Business Report for Fiscal Year 2016
(From April 1, 2015 to March 31, 2016)
Stock code: 6995

To Our Shareholders
Review of Operations
Tokai Rika is grateful to its shareholders fortheir continued support.
In this business report, we present theCompany's business results for fiscal year
2016 (from April 1, 2015 to March 31, 2016)
and report on the challenges and opportunities
ahead.

Kenji Miura
President
1

During the year under review, while economic growth slowed
in China and certain other emerging economies, the U.S.
economy experienced robust personal consumption andeconomic growth remained firm in Europe. The moderate
recovery of the Japanese economy continued despite
weakness in personal consumption. As a result, the world
economy maintained moderate growth.
In the automotive industry, although sales volumes in certain
emerging economies were lower than in the previous year, they
increased in the U.S. where personal consumption was brisk,
in China where the vehicle acquisition tax was reduced, and inEurope where the economic recovery continues. In Japan,
sales volumes were lower than in the previous year because of
the continuing impact of the consumption tax increase, in
addition to an increase in tax on compact cars.
In these circumstances, we continued initiatives to ensure
quality throughout the Group, reinforce manufacturing globally,
develop next-generation products, establish a strong earnings
base, and strengthen the Group’s global sites.
For quality and manufacturing, we applied the latest
activities implemented in Japan to global sites and worked toshare and entrench them. Meanwhile, certain products
manufactured by the Company in the past were found to be
defective, resulting in a recall by the customer. In order toprevent recurrence of major defects, we are strengthening
quality assurance systems.
Regarding new product development, we received
commendations from customers in diverse fields. For the
automatic transmission shift lever, the customer and theCompany worked together based on the Toyota New Global
Architecture (TNGA) concept and we simplified the assembly
process and realized standardization across all car models
and regions. The newly developed automatic transmission shift
lever has been adopted for the Lexus RX of Toyota Motor
Corporation. We also applied the same approach to steeringcolumn peripheral components, such as lever combination
switches and achieved enhanced performance, smaller size,and optimization of the components layout. The La Lock II
developed by the Company is a unique anti-theft electric homedoor lock, which can be operated by a simple touch of thefront door handle. This lock has been adopted for the Sincé
Vietrois and Sincé Hugmi homes of Toyota Housing
Corporation. In addition, we built a new wind tunnel testing
facility for the development of more competitive door mirrorsthat meet customers’ requirements for greater quietness. With

regard to strengthening of global sites, we established a newcompany in Mexico and are preparing for the start of operationin the fall of 2016. All these initiatives are designed tocontribute to establishment of a strong earnings base.
Regarding financial results for the year under review, net
sales increased 24,006 million yen or 5.3% year on year to476,202 million yen. This increase reflected increased auto
sales volumes in the U.S. where personal consumption was
brisk, in China where the government reduced the vehicleacquisition tax, and in Europe where the economic recovery
continued, whereas Japan was affected by the increased tax
on compact cars as well as the protracted decline in sales
volumes following the consumption tax hike. With respect toprofit, despite an increase in fixed costs, such as labor costs

and depreciation, a weaker yen and the impact of initiatives
across the Group to reduce costs led to a 3,416 million yen or
11.0% increase in operating income to 34,608 million yen.
Ordinary income increased 2,431 million yen or 7.5% to 34,673
million yen because of an increase in operating income
despite an increase in non-operating expenses. Profit
attributable to owners of the parent decreased 14,138 million
yen or 71.7% to 5,591 million yen owing to an increase inprovision for product warranties.
The Company paid out an interim dividend of 30 yen per
share in November 2015. The year-end dividend was 30 yen
per share. As a result, total dividends for the year under review,
including the interim dividend, amounted to 60 yen per share,
2 yen higher than for the previous year.

Challenges and Opportunities
With regard to the world economy, certain emerging
economies, notably China, where investment and production are
slowing, are likely to continue to decelerate. On the other hand,
expectations are that economic expansion driven by domestic
demand will continue in the U.S. and personal consumption willremain robust in Europe. The Japanese economy is expected toexperience a moderate recovery as the labor market andpersonal incomes improve. Therefore, the world economy isexpected to continue growing at a modest pace.
In the automotive industry, auto sales volumes are expected
to be robust in the U.S. where economic expansion iscontinuing and in China where the impact of the reduction in
the vehicle acquisition tax remains a positive factor. Auto sales
volumes in Europe are also expected to rise moderately. Some
forecasters predict that auto sales volumes in Japan will also
increase. Thus, a moderate increase in worldwide auto sales
volumes is expected to continue.
The business environment of the Company is expected to be
increasingly challenging despite expansion of the worldwide
automotive market, and in view of the greater demand for
quality, intensifying price competition, and other factors. The
evolution of cars brought about by new technologies, such as
autonomous driving, preventive safety, and IoT, requires theCompany to also further evolve.
In these circumstances, the Group will continue with its
initiatives, namely, those to ensure quality throughout theGroup, reinforcement of manufacturing globally, developmentof next-generation products, establishment of a strong
earnings base, and strengthening of the Group’s global sites.
Specifically, in view of the extraordinary loss recorded in theyear under review because of a quality problem, adhering to
the principle of putting quality first, we will focus on fostering
human resources capable of supporting quality at each globalsite and thoroughly implement initiatives to prevent occurrenceof major defects, including at suppliers. With regard to nextgeneration products, we will accelerate development of
products and reinforce key technologies in step with theevolution of automotive vehicles centering on advanced safety
and computerization. Over the medium- to long-term, we
intend to pursue development of new human machineinterface (HMI) functions that will contribute to enhancement ofcommunication between people and cars to address new userneeds brought about by autonomous driving. In addition, we
will implement a strategy attuned to the market environment ofeach site in the Group’s global network and promote fostering
human resources who can compete in a global setting. Alongwith these measures, we intend to further enhance efficiency ofmanagement resources in order to ensure profit while securingresources to continue and reinforce our initiatives for future
growth.
In these endeavors, we request our shareholders to favor us
with their continued support and guidance.
2Consolidated Financial Highlights
Net Sales(100 million yen)

Business Performance by Geographic Region
Ordinary Income and Net Income

Ordinary Income

5,000

4,378 4,521

4,000

4,762

350

323

210

2,000

140

1,000

70

0

0

172

149

2013

2014

2015

Net Income per Share

2016

(Yen)

250

55

51

2012

2013

2014

2015

Return on Equity (ROE)2016

190.77

9.3

Asia

Net sales increased 17,359 million yen (17.4%)

Composition of Net Sales

100

6
89.95

5.1
3.1

4

2.6

61.36

57.44

2

50

3

2012

2013

2014

2015

2016

0

2012

2013

year on year to 116,948 million yen. Operating
income increased 2,930 million yen (32.1%) to

21.9%

12,068 million yen owing to increased sales

North America

Net sales rose 14,835 million yen (13.8%) year

despite an increase in fixed costs such as
depreciation and amortization.

2014

2015

2016

on year to 121,978 million yen. Operating income

100
1,000
50

0

22.8%

Europe andelsewhere

Net sales decreased 1,326 million yen (4.7%)

5.0%

0

2014

2015

2016

1,200

120

900

90

600

60

300

30

0

2014

2015

2016

2014

2015

2016

2014

2015

2016

2014

2015

2016

0

2014

2015

2016

100

1,350

75
900

increased 3,475 million yen (55.5%) to 9,740
million yen owing to increased sales andComposition of Net Sales

0

150
2,000

despite rationalization efforts and the impact of a
weaker yen.

Operating Income (100 million yen)
200

3,000

income decreased 3,492 million yen (23.6%) to

50.3%

Composition of Net Sales

8

150

year on year to 268,659 million yen. Operating
11,280 million yen owing to a decrease in sales

217.45200

Net sales decreased 10,123 million yen (3.6%)

(%)

9.3

10

Composition of Net Sales

197

81

2012

Net Sales (100 million yen)

346

245

3,195
3,000

322

Net Income

Japan

280

3,719

Results by Geographical Region(100 million yen)

50
450
25

rationalization efforts.
0

0

2014

2015

2016

300

20

250

16

year on year to 26,763 million yen. Operating200

income decreased 722 million yen (42.5%) to

150

975 million yen.

100

12
8
4

50
0

0

2014

2015

2016

*Net sales include intersegment sales.

4Topics

Tokai Rika’s Product Fields

Human Machine Interface Systems, notably switches to accurately relay human commands, security systems to prevent
unauthorized access to automobiles, and safety systems to protect human lives. Wherever people and automobiles intersect,
we deliver comfort, safety and security by fully utilizing the underlying electronics technologies.

Highly Evaluated by Customers in Diverse Fields

Groundbreaking Ceremony at a Site for TRMX,
a Subsidiary in Mexico

In November 2015, at the line-off ceremony for the new Lexus RX held at
the Miyata Plant of Toyota Motor Kyushu, Inc., the automatic transmission
shift lever and the front seatbelt developed by Tokai Rika received projectawards in the technology category and the cost category, respectively.

In November 2015, TOKAI RIKA MEXICO, S.A. DE C.V. (TRMX) held agroundbreaking ceremony in Nuevo León, Mexico, at the site where its
plant will be constructed. There was news coverage by Mexican media,
indicating high interest.

Switch/Interface

Security

Switches/Human Machine Interface Systems

Security Systems

In December 2015, at the line-off ceremony for the new Prius held at the
Tsutsumi Plant of Toyota Motor Corporation, the shift-by-wire shifter ofTokai Rika received a project award in the cost category.

TRMX, our first base in Mexico established in June 2015, will produce
Tokai Rika’s principal products, including switches, key sets, and seatbelts.
Preparation is underway for the start of operation in fall 2016. The aim is tostrengthen the fundamentals of the business in North America where themarket is expected to show sustained growth.

Precise operability accurately conveying the drivers' commands, simplicity, and functional elegance are the hallmarks of our products.

Sophisticated mechanical and electronic anti-theft
functions ensure both security and ease of use.

At the global supplier conference of Toyota Motor Corporation in February
2016, Tokai Rika received the Toyota New Global Architecture (TNGA)
Promotion Superior Award for the second consecutive year. TNGA is partof Toyota’s initiatives to create ever-better cars. The Company’s contribution to promotion of TNGA through the enhancement of functions and cost
reduction of steering peripheral components was recognized.

Completion of Construction of a new building at
Toyota Plant

We also received the Parts Standardization Award (Service Parts), which ispresented to suppliers whose achievements are outstanding with respect toreduction of types and cost through development of standardized components, and the Cost Reduction Superior Award, which is presented to suppliers that greatly contributed to cost reduction activities.

In August 2015, construction of a new building was completed at the
Toyota Plant where seatbelts are produced. Emphasizing efficiency oflogistics, parts are produced on the first floor and assembly is conductedon the second floor of the building.
We are reestablishing the Toyota Plant step by step. Completion of the newbuilding will enable us to strengthen seatbelt production systems to proactively and flexibly meet a wider range of customer needs.

Smart Key Portable Device
and Emergency Key

Electro Shiftmatic

Multi-Function Switch

Touch Pad

Remote Key and Receiver

SafetyElectronics & Others

Safety Systems

Electronics & Others

Our safety devices include seatbelts to protect drivers and passengers in the event ofcollision, stylish steering wheels optimized
for excellent handling, and mirrors thatenhance visibility.

Housing Facilities and Equipment

Seatbelt(Selectable Force-Limiter)5

Automotive Accessories

Door Mirror(With Blind-Spot Monitoring Function and Glare Protection)

Steering Wheel(Hologram Decoration)*The steering wheel business is co-operated with Toyoda Gosei Co., Ltd.

Automotive Electronics
Products

Applying technologies originallyemployed in automotive
applications, we offer convenient
products meeting today's
housing-security needs.
La Lock Ⅱ Anti-Theft Electric Door Lock

In addition, Tokai Rika received various awards from Daihatsu Motor Co.,
Ltd., Suzuki Motor Corporation, Mitsubishi Motors Corporation, andMazda Motor Corporation. Our overseas subsidiaries also received commendations from their customers. Customers highly evaluate our technological capabilities and manufacturing capabilities in diverse fields.

Immobilizer

We are a source of vehicle
décor with design flair.
These products allow
owners to enhance theappeal of their vehicles
through customization.

Power Supply ECU

We o f f e r p r o d u c t s f o r
function control and status
detection as well as various
types of connectors in
response to the ongoing
computerization of
automobile controls.
6

Consolidated Financial Statements

Stock Information/Dividends

Consolidated Balance Sheets (Millions of yen)

Stock Information (as of March 31, 2016)

As of March
31, 2016

As of March
31, 2015

197,161

188,464

Cash and deposits

40,00925,828ASSETS
Current assets

Notes and accounts receivable

60,13061,353

Electronically recorded monetary claims-operating

10,625

9,833

Marketable securities

14,51637,234Inventories

32,65635,745

Other current assets

39,221

18,468

166,182

186,731

Tangible fixed assets

98,548104,147

Intangible fixed assets

2,480

2,059

Inventories and other assets

65,15380,523

Investment securities

40,11652,205

Other

25,03628,318

Total assets

363,343

375,195

Fixed assets

As of March
31, 2015

114,365
37,80318,083
2,623
55,85527,227807
26,420141,593108,918
40,407
17,383
3,437
47,691
27,0601,658
25,402
135,978

204,069
22,85625,600161,071(5,458)
6,509
4,078
1,456
973
74
11,097
221,750
363,343

204,60722,85625,432
162,175(5,856)
22,769
4,778
9,268
8,723
239
11,599239,216
375,195

Consolidated Statements of Income (Millions of yen)

Consolidated Cash Flow Statements (Millions of yen)

Year ended
Year ended
March 31, 2016 March 31, 2015

Year ended
Year ended
March 31, 2016 March 31, 2015

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary gains
Extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of the parent
7

LIABILITIESCurrent liabilities
Notes and accounts payable
Electronically recorded obligations-operating
Short-term borrowings
Other current liabilities
Long-term liabilities
Long-term borrowings
Other long-term liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Less: Treasury stock, at cost
Accumulated other comprehensive income
Net unrealized loss on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

As of March
31, 2016

476,202403,372
72,82938,221
34,6081,842
1,777
34,673
161
23,115
11,7196,481(1,277)
6,515
924
5,591

452,195
384,525
67,67036,47831,192
1,618
568
32,24268
2,716
29,593
8,825(168)
20,936
1,206
19,730Cash flows from operating activities

20,747

40,571

Cash flows from investing activities(22,347)(36,413)

Cash flows from financing activities(7,713)(11,375)

Effect of foreign currency translation
adjustments on cash and cash equivalents(1,805)

1,265

Composition of Shareholders by Shareholder Type

Total number of shares
Total number of shares authorized to be issued:
Number of shares issued and outstanding:

200,000,000
94,234,171
6,795

Number of shareholders:

Treasury stock

3.2%

Major shareholders (Top 10)

Toyota Motor Corporation
Denso Corporation
Japan Trustee Services Bank, Ltd. (Trust
Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
The Dai-ichi Life Insurance Company, Limited
Japan Trustee Services Bank, Ltd. (Trust
Account 9)
Tokai Rika Employee Stock Ownership Plan
CBNY-GOVERNMENT OF NORWAY
State Street Bank and Trust Company 505223
State Street Bank and Trust Company 505103

29,367
8,839

32.20
9.69

3,007

3.29

2,605
2,275

2.85
2.49

1,102

1.20

1,061
1,052
1,028
888

1.16
1.15
1.12
0.97

1.1%

Individuals

EquityNumber of shares(thousands of shares) participation (%)

Shareholder

Securities firms

9.5%
Total number of shares

Foreign entities

22.9%

94,234,171

Corporations in
Japan

44.8%

Financial institutions

18.5%

Note: The Company holds 3,033 thousand shares of treasury stock but is excluded
from the major shareholders stated above.

Cash Dividends(Yen)

Full year

70

58

60

40

20

Net increase (decrease) in cash andcash equivalents(11,118)(5,952)

10

Cash and cash equivalents at beginning of year

50,432

56,3850Cash and cash equivalents at end of year

39,31450,432At the 69th annual general meeting of

60

shareholders held on June 9, 2016, theCompany's proposal to pay the year-end

46

50

30

Interim30

dividend to shareholders on the record

32

14

14

2012

2013

20

2014

25

2015

date of March 31, 2016, was approved.

30

2016

1

Year-end cash dividend

30 yen per share

2

Effective date for year-end dividend(payment commencement date)June 10, 20168

Company Information (as of March 31, 2016)
Global Network

Corporate overview

Tokai Rika is establishing globally standardized business processes in a manufacturing system consistentfrom development through to production and quality assurance.

Company name:TOKAI RIKA CO., LTD.
Establishment:
August 30, 1948

Gifu Pref.
ENA TOKAI RIKA Co., Ltd.

Paid-in capital:
22.8 billion yen

NSK Co., Ltd.

Tohoku Engineering Center

Head Office &Plant

RIKASEIKI CO., LTD.

Osaka Office

Number of employees:
17,720 (consolidated)

Tokai Rika Create Corporation
TOKAI RIKA
ADVANCED CO., LTD.

Kumagaya Office
Hachioji Office

Hiroshima Office

TOKAI RIKASERVICE Co., Ltd.

Toyota Plant

6,061 (non-consolidated)

Aichi Pref.
Hagi Plant

Otowa Plant

TOKAI RIKA
ELETEC CO., LTD.

MIROKU TECHNO WOOD Co., Ltd.

Head office:3-260 Toyota, Oguchi-cho, Niwa-gun, Aichi 480-0195, Japan
Tel: +81-587-95-5211

SANDENZAISHA CO., LTD.

Tokai Rika Belgium N.V.

TRCZ s.r.o.

Wuxi Risho Technology Co., Ltd.

Sales of automotive parts

Production of automotive switches,seat belts, and push start systems

Production of seat belts and molds

Consolidated subsidiaries:
38
Affiliates accounted for by the equity method:
5

Tianjin Tokairika Automotive Parts Co., Ltd.
Production of automotive switches
TRMI,Inc.

Production of seat belts

Production of
automotive switches

Production of keys, locks, shift levers,
and automotive switches

TGR Technical Center,LLC
Testing and evaluation

TRB Limited
TOKAI RIKA (THAILAND) CO., LTD.
Production of automotive switches,
keys and locks
MINDARIKA PRIVATE LIMITEDTAC Manufacturing,Inc.
Production of steering wheels,keys and locks, and shift levers

Production of automotive switches

TRAM,Inc.
Holding company in North America,
sales, technology development

TOKAI RIKA MEXICO, S.A. DE C.V.
Production of automotive swiches,
keys and locks, and seat belts

TOKAI RIKA MINDA INDIA Private Limited.

TRIN,Inc.

Production of seat belts, keys and locks

Production of automotive switches

Rica Auto Parts Co., Ltd.
PT.TOKAI RIKA INDONESIA
Production of automotive switches, keys and locks

9

Kenji Miura

Senior Managing Director Yoshihiro Tanaka*Executive Vice President Yoshihiro Obayashi

Managing Director Kazuhiko Noguchi*Executive Vice President Tadashi Wakiya

Managing Director Toshimasa Yamamoto

Senior Managing Director Masaharu Tanino

Director

Kiyomune Hayashi

Senior Managing Director Kouji Buma

Director

Yasushi Yamanaka

Senior Managing Director Koki Sato
Audit & Supervisory
Board Member

Mikihiro Mori

Audit & Supervisory
Board Member

Takahiko Ijichi

Audit & Supervisory
Board Member

Masakazu Goto

Audit & Supervisory
Board Member

Kiyotaka Ise

Audit & Supervisory
Board Member

Yoshinori Yamada

Corporate Officer

Shigeru Hayashi

Corporate Officer

Masato Hotta

Corporate Officer

Isaki Sugiura

Corporate Officer

Hiroshi Nishida

Corporate Officer

Kazuhiro Ikai

Corporate Officer

Yasutaka Watanabe

Corporate Officer

Toshiki Nogami

Corporate Officer

Hideki Ono

Corporate Officer

Toshiki Akita

Corporate Officer

Naohiko Inoue

Corporate Officer

Koki Imaeda

Corporate Officer

Masahiko Sato

Corporate Officer

Masami Nagaya

Note: Persons marked with an asterisk (*) are representative directors.

Production of automotive switches,
keys, locks and shift levers

Thai Seat Belt Co., Ltd.
Production of seat belts*President

TRQSS,Inc.

Foshan Tokairika Automotive Parts Co., Ltd.

Production of
automotive switches

Executive Management (as of June 9, 2016)

TOKAI RIKA ASIA CO.,LTD.

PT.TOKAI RIKA SAFETY INDONESIATRP,Inc.

TRBR INDUSTRIA E COMERCIO LTDA.

Holding company in ASEAN

Production of seat belts

Production of
automotive switches

Production of automotive switches
and shift levers

Major consolidated subsidiaries
Major affiliates
Other offices

10Shareholder Information
Business year
Annual general meetingof shareholders
Record date for
distribution of surplus
Number of sharesconstituting one unit of stock
Stock code
Transfer agent
Agency administration
officeFor inquiry/postal
address

Listing stock
exchanges
Method of public
noticeFrom April 1 to March 31 of the following year
June

Visit Our Website

Year-end dividend: March 31
Interim dividend: September 30
100 shares

The Tokai Rika Website provides a range of

6995
Sumitomo Mitsui Trust Bank, Ltd.
1-4-1 Marunouchi, Chiyoda-ku, Tokyo
Stock Transfer Agent Department, Sumitomo Mitsui Trust Bank, Ltd.
3-15-33 Sakae, Naka-ku, Nagoya
Stock Transfer Agent Department, Sumitomo Mitsui Trust Bank, Ltd.
2-8-4 Izumi, Suginami-ku, Tokyo 168-0063
Tel: 0120-782-031 (toll free in Japan)
Website:http://www.smtb.jp/personal/agency/index.html
Tokyo Stock Exchange, Nagoya Stock Exchange

to visit us online.

information on the Company. Public notices arealso posted on the website. We encourage you

http://www.tokai-rika.co.jp/en/

Electronic public notice at http://www.tokai-rika.co.jp/
If electronic public notice is unavailable, the Company
shall post a public notice in the Nihon Keizai Shimbun.

Notice1. Receipt of uncollected dividends
Please contact the transfer agent Sumitomo Mitsui Trust Bank, Ltd.
Please note that under the Articles of Incorporation of the Company,
the Company is not obliged to pay dividends that are unclaimed forthree full years from the date on which they first became payable. You
are requested to collect your dividends at your earliest convenience.
2.	Address change, purchase and sale of shares constituting lessthan one trading unit, and specification of the method of receiving
dividends
Please contact the securities firm with which you have your securities
account. If you have a special account, please contact Sumitomo
Mitsui Trust Bank, Ltd., which is the agent for managing special
accounts.

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