2,313,598

Less current portion

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2020 are summarized as follows:Year ending March 31,

Millions of yen

35

–

325

2021

¥ 41,121$ 381,297¥ 16,963$ 268,914

2022

53,056491,965

The recoverable value of the fixed assets presented in the above table has been measured primarily at net realizable value or value in use. If a fixed asset isunlikely to be sold or diverted to other usage, such asset is valued at nil. Value in use is measured as the sum of anticipated future cash flows by each business
units mainly discounted at rate of 6% for the year ended March 31, 2020 and 2019.

2023

51,350476,1462024

41,242

382,4192025

51,234

475,071

8. Securities

2026 and thereafter

52,628487,997¥ 290,631$ 2,694,895(a) Information regarding marketable securities classified as other securities at March 31, 2020 and 2019 is summarized as follows:Business Strategies

Thousands of
U.S. dollars¥ 29,001

Other

NTN Revitalization Story

Location

Thousands of
U.S. dollars

Millions of yen

Loans from banks and other financial institutions, due through 2029, at an average annual interest rate of 0.94%

About Us

7. Impairment of Fixed Assets

2020
Carrying
value

Acquisition
costs

10. Retirement Benefits

2019
Unrealized gain
(loss)

Carrying
value

Acquisition
costs

Unrealized gain
(loss)

Securities whose carrying value exceeds theiracquisition costs:
Equity securities¥ 17,124¥ 8,986¥ 8,138¥ 29,866¥ 11,798¥ 18,068

Securities whose carrying value does not exceed
their acquisition costs:
Equity securities
Total

3,512

4,372

(860)

4,088

4,999

(911)

¥ 20,636¥ 13,358¥ 7,278¥ 33,954¥ 16,797¥ 17,157

1. Outline of retirement benefits for employees
The Company and certain domestic consolidated subsidiaries have defined benefit pension plans (i.e., corporate pension fund plans and lump-sum payment
plans), covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts of which are determined by reference to theirbasic rates of pay, length of service, and the conditions under which termination occurs. They also have defined contribution pension plans and advancepayment plans. Certain overseas consolidated subsidiaries have defined benefit pension plans and/or defined contribution pension plans. The Company has
also established an employees’ retirement benefit trust.
2. Defined benefit pension plans(1) The changes in the retirement benefit obligation for the years ended March 31, 2020 and 2019 are as follows:

2020
Acquisition
costs

Unrealized gain
(loss)

Securities whose carrying value exceeds theiracquisition costs:
Equity securities$ 158,783$ 83,323$ 75,460

Securities whose carrying value does not exceed
their acquisition costs:

Total

40,540(7,974)$ 191,349$ 123,863$ 67,4862020¥ 102,441¥ 102,839$ 949,891

3,553

3,380

32,945Interest cost

1,705

1,799

15,810

Actuarial gain

166

(407)

1,539

Benefits paid

(5,500)(5,131)(50,999)

Other

32,5662019

Retirement benefit obligation at the end of the year

(1,016)(39)(9,421)¥ 101,349¥ 102,441$ 939,765

Company/Stock Information

Equity securities

2020

Service cost

Retirement benefit obligation at the beginning of the year

Financial Data

Thousands of
U.S. dollars

Millions of yen
Thousands of U.S. dollars

Carryingvalue

ESG Strategies

Millions of yen* Certain domestic consolidated subsidiaries calculate the liability for retirement benefits based on the simplified method.
(b) Sales and aggregate gain on investment securities are summarized as follows:
The Company sold certain available-for-sale securities with a fair value of ¥2,410 million ($22,347 thousand), and recognized gain of ¥1,353 million ($12,546
thousand) for the fiscal year ended March 31, 2020.

93 NTN Report 2020

NTN Report 202094

Financial Report

Consolidated Financial Statements (March 31, 2020)

Thousands of
U.S. dollars

Millions of yen

2020(6) The components of retirement benefit liability adjustments included in accumulated other comprehensive income (before tax effect) as of March 31, 2020
and 2019 are as follows:

2020

2019
¥ 62,446$ 561,463

Expected return on plan assets

1,434

1,463

13,297

Unrecognized actuarial loss

Actuarial gain or loss

(5,153)(2,575)(47,782)

Unrecognized past service cost

Contributions by the employers

3,357

3,716

31,128

Total

Benefits paid

(4,240)(4,310)(39,316)(189)(12,304)¥ 60,551$ 506,486(3) The balance of retirement benefit obligation and plan assets at fair value, liabilities and assets recognized in consolidated balance sheets as of March 31,
2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

¥ 94,896¥ 96,191$ 879,929

Plan assets at fair value(54,622)(60,551)(506,486)

40,27435,640373,443

Unfunded retirement benefit obligation

6,453

6,250

59,836

Net amount of liabilities and assets recognized in the consolidated balance sheet

46,72741,890433,279

46,72741,890433,279¥ 46,727¥ 41,890$ 433,279

Liability for retirement benefits
Net amount of liabilities and assets recognized in the consolidated balance sheet

2019

2020

¥ (12,500)¥ (9,934))$ (115,907)

(209)

(233)

(1,938)¥ (12,709)¥ (10,167)$ (117,845)(7) The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2020 and 2019 are as follows:
2020

2019

Equities

29.9%

38.4%

Bonds

41.2

33.9

General accounts at life insurance companies

15.1

16.1

Other

13.8

11.6

Total

100.0%

100.0%The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present and anticipated in
the future, and long-term expected rate of return from multiple plan assets.

Business Strategies

Funded retirement benefit obligation

2020

NTN Revitalization Story(1,327)¥ 54,622

Other
Plan assets at fair value at the end of the year

Thousands of
U.S. dollars

Millions of yen¥ 60,551

Plan assets at fair value at the beginning of the year

About Us

(2) The changes in plan assets for the years ended March 31, 2020 and 2019 are as follows:(8) The assumptions used in accounting for the defined benefit plans are as follows:
2020

2019

Discount rate

Principally 1.2%

Principally 1.2%

Expected long-term rate of return on plan assets

Principally 1.5%

Principally 2.5%

3. Defined contribution pension plans(4) The components of retirement benefit expenses for the years ended March 31, 2020 and 2019 are as follows:

2020

2019

2020
Contributions to defined contribution pension plans

Service cost

¥ 3,553¥ 3,380$ 32,945

Interest cost

1,705

1,799

15,810

Expected return on plan assets(1,434)(1,463)(13,297)

1,219

352

11,303¥ 1,6292019¥ 1,670

ESG Strategies

2020

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

2020$ 15,105

Amortization:
Actuarial loss

Retirement benefit expenses

35

622

¥ 4,103$ 47,383

Financial Data67
¥ 5,110

Past service cost(5) The components of retirement benefit liability adjustments included in other comprehensive income (before tax effect) for the years ended March 31, 2020
and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen

2020
Actuarial gain or loss
Past service cost
Total

2020

2019

¥ (2,567)¥ (1,817)$ (23,803)

24

24

223

¥ (2,543)¥ (1,793)$ (23,580)
Company/Stock Information

95 NTN Report 2020

NTN Report 202096

Financial Report

Consolidated Financial Statements (March 31, 2020)
13. Operating Leases(a) The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until
the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any time by resolution of
the shareholders or by the Board of Directors if certain conditions are met.
 Retained earnings include the legal reserve provided in accordance with the provisions of the Law. The legal reserve of the Company included inretained earnings amounted to ¥8,639 million ($80,106 thousand) at March 31, 2020 and 2019.

Future minimum lease payments subsequent to March 31, 2020 for non-cancelable operating leases were as follows:

Decrease

March 31, 2020

Shares issued:532,463,527––

532,463,527

1,320,628

1,413

7,095

1,314,946

Treasury stock:
Common stock

2019
Increase

Decrease

March 31, 2019

Shares issued:
Common stock

532,463,527––

532,463,527

1,405,959

1,829

87,1601,320,628

Treasury stock:
Common stock760$ 7,047

3,068

28,448¥ 3,828$ 35,495

12. Contingent Liabilities
Lawsuits, etc.
(1) There are ongoing investigations by the authorities into consolidated subsidiaries in Brazil and elsewhere on suspicion of violating competition laws ofeach country in connection with overseas sales of bearings.
(2) In the U.S., a number of class action suits was filed against the Company and its consolidated subsidiaries for suspected price-fixing of bearing sales withbusiness competitors.

(4) The Company and its related companies may be subject to claims for compensation for damages in connection with the past violation of the AntiMonopoly Act of Japan or the European Competition Law, etc. and continue to address these claims. Depending on the results of the claims, the results ofoperations of the Company and its consolidated subsidiaries could be affected. However, it is currently difficult to make reasonable estimates of the future
possible effects on the results of operations and financial position of the Company and its consolidated subsidiaries.

(b) Types of financial instruments and related risks
Trade receivables, notes, accounts receivable and electronically recorded monetary claims, are exposed to credit risk of customers. In addition, as a result of
the business of the Group, which operates globally, foreign currency trade receivables are exposed to currency rate fluctuation risk, which is mitigated byutilizing forward foreign currency exchange contracts. Securities are mainly composed of stocks of the companies with which the Group has business
relationships and they are exposed to fluctuation risk of market prices.
Trade payables, notes, accounts payable and electronically recorded obligations, are due within one year. Certain trade payables resulting from the importof raw materials are denominated in foreign currencies. These are exposed to fluctuation risk of foreign currencies. However, the risk is mitigated because thetrade payables, notes and accounts payable denominated in foreign currencies are within persistently the range of accounts receivable denominated in thesame currencies.
Loans are mainly utilized for business operations of the Group. Short-term loans are mainly utilized for financing of operating activities. Long-term loans aremainly utilized for capital investments and financing. These have maturity dates of 10 years or less, at the longest, subsequent to March 31, 2020. Certain loans
are exposed to fluctuation risk of interest rates and fluctuation risk of exchange rates and this risk is hedged by derivative transactions of interest rate swap
agreements and interest-rate and cross currency swap agreements.
The Group has a policy to utilize derivative transactions involving forward foreign currency exchange contracts, currency option agreements, currency swap
agreements, interest rate option agreements and interest rate swap agreements for the purpose of avoiding future fluctuation risk of foreign currencies tradereceivables and payables and mitigating future fluctuation risk of interest rate of loans and corporate bonds. The Group utilized forward foreign currency
exchange contracts, interest rate swap agreements and interest-rate and cross currency swap agreements for the year ended March 31, 2020. Refer to “(m)Derivative financial instruments and hedging activities” in Note 2 “Summary of Significant Accounting Policies.”(c) Risk management for financial instruments(i) Monitoring of credit risk (the risk that customers or counterparties may default)In accordance with internal rules and manual, the credit management section periodically monitors financial conditions of major customers, manages
collection due dates and balances of each customer and tries to identify credit risk of customers with worsening financial conditions at the early stage andmitigate the risk. Credit risk of securities is quite low because the Group utilizes certificate of deposits with high credit ratings, up to a limited amount,which is approved by the Company. The Group believes credit risk of derivative transactions is almost nil because counterparties are financial institutions
with high credit ratings.

Financial Data(3) In Europe, a lawsuit has been filed against the Company and its two consolidated subsidiaries in the France Tribunal de Commerce de Lyon. The suit seeks
the payment of damages of €66.7 million (provisional amount) to Renault S.A. and its total 15 group companies (hereinafter referred to as “Renault”). In
addition, another lawsuit has been filed against the Company and its two consolidated subsidiaries in Europe in the United Kingdom Commercial Court by
Fiat Chrysler Automobiles N.V. and its total 7 group companies (hereinafter referred to as “FCA”).
 These suits have been filed because Renault and FCA claimed damages incurred in connection with the alleged violation of the European Competition
Law, which is the subject of a decision made by the European Commission on March 19, 2014.

Overview(a) Policy for financial instruments
The Company and its subsidiaries (collectively, the “Group”) raise necessary funds in accordance with management plans mainly by bank borrowings andissuance of corporate bonds in support of operations related to the manufacture and sales of bearings, constant-velocity joints (CVJs) and precisionequipments. The Group utilizes bank borrowings for short-term operating funds, and bank borrowings and issuance of corporate bonds for long-term capital
investments and finances. Temporary surplus funds are managed by low-risk financial assets. The Group utilizes derivatives to avoid or mitigate risks as
described in the later part of this note and does not hold them for speculative purposes.

ESG Strategies

The increase in treasury stock of 1,413 shares was due to purchases of shares of less than one voting unit and the decrease in treasury stock of 7,095 shares
was mainly due to disposal of shares by the “Officer Remuneration BIP Trust” for the year ended March 31, 2020 (Please refer to Note 5). Additionally, theCompany included 472,666 shares held by the “Officer Remuneration BIP Trust” in the number of treasury stock at March 31, 2020.
The increase in treasury stock of 1,829 shares was due to purchases of shares of less than one voting unit and the decrease in treasury stock of 87,160 shares
was mainly due to disposal of shares by the “Officer Remuneration BIP Trust” for the year ended March 31, 2019 (Please refer to Note 5). Additionally, theCompany included 479,761 shares held by the “Officer Remuneration BIP Trust” in the number of treasury stock at March 31, 2019.

14. Financial Instruments

Business Strategies

April 1, 2018¥

Thousands of
U.S. dollars

NTN Revitalization Story

2020

Common stock

2022 and thereafter

Millions of yen

The total amount for the year ended March 31, 2020 did not include the lease obligations of ¥2,796 million ($25,926 thousand) recorded in accordance withthe application of IFRS 16.

Number of shares

Increase

2021

Total

(b) Movements in shares issued and treasury stock during the years ended March 31, 2020 and 2019 are summarized as follows:

April 1, 2019Years ending March 31,

About Us

11. Shareholders’ Equity

Company/Stock Information(ii) Monitoring of market risks (the risks arising from fluctuations in foreign currency exchange rates, interest rates and others)
The Group mainly utilizes forward foreign currency exchange contracts for hedging of fluctuation risk which is identified by each currency. Depending on
the market conditions of foreign currencies, the Group utilizes forward foreign currency exchange contracts for forecasted export transactions with amaximum period of 6 months.
 The Group utilizes interest rate swap agreements and interest-rate and cross currency swap agreements to mitigate fluctuation risk of interest rates andfluctuation risk of loan principal due to floating exchange rates.
 The Group continuously reviews securities holdings by monitoring periodically the market value and financial condition of securities’ issuers (companies
with business relationships with the Group) and by evaluating those relationships.
 The Group has established policies which include maximum upper limits and reporting obligations for derivative transactions and complies fully withthese guidelines. Derivative transactions are entered into by the Company’s Accounting Department and certain consolidated subsidiaries. The Company
carries out mutual supervision and monitoring of the derivative transactions in accordance with management policies and its consolidated subsidiaries
apply the same approach. Each derivative transaction of the Company is reported to the responsible director when entered into. The consolidated
subsidiaries are required to report the status of their derivatives transactions to the Company on a monthly basis and are also required to consult with theCompany when they enter into derivative transactions other than forward foreign currency exchange contracts.
(iii) Monitoring of liquidity risk (the risk that the Group may not be able to meet its obligations on scheduled due dates) The Group manages liquidity risk with the responsible section preparing and updating cash flow plans and keeping necessary funds based on reportsof each section.

97 NTN Report 2020

NTN Report 202098

Financial Report

Consolidated Financial Statements (March 31, 2020)(d) Supplementary explanation of the fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value isreasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result indifferent fair value. In addition, the notional amounts of derivatives in Note 15 “Derivative Financial Instruments and Hedging Activities’’ are not necessarily
indicative of the actual market risk involved in the derivative transactions.

(5) Investment securities
The fair value of equity securities is based on quoted market prices.

Fair Value of Financial Instruments
The carrying value of financial instruments on the consolidated balance sheets, fair value and the difference as of March 31, 2020 and 2019, are shown in thefollowing table. The table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note 2 below).

(7) Short-term bank loans, (9) Notes and accounts-trade payables (10) Electronically recorded obligations and (11) Accrued income taxes
Since these items are settled in a short time period, their carrying value approximates fair value.

Millions of yen

Carrying value

Fair value¥ 71,165(1) Cash and cash equivalents(2) Short-term investments(3) Notes and accounts – trade receivables¥ 71,165

Difference¥

Carrying value–¥ 83,474

Fair value

Difference¥ 83,474

¥

–

6,403

6,403

–

6,770

6,770

–

103,235

103,235–

128,806

128,806

–

4,788

4,788

–

9,505

9,505

–

20,636

20,6382

33,95433,9584(6) Short-term loans receivable included in othercurrent assets

2,652

2,652

–

71

71

–

¥ 208,879¥ 208,881

2¥ 262,580¥ 262,584(7) Short-term bank loans

77,431

77,431–

71,102

71,102–(8) Current portion of long-term debt

39,84539,845–25,33025,330–(9) Notes and accounts – trade payables

48,676

48,676–59,971

59,971–(10) Electronically recorded obligations

68,68568,685–73,18873,188–(11) Accrued income taxes

1,828

1,828

–

2,504

2,504

–

(12) Long-term debt

245,140

248,523

3,383

253,912

256,307

2,395

Total liabilities¥ 481,605¥ 484,988¥ 3,383¥ 486,007¥ 488,402¥ 2,395

¥

¥

¥

¥

¥

¥

Derivative transactions (*)

1,331

1,331

¥

–

896

896

¥

4

–

Derivative Transactions
Please refer to Note 15 “Derivative Financial Instruments and Hedging Activities” section of these Notes to Consolidated Financial Statements.
Note 2: Financial instruments for which it is extremely difficult to determine the fair value are as follows:

Unlisted stocks
Stocks of subsidiaries and affiliates
Other
Total

59,372–(3) Notes and accounts – trade receivables

957,253

957,253–(4) Electronically recorded monetary claims

44,39744,397–(5) Investment securities

191,349

191,36718(6) Short-term loans receivable included in othercurrent assets

24,592

24,592–$$ 196,106$

Cash and cash equivalents

Within one year

More than one
year and within
five years

More than five
years and within
ten years¥ 71,165

¥–

¥–

¥–

More thanten years

–

–

–

–

–

–

Electronically recorded monetary claims

4,788

–

–

–

18

Short-term loans receivable included in other current assets

2,652

–

–

–

Total

¥ 188,243

¥–

¥–

¥–

Within one year

More than one
year and within
five years

More than five
years and within
ten years¥ 83,474

¥–

¥–

¥–

6,770

–

–

–

128,806–––

717,984

717,984–(8) Current portion of long-term debt

369,466

369,466–(9) Notes and accounts – trade payables

451,352

451,352–

Short-term investments
Trade receivables

2019

636,886

636,886–(11) Accrued income taxes

16,95016,950–(12) Long-term debt

2,273,077

2,304,446

31,369Cash and cash equivalents

Total liabilities$ 4,465,715$ 4,497,084$ 31,369

Short-term investments$

Trade receivables–

Electronically recorded monetary claims* Assets and liabilities arising from derivative transactions are shown at net value with the amount in parentheses representing net liability position.

Short-term loans receivable included in other current assets
Total

More thanten years

9,505

–

–

–

71

–

–

–

¥ 228,626

¥–

¥–

¥–

NTN Report 2020

Company/Stock Information(10) Electronically recorded obligations

99 NTN Report 2020

¥ 25,237

6,403(7) Short-term bank loans

12,342¥ 21,149

103,235$ 1,936,863

$

2,662

2020

–

$ 1,936,845

12,342

288

Financial Data

59,372$287

ESG Strategies(2) Short-term investments

Derivative transactions (*)$ 193,444

Millions of yen$ 659,882

Total assets¥ 24,949

Difference$ 659,882(1) Cash and cash equivalents¥ 20,862

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in thepreceding table.

2020
Fair value

2020

2019

Note 3: Redemption schedules for cash and cash equivalents, receivables and marketable securities with maturities at March 31, 2020 and 2019 are as follows:

Thousands of U.S. dollars

Carrying value

Thousands of
U.S. dollars

Millions of yen

2020

Business Strategies(4) Electronically recorded monetary claims(5) Investment securities

Total assets(8) Current portion of long-term debt and (12) Long-term debt
Long-term debt is composed of corporate bonds and long-term loans. The fair market value of corporate bonds is based on quoted market prices. The
fair value of long-term loans is based on the present value of the total of principal and interest discounted by the interest rate to be applied assuming
new loans under the similar conditions to existing loans are made.
 Certain long-term loans with floating interest rates have been hedged by interest rate swap agreements and interest-rate and cross currency swap
agreements. These have been accounted for as loans with fixed interest rates. The fair value of those long-term loans is based on the present value ofthe total of the principal, interest payments and net cash flows of the swap agreements discounted by the interest rates to be applied assuming newloans under similar conditions are made.

2019

NTN Revitalization Story

2020

About Us

Note 1: Methods to determine the fair value of financial instruments and other matters related to securities and derivative transactions
(1) Cash and cash equivalents, (2) Short-term investments, (3) Notes and accounts-trade receivables, (4) Electronically recorded monetary claims and (6)Short-term loans receivable included in other current assets
Since these items are settled in a short time period, their carrying value approximates fair value.

100

Financial Report

Consolidated Financial Statements (March 31, 2020)
Millions of yen

2020

2019

More than one
year and within
five years

More than five
years and within
ten years

Cash and cash equivalents$ 659,882

$–

$–

$–

Short-term investments

59,372–––

Trade receivables

957,253–––

Electronically recorded monetary claims

44,397–––

Short-term loans receivable included in other current assets

24,592–––$ 1,745,496

$–

$–

$–

Total

More thanten years

Classification

Transaction

Notional
amountMore than
one year

Valuation gain
(loss)

Fair value

Forward foreign currency exchange contracts
Selling:

–

¥ 30

¥ 30

U.S. dollars¥ 6,419
14,939

–

(129)

(129)

Other

2,760

–

(24)

(24)

572

–

6

6

15,39812,731

916

916

Euro

Over-the-counter transactions

Buying:Note 4: The redemption schedule for long-term debt is disclosed in Note 9 “Short-Term Bank Loans, Long-Term Debt and Lease Obligations” section of these
Notes to Consolidated Financial Statements.

Other

15. Derivative Financial Instruments and Hedging Activities¥

NTN Revitalization Story

Within one year

About Us

Thousands of U.S. dollars

Interest-rate and cross currency swaps
Receive/fixed yen and pay/fixed Euro(a) Derivative transactions to which hedge accounting is not applied
The estimated fair value of the derivatives positions outstanding which do not qualify for deferral hedge accounting at March 31, 2020 and 2019 issummarized as follows:

Other
Total

4,328

–

97

97

¥ 44,416¥ 12,731

¥ 896

¥ 896

Thousands of U.S. dollars

Millions of yen

2020

2020
Classification

Transaction

Notional
amountMore than
one year

Valuation gain
(loss)

Fair value

Classification¥ 4,676

¥

–

¥

17

¥

$

158

158

–

2,485

2,485

–

–

–

–

141,536

73,012

13,00913,00930,460–(2,726)(2,726)$ 367,323$ 73,012$ 12,342$ 12,342

(63)

(63)

268

268

Other
Over-the-counter transactions

ESG Strategies

25,509–Buying:Buying:Other–

Interest-rate and cross currency swaps

Interest-rate and cross currency swaps

15,264

7,874

1,403

1,403

3,285

–

(294)

(294)

¥ 39,614¥ 7,874¥ 1,331¥ 1,331

Receive/fixed yen and pay/fixed Euro
Other
Total

Financial Data

Total

$

(584)

–

–

–

(584)

2,751

–

$

–

13,638–$ 43,359
126,459

Other

Other

Valuation gain
(loss)Euro

U.S. dollars

Receive/fixed yen and pay/fixed Euro

Fair value

17

U.S. dollars

Other

More than
one year

Selling:

Selling:Over-the-counter transactions

Transaction

Notional
amountForward foreign currency exchange contracts

Forward foreign currency exchange contracts

Euro

Business Strategies

Currency-related transactions

The fair value of forward foreign currency exchange contracts is computed using prices provided by counterparty financial institutions.

Company/Stock Information

101 NTN Report 2020

NTN Report 2020102

Financial Report

Consolidated Financial Statements (March 31, 2020)

Millions of yen

2020
Method of hedge accounting
Swap rates applied to underlying long-term debt

Transaction

The Company recorded loss resulting from low operating capacity in the amount of ¥2,097 million ($19,445 thousand) for the year ended March 31, 2020. This
represents fixed costs recorded during the period attributable to some overseas consolidated subsidiaries that had temporarily suspended operations due tothe spread of the COVID-19 infection worldwide.

19. Other Comprehensive Income (Loss)

More than
one year

Fair value

The following table presents the analysis of other comprehensive income (loss) for the years ended March 31, 2020 and 2019.

Interest rate swaps
Receive / floating and pay / fixed¥ 6,000¥ 2,500(*1)
2020

Selling:

¥

66

¥

–

(*2)

¥ (8,526)¥ (6,254)$ (79,058)(1,353)–(12,546)

Before tax effect(9,879)(6,254)(91,604)

Tax effect

2,953

1,894

27,382

Total(6,926)(4,360)(64,222)(13,710)(1,939)(127,127)

–

98

–

(13,710)(1,841)(127,127)

Amount arising during the year
Reclassification adjustments for gains included in profit

Millions of yen

2019
Method of hedge accounting

Transaction

Notional
amountMore than
one year

Fair value

Translation adjustments:

Interest rate swaps¥ 6,000(*1)

Reclassification adjustments for gains included in profit

Forward foreign currency exchange contract

Before tax effectSelling:¥ 130

U.S. dollars

¥

–

(*2)

Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable$ 55,635

Fair value$ 23,181(*1)(127,127)(5,258)(2,114)(48,755)

2,810

457

26,056

Before tax effect(2,448)(1,657)(22,699)

Tax effect(1,301)

392(12,064)

Total(3,749)1,265(34,763)

(44)

(936)

(407)

–

(63)

–

Share of other comprehensive loss of affiliates accounted for by the equity method:

Forward foreign currency exchange contract

Amount arising during the year

Selling:
U.S. dollars–(1,841)

Reclassification adjustments for gains included in profit

More than
one yearInterest rate swaps
Receive / floating and pay / fixed–(13,710)ESG Strategies

Swap rates applied to underlying long-term debt

Notional
amount–Total

Amount arising during the year

2020
Transaction

Tax effect

Retirement benefit liability adjustments:

Thousands of U.S. dollars

Method of hedge accounting

Amount arising during the year

Business Strategies¥ 6,000

Receive / floating and pay / fixed
Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable

2020

2019

Net unrealized holding loss on securities:

U.S. dollars

Swap rates applied to underlying long-term debt

Thousands of
U.S. dollars

Millions of yen
Forward foreign currency exchange contract

NTN Revitalization Story

Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable

Notional
amount18. Loss Resulting from Low Operating Capacity

About Us(b) Derivative transactions to which hedge accounting is applied
The estimated fair value of the derivatives positions outstanding which qualify for deferral hedge accounting at March 31, 2020 and 2019 is summarized asfollows.

$

612

$

–

(*2)

Total
Other comprehensive loss, net

(44)

(999)

(407)

¥ (24,429)¥ (8,465)$ (226,519)

Financial Data

*1 Because interest rate swap agreements are accounted for applying swap rates to underlying long-term debt, their fair value is included in that of long-term
debt disclosed in Note 14 “Financial Instruments.”*2 Because forward foreign currency exchange contracts are accounted for applying forward foreign exchange rate to underlying accounts-trade receivable,
for the years ended March 31, 2020 and 2019, respectively, their fair value is included in that of accounts-trade receivable.

Reclassification adjustments for gains included in profit

16. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses totaled ¥19,962 million ($185,099 thousand) and¥21,661 million for the years ended March 31, 2020 and 2019, respectively.

17. Loss on Surcharge Payments under the Anti-Monopoly Act

103 NTN Report 2020

Company/Stock Information

The Company has negotiated the compensation of damages with a part of customers in association with investigations by the authorities about thecompetition laws. Nevertheless, in overall consideration of the effects to operations of the Company and its consolidated subsidiaries due to extended
negotiations, the Company reached the conclusion to pay the settlement amount because the Company considered that an amicable and early resolution
would accord with the overall benefits for both parties.
As a result, the Company and its consolidated subsidiaries recorded loss on surcharge payments under the Anti-Monopoly Act in the amount of ¥745
million ($6,908 thousand) and ¥2,108 million for the years ended March 31, 2020 and 2019, respectively.

NTN Report 2020104

Financial Report

Consolidated Financial Statements (March 31, 2020)

20. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporate taxes, inhabitants’ taxes and enterprise taxes which, in theaggregate, resulted in statutory tax rates of 29.9% and 30.0% for the years ended March 31, 2020 and 2019, respectively. Overseas subsidiaries are subject tothe income taxes of the respective countries in which they operate.
The details of the differences between the statutory tax rate and effective tax rate for the year ended March 31, 2020 are omitted because the Company andits consolidated subsidiaries recorded a loss before income taxes for the year.
The effective tax rate for the years ended March 31, 2019 differs from the Company’s statutory tax rate for the following reasons:
2019

Millions of yen

2020
Year ending March 31,

(401)

¥

257

386

(64)

322

437

–

437

2024

Permanent non-taxable income(68.0)

2025

Elimination of dividend income

96.7

2026 and thereafter

120

(2)

118

17,352(16,751)

601¥ 19,467¥ (17,387)(*2) ¥ 2,080

Millions of yen

(1.7)

2019

Tax credit for research and development expenses(1.6)

Unrealized inter-company profit

29.5

Other

6.9

2020

309.8%

2021

890

(612)

278

2022

698

(379)

319

2023

546

(184)

362

Effective tax rate

The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2020 and 2019 arepresented below:
Thousands of
U.S. dollars

Millions of yen

2020

Year ending March 31,

Tax losscarryforwards (*1)

Valuation allowancefor tax loss
carryforwards

Deferred tax
assets for tax loss
carryforwards

¥

¥

¥

2024
2025 and thereafter

2020

2019

444

(266)

Business Strategies

267.2

Decrease in deferred tax assets due to change in statutory tax rates

NTN Revitalization Story

345

4.9

Increase in valuation allowance

¥

(169)

30.0%

(1.0)

658
514

Permanent non-deductible expenses(53.1)¥

Deferred tax
assets for tax loss
carryforwards

2022

Statutory tax rate

Difference in overseas consolidated subsidiaries’ applicable tax rates

Valuation allowance
Tax lossfor tax loss
carryforwards (*1)
carryforwards

2021

2023

Equity in earnings of affiliates

About Us

Note 2: Tax loss carryforwards and related deferred tax assets as of March 31, 2020 and 2019 expired or will expire as follows:

178

528

(55)

473

13,510(9,622)

3,888¥ 16,616¥ (11,118)(*2) ¥ 5,498

Deferred tax assets:¥ 16,616$ 180,509

Thousands of U.S. dollars

15,601

15,503

144,6612020

Impairment loss

11,492

5,882

106,560

Accrued expenses

2,975

4,115

27,586

Year ending March 31,

Tax losscarryforwards (*1)

$

6,101

Valuation allowancefor tax loss
carryforwards$

Deferred tax
assets for tax loss
carryforwards

Valuation loss on investment securities

1,452

895

13,4642021(3,718)$ 2,383

Inventories

1,011

990

9,375

2022

4,766

(1,567)

3,199

4,101

45,816

2023

3,579

(593)

2,986

48,102527,971

2024

4,052

–

4,052

Valuation allowance for tax loss carryforwards(17,387)(11,118)(161,222)

2025

Valuation allowance for taxable temporary differences(23,153)(10,605)(214,688)

2026 and thereafter(40,540)(21,723)(375,910)

16,39926,379152,061

Less: valuation allowance
Total deferred tax assets

Deferred tax liabilities:
Depreciation and amortization(6,459)(8,895)(59,892)

Unrealized holding gain on securities(2,172)(5,126)(20,140)

Reserve for deferred gain on property included in retained earnings(1,143)(1,167)(10,599)(1,119)(8,020)(10,639)(16,307)(98,651)

Net deferred tax assets¥ 5,760¥ 10,072$ 53,410

(19)

1,094

(155,325)

5,573$ 180,509$ (161,222)(*2) $ 19,287(*1) The tax loss carryforwards in the above table are measured using the statutory tax rates.
(*2) The balance of deferred tax assets of ¥2,080 million ($19,287 thousand) and ¥5,498 million arising from tax loss carryforwards of ¥19,467 million ($180,509
thousand) and ¥16,616 million calculated after multiplying the loss amount with the statutory tax rates as of March 31, 2020 and 2019, respectively. A
certain portion of tax loss carryforwards was considered to be recoverable in future income taxes because it is probable that future taxable profit would
be available.

Company/Stock Information(865)

Total deferred tax liabilities

Other

1,113
160,898

Financial Data

4,941
56,939Other
Gross deferred tax assets

ESG Strategies¥ 19,467

Liability for retirement benefits

Tax loss carryforwards

Note 1: Valuation allowance is increased ¥18,817 million ($174,482 thousand) in the years ended March 31, 2020. The main reason for this increase is thatvaluation allowance for taxable temporary differences increased ¥12,549 million ($116,363 thousand).

105 NTN Report 2020

NTN Report 2020106

Financial Report

Consolidated Financial Statements (March 31, 2020)

Amounts per share at March 31, 2020 and 2019 and for the years then ended were as follows:
Yen

2020
Net assets¥ 294.00

Millions of yen

U.S. dollars

2019¥ 433.32

2020

2020
Reporting segments$ 2.73Japan

Loss attributable to owners of parent:
BasicCash dividends

About Us

3. Information as to net sales, profit or loss, assets, liabilities, and other items for each reporting segment for the years ended March 31, 2020 and2019
Reportable segment information for the years ended March 31, 2020 and 2019 is summarized as follows:

21. Amounts per Share(82.83)(13.10)(0.77)

5.00

15.00

0.05

Americas

EuropeAsia and other areas

Total

Adjustments

Consolidated

Sales, profit and assets
or liabilities by reporting
segments:

NTN Revitalization Story

Net sales:¥ 205,371¥ 169,879¥ 152,582¥ 123,664

Inter-segment sales andtransfers

123,726

1,194

3,058

11,266

Total

329,097

171,073

155,640

134,930

Segment profit or loss

¥ (1,282)¥ (6,438)¥

402¥ 11,419¥

Segment assets¥ 584,431¥ 161,409¥ 128,354¥ 170,303¥ 1,044,497¥ (286,675)¥ 757,822

Segment liabilities¥ 417,340¥ 112,518¥ 101,592¥ 38,182¥ 669,632¥ (80,188)¥ 589,444

Depreciation and amortization¥ 13,424

¥

9,719

¥

7,363

¥

6,801

¥

37,307¥–¥ 37,307

Capital expenditures¥ 38,754¥ 18,047

¥

6,097

¥

4,692

¥

67,590¥(41)¥ 67,549

Sales to third parties¥ 651,496

139,244(139,244)–

790,740(139,244)

651,496

¥

2,956

¥

7,057

Millions of yen

2019
Reporting segments
Japan

Americas

EuropeAsia and other areas

Total

Adjustments

Consolidated

Sales, profit and assets
or liabilities by reporting
segments:
Net sales:¥ 216,268¥ 194,668¥ 179,827¥ 142,806¥ 733,569

Inter-segment sales andtransfers

136,804

3,635

4,177

12,771

Total

353,072

198,303

184,004

155,577

Sales to third parties

682

¥

4,345

¥

–

¥ 733,569

157,387(157,387)–

890,956(157,387)

733,569

23,200¥

Segment profit¥955¥ 17,218¥

3,746¥ 26,946

Segment assets¥ 609,258¥ 176,903¥ 143,805¥ 173,683¥ 1,103,649¥ (262,898)¥¥ 840,751

Segment liabilities¥ 417,716¥ 107,032¥ 110,503¥ 45,417¥ 680,668¥ (86,322)¥ 594,346

Depreciation and amortization¥ 15,285

¥

9,687

¥

7,117

¥

6,837

¥

38,926¥–¥ 38,926

Capital expenditures¥ 27,253¥ 13,600

¥

9,366

¥

5,146

¥

55,365¥(553)¥ 54,812

Financial Data

(Application of IFRS 16)
Certain overseas consolidated subsidiaries have applied IFRS 16, “Leases” from the beginning of the fiscal year ended March 31, 2020. The cumulative effect ofapplying IFRS 16 was recognized by adjusting the amounts of tangible fixed assets, intangible fixed assets, lease liabilities and retained earnings at the
beginning of the fiscal year ended March 31, 2020, in accordance with the transitional treatment provided in this standard. However, the amounts recorded
for the previous fiscal year ended March 31, 2019 have not been revised. In addition, the effects of applying IFRS 16 on segment information are immaterial.

–

4,101

¥

ESG Strategies

2. Calculation methods used for net sales, profit or loss, assets, liabilities and other items on each reporting segment
The accounting policies of the segments are substantially the same as those described in Note 2 “Summary of Significant Accounting Policies.” Inter-segment
sales and transfers are recorded at the same prices used in transactions with third parties.

651,496

Other items:

22. Segment Information
1. Outline of reporting segments
The Group’s reporting segments are divisions of the Group for which separate financial information is available, and whose operating results are reviewed
regularly by the highest management decision-making body (the Board of Directors meeting of the Company) in order to allocate management resources
and assess performance of operations.
The Group’s main business lines consist of the manufacture and sales of bearings, CVJs and precision equipments for the aftermarket, general industrial
machinery market, and automotive market. Business activities in Japan are controlled by the Company (the Head Office), and overseas business activities arecontrolled by the General Manager responsible in each region. Business entities in each region prepare their own plans and strategies to conduct businessactivities while analyzing profitability and the investment efficiency of operations.
Accordingly, the Group has four reporting segments based on geographic business segmentation controlled by the Head Office or the General Managers:
Japan, the Americas, Europe, and Asia and other areas. Each reporting segment engages in the manufacture and sale of bearings, CVJs, and precisionequipments and other products.

¥

Business Strategies

Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end.
Basic loss attributable to owners of parent per share is computed based on the profit or attributable to owners of parent of common stock and theweighted-average number of shares of common stock outstanding during the year. Diluted profit attributable to owners of parent per share has not beenpresented because there were no potentially dilutive shares of common stock, and the Company and consolidated subsidiaries recorded loss attributable toowners of parent for the years ended March 31, 2020 and 2019.
The Company recorded shares held by the “Officer Remuneration BIP Trust” (Please refer to Note 5) as treasury stock in the consolidated financial statements
as of March 31, 2020 and 2019. Accordingly, to compute “net assets per share,” the Company’s shares held by the trust (472,666 shares and 479,761 shares at
March 31, 2020 and 2019, respectively) are included in treasury stock that is excluded from the number of shares outstanding as of March 31, 2020 and 2019.
In addition, to compute “Loss attributable to owners of parent per share,” the Company’s shares held by the trust (474,565 and 516,314 average number ofshares for the years ended March 31, 2020 and 2019, respectively) are included in treasury stock that is excluded from the computation of the average numberof shares for the years ended March 31, 2020 and 2019.
Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective years together with the interim
cash dividends paid.

Other items:

Company/Stock Information

107 NTN Report 2020

NTN Report 2020108

Financial Report

Consolidated Financial Statements (March 31, 2020)

2020
Reporting segments
Japan

Americas

EuropeAsia and other areas

Total

Adjustments

Consolidated

Millions of yen

Sales, profit and assets
or liabilities by reporting
segments:

2020

Net sales:$ 1,575,214$ 1,414,827$ 1,146,683$ 6,041,040

Inter-segment sales andtransfers

1,147,258

11,07228,355

104,464

Total

3,051,574

1,586,286

1,443,182

1,251,147

3,728$ 105,883$(11,887)$(59,697)$–$ 6,041,040

1,291,149(1,291,149)–

7,332,189(1,291,149)

6,041,040

38,027$

Segment profit or loss$$

27,410$65,437

Segment assets$ 5,419,176$ 1,496,676$ 1,190,171$ 1,579,146$ 9,685,169$ (2,658,214)$ 7,026,955

Segment liabilities$ 3,869,813$ 1,043,331$ 942,019$ 354,045$ 6,209,208$ (743,549)$ 5,465,659

Japan

Americas

EuropeAsia and other areas

Total¥ 197,996¥ 174,308¥ 140,839¥ 138,353¥ 651,496

NTN Revitalization Story$ 1,904,316

Sales to third parties

About Us

(2) Regional information(a) Sales
Sales categorized by country and region based on locations of customers within the Group for the years ended March 31, 2020 and 2019 are summarized asfollows:

Thousands of U.S. dollars

Millions of yen

2019
Japan

Americas

EuropeAsia and other areas

Total¥ 207,249¥ 201,464¥ 167,826¥ 157,030¥ 733,569

Thousands of U.S. dollars

2020

Other items:$ 124,475$

90,120$68,274$63,063$ 345,932$–$ 345,932

Japan

Americas

EuropeAsia and other areas

Total

Capital expenditures$ 359,349$ 167,342$

56,535$43,507$ 626,733

$

(380)

$ 626,353$ 1,835,931$ 1,616,283$ 1,305,939$ 1,282,887$ 6,041,040

The total amount of segment profit is adjusted to operating income of the consolidated statement of operations.
Other than those corresponding to segment assets, adjustments relate to the elimination of inter-segment transactions, etc. The adjustments for segment
assets consist of inter-segment elimination, etc. of ¥307,596 million ($2,852,205 thousand) and ¥297,147 million and the corporate assets of the Group of¥20,922 million ($194,001 thousand) and ¥34,249 million for the years ended March 31, 2020 and 2019, respectively. The corporate assets are mainly longterm investment funds (investment securities) for the years ended March 31, 2020 and 2019.

“Americas” includes the U.S.A., Canada and Central and South America. “Europe” includes Germany, France, the U.K. and others. “Asia and other areas” include
China, Thailand, India and others. The sales of the “Americas” segment above include the sales to customers in the U.S.A. of ¥146,644 million ($1,359,766
thousand) and ¥171,062 million for the years ended March 31, 2020 and 2019, respectively. The sales of the “Asia and other areas” segment above include thesales to customers in China of ¥79,886 million ($722,068 thousand) for the years ended March 31, 2019.
(b) Property, plant and equipment
Property, plant and equipment categorized by country and region within the Group at March 31, 2020 and 2019 are summarized as follows:

4. Related information(1) Sales by products and service
Sales by products and service classified by the similarity of the market for the years ended March 31, 2020 and 2019 are summarized as follows:

Millions of yen

2020
Aftermarket
Sales to third parties¥ 109,417

Automotive¥ 105,072¥ 437,007

Total¥ 118,849

Asia and other areas¥ 38,825

Total¥ 262,644

Millions of yen

2019¥ 104,182
Automotive¥ 123,398¥ 45,225¥ 491,322

Americas¥ 79,046

Europe¥ 48,400

Asia and other areas¥ 48,235

Total¥ 279,863

Total¥ 733,569

Financial Data

Sales to third parties

Europe¥ 78,120

Japan

2019
Industrial
machinery

Americas¥ 651,496

Millions of yen

Aftermarket

Japan¥ 100,474

ESG Strategies

2020

Millions of yen

Industrial
machineryBusiness Strategies

Depreciation and amortization

Thousands of U.S. dollars

2020

Aftermarket
Sales to third parties

Japan

Americas

EuropeAsia and other areas

Total

2020

$ 931,652$ 724,373$ 419,352$ 360,007$ 2,435,384

Industrial
machinery$ 974,287

Automotive$ 4,052,177

Total$ 6,041,040

1. Property, plant and equipment in “Americas” in the amount of ¥70,347 million ($652,297 thousand) and ¥70,062 million is located in the U.S.A. at March 31,
2020 and 2019, respectively.
2. Property, plant and equipment in “Europe” in the amount of ¥29,688 million ($275,284 thousand) and ¥31,930 million is located in France at March 31, 2020
and 2019, respectively.
3. Property, plant and equipment in “Asia and other areas” in the amount of ¥27,623 million ($256,136 thousand) and ¥35,843 million is located in China at
March 31, 2020 and 2019, respectively.

NTN Report 2020

Company/Stock Information

109 NTN Report 2020

$ 1,014,576

Thousands of U.S. dollars

110

Financial Report

Consolidated Financial Statements (March 31, 2020)

Financial Report

Independent Auditor’s Report
About Us

5. Loss on impairment of fixed assets
Loss on impairment of fixed assets by reporting segment for the years ended March 31, 2020 and 2019 is summarized as follows:
Millions of yen

2020
Japan

Americas

Europe¥ 21,955¥ 5,518¥ 1,528

Asia and other areas¥–

Adjustments

¥–

Total

¥ 29,001

Millions of yen

JapanAmericas

Europe¥ 16,963¥–¥–

Asia and other areas¥–

Adjustments¥–

NTN Revitalization Story

2019
Total

¥ 16,963

Thousands of U.S. dollars

2020
Japan

Americas

Europe$ 203,579$ 51,166$ 14,169

Asia and other areas$–

Adjustments

$–

Total

$ 268,914

Business Strategies

23. Subsequent Event
1. Suspension of plant operations
The Company and its consolidated subsidiaries temporarily suspended production at some domestic and overseas plants even after April, 2020 at the requestof the government in each country and due to decreased customer demand. At the present time, it is difficult to reasonably estimate the impact on theGroup’s financial position, business results and cash flow.

ESG Strategies

2. Significant borrowings
The Company 1) borrowed funds and 2) entered into a commitment line contract below to mitigate liquidity risk due to the effects of the novel coronavirus
infection disease.
1. Purpose of funds: working capital
2. Financial institutions: MUFG Bank, Ltd. and Development Bank of Japan Inc.
3. Amounts:
1) Borrowings: ¥30,000 million (interest rate is based on the market interest rate)2) Commitment line contract : ¥70,000 million (maximum amount) (no borrowings under such commitment line contract at the moment)
4. Borrowing date: Starting from May 18, 2020
5. Term: Maximum of 3 years
6. Pledged assets: Yes (land, building and structure and investments in securities)

Financial Data
Company/Stock Information

111 NTN Report 2020

NTN Report 2020

112

Global Network

Financial/Company Data

(March 31, 2020)

About Us

Japan

EuropePaid-in capital

Holdings aspercentage (%)

EUR 14,500,000

100

NTN Kugellagerfabrik(Deutschland) G.m.b.H.

EUR 18,500,000

100

IV Industrial Business Headquarters, Kongo WorksNTN Mettmann
30(Deutschland) G.m.b.H.

EUR 25,000

100

V Automotive Business Headquarters, Iwata Works

31 NTN Antriebstechnik G.m.b.H.

EUR 50,000100

32 NTN BEARINGS (UK) LTD.

GBP 2,600,000

100

33 NTN-SNR ROULEMENTS

EUR 123,599,542

100

34 NTN TRANSMISSIONS EUROPE

EUR 82,843,207

100

EUR 11,500,000

100

Company nameI

Paid-in capital

Holdings aspercentage (%)

Company name

28 NTN Wälzlager (Europa) G.m.b.H.

NTN Corporation (parent company)

II Industrial Business Headquarters, Kuwana Works

29

III Industrial Business Headquarters, Nagano Works

31
29
28
30

VII Automotive Business Headquarters Mikumo Works
VIII Composite Material Product Division, Engineering Plastics Works
1 NTN SALES JAPAN CORP

4
3
9
6 Ⅵ

10

Ⅳ Ⅶ

8
5

1
7
Ⅴ A

B

C

Ⅱ 2 13 D100

2 NTN MIE CORP.

JPY 3,000,000,000100

3 NTN HOUDATSU SHIMIZU CORP.

JPY 1,250,000,000100

4 NTN NOTO CORP.

JPY 1,000,000,000

100

5 NTN FUKUROI CORP.

JPY 1,500,000,000100

6 NTN AKAIWA CORP.

JPY 1,250,000,000

100

7 NTN Advanced Materials Corp.

JPY 266,000,000

97.4

8 NTN Advanced Materials Corp.

JPY 400,000,000

99.34

9 NTN CASTING CORP.

JPY 450,000,000100

10 NTN KINAN CORP.

JPY 450,000,000100

11 NTN KAMIINA CORP.

JPY 725,000,00080

12 NTN TECHNICAL SERVICE CORP.

JPY 200,000,000

100

13 NTN LOGISTICS CO., LTD.

JPY 10,000,000

100

35

35

34

NTN TRANSMISSIONSEUROPE CREZANCY(0.04)(100)

G NTN-SNR R&D Center

33 G

Six consolidated subsidiaries in addition to the Group companies above

Business Strategies

Ⅰ E

12 Ⅷ

11
Ⅲ

JPY 480,000,000

NTN Revitalization Story

32

VI Automotive Business Headquarters, Okayama Works

(100)

(100)

A New Product Development R&D Center
B Production Engineering R&D Center
C CAE R&D Center
D Advanced Technology R&D Center

Asia and Others

E NTN Next Generation Research Alliance Laboratory

Paid-in capital

Holdings aspercentage (%)

14 NTN USA CORP.

USD 200,620,000

100

NTN BEARING CORP.
15OF AMERICA

USD 24,700,000100

16 NTN DRIVESHAFT, INC.

USD 54,580,000

100

(100)

NTN DRIVESHAFT
17
ANDERSON, INC.

USD 19,500,000

100

(100)

Company name

2214
F
19 15 18
21 20 1617 26
27

USD 24,330,000

19 NTN-BOWER CORP.

USD 117,000,000

100

(100)

USD 15,000,000

60

(60)

USD 20,000,000

62.5(62.5)CAD 20,100,000

100

23 NTN-SUDAMERICANA, S.A.

USD 700,000

100

NTN do Brasil Producão de
Semi-Eixos Ltda.

BRL 390,739,432

100(2.72)

26 ASAHI FORGE OF AMERICA CORP.

USD 10,100,000

19.8(19.8)

Seohan-NTN Driveshaft
27
USA CORP.

USD 6,000,000

MYR 10,000,000

100

(100)

45
56 47

38 NTN BEARING-THAILAND CO., LTD.

THB 780,000,000

100(99.999)

43

49
48 51

39 NTN MANUFACTURING (THAILAND) CO., LTD.

THB 1,311,000,000

100(99.999)

52 53

40 NTPT CO., LTD.

THB 700,000,00075(10.73)41 PT. NTN BEARING INDONESIA

USD 7,300,000

100

(100)

42 NTN BEARING INDIA PRIVATE LTD.

INR 300,000,000

100

(0.1)

43 NTN NEI Manufacturing India Private LTD.

INR 4,808,000,000

97.4(24.96)4244 NTN KOREA CO., LTD.

KRW 500,000,000100

45 NTN (CHINA) Investment Corporation

USD 388,547,500

100

46 NANJING NTN CORP.

USD 180,000,000

100(86.67)47 SHANGHAI NTN CORP

USD 166,500,000

95

(95)

48 Guangzhou NTN-Yulon Drivetrain Co., Ltd.

USD 12,500,000

60

(12)

49 Xiangyang NTN-Yulon Drivetrain Co., Ltd.

USD 34,000,000

60

(60)

50 NTN-RAB (CHANGZHOU) CORP.

USD 28,440,000

100

HKD 2,500,000

100

38 39
40

36

MXN 594,205,718

25

37 NTN BEARING-MALAYSIA SDN.BHD.

44 55

37

NTN MANUFACTURING DE
24
MEXICO, S.A.DE C.V.

100

46
59 50 H(100)

21 NTA PRECISION AXLE CORP.
NTN BEARING CORP. OF
CANADA LTD.

100

(100)

20 NTK PRECISION AXLE CORP.

22

23

100

Holdings aspercentage (%)

SGD 36,000,000

Company name

41 57 58

(5)

51 NTN CHINA LTD.
52 TUNG PEI INDUSTRIAL CO., LTD.

49

53 TAIWAY LTD.

25

54 BEIJING NTN-SEOHAN DRIVESHAFT CO., LTD.

One consolidated subsidiary in addition to the Group companies above

NOTES 1. The scope of consolidation as of March 31, 2020 consisted of NTN Corporation and 57 consolidated subsidiaries (13 domestic and 44 overseas subsidiaries). A total of 10 affiliates (alloverseas affiliates) were accounted for by the equity method.
The following changes to the scope of consolidation and application of the equity method were made during the fiscal year under review.
Consolidated subsidiaries: No additions/1 removals
Affiliates: 2 additions/No removal
2. Of the above subsidiaries, the following companies are specified subsidiaries: NTN USA CORP., NTN DRIVESHAFT, INC., NTN-BOWER CORP., NTN do Brasil Produção de Semi-Eixos Ltda.,
NTN Wälzlager (Europa) G.m.b.H., NTN-SNR ROULEMENTS (‘NTN-SNR’), NTN TRANSMISSIONS EUROPE, NTN NEI Manufacturing India Private LTD., NTN (CHINA) INVESTMENT Corporation,
Nanjing NTN Corp., and SHANGHAI NTN Corporation

113 NTN Report 2020

Production

Production and sales

R&D base

Others36.25

USD 6,000,000

40

KRW 75,780,330,00049

56 NTN-DONGPAI (Shanghai) Bearing Sales Co, Ltd.

USD 1,460,000

25

(25)

57 PT. TPI MANUFACTURING INDONESIA

USD 55,415,050

28.8(0.002)55 Seohan-NTN Bearing CO., LTD.

Sales

27.35

TWD 160,000,000

58 PT. Astra NTN Driveshaft Indonesia

IDR 120,000,000,00049

59 NTN-LYC (LUOYANG) BEARING CORP.

USD 73,800,000

50Company/Stock Information

F NTN Automotive Center

TWD 1,257,232,620(0.97)

Financial Data

24

AMERICAN NTN BEARING
18
MFG. CORP.

Paid-in capital

36 NTN BEARING-SINGAPORE (PTE) LTD.

54

ESG Strategies

Americas(6.67)(50)

H NTN China Technical Center

One consolidated subsidiary in addition to the Group companies above

3. Figures in curved brackets under “Holding as percentage” indicate the percentage of indirectly owned holdings, and are included in the total holding.
4. None of the companies has submitted a securities registration statement or securities report.
5. Of the above subsidiaries, NTN BEARING CORP. OF AMERICA and NTN-SNR have sales (excluding internal sales between consolidated companies) accounting for more than 10% of consolidated sales.
Figures for NTN-SNR are consolidated figures encompassing eight NTN-SNR subsidiaries.
6. Of the above subsidiaries, I to VIII are NTN Corporation business units, 1 to 25 and 28 to 51 (in symbols) are consolidated subsidiaries, and 26, 27 and 52 to 59 (in symbols) areaffiliates subject to the equity method.
NTN Report 2020114

M a k e t hThird-Partye W o r Opinion
l d “ N A M E R A K A* ”
Financial/Company Data

Takeshi Mizuguchi*A society where people can easily lead a secure and fulfilling life in harmony with nature.

Corporate Philosophy

We shall contribute to international society through creating
new technologies and developing new products.

General Meeting of Shareholders
The General Meeting of Shareholders washeld on July 30, 2020; Osaka

Common Stock
Authorized:
1,800,000,000
Issued and Outstanding: 532,463,527

Stock Exchange Listings
First Section of Tokyo Stock Exchange (#6472)

Stock Price Range in the Fiscal Year
ended March 31, 2019
High: 365 yen
Low: 189 yen

Number of Shareholders
48,773

Independent Audit Firm
Ernst & Young ShinNihon LLC

Breakdown of Shareholders

Breakdown of Number of Shares Held

Financial instruments firms

Between 5,000 and 9,999

2.95%

Between 1,000
to 4,999

3.47%

6.04%

Between 10,000
and 49,999

Foreign owners

7.70%

Financial institutions

12.45%

44.13%

532,463,000

Other corporations

14.11%

Less than 1,000

1.07%

Between 50,000
and 99,999

532,463,000

2.31%

sharesshares

Between 100,000
and 499,999

1,000,000 or more

7.28%

Individuals

26.36%

68.24%

Between 500,000
and 999,999

3.89%
Recent Stock Price Range

Close
Open

Stock price (yen)High

Monthly Volume Traded

Open
Close

Low

Nikkei Stock
Average

Nikkei Stock Average (yen)1,000

25,000800

20,000600

15,000400

10,000200

5,000(Millions of shares)

200

150

100

0

0

50

0

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

2018

2018

2019

Financial Data

Achieving a NAMERAKA society

Transfer Agent for Common Stock
Mitsubishi UFJ Trust and Banking Corporation
4-5, 1-chome, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, JapanESG Strategies

and the recovery from the pandemic is being linked to theon sustainability," but director selection criteria includes "Mustcreation of a green economy. I hope that NTN will strongly
have excellent insight and foresight concerning changes to thecontribute to that move and turn the crisis into an opportunity.
overall environment and to society," indicating that the ability
This pandemic has also increased attention to the issue NTN SPIRITrelated to sustainability is regarded as qualifications rather thanrepresented by ESG's "S". The existence of people who are unableskills. A woman has joined Board of Directors for the first time,
Guidelines
to take measures againstCredos
infectious diseases underscores thatand diversity has
increased. The ratio of Outside Directors is also
economic inequality is exactly the inequality of life. Your We challenge passionately
high, andit
conveysthe intention
to makethe "G (Governance)"
without being satisfied
with the current
situation.
Buds appear whencompany
cites"ensuringthehealthandsafetyofemployees"
as
of
ESG
work
properly.
We
respondquicklytoanychanges,emphasizing
on-siteverification.
we challenge
Challenge
with frontier
spiritand I would like to praise
the first step in responding
to crises,
this sense,
is somewhat
that you have a
We enrich our lives byInthinking,actingitwith
initiative and regrettable
continuing to grow.
this point. However, in the future, I think that efforts for "S" will besustainability-related committee only on the executive side. Of
Leaves grow throughWe accept and respectdifferencesin eachshould
other. be in charge of practical operations,required in a broader
range,
suppliers and businesscourse,executives
thespirit includingof collaboration
We help each other, treating all associates honestly.
Collaboration
partners. In Europe andAmerica,and the final decisions, such as on the identification of
withNorthcoexistence
and Black Lives Matter
We take care of the natural environment and maintain coexistence with local community.
co-prosperity
movements are boilingover, while in China, concerns aboutmateriality, are to be made by Board of Directors, however, it
human rights are becoming a focus in various issues including
anaiming
idea toposition
We maximize the would
quality ofbe
work
for formallyfirst-class quality
underOutside
safety-firstDirectors
policy. as the
Flowers bloom and fruits
those
in
the
Xinjiang
UyghurAutonomous
Region.
I
truly
centeroftheframework
that
will
be
the
counterpartof theWe intend to be the strongest partner delivering customer delight beyond satisfaction.
Commitment grow through fulfillingcommitments
appreciate that you ourestablishedthe Human Rights Policy inWe
Julysustainability
committeeof thethroughexecutive
team. I hope that fromsupport improving
lives of people
around the world
our work.
2020. In the near future, however, not only on-site decisions but
a broader, higher and longer-term perspective, those Directors
also management decisions regarding those human rights issues
will hold discussions about how the Company will confront
around world may draw attention.
global issues such as climate risks and risks of social division andThis year, I also read the dialog between the two Outside
how the Company will fulfill its social roles.

Head Office
NTN Corporation
3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan

Business Strategies

For New Technology Network
1 Creation of original technologies.
A senseof crisis is spreading
to the message
top management.
Directors
andthatfoundareit veryinteresting.
talked over issues,
the technologies
forof additional
values andservicesuitableforTheyeach
2 Offering
Many companies
aroundworld
are struggling with COVID-19,
which consumed 4 pages and is reminiscent of a discussion at acustomerandtheend
user.
and your company has positioned the term ending March 2021
meeting of Board of Directors. I think it good that NTN created
3 Improvement of employees’ standard of living, distribution of fair returns to stockholders,
as the "crisis response period." In this situation, I believe it was aand published a skill matrix this time. Director selection criteria
and contribution to society based on the steady growthof our business.
good idea for NTN to strengthen its ESG management and to
was also made public, increasing the transparency of corporateof globalization,and toformationof management
4 Promotion
demonstrate
its unchanged
stance in responding
climategovernance. systems/corporate organization
are essential
foradvocated
NTN, asmainly
an international
leadingcompany.
change.which"Green recovery"
has beenin Europe,
Initially,
I thought that a skill matrix should include "knowledge(March 31, 2020)

NTN Revitalization Story

ProfileAfter working at a trading company and auditing firm, Mizuguchi became a lecturer of the Faculty of Economics at Takasaki City
University of Economics in 1997. He assumed his present role in 2008.
Mizuguchi specializes in responsible investment and non-financial information disclosure.
He has served as Chair of the Green Bonds Working Group (Ministry of the Environment), a member of the ESG Working Group(Ministry of the Environment) and Director of the Society for Environmental Economics and Policy Studies.
His major publications include Responsible Investment— Changing the Future through the Flow of Capital (Iwanami Shoten,
Publishers; winner of the SEEPS Commentary Award), ESG Investment—Form of the New Capitalism (Nikkei Publishing) and An Era
of Sustainable Finance—ESG/SDGs and the Bond Market (Written and Edited by KINZAI).

Investor Information

About Us

The Founders’ Spirit that NTN has embraced since its foundation in 1918 is the “Frontier Spirit,” which encourages us to keep
taking on challenges, and the “Coexistence and Co-prosperity Spirit,” which encourages us to develop together with society.
The Founders’ Spirit is incorporated into the corporate philosophy as NTN’s DNA, and has been passed down to the employees
for over100
years. 2020 third-party opinion
NTN
ReportIn order to put the corporate philosophy into practice, NTN Group employees are working based on the “NTN SPIRIT,” theProfessor,
Facultyof Economics,
Takasakiour
City Universityof Economics
mindset and actions they should
aim for.
Throughputting
corporatephilosophy into practice, we aim to help solve global
social issues, and achieve a sustainable “NAMERAKA Society.”

Company/Stock Information

2020

2019

2020

Response to the third-party opinion

achievement of a “NAMERAKA Society.”

20202020
01115
NTN Report
NTN Report

Status of inclusion in
ESG indexes

FTSE Blossom Japan Index*1 Inclusion status as of the end of September 2020.
*2 The inclusion of NTN Corporation in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute asponsorship, endorsement, or promotion of NTN Corporation by MSCI or any of its affiliates.
The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

MSCI Japan ESG
Select Leaders Index*

S&P/JPX Carbon
Efficient Index

Company/Stock Information

We would like to thank Professor Mizuguchi for his valuable opinions.
We have positioned the fiscal year ending March 2021 as a crisis response period, and in the section of “Prepare
for future growth,” which is a part of the Business Operating Policy, we aim to identify key issues (materiality) that
Organization Covered
we mustprioritize, and to contribute to the Concepts
achievementof SDGs
byProduction
putting our response
to key issues
into our
Editorial
Policybehindtheof “NTN Report
2020”
and Reporting Period
strategy.
The business
NTN Group believes
that building trusting
The spread of the new coronavirus has caused global economic activity to shrink, and the NTN Group
Reporting Period:
relationships
shareholders
investors,
is alsoRights
seriouslyPolicy.
affected.This
Amid represents
this environment,
have positioned theyear ending MarchFiscal year ended March 31, 2020
This withfiscalyear, weandestablisheda new Human
ourwecommitment
to fiscal
encouraging
the 31,
customers, business partners, the international society,as the "Crisis Response Period" for dealing with the new coronavirus problems, and we have
(April 1, 2019-March 31, 2020)
respect of human rights not only within the2021
Group
but also at the Group’s suppliers, and we will build a mechanism
local communities, and employees and contribution toestablished the Business Operation Policy to "ensure the health and safety of employees" by
Includes some activities for thefor humanrightsthatthe implementing
challengesmeasuresthat aretooccurring
worldwide.
believethatthe global
environment
will duelead todiligenceenhancementof will address
thoroughly
prevent infection
as well as toWe"securecash andcontinuefiscal year ending March 31,
corporate
value. In orderto report
our suchbusinessbusiness"and "prepare
for future
growth"in theevent of emergencies.
2021.
addressing
globalissuesas climate risks
and risksof socialdivisionis anextremely
important perspective.
activities and sustainability activities to ourWith regard to the corporate governance, we shifted to a Company with a Nominating Committee,
Inaddition,thekeyissuesdiscussedbytheSustainability
Committee
willberesolved
by
Board
of
Directors
fromstakeholders, we have published the “NTN Reportetc. from the General Meeting of Shareholders held in June 2019, and in July 2020 we added two new
Organization Covered:Managing
Officera long-term
view,
work
account
whenoursettinga majordirection(Integrated
Report)” sincetheandfiscalwe
yearwill
endedMarchto take themOutsideinto
Directors
to strengthen
corporate
governancestructure.of
Wemanagement.
also established the
NTNExecutiveGroup
CSR Headquarters
31, 2010.
We willuse this
report as ato
means
Sustainability
Committee
in November
2019 towithincrease
the aim of corporate
accelerating sustainable
management.
Includes some reports for NTN
We willlistensincerely
theofvaluable opinions
we havereceived
and strive
value overthecommunicating with our stakeholders to deepen their
The committee, which is made up from a cross-organizational perspective, plays a key role in
only.
Toshinori
Shiratori
medium- to long-term.
understanding of us, thereby contributing to theidentifying important issues (materiality) in discussions with management for the sustainable growth

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of the NTN Group. This report describes these topics.

NTN Report 2020

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NTN Report 2020

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NTN Report 2020
For the fiscal year ended March 31, 2020