NTN Report2013
for the year ended
March 31, 2013

Profile

Bearings for a Wide Range ofApplications Support Industry
and Daily Life

Constant-velocity joints

Better fuel efficiency
and a more comfortable ride

NTN is a precision equipment manufacturer that develops business worldwide with its mainstay product of bearings.
Ever since its foundation in 1918, NTN has been coming out with new products and technologies in a wide range offields including automobiles, construction machinery, agricultural machinery, aerospace, rolling stock, wind turbine,and medical and environmental equipment.
Rolling stockHigh-speed railways
around the worldConstruction machinery

In the world

Resource mining andcivil engineering

No.2

Corporate Philosophy

Aerospace

For New Technology Network

Jets, rockets,and satellites
around the world“We shall contribute to international society
through creating new technologies
and developing new products.”
1. Creation of original technologies.
2. Offering the technologies for additional values andservice that are suitable for each customer and end user.
3. Improvement of employees’ standard of living, distributionof fair returns to stockholders, and contribution tosociety based on the steady growth of our business.
4. Promotion of globalization, and formation of management
systems / corporate organization which are essential
for NTN, as an international leading company.

Industrial Machinery Applications

Enabling high performance in the rotating partsof a range of industrial machinery
Machine tools

High-speed-rotation
machinery

Medical equipment

CT scanners
and artificial hearts

Wind turbines

Highly efficient power
generators andocean-based wind
power systems
Agricultural machinery

Agricultural machineryworldwide1

CONTENTS

In the world

No.1
Hub bearings

Major Management Indicators(Graph) .................................................... 3

Better fuel efficiency and safety

Financial Highlights ............................ 5
To Our Stakeholders .......................... 7

Needle roller bearings

More compact and lighter weightof transmissions

Feature From
“Revival” to “Growth” .............. 15

Automotive Applications

Contributing to energy
saving of automobile
through more compact,
lighter weight andlower torque

Interview with
the Top Management ........................ 8

Action for change 1 ................... 15
Strengthening Marketing Worldwide
in Industrial Machinery andthe Aftermarket and Distributor Applications
EV system products

In-wheel Motor System,
various modular productsTechnical Service

Helping customers choose and use
the bearings that are right for them

Action for change 2 ................... 17
Build a Structure Capableof Generating Profit
in the Automotive Applications

Action for change 3 ................... 19
Aiming for Expansion of
New Products and New BusinessAt a Glance ...................................... 21
Industrial Machinery Applications ... 23

Aftermarket for
Industrial Machinery

Aftermarket &Distributor Applications ............... 25

Maintenance andreplacement of bearings

Automotive Applications .............. 27
Research and Development ........... 29

Aftermarket &Distributor Applications

Meeting the maintenanceneeds in the industrial
machinery andautomotive applications

CSR Activities Report ....................... 30
Corporate Governance .................. 31

Sales ofautomotive repair
parts (auto parts)

Social andEnvironmental Responsibility ........ 39

Developing
businessin Europeand Asia

Third-Party Opinion ............................. 59
Financial Section .................................. 60
Report of Independent Auditors ........ 83
Investor Information ............................. 84
Global Network .................................... 85

Outline (as of March 31, 2013)
Corporate name: NTN Corporation
Trademark:
Date founded: March 1918
Head Office:3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan
Representative:
Yasunobu Suzuki, Chairman and CEO
Shigeyoshi Takagi, President
Number of employees:
Consolidated: 21,398
Non-consolidated: 5,450
Fiscal term: March
Capitalization: 54.3 billion yen
Net Sales:
Consolidated: 539.6 billion yen
Non-consolidated: 318.4 billion yen

Net Sales by Business Sector (consolidated)
Automotive
Market66%(356.6 billion yen)

Industrial
Machinery Market

17%

Forward Looking Statements
Fiscal year
ended
March 31, 2013

539.6
(billion yen)This report contains forecasts and projections
regarding NTN’s future plans, strategies, andbusiness results. Please understand that actual
business results may vary from the projections
made herein by the Company.

(93.7 billion yen)

Editorial Policy

Aftermarket &Distributor Market

NTN believes the active disclosure of management
plans and business results, as well as its basic
policy for corporate social responsibility (CSR),
CSR activities, and environmental preservation
initiatives, among other information, will help
garner the understanding and support of all
stakeholders. This “NTN Report,” which since thefiscal year ended March, 31 2010 has combined
the “Annual Report” and the “CSR Report,” is partof this active approach to information disclosure.

17%(89.2 billion yen)2

Major Management Indicators (Graph)
NTN Corporation and consolidated subsidiaries

Years ended March 31

IR Indicators
The forecast for the fiscal year ending March 31, 2014 is the one announced on May 20, 2013.

Net Sales by Region
Net sales(Billions of yen)

600

530.1

527.1

543.5

539.6

600

452.7
400

527.1
81.3
109.3
141.7

200

200

2010

2011

2013

2012

2014 (Years ended)(Plan)

Americas0March 31

Asia and Others

530.1
92.7

543.5
92.4

539.6
123.0
95.8

118.0

124.6

141.6 169.8

132.8

133.0

124.8 143.6

600.0

452.7
79.3
90.0

2009

Europe(Billions of yen)

600.0

400

0

Japan

127.1

194.8

156.4

186.6

193.4

177.5 163.6

2009

2010

2011

2012

2013

2014 (Years ended)(Plan)March 31

Operating income /Operating margin
Operating income

Operating margin

Net income (loss)(Billions of yen)(%)(Billions of yen)

40

10.0

20

14.4

30.0

30

24.6

10

5.0

0

2.5

-10

0

-20

10.0
6.0

5.0

4.6 20.7

20

7.5

-2.0

3.8
10

9.5

7.3

1.8

1.3

1.4

0

2009

0.3
2010
2011

2012

2013

2014 (Years ended)(Plan)

Industrial Machinery

530.1

527.1

543.5

315.6

342.9

300.9
200

0

91.8
119.7

72.2
79.7

539.6

2009

2010

Inventories

356.6

106.6
2012

2013

2014 (Years ended)

2011(Times)

10.0

140.5

398.0

105.0

99.5

3.8

155.1
126.7

3.9

3.6

0

March 31

2009

2010

2011

2.5

(Billions of yen)

60

54.4

49.6

45.8

38.5

2012

2013

0

2014 (Years ended)(Plan)(Billions of yen)

34.8

3.9

3.3

60

34.2

7.5
5.0

3.5

50

Capital expenditures

35.9

155.0

137.0

Depreciation

40

163.3

97.0
(Plan)

40.7

March 31

Inventory Turnover Ratio

200

89.2
93.7

94.0

2014 (Years ended)(Billions of yen)

600.0

100

86.2

2013

2012

(Plan)

150

344.4

2011

Automotive

452.7
400

2010

Inventories / Inventory Turnover Ratio

Aftermarket & Distributor(Billions of yen)

600

-14.2
2009

March 31Net Sales by Business Sector-9.0

March 31

49.0

40

35.0
29.7
21.5

20

0

20

2009

2010

2011

2012

2013

2014 (Years ended)(Plan)March 31

0

2009

2010

2011

Forward Looking Statements This report contains forecasts and projections regarding NTN’s future plans, strategies, and business results.
Please understand that actual business results may vary from the projections made herein by the Company.

3

2012

2013

ended
2014 (Years
March 31 )(Plan)

CSR Indicators

Net income (loss) / Average total assets (ROA)(%)(10,000 tons/year)

3.0

30

2.3

28.2

0.9

0

-2.0

-1.9
2010

2011

2012

2013 (Years ended)

0

2009

March 31

Net income (loss) / Average shareholders’ equity (ROE)(GWh/year)

600

2010

ended
2014 (Years
March 31 )

499
467

200

-7.2
2009

536

400

-1.1

-4.3

2013

2012

446
3.0

0

-8.0

538

523
7.2

4.0

2011

Electricity consumption

(%)

-4.0

2010

(Plan)

12.0
8.0

25.2

10

-1.3
2009

26.9

20.7

20

-0.3

-1.0

28.8

24.8

2.0
1.0

* Based on fixity emissions coefficient:
0.381 (See page 54.)

Total CO2 emissions*

2011

2012

ended
2013 (Years
March 31 )

0

2009

2010

2011

2013

2012

ended
2014 (Years
March 31 )(Plan)

Recycle Rate and Landfill Waste (NTN group companies in Japan)
Net D/E ratio(%)(Tons/year)

2.00

300

1.50

240

1.37

1.38
1.00

1.00

1.11

99.6

99.9

217

99.7

99.8

99.9

80
60

106

2011

2012

2013 (Years ended)* NTN-ROI = Net operating income after tax/
(Inventories + tangible fixed assets)

NTN-ROI*0

March 31

2009

2010

2011

40

81

62

58

60

2010

100

204

120

2009

(%)

99.8

180

0.92

0.50
0

Recycle Rate

Landfill Waste

20

2013

2012

0

2014 (Years ended)
March 31

(Plan)

Occupational safety Indicators (Incidence Rate, Severity Rate)(Sites in Japan)
Severity Rate
Incidence Rate

(%)

8.0

0.8

6.0

0.6

4.2
4.0

3.4

0.8

0.58

0.6
0.4

0.4

0.24
2.0

1.5

0.2

1.1

0.2
0

2009

2010

2011

2012

2013 (Years ended)
March 31

0

0.018

2009

2012

2010

2011

0.2

0.16

0.18
0.08
0.011
0.002 0.006

0.005
2013

0

ended
(YearsMarch 31 )4

Financial Highlights
NTN Corporation and consolidated subsidiaries

Years ended March 31

2003

2004

2005

2006

2007

342,745
20,785
6.1
6,198
2,657
25,264
23,83812,255357,394
24,7096.918,181
11,032
38,092
23,97913,543388,349
33,201
8.5
26,586
16,74049,67024,87014,952434,837
37,6458.7
30,37019,55049,28428,586
14,771

483,818
46,793
9.7
45,17027,014
59,34732,693
14,221

467,198
134,928
92,729161,446
11,810460,341
142,487
83,565
164,091
11,885516,578
157,952
93,167
176,186
12,788561,494
183,247
107,048
183,199
14,631

611,944
215,815
107,131
197,911
17,306291.82308.27341.93396.73445.61

5.70
5.51
5.00

23.54
21.87
5.50

35.83
32.94
8.50

41.94
38.55
11.00

58.34
53.74
16.00

3.7
0.82
0.6

4.3
0.86
2.4

4.2
0.79
3.4

4.1
0.80
3.6

4.5
0.79
4.6

1.9
5.0
28.9

8.0
6.1
31.0

11.1
7.7
30.6

11.5
7.7
32.6

13.8
8.6
34.2

20.5
448

22.3
452

24.7
512

27.0
532

27.0
562

175

200

211

229

225

–
93.2

–
94.4
1,722

–
96.3
2,843

–
98.7
1,969

114.3
98.5
710.7

0.15
0.003

0.26
0.004

0.35
0.010

0.34
0.004

0.26
0.002

FOR THE YEAR DATA
Net sales ...................................... (Millions of yen)
Operating income ......................... (Millions of yen)
Operating margin .......................................... (%)
Income (loss) before income taxes ... (Millions of yen)
Net income (loss) .......................... (Millions of yen)
Capital expenditures ..................... (Millions of yen)
Depreciation ................................. (Millions of yen)
R&D costs .................................... (Millions of yen)
YEAR-END DATA
Total assets ................................... (Millions of yen)
Net assets/Shareholders’ equity ... (Millions of yen)
Inventories .................................... (Millions of yen)Interest-bearing debt .................... (Millions of yen)
Number of employees ........................................
PER SHARE DATA
Net assets .................................................. (Yen)
Net income (loss):- Basic ........................................................ (Yen)- Diluted ...................................................... (Yen)
Cash dividends ........................................... (Yen)OTHER INFORMATION
Inventory Turnover Ratio .......................... (Times)
Net D/E ratio .....................................................
Net income (loss)/Average total assets (ROA) ... (%)
Net income (loss)/
Average shareholders’ equity (ROE) ............ (%)
NTN-ROI ....................................................... (%)
Shareholders’ equity ratio .............................. (%)
ESG Indicators
Total CO2 emissions (NTN group companies
in Japan) ................................ (10,000 tons/year)
Electricity consumption ...................... (GWh/year)
Water usage (NTN group companies
in Japan) .................................. (10,000 m3/year)
Usage of Substances Designatedby the PRTR Law ............................. (Tons/year)
Recycle rate (NTN group companies in Japan) .. (%)
Landfill Waste ..................................... (Tons/year)
Occupational safety Indicators(Incidence Rate, Severity Rate)
Incidence Rate ................................................
Severity Rate ..................................................

Note 1: U.S. dollar amounts have been converted from yen, for convenience only, using the approximate exchange rate on March 31,2013, which was U.S.$1 = ¥94.05.
Note 2: Total CO2 emissions: Based on fixity coefficient (0.381) (See page 54.)5

Thousands of U.S. dollars(except per share amounts)

2008

2009

2010

2011

2012

2013

2013

533,985
49,612
9.3
44,31327,43159,50439,547
15,006527,100
9,479
1.8(10,104)(8,985)49,59445,75917,402452,746
1,399
0.3(1,838)(2,015)21,50440,702
14,687530,056
24,5604.6
22,855
14,39929,70035,936
15,697543,468
20,7243.8
16,357
5,993
54,44034,175
17,157539,595
7,278
1.3(13,898)(14,196)
48,97934,841
16,174$ 5,737,321
77,384
1.3(147,773)(150,941)
520,776
370,452
171,972

629,464
216,401
109,970
212,874
18,960627,613
192,223
140,467
275,996
20,679618,802214,551
126,664
231,639
17,959632,001
210,353
136,985
223,283
19,172

693,258
212,126
155,107271,978
20,789768,462
211,743
163,287
360,802
21,398$ 8,170,781
2,251,388
1,736,172
3,836,278

445.98376.77374.19376.05370.19375.84$ 4.00

58.43
54.59
19.00

(19.14)–13.00(4.00)
–
8.00

27.08
–
10.00

11.27
–
10.00

(26.69)
–
0

0.28
–
0

4.9
0.86
4.4

3.8
1.38
(1.3)

3.6
1.00
(0.3)

3.9
0.92
2.3

3.5
1.11
0.9

3.3
1.37
(1.9)

13.1
8.6
33.3

(4.3)
1.5
28.2

(1.1)
0.2
32.2

7.2
4.2
31.6

3.0
3.4
28.4

(7.2)
1.1
26.0

28.1
583

24.8
523

20.7
446

28.2
538

28.8
536

26.9
499

237

207

179

225

220

203

114.2
98.5
923

69.1
99.6
217.2

51.7
99.9
58

66.9
99.7
204

60.7
99.9
62

48.4
99.8
106

0.26
0.002

0.08
0.002

0.18
0.006

0.58
0.011

0.24
0.018

0.16
0.005

6

To Our Stakeholders

The NTN Group has made compliance a top priority and is
striving to strengthen its systems for complying with laws
and regulations. Despite these efforts, during the fiscal
year ended March 31, 2013, NTN subsidiaries in Korea
and Singapore underwent on-site inspections by thosecountries’ authorities.
In Japan we received a cease and desist orderand surcharge payment order from the Japan Fair Trade
Commission (JFTC) for a cartel problem in relation to
the domestic sale of bearings. NTN believes that it has notbeen involved in any such cartel conduct and we intend todemonstrate that in coming proceedings. NTN has appealed
the JFTC’s orders and expects to be fully exonerated.
The NTN Group has been committed and remains
committed to ethical business activity and fair competitionin compliance with all laws and regulations including
the Antimonopoly Act. We embark on continuous education
and awareness activities that will strengthen overall control
over compliance.
In the fiscal year ended March 31, 2013, areas of Japan’s
economy appeared to have bottomed out; however,the business environment continues to be tough. In the restof the world, meanwhile, while the U.S. is enjoying moderate
recovery, Europe is seeing its financial sector still burdened
by deep worries of the debt crises, and China has yet tobegin significant recovery.
Against this background, the NTN Group embarked

7

on “Global Advance 2013,” a three-year medium-term
management plan starting in April 2011. But major changes
in the economic environment around the world haveprompted us to overhaul this plan and introduce various
emergency measures and structural reform. In April 2013,
we launched our new medium-term management plan, called“Revival 2014.” Under the basic policy of reform businessstructure to generate profit, “Revival 2014” calls for four
key measures: Emergency measures; centralization ofmanagement resources; structural reform; and expansionof new products and new business.
In positioning Corporate Social Responsibility (CSR) as
the foundation of its management, NTN strives to meet its
responsibilities to customers, shareholders, and otherstakeholders, and contribute to the realization ofa sustainable society through efforts in the environment,labor, and human rights.
The entire NTN Group also strives to develop energyefficient, environmentally friendly products as well as reduce
the effects on the environment.
We look forward to the continued support andunderstanding of our shareholders and stakeholders.

Chairman and CEO

President

Yasunobu
Suzuki

Shigeyoshi
Takagi

Chairman andCEO

PresidentInterview with the Top Management
Overall performance in the fiscal year ended March 31, 2013 and medium-term management plan

was the performance in the fiscal year
Q2 Whatended March 31, 2013?

AA

We have established a special committee
under direct control of the Board of
Directors and we are strengthening ourcompliance systems on a global scale.

Profits were down due to factors suchas an increase in temporal costs
for overseas business.

In the fiscal year ended March 31, 2013, consolidated net
sales were 539.6 billion yen, nearly level with the previous
fiscal year (down 0.7% over the previous fiscal year). Whilethe industrial machinery applications was slow in Europe anddemand was down in the Americas and Asia, sales were up
in the automotive market in the Americas and Asia.
On the profit side, operating income was 7.3 billion yen(down 64.9%) and ordinary income was 2.5 billion yen (down
86.6%). The main reasons for this large drop in profit were alow selling-price level in the automotive market and an increasein temporal costs for overseas business. In particular, an
increase in temporal costs resulting from an additional burden
imposed on production lines in coping with increased sales
to the Americas had a large impact on profits. We have since
alleviated the situation that forced us to increase temporal costs.
As a result of 7.2 billion yen reserve for loss related toanti-monopolies law, 6.4 billion yen in structural reform
expenses, 3 billion yen in business restructuring expenses,
and 2.7 billion yen in impairment losses, the net loss was
14.2 billion yen (compared to a net profit of 6.0 billion yen theprevious fiscal year).

The NTN Group has considered its situation in light of theJapan Antimonopoly Act, and the policies of the JFTC, aspart of its sincere commitment to maintain a level of thoroughcompliance with laws.
In April 2012, we established the Fair Trade Monitoring
Committee, which is under direct control of the Board of
Directors and chaired by president, and the Fair Trade
Promoting Department, which is responsible for thecompany-wide development of the policies and decisions of
the Fair Trade Monitoring Committee. In-house complianceeducational activities include employee compliance training
and the publication and distribution of the Antimonopoly Act
Compliance Handbook. We also monitor progress and conduct
guidance of our compliance with laws and regulations; forexample, self-audits by employees and in-advanceapplications by employees to request an approval from the
Fair Trade Promoting Department to participate in meetings
with potential contacts with competitors (such as suppliermeetings) or to have continuous contacts with competitors
for necessary business reasons (such as OEM supply).
At NTN’s overseas bases, we are establishing a systemof responsibility for each of our business regions under theguidance of the Fair Trade Promoting Department, and weare strengthening compliance systems that ensure we abide
by antimonopoly and competition laws in various countries.

was the situation in each region
Q3 Whatand what measures did you take?

A

Sales were up in the Americas and Asiaand down in Japan and Europe.

In the fiscal year ended March 31, 2013, sales were downin products for the Japanese automotive market; despite signsof recovery from a manufacturing drop following the Great East
Japan Earthquake of March 2011, Japanese car exports
were down. In the industrial machinery applications as well,factors including a stagnant construction machinery market
contributed to a continuing difficult business environment.
Performance in the Fiscal Year Ended March 31, 2013
(Billions of yen)

8.5%

Net sales

9.7%

8.7%

9.3%
1.8%

388.3

33.2

434.8

534.0

483.8

37.6

2006

4.6%
530.1

527.1

3.8%
543.5

1.3%

4.9%

46.8

49.6

40.0
24.6

2007

2008

2009

1.4
2010

28.0

20.7

7.3
2011

2012

2013

2014
(Objective)

Rapid Advance 21

6.7%
600.0

570.0

539.6

Operating margin

452.7

9.5
2005

0.3%

Operating income

Growth throughCreativity andAchievements 21

NTN 2010
for The Next Step

Global Advance20132015 (Years ended)(Objective)

March 31

Revival 2014

Note: SNR has been included in consolidated performance since the fiscal year ended March 31, 2009.
Note: The target value for “Revival 2014”, our medium-term management plan, is the one announced on February 18, 2013. (Exchange rate: 1$US=¥85, 1Euro=¥110)

8Interview with
the Top Management

is NTN doing to ensure thoroughQ1 Whatcompliance?

The results were net sales in Japan of 315.9 billion yen (down
5.5% over the previous fiscal year). However, a decrease inpersonnel costs and other fixed costs led to operating incomeof 9.8 billion yen (up 20.8%).
In the Americas, in the industrial machinery applications,sales of construction machinery were down, while in theautomotive applications and the aftermarket and distributor
applications, demand increased. This resulted in net sales of138.5 billion yen (up 14.3%). However, the aforementioned
increase in temporal costs resulting from an additional burden
imposed on production lines led to an operating loss of 3.2
billion yen (compared to an operating income of 600 million
yen the previous fiscal year).
In Europe, economic recovery is slow due to financial
instability, and this has led to lower demand in the automotive
applications, industrial machinery applications, and theaftermarket and distributor applications. Net sales were136.5 billion yen (down 5.0%) and the operating loss was
200 million yen (compared to an operating income of 4.6 billion
the previous fiscal year) due to the effect of lower sales.
In Asia, while sales were down to Japanese manufacturers
in China, other areas of Asia showed recovery from the
manufacturing drop following the floods in Thailand, andcustomer demand was up. This contributed to net sales of 85.8
billion yen (up 4.1%). The operating income was 700 million yen(down 86.2%) due to temporal expenses including expenses
incurred during the operational launch of production companies.

Q4

What kind of market environment andbusiness performance do you forecast
for the fiscal year ending March 31, 2014?

A

We see a performance recovery in termsof both net sales and profit due
to increased sales in overseas markets.

In the fiscal year ending March 31, 2014, there are hopes ofan economic recovery in Japan as the yen weakens andgovernment economic measures take effect. Worldwide,
however, uncertainty looks to continue as financial instability
drags on in Europe and economic growth slows in China.
Amidst all this, the NTN Group is aiming to steadily implement
various measures under its medium-term management plan
“Revival 2014” (described below) and thus get business9

performance back on track.
Thanks to efforts overseas in the fiscal year ended March
31, 2013 to gain new customers and increase market share,
we foresee an overall improvement in sales in the fiscal year
ending March 31, 2014.
In Asia, we anticipate a 28.4% drastic increase over theprevious fiscal year in sales due to factors including recovering
demand for wind turbines, rolling stock, and construction
machinery in China; new orders for construction machinery andmachine tool bearings in Korea; and increasing sales due tostrong domestic demand in ASEAN countries in the automotive
market. In Europe, we anticipate a 15.1% increase in sales due tofactors including growing demand in aerospace and increasingorders for rolling stock and agricultural machinery bearings, andorders from new projects in the automotive market. In theAmericas, we foresee falling demand for construction machinery
and wind turbines; however, increasing demand in areas suchas agricultural machinery and aerospace, along with demand
from replacement purchases in the automotive sector, willcontribute to a predicted 20% increase in sales.
In the Japanese market, we anticipate increasing orders
in fields such as aerospace, rolling stock, and wind turbines,
but decreasing demand in construction machinery and gearboxes, Japanese car manufacturers moving production
overseas and lower sales due to the end of the government’s
eco-car subsidy program. The result we forecast is a 7.8%
decrease over the previous fiscal year.
To sum up, our forecast for the entire fiscal year ending
March 31, 2014 calls for net sales of 600 billion yen (up 11.2%),
operating income of 30 billion yen (up 311%), ordinary incomeof 23 billion yen (up 820%), and net income of 10 billion yen(compared to a net loss of 14.2 billion the previous fiscal year).
Note: Performance estimates for the fiscal year ending March 31, 2014 arebased on an exchange rate of 1$US=¥95, 1Euro=¥120.
Note: Consolidated subsidiaries of the Company in Europe, the United States, South
Korea and Singapore have been investigated by the respective authorities
in relation to competition law, and multiple civil action lawsuits (class action
lawsuits) have been launched against the Company and its American andCanadian consolidated subsidiaries. Moreover, arbitration proceedings
related to compensation for damages have been launched in respect to theCompany’s European consolidated subsidiary. In all cases it is difficult toestimate any impact on our operating results and financial position. As such,
this situation has not been taken into consideration in the above forecast.

will be the dividend for the fiscal year
Q5 Whatended March 31, 2013?

A

We regret to say that we are deferring
the dividend for the fiscal year.

The NTN Group considers rewarding its shareholders an issue
of foremost importance. Regarding dividends, from a mediumand long-term perspective, the Company’s goal is to provide
a steady and sustainable dividend, which it will determine on
the basis of its consolidated performance, dividend payout
ratio, and business environment.
However, in consideration of the large current net loss as aresult of the reserve for structural reform expenses, restructuring
expenses and impairment loss, we regret to announce thatno dividend will be paid this fiscal year. No decision has
yet been made regarded dividends in the next fiscal year.
An announcement will be made as soon as disclosure becomes
possible in the light of progress in business results.

A

Our policy is to reform corporate structure
and overcome the current situation
by revamping strategy.

Under “Global Advance 2013”, the medium-term management
plan we started in April 2011, we conducted business withthe aim of achieving high growth in all regions of the world.
However, economic environments have changed dramaticallyaround the world, and this made us realize that we had to
rapidly reform our corporate structure if we hoped to catchthe next wave of growth. We therefore decided to revamp our“Global Advance 2013” strategy into a two-year plan startingin April 2013 called “Revival 2014”.
The basic policy of “Revival 2014” is to “reform businessstructure to generate profit”. From our previous medium-term
management plan’s strategy of achieving high growth in all

regions of the world, we have switched to a strategy in which
we focus on “improving profit ratio” and “strengthening
financial framework”, while also building systems that are notaffected by exchange rates.
There are four main policies to “Revival 2014”:
1 Emergency Measures over the short term to generate profits.
2 Centralization of Management Resources into threepriority areas, such as automotive, where we aim to
improve profits.
3 Structural Reform over the medium term.
4 Expansion of New Products and New Businesstowards further growth. Through these four initiatives, forthe fiscal year ending March 31, 2015, we are aiming for net
sales of 600 billion yen (up 11% over the fiscal year ended
March 31, 2013) and operating income of 40 billion yen(up five-fold*). These targets aim for a much greater increasein profit than in net sales and represent our desire to build
a corporate structure capable of generating profits without
being adversely affected by external factors.
Note: The target value for “Revival 2014”, our medium-term management plan, is theone announced on February 18, 2013. (Exchange rate: 1$US=¥85, 1Euro=¥110)

New Medium-term Management Plan “Revival 2014”(Fiscal Year Ending March 31, 2014 to Fiscal Year Ending March 31, 2015)
Basic policy: Reform business structure to generate profit

Emergency Measures

Centralization ofManagement Resources

Main Policies
Structural Reform

Expansion of New Products
and New Business

Targets for fiscal year ending March 31, 2015
Net sales: 600 billion yen, Operating income: 40 billion yen, Operating margin: 6.7%
Revival 2014

Results
FY2012FY2013

FY2014

Net sales (billions of yen)

539.6

570.0

600.0

Operating income (billions of yen)

7.3

28.0

40.0

1.3%

4.9%

6.7%

Operating margin
Net income (billions of yen)

(14.2)

12.0

20.0

Inventories (billions of yen)

163.3

150.0

145.0

3.3

3.8

4.1

ROA

(1.9%)

1.6%

2.6%

ROE

(7.2%)

6.4%

10.5%

Net D/E ratio

1.37

1.46

1.24

Inventory turnover ratio (times)

NTN-ROI*
Exchange rate

1.1%

4.3%

6.4%

$:¥82.9 €:¥106.8$:¥85 €:¥110$:¥85 €:¥110* NTN-ROI = Net operating income after tax/(Inventories + tangible fixed assets)
Note: The target value for “Revival 2014”, our medium-term management plan, is the one announced on February 18, 2013. (Exchange rate: 1$US=¥85, 1Euro=¥110)

10Interview with
the Top Management

Q6

Can you sum up the results of NTN’s
previous medium-term management plan
“Global Advance 2013”, and describe thepolicy behind the new medium-term
management plan “Revival 2014”?

Revival 2014: Objectives of Net Sales by Region• Sales will decrease in Japan and increase overseas• Overseas will account for a higher percentage of overall net sales

Net sales(Against FY2012)(Billions of yen)

570.0

600.0

530.0

Asia

Asia

600.0

+13%

Asia

+36%

126.5

111.0

92.9

450.0

EuropeEuropeEurope

132.5

135.0

Americas

Americas

Americas

137.2

153.5

168.0

Japan

Japan

Japan

176.8

173.0

170.5

123.1

+10%

Q7

Tell us about the “Emergency Measures”
part of “Revival 2014”
and what it will accomplish.

A

We began implementing these emergency
measures in the second half ofthe fiscal year ended March 31, 2013
and they have already yielded results.

There are five key measures. (1) Reduce personnel costs.
By reducing employee salaries and bonuses, we saved
approximately 2 billion yen in the fiscal year ended March 31,
2013, and we plan to save another approximately 2.8 billion
yen over the next two years. (2) Reduce fixed costs. We are
striving to reduce expenses in all divisions and are focusing
costs on areas that contribute directly to profit. As a result,in the fiscal year ended March 31, 2013, we achieved reductionsof approximately 3.5 billion yen, and plan to reduce another 7.4
billion yen over the next two years. (3) Limit capital expenditure.
We are limiting capital expenditures to R&D and advanceinvestments, and kept them to 48 billion yen in the fiscal year
ended March 31, 2013, a figure we plan to limit to 51 billion
yen (less than the allowance for depreciation costs over two
years). (4) Reduce inventories. Inventories were 157 billion yen
in the fiscal year ended March 31, 2013 and we plan to reduce
this to 145 billion yen in two years. (5) Abolish, sell assets. We
expected to have disposed of or sold-off approximately 2.5
billion yen in assets in the fiscal year ended March 31, 2013.
These emergency measures had the effect of reducing costs
and expenses in the fiscal year ended March 31, 2013 by 5.5billion yen, and we anticipate further reductions of 5.5 billion
yen in the fiscal year ending March 31, 2014, and 4.7 billion
yen in the fiscal year ending March 31, 2015.

300.0

+22%

150.0

0

2013

2014

2015

(Objective)(Objective)

Emergency Measures
Short-Term Measures to Generate Profit

– 4%
ended
(YearsMarch 31 )Note: The target value for “Revival 2014”, our medium-term management plan,is the one announced on February 18, 2013.
(Exchange rate: 1$US=¥85, 1Euro=¥110)

Measures were implemented starting in the second halfof the fiscal year ended March 31, 2013 to generate
profit in the short term. The following measures will be
implemented under “Revival 2014”.
1 Reduce personnel costs

Approximately 2.8 billion yen reduction planned
2 Reduce fixed costs

Revival 2014: Amount of improvement of eachpolicy over a 2 year period by business type
Centralizationof Management Structural
ReformResources(b)(variable costs)(a)(Billions of yen)

3 Limit capital expenditure
Emergency
Sub-total Measures(c=a+b)(d)

Automotive

15.2

9.7

24.9

Industrial
Machinery /Aftermarket

4.8

2.6

7.4

Total

20.0

12.3

32.3

Total
(c+d)

Limited to 51 billion yen under depreciation costs
over 2 years
4 Reduce inventories

10.2

42.5

Reduction of up to 145 billion yen planned in 2 years
5 Abolish, sell assets (completed)

10.2

42.5

Note: The measures are calculated using an exchange rate of 1$US=¥75,
1Euro=¥100

11

Approximately 7.4 billion yen reduction planned

Approximately 2.5 billion yen in assets were
disposed of or sold off in the fiscal year ended
March 31, 2013

A

Three key measures will be used
to centralize resources in priority areas.

(1) Greater profits in the automotive business. To improve theprofit ratio of automotive products, we will thoroughly reduce
costs, including expand utilization of local steel and integrated
production of parts from pre-processes, and review ofdesign and manufacturing methods so as to standardize
parts and integrated varieties material. We are also bringing
out more high-value-added products with a high profit ratio,such as modular products and system products. (See page
19 for details.)(2) Sales expansion for the aftermarket/distributor.
NTN-SNR, an NTN subsidiary in Europe doing business in thehighly profitable automotive repair parts (auto parts) market,
shares its experience and know-how with NTN Group
companies worldwide. In the repair of industrial machinery as
well, we will expand its MRO* business covering social
infrastructure industries such as energy, steel, and mining by* MRO: Maintenance Repair Overhaul

collaborating with local sales distributors to boost selling
power and train human resources, and by holding technicalworkshops for customers and selling them maintenance tools.
Furthermore, in Japan by establishing aftermarket stock officers,
we will strengthen product availability globally and keep
inventory levels low. Also building a dedicated manufacturinglines for aftermarket products, thus boosting its ability to reply
flexibly to demand with small-lot, multi-product manufacturingthat can deliver to customers in a shorter time frame.
(3) Strengthening industrial machinery business globally.
We will focus marketing activities on sectors with the promiseof continuous future growth, such as aerospace, rollingstock, wind turbines, agricultural machinery, and machine
tools. As well, in China and ASEAN, where we have so far
had only a low market share, we will step up efforts in windturbines, machine tools, construction machinery, androlling stock, as well as increase sales to local manufacturers.
In recent years the level of quality has improved in theseregions and manufacturers require high-value-added bearings.
In response, we are utilizing the NTN China Technical Centeras the basis for a design and development system that meetsthese local needs, and this is consequently helping us build
the foundation for future product orders.

Centralization ofManagement Resources
Centralization on Below Three
Priority Areas
1 Greater profits in the automotive business

Improvements to the profit ratio of
automotive products• Review of design and manufacturing methods• Improve sales price of low-profit products• Early release to market of high-value added products• Expand production in areas of local demandin growth markets
Improving technical services with mobile training unit

Utilization of local materials and greater
integrated production of parts from pre-process• Expand utilization of local steel• Local procurement of pre-process parts

Global Supply Chain (Image)

2 Sales expansion for the aftermarket / distributor

Focusing on greater sales in high-profit businesses• Strengthen the global supply chain• Set up dedicated production lines foraftermarket products• Expand automotive aftermarket businessand MRO business

3 Strengthening Industrial machinery

Sales offices
in Europe

Sales offices
in China

Sales offices
in ASEAN

Sales offices
in Americas

Aftermarket
stock centersbusiness globally
Focus on greater sales in growth industries
and low-share regions• Expand sales in growth industries• Strengthen business in China and ASEAN region

Plant

12

Interview with
the Top Management

Q8

What are the main points of the key measure“Centralization of Management Resources”?

Q9

What are the main points of the key policy“Structural Reform”?

A

Three key measures will be used to reformbusiness structure in the medium term.

(1) Reforms to personnel costs. As the NTN Group increases
its overseas manufacturing, we will reduce personnel costschanging personnel organization by region. In two years fromnow, personnel in overseas will account for 3% more mainlyin Asia. Japan, on the other hand, is expected to account for
5% less due to factors including the early retirement system.
These will contribute to approximately 11.5 billion yen inpersonnel cost reductions. And based on our philosophy of“on local site with local materials by local personnel”, we will
employ more outstanding locals staff, train them, and place
more of them as managers.
(2) Acceleration of overseas production. By moving
manufacturing to demand regions, we will establish a
production system that is unaffected by exchange rates.
By making the most of existing facilities overseas, we will
localize everything from design and parts procurement tomanufacturing. This is a measure to counteract products
from LCCs* in the medium and long term, and it will make amajor contribution to improving profits in the automotive
business. In Japan, we are moving production from NTN
actual plants to subsidiaries that have the latest production
equipment, which modernizes production and spreads therisk of natural disasters.

(3) Selection of business. NTN LOGISTICS CO., LTD.
was established in April 2013 to integrate NTN’s previously
separate production logistics and sales logistics functions.
By eliminating wasted time and resources through centralized
logistics control, and by making shipping more efficient throughjoint logistics, the new company will reduce logistics costs byapproximately 1 billion yen. As well, we are withdrawing fromsome products in the precision equipment business, so we are
currently narrowing down these categories and building an aftersales service system for customers still using these products.

Structural Reform
Mid-term Business Structural Reform
1 Reforms to personnel costs

Reforms to personnel organization by region
and personnel costs following acceleration of
production overseas<Overseas>
Increase personnel. Employ more local staff, increase
and train local managers that will key personnel<Japan>Reduce personnel by utilizing early retirement system

2 Acceleration of overseas production

Establish a system based in areas oflocal demand, that are not affectedby exchange rates* LCCs: Low Cost Countries.

• Acceleration of overseas production• Risk diversification and modernization in Japan

3 Selection of business

Reduction of logistics costs in Japanand withdrawal from a part of businessin the precision equipment• Integration of production logistics and sales logistics• Withdrawal from some products in the precisionequipment business that have low profits
The head office of NTN LOGISTICS CO., LTD.

Change in personnel organization by region

Asia

Q10

+17%
67% (+3%)

Europe64%

Americas+ 3%

Increasing
percentage
overseas+ 2%
33% (– 3%)

Japan

2013

36%

– 5%

Decreasing
percentage
in Japan

2015(Years ended March 31)(Estimate)

13

A

What are the points of the key policy“Expansion of New Products
and New Business”?
Three key measures will be used to develop
high-value-added products and expand
the service and solutions business.

(1) Strengthening development of module products and systemproducts. Instead of just making bearings alone, provide more
added value by coming out with modularized products thatincorporate peripheral components. This can be done by
developing advanced modules that integrate state-of-the-art
mechatronic technologies. Furthermore, by improving on thedevelopment of system products such as equipped with sensor
technologies, we can help reduce maintenance costs and thus
provide better services and solutions for customers.

Interview with
the Top Management(2) Full operation of the EV system products business.
We will step up social demonstration tests for commercialization.
Last year, we delivered a two-seater electric commuters fordemonstration project in France and Shizuoka Prefecture,
Japan. We also teamed up with the municipal government of
Iwata City in Shizuoka for successful one-year social
demonstration test. We hope to use the data gathered fromthese road tests to mass-produce EV systems as early as
possible and fully operate the EV system product business.
(3) Development of composite material products andmarket deployment. We will expand our lineup of composite
materials products, such as sintered bearings, which use metal
powder, and plastic bearings, which use high-performancematerials. By combining our years of material technology
experience with the technologies of Nippon Kagaku YakinCo., Ltd., which we acquired in 2011, we will accelerate
development and release of a range of new functional materials.

us about your thoughts for future CSR
Q11 Tellplans and measures.

A

NTN has started a EV demonstration project of microcompact EV in France (June 2013)

Expansion of New Products
and New Business
Strengthening Competitivenesstowards Further Growth

We will step up CSR efforts throughour business and raise the corporate valueof NTN.

The NTN Group regards CSR activities as aiming to maximize
the economic, environmental, and social value through ourbusiness for the realization of a sustainable society.
Our key products of bearings and constant-velocity
joints reduce energy lost through friction. Bearings make amajor contribution to the realization of a low-carbon society
through their application in product fields like wind turbinesand rolling stock. To ensure that our efforts in environmental
fields are as effective as possible, we have set completely
new company-wide environmental targets for the fiscal year
ending March 31, 2014. (See page 52 for details.)
At the same time, our business activities are supported
by our many stakeholders—shareholders, employees,
suppliers, and customers, to name a few. We will continue
to strive to answer to each of these stakeholder groups,
respond to their expectations, and earn their trust.

1 Strengthening development ofmodule products and system products
Increase added value of unit products,
module products and system products
Increase scope of service and solutions business
2 Full operation of the EV system products

business
Make preparations for mass-production of
EV system products as early as possible
Plan demonstration tests of the microcompact mobility
3 Development of composite material products

and market deployment
Expand business from bearings to structural
materials and new functional materials

14

Actionfor Change 1

FeatureFrom “Revival” to “Growth”

Strengthening Sales Worldwide in Industrial Machineryand the Aftermarket and Distributor Applications
Develop Business with a Clear Target
Net Sales and Operating Incomein the Industrial Machinery
Applications
Net Sales (Billions of yen)

99.5

Operating Income (Billions of yen)

106.6
93.7

Net Sales and Operating Incomein the Aftermarket andDistributor Applications
Net Sales (Billions of yen)

105.0

97.0
86.2

79.7

94.0

89.2

17.9 19.1

3.0

3.1

11.5

1.5
-1.6

2010 2011 2012 2013

Years ended or2014 (ending
March 31)21.0

2 Strengthen business in the China
and ASEAN region

14.7

2010 2011 2012 2013

(Forecast)

Industrial Machinery Applications

1 Expand sales in growth industries

72.2
4.8

To strengthen sales

Operating Income (Billions of yen)

Aftermarket and Distributor Applications
Years ended or2014 (ending
March 31)

(Forecast)

The forecast for the fiscal year ending March 31, 2014 is the one announced on May 20, 2013.

3 Strengthen the global supply chain
4 Expand MRO business
MRO: Maintenance Repair Overhaul

In the industrial machinery applications and the aftermarket and distributor applications, we are stepping up sales
activities in promising growth industries such as aircraft and wind turbines. We plan to boost sales in Europe,
the Americas, China, and ASEAN region by building up our development and manufacturing systems.

Industrial Machinery Applications

1 Expand sales in growth industries
We are stepping up sales activities with an eye to industries
that promise continuing growth; these include aircraft,rolling stock, wind turbines, agricultural machinery, andmachine tools. In the fiscal year ended March 31, 2013,
we received an order for jet engine bearings from a major
American jet engine manufacturer, and an order for bearingsfor offshore wind turbines
being developed by amajor company. We willcontinue to step up
marketing efforts in thesegrowth industries in order toboost profits.

business in the China
2 Strengthenand ASEAN region
The markets look to expand in China and ASEAN region, where
we will focus on our Condition Monitoring System (CMS)for Wind Turbines, axle bearings for construction
machinery and machine tools, bearings for gearboxes, andbearings for high-speed railways and electric locomotives.
In these regions we are also stepping up sales activities to local

15

manufacturers. We will also make the most of the NTN China
Technical Center in Shanghai to build a system for local designand development and thus speed up the time to customer order.

Aftermarket and Distributor Applications

3 Strengthen the global supply chain
NTN’s aftermarket stock centers in Japan is where weconcentrate stock of top-selling products. This boosts our supply
capabilities to various regions and adjust differences in stock level.
As well, we have dedicated exclusive production lines in Japanfor individual product manufacturing and small-lot, multi-productmanufacturing. This brings products quickly to customers,
boosts customer satisfaction, and leads to greater sales.

4 Expand MRO businessWe are expanding our MRO (Maintenance Repair Overhaul)business by targeting industries such as steel, paper, andport facilities. Working closely with local distributors, we aretraining local engineers and building a service network, offering
customers products promptly with the aid of a database,holding technical workshops for customers, and providing
maintenance tools. This comprehensive and coordinated effort
is boosting recognition of the NTN brand.

Feature

Stepping Up Global Expansion
Industrial Machinery Applications

EuropeFocus on aircraft, rolling stock,
and agricultural machinery
Aftermarket and Distributor Applications

Industrial Machinery Applications

Americas

Increase sales to major MRO customers

Agricultural machinery remains
steady due to economy recovery
Aftermarket and Distributor Applications

Strengthen collaboration systemwith major distributors

Rolling stock

Sales offices
in Americas

Sales offices
in Europe

Agricultural machinery

NTN China
Technical Center

Sales offices
in China
Sales offices
in ASEAN

Aftermarket stock centers

Aftermarket plant

Wind turbines

Industrial Machinery Applications
Industrial Machinery Applications

Asia

Demand recovery and market share increasein wind turbines and rolling stock in China
Increase speed of local development further
with the China Technical Center

Japan

Increase orders for aircraft,rolling stock, and wind turbines
Aftermarket and Distributor Applications

Establish the aftermarket plant
and aftermarket stock centers

Aftermarket and Distributor Applications

Expand sales channel andcultivate core distributors

16

Actionfor Change 2

FeatureFrom “Revival” to “Growth”

Building a Structure Capable of Generating Profit
with the Automotive Applications
In Pursuit of Greater Profitability and Higher Added ValueNet Sales and Operating Income in the Automotive Applications
Net Sales (Billions of yen)
Operating margin (%)

Operating Income (Billions of yen)

To raise profits

398.0

344.4

356.6

342.9

300.9

1.5

1.0

Automotive Applications

6.0

3.5

1 Expand local production
-3.2
-2.8

-0.9

-8.5

2010

2011

2012

local procurement of
2 Expandsteel and pre-process parts

-9.0

-2.5

Years ended or2014 (ending
March 31)2013

(Forecast)

The forecast for the fiscal year ending March 31, 2014 is the one announced on May 20, 2013.

of design and
3 Review
manufacturing methods

While reducing costs by expanding local production and procurement and reviewing design and manufacturingmethods, we will release high-value-added products at the earliest possible date in order to meet automotive
manufacturers’ needs for light weight and fuel efficiency, and at the same time increase our profitability.

Automotive Applications

1 Expand local production
We are strengthening our worldwide production systems witha focus on local production with the aim of raising profits
in the automotive applications. Utilizing the strengths ofcompanies like NTA Precision Axle Corp. (NTA) and NTPT
Company Limited (NTPT), which handle manufacturing
pre-processes (such as forging and turning), we aim toestablish a locally integrated production system covering all
steps from materials to finished products. This will make us
more cost-competitive and better able to provide products
around the world, and it will reduce the effects of currency
fluctuations on our business by reducing exports from Japan.
The result will be a more stable corporate structure.

local procurement of steel
2 Expandand pre-process parts
Besides local production, we are expanding local procurement,such as for steel and pre-process parts. Steel is being procured
as much as possible from China, South Korea, Russia, and otherTrend in local procurement rate
Global(%)
100

EuropeAmericas

Asia

China

95

NTA (USA)

Hub bearing*

90
85
80
75

Raise the local
procurement
rate up to

70
65

90%

60
55

NTPT (Thailand)* Photos are cross-sectional models of products

17

CVJs

50

2012

2013

2014

2015

(Years ended or ending March 31)

Feature

countries offering competitively priced, high-quality steel.
This helps us maintain quality and cut production costs.
For pre-processes such as forging and turning, we aretrying to decrease exports from Japan and increase thepercentage of local procurement. As of FY2012, there wereapproximately 300 overseas manufacturers supplying NTN.
We aim to find and build partnerships with more local suppliers
capable of providing competitively priced, quality materials withthe goal of building at each NTN base a locally integrated
production system from pre-processes onwards. We will takeadvantage of free-trade agreements in dealings with theseoverseas manufacturers of steel and other products.
Thailand is the hub for procuring materials andsupplying half-finished products and completed productsof design and manufacturing
3 Review
methods
To raise profits in the automotive applications, besides
restructuring our global production systems, we are reviewing
our design and manufacturing methods so as to reduce costs
wherever possible.
In design, we are aiming for not just function but also ease of
production. We are thus changing design to use raw materials
that are easy to procure. As well, we are seeking maximum
cost-efficiency through measures such as use of common
parts and reasonably priced materials.
Example of Standardizing CVJ
Tailored to eachcustomer’s needs

Standardize

South Korea

To Europe
China

To the Americas

India

Thailand

VietnamPinthong Plant
NTPT ( joint venture)

Malaysia

Utilization of FTA
in ASEAN region

Eastern Seaboard Plant

Indonesia

Standardization is carried out even for parts tailoredto each customer’s particular needs.
Materials and parts
NTN’s sales baseSemi-finished products

Finished products

Production base18

Actionfor Change 3

FeatureFrom “Revival” to “Growth”

Aiming for Expansion of New Products and New Business
From individual products to system products
I nd i vi d ua lpro d uc t s

1 Unitization / Modulization

3 Systematization

Data
management
softwareData collection
deviceMonitoring
and analysis
softwareLAN
User / NTN
Internet

CMS (Condition Monitoring System)
Reduce assembly man-hour through integrationof bearings and peripheral components
Achieve high functionality by integrating
components like motors and sensors

Unified control throughthe integration ofmachine parts andelectronic components

With an eye to future growth, we are stepping up development of high-value-added products and services
that utilize the advanced mechatronics technologies we have built up. We are also tapping into new business areas
with moduler products, system products, and composite material products.

development of
1 Strengthening
module products and system productsof composite material
2 Development
products and market deployment

By modularization through the incorporation of peripheral
components into individual products such as bearings, we not
only boost convenience for customers but also reduce thenumber of parts and provide more compact and light weightsolutions. For example, the Press Cut Spline Hub Joint that wereleased in 2012 uses our proprietary joint method to enableeasy integration of hub bearings and constant-velocity joints
on customers’ production lines. It also realizes thinner joints
and thus less weight, which means resource savings plus
better fuel efficiency for cars.
We are tapping into new markets outside of just bearings
through unique, proprietary system products. For example, our IC
Tag Integrated Bearing keeps a maintenance record of peripheral
components; while our Condition Monitoring System (CMS)for Wind Turbines allows for remote monitoring of the
bearings and peripheral components of large wind turbines,
which are normally difficult to inspect once they are installed.

We have built up advanced technologies in the field ofmaterials, as exemplified by our sintered bearings, which use
metal powder, and plastic bearings, which use high-performancematerials. By combining these proprietary technologies withthe molding and manufacturing technologies of Nippon Kagaku
Yakin Co., Ltd., which we acquired in 2011, we are expanding
business in the field of new functional materials.
One example is the Amorphous Core we developed in 2012
for high-current applications. It is used in EVs, solar power
facility reactors, MRI choke coils, and other applications.
For EV / HEV

Used in an converter for EVs

Successfulcommercializationof amorphous core

Press Cut Spline Hub Joint*

IC Tag Integrated Bearing* Photos are cross-sectional models of products

19

For medical
equipment

Used in a choke coil for MRI

Feature

Besides providing superb reliability under the trying conditionsof these applications, this product offers design freedom
in injection molding and contributes to devices that boast
compact and light designs. We will continue to develop new,high-value-added materials.

operation of the EV system
3 Fullproducts business
The NTN Group is combining the assessment technology built
up in car wheel applications with motor drive technologies suchas magnetic bearings in order to develop system products forEVs. With our In-wheel Motor System, incorporating a motor
into each car wheel makes the car’s interior more spacious

and gives greater freedom of its design. It makes possible a
new generation of cars that can “pivot turn” and “lateral move”.
NTN has been planning, designing, producing, and assessing
this product mainly with young engineers.
In the fiscal year ended March 31, 2013, we implemented
demonstration project of two-seater electric commuter inFrance. We also confirmed the feasibility of converted EVs(modified EV with a motor replacing the ordinary internal
combustion engine and batteries mounted on-board) that we
provided to the government of Iwata City, Shizuoka Prefecture,
which conducted a successful year-long demonstration teston public roads. These successes are the basis for accelerating
efforts to bring products and technologies to market at theearliest possible date.

Measures for full operation of the EV systemproducts businessStart of a public road EV
demonstration project asregistered light vehicle
Social demonstration project of
micro compact EV (France)
In-wheel Motor Systemfor compact EVs

Earlycommercializationof EV systemproducts

Demonstration
Project

Intelligent In-wheel

Q’mo demonstration
model

Product
Development
In-wheel Motor System

World’s first demonstration test of converted EV (Iwata City)20

At a Glance
Net Sales in Each Business Application as Percentage of Total Sales

Industrial Machinery
Applications
Percentage of
total sales

17%(93.7 billion yen)

Aftermarket &Distributor Applications
Percentage of
total sales

17%(89.2 billion yen)

Automotive
Applications
Percentage of
total sales

66 %(356.6 billion yen)This business covers
a range of industrial
machinery sectors including
construction machinery,
agricultural machinery,
aerospace, officeequipment, wind turbines,
machine tools, and rollingstock. We are working
to develop new technologies
and expand sales for all
sizes of bearings.

Net Sales and Operating Income for Industrial Machinery

Through distributors,
we provide bearings
for aftermarket for generalmachinery, and we service
the aftermarkets for mining,
paper, and steel machinery,
as well as the aftermarket
for automotive repair parts(auto parts). We provide
increasingly more bearingsof all types to customers
around the world.

Net Sales and Operating Income for the Aftermarket andDistributor

This market covers
automotive and automotiverelated parts. With the main
products of hub bearings,
constant-velocity joints,
and needle roller bearings,
NTN provides the world’s
automotive and automotiverelated companies with newtechnologies and products.

Net Sales and Operating Income for Automotive

Net sales

Net Sales
150
100

106.6

99.5

79.7

50

Operating
Income93.7(Billions of yen)

4.8

3.1

5

1.5

0

0

-1.6

-5

2010

2011

2013

2012

Net sales

Net Sales

ended(YearsMarch 31 )Operating Income(Billions of yen)

100

94.0

86.2

89.2

Operating
Income

72.2

17.9

50

(Billions of yen)

19.1

20

14.7

11.5

10
0

0

2010

2011

2013

2012

Net sales

Net Sales

ended(YearsMarch 31 )Operating Income(Billions of yen)

450
300

300.9

344.4

342.9

356.6

Operating
Income(Billions of yen)

150

10

3.5

0

0

-3.2

-8.5
2010

21

Operating Income(Billions of yen)

2011

2012

-9.0
2013

-10

ended
(YearsMarch 31 )

Reference: Net Sales by Region
Japan

Percentage
of total sales

33%

Europe(Billions of yen)(Billions of yen)

250

200

200

194.8

186.6

193.4

177.5

150

156.4

141.7

23%

Percentage
of total sales

127.1

132.8

133.0

124.8

2010

2011

2012

2013 (Years ended)

150
100
100

0

At a Glance

50

50

2009

2010

2011

2012

2013 (Years ended)

In the industrial machinery applications, sales for general machinery fell, as didconstruction machinery due to a drop in customer demand in China. Sales
were also down in the aftermarket and distributor applications. In the automotive
applications, despite signs of recovery from a manufacturing drop following
the Great East Japan Earthquake of March 2011, sales were down overall
due to a decrease in demand for Japanese car exports.

Americas

Percentage
of total sales

0March 31

26%

2009

Asia and Others(Billions of yen)(Billions of yen)

200

120

141.6

150

118.0

109.3

90

124.6

90.0

100

81.3

79.3

2009

2010

18%

Percentage
of total sales

92.7

92.4

95.8

2011

2012

ended
2013 (Years
March 31 )

60

50

0

March 31

In Europe, economic recovery is slow due to financial instability, and thishas led to lower sales in the industrial machinery applications, the aftermarket
and distributor applications, and the automotive applications.

30

2009

2010

2011

2012

2013 (Years ended)
March 31

In the industrial machinery applications, sales decreased in construction
machinery and increased in the aftermarket and distributor markets.
In the automotive market, sales were up overall due to increased customer
demand.

0

In the industrial machinery applications, sales were down in the markets
for general machinery, office equipment, and construction machinery,
and the aftermarket and distributor applications. In the automotive
applications, sales were down to Japanese manufacturers in China, but
in Asia and other areas, a recovery from the manufacturing drop following
the floods in Thailand, along with increased demand from customers,
contributed to increased sales.

22At a Glance

Industrial Machinery Applications

Net Sales in Each Business Application as Percentage
of Total Sales
Net Sales and Operating Income for Industrial MachineryJapan

Net Sales

EuropeAmericas

Asia and Others
Operating Income(Billions of yen)120

Kenji Okada
Deputy President

80

106.6

99.5

100

93.7

79.7

60

Operating
Income40
20

3.1(Billions of yen)

4.8
1.5

0

0

-1.6
2010

Results in the Fiscal Year Ended March
31, 2013
Net sales in industrial machinery were 93.7 billion yen, down
12.9 billion yen (12.1%) from the previous fiscal year.
In Japan, sales were up in aerospace and agricultural
machinery. Demand was down significantly, however,in construction machinery and machine tools in China,
Indonesia. In the Americas, demand was downin the construction machinery and gear box markets,and in Europe demand was stagnant overall.
Operating income was 1.5 billion yen, down 3.3 billion yen(68.3%) due to the drop in net sales.

Overview of the Fiscal Year Ending March
31, 2014
For the fiscal year ending March 31, 2014, we forecast an
increase in overseas sales as we work to gain new
customers and increase market share. Asia will be a key
region as we anticipate recovering demand and growing
market share in wind turbines and rolling stock, andincreasing sales in construction machinery in China.
We also anticipate increasing sales thanks to growing
demand in agricultural machinery in the Americas and inaerospace in Europe.

23

5

-5

2011

2012

2013

ended
(YearsMarch 31 )Medium- and Long-Term Strategies
The basis of NTN’s medium- and long-term strategy is “expand
sales in growth industries”. In newly emerging countries,
where economies are advancing and populations are growing,
we expect to see a continuing increase in demand in construction
machinery, agricultural machinery, aircraft, rolling stock,and other markets. The wind turbine market looks particularly
promising as the number of installations continues to increaseprimarily in Europe. We aim to increase profits by responding
to these growth markets with a stable supply of high-quality
products that meet varying customer needs. In the areaof research and development, we are focusing
on high-performance bearings such as the ULTAGE seriesof spherical roller bearings, and on unique system products
such as Condition Monitoring System (CMS) for Wind
Turbines. We will promote self-contained developmentat our four regionally.
Regionally, we are focusing on China and ASEAN. Basedon our philosophy of “on local site with local materials
by local personnel,” we will expand manufacturing at local
plants, and boost cost competitiveness by procuring partsand materials locally. At the same time, we are hiring
and training skilled local personnel so that we can improve
our local customer support capabilities and increase sales
to local manufacturers.

Main Product Lineups for the Industrial Machinery Applications

Construction
machinery bearings

Agricultural
machinery bearings

At work in resource
mining and civilengineering

Contributing to fooddemand with highquality products

Gearbox bearings

Aerospacebearings

Supporting
industrial
machinery robots

At work in jetengines aroundthe world

Office equipment
bearings

Wind turbine
bearings

Supporting smooth
operation in copiersand multifunctional
printers

Meeting growing
demand inrenewable energy
and other areas*

Machine tool
bearings

Rolling stock
bearings

High-precision
support for
high-speed-rotation
machinery

Providing safety
for the world’s
high-speed railways*

Hydrodynamic
bearings

Medical equipment
bearings

Used for HDDs
and thin fan motors

Used in CT scanners
and artificial hearts

At a Glance** Photos are cross-sectional models of products.

TopicsSupplying the 4 World’ Largest Engine
Manufacturers
In October 2012, we received a mass-production order from Pratt& Whitney to mass-produce bearings for the PurePower® familyof jet engines. In June 2013, we took an order to mass-produce
bearings for the Rolls-Royce Trent XWB jet engines. KUWANA Works
was the first bearing manufacture in Japan to acquire the JIS Q 9100
quality management system and Nadcap* accreditation program.
High-performance, high-quality bearings are supplied to companies
around the world.
The mass-production orders from these two engine companies
were the first for NTN and represent a successful effort by KUWANA
Works, that have a dedicated plant for aerospace bearings,
and the Argonay Plant of NTN-SNR in France to cooperate
in development and manufacturing.

Kuwana Works Ultra-precision bearing plant(Kuwana-city, Mie Prefecture, Japan)

NTN-SNR Argonay Plant (Argonay, France)

Various NTN bearings
for the aerospace industry* Nadcap: Nadcap (National Aerospace and Defense Contractors Accreditation Program) is developed by PRI (Performance Review Institute), which is managedby participating members such as aircraft manufacturers including Airbus and Boeing, and prime engine manufacturers including P&W. Rolls Royce, and GE.
Launched in 1990, the program manages auditing and accreditation for quality assurance and special processes.

24

At a Glance

Aftermarket & Distributor
Applications

Offering Ever-Improving Products and After-Sales
Service in All Markets
Net Sales and Operating Income for the Aftermarket andDistributorJapan

Net Sales

EuropeAmericas(Billions of yen)

100

94.0

89.2

86.2
80

Fukumatsu Kometani

Asia and Others
Operating Income

72.2
Operating
Income60

Executive Director(Billions of yen)

30

40
17.9
20

19.1
14.7

11.5

10

0

0

2010

Results in the Fiscal Year Ended March
31, 2013
Net sales in the aftermarket and distributor applications were 89.2
billion yen, down 4.8 billion yen (5%) from the previous fiscal year.
This was the result of a lingering slowdown in inventory
turnover at distributors due to a stagnant economy.
On the positive side, in North America we enjoyed increased
sales of parts kits for large trucks, new products we recently
started to sell, and in Europe we boosted sales to large
equipment repair companies.
Operating income was hurt by the fall in net sales, coming
in at 14.7 billion yen, down 4.4 billion yen (22.8%).

Overview of the Fiscal Year Ending March
31, 2014
In the fiscal year ending March 31, 2014, in China and otherpromising Asian markets, we will expand sales network,
nurture our core distributors, and tap the market for MRO
customers. In Europe, we will continue to increase sales
to large MRO customers, and in Eastern Europe and Russia
we will expand sales network. In the Americas, we will
strengthen ties with large distributors and increase salesof parts kits for trucks.

25

20

2011

2012

2013

ended
(YearsMarch 31 )Medium- and Long-Term Strategies
In the automotive field, we aim to expand the highly profitable
automotive parts business overseas. We will focus on the parts
kit business and unit products and utilize the experienceand know-how of NTN-SNR to become stronger in this fieldworldwide. In the Americas, we have already embarked
on full-scale marketing of parts kits to large distributors with
North-American-wide sales and supply networks and large
parts dealers.
In the industrial machinery field, we are focusing
on expanding the highly profitable MRO business. In unisonwith local distributors, we are improving our technicalservices by visiting customers in fully equipped mobile training
units in four world regions (Japan, the Americas, Europe,and China). We are also boosting our competitivenessby nurturing local engineers and selling maintenance tools.
We are also strengthening the supply chain with the startup
of a dedicated production line in Japan for industrial machinery
aftermarket products, which will allow us to flexibly provide
a range of products in small lots. We have also started
revamping the supply chain to properly manage inventory
on a global scale. These efforts will garner us more sales
opportunities through the stable supply of products
in a shorter time frame.

* Photos are cross-sectional

Main Product Lineups for the Aftermarket and Distributor Applications
For furnace body trunnion

Steel

models of products.

Auto Parts
Rolling mill

Converter

Super large-sized split sphericalroller bearing*

At a Glance

Four row cylindricalroller bearing*

Double row tapered
roller bearing

Sealed four row tapered
roller bearing

Extensive lineupof parts kit

Parts kit
for North America

Oil and Gas

MiningBearingunit

Conveyor
Thrust cylindricalroller bearing

Equipments at oil
and gas including
shale gas production site

Sealed sphericalroller bearing*

Crusher

TopicsExpanding Sales Network Throughout Asia
In China, India, and Indonesia, NTN is working to expand sales
network, nurture core distributors, and strengthen selling systems
using IT.
In China and Indonesia we are increasing the number of distributors,
and in India we are establishing new sales bases (in Mumbai)
and reorganizing and strengthening existing distributors with the goalof expanding sales network.
We are also nurturing distributors capable of increasing sales sothat we can boost the selling power of our products.
We are also using IT to strengthen our sales systems. We are
improving the functions of our online sales systems for local
distributors, and we are working to introduce these online systems
to regions that don’t yet have them.

China

Increase numberof distributors

Mobile training unit

India

Establish new sales bases
Reorganize existing distributors
Indonesia

Increase numberof distributors

26

At a Glance

Automotive Applications

Achieving to Improve Profitability by Strengthening
Product Competitiveness and Response to Market Needs
Net Sales and Operating Income for Automotive
Japan

Net Sales

EuropeAmericas

Asia and Others
Operating Income(Billions of yen)

400

344.4

350
300

342.9

356.6

300.9

250
Operating
Income200
150

Yoshinori Terasaka
Director(Billions of yen)

100

20

50

10

3.5

0

0

-3.2

-8.5
2010

Results in the Fiscal Year Ended March
31, 2013
Net sales in the automotive applications were 356.6 billion
yen, up 13.7 billion yen (4%) from the previous fiscal year.
While customer demand was down in Europe, sales were up
in the Americas and Asia.
The operating loss was 9.0 billion yen (compared toan operating loss of 3.2 billion in the previous fiscal year).
Contributing factors were an increase in temporal costs
resulting from an additional burden imposed on productionlines in coping with increased sales to the Americas.

Overview of the Fiscal Year Ending March
31, 2014
In the fiscal year ending March 31, 2014, we forecast decreasing
sales as Japanese car manufacturers move production overseas
and the Japanese government ends its eco-car subsidy
program. But we also see increasing sales in Asia thanks
to strong domestic demand within ASEAN countries, growthin the Chinese market, and recovering demand for Japanese
car manufacturers in the region. The Americas will enjoy
a manufacturing boost on the strength of replacement purchases
and we estimate to receive new orders for new projects as well.

27

2011

2012

-9.0
2013

-10
ended
(YearsMarch 31 )Medium- and Long-Term Strategy
Looking medium to long term, the market will likely shrink as
automotive production volumes decrease in Japan. However,
we anticipate demand to rise on the strength of increasing
car sales in the Americas and continuing growth in Asian
economies.
Amidst this climate, we aim to tackle the pressing problem
of profitability by review of design and manufacturing methods
to reduce costs. We will also boost cost-competitivenessby not just expanding production volume in demand regions
but also by promoting to use more local steel and procure
more local pre-processes parts.
In the area of product development, car drive mechanisms
are expected to go increasingly electric, and in response
we are developing new products and systems throughcooperative efforts across engineering divisions. As
exemplified by the Ball Screw Drive Module for electricvehicles (EVs) and hybrid vehicles (HEVs) that we beganmass-producing in 2013 (see page 28 for details), we areusing the unique technologies we have built up to quickly
bring to market high-value-added products that improvethe energy efficiency of EVs and HEVs. This is in turnimproving profitability.

Main Product Lineups for Automotive Applications
Transmission

Tapered roller bearings* Photos are cross-sectional models of products.

Steering

Seat

Constant-velocity joint for steering*

Clutch for seat lifter*

Third generation
hub bearings*
At a Glance

CVT
Thrust needle
roller bearings
The world No.1

Wheel applications

Hollow ball screw unit*

Engine, accessories

The world No.2
High-load
resin pulley

Autotensioner unit*

Needle roller bearings
for rocker arm

Constant-velocity joints*

TopicsApril 2013

Ball Screw Drive Module
for EVs and HEVs Developed
Cooperative
regenerative
braking system

EVs and HEVs generate brake force by using the vehicle’s drive
motor as a generator while braking to convert (regenerate) thevehicle’s driving energy to electrical power. NTN has developed andbegun mass-producing a Ball Screw Drive Module that is usedon the cooperative regenerative braking system, which raises thiselectrical conversion efficiency. This compact and highly reliable
modularized product, the culmination of NTN’s years of expertisein ball screws, bearings, sintered materials, and other automotive
technologies, contributes to fuel savings of several percent.

Hydraulicbrake force

Ball screw
drive module

Amountbrake pedal
is pressed

ECU

Regenerated
brake force
Inverter

Vehicle drive
motorBall Screw Drive Module

28

Research and Development System

NTN conducts research and development through four regionallyindependent development bases around the world with a theme ofenvironmental protection and creating technologies for renewable energy.
Strengthening Self-Contained Technical Capabilities on Local Sites with a Global R&D System
NTN’s R&D includes basic research in elemental technology
and other areas, which we conduct at two R&D bases, one inJapan and one in France. The development of products andtechnological services is conducted in a locally based,
self-contained manner in order to promptly meet the needs ofcustomers in each worldwide market. Relevant information is

Research

Production Engineering
R&D Center

stored in a database to be shared with NTN bases worldwide.
In May 2011, we established the NTN China Technical Centerin Shanghai in order to offer customers technical services suchas design and evaluation tests in the growing Chinese market.
This has led us to strengthen technical capabilities on local sites
in Europe and the Americas as well.

Development

Japan

Advanced Technology
R&D CenterIndustrial Technical Center

NTN R&D Center

Share database

EuropeResearch

Design data / Testing data / Experimental data /Production technology data / Customer-project data

Americas
Development

Development

China
Development
NTN-SNR
R&D Center

NTN China Technical Center

NTN Automotive Center

Tribology is Key to Creation of Future Technologies in Environmental Protection
and Renewable Energy.
The two pillars of our R&D are preservation of the global

Tribology

environment and contribution to renewable energy. Bearings
that reduce friction, and thus energy consumption, in a variety ofmachinery are truly eco-products. Based on the expertise wehave built up in tribology* 1, we use our material technologies
including surface modification, ceramics, sintered alloys,
and engineering plastics*2, and our lubrication technologies
in oil and grease, to bring customers products that are lightand compact, offer low torque and a long service life (high reliability),
and can handle high-speed and special environmental applications.
Established in April 2011, NTN’s EV System Division*3 develops
products for EVs as the company’s in-house venture division.
In January 2012, Nippon Kagaku Yakin Co., Ltd., which
possesses technologies for powdered metals, plastic molding,and high-precision processing, became a wholly owned NTN
subsidiary. The company works closely with NTN’s Advanced
Technology R&D Center and the Composite Material Product
Division to speed up development in powdered metals andengineering plastics.

Forging, Lathe turning, Polishing, Joining, Lubricating, Coating & surface improving,
Oiling, Greasing, Metals, Ceramics, Engineering plastics, Sintered alloys, Sensing(Rotation, load, angle, remote monitoring, wireless communication),
Analysis, Measurement, Evaluation*1 Tribology: A science and technology that includes the study and applicationof mechanisms of friction, wear and lubrication.
*2 Engineering plastics: Synthetic plastics that are engineered to havea specific function.
*3 The EV System Division changed its name to the EV Module Business HQ
on March 1, 2013.

Creating the Technologies of the Future
Preservation of the global environment,
new energy
Wind turbines
Rolling stock
Construction
machinery
Electric
vehiclesAutomobiles

29

Longerworking life
(high reliability)

Morelightweight&more
compact

Ultrahigh-speed&
specialenvironments

Space rockets,
artificial satellites
AircraftMedicalequipment

Customer needs

Lower friction(lower torque)

Strong support for customers through elemental technologies,
design and development, production technologies,
assessment technologies, and intellectual property

Precisionequipment
MachinetoolsCorporate Governance
Governance · · · · · · · · · · · · · · · · · · · · · · · · · · · · 31
Governance, Compliance · · · · · · · · · · · · · 31
Disclosure of Information · · · · · · · · · · · · · 37
Officers · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 38

Social and Environmental
Responsibility
Focus 1NTN-SNR (France)

Increasing Production Volume
by 20% for Tapered
Roller Bearings · · · · · · · · · · · · · · · · · · · · · · · · · · · 39

CSR Activities
ReportFocus 2NTN Group in Japan

10 Years of Striving to Preserve
the Bounty of Nature · · · · · · · · · · · · · · · · · · 40

Focus 3
Response to Restrictions on Conflict
Minerals from Democratic
Republic of the Congoand Adjoining Countries · · · · · · · · · · · · · 41

Society · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 42
Quality Management · · · · · · · · · · · · · · · · · · · · 42
Supply Chain Management · · · · · · · · · · 44
Human Resources Management · · · 45
Contributions to Local Communities · · · 47

Environment · · · · · · · · · · · · · · · · · · · · · · · · · · 48
Environmental Management · · · · · · · · · 48
Prevention of Global Warming · · · · · · 54
Reducing Waste · · · · · · · · · · · · · · · · · · · · · · · · · · 56
Management and Reductionof Environmentally
Hazardous Substances · · · · · · · · · · · · · · · · 57
Biodiversity · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 58

30

Governance Governance, Compliance
We position thorough corporate governance and strong
compliance as top priorities and strive to realize thesethroughout the NTN Group worldwide.
Strengthening Corporate Governance
Philosophy and System of Corporate
Governance
NTN makes the implementation of highly efficient corporate
governance a top management priority and we build systems
that make management more efficient and robust.
We also strive to communicate with shareholders, investors,
and other stakeholders by providing information in a prompt,
accurate manner. This ensures more transparent management.
Corporate Governance Structure (As of July 2013)
Stockholder Meeting
Assigns/
Removes

Assigns/
Removes

Corporate
Auditors

Board
of Directors
AuditsFair Trade
Monitoring
Committee

Assigns/
RemovesAccounting
Auditors(Audit firm)
Business Strategy
Committee
Executive
Committee

Divisions, Subsidiaries

Continuously Strengthening Management Auditing
Functions
NTN employs a corporate auditor-based governance system
in which three of the four corporate auditors are from outside
the company. Outside corporate auditors bring specialized
knowledge in areas such as finance, management, and law,and they conduct audits in collaboration with in-housestanding statutory auditors and the Internal Audit Department.
The Board of Directors, which includes two outside
directors, makes decisions on important matters and oversees
business execution, and corporate auditors sit on the Boardof Directors to give their opinions. In this way, we strive
to maintain and improve transparency and fairnessof the Company’s management supervision system.
We also employ the Executive Officer System to ensureswift decision-making and business execution.
The Board of Directors, based on set regulations, makes
decisions on the selection and dismissal of representative
directors and directors with special titles, as well as
the designation and cancellation of duties delegated to directors.
After director candidates are decided on at the Board of Directors
meeting, they are nominated and voted in at the generalshareholder meeting. This ensures transparency and fairness.

Board of Directors:
The role of the Board of Directors is to make decisions relating
to fundamental business policies, statutory matters, and importantmanagement issues, and to supervise the performance of duties by its
members. The board holds regular meetings at least once per month,with extraordinary meetings also convened at any time when necessary.

Business Strategy Committee:
The Business Strategy Committee discusses fundamental business
policies and important management strategies, with meetings held
twice per month.

Compensation Based on Regulations
The upper limit for the compensation for officers is voted on at
the general shareholder meeting, and the compensation
and bonuses for directors are decided on by the Boardof Directors based on its regulations. Statutory auditors
negotiate their compensation. NTN has no systemof retirement benefits.

Executive Committee:
NTN introduced the Executive Officer System in the fiscal year ended
March 31, 2005 to enable swift decision-making and businessexecution. Reviews of monthly performance are conducted by
the Executive Committee, comprising Directors and Executive Officers.

Corporate Auditors:
NTN has four corporate auditors, two of who are standing auditors(with three of the four being outside auditors). The auditors are
responsible for auditing the performance of duties by members of
the board. Auditors attend board meetings and express their opinions
as part of their efforts to maintain and improve the transparency
and fairness of the Company’s management supervision system.
The system is structured to enable standing auditors to participate
and express their opinions during meetings of the Business Strategy
and Executive committees. The corporate auditors also strive
to increase the efficiency of the overall auditing process, meeting
regularly to coordinate their own corporate audits, independent publicauditing firm audits, and internal audits. There are no special business
relationships or interests between the outside auditors and NTN.

Fair Trade Monitoring Committee (Established April 2012)
Chaired by the NTN President, the commission exerts practicalcontrol to ensure fair trading in compliance with the Antimonopoly
Act and Subcontracting Act, and also monitors and provides advice
regarding training and educational activities.

31

Internal Control
Creating and Implementing Systemsa Top Priority
In line with the basic framework for internal control as
outlined in “On the Setting of the Standards and PracticeStandards for Management Assessments and Audits
Concerning Internal Control Over Financial Reporting (Council
Opinions),” published by the Business Accounting Council,
NTN has a basic policy for the structure of internal control.
Based on this policy, we have made the creationand implementation of an internal control system a toppriority of our risk management and compliance. The Internal
Audit Department is responsible for internal audits, and has
been established as an independent auditing organization
to audit business execution throughout the Company.

NTN’s Efforts to Comply with the Antimonopoly Act(1) The construction of systems to ensurecompliance with the Antimonopoly Act
In April 2012, we established the Fair Trade Monitoring
Committee to ensure fair trading in compliance with
the Antimonopoly Act and the Subcontracting Act. It is
under direct control of the Board of Directors and chairedby the president, with directors in charge of the sales andprocurement departments in Japan and overseas, and external
directors and attorneys acting as committee members. At
the same time we also established the Fair Trade Promoting
Department, which is responsible for the company-wide
development of the policies set out by the Fair Trade
Monitoring Committee and institutional decisions.

(2) Continuous compliance activities
for the Antimonopoly Act
The Fair Trade Promoting Department leads in-housetraining for directors, sales departments, and managers.
In August 2012, it established five principles for preventing
cartels and these were put on cards for employees torecite. In December 2012, it published and distributed
the Antimonopoly Act Compliance Handbook. We also
monitor progress and conduct guidance of our compliancewith laws and regulations; for example, self-audits byemployees and in-advance applications by employees torequest an approval from the Fair Trade Promoting
Department to participate in meetings with potential
contacts with competitors, such as customer/suppliersituations or collaborating for joint supply to OEMs at
an OEM’s requests. Under our in-advance application
system, we have employees who will take part in meetings
with other companies, such as a Trade Association
Meeting, sign and submit an agreement that says, “I will nothave any discussions, such as regarding pricing
information, that would cause suspicion of NTN being inviolation of the Antimonopoly Act. If such a topic shouldarise, I will explain that I cannot take part in such discussion
and immediately excuse myself.” It is also mandatory thatNTN employees report any contacts different from those on
the in-advance application and any unexpected contacts
without an in-advance application so that we can havea global picture of contacts with competitors.
Any reports or consultations from directors andemployees are received through the consultation servicesof the Fair Trade Promoting Department and through as
helpline, and we can provide a prompt answer or startinvestigation quickly. The Fair Trade Promoting Department
also controls NTN’s compliance system by auditing
progress of the improvement measures taken in
the relevant NTN departments.
At NTN’s overseas bases, we are working to ensure
control over our global activities by strengthening
compliance systems that ensure we abide by antimonopoly
and competition laws in various countries. We areestablishing a system of responsibility for each of ourbusiness regions under the guidance of the Fair Trade
Promoting Department, our subsidiaries are conducting
compliance training for employees, and we are building
systems for conducting audits such as the in-advanceapplications mentioned previously.
The NTN Group will use these various systems to
conduct continuous education and awareness activities
that strengthen overall control over our compliance.

Corporate Governance

The NTN Group has made compliance a top priority and is
striving to strengthen its systems for complying with laws
and regulations.
In June 2012, NTN and former executives received
an indictment filed by the Tokyo District Prosecutors
Office (TDPO) on suspicion of having violated Japan’s
Antimonopoly Act in relation to the domestic sale ofbearings. In March 2013, we received a cease and desist
order and surcharge payment order (for ¥7.231 billion)
from the Japan Fair Trade Commission (JFTC). Because
the assertions by the JFTC and TDPO are greatly different
from NTN’s view of the facts, in April 2013, NTN appealed
the JFTC’s order and we intend to assert our defense inupcoming criminal proceedings.
In July 2012, a consolidated subsidiary of NTN in South
Korea underwent an on-site inspection by the Korea Fair
Trade Commission, and in February 2013, NTN’s Singapore
subsidiary underwent an inspection from Competition
Commission Singapore. NTN subsidiaries are also underinvestigation by the authorities in the U.S. and the E.U.
As well, NTN and its subsidiaries in the U.S. andCanada are defendants in a number of class action suits.
We at NTN sincerely regret any concern caused toshareholders by these events.
The NTN Group has been committed and remains
committed to ethical business activity and faircompetition in compliance with all laws and regulations
including the Antimonopoly Act.

32

Governance Governance, CompliancePursuing Risk Management
Philosophy and System of Risk Management

Formulating BCP and Other Disaster Measures

System Implementation in Line with Basic Policy
and Management Rules

In the area of hazard risks, NTN used a hypothetical situationof multiple bases coming to a halt due to a large-scale natural
disaster to create three types of measures: for preventing
damage, minimizing damage, and restarting business.
For example, problems that could occur in a disaster include
defective products, the leaking of harmful and dangerous
substances, damage and loss of IT equipment and digital
information, stoppages at suppliers, and loss of logistics
functions. We look at each of these to study and makeappropriate measures.
To make business continuity plans (BCP) for the prompt
recovery and continuation of business following a disaster, alldivisions share their policies on current and possible future
BCPs and this cooperation leads to the formulationof updated measures. In addition, we constantly improvesystems to ensure we can effectively confirm the safe
whereabouts of employees in a disaster.

In line with NTN’s Basic Policies, we have formulated our Risk
Management Policy, and we have established the Risk
Management Rules, which set out the systems and standards
to follow in case of an emergency. Based on these policies
and rules, we have created an integrated system thatprevents the occurrence of emergencies and provides
a protocol for promptly handling them if they do occur.
Setting Key Management Risks to Handle with
the PDCA Cycle
We established the Risk Management Committee as
an advisory body for managing risk. The committee leads
focused risk measures.
In the fiscal year ended March 31, 2013, the Risk
Management Committee determined possible risks and createdmeasures to deal with them, with a special focus on hazard
risk (external risks) such as disasters and compliance risks.
Risk Management System
Board of Directors
Chief Management Officer(Director in charge of risk management)

Risk Management Committee
Chairman: Chief Management Officer
Vice-Chairmen: Risk Management Manager
Emergency Management Manager
Members: Head of the Promotion Division

Risk Management
Department(CSR Department)

Emergency Management
Department(Personnel &General Affairs Department)

Emergency
Management
CenterPromoting Department

Risk Management Approach
Preventative
measures

Emergency
measures

Risk management planning
An incident occurs
Creation and implementation of
measures to address risk

Evaluation of measures toaddress risk
Evaluation of effectivenessof risk management

33

Determining the level
Establishment ofcentral task force
and response

Response by
department
in charge

Measures toprevent reoccurrence

Information Security Measures
In the fiscal year ended March 31, 2004, NTN formulated our
Basic Policy on Information Security. The Information Security
Guide on the NTN intranet contains items like the Information
Security Handbook and tests of employee level of understanding
on information security; the aim is to make all employees
aware of the proper ways to handle information at NTN.
Sales sites in Japan have a Classified Information Protection
Manual that details how to prevent information leaks. And all
employees who carry company laptop computers are
required to take the NTN Mobile Information Pledge.

CSR Management
CSR a Key to Corporate Philosophy System
NTN’s corporate philosophy is “We shall contributeto international society through creating new technologies
and developing new products.” To realize this philosophy,
in June 2006 we formulated the CSR Policy, one of NTN’s
Basic Policies.

Corporate Philosophy System

Basic corporate values.
Show intended direction of
corporate activities.

Corporate
Philosophy

Corporate
Management
Policies

NTN’s
Basic
Policies

Employee Code of
Conduct

1. Policy on Controlof the Company
2. Financial Reporting Policy
3. Risk Management Policy
4. Internal Control Policy
5. CSR Policy
6. Policies on decisions
to dismiss or not rehire
accounting auditors
7. NTN Environmental Policy

Business Code of
Conduct

Guideline to encourage aggressive actions

Guideline for compliance actions

Corporate Governance

CSR Policy
1 Legal compliance/Policy for activities: We shall comply with laws and regulations, endeavor to engage in fair competition,and carry out our business activities in an honest and ethical manner.
2 Customers: We shall strive to develop new technologies and new products, as well as to provide safe and reliable products.
3 Business partners: We shall engage in fair and free competition, and at the same time establish excellent partnerships with ourbusiness partners.
4 Stockholders/Disclosure of information: We shall work to develop this corporation and increase stockholder return, while atthe same time communicating broadly with society and actively disclosing information.
5 Employees: We shall value the individuality and diversity of our employees, work to create a safe and pleasant work place,and achieve comfort and prosperity.
6 The environment: With ample consideration to preserving the global environment and protecting the ecosystem, we shall work

toward the creation of a sustainable, progressing society.
7 Society: We shall make every effort to interact meaningfully with society on a local level, and to engage in activities that contribute to society.
8 International activities: We shall, as a matter of course, obey all international rules as well as the laws of each country and eachregion that we operate in; we shall also respect local cultures and practices and contribute to local development.

Employee Code of Conduct
1 We respect social ethics and act as good members of society.
2 We have noble ambitions and always make efforts to brainstorm and achieve the set target.
3 We accept changes, have broad vision and act voluntarily.
4 We deepen mutual understanding and enhance the vitality of our work site.
5 Management and supervisors in particular, as faces of the corporation, improve their qualifications, make efforts to develop individuals,

always take care of safety and show leadership.

Business Code of Conduct
1 Compliance with laws andnorms
2 Pursuit of quality and safety
3 Compliance with the Anti-TrustLaw
4 Fair trade with suppliers
5 Honoring agreements
6 Refusal to engage in improper

conduct with business partners
7 Proper labeling andspecification

8 Respect for intellectual

property rights
9 Proper control of confidential

information
10 Ensuring security bystrengthening export controls
11 Compliance with industriallaws
12 Compliance with corporate

accounting principles
13 Compliance with internationalrules

14 Promotion of environmental

preservation
15 Positive contribution to society
16 Compliance with labor-related

laws and company work rules
17 Realization of a safe andpositive work environment
18 Respect for human rights
19 Prohibition of sexual harassment
20 Proper control of information

about individuals

21 Strict distinction between

public and private matters
22 Confronting harmful social

forces23 Proper utilization of our

information system
24 Prohibition of insider trading
25 Self-restraint regarding

entertainment and gifts
26 Lawful donations/political

donations34

Governance Governance, Compliance

Disseminating the Codes of Conduct Accordancewith Basic Policies

Chief Management
Officer

Department in charge
and the Committee Office

CSR Committee

CSR Management (CSR Dept.)

Managing departments

Corporate Planning
Department

Legal Department

General Affairs
Department

Personnel
Department

Environmental
Management Department

Quality Management
Department

Intellectual Property
Planning Department

Procurement
Department

Management andcontrol Departments

In accordance with its CSR Policy, NTN formulated
the Employee Code of Conduct, the guidelines for carrying
out CSR activities, and the Business Code of Conduct, which
all officers and employees must abide by.
These are written in the CSR Guidebook and the Pocket
CSR Card that all NTN Group employees in Japan possess
so that they can put CSR into action into their daily work.

CSR Promotion Structure

Implementing Departments (plants,
Engineering Departments, Research & Development, CSR Managers
Persons in charge of CSR
Sales, Head Office) and Subsidiaries

Compliance Subcommittee

The CSR Guidebook and the Pocket CSR Card

Disseminating Codes of Conduct at Overseas
NTN Group Companies
All NTN Group companies overseas disseminate Codes ofConduct that match their particular situation. For example,
NTN-SNR (France) formulated its Codes of Conduct in 2011and put them in booklets that are distributed to all employees.

CSR Promotion Structure
CSR Department and CSR Committee Lead Activities
In 2006, we began our CSR activities in earnest withthe establishment of the CSR Management Rules and the CSR
Department. The CSR Department is a dedicated division
for overseeing the NTN Group’s CSR activities as well as
advancing and strengthening them. The CSR Committee ischaired by the head of the CSR Department and made upof the heads of relevant divisions. It systematizes CSR activity
plans and CSR policies, and it deliberates on CSR issues
across all divisions. We pursue CSR throughout the entire
NTN Group in Japan by appointing CSR managers
and persons in charge of CSR at all of our sites and at NTN
Group companies in Japan.

35

Other Subcommittees

Key Focus Areas in the Fiscal Year Ended
March 31, 2013
(CSR Department)• Review CSR Policy
Systematize the CSR Policy along with the Employee Code of
Conduct and Business Code of Conduct.
• Create and publish the NTN Report (on CSR activities)• Plan and implement compliance education
This education was available to new employees, employees
being promoted to managerial positions, and employees of the
new subsidiary Nippon Kagaku Yakin Co., Ltd.
• Measures for conflict minerals covered by the Dodd-Frank Act
Prior inspections are carried out in Japan, and we built asystem for responding to inquiries from overseas customers.
• Meet customer needs by having plans for business
continuity management (BCM).

Overseas Group Companies Gear CSR Activities
to Local Needs
NTN Group companies overseas each create a systemfor conducting CSR activities by making and implementing
plans that meet specific local needs.
For example, Shanghai NTN Corp. distributes a varietyof CSR-related manuals to employees, and each division has
a person in charge of CSR who takes the initiative in leading
CSR activities for that particular division. These people
in charge of CSR periodically patrol their own and otherdivisions to check on the progress of CSR activities and whennecessary point out areas where improvement is needed.

Furthering Compliance
Philosophy and System of Compliance
NTN defines compliance as not only abiding by laws
and regulations, but also as having a system for thoroughcompliance with all social norms and rules.
Compliance Subcommittee Carries Out CSR Activities
NTN has the Compliance Subcommittee as an advisory bodyunder the CSR Committee. This subcommittee is charged
with comprehensively promoting and managing complianceinitiatives for the entire Group.
Helpline EstablishedNTN focuses on compliance-related education. At NTN sites
and Group companies in Japan, chiefly CSR managers
and persons in charge of CSR plan educational activities
and lead sessions on a range of topics for all levelsof employees.
One focus is training for employees being promoted
to managerial positions, who take self-learning withcompany-provided textbooks and online CSR comprehension
tests. As well, the NTN intranet compliance database hascase studies in non-compliance and the latest informationon compliance issues so as to raise employee awarenessin this area.
In addition to company-wide education, each workplace
has its own systems in place, such as employee self-checks
and feedback sessions, that ensure its workers are constantly
raising their awareness of compliance.

Compliance · Helpline Management System
Compliance promotion

Manages the Help Line

Chief Management Officer

Chief Management Officer(Director in chargeof the Legal Department)(Director in charge of CSR)

Office(CSR Management
Department)

CSR Committee

Legal
Department

Compliance Subcommittee
CSR
Management
Department

Legal
Department

Personnel
Department

CSR managers
Persons in charge of CSR
Corporate
Philosophy

Internal Help
Desk

External Help
Desk

Officers and employees of NTN Group companies

CSR Policy

Employee Codeof Conduct

Business Codeof Conduct

36

Corporate Governance

We have set up helplines inside and outside the company
to offer consultation on compliance matters. In the fiscal year
ended March 31, 2012, our helpline management rules wererevised so that calls to the helpline related to competition
laws (Antimonopoly Act, Subcontract Act) could be reported
to the Fair Trade Monitoring Committee.

Focus on Education Aimed at Disseminating
ComplianceGovernance Disclosure of Information
We strive to realize an open general shareholder meeting
and release accurate information in a fair and timely manner.
General Shareholder Meeting
Our Goal: An Open General Shareholder
Meeting
We have taken the following steps, such as making it easy
to take part in general shareholder meetings, to streamline
procedures for shareholders to exercise their voting rights.
Measures to Streamline Shareholder Voting Rights
Swiftly mailing ourgeneral shareholder
meeting notice

The law says shareholders must be notified two weeks prior
to a shareholder meeting, but we send our notices sevendays earlier than that (three weeks prior).

Scheduling meetings
that avoid the dates thatmost companies set forsuch gatherings

The following make it possible for as many shareholders as
possible to attend:
1. Avoid dates that most companies hold their meetings.
2. Take into account factors such as settlement and audit
schedules.

Broadly notifying of ourgeneral shareholders
meeting through theinternet and other media

We publicize notices of our general shareholder meetingand other information through the Tokyo Stock Exchange
and our website to reach as many shareholders
and investors as possible.

Using electronic voting
via the Internet

1. We participate in the Electronic Voting Platform, which ismanaged by Investor Communications Japan (ICJ),an entity formed by the Tokyo Stock Exchange and otherbodies, and which allows voting from outside of Japan.
2. We accept shareholder votes via mail and the Internet
through the 5:25 p.m. close of business up to the day
before the general shareholder meeting.
3. We have methods for dealing with cases in which there
are overlapping votes by mail and the Internet, or where
shareholders vote multiple times over the Internet.

Other efforts

At the general shareholder meeting, we present someof the business report and settlement data as graphs,
photos, and other visuals to complement the meeting
chairperson’s explanations.

on the website of the Tokyo Stock Exchange. On the NTN
website, we release timely information including our securities,
quarterly report, business results, annual and business reports,
and materials from our results meetings.
For those who register on our website for the NTN
newsletter, we send an email with the latest news as soon as
it appears on our home page.
Explaining Policy at Seminars and Briefings
We provide as many opportunities as possible for stakeholders
to hear about NTN management policy from the company’s
top management.
At seminars for individual investors hosted by large
securities companies, NTN top management talk about ourcompany. They also host visits to production sites in Japan.
On a regular basis, our executives convene results meetings,
teleconferences, one-on-one gatherings, and other regularbriefings for analysts and institutional investors. They also
respond whenever there are questions or requests frominvestors. In the fiscal year ended March 31, 2013, we helda briefing on February 18 for 82 attendees so that we could
explain our Revival 2014 medium-term management plan,
which began in April 2013.

Briefing on business resultsfor investors

NTN Included in SRI Indices
Products on display at the generalshareholder meeting

IR Activities
Disclosing Accurate Information in a Fair
and Timely Manner
We respond to the desire of shareholders and investors
to receive accurate information in a fair and timely manner.
Timely Information Online
We focus on making information available for anyone to readby disclosing it on the Internet.
We satisfy timely disclosure requirements under Securities
Listing Regulations by presenting information throughthe Company Announcements Disclosure Service

37

NTN Continues to be Included in Numerous
SRI Indices
NTN has been included in several socially responsible
investment (SRI) indices in the stock market for its aggressive
efforts to protect the environment and contribute to society.

Governance Officers

Officers (As of June, 2013)
Directors

Yasunobu Suzuki

Hironori Inoue

Yoshinori Terasaka

Chairman and CEO

Managing Director

Director

Shigeyoshi Takagi

Hiroshi Ohkubo

Hisaji Kawabata

President

Managing Director

Director (external)

Kenji Okada

Keiji Ohashi

Akira Wada

Deputy President

Director

Director (external)

Fukumatsu Kometani

Itsuji Gotou

Executive Director

Director

Corporate GovernanceStatutory Auditors
Standing Statutory Auditors

Statutory Auditors(External)(External)(External)

Tadao Kagono

Norifumi Ishii

Akio Imanishi

Mizuho Hikida

Executive Officers
Senior Executive Officers

Executive Officers

Didier SEPULCHRE DE CONDE

Takayuki Matsuo

Takehiko Umemoto

Pete Eich

Yukiyoshi Hagimoto

Toru Tomiyama

Natsuhiko Mori

Makoto Okasaka

Tetsuya Kondo

Yoshihiro Inami

Toshinori Shiratori

Isao Ozako

Hidefumi Tsuji

Tatsunobu Yasui

Tetsuya Sogo

Kouji Kametaka

Yoshinobu Akamatsu

Isao Koiwai

Jianping Zhu

Tomoyuki Miyanomae

Tsutomu Kishi

Eiichi Ukai

Etsu Harima

38

Social and Environmental Responsibility

Focus 1
Raising Productivity While
Maintaining Quality

NTN-SNR (France)

Increasing Production
Volume by 20% forTapered Roller Bearings
Craftsman-like skills
by seasoned workers
Break work down into morethan 30 steps for verification
Verify issues daily
Increase productivity by 20%
Tapered roller bearings

Raising Productivity While Maintaining
Quality
The Seynod Plant of NTN-SNR was pressed to increase
production volume of tapered roller bearings by 20% to keep
up with a rapid rise in demand accompanying a growth in car
manufacturing. While maintaining the same high quality
demanded of its products, the company completely
revamped its manufacturing processes to boost productivity.

3 Ways to Improve Productivity
The first thing the Seynod Plant did was to analyze the current
state of the plant and establish three ways to boost productivity:
improve on-site work processes, solve issues with
manufacturing technology, and shorten arrangement time.
First, NTN-SNR set out to record work processes eachhour and use this record to find work protocol issues
and technological issues, and come up with measures
to deal with these at daily meetings. As a result of thisverification, the company came up with the following three
proposals that it implemented.
1 Have the grindstone and the tools used to replace the grind
stone ready in advance to shorten replacement time.
2 Change the position of the revolution display lamp
to improve visibility of line operation.
3 Create a work standards manual to use for drills(to pass down the knowledge of seasoned employees).
In addition, NTN-SNR formed an “arrangement time shorteningteam” and used the SMED* method to make improvements
towards this goal. They did this in the following two ways.

39

1 They put the tools used in the various arrangement

jobs into “tooling boxes” beforehand.
2 They organized things like component supply devices

into units.
* SMED: The time needed to arrange or prepare for a work process isshortened by analyzing the work process and figuring out how to modify or
shorten each step.

20% Production Volume Increasein 6 Months
These efforts resulted in the Seynod Plant increasing
production volume by 20% in six months. The NTN Group
used the NTN-SNR example as a case study in Groupin-house training to help other bases improve their productivity.

A Word From the WorkplaceOn-the-Job Ideas Helped Us Reach
Our Targets

Bruno Vellut
Team Leader,
NTN-SNR Seynod Plant

We come up with a variety of new ideas
daily in the plant. With this project, wewere able to make good use of theseideas to achieve a difficult target. I thinkthat by working as one toward the target
we also improved our teamwork
and motivation. We plan to continue
taking on new challenges.

Focus 2
Protecting Biodiversity

NTN Group in Japan

10 Years of Striving
to Preserve the Bountyof Nature
Forest Area (hectares) Protectedin NTN Kigyo no Mori Project
22.9

25.3

25.3

29.8

29.8

30.3

2008 2009 2010 2011 2012 2013
(Years ended March 31)

NTN’s family members plant vegetation

Expanding Efforts to Protect Biodiversity
NTN Kigyo no Mori Activities

6 “NTN Okukawachi Lakeside

Every since IWATA Works launched its Green Charity in 2002,
the NTN Group in Japan has conducted a range of activities
to protect the bountiful habitats of a diverse range of life
forms. Starting in 2006, we have wherever possible taken
part in projects where local governments put corporations
in charge of protecting forests.
Under the NTN Kigyo no Mori project, the most important
thing has been to continue activities long-term. We havetherefore conducted ongoing dialogue with municipalities while
gradually expanding the scope of action to include activities
like underbrush cutting, forest thinning, and tree-planting.

1 “Mori-no-satooya” program(0.5 hectare since November 2012)30.3 Hectares as of Fiscal Year Ended
March 31, 2013
In November 2012, NTN signed an agreement under Osaka
Prefecture’s “Adopt-a-Forest Program” to manage
an approximately 0.5-hectare forest at the “NTN Okukawachi
Lakeside Forest” at the Takihata Dam. (See page 58 fordetails.) This brings the total area of forest that NTN isprotecting in six locations to 30.3 hectares. And we don’t justmanage the forest. In July 2011, NTN began a joint initiativewith Ishikawa Prefecture called the Protect and Nurture Lifein a Community Forest in order to protect fireflies’ habitats.
We will continue to expand the scope of our activities
while looking for new ways to protect the environment.

(Adopt-a-Forest)(21.9 hectares since April 2006)

Employees team up with the municipality
for forest conservation activities such as
planting trees and clearing underbrush.
(Komagane City, Nagano Prefecture)

Forest”

Employees conduct forest conservation
activities such as planting trees
and clearing underbrush.
(Kawachinagano City, Osaka Prefecture)

Other Activities

2 “Nagomi-no mori”(Forest of Relaxation)“Protect and Nurture Life in a
Community Forest”(1.0 hectare since June 2007)

Employees conduct forest conservation
activities such as planting trees and clearing
underbrush. (Nishimuro County,
Wakayama Prefecture)

3 “Shizuoka mirai-no morisupporter” system (Supportersof Shizuoka’s future forest)(Since July 2011)

Employees work to protect and expand
the habitats of several species of firefliesin the streams running down from
Houdatsuyama by breeding larva
and releasing it into the river habitat.
(Hakui County, Ishikawa Prefecture)(1.4 hectares since April 2008)

Besides forest conservation activities
such as clearing underbrush, employees
build and maintain a hiking trail
and manage a forest that is home to many
birds. (Iwata City, Shizuoka Prefecture)

4 “Kigyo tono kyodo no mori zukuri”
agreement (Public corporate
forest-planting)(1.0 hectare since August 2008)

Besides planting trees and conducting
forest conservation activities, employees
plant mushrooms and hold nature walks.
(Mimasaka City, Okayama Prefecture)

5 “NTN Komorebi no Mori”(4.5 hectares since November 2010)

At Tadoyama, employees plant trees
and clear underbrush, build and maintaina hiking trail, and hold nature walks.
(Kuwana City, Mie Prefecture)

1
4

6 5

3

2

40

Social and Environmental
Responsibility

Ongoing Cooperation with
the Municipality to Protect Natural Habitats

Social and Environmental Responsibility

Focus 3
Meeting New Challenges
in CSR Procurement

Response to Restrictions
on Conflict Minerals
from Democratic Republicof the Congo and Adjoining
Countries
Gathering Information on Conflict Minerals
Note: Customer makes final
report to SEC (Securities
and Exchange Commissions)

SEC

Customer
NTN
Supplier

What are Conflict Minerals?
Countries Affected
The Democratic Republic
by Conflict Minerals Regulationsof the Congo (DRC) is
The Republicknown as a countryof the Sudan
suffering years of armed Central African
Republic
conflict between
Republic
Democraticof Rwanda
Republic
governmentof the Congo
Republic
and anti-governmentof Uganda
Republic
Republic
groups. The country has of the Congoof Burundi
Kingdomrich mineral resources,of Aragon
UnitedRepublic
and the United Nationsof Tanzania
Countries
warns that minerals are
Affected
Republic
by Conflict
being illegally exportedof Zambia
Minerals
Regulations
via surrounding countries
and the money obtained is being used to buy weapons
in the armed conflict. These minerals are generally referred
to as “conflict minerals.”
In response, in the U.S. signed the Dodd-Frank Wall Street
Reform and Consumer Protection Act into law in July 2010.
It included a section requiring manufacturing companies
to report and make public their use of four minerals (gold,
tantalum, tin, and tungsten), as well as their derivatives, thatare mined in the DRC and nine surrounding countries.

Standard reply form for customers

to U.S. regulations on the use of conflict minerals. With thistrend has come a large number of inquiries from our customers
regarding our use of the four minerals mentioned above.
For example, tin is mainly used for plating a part of deep
groove ball bearings. However, there are many varietiesof items in this one product category. So to ensure that
we know exactly what minerals are in what products, we havebuilt a database relating to what NTN items the four designatedminerals are used in. Along with this we have built a systemthat allows us to reply at once to any inquiry from a customer.
Our next goal is to build a system that operates 24-7
and allows us to answer questions from customers anywherein the world about our use of certain minerals.

A Word From the Workplace

Striving to Respond to All Customer
Inquiries

Building An Information System
to Meet Customer Demands
NTN has many American customer that it supplies with primary
components. There are more and more Japanese corporations,particularly international companies, that are moving to conform

41

Cynthia Tarka
Manager, Environment,
Health, and Safety

Although we can respond to customer
inquiries regarding our compliance with
the Dodd-Frank Act, each customer stillrequires a different and unique levelof detail and type of information fromus. We are, therefore, striving to fully
meet customer needs by building
a flexible system that allows us
to respond thoroughly to all inquiries.

Society Quality Management
With “Ensure global quality” our top priority, we are boosting
quality throughout the value chain and enhancing
customer satisfaction.
Quality Management Policy
New Management Policies Each Year Underof Basic Policy of Quality
Under our Basic Policy of Quality, which forms the basic
concept of all our manufacturing, we formulate quality
management policies for each fiscal year and set down
themes for maintaining and raising product quality.
In the fiscal year ended March 31, 2013, as we proceededwith plans to open new production sites in Japanand overseas, we continued our “Ensure global quality”
theme from the previous fiscal year. To this end, we soughtto raise the worldwide value of the NTN brand and generate
corporate profit by having all employees work towards nocustomer claim and dramatically fewer cases of productdisposals due to defects.

Basic Policy of Quality
Pursuit of appropriate quality that can suffice
the functions and specifications required by customers.
Quality that meets diversified needs in markets(Conformable quality)
Superior quality to competitors’ (Competitive quality)
Quality that benefits producer (Economic quality)~Quality paves the way for our future~

Quality Management Policy in the Fiscal Year
Ended March 31, 2013
As we start operations at new production bases aroundthe world, we aim to contribute to the NTN brandand corporate profit by having all employees work towards
our important quality theme of “Ensure global quality.”
The goal is to dramatically reduce the number of complaints
and defective products.

We have been working to get our sites in Japan and aroundthe world that produce automotive products certified for
ISO/TS16949, a quality management standard that automotive
manufacturers demand that their suppliers achieve. In the fiscal
year ended March 31, 2013, NTN OMAEZAKI Corp. wascertified for this standard, bringing to 22 the number of certified
NTN production sites that make automotive products.
In 2010, NTN became Japan’s first bearing manufacturer
to obtain certification under the International Railroad Industry
Standard (IRIS), the quality standard for the European railway
industry. This achievement complements the quality
management system certification of the Associationof American Railroads (AAR) that we received in 1986
and underscores our high quality as a supplier to the rail
industry.
NTN has also been certified for the AS/JISQ9100
and Nadcap* standards for aerospace quality management.
(See page 24 for details.)

Focused on Achieving Global Quality
Electronic System for Integrated Managementof Quality Information
To speed up initial response to quality proposals at ourworldwide bases and to streamline quality control work in
the NTN Group, in January 2012 we installed the G-QUICK
quality information control system. This has globally
standardized the quality information control methods
and systems at our various worldwide bases and sped up
our response. G-QUICK has also had the benefit of improving
the sharing and usage of information among bases in Japanand overseas that manufacture the same products.
Dissemination of Basic Policy of Quality Throughout
Worldwide NTN Group

Quality Management System
Certification for All Products
Acquiring ISO 9001 Certification
The NTN Group has been working to get its production andsales sites certified for the ISO 9001 quality management
system and currently 33 production sites and two sales sites
in Japan and overseas have been certified.
In the fiscal year ended March 31, 2013, NTA Precision
Axle Corp., a joint venture established in 2010 in Illinois,
U.S.A. to carry out pre processes for automobile hub bearing
manufacturing, was certified, bringing the total of ISO 9001
certified NTN Group companies worldwide to 34 production
sites and two sales sites.

We have published Japanese, English, and Chinese versionsof our Basic Policy of Quality and our Quality Control
Handbook. These have been distributed to approximately
100 locations including NTN worldwide manufacturing,
engineering, and distribution divisions, and suppliers.

Japanese, English, and Chinese editionsof the Quality Control Handbook

42

Social and Environmental
Responsibility

Quality Slogan : Quality is our future

Using Certifications from Industry Groups

Society Quality Management

Working with Suppliers
The NTN Group strives to boost quality by cooperating withthe suppliers who provide us with raw materials and parts.
During our November quality month, we hold supplier quality
improvement meetings aimed at giving suppliers the knowledge
needed to boost quality through case study presentations
and workshops led by outside experts. In the fiscal year ended
March 31, 2013, 99 suppliers took part in these meetings.
Every year our suppliers conduct quality audits of theirbusiness using a checklist of the NTN Group’s quality control
criteria to ensure their quality management is operating up to
NTN standards. The results of these are used in on-site audits
by NTN aimed at ongoing problem-solving in quality management.
In the fiscal year ended March 31, 2013, audits were conducted
at 271 suppliers (31 more than the previous year).

Enhancing Customer Satisfaction
Sales and Engineering Join to Focus
on Customer Needs
Focusing on the Unique Needs of Each Customer
All NTN Group sales companies in Japan and around theworld have a sales person and engineer for each customer
and sales agent. Through this system, we strive to understandthe exact needs and wants of customers, and to quickly findproblems and offer customers the best ways to solve them.
We strive to constantly improve the skills of these sales
person and engineer. In Japan, we conduct TQM ( Total Quality
Management) activities. At meetings and educational gatherings
these sales people
reflect on theirweekly dealings
with customers as
a way to help themthink and act fromtheir customers’
A sales TQM conference
perspective.
Helping Solve Customers’ Engineering Issues
We continue to send engineers to customer locations to holdtraveling product exhibitions and technical seminars that givecustomers a chance to learn about the performanceand features of our products and technologies and speak
directly to NTN about what they need and want.
At the NTN Group overseas, more and more customers
are requesting such traveling technical seminars. For example,
engineers from NTN Bearing Corp. of America (NBCA) tour
customer sites around the U.S. to give training on bearing
basics and bearing use.

Strengthening Ties with Sales Agents Around
the World
Educating Sales Agents About NTN
NTN holds product briefings for its sales agents so that they
can better convey information to NTN’s end users. At various
periodic training sessions for employees of sales agents, we
deepen understanding of NTN products and technologies.
In the fiscal year ended March 31, 2013, we held our meetingof Domestic
Distributor Associationin Shanghai, with 44
Chinese sales agents
attending and visiting
the NTN China
Technical Center andShanghai NTN Corp. Honoring outstanding sales agents
Strengthening Ties at NTN’s Overseas GroupNTN Group companies overseas also strive to boost ties withsales agents. In the fiscal year ended March 31, 2013, NTN(China) Investment Corporation held the NTN 3-Day ProductTraining School, a technical seminar for sales agents whereparticipants learned basic bearing knowledge and techniquessuch as how to attach and detach bearings. The twoseminars, held in June 2012 and March 2013, welcomed 55
representatives of 28 sales agents.

Survey Shows Overall Customer Satisfaction
Up 5 Points
Once a year, we conduct customer satisfaction surveys on our
products and services in which customers choose one of fourlevels of satisfaction in six survey items including quality, cost,and delivery. Survey results go to relevant company divisions to
be reflected in improved products and services.
In the fiscal year ended March 31, 2013, we received survey
responses from 86 companies in Japan and other countries,
eight more than the previous fiscal year. In overall levelof satisfaction, 93% of respondents answered either of the twohighest levels of satisfaction (“Very good” and “Good”), five
points higher than the previous year. However, in the quality
item of the survey, 77% of respondents answered one of theselevels of satisfaction, two points down. The NTN Group vows
to work to remedy this through even stricter quality control efforts.
Overall Assessment of Customer Satisfaction Surveys(Fiscal year ended March 31, 2013)

Customersatisfaction Very good
Fiscal year
ended March
31, 2013

26 %

Good

67 %

7%

Needs slight improvement
Needs a lot of improvement 0 %43Society Supply Chain Management
Based on fair and appropriate business, we strive to build
a partnership with our suppliers.
Procurement Policy
Selecting Partners in Line with Group Policy
Building Partners Worldwide
Based on our Basic Procurement Policy, which we formulatedwith a view to fairness, equality, and global thinking, we havestrived to select suppliers and build a relationship of trust withthem. We have especially tried to build relationships with local
overseas suppliers based on a philosophy of “on local sitewith local materials by local personnel.” *In the fiscal year ended March 31, 2013, we strove to spreadand offset risk by cultivating multiple suppliers and establishingsuppliers adjacent to production sites. We will continue
to secure new suppliers as we open up new production sites.
* Establish a system allowing local management by local employees using local
facilities and materials.

Promotion of CSR Procurement
We go through several stages in choosing suppliers who areearnest in putting CSR into business action.
Our CSR Procurement Guidelines follow our CSR Policy
and we constantly monitor procurement activities to ensure
they are true to these guidelines.

Exchanges with Worldwide Suppliers
Besides providing our suppliers with a range of information,
we also create opportunities for direct interaction with them.
Since the fiscal year ended March 31, 2007, for example,
the NTN Group in Japan has visited the sites of our suppliers
to hold commemorative cherry tree planting events.
NTN Group companies overseas also strive to interact with
their suppliers. For example, in December 2012, Shanghai
NTN Corp. invited 52
suppliers from around
China to the 2nd Supplier
Meeting. At the meeting,outstanding suppliers were
honored and Shanghai
NTN Corp. announced its
strategy of reaching 100
billion yen in sales in 2015. Supplier Meeting at Shanghai NTN Corp.

Fair and Appropriate BusinessThorough Compliance with the Subcontract Act
Periodic Confirmation of Compliance

1 We stress quality, cost advantage, and on-time delivery froma global viewpoint, and we pursue stable procurement
through prompt response to market changes.
2 We abide by laws and ethics, and we promote fairness andequality in business.
3 Through procurement activities, we strive to conductbusiness in a manner that protects the environment andpreserves resources.
4 We deepen understanding with suppliers, and we aim tocreate a partnership founded on trust that generates mutual
prosperity.

Conveying Policy Through Briefings and Workshops
NTN holds periodic Responsibility to Suppliers meetings where
suppliers learn about NTN’s procurement policy and production
volumes at production sites, as well as about how they canhelp in production activities and obtain ISO certification.
These meetings were held twice in the fiscal year ended
March 31, 2013 and attended by a total of 58 suppliers.
Topics included NTN’s global strategy, its efforts to spreadthe philosophy of “on local site with local materials by local
personnel,” and recent successes.
We also invite suppliers to take part in workshops for NTN
employee training purposes led by outside experts.

In January 1997, NTN formulated the Voluntary Audit Manualfor Subcontractors. NTN production bases conduct their own
voluntary audits using this manual, and when necessary,
NTN’s procurement division intervenes with periodic audits
and guidance to ensure compliance with Japan’s Subcontract
Act. Of NTN’s suppliers in Japan, 80% are subject to
the Subcontract Act, so it is crucial that we ensure these
suppliers are carrying out business dealings in a fair manner.
In the fiscal year ended March 31, 2013, 15 bases in Japan(14 production bases, one research base) held voluntary audits.
Of these, nine required intervention by NTN’s procurement
division, six more than previously. We therefore made our audits
stricter. We will work to improve the compliance situation atbases that, for example, require a better understanding of
the Subcontract Act or have failed to recognize its full importance.
Helping Procurement Staff Better Understandthe Subcontract Act
We require all procurement staff to attend subcontractor businessworkshops sponsored by the Japan Fair Trade Commission
and seminars held outside NTN. In the fiscal year ended March
31, 2013, 10 NTN bases in Japan held their first Subcontract Act
workshops led by the procurement, distribution, and cost planningdepartments. At these gatherings, everyone from production baseheads to staff in charge of making orders learned what theyneeded to know about the Subcontract Act. (See pages
31-36 for details on education related to the Subcontract Act.)

44

Social and Environmental
Responsibility

Basic Procurement Policy

Society Human Resources Management
We respect diversity of employees and strive to build
a safe and comfortable workplace.
Occupational Safety and Health

Improving Employees’ Mental HealthThorough Occupational Safety and Health
Acquiring Certification for Management Systems
We work to create safe work environments based on a “safety
first” spirit that respects people. We have therefore created a safety
and health management system based on the criteria of the
Occupational Safety and Health Management System (OSHMS).
In the fiscal year ended March 31, 2013, NTN OMAEZAKI
Corp. was certified for OSHMS in August 2012, bringing
to eight the number of NTN sites in Japan certified.
NTN Group in Japan Making Measures to Deal With
Workplace Accidents
In the fiscal year ended March 31, 2013, the theme of
the NTN Group in Japan was “all NTN Group companies
in Japan and all NTN sites be thorough in adhering to safetyin accordance with the Occupational Safety and Health Law.”
For sites where accidents occurred in the previous year, it was
crucial that we determine and analyze their risk, understand whichtypes of jobs and workplaces are most susceptible to such
accidents, and conduct thorough measures to prevent accident
reoccurrence. We also raised the level of our risk assessment
and related education. At NTN Group companies in Japan that
had particularly large numbers of work accidents, we are focusing
on building management systems, conducting safety education,
carrying out safety patrols and on-site guidance by the Safety
and Health Committee, and holding safety and health education
for management members and supervisors. We have also revised
the safety and health report and stipulated guidelines that wehave put into action for management of the work environment.
The number of workplace accidents in the fiscal year
ended March 31, 2013 totaled 35 at NTN Group companies
in Japan, 15 less than the previous year.
Incidence Rate / Severity Rate
1.8

Incidence Rate
Severity Rate

NTN
NTN

National average for Japanese industry
National average for Japanese industry

1.75

1.7

1.62

1.62

1.61

1.6

0.58

0.4
0.3

0.24
0.18

0.2

0.100

0.090

0.08
0.002
2009

45

A Workplace Free of Discrimination
The NTN Group strives to create a discrimination-freeworkplace where all human rights are respected.
At NTN sites and Group companies in Japan, we include
human-rights education as part of training for new employees,
supervisors, and managers. We place particular emphasis on
measures against sexual harassment and power harassment,
and we have ongoing education on these issues for new
employees and newly appointed managers. We also participate
in the activities of regional human rights organizations and takepart in a variety of human rights exhibitions and seminars. We
also have Help Lines inside and outside the company thatmake it easy for employees and others to seek advice when
they feel that someone’s humanrights have been violated.
NTN Group companies
overseas have also built
systems that help them continue
to respect human rights.
New employee training

A Workplace Where All Kinds of People Feel
Comfortable
The NTN Group strives to build a workplace where all
employees can use their unique personalities and abilities
to the fullest.

1.59

0.5

0.0

Respecting Human Rights and Diversity

Hiring Women, the Disabled, and Seniors

0.6

0.1

NTN holds mental health training sessions for managers
and supervisors, while outside counselors offer counseling
during regular medical check-ups. Employees can also
receive counseling through NTN’s in-house counselingservice, called the “Oasis NTN” (held twice a month)and the “Mental and Physical Health Counseling Service” viaphone or email.

0.006
2010

0.090
0.011
2011

0.110
0.018
2012

0.16
0.10
0.005
2013 (Years ended)
March 31

We continue to increase the number of women we hire.
In the fiscal year ended March 31, 2013, women accounted
for 12.3% of the NTN Group in Japan, up 1.1 points fromthe previous fiscal year.
We are also giving disabled employees the chance to contributeto the company as much as anyone else. To this end we created‘Dream Workshops’ at IWATA Works, KUWANA Works,
and OKAYAMA Works, where 10 intellectually disabled employees
work as of the fiscal year ended March 31, 2013. Including these
employees, the entire Group employs 117 disabled people.

Revisions to Japanese law in April 2013 raised the disabled
persons employment rate for a company from 1.8% to 2.0%.
NTN has responded by strengthening ties with special schools
and disabled persons employment unions. The NTN Group in
Japan has also striven to provide stable employment for seniors
with a system under which retirees can be re-employed (system
for re-employment of those in their early 60s). In the fiscal year
ended March 31, 2013, there were 389 employees working under
this system (including those continuing from previous years).
Helping Employees Continue Working While RaisingChildren
The NTN Group strives to support employees in both theirwork and child-rearing.
In Japan, for example, there are numerous such programs,
including the Mom-back system to rehire women who have
temporarily retired to give birth or raise a child; Bear Kids Land,an in-company day-care center for employees; and the Child-raising
Support Declaration system, under which employees writea child-raising plan and schedule that is shared with the entire
workplace so that support is available. We also provide support
beyond legal requirements with our system for reduced working
hours for childcare, which now covers employees until theirchildren have finished the second grade of elementary school.

Employees taking childcare leave

16 (1)

Employees using Mom-back system (for the first time)

9

Employees using Child-raising Support Declaration system

9

Human Resource Development
Developing Human Resources to Lead
Overseas Bases
Of NTN’s worldwide employees, 36% are in Japan and 64%
are overseas, and our worldwide business expansion is set tocontinue. That’s why we strive to develop the human resources
who will run our production bases around the world.
We have a system under which Japanese NTN employees
are sent to overseas bases for one year. We also have domestic
and overseas training and scholarship programs for employees
to acquire specialized skills and knowledge. NTN Group
companies in Japan also host trainees from overseas companies
on an ongoing basis.
In the fiscal year ended March 31, 2013, we focused on
fostering human resources who will support our future businessin China. A total of 71 employees took Chinese language training
open to newly hired university graduates. We also welcomed 52
trainees (including nine women) from Shanghai NTN Corp.
and Nanjing NTN Corp. coming to acquire technical skills
and knowledge. Future projects will involve training employees who
can help disseminate technologies from NTN’s main Japanese plants

Raising Employee Motivation
In the fiscal year ended March 31, 2012, the NTN Groupbegan QC activities in which employee teams work
independently to boost product quality. The results of these
efforts are presented at the annual Global QC Circle
Convention. The aim of QC
activities is to boost employee
motivation by encouraging
friendly competition among
teams that look for problems intheir workplace and figure out
The Global QC Circle Convention
the best ways to solve them.

Other Efforts
Employment, Working Conditions,
Employee Evaluation
NTN strives to hire and treat employees as well as the company’s
management situation allows. For example, we require that
all employees join the NTN labor union so that they can havethe right to organize.
In the fiscal year ended March 31, 2013, a difficult businessenvironment forced us to ask employees to voluntarily retire.
Accordingly we implemented a system for preferential
treatment for early retirees that included retirement bonuses
and re-employment assistance.
In evaluating our employees, all are subject to a uniform
evaluation standard that operates fairly regardlessof employee gender.
Salary is composed of a base salary combining age
consideration and job ability, as well as various allowances.
The job ability portion of salary is based on an employee
evaluation undertaken by multiple managers, each witha unique perspective on the individual being evaluated.

Rewards for Employee Inventions
To reward our employees’ inventions, we have establisheda Patent Management Rule and a Patent Reward Rule and wehave clarified how patent rights are attributed and how the valueof the award is calculated. Rewards are also made for foreign
patents and for know-how and inventions considered to be
trade secrets. There is no upper limit to actual awards.
In the fiscal year ended March 31, 2013, we pursued
an intellectual property strategy linked directly to businessstrategy and R&D strategy with the goal of boosting ourcompetitiveness in key product areas. As a result, 269
employees (cumulative) were rewarded for obtaining rights
for 117 patents, 13 more than the previous year.

46

Social and Environmental
Responsibility

Number of Employees Using Support Systems in Fiscal
Year Ended March 31, 2013 Note: Numbers in parentheses are males

to overseas NTN companies. Overseas NTN Group companies
also each have their own training geared to their particular needs.

Society Contributions to Local Communities
We strive to contribute to society as we conduct ongoing
activities that help local communities.
Policy on Contributing to Society
Doing All We Can For Communities asa Good Corporate Citizen
The NTN Group’s CSR Policy states that we shall do all we
can to interact with and contribute to local communities.

Based on the CSR Policy, business sites and Group companies
around the world plan and implement a range of activities
that include disaster recovery support, education support,internship hosting, participation in local events, and promotionof culture and sports.

Ongoing Participation in Local Environmental Events—NAGANO Works, NTN KAMIINA Corp.
Since 2007, NAGANO Works and NTN KAMIINA Corp. have taken
part a local environmental event called the Tenryu River Water
Environmental Picnic.
Sponsored by the Nagano Employers’ Association
and a citizens group called the Nagano Techno Foundation, this isa large event in which participants pick up litter along the Tenryu
River and all of its surrounding riverbeds. May 2012 marked
the 19th edition of the event, with 4,778 people taking part fromthe local community and neighboring companies. The 63
employees taking part from NTN enjoyed getting to know local
residents better in this collaborative cleanup of the environment.

NTN employees and local
community members cooperatein picking up litter

Sponsoring a Municipal Monument—NTN Kugellagerfabrik (Deutschland) GmbHIn Mettmann City, North Rhine-Westphalia, home to NTN Kugellagerfabrik(Deutschland) GmbH (DMF), there is a monument called the Memory Ring.
As a way to honor the city’s history, every year since 2004 citizens vote andselect the most notable event from the previous year, and this is carved intoa metal ring that is placed on top of platform in the city square.
To celebrate its 40th anniversary in 2011, DMF became a sponsor in 2012of the 2011 Memory Ring memorial carving. A new ring was installed in
September 2012.
DMF will continue to give back to the community by using every opportunity
possible to contribute.
DMF personnel with the monument in September 2012

Collecting Donations at In-House Events—Shanghai NTN Corp.
Every year Shanghai NTN Corp. holds a company festival to promote employee
interaction and reward all for their hard work. At that time, the company gathers
donations for local schools for the physically disabled.
At the 5th edition of the festival held in September 2012, 3,256 employees
and their families donated 19,024 renminbi. The company’s union pitchedin more to make a total of 20,000 renminbi, which was donated evenly to two
local schools for the physically disabled.
The money was used to purchase educational toys and textbooks.

Shanghai NTN Corp. collected donations for charity at its
annual employee festival

47

Environment Environmental Management
Based on NTN Group’s Environmental Policy, we acquire
external certifications and carry out the PDCA cyclein environmental protection activities.
Environmental Policy
and Management Rules
Policies and Manuals in Supportof Environmental Management
Building a Management System Based on NTN
Environmental Policy
Based on the NTN Group’s Environmental Policy, the purposeof which is to reduce environmental impact and ensure ourcompany’s continuous development, we have built
an environmental management system centered aroundthe Company-wide Environmental Management Committee.
Making and Revising All Necessary Manuals
We prepare various manuals and regulations needed toprotect the environment during work activities and we revise
these when necessary.
In the fiscal year ended March 31, 2013, we brought all
equipment and management systems in line with requirementsof the Revised Water Pollution Prevention Act, which went
into effect in June 2012. The law aims to prevent groundwaterpollution from harmful substances by obligating facilities using
and storing harmful substances to meet construction standards
and undergo periodic inspections.

Environmental Management System
Multi-Site ISO Certification
NTN is obtaining ISO 14001 certification in Japan undermulti-site certification so that it can build an environmental
management system consistent over all sites.
In August 2012, NTN HOUDATSUSHIMIZU Corp., NTN HAKUICorp., and NTN SHIKA Corp. were certified, and as of the fiscal
year ended March 31, 2013, 23 of our 25 bases had been certified.
And 15 of 18 NTN sites outside Japan have been certified.
NTN makes it a rule to have all new sites certified within three
years of the startup of operations. Below is the certification
schedule starting in April 2013.
Operating Sites with ISO 14001 Certification
Date ofcertification

Operating site
RegionEnvironmental Policy

CompanyJapan• NTN will contribute to world-wide energy conservation by
developing and providing eco-products using tribological
technologies and high precision processing technologies.

2. Reduction of environmental impact• NTN will work to prevent global warming by improving energy
efficiency activities throughout the business process, fromprocurement of materials and parts, through to manufacture,
distribution and sales.
• NTN will strive to reduce waste by paying heed to efficient useof raw materials, and thorough application of the 3Rs (reduce,reuse, recycle).
• NTN will avert environmental pollution by rigorous managementof substances having an environmental impact that are usedin products or processes, and by active substitutionof chemical substances suspected of having harmful effects.

3. Observance of laws and regulations and implementationof thorough environmental management systems• In addition to observing laws, regulations and ordinances,
NTN will actively seek to comply with requests from regional
communities and customers by imposing tighter self-determined
standards and internal rules, and keeping to them.
• NTN will establish an environmental management organizationand operational methods, and will conduct environmental audits
to maintain and improve corporate environmental management
systems. We will also advance communication with society atlarge by publishing information about our environmental initiatives.
• NTN will conduct environmental education. NTN will promote
improved awareness of this Environmental Policy and environmental
protection to all persons working on behalf of the NTN Group.

4. Activities to contribute to society and protect
the natural environment• By actively participating in regional social contribution activities
and natural environmental protection activities, NTN will interact
with the immediate community, aiming to develop together
with the local region.

(Operating sites included)
Head Office, KUWANA Works, IWATA Works, OKAYAMA Works, NAGANO Works,
NTN KONGO Corp., NTN Engineering Plastics Corp., NTN Powder Metal Corp.,
NTN MIKUMO Corp., NTN Casting Corp., NTN KINAN Corp.,
Hikari Seiki Industry Co., Ltd., NTN MIE Corp., NTN OMAEZAKI Corp.,
NTN FUKUROI Corp., Advanced Technology R&D Center, NTN KAMIINA Corp.,
NTN BIZEN Corp., NTN HOUDATSUSHIMIZU Corp., NTN HAKUI Corp., NTN SHIKA Corp.
NTN Tado Corp

2005

3

JSAE1058

JSA

Nippon Kagaku Yakin Co., Ltd.

2000

8

JQAEM0956

JQA

American NTN
Bearing Mfg. Corp.

Elgin Plant

2000

6

111994

LRQA

Schiller Park Plant

2000

9

112115LRQA

NTN-Bower
Corp.

Macomb Plant

2000

6

111998LRQA

Hamilton Plant

2000

6

111999LRQA

NTN Driveshaft, Inc.

1999

12

A8478

UL

NTN USA Corp. Head Office

2000

4

0112005LRQA

NTK Precision Axle Corp.

2008

4

4000717LRQA

NTN Bearing Corp. of Canada Ltd.
NTN Kugellagerfabrik(Deutschland) GmbH

1999

7

287

KPMG

1999

6

201167-2

LRQA

FranceNTN Transmissions Europe
NTN-SNR ROULEMENTS *

2003

1

19479

AFAQ

2009

1

0448-4

UTAC

ThailandNTN Manufacturing(Thailand) Co., Ltd.

TÜV

U.S.A

CanadaGermany

China
India

2003

3

31634

Guangzhou NTN-Yulon Drivetrain co., Ltd. 2005

4104043247

TÜVShanghai NTN Corp.

2005

7

CH05/0489

SGS

NTN NEI Manufacturing India Pvt. Ltd.

2011

6

104071903

TÜV* Multi-site certification

Operating sites expected to be ISO 14001 certified
Operating site

RegionDate of certification
Year

Month

NTN NOTO Corp.

2013

7

NTN AKAIWA Corp.

2014

7

U.S.A

NTA Precision Axle Corp.

2014

12

BrazilNTN Driveshaft do Brasil

2014

12

China

NTN-LYC (Luoyang) Bearing Corporation

2014

12

Japan

48

Social and Environmental
Responsibility

1. Development and sales of environmentally-friendly products

Plant

Multi-site certification

Harmony with the global environment is our most important
issue and we will continuously strive to contribute to
the harmonious development of society and work to reducethe impact of our corporate activities on the environment.

Registration

Registration Registration
Year MonthNo.
body
1999 11
JSAE176
JSA

Environment Environmental Management

Environmental Impact
of Business Activities

an increase in CO2 emissions due to a change in the CO2
emissions coefficient* from power suppliers, as well as
an increase in landfill waste due to the changing of grinding fluid
at some bases. Meanwhile, there was a decrease in energy
and other input. These were the result of the positive effectsof certain measures and a reduction in manufacturing activity.
* CO2 emissions coefficient: A conversion indicator for deriving CO2 emitted

Reducing Environmental Impact
in All Production Processes
The NTN Group strives to reduce environmental impact in allprocesses, from forging to assembly. To this end, we strive
to understand the amount of raw materials, energy,
and water we use (the input) and the products, CO2, waste,
and wastewater (the output) that are generated.
In the fiscal year ended March 31, 2013, there waswhen electricity is generated upon purchase from a power supplier; it is theCO2 generated per unit of electrical power.
At operating site in Japan

Raw materials

EnergyRaw materials
353,000 tons

Fuel(gasoline, gas)

INPUT

Steel materials: 349,000 tons
Non-ferrous materials: 4,000 tons
Purchased amount of
raw materials (10,000 ton/year)
34.0

38.6

Water

39.3

28.8

35.3

Electricity
499 GWh(crude oil equivalent)
19,000 kL
Purchased amount(10,000 kL/year)of fuelElectricity
consumption

2.12

523

2.07

2.12

1.90

1.62

2009 2010 2011 2012 2013

(GWh/year)

538

446

536

499

Water usage
207

225

(10,000 m3/year)

220

179

2012 20132009 2010 2011 2012 20132009 2010 2011 2012 2013

(Years ended March 31)(Years ended March 31)

Production process

Forging
Turning

Heat
Treatment

Grinding
PolishingAssembly

Scrap metal
14,678 tons
Use of circulating water
50,000 m3

Thermal recycling*2
Waste oil 4,500 tons

Disposal ofindustrial waste

CO2

OUTPUT

CO2 emissions (10,000 ton/year)
31.1
25.0

29.0

Wastewater

Disposal ofindustrial waste
Total landfilled amount
106 tons

CO2 emissions
311,000 tons

28.3

Total landfilledamount(ton/year)

Wastewater
163

58

204

62

164

(10,000 m3/year)

175

198

174

106

2012 20132009 2010 2011 2012 20132009 2010 2011 2012 2013

(Years ended March 31)(Years ended March 31)(Years ended March 31)

2009 2010 2011

*1 Material recycling: To recycle for use as a raw material *2 Thermal recycling: To recycle for use as fuel49

Products

Wastewater
1,740,000 m3

31.1

217

203

(Years ended March 31)

2009 2010 2011

(Years ended March 31)

Material
recycling*1

Water
2,030,000 m3

Environmental Accounting
Aggressive Investment in R&D
for Environmental Protection
The NTN Group uses environmental accounting to quantitatively
assess its environmental protection activities.
Environmental preservation costs in the fiscal year ended
March 31, 2013 were approximately 3,980 million yen, down
4% from the previous fiscal year. This consisted of 985 million
yen in environment-related equipment investment, down
approximately 11%, and related costs of 2,995 million yen,down 1%. We continued to invest aggressively in R&D(EV-related business) related to environmental protection
and renewable energy; however, a decrease in equipment
investment resulted in an overall decrease. There were also
costs for things like energy-efficient equipment and waste
recycling.
The economic benefit of environmental protection
activities was 683 million yen, due partly to reduced
manufacturing. As for impact on environmental preservation,
CO2 emissions were 311,000 tons. The 28,000-ton increaseover the previous year was due to a change in the target
emissions coefficient for power suppliers, and using a fixity

coefficient the equivalent value was a 19,000-ton reduction.
A main initiative last year was KUWANA Works switching
the energy source of air conditioning in its small- andmedium-sized plants from kerosene to electricity. (See page
54 for details.)

Heat source generation units in the small- and medium-size plantof KUWANA WorksClassification

Equipment investment
Details

Costs

Work areas
internal costs

Pollution prevention costs

40

Expenses to preserve
the global environment133

At operating site in Japan (Millions of yen/year)

Environmental equipment (dust collectors, particulate smoke
removal devices, and wastewater treatment equipment)
Energy-conserving equipment (compressors and otherequipment for upgrading or switchover of fuel type), etc.

154

Inspection and management of environmental equipment(dust collectors and wastewater treatment equipment)

167

Costs of switching to energy-saving equipment

0

530

Upstream / downstream costs

01

Costs of management activities

7

320

Resource recycling expenses

R&D costs
Costs of social activities
Environmental remediation expenses
Total
Reference: Total for fiscal year ended
March 31, 2011

798
0
7
985

R&D equipment related to environmental preservation

1,106

1,798
14
11
2,995

Cost of recycling and waste reduction measures,
cost of processing regular and industrial waste
Analysis related to green procurement
Labor costs related to the EMS and information disclosure(advertising and NTN reports) and the greening andbeautification of company grounds
R&D costs related to environmental preservation
Greening and beautification outside the company
Cost of soil samplingGrand total
3,980
4,129

3,023

Financial Effect of Environmental
Preservation Activities

Impact on Environmental Preservation
Fiscal year ended
March 31, 2013

Fiscal year ended
March 31, 2012

Total CO2 emissions

311,000 tons

283,000 tons

Reduction of waste

Recycle rate 99.8%

99.9%

Indicator

AmountDetails

Costs

Item
Global environment preservation
expenses, effects
Resource recycling expenses,
effects
Total
Reference: Total for fiscal year
ended March 31, 2012

Amount103
580(Millions of yen/year)

Details
Energy-conserving effects, etc. of fuelconversion, compressors, and lighting
Profit from saleable materials such as metallic
sludge

683
826

50

Social and Environmental
Responsibility

Environmental Preservation Costs

Environment Environmental Management

Environmental Targets and Results for
the Fiscal Year Ended March 31, 201317 of 23 Targets Achieved
Every year, NTN sets targets in three areas: preservationof the global environment, creation of a recycling society,and maintenance and improvement of the environmental
management system.
In the fiscal year ended March 31, 2013, we focusedon reducing the amount of PRTR-designated substances

we handle, stepping up green procurement, and protecting
the local environment.
In addition, we set new environmental targets for the fiscal
year ending March 31, 2014. To objectively determine
whether the new targets are in line with policy, we haveclassified activities according to the NTN Group Environmental
Policy. And to make it easy to compare the results of ourefforts from year to year, we have changed the calculation
method of numerical indicators for certain criteria (*1, *2).

Results of Environmental Management Activities in the Fiscal Year Ended March 31, 2013
PurposeTargets for the fiscal year ended March 31, 2013

Preservation of the global environment
Creating a recycling society

Domestic· 311,000 tons/year· -19%

Overseas· Total CO2 emissions: 270,000 tons/year or less
· Achieve a 5% improvement in CO2 emissions rate over the fiscal year
ended March 31, 2007

· 301,000 tons/year· +38%

Reduce the use of substances designated by PRTR Law· Completely eliminate 2-aminoethanol· Completed elimination· Reduce N,N-Dicyclohexylamine by 30% over the fiscal year ended
March 31, 2011

· -74%

Soil purification following closure of TAKARAZUKA Works

Looking into soil purification proposals

Begin greening activities in the Kansai district

Began activities in November around lake of Takihata Dam

Work toward achieving zero emissions with a recycle rate of 99.8%

99.8%

Reduce waste generation rate by 2% over the fiscal year ended
March 31, 2011

+5%

Work toward achieving zero emissions with a recycle rate of 97%

95%

Reduce paper consumption by 2% over the fiscal year ended
March 31, 2011+16%

Reduce water usage rate by 3% over the fiscal year ended
March 31, 2011

-3%

Maintain Styrofoam usage at 99% less than the fiscal year ended
March 31, 2000

-99%

Reduce CO2 emissions

Reduce air, water, andground pollution

Participate in local
environmental activities

Domestic

Domestic
Overseas

Domestic
Reduce waste materials
Overseas

Preserve resources

Results for the fiscal year ended March 31, 2013

· Achieve total CO2 emissions of 275,000 tons/year or less(Target emissions coefficient for power suppliers)· Achieve a 22.5% improvement in CO2 emissions rate over the fiscal year
ended March 31, 1998 (emissions coefficient: 0.381)

Domestic

Maintaining and improving the environmental management system

ISO 14001 certification

Domestic
Overseas· Certification for HOUDATSUSHIMIZU Corp., HAKUI Corp., and SHIKA Corp.
· Preparation for conversion to multi-site certification(NTN TADO Corp., Nippon Kagaku Yakin Co., Ltd.)· Certification completed· Currently making conversion plans

ISO 50001 certification

Domestic
Overseas· Prepare a system for certification in Japan

Took part in training related to methods and certification
procedure systems

Strictly abide byregulations,in-house standards,
and environmentrelated rules

Domestic· Thorough management of poisonous materials(Monthly confirmation by person in charge, confirmation by
managers once every fiscal half)Continue strict management of poisonous materials· Receive green procurement paperwork from all key suppliers· Received from 90%· Formulate and implement plan to substitute phthalate esters· Currently making substitution plans· Conduct audits for environmentally hazardous substances at all sites· Audits completed at all sites· Conduct ongoing incoming analysis of environmentally hazardous substances· Analysis ongoing· Zero complaints of environmentally hazardous substances· No complaints

Distribute the Green Procurement Standard to overseas suppliers

Began distributing starting with new suppliers

Maintain at least a 95% rate of environmental management system
certification for key suppliers

95%

Respond appropriately whenever there are revisions

Confirmed influence of Revised Water Pollution Prevention
Act and other laws on NTN business

Promote green
procurement

Domestic

Overseas
Encourage suppliersand vendors to implement Domestic
environmental
management systems
Comply withnew regulations

Domestic
Overseas

Achieved

51

Evaluation

Not achieved

Environmental Targets for the Fiscal Years Ending March 31, 2014
NTN Environmental Action Policy for the Fiscal Year Ending March 31, 2014
1. Development and sales of environmentally-friendly products
2. Reduction of environmental impact
3. Observance of laws and regulations and implementation of thoroughenvironmental management systems
4. Activities to contribute to society and protect the natural environment(1) Development of energy-efficient products(1) Prevention of global warming (2) Reduce, reuse, and recycle(3) Preserve resources(4) Management and reduction of environmentally hazardous substances(1) Compliance with environmental laws(2) Improvement of environmental management systems(1) Protecting biodiversity

Company-Wide Environmental Targets for the Fiscal Year Ending March 31, 2014

Items not labeled “Domestic” or “Overseas” are NTN targets.

NTN Group Environmental Policy
Environmental Purpose

Environmental Targets for the fiscal year ending March 31, 2014

1. Development and sales of environmentally friendly products(1) Development of energy-efficient
products

Develop environmentally friendly products to meet needs of expanding new energy and greater number of electric cars
Establish and implement assessment and decision-making rules for life cycle assessment to use in new product development

2. Reduction of environmental impact
Wherever possible, save energy and cut peak energy use
Make existing manufacturing equipment more energy efficient
Publish and use case studies(1) Prevention of global warming

Reduce CO2 emissions

Raise the recycling rate(2) Reduce, reuse, and recycle(3) Preserve resources(4) Management and reductionof environmentally hazardous
substances

Overseas 340,000 tons/year
Domestic Achieve a 20.3% improvement in2CO2 emissions rate over the fiscal year
ended March 31, 1998 -20.3%*

Social and Environmental
Responsibility

Reduction in CO2 emissions rate

Domestic 252,000 tons/year*1

Overseas Achieve a 10% improvement in2CO2 emissions rate over the fiscal year
ended March 31, 2007 -10%*
Domestic 99.8%
Overseas 98%

Reduction in waste per unit of production output

Reduce waste generation rate by 1% over the fiscal year ended March
Domestic 31, 2011 -1%*2

Reduction in paper purchased per unit of production output

consumption over the fiscal year ended March
Domestic Reduce by 5% paper
31, 2011 +5%*2

Reduction in water used per unit of production output

usage rate over the fiscal year ended March
Domestic Reduce by 6% water
31, 2011 -6%*2

Reduction in use of Styrofoam

Domestic Reduce Styrofoam usage by 99% less than the fiscal year ended March
31, 2000 -99%

Begin manufacturing using phthalate esters substitutes
Establish technology for using substitutes for BNST and dibutyltin
Reduce PRTR-designated substances

Domestic Reduce N,N-Dicyclohexylamine by 85% over fiscal year ended March 31, 2011

3. Observance of laws and regulations and implementation of thorough environmental management systems
Create measures to prevent leak accidents, carry out improved and full-scale emergency drills
Continue strict management of poisonous materials(1) Compliance withenvironmental laws

Start soil purification at former site of TAKARAZUKA Works
ISO 14000 certification
ISO 50001 certification

Certification at NTN NOTO Corp.
Prepare for certification at NTN AKAIWA Corp.
Trial introduction of energy review and other methods to confirm effectiveness
Certify the environmental management systems of at least 95% of key suppliers(2) Improvement of environmental
management systems

Promote green procurement

Thoroughly assess potential new suppliers on their green procurement paperwork
Zero complaints of environmentally hazardous substances

4. Activities to contribute to society and protect the natural environment(1) Protecting Biodiversity

NTN Kigyo no Mori and other greening and environmental protection activities*1 CO2 emissions: The CO2 emissions coefficient from power suppliers was changed from target emissions coefficient for power suppliers to a fixity coefficient of 0.381*2 CO2 emissions rate: Changed from per unit of added-value production output to per unit of production output

52

Environment Environmental Management

Environmental Audits
Two Types Internal Audits Conducted Each Year
Confirming Environmental Management through
Periodic Audits
The NTN Group in Japan has internal site audits (oncea year), which are conducted by each site’s internal auditors,
and cross-audits (every three years), which are conducted
between operating sites. Also part of improving the levelof environmental management systems are external audits
by ISO certification institutes.
In the fiscal year ended March 31, 2013, site audits were
held at all bases and cross-audits were held at eight bases.
ISO audits were held at seven bases in July 2012, and there
were no violations of laws or internal NTN regulations; thesesites thus kept their multi-site certification designation.
The NTN Group in Japan also implemented measures
to deal with other environmental management issues in the fiscal
year ended March 31, 2013. For example, not all sites used
the same style of documentation for ISO 14001 criteria, so
unified style for this documentation was created across all sites.

Activities Unique to Each Site of the NTN Group in JapanNTN KONGO Corp.

• “ISO 14001 News,” an in-house publication with information
including environmental targets, and energyand resource-saving efforts.
• Training for all employees, divided by job description.

NTN MIKUMO Corp.

“Environmental ISO News,” a monthly publication focusing
on a different theme each time, such as environmental targets
and environmentally hazardous substances.

NTN HAKUI Corp.

Employees have “environmental proclamation cards,” which
they carry at all times, on which is written the site’senvironmental targets (such as for reduction of CO2 and waste)
and their own workplace’s targets.

NTN Powder Metal Corp.

In preparation for a possible ammonia or oil leak, practical
drills are conducted to familiarize employees with chainsof communication and the location of protective wear
and firefighting equipment.

“Environmental ISO News” of NTN
MIKUMO Corp.

Emergency drill at NTN Powder Metal
Corp.

Increasing the Number of Internal Auditors throughTraining
The NTN Group in Japan holds internal environmental auditor
training led by a top instructor from L. Marvin Johnson& Associates, Inc., an institute that trains ISO auditors.
In December 2012, 24 members of 18 sites in Japan took
training at KUWANA Works. This included members of NTN
NOTO Corp., which was aiming for ISO 14001 certificationin July 2013. The training included an overview of ISO
and a look at case studies as participants acquired
the knowledge needed by an internal environmental auditor,
learned what to look for when conducting audits, and picked
up practical auditing skills. This training raised the numberof internal environmental auditors in the NTN Group in Japan
to 269.

Environmental Education
Raising Environmental Awareness throughConstant Education and Training
Education and Training Based on Situational Needs
NTN strives to raise environmental awareness through ongoing
eco-education for all levels of employees and management.
Each site and Group company use their own particularsituation as the basis for tailor-made training and education.
The following is a list of the training and educational efforts
conducted by the NTN Group in Japan in the fiscal year
ended March 31, 2013.

53

Environmental Communication
Participation in Trade Shows
NTN takes part in environment- and technology-related tradeshows whenever possible in order to promote products
and technologies that contribute to the environment.
In February 2013, we took part in “Leading Industry
Exhibition Mie 2013” in Mie Prefecture, where we introduced
products that contribute to the creation and saving of energy.
We displayed several items in our key product line of bearings,
including journal bearings used in the new N700A Shinkansenbullet train, spherical plain bearings used on Japan’s Hayabusa
asteroid probe, and bearings for wind turbines. We also had
other energy-creating and energy-saving devices and systems
on display: the first Condition Monitoring System (CMS)for Wind Turbines in Japan certified for GL*,and a micro-hydroelectric generation equipment undergoingtrial operation in Kuwana
City, Mie Prefecture.
The micro-hydroelectric
generation equipment
was also shown at “Suigo
Festa 2012,” an exchange
event held in October
2012 in Mie Prefecture.
Micro-hydroelectric generation equipment* GL certification: A global certification for wind power generators, run by
Germanischer Lloyd, a classification society for the German shipping industry

Environment Prevention of Global Warming
We’re reducing CO2 emissions by upgrading equipment at
manufacturing bases and shifting to environmentallyfriendly modes of transport.
Reduction of Total CO2 Emissions

Upgrading Equipment and Streamlining Operation
at Production Bases

Efforts in Japan
Total CO2 Emissions Up 10% Over Fiscal Year Ended
March 31, 2012

Total CO2 Emissions and CO2 Emission Rate
(NTN Group in Japan)
Equivalent value based on old calculation method*1
CO2 per unit of production output
Total CO2 emissions
Equivalent value based on new calculation method*2
CO2 per unit of production output
Total CO2 emissions(10,000 tons/year)

35.0

31.1

31.1
29.0 28.2 28.3 28.8

30.0

Emission rate
(t-CO2/million yen)

26.9

24.8 25.0

25.0

2.50

25.2

Social and Environmental
Responsibility

In the fiscal year ended March 31, 2013, thermal power plants
accounted for an increasing percentage of Japan’s power as
nuclear reactors remained closed following the Great East Japan
Earthquake of March 2011. With this, there was an increase overthe previous year of the emissions coefficient announced bypower companies, which NTN uses to calculate its CO2
emissions. This meant that despite a decrease over the previous
year in NTN’s production volume, total CO2 emissions were up
numerically and company efforts to reduce CO2 did not bear fruit.
In response, in the fiscal year ended March 31, 2013,
for the indicator we used a conversion value that used the fixity
coefficient (0.381). Accordingly, we also revised the calculation
method for units, switching from per unit of added-value
production output to per unit of production output.
Calculating with this method, total CO2 emissions in the fiscal
year ended March 31, 2013 were 269,000 tons, a 6% decreaseover the previous year’s 288,000 tons. CO2 emissions perunit of production output were 0.7 t-CO2 per million yen,down 19% over the fiscal year ended March 31, 1998.
Using the same calculation, target values for the fiscal
year ending March 31, 2014 are total CO2 emissionsof 252,000 tons and the CO2 emissions per unit of productionof 0.69 t-CO2 per million yen (down 20% over the fiscal year
ended March 31, 1998). We will work towards achieving
these targets by continuing to reduce CO2 emissions.

We strive to reduce CO2 emissions at all production bases by
upgrading equipment such as compressors, boilers, airconditioners, and lighting and making them more energy
efficient. We conducted a range of such work in the fiscal
year ended March 31, 2013.
At KUWANA Works, we conducted a conversion to fuels that
emit relatively low amounts of CO2. Air conditioning fuel was
switched from kerosene to electricity, and heat treatment furnaces
were switched from kerosene to natural gas. These are expected
to result in annual CO2 emission reductions of 339 tons.
At NTN MIE Corp., the entire company has worked as one
to boost energy efficiency following the Great East Japan
Earthquake of March 2011 and the electricity supply shortages it
spawned. In the fiscal year ended March 31, 2013, the company
inspected for air leaks and repaired all those detected. This is
expected to yield annual CO2 emission reductions of 143 tons.
At Hikari Seiki Industry Co., Ltd., monitors were installed inplant buildings to reveal electricity usage. The monitors show
the amount of electricity being used at all times and thus
raise employee awareness of electricity saving.
Commendation for Cutting Peak Energy Use
OKAYAMA Works installeda heat storage-type air
conditioning system in 2008
to cut peak energy use.
This resulted in a 21%
reduction in air conditioner
electricity usage during
peak summer periods
and for this the company
was honored in July 2012
with a Special Certificate
of Appreciation by the Heat
Pump and Thermal Storage
Technology Centerof Japan.

Special Certificate of Appreciation forsaving electricity

2.00

20.7
20.0

1.78

1.50

1.56

15.0

1.54

1.45

1.42

Efforts Overseas

1.44
1.00

10.0

0.87
5.0
0

1998

0.72

0.71

0.70

0.69

0.70

0.69 0.50

2009

2010

2011

2012

2013

2014

0

(Target)(Years ended or ending March 31)*1 Total CO2 emissions: Based on target emissions coefficient for power suppliers
CO2 emissions rate: Per unit of added-value production output

Overseas Group companies have used the fixity coefficient (0.381)
in their target management for some time now. Starting in the fiscal
year ended March 31, 2013, they joined Group companies
in Japan in switching to production output as the unit value.
In the fiscal year ended March 31, 2013, total CO2
emissions were 301,000 tons, an increase over the previous
year of 9%. The CO2 emissions rate under the new calculation
method was 1.13 t-CO2 per million yen, an increase of 1%.

*2 Total CO2 emissions: Based on fixity coefficient (0.381)
CO2 emissions rate: Per unit of production output

54

Environment Prevention of Global Warming

The target for the fiscal year ending March 31, 2014 is total
CO2 emissions of 340,000 tons and 1.11 t-CO2 per million yen.
Total CO2 Emissions and CO2 Emission Rate
(NTN Group Overseas)
Total emissions

CO2 emissions rate (old calculation method)*1
CO2 emissions rate (new calculation method)*2(10,000 tons/year)

40.0

Emission rate (t-CO2/million yen)

34.0
30.1

30.0

26.0

7.00

27.5

6.00

21.3
20.0

5.00

0

3.17

4.00

3.50

3.02

3.03

3.00

3.30

2.00

Reducing CO2 Emissions During
Distribution

1.00

1.23

1.31

1.17

1.10

1.12

1.13

1.11

2007

2009

2010

2011

2012

2013

2014

0

(Target)(Years ended or ending March 31)*1 CO2 emissions rate: CO2 per unit of added-value production output*2 CO2 emissions rate: CO2 per unit of production output

Energy Consumption “Visual” with Special Device
At NTN-SNR ROULEMENTS (NTN-SNR) in France, a special
device has been installed in the main plant to observe energy
use and thus help reduce energy consumption. The device
has been customized by the company and shows 175
values, such as use of electricity, gas, and compressed air,making it possible to analyze how much energy is being usedanytime at any place in the plant.
This information on the main plant is shared with all
employees so they can see for themselves if any energy is
being wasted. The result has been annual CO2 emission
reductions of 168 tons. There are plans to have this device
used at all overseas Group companies in future.

The monitoring device shows figures for consumption including electricity, gas,and compressed air

55

NTN BEARING Mfg CANADA upgraded the compressor in its
plant to a high-efficiency model (variable speed compressor).
The new compressor can automatically adjust the amountof electricity used to meet change in production volume.
This has resulted in annual CO2
emission reductions of 468 tons.
NTN Kugellagerfabrik(Deutschland) G.m.b.H. conducteda similar upgrade and successfully
reduced it annual CO2 emissions
High-efficiency compressor at
NTN BEARING Mfg CANADA
by 10 tons.

19.3

19.3

4.52
10.0

Saving Electricity Through Equipment Upgrades

Pursuing Modal Shifts
The NTN Group strives to reduce CO2 emissions and costs
through modal shifts: more environmentally friendly formsof transport.
In January 2012, we began switching deliveries between
OKAYAMA Works and the Kanto Distribution Center(Kanagawa Prefecture) from truck to rail. We estimate this will
reduce CO2 emissions by 7.6 tons and annual crude oil use
by 8.2 kiloliters in the fiscal year ended March 31, 2013.

More Efficient Truck Transport
We are striving to make truck transport more efficient
by reducing the cargo volume and shortening the delivery
distances.
For the fiscal year ended March 31, 2013, NTN began
container shipping jointly with other companies in September
2012 between the Okayama area and Kobe Port. These joint
shipment efforts will be expanded in future.
We are also shortening truck driving distances by using
ports close to NTN transport facilities.
To reduce CO2 emissions from the Kuwana Export
Distribution Center in Mie Prefecture, since the fiscal year
ended March 31, 2009, we have gradually switched the port
from which our deliveries leave Japan to Asian and European
destinations from Nagoya Port (Aichi Prefecture) to Yokkaichi
Port (Mie Prefecture). Nagoya Port now handles 75%
of shipments and Yokkaichi Port 25%. In the fiscal year ended
March 31, 2013, Yokkaichi Port shipped 974 twenty-footcontainers of NTN products for an estimated CO2 emissions
reduction of 39.5 tons for the year. Use of the Yokkaichi route
will be expanded in future.

Environment Reducing Waste
Working to Reduce Waste in All Manufacturing
and Distribution Processes.
Zero Emissions

Sharing Recycling Know-How with Other
Companies

Increasing the Recycling Ratio at Production
Bases
The NTN Group defines zero emissions as landfill waste
constituting 0.5% or less of total waste generated and we work
towards this by raising the recycling ratio.
Efforts in Japan
In the fiscal year ended March 31, 2013, the NTN Groupin Japan strove to maintain a recycle rate of at least 99.8%.
NTN MIE Corp. began recycling sludge from grinding, which
it used to dispose of as waste. The company achieved ittargets in this area and plans to maintain this level in the fiscal
year ending March 31, 2014.
Efforts Overseas

Recycle Rate and Landfill Waste (NTN Group in Japan)(Tons/year)

Recycle rate

Landfill waste

99.6

300

99.9
217

99.7

99.8

99.9

80

204

200

(%)

60

106

100

62

58
0

2009

2010

2011

40
20

2012

2013

Reducing Waste During Distribution

1000(Years ended March 31)

Providing Society with Recycling Technology
In 2000, NTN developed a grinding swarf briquetting machine,which makes it easy to take metal debris, which remains after
grinding fluid is separated from the swarf generated during
the grinding process in manufacturing bearings, and make itinto briquettes that can be used again. These machines havesince been installed at NTN Group companies, and in the fiscal
year ended March 31, 2013, they processed a total of 3,690
tons. The machines have also been sold around the worldand have contributed to a wide range of recycling efforts.
Six were sold in the fiscal year ended March 31, 2013.

The NTN Group strives to reduce the amount of waste frompackaging resulting from the shipping of raw materials
and products.
In Japan, we have been looking into reusing the bands
that are used to prevent product cases from being crushedduring delivery. Conventional bands used to prevent goods
from being crushed during delivery are made of polypropylene
and wear out quickly, meaning they must be thrown away
after just one use. In response, NTN developed eco-bands,
made of durable polyester and closed using Velcro. These
are being tested at a growing number of NTN bases.
Overseas NTN Group companies are also striving
to reduce waste. In the fiscal year ended March 31, 2013,
NTN-SNR in France collected
and reused shipping palettes
and reduced palette waste by
28 tons for the year.

Waste was reduced with a palette structurethat made cardboard easy to detach

Palette56

Social and Environmental
Responsibility

Companies in the NTN Group overseas strove to make useof their waste products in the fiscal year ended March 31, 2013.
The production base in India installed a grinding swarf
briquetting machine (see below), while in the U.S., NTK
Precision Axle Corp. recycled used oil and NTN-Bower Corp.
conducted thorough separation of waste. Although the recycle
rate of 97% was not achieved, companies are working
towards a 98% recycle rate for the fiscal year ending March
31, 2014.

NTN Casting Corp., which casts bearings and othermaterials, has since 2003 been recycling the approximately
3,000 tons of waste molding sand and melting furnace slag
generated each year. Initially, in Shimane Prefecture, where
the company is located, there were no recycling contractors
who would take this waste. But NTN Casting Corp. foundpartners in construction and other local industries,
and proceeded to develop the necessary recycling
technology and sales channels to use the waste as roadbed
material and landscaping sand. As a result, the company
achieved an in-house recycle rate of 100% in 2008.
NTN Casting Corp. also provided this recycling technology
to nearby companies in the same industry that had the sameproblem with leftover waste. As of the fiscal year ended
March 31, 2013, seven companies were using thistechnology and together have managed to reduce waste by
17,000 tons. This
accomplishment wasrecognized with anaward in October 2012
from Japan’s Reduce,
Reuse, Recycle
Honored for successful recycling
Promotion Council.

Environment Management and Reduction of Environmentally Hazardous Substances
Managing and Reducing Environmentally Hazardous
Substances While Complying with Worldwide Laws
and Regulations.
Management of Environmentally
Hazardous and Harmful Substances
Meeting REACH and CLP Requirements
The NTN Group complies with chemical substance
restrictions around the world by keeping a close watch
on changing restrictions and constantly testing for whatsubstances are contained in the raw materials, parts,and materials it procures.
In Europe, for example, in line with the REACH (Registration,
Evaluation, Authorisation and Restriction of Chemicals)
regulation and the CLP (Classification, Labeling, and Packaging)regulation, we check whether our products contain
substances designated by these regulations and reportto the relevant authorities. We also develop technologies
for using substitutes for the designated substances.

Meeting PRTR Law Requirements
The NTN Group in Japan continuously works to reduce
the amount it handles of chemicals designated under
the PRTR (Pollutant Release and Transfer Register) Law.

KUWANA Works properly stored 53 high-voltage
capacitors in accordance with the law, and starting in April
2012 the company disposed of these in three stages.
NTN KONGO Corp. drained the oil from eight transformers
containing minute amounts of PCB and disposed of thisin compliance with the law. The company will disposeof the transformer housings within the legal deadline.
Under revisions to the Law Concerning Special Measures
Against PCB Waste made in December 2012, the legal
disposal deadline was extended from 2016 to 2027.

Reducing Environmentally Hazardous
Substances
Besides the aforementioned efforts, NTN is working to reduce
the amount of environmentally hazardous and harmful
substances it uses.
In the fiscal year ended March 31, 2013 at Guangzhou
NTN-Yulon Drivetrain co., Ltd., an exhaust treatment device
was installed on the painting line to reduce the amountof xylene emitted. The device uses water spray and active
charcoal absorption to remove the organic compounds.

Company-Wide Reduction Targets for Each SubstanceIn the fiscal year ended March 31, 2013, the NTN Group set
company-wide targets for the complete elimination of
2-aminoethanol, which is contained in cleaning agents, anda 30% reduction over the fiscal year ended March 31, 2011of N,N-Dicyclohexylamine, which is contained in metal cutting
and grinding fluids. Bases are switching to substitutes for these.
In the fiscal year ended March 31, 2013, we were able
to completely eliminate 2-aminoethanol by switching
to cleaning agents that do not contain this substance. IWATA
Works and OKAYAMA Works completely eliminated the useof N,N-Dicyclohexylamine by switching to water-based cutting
and grinding fluids not containing this substance. Other bases
continued their switch to substitutes and for all basesin Japan in the fiscal year ended March 31, 2013, the reduction
was 74% over the fiscal year ended March 31, 2011.
For the fiscal year ending March 31, 2014, we have set
a target of an 85% reduction of N,N-Dicyclohexylamine overthe fiscal year ended March 31, 2011.

PCB Waste
The NTN Group in Japan carries out planned disposal of PCB
in accordance with the Law Concerning Special Measures
Against PCB Waste. In January 2006, the NTN Group in Japan
conducted early registration with the Japan Environmental
Safety Corporation (JESCO), a government-owned PCB
waste treatment company, for the disposal of PCB equipment.

57

Hazardous Substances Auditors
The NTN Group in Japan conducts hazardous substance
audits internally for the specific purpose of determining
the state of environmentally hazardous substances. Ongoingtraining is held for hazardous substance auditors, and asof the fiscal year ended March 31, 2013, there were 135 auditors.

Oil Leak at IWATA Works and Efforts to Prevent
Reoccurrence
In March 2013, grinding fluid from the ball bearing plantof IWATA Works leaked into the nearby Hachimanya River.
Although the leaked grinding fluid is not harmful to humans or
animals, the company immediately set up an oil fence
and absorption mats to clean up the spill.
Following this accident, the company convened a pollution
prevention task force to determine the cause of the accident
and draw up preventative measures. As well, other plants using
similar production processes underwent comprehensive
inspections to formulate measures.
We sincerely apologize to neighboring residents forthe trouble and concern resulting from this accident.

Environment Biodiversity
NTN Group companies participate whenever possible
in local environmental protection activities and strive
to preserve a range of ecosystems.
Protecting Biodiversity
Preserving and Repairing the Natural
Environment
Around NTN sites, employees work to preserve the naturalenvironment and repair ecosystems.
NTN Kigyo no Mori Activities at 6 Sites in Japan* Adopt-a-Forest Program:
The Osaka Prefectural
Government introduces
corporations to landowners so that thesecompanies can contributeto forest restoration.

Other Environmental Protection Activities
NTN’s Advanced Technology R&D Center in Kuwana City, Mie
Prefecture has been taking part since 2010 in an activity, runby the city and volunteer groups, aimed at protecting fireflies.
So that lights from its facilities do not intrude on the neighboring
firefly habitat, the R&D Center plants trees and turns off lights
when locals are out to observe the fireflies at night.
The center also lets locals use its parking lot at these times.
NTN MIKUMO Corp. planted trees in March 2013. The 30
participants made up of employees and family members
gathered in Matsugasaki Park to plant about 200 trees ofvarieties such as rhododendron.

Activities Overseas
Planting Trees to Replace Those Cut Down During
Plant Expansion
The Curitiba Plant of NTN-SNR in Brazil carries out ongoing tree
planting. In the fiscal year ended March 31, 2013, the company had
to cut down four Chilean pine (Araucaria araucana)*, an endangered
tree species, during plant expansion. After expansion wascompleted, in December 2012 it planted 12 Chilean pineseedlings on its premises.
This helped raise
environmental awarenessamong employees.
* Parana pine: An evergreen

Thinning a forest under guidance from the Osaka
Prefecture Forest Owners Association

OKAYAMA Works strives to protect a forest on land borrowed
from Mimasaka City under the NTN no Mori. This initiative started

species in the conifer genus
Araucaria. It is on the Red Listof Threatened Species publishedby the International Union forConservation of Nature (IUCN).
Planting Parana pines

A Word from a Collaborating Partner

Working with Communities to Build Forests for Future Generations
To build a forest under the Adopt-a-Forest Program, recently NTN, forest owners, Kawachinagano City
and Osaka Prefecture joined in an agreement to grow a forest in the Takihata area over five years. The parties
will work to improve the forest’s ability to establish a watershed by thinning trees. At the inaugural activity
on May 11, 2013, I joined in the thoroughly satisfying tree thinning work.
Growing a forest requires dedication. I look forward to working with all concerned in a locally rooted effort
that will last until future generations.

Koichi Takamine
Assistant General Manager,
Forest Improvement Section
Agriculture and Forests
Administrative Office
Minami Kawachi,
Osaka Prefecture

58

Social and Environmental
Responsibility

Since 2002, the NTN Group in Japan has been using mountainous
areas near its sites, where employees and their families work
to repair forests under the NTN Kigyo no Mori initiative.
In the fiscal year ended March 31, 2013, the NTN head officeand NTN KONGO Corp. joined the municipal governmentof Kawachinagano (where NTN KONGO is located) to open the NTN
Okukawachi Lakeside Forest under the Adopt-a-Forest Program*.
Under this five-year project, participants will build a forest capableof retaining water resources on a 0.5 hectare area around the lakeof the Takihata Dam. A signing ceremony was held on November
9, 2012 at the Osaka Prefectural office and a tree-planting
ceremony was held November 28 at the Takihata Dam.
In May 2013, the first activity was held as participants
practiced thinning out a hinoki (Japanese cypress) forest
under the guidance of the Osaka Prefecture Forest Owners
Association. Thinning work is scheduled for autumn 2013.
There will be about two forest preservation sessions per year
and NTN plans to use the site for environmental education.

in 2008, and at the fifth activity in November 2012, 50
participants made up of employees and their families planted
trees, improved the forest, and observed the surrounding nature.

Third-Party Opinion

NTN Report 2013 Third-Party Opinion
Again this year, I present a third-party opinion on the social and environmental
aspects of NTN’s Report.
To start, I think that NTN needs more strengthening and implementationin compliance, an area in which the company admits it still has much to do.
In the fiscal year ended March 31, 2013, provisions for losses related to the Anti
Monopoly Act were calculated as an extraordinary loss, and this affected
the company’s performance. Although I believe that NTN’s current efforts to boost
compliance are moving in the right direction, it will probably take some time before
awareness filters from top management through all levels of company employees.
It is important that the company be resolved to changing the organizational culture
and use this resolve to carry out ongoing efforts. It needs to disclose information
on how well its compliance efforts are proceeding, for example in areas likethe number of helpline inquiries, to what degree employees are improving theircompliance awareness, and expansion of compliance education. It must also carryout the PDCA cycle so that practical action is in fact being taken in these areas.
There have also been a number of violations of competition laws in othercountries, creating a pressing need to build a system of conduct for eachof NTN’s worldwide business regions and to better train its human resourcesin compliance matters.
Next, I praise NTN for having begun the process of integrating management
and CSR by including social and environmental indicators in its main management
indicators in this year’s report. In last year’s third-party opinion column, I said thata company should reflect its contributions to creating a sustainable society in its
management strategy and plans by combining management strategy andbusiness activities with sustainability. In re-thinking its CSR policy, I would liketo see NTN examine exactly how its current accelerated entry in the world’s
growth markets and management strategies like cutting costs through local
manufacturing and local procurement will impact communities around the worldand stakeholders such as suppliers and employees. NTN is building a group-wide
environmental management system to handle environment-related manners and it
is putting this system into systematic action. On the social side as well, it must set
key targets and formulate a medium-term plan for CSR.
I also look forward seeing what NTN will do in the way of establishing dialogue
with stakeholders. A core philosophy of CSR is dialogue with communities.
This dialogue with external parties is crucial to conducting due diligence; in otherwords to ensuring that business activities do not inadvertently have a negative
impact on society. This dialogue is especially crucial for NTN to identify the scopeof its social responsibility in areas such as improving human rights and raising
the quality of life as it expands its supply chain with the opening of new factories
around the world. In the process of re-thinking CSR policy, I hope to see NTN
engage with non-profit organizations and other groups that represent
the company’s stakeholders. Such external dialogue will be helpful in changing
the organizational culture.

59

Sachiko Kishimoto
Executive Director
Center for Public Resources
Development
Biographical Information
Worked for a private think-tank
before founding the Public
Resources Foundation in 2000.
Has worked in her current position
since 2013. Areas of specialty
include promoting the cultureof donating, not-for-profit
management, CSR assessment,
and ways that corporations that
contribute to society.
Co-Chairperson of the CSR
Review Forum-Japan.
Officer for The Japan Associationof Charitable Organizations.
Guest lecturer in the graduate
school of Rikkyo University.

Financial Review
Net Sales by Business Segment /Business Sector

Net Sales

Net Sales by Region

600

Bearing
Constant-Velocity Joints
Precision Equipment and Other ProductIndustrial Machinery
Automotive(Billions of Yen)
Aftermarket & Distributor
600

600

500

500

500

400

400

400

300

300

300

200

200

200

100

100

100

(Billions of Yen)

0

2008 2009 2010 2011 2012 201302008 2009 2010 2011 2012 2013

(Years ended March 31)

Americas

Japan
EuropeAsia and Others(Billions of Yen)

0

2008 2009 2010 2011 2012 2013

(Years ended March 31)(Years ended March 31)

Note: Called “sales by business sector”
starting in the fiscal year ended March 31, 2011

Scope of Consolidation
The scope of consolidation as of March 31, 2012 consisted of
NTN Corporation and 61 consolidated subsidiaries (15 domestic
and 46 overseas subsidiaries). A total of 9 affiliates (all overseas
affiliates) were accounted for by the equity method. The followingchanges to the scope of consolidation and application of the equity
method were made during the fiscal year under review.
Consolidated Subsidiaries(One company joining NTN Group)
Nippon Kagaku Yakin Co., Ltd(One company less)
NTN-BCA CORP.
Affiliates(No change in number)

Summary of the Fiscal Year Ended March 31, 2013

Net sales: 539.6 billion yen, a year-on-year decrease of
3.9 billion yen (0.7%)
Operating income: 7.3 billion yen (operating margin of 1.3%)
Interest-bearing debt: 360.8 billion yen, an increase of
88.8 billion yen from March 31, 2012
Capital expenditures: 49.0 billion yen, a year-on-year
decrease of 5.4 billion yen (9.9%)
Dividend: No dividend

Sales Performance
Consolidate net sales for the fiscal year ended March 31, 2013
were 539,595 million yen, a decrease of 3,873 million yen (0.7%)
from the previous fiscal year. Overseas sales totaled 362,123
million yen, an increase of 12,103 million yen (3.5%) year-on-year.
Overseas sales accounted for 67.1% of net sales overall (Americas
26.2%, Europe 23.1%, Asia and others 17.8%), an increase of
2.7 percentage points from the previous fiscal year.
Net Sales and Earning by Business Sector
The industrial machinery applications saw decreased sales due
to a drop in customer demand, with resulting net sales of 93,746
million yen. Operating income was 1,534 million yen.
In the aftermarket and distributor applications, lower customer
demand led to a decrease, with net sales of 89,222 million yen.
Operating income was 14,725 million yen.
In the automotive applications, while customer demand was
down in Europe, sales increased chiefly in the Americas andAsia, resulting in net sales of 356,627 million. The operating loss
was 8,981 million yen. Despite a positive effect from a reductionin personnel costs and other fixed costs, an increase in temporal
costs resulting from an additional burden imposed on productionlines in coping with increased sales to the Americas was among
factors contributing to the operating loss.
Net Sales and Earning by Region
In Japan, net sales decreased overall in the automotive applications.
Despite signs recovery from the manufacturing drop following theGreat East Japan Earthquake of March 2011, customer demanddecreased in exports. In the industrial machinery applications, sales
for general machinery fell, as did construction machinery due toa drop in customer orders in China. Sales were also down in theaftermarket and distributor applications. As a result, net sales were
177,472 million yen (down 8.3% over the previous fiscal year).
In Europe, sales decreased in the automotive applications,the industrial machinery applications, and the aftermarket anddistributor applications. This was due to the lack of economic
recovery in the region against the background of financial instability.
As a result, exchange rates were partly responsible for net salesof 124,752 million yen (down 6.2%).

60

Financial Section

In the fiscal year ended March 31, 2013, although Japan’s
economy showed signs of bottoming out, the businessenvironment was still difficult. The economy in the Americas
showed gradual recovery, but in Europe persistent uneaseabout the debt crisis impacted the financial sector while in
China business recovery continued at a slow pace.
Against this background, the NTN Group strove to expand
business with a focus on growth markets and increase sales
in the industrial machinery and the aftermarket and distributor
applications. But due to major changes in economies aroundthe world, we are overhauling plans and embarking on avariety of emergency measures and structural reforms.

Net Sales and Earnings
Net sales and operating income both decreased. Targets
were not achieved due to factors including a drop in customer
demand, the Thai floods, and financial crises in Europe.

Financial Review
Net Income (Loss) /Ratio of Net Income (Loss) to Sales

Operating Income / Operating Margin
Operating income
Operating margin

Capital Expenditures and Depreciation

Net income (Loss)
Ratio of net income (Loss) to sales(Billions of Yen)(%)

(Billions of Yen)

50

10

30

(%)

6

40

8

20

4

30

6

10

2

20

4

0

0

10

2

-10

-2

0

-20

Capital expenditures
Depreciation(Billions of Yen)

60
50
40
30
20

0

2008 2009 2010 2011 2012 2013-42008 2009 2010 2011 2012 2013

(Years ended March 31)

In the Americas, sales increased overall in the automotive
applications due to an increase in customer demand. In theindustrial machinery applications, sales decreased in construction
machinery and increased in the aftermarket and distributor
applications. As a result, exchange rates were partly responsible
for net sales of 141,571 million yen (up 13.6%).
In Asia, in the automotive applications, sales were down toJapanese manufacturers in China, but in other parts of Asia,
a recovery from the manufacturing drop following the floods inThailand, along with increased demand from customers, contributed
to increased sales. In the industrial machinery applications, sales
were down in general machinery, office equipment, construction
machinery, and the aftermarket and distributor applications. As aresult, exchange rates were partly responsible for net sales of
95,800 million yen (up 3.7%).
Cost of Sales and Selling, General and Administrative(SG&A) Expenses
The cost of sales was 462,106 million yen, up 2.3 percentage
points and representing 85.6% of consolidated net sales. Thiswas mainly the result of a decrease in sales and production.
Selling, general and administrative (SG&A) expenses were70,211 million yen, representing 13.0% of consolidated net sales,
0.2 percentage points up from the previous fiscal year.
Earnings
Looking at earnings, there were factors contributing to an increase(a decrease in personnel and other costs) and factors contributing
to a decrease (decreased sales and production due to a drop in
customer demand, and an increase in temporal costs resulting
from an additional burden imposed on production lines in copingwith increased sales to the Americas. As a result, the operating
income for the term was 7,278 million yen, decreased 13,446 million
over the previous fiscal year.
Other expenses amounted to a net expense of 21,176 million yen.
Major contributing factors were income totaling 4,895 million
including gain on recognition of negative goodwill of 1,929 million
yen and gain on sales of investment securities of 1,593 million yen,and expenses of 26,071 million including reserve for loss related
to antimonopoly law of 7,231 million yen, structural reform
expenses of 6,365 million yen, interest expense of 4,069 million
yen, and business restructuring expense of 3,027 million yen.
As a result, the loss before income taxes was 13,898 million yen,

61

10
0

2008 2009 2010 2011 2012 2013

(Years ended March 31)(Years ended March 31)

down from the 16,357 million yen in income of the previous fiscal
year. The net loss per share was 26.69 yen for the year under review.
We regret to announce that no interim dividend and end-of
term dividend will be paid this fiscal year.

R&D and Capital Expenditures
Decrease in Both R&D Costs and Capital Expenditures
R&D Costs
R&D costs for the fiscal year under review were 16,174 million yen,down 983 million yen and representing 3.0% of consolidated net sales.
In the industrial machinery applications, NTN is positioning as key
business sectors wind turbines, a form of new energy with promising
global growth, and the sectors of rolling stock, aircraft, machine
tools, and construction machinery, which all require state-of-the-art
bearing technology. We are working to reduce environmental impact
by developing more compact, lighter weight products with long lifeand low-torque, and by developing new products that meetcustomer needs for precision and speed, while at the same time
focusing on basic technologies that will make us more competitive,
and adding value by modularizing products such as sensors.
In the automotive applications, as cars rapidly and increasingly
incorporate electrical systems, we are picking up the pace at which
we develop and release system products for next-generation
EVs; examples include our In-wheel Motor System and ourElectromechanical Brake System with Parking Brake. We conducted
tests on converted EVs equipped with NTN products in Iwata City,
Shizuoka Prefecture, and the information garnered from these tests
is being fed back to our labs to make future products even better.
Capital Expenditures
The main focus of capital expenditures was on increasing
production capacity, labor savings, and rationalization,
maintaining and upgrading existing facilities, improving safety,
and conducting R&D for new products.
In Japan, capital expenditures were 13,321 million yen, with projects
including the installation of bearing production equipment along withthe construction of new plant buildings at NTN AKAIWA Corp.
In the Americas, capital expenditures were 14,665 million yen,with projects including expansion of bearing production equipment
at AMERICAN NTN BEARING MFG. CORP. and expansion ofplant buildings and expansion of bearing production equipment
at NTN-BOWER CORP.

Inventories / Inventory Turnover Ratio

Interest-Bearing Debt

Inventories
Inventory turnover ratio(Billions of Yen)

(Times)(Billions of Yen)

200

8

400

150

6

300

100

4

200

50

2

100

0

0

0

2008 2009 2010 2011 2012 20132008 2009 2010 2011 2012 2013

(Years ended March 31)

In Europe, capital expenditures were 7,168 million yen, withmain projects including expansion of bearing production equipment
at NTN-SNR ROULEMENTS. In Asia, capital expenditures were
13,927 million yen, accounted for by projects including theconstruction of new plant buildings and the installation of bearing
production equipment at Nanjing NTN Corporation and NTN-LYC(Luoyang) Bearing Corporation. After adjusting for 103 million yen
in equipment transfers between segments, total capital expenditures
for the fiscal year under review were 48,979 million yen.
All expenditures were funded from internal funds and short-termloans. Depreciation for the fiscal year under review amounted to34,841 million yen (up 666 million yen from the previous fiscal year).

Financial Position and Cash Flows

outstanding over the end of the previous fiscal year, were 375.84
yen per share (an increase of 5.65 yen per share over the end of theprevious fiscal year). Interest-bearing debt amounted to 360,802
million yen, an increase of 88,824 million yen (32.7%) from the endof the previous fiscal year. Factoring in the increase from currency
effects, the actual increase was 73,306 million yen. This was dueto the incurrence of debt as long-term stable funding provided
for by capital expenditure funds, investments and loans, and thechange in the business environment. The ratio of interest-bearing
debt to total assets was 47.0% (up 7.8 percentage points).
Net working capital was 85,959 million yen, an increase of 5,935
million yen from the end of the previous fiscal year. The current
ratio was 127.3% (down of 1.0 percentage point over the end of
the previous fiscal year).
The inventory turnover ratio for the fiscal year under review was
3.3 times (0.2 times down over the end of the previous fiscal year),while the turnover ratio of total assets was 0.7 times (0.1 times down).
Net cash provided by operating activities was 20,505 million
yen, an increase of 3,453 million yen, or 20.2%, over the end of
the previous fiscal year. This mainly reflected inflows in the formof depreciation and amortization of 34,841 million yen and adecrease in trade receivables of 11,953 million yen; offset against
outlays of a decrease in trade payables of 27,967 million yen.
Net cash used in investing activities was 56,604 million yen(up 3,761 million yen, or 7.1%, over the previous fiscal year).
This was due mainly to outlays of 55,244 million yen through thepurchases of property, plant, and equipment.
Net cash provided by financing activities was 69,586 million yen,up 22,337 million (47.3%) over the previous fiscal year. This mainlyreflected an inflow from long-term loans of 89,248 million yen,
set against a payment of 13,471 million yen for long-term loans.
Factoring in the 208 million yen decrease due to the effect of
exchange rate changes, along with an increase of 215 million yen
in cash and cash equivalents from newly consolidated subsidiaries,
cash and cash equivalents at the end of the fiscal year were
86,100 million yen, up 33,494 million yen (63.7%) over the end of
the previous fiscal year.
Free cash flow, the difference between net cash provided byoperating activities and net cash used in investing activities,
amounted to minus 36,099 million yen.
The proportion of net cash provided by operating activities to
net sales was 3.8%.

62

Financial Section

Interest-Bearing Debt Increased by 88.8 Billion Yen.
Free Cash Flow Decreased by 36.1 Billion Yen
Total current assets at the fiscal year-end amounted to 401,321
million yen, an increase of 39,003 million yen, or 10.8%, from theend of the previous fiscal year. This was the result of an increasein cash and cash equivalents of 33,494 million yen and an increase
in inventory of 8,180 million yen. Property, plant, and equipment
were 298,153 million yen, up 32,471 million yen (12.2%) over theprevious fiscal year-end. This came mainly from an increase of
65,452 million in machinery, equipment and other vehicles. As aresult, total assets were 768,462 million yen, up 75,204 million yen(10.8%) over the end of the previous fiscal year.
Current liabilities were up 33,068 million yen (11.7%) over theend of the previous fiscal year to 315,362 million yen. This was
mainly due to an increase of 50,264 million yen in long-termloans and the current portion of lease obligations, reserve forloss related to antimonopoly law of 7,231 million yen, andreserve for early retirement expenses of 5,923 million yen.
Long-term liabilities were up 42,519 million yen (21.4%) over theend of the previous fiscal year to 241,357 million yen. This was
mainly due to an increase in long-term loans and lease obligationsof 34,952 million yen.
Total net assets were 211,743 million yen, decreased 383 million
yen (0.2%) over the end of the previous fiscal year. This was mainly
due to an increase in currency translation adjustments of 19,135
million yen and a decrease in retained earnings of 16,855 million yen.
The shareholders’ equity ratio was 26.0%, down 2.4 percentage
points. Total net assets per share, based on the number of shares(Years ended March 31)

Risk Factors

Business results and the financial position of the NTN Groupare subject to the following risks. It should be noted that theforward-looking statements contained in the following reflect
judgments of the NTN Group as of the submission date of our
securities report (June 26, 2013).
1) Economy
The NTN Group operates global production and sales networks,
and supplies customers in various industrial sectors. Businessresults and the financial position of the NTN Group operations may
be affected by the economic conditions in specific countries andbusiness conditions in industries to which our customers belong.
2) Foreign Exchange Fluctuations
Overseas sales of the NTN Group account for over 50% ofconsolidated sales. This percentage is expected to increase further
due to continued acceleration in the global business developmentof the NTN Group.
Overseas subsidiaries’ foreign currency-denominated businessresults and financial positions are converted to yen for the
preparation of consolidated financial statements. Moreover, many
export transactions with overseas customers of the Company are
conducted in foreign currencies. Although the NTN Group hedges
risks through forward foreign exchange contracts and expansion of
local procurement, effects of exchange rate fluctuations on businessresults and financial positions 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 and Eastern Europe are gaining ground, bearings
have been affected by falling market prices. At the same time, against
a backdrop of global price competition, calls for price reductions aremounting 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 products of high quality andhigh added value, business results and the NTN Group’s financial
position 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 high weighting in materials costs, measures have beentaken such as mark-ups on selling prices to reflect higher materials
cost. In addition, the Group is targeting cost reductions throughenhanced production yields and VA/VE methods. Nevertheless,business results and the NTN Group’s financial position may beaffected by stronger than expected increases in raw materials costs.
5) Disasters and Accidents
Production plants and facilities of the NTN Group and its
transaction counterparts are exposed to the risk of damage fromnatural disasters such as earthquakes, floods, and fires. Although
the NTN Group has put into place crisis management systems
and stands ready to engage in measures to contain damage as
much as possible, risks cannot be completely eliminated. Businessperformance and the financial status of the NTN Group may beaffected by a natural disaster or by accidents.

636) Dependence on Specific Industries
The NTN Group’s Bearings Division derives approximately half of its
sales revenues from the automotive industry, which also accounts
for more than half of sales of components that the Constant-velocity
Joints Division produces for automotive power transmission to thedrive axle. Dependence on the automotive industry is therefore high.
Although the NTN Group works to increase sales of bearings andprecision equipment products to the industrial machinery sector andimplements policies to achieve a balanced sales structure, a rapid
shift in demand in the automotive industry could potentially affect
the NTN Group’s business results and financial position.
7) Product Defects
To ensure product quality, the NTN Group works to satisfy
customers’ requirements concerning product functions andspecifications, and strives to provide appropriate quality and productsafety by enforcing quality assurance globally. However, a substantial
product defect leading to a serious accident, claim for damages,
or product recall could entail huge product warranty costs andpotentially affect business performance and the financial positionof the NTN Group. Although the NTN Group has taken out global
product liability insurance, complete coverage for loss is not possible.
8) Intellectual Property
The NTN Group generates a wealth of innovative technologies
and know-how in the process of new product development,
representing valuable intellectual property for which the NTNGroup files patent applications to protect its rights. However,business performance and the financial position of the NTN Groupmay be affected if a legal challenge is initiated against its intellectual
property or if its intellectual property is infringed by a third party.
9) Global Operations
The NTN Group develops its business operations worldwide withoverseas sales exceeding 50% of consolidated sales. Overseas
business development is associated with the following risks:a. Risks from unforeseen change in tax systems of or between
individual countries
b. Risks from unforeseen change in laws of individual countries
c. Difficulty in hiring and retaining appropriate staff
d. Evolving technology levels and unstable labor relations inemerging economies
e. Political instability in emerging economies
10) Statutory Regulations
The NTN Group is subject to the various laws and regulations(tax laws, environmental laws, occupational safety and health laws,
economic statutes such as antimonopoly laws and anti-dumping
laws, trade and exchange laws, and securities trading regulations)of the 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 everbe subject to litigation or involved in legal proceedings because ofa violation of a law or regulation, and if the decision of such litigationor legal proceedings goes against the Group, this may have an affecton the business performance or the financial state of the Group.
As well, if these laws or regulations change, or if new unforeseenlaws or regulations are enacted, these also may have an affecton the business performance or the financial state of the Group.

Consolidated Balance Sheets
March 31, 2013 and 2012

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

2013

2012

2013

¥ 86,100¥ 52,606$ 915,470

692

1,755

7,358

AssetsCurrent assets:
Cash and cash equivalents (Note 14)
Short-term investments (Note 14)
Trade receivables (Note 14):
Notes

10,590

10,251

112,600

Accounts

108,022

109,243

1,148,559

Allowance for doubtful accounts
Inventories (Note 5)
Deferred income taxes (Note 23)

(937)

(632)

(9,963)

117,675

118,8621,251,196

163,287

155,107

1,736,172

7,377

4,356

78,437

26,19029,632

278,470

401,321362,318

4,267,103

Land (Note 2(g))

32,15731,225341,914

Buildings and structures (Note 2(g))

173,323

155,813

1,842,881

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

696,862

631,410

7,409,484

Other current assets (Note 14)
Total current assets

Property, plant and equipment, at cost (Note 6):

31,025297,299

849,473

9,891,578(632,150)(583,791)(6,721,424)

298,153

265,682

3,170,154

Investment securities (Notes 7 and 14)

27,601

24,520293,471

Investments in unconsolidated subsidiaries and affiliates (Note 14)

13,69012,516

145,561

272

279

2,892

Deferred income taxes (Note 23)

20,904

21,865222,265

Other assets

6,521

6,078

69,33568,98865,258733,524¥ 768,462¥ 693,258$ 8,170,781

Less accumulated depreciation
Property, plant and equipment, net (Note 25)

Financial Section

27,961
930,303

Construction in progress

Investments and other assets:

Goodwill

Total investments and other assets

Total assets (Note 25)
See accompanying notes to the consolidated financial statements.

64

Consolidated Balance Sheets
March 31, 2013 and 2012

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

2013

2012

2013

¥ 105,706¥ 101,629$ 1,123,934

64,961

14,697690,707

Notes

11,677

15,000124,157

Accounts

76,782

99,216816,396

88,459114,216

940,553

1,485

2,677

15,789

74

338

787

7,231

–

76,885

Liabilities and net assets
Current liabilities:
Short-term bank loans (Notes 8 and 14)
Current portion of long-term debt and lease obligations (Notes 8 and 14)
Trade payables (Note 14):

Accrued income taxes (Notes 14 and 23)
Deferred income taxes (Note 23)
Provision for surcharge payments under the Anti-Monopoly Act (Note 18)
Provision for employees’ early retirement incentive plans (Note 19)

5,923

–

62,977

Other current liabilities

41,523

48,737

441,499

Total current liabilities (Note 25)

315,362

282,294

3,353,131

Long-term debt and lease obligations (Notes 8 and 14)

191,736

156,784

2,038,660

Accrued retirement benefits for employees (Note 9)37,88033,019402,764

Provision for product defect compensation

1,164

779

12,376

Deferred income taxes (Note 23)

3,174

3,389

33,748Other long-term liabilities

7,403

4,867

78,714

Total long-term liabilities (Note 25)

241,357

198,838

2,566,262

54,34754,347

577,852

67,37067,370716,32196,740113,595

1,028,602

(517)

(514)

(5,497)217,940

234,798

2,317,278

Long-term liabilities:

Contingent liabilities (Note 11)
Net assets:
Shareholders’ equity (Note 10):
Common stock:
Authorized — 1,800,000,000 shares
Issued — 532,463,527 shares in 2013 and 2012
Capital surplus
Retained earnings
Treasury stock, at cost:
576,643 shares in 2013 and 566,982 shares in 2012
Total shareholders’ equity
Accumulated other comprehensive income (loss):
5,211

3,396

55,407

Translation adjustments(18,128)(37,263)(192,749)

Unfunded retirement benefit obligation of foreign subsidiaries(5,119)(4,027)(54,428)

Total accumulated other comprehensive loss, net(18,036)(37,894)(191,770)

Minority interests

11,83915,222

125,880

Net unrealized holding gain on securities (Note 7)

Total net assets
Total liabilities and net assets
See accompanying notes to the consolidated financial statements.

65

211,743

212,126

2,251,388¥ 768,462¥ 693,258$ 8,170,781

Consolidated Statements of Operations
Years ended March 31, 2013 and 2012

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

Net sales (Note 25)
Cost of sales (Note 16)
Gross profit
Selling, general and administrative expenses (Note 16)
Operating income (Note 25)
Other income (expenses):
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Gain on bargain purchase of a subsidiary’s share (Notes 25 and 26)
Gain on sales of investment securities (Note 7)
Gain on sales of fixed assets (Note 17)
Provision for surcharge payments under the Anti-Monopoly Act (Note 18)
Restructuring costs (Note 19)
Reorganization expenses (Note 20)
Loss on impairment of fixed assets (Note 6)
Loss on valuation of investment securities
Casualty losses
Loss on earthquake (Note 21)
Loss on sales of fixed assets
Other, net(Loss) income before income taxes and minority interests
Income taxes (Note 23):
Current
Deferred(Loss) income before minority interests
Minority interests
Net (loss) income

2013

2012

2013

¥ 539,595
462,106
77,489¥ 543,468
452,975
90,493$ 5,737,321
4,913,408
823,91370,211
7,278

69,76920,724

746,529
77,384820(4,069)
553
1,929
1,593
–
(7,231)(6,365)(3,027)(2,693)
(491)
(126)
–
–
(2,069)(21,176)(13,898)881(3,369)
1,010
–
–
1,202
–
–
(580)
–
(2,105)
–
(744)
(107)
(555)
(4,367)
16,357

8,719(43,264)
5,880
20,51016,938–(76,885)(67,677)(32,185)(28,634)(5,221)(1,340)––(21,998)(225,157)(147,773)

2,936(3,116)(180)(13,718)(478)¥ (14,196)

5,527
3,806
9,333
7,024
(1,031)¥ 5,993

31,217(33,131)(1,914)(145,859)(5,082)$ (150,941)

See accompanying notes to the consolidated financial statements.

Financial Section

Consolidated Statements of Comprehensive Income
Years ended March 31, 2013 and 2012

Thousands of
U.S. dollars(Note 1)Millions of yen(Loss) income before minority interests
Other comprehensive income (loss) (Note 22):
Net unrealized holding gain on securities (Note 7)
Translation adjustments
Unfunded retirement benefit obligation of foreign subsidiaries
Share of other comprehensive income (loss) ofaffiliates accounted for by the equity method
Other comprehensive income (loss), net
Comprehensive income
Total comprehensive income attributable to:Shareholders of NTN Corporation
Minority interests

2013

2012

2013

¥ (13,718)¥ 7,024$ (145,859)

1,815
19,502(1,092)

1,259(3,075)(1,454)

19,299207,357(11,610)

1,581
21,806¥ 8,088(779)(4,049)¥ 2,975

16,810231,856$ 85,997¥ 5,662¥ 2,426¥ 2,215¥ 760$ 60,202$ 25,795

See accompanying notes to the consolidated financial statements.

66

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2013 and 2012

Millions of yen

Retainedearnings

Treasurystock,
at costUnfundedNet
retirement
unrealized
benefitholding
obligation
gain onTranslationof foreign
securities adjustments subsidiaries

532,463,527 ¥ 54,347 ¥ 67,418 ¥ 113,030¥ (758)¥ 2,137¥ (33,679)¥ (2,573)

Number ofshares in
issue

Balance at April 1, 2011

Commonstock

CapitalsurplusMinority
interests

Total net
assets¥ 10,431 ¥ 210,353

Cash dividends paid

–

–

–

(5,316)

–

–

–

–

–

(5,316)

Net income

–

–

–

5,993

–

–

–

–

–

5,993

Net effect of change in scope of consolidation

–

–

–

5

–

–

–

–

–

5

Purchases of treasury stock

–

–

–

–

(9)

–

–

–

–

(9)

Sales of treasury stock

–

–

(165)

–

253

–

–

–

–

88

Transfer of loss on sales of treasury stock

–

–

117

(117)

–

–

–

–

–

–

Other changes

–

–

–

–

–

1,259

(3,584）(1,454)

4,791

1,012

532,463,527

54,347

67,370113,595

(514)

3,396

(37,263)(4,027)

15,222

212,126

Cash dividends paid

–

–

–

(2,659)

–

–

–

–

–

(2,659)Net loss–––(14,196)

–

–

–

–

–

(14,196)

Purchases of treasury stock

–

–

–

–

(4)

–

–

–

–

(4)

Sales of treasury stock

–

–

–

–

1

–

–

–

–

1

–

–

–

–

–

1,815

19,135(1,092)(3,383)

16,475

532,463,527 ¥ 54,347 ¥ 67,370¥ 96,740¥ (517)¥ 5,211¥ (18,128)¥ (5,119)

Balance at April 1, 2012

Other changes
Balance at March 31, 2013

¥ 11,839 ¥ 211,743

Thousands of U.S. dollars (Note 1)

Commonstock

Balance at April 1, 2012

CapitalsurplusTreasurystock,
at costRetainedearnings$ 577,852 $ 716,321 $ 1,207,815 $ (5,465) $ 36,108

Cash dividends paid––

(28,272)

Net loss––

Purchases of treasury stock––

Sales of treasury stock–

Other changes–

Balance at March 31, 2013

Total net
assets$ (396,204) $ (42,818) $ 161,850 $ 2,255,459

–

–

–

–

–

(28,272)(150,941)

–

–

–

–

–

(150,941)

–

(43)

–

–

–

–

(43)

–

–

11

–

–

–

–

11

–

–

–

19,299203,455(11,610)(35,970)

175,174$ 577,852 $ 716,321 $ 1,028,602 $ (5,497) $ 55,407

See accompanying notes to the consolidated financial statements.

67

UnfundedNet
retirement
unrealized
benefitholding
obligation
gain onTranslation
Minorityof foreign
securities adjustments subsidiaries interests$ (192,749) $ (54,428) $ 125,880 $ 2,251,388

Consolidated Statements of Cash Flows
Years ended March 31, 2013 and 2012

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

2012

2013

¥ (13,898)¥ 16,357$ (147,773)

34,841
2,838
128(1,929)
7,231
5,911
126
(75)
2,278
352
2,600
(1,205)
(820)
4,069
632
(553)
25
(1,589)491
11,953
4,457(27,967)(3,947)25,9491,453(3,973)(2,924)¥ 20,505

34,175
–
–
–
–
–
46
(92)
894
(89)
–
(1,395)
(881)
3,369
543
(1,010)(1,095)–
2,105(11,754)(20,216)
4,891
1,113
26,961
1,850(3,355)(8,404)¥ 17,052

370,452
30,175
1,361(20,510)76,88562,8501,340(797)
24,221
3,743
27,645(12,812)(8,719)43,2646,720(5,880)266(16,895)
5,221
127,092
47,389(297,364)(41,968)
275,906
15,449(42,243)(31,090)$ 218,022

Cash flows from investing activities:
Decrease (increase) in short-term investments
Purchases of property, plant and equipment
Purchases of other assets
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Purchases of investments in subsidiaries
Proceeds from liquidation of a subsidiary
Purchases of investments in an affiliate
Decrease (increase) in short-term loans receivable
Other
Net cash used in investing activities

1,150(55,244)(1,536)
935
(893)
1,702
(3,927)
–
–
1,026
183
(56,604)(422)(49,102)(1,094)
1,559
(0)
28
(496)
113
(2,300)(812)(317)(52,843)

12,228(587,390)(16,332)
9,942(9,495)18,097(41,754)––
10,9091,945(601,850)

Cash flows from financing activities:(Decrease) increase in short-term bank loans, net
Proceeds from long-term debt
Repayment of long-term debt, including current portion
Proceeds from issuance of common stock to minority shareholders of consolidated subsidiaries
Cash dividends paid
Repayment of lease obligations
Other
Net cash provided by financing activities(3,013)89,248(13,471)230(2,659)(249)(500)
69,586

7,084
68,043(25,523)
3,537(5,316)(192)(384)
47,249(32,036)
948,942(143,232)
2,446(28,272)(2,648)(5,317)
739,883

Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents resulting from inclusion of subsidiaries in consolidation
Cash and cash equivalents at end of the year

(208)
33,27952,606215¥ 86,100959
12,41740,082107¥ 52,606(2,212)353,843559,341
2,286$ 915,470

Cash flows from operating activities:(Loss) income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Loss on impairment of fixed assets (Note 6)
Amortization of goodwill
Gain on bargain purchase of a subsidiary’s share
Increase in provision for surcharge payments under the Anti-Monopoly Act
Increase in provision for employees’ early retirement incentive plans
Increase in allowance for doubtful accounts
Decrease in allowance for directors’ and corporate auditors’ bonuses
Increase in accrued retirement benefits for employees
Increase (decrease) in provision for product defect compensation
Increase in other current liabilities for reorganization expenses
Decrease in other current and long-term liabilities resulting from amendment of pension plans
Interest and dividend income
Interest expense
Translation adjustments and foreign exchange loss, net
Equity in earnings of affiliates
Loss (gain) on sales of fixed assets, net
Gain on sales of investment securities, net
Loss on valuation of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in inventories(Decrease) increase in trade payables
Other
SubtotalInterest and dividend income received
Interest paid
Income taxes paid
Net cash provided by operating activities

Financial Section

2013

See accompanying notes to the consolidated financial statements.

68Notes to Consolidated Financial Statements
March 31, 2013

1. Basis of Preparation(g) Property, plant and equipment

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.

Property, plant and equipment are stated at cost. Depreciation iscomputed at rates based on the estimated useful lives of the respective
assets by the declining-balance method, except for the buildings andassets of foreign consolidated subsidiaries to which the straight-line
method is principally applied.

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 morefamiliar to readers outside Japan. In addition, certain notes included
herein are not required under accounting principles generally acceptedin Japan but are presented as additional information.
The translation of yen amounts into U.S. dollar amounts is included
solely for the convenience of readers outside Japan and has been madeat ¥94.05 = U.S.$1.00, the exchange rate prevailing on March 31, 2013.
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.
Certain reclassifications of previously reported amounts have been madeto the consolidated statement of cash flows for the year ended March 31,
2012 to conform them to the 2013 presentation. Such reclassifications
had no effect on consolidated net assets and net income.

2. Summary of Significant Accounting Policies(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 principal estimated useful lives are as follows:
Buildings and structures
Machinery, equipment and vehicles

10 to 50 years
5 to 12 years

Contributions 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, plantand equipment accounts on the consolidated balance sheets at March
31, 2013 and 2012 were reduced by the following amounts:
Thousands of
U.S. dollars

Millions of yen

Land
Buildings andstructures
Machinery,equipment
and vehicles

2013
¥ 799

2012
¥ 799

2013
$ 8,495

468

512

4,976

504

604

5,359

(h) Provision for surcharge payments under the Anti-Monopoly Act
Provision for surcharge payments under the Anti-Monopoly Act isprovided for the expected corresponding payments.

(i) Provision for employees’ early retirement incentive plans

The financial statements of certain consolidated subsidiaries whose fiscal
year end is December 31 have been included in consolidation on thebasis of a full fiscal year closing on March 31 for consolidation purposes.

The Company and certain subsidiaries recently introduced employees’
early retirement incentive plans. During March 2013, the Company andcertain subsidiaries have provided a provision for these plans basedon the expected payment of additional retirement benefits and therelated expenses under these plans.

(b) Foreign currency translation(j) Accrued retirement benefits for employees

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 are translated
into yen at the exchange rates in effect at the respective balance sheet
dates, except for the components of net assets excluding minority
interests which are translated at the respective historical rates.
Revenue and expenses are translated at the average rates of exchange
for the respective years. Differences arising from translation arereflected in “Translation adjustments” and “Minority interests” in theaccompanying consolidated balance sheets and statements ofchanges in net assets.

(c) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits withbanks withdrawable on demand, and short-term investments which
are readily convertible to cash subject to an insignificant risk of any
change in their value and which were purchased with an original
maturity of three months 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
in 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.

Accrued retirement benefits for employees have been provided
principally at an amount calculated based on the retirement benefit
obligation and the fair value of the pension plan assets, as adjusted
for net unrecognized actuarial gain or loss and unrecognized past
service cost. The estimated benefit is attributed to each period by
the straight-line method over the estimated years of service of theeligible employees.
Past service cost is amortized in the year in which the gain or loss isrecognized primarily by the straight-line method over a period of
principally 15 years, which is within the estimated average remaining
years of service of the eligible employees.
Net unrecognized actuarial gain or loss is amortized commencing theyear following the year in which the gain or loss was recognized primarily
by the straight-line method over a period of principally 15 years, which
is within the estimated average remaining years of service of theeligible employees.

(k) Provision for product defect compensation
Provision for product defect compensation is provided at an
estimated amount in order to cover the anticipated compensation.

(l) 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.
The Company and its domestic consolidated subsidiaries continue toaccount for finance lease transactions not involving the transfer ofownership that commenced prior to April 1, 2008 as operating leases.

(m) Goodwill
Goodwill is being amortized on the straight-line method over theestimated period of the economic benefits, with the exception of
immaterial amounts, which are charged to income as incurred.

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

69(n) 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 costsavings. Such expenditures are capitalized as assets and are amortizedby the straight-line method over their respective estimated useful lives,
generally a 5-year period.

minority interests by the same amount for the year ended March
31, 2013 from the corresponding amounts which would have beenrecorded under the previous method.

(o) Deferred income taxes

On May 17, 2012, the Accounting Standards Board of Japan(“ASBJ”) issued ASBJ Statement No.26, “Accounting Standard for
Retirement Benefits” and ASBJ Guidance No.25, “Guidance on
Accounting Standard for Retirement Benefits,” which replaced the“Accounting Standard for Retirement Benefits” issued by theBusiness Accounting Council in 1998 with an effective date of April
1, 2000 and the other related practical guidance, being followed bypartial amendments from time to time through 2009.

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.

(p) Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes in fair value
included in net income for the period in which they arise, except forderivatives which meet the criteria for deferral hedge accounting
under which realized 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. An interest-rate swap which meets certain conditions
is accounted for as if the interest rates applied to the interest-rate swap
had originally applied to the underlying debt.

(q) 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
for the period do not reflect such distributions.

(r) 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.

4. Standards Issued but Not Yet Effective
Accounting standard for retirement benefits

In accordance with the revision of this accounting standard, actuarial
gains and losses and past service costs that have yet to be recognizedin profit or loss shall be recognized within net assets after adjustingfor tax effects, and the deficit or surplus shall be recognized as aliability or asset. Actuarial gains and losses and past service costthat arose in the current period and have yet to be recognized in
profit or loss shall be included in other comprehensive income andactuarial gains and losses and past service cost that were recognizedin other comprehensive income in prior periods and then recognizedin profit or loss in the current period shall be treated as reclassification
adjustments. In addition, the new accounting standard allows achoice for the method of attributing expected benefits to periods
between either the straight-line basis or the plan’s benefit formulabasis. In addition, the method used to determine the discount rate
was revised.
The Company will adopt the revised accounting standard effective the endof March 31, 2014. However, the amendment of the calculation method
for the present value of defined obligations and current service costs will
be adopted effective the beginning of the year ending March 31, 2015.
The Company is currently evaluating the effect these modifications will
have on its consolidated results of operations and financial position.

5. Inventories
Inventories at March 31, 2013 and 2012 consisted of the following:

3. Accounting Change
Change of method of depreciation
Effective April 1, 2012, based on a revision of Corporation Tax Law ofJapan, the Company and its domestic consolidated subsidiaries changed
the method of depreciation for property, plant and equipment acquiredon or after April 1, 2012. The previously applied 250% declining-balancemethod was changed to the 200% declining-balance method.
The effect of this change was to increase operating income by ¥507
million ($5,391 thousand) and to decrease loss before income taxes andMillions of yen

Finished goods
Work in process
Raw materials
and supplies

Thousands of
U.S. dollars

2013¥ 92,771
41,9962012¥ 85,083
42,6822013$ 986,401
446,528

28,520¥ 163,287

27,342¥ 155,107

303,243$ 1,736,172

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.
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 any future use for them and do not expect them to be recoverable. Consequently, the Company and its
consolidated subsidiaries recorded a related loss on impairment of fixed assets of ¥2,693 million ($28,634 thousand) in the accompanying consolidated
statement of operations for the year ended March 31, 2013:

Location

Usage

Production equipment
Japan
Employee recreational facilities
Americas

Production equipment

EuropeProduction equipment and otherAsia and other areas

Production equipment

Classification

Buildings and structures
Machinery and equipment
Construction in progress
Other
Buildings and structures
Land
Other
Machinery and equipment
Construction in progress
Machinery and equipment
Construction in progress
Other
Machinery and equipment
Construction in progress
Other

Millions of yen

Thousands of
U.S. dollars

2013
¥ 192
269
334
20
202
122
1
8
183
235
220
215
648
39
5
¥ 2,6932013$ 2,041
2,860
3,551
213
2,148
1,297
11
85
1,946
2,499
2,339
2,286
6,890
415
53
$ 28,634

70

Financial Section

6. Impairment of Fixed Assets

Notes to Consolidated Financial Statements
March 31, 2013

The recoverable value of the fixed assets presented in the above table has been measured primarily at net realizable value based on appraisals conductedby real estate appraisers or value in use. If a fixed asset cannot be sold or diverted to other usage, such asset is valued at nil.
The Company recorded reorganization expenses of ¥3,027 million ($32,185 thousand), which included loss on impairment of fixed assets in the amountof ¥145 million ($1,542 thousand) for the year ended March 31, 2013. The aggregate amount of ¥2,838 million ($30,175 thousand) of loss on impairmentof fixed assets included ¥2,693 million ($28,633 thousand) as shown in the above table the ¥145 million ($1,542 thousand), which was included in the
reorganization expenses mentioned above, was presented as a component of cash flows from operating activities in the consolidated statement of cash
flows for the year ended March 31, 2013.

7. Securities(a) Information regarding marketable securities classified as other securities at March 31, 2013 and 2012 is summarized as follows:
Millions of yen

2013

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Subtotal
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Other
Subtotal
Total

2012

Carrying
value

Acquisition
costs

Unrealized
gain (loss)

Carrying
value

Acquisition
costs

Unrealized
gain (loss)¥ 19,880
19,880¥ 11,213
11,213¥ 8,667
8,667¥ 13,921
13,921¥ 7,278
7,278¥ 6,643
6,643

5,398
34,00039,398¥ 59,278

6,176
34,00040,176¥ 51,389

(778)
–
(778)
¥ 7,889

9,239
10,00019,239¥ 33,160

10,657
10,00020,657¥ 27,935(1,418)–(1,418)¥ 5,225

Thousands of U.S. dollars

2013

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Subtotal
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Other
Subtotal
Total

Carrying
value

Acquisition
costs

Unrealized
gain (loss)$ 211,377
211,377$ 119,224
119,224$ 92,153
92,15357,395361,510
418,905$ 630,282

65,667
361,510427,177$ 546,401(8,272)–(8,272)$ 83,881

Impairment losses are recorded for securities whose fair value have declined by 50% or more, or whose fair value have declined by 30% or more,
but less than 50%, if the decline is deemed to be irrecoverable.
The Company has recognized impairment losses on valuation of investment securities of ¥490 million ($5,210 thousand) and ¥1,886 million for theyears ended March 31, 2013 and 2012, respectively.
(b) Sales and aggregate gain on investment securities for the year ended March 31, 2013 are summarized as follows:

Sales
Aggregate gain

Millions of yen

Thousands of
U.S. dollars

2013¥ 1,692
1,593

2013$ 17,990
16,938

8. Short-Term Bank Loans, Long-Term Debt and Lease Obligations
Short-term bank loans principally represent short-term notes with average annual interest rates of 0.76% and 0.83% at March 31, 2013 and 2012,
respectively.
Long-term debt and lease obligations at March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Loans from banks and other financial institutions, due through 2021, at an averageannual interest rate of 1.5%
1.66% unsecured bonds due 2013
Lease obligations due through 2026
Less current portion

71

2013

2012

2013

¥ 245,096
10,0001,601
256,697(64,961)¥ 191,736¥ 160,349
10,0001,132
171,481(14,697)¥ 156,784$ 2,606,018
106,326
17,0232,729,367(690,707)$ 2,038,660

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2013 are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2014
2015
2016
2017
2018
2019 and thereafter¥ 64,961
26,67036,73754,81660,274
13,239¥ 256,697$ 690,707
283,573
390,611582,839
640,872
140,765$ 2,729,367

9. Accrued 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 their basic rates of pay, length of service, and the conditions under which termination occurs. They also have defined contribution pension plans andadvance payment plans. Certain overseas consolidated subsidiaries also have defined benefit pension plans and/or defined contribution pension plans.
The following table sets forth the funded and accrued status and the amounts recognized in the accompanying consolidated balance sheets at
March 31, 2013 and 2012 for the Company’s and consolidated subsidiaries’ defined benefit pension plans:
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Unrecognized actuarial loss
Unrecognized past service cost
Net retirement benefit obligation
Prepaid pension costAccrued retirement benefits for employees

2013¥ (110,526)
56,541(53,985)
16,036
103(37,846)
34¥ (37,880)

2013$ (1,175,183)
601,180(574,003)
170,505
1,095(402,403)
361$ (402,764)2012¥ (97,423)
52,132(45,291)
12,415(111)(32,987)32¥ (33,019)

The components of retirement benefit expenses for the years ended March 31, 2013 and 2012 are outlined as follows:

Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization:
Actuarial loss
Past service cost
Retirement benefit expenses
Contributions to defined contribution pension plans
Retirement benefit expenses

2013¥ 3,781
2,762(1,496)2012¥ 2,789
2,810(1,487)2013$ 40,202
29,367(15,906)

2,208
(150)
7,105
1,203
¥ 8,308

1,977
(163)
5,926
1,157
¥ 7,083

23,477(1,595)75,545
12,791$ 88,336
Financial Section

The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2013 and 2012 were as follows:2013
Principally 1.5%
Principally 2.5%

Discount rates (*)
Expected rate of return on plan assets

2012
Principally 2.6%
Principally 2.5%

*As a result of a review of discount rates by reference to bond market rates, the Company and its consolidated subsidiaries changed the discountrates as of March 31, 2013 to principally 1.5% from principally 2.6% as of April 1, 2012.

10. Shareholders’ Equity(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(other than 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 byresolution 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 ($91,855 thousand) at March 31, 2013 and 2012.
(b) Movements in shares issued and treasury stock during the years ended March 31, 2013 and 2012 are summarized as follows:
Number of shares

2013
Shares issued: Common stock
Treasury stock: Common stock

April 1, 2012

Increase

Decrease

March 31, 2013

532,463,527
566,982–
19,171–
9,510

532,463,527
576,643

April 1, 2011

Increase

Decrease

March 31, 2012

532,463,527
824,400–
23,299–280,717532,463,527
566,9822012
Shares issued: Common stock
Treasury stock: Common stock72

Notes to Consolidated Financial Statements
March 31, 2013

The increases in treasury stock were due to purchases of shares of less than one voting unit for the years ended March 31, 2013 and 2012. The decreases
in treasury stock for the year ended March 31, 2013 were due to sales of shares at requests of shareholders owning less than one voting unit. The
decreases in treasury stock for the year ended March 31, 2012 were due to the exchange of 274,597 shares as part of the acquisition of Nippon
Kagaku Yakin Co., Ltd. and sales of 6,120 shares at requests of shareholders owning less than one voting unit.

11. Contingent Liabilities
Arbitration for claim of damages
NTN-SNR ROULEMENTS (hereinafter referred as NTN-SNR), which is a Company’s consolidated subsidiary, has been involved in arbitration proceedings
since November 2012. One automotive customer submitted a claim to arbitration and requested the payment in the amount of $57,774 thousand(¥5,433 million) for damages due to defective products provided by allegedly NTN-SNR. Depending on the results of the arbitration, 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.

12. Finance Lease Transactions That Do Not Transfer Ownership
Lessees’ accounting
The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of property leased to the Company
and its consolidated subsidiaries at March 31, 2013 and 2012, which would have been reflected in the accompanying consolidated balance sheets
if finance leases other than those which transfer the ownership of the leased property to the Company and its consolidated subsidiaries (which are
currently accounted for as operating leases) had been capitalized:
Millions of yen

2012

2013

Buildings and structures
Machinery, equipment and vehicles
Other assets

Acquisition
costs

Accumulated
depreciation

Net bookvalue

Acquisition
costs

Accumulated
depreciation

Net bookvalue¥ 1,41110
16¥ 1,437¥ 1,138
9
13¥ 1,160

¥ 273
1
3
¥ 277

¥ 1,41152
37¥ 1,500¥ 1,082
4630¥ 1,158

¥ 329
6
7
¥ 342

Thousands of U.S. dollars

2013

Buildings and structures
Machinery, equipment and vehicles
Other assets

Acquisition
costs

Accumulated
depreciation

Net book
value$ 15,003
106
170$ 15,279$ 12,100
96
138$ 12,334$ 2,90310
32$ 2,945

Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to¥65 million ($691 thousand) and ¥80 million for the years ended March 31, 2013 and 2012, respectively. Depreciation of the leased assets computedby the straight-line method over the respective lease terms with a nil residual value amounted to ¥65 million ($691 thousand) and ¥80 million for theyears ended March 31, 2013 and 2012, respectively.
Future minimum lease payments subsequent to March 31, 2013 for finance leases accounted for as operating leases are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

20142015 and thereafter
Total

¥ 59
218
¥ 277

$ 627
2,318
$ 2,945

The acquisition costs and future minimum lease payments under finance leases presented in the above tables include the imputed interest expense.
No loss on impairment was allocated to any leased assets for the years ended March 31, 2013 and 2012.

13. Operating Leases
Future minimum lease payments subsequent to March 31, 2013 for non-cancelable operating leases were as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

20142015 and thereafter
Total

¥ 321
2,335
¥ 2,656$ 3,413
24,827$ 28,24073

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.

14. Financial Instruments – Fair Value
Overview(a) Policy for financial instruments
The Company and its subsidiaries (collectively, the “Group”) raisenecessary funds in accordance with management plans mainly bybank borrowings and corporate bonds in support of operations related
to the manufacture and sales of bearings, constant-velocity joints(CVJs) and precision equipments. The Group utilizes bank borrowings
for short-term operating funds, and bank borrowings and corporate
bonds for long-term capital investments and finances. Temporary
surplus funds are managed by low-risk financial assets. The Grouputilizes derivatives to avoid or mitigate risks as described in the laterpart of this note and does not hold them for speculative purposes.

(b) Types of financial instruments and related risks
Trade receivables, notes and accounts receivable, 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 by utilizing forward
foreign currency exchange contracts. Securities are mainly composedof stocks of the companies with which the Group has business
relationships and they are exposed to fluctuation risk of market prices.
Trade payables, notes and accounts payable, are due within one year.
Certain trade payables resulting from the import of raw materials aredenominated 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 the range of accounts receivable denominated in
the same currencies.
Loans and corporate bonds are mainly utilized for business operationsof the Group. Short-term loans are mainly utilized for financing ofoperating activities. Long-term loans and corporate bonds are mainly
utilized for capital investments and financing. These have maturity datesof less than 9 years, at the longest, subsequent to March 31, 2013.
Certain loans are exposed to fluctuation risk of interest rates due tofloating rates and this risk is hedged by interest rate 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 swap agreements and interest
rate option agreements for the purpose of avoiding future fluctuation riskof foreign currencies trade receivables and payables and mitigating
future fluctuation risk of interest rate of loans and corporate bonds. The
Group utilized forward foreign currency exchange contracts and interest
rate swap agreements for the year ended March 31, 2013. Refer to “(p)Derivative financial instruments and hedging activities” in Note 2.
“Summary of Significant Accounting Policies.”(c) Risk management for financial instruments

The Group utilizes interest rate swap agreements to mitigate fluctuation
risk of interest 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) andby evaluating those relationships.
The Group has established policies which include maximum upper
limits and reporting obligations for derivative transactions and comply
fully with these guidelines. Derivative transactions are entered into by
the Company’s Accounting Department and certain consolidated
subsidiaries. The Company carries out mutual supervision and monitoringof the derivative transactions in accordance with management policies
and its consolidated subsidiaries apply the same approach. Eachderivative 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 ona monthly basis and are also required to consult with the Company
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 onreports of each section.
Syndicated loans have certain financial covenants that represent aliquidity risk from an early repayment request by financial institutions.
(iv) 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, fairvalue is reasonably estimated. Since various assumptions and factors
are reflected in estimating the fair value, different assumptions andfactors could result in different fair value. In addition, the notional amountsof derivatives in Note 15 “Derivative Financial Instruments and Hedging
Activities’’ are not necessarily indicative of the actual market risk involvedin the derivative transactions.

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, 2013 and 2012,
are shown in the following 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).
Millions of yen

2013
(1)
(2)
(3)
(4)
(5)

Cash and cash equivalents
Short-term investments
Trade receivables
Investment securities
Short-term loans receivable included
in other current assets
Total assets(6) Trade payables(7) Short-term bank loans(8) Current portion of long-term debt
(9) Accrued income taxes(10) Long-term debt
Total liabilities
Derivative transactions (*)

Carrying value

Fair value¥ 86,100
692
118,61225,278310¥ 230,992
88,459105,706
64,715
1,485
190,381¥ 450,746¥ (1,449)

2012
Difference

Carrying value

Fair value¥ 86,100
692
118,61225,282¥–––
4¥ 52,606
1,755
119,494
23,160¥ 52,606
1,755
119,494
23,160

¥–
–
–
0

310
¥ 230,996
88,459105,706
64,745
1,485
192,191¥ 452,586¥ (1,449)

–
¥4
–
–
30
–
1,810
¥ 1,840¥–

1,332¥ 198,347
114,216
101,629
14,502
2,677
155,847¥ 388,871¥ (814)

1,332¥ 198,347
114,216
101,629
14,502
2,677
157,168¥ 390,192¥ (814)

–
¥0
–
–
–
–
1,321
¥ 1,321¥–

Difference

74

Financial Section(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 and mitigate the risk. Credit risk of securities is quite low
because the Group utilizes certificate of deposits with high credit ratings,(ii) Monitoring of market risks (the risks arising from fluctuations inforeign 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 Grouputilizes forward foreign currency exchange contracts for forecasted
export transactions with a maximum period of 6 months.

Notes to Consolidated Financial Statements
March 31, 2013

Thousands of U.S. dollars

2013
(1)
(2)
(3)
(4)
(5)

Cash and cash equivalents
Short-term investments
Trade receivables
Investment securities
Short-term loans receivable included
in other current assets
Total assets(6) Trade payables(7) Short-term bank loans(8) Current portion of long-term debt
(9) Accrued income taxes(10) Long-term debt
Total liabilities
Derivative transactions (*)

Carrying value

Fair value$ 915,470
7,358
1,261,159
268,772$ 915,470
7,358
1,261,159
268,815

Difference

$–
–
–
43

3,296
$ 2,456,055
940,553
1,123,934
688,091
15,7892,024,253$ 4,792,620$ (15,407)

3,296$ 2,456,098
940,553
1,123,934
688,411
15,7892,043,498$ 4,812,185$ (15,407)

–
$ 43
–
–
320
–
19,245$ 19,565$–* Assets and liabilities arising from derivative transactions are shown at net value with the amount in parentheses representing net liability position.
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) Trade receivables and (5) Short-term loans receivable included in othercurrent assets
Since these items are settled in a short time period, their carrying value approximates fair value.
(4) Investment securities
The fair value of equity securities is based on quoted market prices.
(6) Trade payables, (7) Short-term bank loans and (9) Accrued income taxes
Since these items are settled in a short time period, their carrying value approximates fair value.
(8) Current portion of long-term debt and (10) 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 debt is based on the present value of the total of principal and interest discounted by the interest rate tobe applied assuming new loans under the similar conditions to existing loans are made.
Certain long-term loans with floating interest rates were hedged by interest rate swap agreements and accounted for as loans with fixedinterest rates. The fair value of those long-term loans is based on the present value of the total of principals, interest payments and net
cash flows of the swap agreements discounted by the interest rates to be applied assuming new loans under similar conditions are made.
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 were as follows:

Thousands of
U.S. dollars

Millions of yen

Unlisted stocks
Stocks of subsidiaries and affiliates
Other
Unlisted foreign bonds
Unlisted domestic bonds
Total

2013

2012

2013

¥ 13,690
285
1,038
1,000
¥ 16,013¥ 12,516
360
–
1,000
¥ 13,876$ 145,561
3,030
11,037
10,632$ 170,260

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not includedin the preceding table.
Note 3: Redemption schedule for cash and cash equivalents, receivables and marketable securities with maturities at March 31, 2013 and 2012 is as follows:
Millions of yen

2013

Cash and cash equivalents
Short-term investments
Trade receivables
Short-term loans receivable included in other current assets
Total

Withinone yearMore than one year
and within five years

More than five years
and within ten years

More thanten years¥ 86,100
692
118,612310¥ 205,714

¥–
–
–
–
¥–

¥–
–
–
–
¥–

¥–
–
–
–
¥–

Millions of yen

2012

Cash and cash equivalents
Short-term investments
Trade receivables
Short-term loans receivable included in other current assets
Total

75

Withinone yearMore than one year
and within five years

More than five years
and within ten years

More thanten years¥ 52,606
1,755
119,494
1,332¥ 175,187

¥–
–
–
–
¥–

¥–
–
–
–
¥–

¥–
–
–
–
¥–

Thousands of U.S. dollars

2013

Cash and cash equivalents
Short-term investments
Trade receivables
Short-term loans receivable included in other current assets
Total

Withinone yearMore than one year
and within five years

More than five years
and within ten years

More thanten years$ 915,470
7,358
1,261,159
3,296$ 2,187,283

$–
–
–
–
$–

$–
–
–
–
$–

$–
–
–
–
$–

Note 4: The redemption schedule for long-term debt is disclosed in Note 8 “Short-Term Bank Loans, Long-Term Debt and Lease Obligations” sectionof these Notes to Consolidated Financial Statements.

15. Derivative Financial Instruments and Hedging Activities(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, 2013 and 2012 issummarized as follows:

Currency-related transactions
Millions of yen

2013
Classification

Over-the-counter transactions

Transaction

Notional amount

Fair value

Valuation gain (loss)

Forward foreign currency exchange contracts
Selling:
U.S. Dollars
Euro
Thai Baht
Canadian Dollars
British Pounds¥ 14,846
7,460
1,706
285
197

¥ (1,072)
(228)
(129)
(5)
0

¥ (1,072)
(228)
(129)
(5)
0

Buying:
Yen
Total

608
¥ 25,102(15)¥ (1,449)(15)¥ (1,449)

Millions of yen

2012Classification

Over-the-counter transactions

Transaction

Fair value

Valuation loss

Forward foreign currency exchange contracts
Selling:
U.S. Dollars
Euro
Thai Baht
Canadian Dollars
British Pounds¥ 14,358
6,022
1,131
316
122

¥ (472)
(210)
(68)
(16)
(10)

¥ (472)
(210)
(68)
(16)
(10)

Buying:
Yen
Total

1,091
¥ 23,040(38)¥ (814)(38)¥ (814)

Financial Section

Notional amountThousands of U.S. dollars

2013
Notional amount

Fair value

Valuation gain (loss)

Forward foreign currency exchange contracts
Selling:
U.S. Dollars
Euro
Thai Baht
Canadian Dollars
British Pounds$ 157,852
79,32018,1393,030
2,095$ (11,398)(2,424)(1,372)(53)
0$ (11,398)(2,424)(1,372)(53)
0Buying:
Yen
Total

6,465
$ 266,901(160)$ (15,407)(160)$ (15,407)

Classification

Over-the-counter transactions

Transaction

The fair value of forward foreign currency exchange contracts are computed using prices provided by counterparty financial institutions. There areno contracts to be settled after one year.

76

Notes to Consolidated Financial Statements
March 31, 2013(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, 2013 and 2012 is summarized
as follows.

Interest-rate related transactions

Millions of yen

2013
Method of hedge accounting

Swap rates applied to underlying long-term debt

Transaction

Contractual value
Notional amountMore than one year

Interest rate swaps
Receive / floating and pay / fixed
Total¥ 37,000¥ 37,000Fair value¥ 19,000¥ 19,000(*)(*)

Millions of yen

2012
Method of hedge accounting

Swap rates applied to underlying long-term debt

Transaction

Contractual value
Notional amountMore than one year

Interest rate swaps
Receive / floating and pay / fixed
Total¥ 32,500¥ 32,500

Fair value¥ 32,500¥ 32,500(*)(*)

Thousands of U.S. dollars

2013
Method of hedge accounting

Swap rates applied to underlying long-term debt

Transaction

Contractual value
Notional amountMore than one year

Interest rate swaps
Receive / floating and pay / fixed
Total$ 393,408$ 393,408

Fair value

(*)
(*)

$ 202,020$ 202,020* Because interest rate swap agreements are accounted for applying swap rates to underlying long-term debt, their fair value is included in that oflong-term debt disclosed in Note 14.

16. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses totalled ¥16,174 million ($171,972 thousand)and ¥17,157 million for the years ended March 31, 2013 and 2012, respectively.

17. Gain on Sales of Fixed Assets
Gain on sales of fixed assets for the year ended March 31, 2012 consisted of the following:

Millions of yen

2012¥ 1,098104¥ 1,202

Gain on sales of dormitory and company housing at TAKARAZUKA Works
Others

18. Provision for Surcharge Payments under the Anti-Monopoly Act
Based on an order from the Japan Fair Trade Commission (the “JFTC”), the Company recorded a provision for surcharge payments under the
Anti-Monopoly Act in the amount of ¥7,231 million ($76,885 thousand) as of March 31, 2013.

19. Restructuring Costs
Restructuring costs for the year ended March 31, 2013 consisted of the following:

Provision for employees’ early retirement incentive plans
Loss on valuation of assets due to the partial discontinuation of operations for precision equipment
OthersMillions of yen

Thousands of
U.S. dollars

2013¥ 5,911356
98¥ 6,365

2013$ 62,850
3,785
1,042
$ 67,677

20. Reorganization Expenses
Reorganization expenses for the years ended March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Expenses for soil improvement work for TAKARAZUKA Works
Expenses for additional construction work for TAKARAZUKA Works
Others (*)

2013¥ 2,600–427¥ 3,027

2012
¥–
580
–
¥ 580

2013
$ 27,645–
4,540$ 32,185* Others included loss on impairment of fixed assets in the amount of ¥145 million ($1,542 thousand) for the year ended March 31, 2013.
The Company plans to sell the site of the TAKARAZUKA Works after soil improvement work is completed.

7721. Loss on Earthquake
During the year ended March 31, 2012, the Company and its domestic subsidiaries suffered losses related to the Great East Japan Earthquake on
March 11, 2011.
Loss on earthquake for the year ended March 31, 2012 consisted of the following:
Millions of yen

2012
¥ 726
18
¥ 744

Fixed costs incurred for suspended operations
Others

22. Other Comprehensive Income (Loss)
The following table presents the analysis of other comprehensive income (loss) for the years ended March 31, 2013 and 2012.
Thousands of
U.S. dollars

Millions of yen

Net unrealized holding gain (loss) on securities:
Amount arising during the year
Reclassification adjustments for losses included in net income
Before tax effectTax effect
Total
Translation adjustments:
Amount arising during the year
Reclassification adjustments for losses included in net income
Before tax effectTax effect
Total
Unfunded retirement benefit obligation of foreign subsidiaries:
Amount arising during the year
Reclassification adjustments for losses included in net income
Before tax effectTax effect
Total
Share of other comprehensive income (loss) of affiliates accounted for by the equity method:Amount arising during the year
Other comprehensive income (loss), net

2013

2012

2013

¥ 2,304
488
2,792
(977)
1,815

¥ (215)
1,878
1,663
(404)
1,259

$ 24,498
5,189
29,687(10,388)
19,29919,48418
19,502–
19,502(3,075)–(3,075)–(3,075)

207,166
191
207,357–
207,357(2,018)603(1,415)323(1,092)(2,913)368(2,545)
1,091(1,454)(21,457)
6,412(15,045)3,435(11,610)

1,581¥ 21,806(779)¥ (4,049)

16,810$ 231,856

23. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporate tax, inhabitants’ taxes and enterprise tax which, in theaggregate, resulted in statutory tax rates of 37.4% and 40.0% for the years ended March 31, 2013 and 2012, respectively. Overseas subsidiaries
are subject to the income taxes of the respective countries in which they operate.

The effective tax rates for the year ended March 31, 2012 differ from the Company’s statutory tax rate for the following reasons:Statutory tax rate
Permanent non-deductible expenses
Permanent non-taxable income
Elimination of dividend income
Equity in earnings of affiliates
Difference in overseas consolidated subsidiaries’ applicable tax rate
Increase in valuation allowance
Decrease in deferred tax assets due to change in statutory tax rates
Other
Effective tax rate

2012
40.0%
0.7
(4.1)
8.0
(2.5)
(7.0)
4.4
14.4
3.2
57.1%

78

Financial Section

The details of the differences between the statutory tax rate and effective tax rate for the year ended March 31, 2013 are omitted because the Company
and its consolidated subsidiaries recorded a loss before income taxes and minority interests for the year.

Notes to Consolidated Financial Statements
March 31, 2013

The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2013 and 2012
are presented below:
Thousands of
U.S. dollars

Millions of yen

2013

2012

2013

Deferred tax assets:
Accrued retirement benefits for employees
Inventories
Tax loss carryforwards
Provision for employees’ early retirement incentive plans
Accrued expenses
Foreign tax credit
Accrued expenses for defined contribution pension plans
Other
Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets¥ 14,840
611
21,359
2,179
2,036
515
378
7,328
49,246(4,565)44,681¥ 14,291
491
17,323
–
2,704
1,806
830
5,433
42,878(4,858)38,020$ 157,788
6,497
227,103
23,16921,648
5,476
4,019
77,915
523,615(48,538)
475,077

Deferred tax liabilities:
Depreciation and amortization
Unrealized holding gain on securities
Reserve for deferred gain on property included in retained earnings
Retained earnings of overseas consolidated subsidiaries
Other
Total deferred tax liabilities
Net deferred tax assets(13,827)(2,806)(561)(147)(2,307)(19,648)¥ 25,033(10,417)(1,829)(565)(201)(2,514)(15,526)¥ 22,494(147,018)(29,835)(5,965)(1,563)(24,529)(208,910)$ 266,167

24. Amounts per Share
Amounts per share at March 31, 2013 and 2012 and for the years then ended were as follows:
U.S. dollars

Yen

Net assets
Net (loss) income:
Basic
Cash dividends

2013¥ 375.84

2012¥ 370.19

2013$ 4.00(26.69)
–

11.27
10.00

(0.28)–

Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end.
Basic net income or loss per share is computed based on the net income or loss attributable to shareholders of common stock and the weighted-average
number of shares of common stock outstanding during the year. Diluted net income per share has not been presented because there were no potentiallydilutive shares of common stock and the Company and consolidated subsidiaries recorded net loss for the year ended March 31, 2013. Diluted net
income per share had not been presented because there were no potentially dilutive shares of common stock for the year ended March 31, 2012.
Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective years together with theinterim cash dividends paid.

25. 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 automotive market, generalindustrial machinery market, and distribution and aftermarket. Business activities in Japan are controlled by the Company (the Head Office), and overseas
business activities are controlled by the General Manager responsible in each region. Business entities in each region prepare their own plans andstrategies to conduct business activities 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 precision equipment and other products.
2. Calculation methods used for net sales, income 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 the significant accounting policies in Note 2. Inter-segment
sales and transfer are recorded at the same prices used in transactions with third parties.
3. Information as to net sales, income or loss, assets, liabilities, and other items for each reporting segment for the years ended March 31, 2013 and 201279

Reportable segment information for the years ended March 31, 2013 and 2012 are summarized as follows:
Millions of yen

2013

Sales, income andassets or liabilities byreporting segments:
Net sales:
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income (loss)
Segment assets
Segment liabilities
Other items:
Depreciation and amortization
Capital expenditures

Reporting segments
EuropeAsia and other areas

Japan

Americas¥ 193,491¥ 135,385¥ 132,177¥ 78,542

122,442
315,933¥ 9,837¥ 472,374¥ 359,873

3,093
138,478¥ (3,218)¥ 151,710¥ 116,160

4,367
136,544¥ (214)¥ 133,042¥ 78,327¥ 18,789¥ 13,689¥ 7,094¥ 14,665¥ 5,325¥ 7,245

Total

Adjustments

Consolidated¥ 539,595¥–¥ 539,595

7,220
85,762¥ 714¥ 131,394¥ 51,840

137,122676,717¥ 7,119¥ 888,520¥ 606,200(137,122)(137,122)¥ 159¥ (120,058)¥ (49,481)–
539,595¥ 7,278¥ 768,462¥ 556,719¥ 3,633¥ 15,019¥ 34,841¥ 50,618¥–¥ (103)¥ 34,841¥ 50,515

Adjustments

Consolidated

Millions of yen

2012

Sales, income andassets or liabilities byreporting segments:
Net sales:
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income
Segment assets
Segment liabilities
Other items:
Depreciation and amortization
Capital expenditures

Reporting segments
EuropeAsia and other areas

Japan

Americas¥ 209,970¥ 118,010¥ 139,993¥ 75,495¥ 543,468¥–¥ 543,468

124,513334,483¥ 8,146¥ 480,571¥ 328,210

3,124
121,134¥ 588¥ 119,717¥ 83,022

3,752
143,745¥ 4,552¥ 125,735¥ 72,582

6,922
82,417¥ 5,159¥ 106,353¥ 41,799

138,311681,779¥ 18,445¥ 832,376¥ 525,613(138,311)(138,311)¥ 2,279¥ (139,118)¥ (44,481)–
543,468¥ 20,724¥ 693,258¥ 481,132¥ 20,292¥ 18,379¥ 5,952¥ 10,518¥ 4,941¥ 7,892¥ 2,990¥ 18,864¥ 34,175¥ 55,653¥–¥ (119)¥ 34,175¥ 55,534

Adjustments

Consolidated

Total

Financial Section

Thousands of U.S. dollars

2013

Sales, income andassets or liabilities byreporting segments:
Net sales:
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income (loss)
Segment assets
Segment liabilities
Other items:
Depreciation and amortization
Capital expenditures

Reporting segments
EuropeAsia and other areas

Japan

Americas$ 2,057,321$ 1,439,500$ 1,405,391$ 835,109$ 5,737,321$–$ 5,737,321

1,301,882
3,359,203$ 104,593$ 5,022,584$ 3,826,401

32,887
1,472,387$ (34,216)$ 1,613,078$ 1,235,088

46,432
1,451,823$ (2,275)$ 1,414,588$ 832,823

76,768911,877$ 7,592$ 1,397,065$ 551,196

1,457,969
7,195,290$ 75,694$ 9,447,315$ 6,445,508(1,457,969)(1,457,969)$ 1,690$ (1,276,534)$ (526,115)–
5,737,321$ 77,384$ 8,170,781$ 5,919,393$ 199,777$ 145,550$ 75,428$ 155,928$ 56,619$ 77,033$ 38,628$ 159,692$ 370,452$ 538,203$–$ (1,095)$ 370,452$ 537,108

Total

The total amount of segment income is adjusted to operating income of the consolidated statements of operations.
Other than those corresponding to segment assets, adjustments relate to the elimination of inter-segment transactions. The adjustments for segment
assets consist of inter-segment elimination of ¥193,691 million ($2,059,447 thousand) and ¥178,673 million and the corporate assets of the groupof ¥73,633 million ($782,913 thousand) and ¥39,555 million for the years ended March 31, 2013 and 2012, respectively. The corporate assets areinvestments held by the Company, mainly cash and cash equivalents and investment securities.

80

Notes to Consolidated Financial Statements
March 31, 2013

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, 2013 and 2012 are summarized as follows:
Millions of yen

2013
Automotive¥ 356,627

Sale to third parties

Industrial
machinery

Repair andaftermarket¥ 93,746¥ 89,222

Total¥ 539,595

Millions of yen

2012

Sale to third parties

Automotive

Industrial
machinery

Repair andaftermarket¥ 342,889¥ 106,619¥ 93,960

Total¥ 543,468

Thousands of U.S. dollars

2013

Sale to third parties

Automotive

Industrial
machinery

Repair andaftermarket

Total$ 3,791,887$ 996,768$ 948,666$ 5,737,321(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, 2013 and 2012 are summarized
as follows:
Millions of yen

2013
Japan

Americas

EuropeAsia and other areas

Total¥ 177,472¥ 141,571¥ 124,752¥ 95,800¥ 539,595

Millions of yen

2012
Japan

Americas

EuropeAsia and other areas

Total¥ 193,448¥ 124,643¥ 132,969¥ 92,408¥ 543,468

Thousands of U.S. dollars

2013
Japan

Americas

EuropeAsia and other areas

Total$ 1,886,996$ 1,505,274$ 1,326,444$ 1,018,607$ 5,737,321“Americas” includes the U.S.A., Canada and Central and South America. Europe includes Germany, France, the U.K. and others. Asia and otherareas include China, Thailand, India and others. The sales of the “Americas” segment above contain the sales to customers in U.S.A. of ¥122,435
million ($1,301,808 thousand) and ¥106,898 million for the years ended March 31, 2013 and 2012, respectively.
(b) Property, plant and equipment
Property, plant and equipment categorized by country and region within the group at March 31, 2013 and 2012 are summarized as follows:
Millions of yen

2013
Japan

Americas

EuropeAsia and other areas

Total¥ 124,887¥ 73,254¥ 45,349¥ 54,663¥ 298,153

Millions of yen

2012
Japan

Americas

EuropeAsia and other areas

Total¥ 130,657¥ 56,850¥ 40,189¥ 37,986¥ 265,682

Thousands of U.S. dollars

2013
Japan

Americas

EuropeAsia and other areas

Total$ 1,327,879$ 778,883$ 482,180$ 581,212$ 3,170,154

1. Property, plant and equipment in “Americas” in the amount of ¥66,841 million ($710,696 thousand) and ¥50,753 million is located in the U.S.A
at March 31, 2013 and 2012, respectively.
2. Property, plant and equipment in “Europe” in the amount of ¥35,364 million ($376,013 thousand) and ¥30,864 million is located in France at
March 31, 2013 and 2012, respectively.
3. Property, plant and equipment in “Asia and other areas” in the amount of ¥40,719 million ($432,951 thousand) and ¥28,483 million is locatedin China at March 31, 2013 and 2012 respectively.

81

5. Loss on impairment of fixed assets
Loss on impairment of fixed assets by reporting segment is summarized as follows:
Millions of yen

2013
Japan

Americas

EuropeAsia and other areas

Total¥ 1,285

¥ 191

¥ 670

¥ 692

¥ 2,838

Thousands of U.S. dollars

2013
Japan

Americas

EuropeAsia and other areas

Total$ 13,663$ 2,031$ 7,124$ 7,357$ 30,175

6. Significant gain on bargain purchase
The Company increased its ownership in NTN-SNR ROULEMENTS, a consolidated subsidiary, to 100% by acquiring an additional 17.7% ownershipinterest on March 27, 2013. This resulted in bargain purchase in the amount of ¥1,929 million ($20,510 thousand) recorded in the “Japan” segment.

26. Business Combination
1. Company name and business description of acquired company, legal description of business combination, trade name after business combinationand main purpose for business combination(1) Company name and business description of acquired company
Acquired company: NTN-SNR ROULEMENTS
Business description: Manufacture and sale of automotive, industrial machinery, aerospace related products(2) Date of the business combination
March 27, 2013
(3) Legal description of business combination
Acquisition of shares from minority shareholder(4) Company name of acquired company after business combination
There was no change in company name after business combination(5) Main purpose for business combination
The Company additionally acquired 17.7% of the shares of NTN-SNR ROULEMENTS to expand its business in Europe and to strengthen the
consolidation of group management. As a result of the acquisition, the Company owns 100% of its shares.
2. Overview of accounting treatment applied

3. Matters related to additional acquisition of the subsidiary’s shares(1) Acquisition cost of acquired company
Acquisition cost in cash and cash equivalents: ¥3,622 million ($38,511 thousand)(2) Amount of gain on bargain purchase and reason
Gain on bargain purchase in the amount of ¥1,929 million ($20,510 thousand) was recognized. The reason for recognition was that the additional
acquisition cost was less than the reduction amount of minority interest.

82

Financial Section

The acquisition of the shares was accounted for as transaction under common control in accordance with “Accounting Standard for Business
Combinations” (ASBJ Statement No.21 issued on December 26, 2008) and the “Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (ASBJ Guidance No.10 issued on December 26, 2008).

Report of Independent Auditors

83

Investor Information
As of March 31, 2013

Head Office
NTN Corporation
3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan

Investor Relations

Shareholders by Category
Financial Instruments Firms 3.22%

Foreign Owners 15.97%

Corporate Communications Dept.
Phone: +81-6-6449-3528
Fax: +81-6-6443-3226
E-mail: irmanager@ntn.co.jp

NTN on the Internet
NTN’s Website offers a variety ofcorporate and product information,
including the latest annual reportand financial results.
http://www.ntn.co.jp

Financial Institutions
42.73%
Individuals 22.62%

Other Corporations 15.44%

Common Stock (As of March 31, 2013)
Authorized 1,800,000,000 shares
Issued and outstanding
532,463,527shares

Tokyo Stock Price Range
Stock Price (Yen)

Number of Shareholders

Nikkei Stock Average (Yen)500

15,000250

10,000(As of March 31, 2013)33,141

Transfer Agent for Common Stock
Mitsubishi UFJ Trust Banking
Corporation
4-5, 1-chome, Marunouchi,
Chiyoda-ku,
Tokyo 100-8212, Japan

Stock Exchange Listings
First Section of Tokyo Stock
Exchange (#6472)
First Section of Osaka Securities
Exchange (#6472)

0Independent Accountants

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
11
12
13
High

Ernst & Young ShinNihon LLC

Low

Closing
Opening

Opening
Closing

5,000

Nikkei stock average

General Meeting of Shareholders
The General Meeting of Shareholders
was held on June 25, 2013 in Osaka

Stock Price Range in the Fiscal
Year Ended March 31, 2013
High: ¥355
Low: ¥131

Monthly Volume Traded (Million Shares)
300
250
Company and Investor
Information

200
150
100
50
0

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
11
12
13

84

Global Network
As of March 31, 2013

Consolidated Subsidiaries

Paid-in
CapitalHolding as
percentage (%)

20 NTN-BOWER CORP.

US. $67,000,000

100

(100)

¥480,000,000

100

21 NTK PRECISION AXLE CORP.

US. $15,000,000

60

(60)

US. $20,000,000

62.5(62.5)

CAN. $20,100,000

100

US. $700,000

100

BRL 35,420,000

100

EURO14,500,000

100

Consolidated Subsidiaries
1 NTN BEARING SERVICE CO., LTD.
2 NTN KONGO CORP.

Paid-in
CapitalConsolidated Subsidiaries¥1,000,000,000100

22 NTA PRECISION AXLE CORP.

3 NTN ENGINEERING PLASTICS CORP.

¥100,000,000

100

23 NTN BEARING

4 NTN POWDER METAL CORP.

¥400,000,000

100

CORP. OF CANADA LTD.
24 NTN-SUDAMERICANA, S.A.

5 NTN MIKUMO CO., LTD.

¥450,000,000

Holding as
percentage (%)

100
25 NTN do Brasil Producão de

6 NTN CASTING CORP.

¥450,000,000

100

Semi-Eixos Ltda.

7 NTN KINAN CORP.

¥450,000,000

100

26 NTN WÄLZLAGER¥3,000,000,000

100

8 NTN MIE CORP.
9 NTN OMAEZAKI CORP.

¥266,000,000

97.4

10 NTN KAMIINA CORP.

¥725,000,000

80(EUROPA) G.m.b.H.

(30)

27 NTN KUGELLAGERFABRIK(DEUTSCHLAND) G.m.b.H.
28 NTE Gardelegen G.m.b.H.

EURO 18,500,000

100EURO 1,500,000100

11 NTN FUKUROI CORP.

¥1,500,000,000

100

29 NTN Antriebstechnik G.m.b.H.

EURO 50,00075

12 NTN HOUDATSUSHIMIZU CORP.

¥1,250,000,000

100

30 NTN BEARINGS (UK) LTD.

STG. £2,600,000

100

13 NTN AKAIWA CORP.

¥1,250,000,000100

31 NTN Transmissions Europe

EURO76,531,592

100

14 NTN NOTO CORP.

¥1,000,000,000100

32 NTN TRANSMISSINONSEURO 9,000,000

100

(100)

TRY 12,000,000

100

(1)

EURO11,359,542

100

15 NIPPON KAGAKU YAKIN CO., LTD.
16 NTN USA CORP.

¥100,000,000

EUROPE CREZANCY

98.069i(0.04)i

33 NTN MAN SA OTOMOT V

US. $131,120,000100

17 NTN BEARING CORP.OF AMERICA

US. $24,700,000

100

(100)

18 NTN DRIVESHAFT, INC.

US. $54,580,000

100

(100)

US. $24,330,000

100

(100)

LiMiTED Ş iRKETi

34 NTN-SNR ROULEMENTS

19 AMERICAN NTN BEARING

MFG. CORP.

30
31 32

27 29 28
26
34

55

33
50

59 43
51

58 60
47

40
48 36

41

37

49
46
52

53

38
39

42

35
44 45

54

85

Paid-in
CapitalConsolidated Subsidiaries

Holding as
percentage (%)

35 NTN BEARING-SINGAPORE(PTE) LTD.

S. $36,000,000100

36 NTN CHINA LTD.

HK. $2,500,000100(0.969)Consolidated Subsidiaries

Paid-in
Capital49 NTN-RAB (CHANGZHOU) CORP.

US. $28,440,000

Corporation
51 Nanjing NTN Corporation

BAHT780,000,000

100(99.999)

BAHT1,311,000,000

99.999(99.999)

BAHT 400,000,00080(0.02)

38 NTN MANUFACTURING(THAILAND) CO., LTD.
39 NTPT CO., LTD.

52 TUNG PEI INDUSTRIAL CO., LTD.
53 TAIWAY LTD.

INR 1,875,000,000

93.333(0.003)54 UNIDRIVE PTY. LTD.

41 NTN BEARING INDIA

PRIVATE LIMITED

INR 300,000,000

100

SDN.BHD.

44 PT. NTN BEARING INDONESIA

M. $10,000,000

60

WON500,000,000

100

US. $7,300,000

100

(0.1)

DRIVESHAFT CO., LTD.

(60)

(50)
(85)

NT. $1,257,232,620

27.35

NT. $160,000,000

36.25

A. $5,000,000

40

US. $6,000,000

40(6.67)

56 ASAHI FORGE OF AMERICA CORP.

US. $7,100,000

28.2(28.2)

57 Seohan-NTN Driveshaft USA CORP.

US. $6,000,000

49

58 Nanjing Puzhen NTN Railway Bearing(100)

Co., Ltd.

45 PT. NTN MANUFACTURING

INDONESIA

50
100

55 BEIJING NTN-SEOHAN

42 NTN BEARING-MALAYSIA

43 NTN KOREA CO., LTD.

US. $73,800,000
US. $160,000,000

Affiliated Companies Accounted for by the Equity Method

40 NTN NEI Manufacturing India

Private LTD.

100

50 NTN-LYC (Luoyang) Bearing

37 NTN BEARING-THAILAND

CO., LTD.

Holding as
percentage (%)

US. $17,250,000

100

US. $216,000,000

100

US. $166,500,000

95(15.72)

US. $12,500,000

60

(12)

59 Seohan-NTN Bearing CO., LTD.

(0.006)

US. $6,600,000

40

WON 71,200,000,000

49

US. $1,460,000

25

(40)

60 NTN-DONGPAI (Shanghai) Bearing

46 NTN (CHINA) INVESTMENTCORPORATION
47 SHANGHAI NTN CORP.

Sales Corp.

1. Of the above consolidated subsidiaries, NTN USA CORP., NTN DRIVESHAFT, INC.,
NTN-BOWER CORP., NTN TRANSMISSIONS EUROPE, and SHANGHAI NTN CORP. are
specified subsidiaries.
2. Figures in curved brackets under “Holding as percentage” indicate the percentage of indirectly
owned holdings, and are included in the total holding.

48 GUANGZHOU NTN-YULONDRIVETRAIN CO., LTD.

(25)

23
16
19 17
22 21
18
20
56
57

24

Global Network

25

14
12
10

6
13

2
7

8
4 11
15 3
9
5

1

86

3-17, 1-chome, Kyomachibori,
Nishi-ku, Osaka 550-0003, Japan
http://www.ntn.co.jp

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