New Medium-term Management Plan

“Revival 2014”
February 18, 20132013/2/18

ＮＴＮ Corporation

1Contents
I. New Medium-term Management Plan “Revival 2014”- Main policies“Emergency Measures”“Centralization of Management Resources”“Structural Reform”“Expansion of New Product and New Business”- Target value in 2 years

II. Objectives and Effects of “Revival 2014”
This presentation and comments made in this conference or during the following Q&A session include forward-looking
statements about management expectations for future performance and future business strategies. These statements
represent the best judgment of the management of the company based on the information currently available. However,there can be no assurance that future results will meet any expectation, estimate or projection conveyed by thesestatements or comments. Actual results may differ materially from management projections depending on various
factors such as changes in product demand, exchange rates, interest rates and contingent liabilities.

2013/2/18

2I. New Medium-term Management Plan "Revival 2014"[Basic Policy]
Reform business structure to generate profit[Main Policies]
Short-term measure to generate profit“Emergency Measures”

Mid-term business structural reform“Structural Reform”

Centralization of resources to priority fields“Centralization of Management Resources”

Towards further growth“Expansion of New Products and New Business”[Applicable Period]
April 2013 to March 2015 (2 year period)
2013/2/18

3

New Medium-term Management Plan "Revival 2014"
FY2013

FY2012

1H

2H

1H

2H

Medium-term management plan “Global Advance2013”

FY2014

1H

・・・・・

2H

100thAnniversary
SinceFoundation"Revival 2014"“Reform business structure to generate profit”
Centralization of Management Resources(Centralization of resources to priority fields)
Structural Reform(Mid-term business structural reform)
Expansion of New Products and New Business(Towards further growth)

2012/102013/2/18

2013/42013/10

2014/4

2014/10

2015/4Company with a high international presence

New Medium-term Management Plan

Next stage of growth

Response to emergencies + further growth

Emergency Measures(Short-term measureto generate profit)

FY20184

Main Policy-1 “ Emergency Measures”
Emergency Measures
Implemented from FY2012 2H as short-term measures

Forecast of FY2012 and Schedule of “Revival 2014”
Main Policies

FY2012 (forecast)“Revival 2014”

Reduce personnel costs(reduction in salaries,bonuses, etc)

Approximately 2 billion
yen reduction planned

Approximately 2.8 billion
yen reduction planned

Reduce fixed costs(reduction in expenses
across all departments, etc)

Approximately 3.5 billion
yen reduction planned

Approximately 7.4 billion
yen reduction planned

Limit capital expenditure

Approximately 48 billion
yen planned

Limited to 51 billion yen
under depreciation costs
over 2 years

Reduce inventories

Approximately 157 billion
yen planned

Reduction of up to 145
billion yen planned in 2years

Abolish, sell assets

Approximately 2.5 billion
yen planned-2013/2/18* Exchange rate of ”Revival 2014” is 1US$=85 yen, 1Euro=110 yen. 5

Main Policy-2 “Centralization of Management Resources”

Centralization of Management Resources
Centralization of resources to priority fields
Management resources have been focused on priority topics aspart of the following issues(1) Greater profits in the Automotive Business(2) Sales expansion for the Aftermarket/Distributor(3) Strengthening Industrial Machinery Business Globally

FurthergrowthFocus on priority topics

(1)

(2)

(3)

Revival 20142013/2/18

62-(1) Greater Profits in the Automotive Business-1

Improvements to the profit ratio of automotive productsReview of design and manufacturing methodsDesigns focusing on functionality andease-of-production
Standardization of parts, integrated
varieties and cheaper materials

Change production methods toassemble standardized parts

Designs chiefly focusedon cost reductions

Improve sales price of low-profit products

Shift to focus on profits from expansionof sales and market share
Gearbox for
Electronic brake

Early release to market ofhigh-value added products
Module products, system products
2013/2/18

Link weight-saving
and fuel efficiency

Press Cut Spline
Hub Joint

Directly linked to greater
profits from products72-(1) Greater Profits in the Automotive Business-2

Improvements to the profit ratio of automotive products
Expand production in areas oflocal demand in growth markets
Reduction in exports
from Japan

Automotive
6,000

Operatingmargin (%)

2.1%

Net sales(100 5,000
million yen)

0.3%

1.0%
-1.0%

-2.5%

Expand local procurement of steel
and pre-process parts
Effects of personnel
cost structural reform

4,000

3,510

3,650

3,820

3,000

-7.0%

2,000

2013/2/18

0-3.0%-5.0%-9.0%-11.0%

1,000

Increase operating margin
to 2.1% by FY2014

3.0%-13.0%FY2012 FY2013 FY2014-15.0%82-(1) Greater Profits in the Automotive Business-3
Utilization of local materials and greater integrated
production of parts from pre-process
Expand utilization of local steel
Utilization of materials from
China, Korea and other countries

Local procurement ofpre-process parts
Establish relations with new
local manufacturers

Utilization of FTA, etc
Trend in local
procurement rateEurope

Raise the local procurement
rate up to 90% in FY2014

Partnerships withsuppliers
NTPT(Thailand)

CVJs

NTA (USA)

Hub bearingAmericas

GlobalAsia

China

2013/2/18

Improve profits of theAutomotive Business92-(2) Sales Expansion for the Aftermarket/Distributor-1
Focusing on greater sales in high-profit businesses
Global Supply Chain (Image)Strengthen the global supply chain

Sales officein China

Sales officein Europe

Establish central aftermarket
warehouse in Japan

Sales officein ASEAN

Reduction in global
stock through sharing

Japanplant

Quicker deliveries,
stable supply

2013/2/18(100 million yen)

Set up dedicated production lines
for aftermarket products
Specialized for individual products
and high-diversity, small-lot products

Sales officein Americas

Central aftermarket
warehouse

Net sales of Aftermarket/ Distributor(comparedto FY2012)+13%+30%+22%+38%102-(2) Sales Expansion for the Aftermarket/Distributor-2
Focusing on greater sales in high-profit businesses
Greater sales of automotive aftermarket(auto parts) business
Share NTN-SNR know-how
Strengthen sales inNorth America and China
Expand MRO business
Collaborate with distributors toimprove sales network
Maintain databases, provide
bearing technology training
Greater sales of maintenanceand inspection tools
2013/2/18

Greater parts kit line-up

Centralization of businesses
with low shareParts kits forNorth America

MaintenanceRepairOverhaul
Oil, gas, power generation,steel, mining, cement, etc

Seminars heldwith special vans

Maintenance tool112-(3) Strengthening Industrial Machinery Business Globally
Focus on greater sales in growth industries and low-share regions
Expand sales in growth industries
Focus on aircraft, rolling stock, wind turbine,machine tools, agricultural equipment, etc
New project
Aircraft

New project

Offshore wind
power generation

Strengthen business in
the China and ASEAN region
Strengthen business for wind turbine, machine
tools, construction machinery, and rolling stock

Greater acquisitionof new projects

Greater sales inlow-share regions

Expand sales to local manufacturers
Increase speed of local developmentwith the China Technical Center
2013/2/18

China Technical Center

Mobile training
unit activities

12

Main Policy-3 “Structural Reform”
Structural Reform
Mid-term business structural reform(1) Reforms to personnel costs(2) Acceleration of overseas production(3) Selection of business

The “on local site with local materials by
local personnel” system

Local design
Local sales

Localcustomers
2013/2/18

Local
procurement
Locally staffedmanagement
Localproducts

Local
facilities
Localproduction13

3-(1) Reforms to Personnel Costs
Reforms to personnel organization by region and personnel costs
following acceleration of production overseas
Increase personnel in overseas

Reductions to personnel costs

Local personnel for leaders andmanagers at local sites
Change in personnel
organization by region

Utilization of early retirement
system (end of March)
Reduction ofpersonnel costs

+3%

+17%
64%

+3%

Overseas

Increaseoverseas

JapanJapan

Decreasein Japan

FY2012FY2014

Overseas67%+2%

36%

2013/2/18-5%

Approximately 5% reduction in
the number of personnel in Japan
Increase personnel in overseas

33%

Savings of approximately 11.5 billion yen
by reducing staff in Japan14

3-(2) Acceleration of Overseas Production
Establish a system based in areas of local demand,
that are not affected by exchange rates
Acceleration of overseas production
Output in Japan

Output in Europe
100

119

100

Output in Asia

98

Output inAmericas
100

130

157
100

'13/3

'13/3'15/3'13/3

'15/3
'13/3

'15/3

Improve profits of theAutomotive BusinessWithin Japan(actual plants → subsidiaries)

Competing against LCC parts
over the medium-term

2013/2/18'15/3* Bar graphs are an index of FY2012 as 100

Risk diversification andmodernization in Japan153-(3) Selection of Business
Reduction of logistics costs in Japan andwithdrawal from a part of business in the precision equipment
Integration of production logistics
and sales logistics
Eliminate reorganization
and wasted logistics
More efficient transportationof joint logistics

Reduction oflogistics costs
about 1 billion yen

Export Distribution
Center (Kuwana)

Withdrawal from some products in the precisionequipment business that have low profits
Narrow down products
Personnel moved toto withdraw
Establish After-sales service

2013/2/18

development and salesof New products andNew business16

Main Policy-4 “Expansion of New Products and New Business”

Expansion of New Products and New BusinessTowards further growth(1) Strengthening development of module products andsystem products(2) Full operation of the EV system products business(3) Development of composite material products andmarket deployment

Bearings
2013/2/18

Module andSystem products

Service andSolution business17

4-(1) Strengthening Development of Module Products and System Products

Development of high-value added products andexpansion of service and solution business
Strengthen development ofmodule products
Modulization withsurrounding products
Development of advanced modules
with more sophisticated andamalgamated mechatronics technology
Reduction in the number of parts,
smaller and more lightweight

Strengthen development ofsystem products
Product development centered onsensor technology
More advanced analysis anddiagnosis technology

Reduction in maintenancecosts of various devices

Spread of Service andSolution businessSensors formeasurement

Data collection device

Press Cut Spline
Hub Joint

2013/2/18

Gearbox for
Electric Brake

Motorized Linear
Module for Solar Heat
Power Generation

IC Tag Integrated
Bearing

Condition Monitoring
System for Wind Power
Generators (CMS)184-(2) Full Operation of the EV System Products Business
Development of high-value added products andexpansion of service and solution business
Full operation ofthe EV system products businessSocial demonstration tests forcommercialization

Faster commercializationof EV system products

Social demonstration testof compact EV (France)
In-wheel Motor Systemfor compact EVs

Planning demonstration tests of ultracompact mobility vehicles (EV)

Demonstration Tests

Intelligent
In-wheel

ProductDevelopment
2013/2/18

In-wheel Motor System

World’s first demonstration test ofconverted EV (Iwata City)

Q’mo test car19

4-(3) Development of Composite Material Products and Market Deployment

Development of high-value added products andexpansion of service and solution business
Development of composite materialproducts and market deployment

StructuralMaterials

Bearings
Automotive

MLE Bearings for
power seats“Corrosion Resistant
Sintered Bearing”
for fuel pumps

Seal rings fortransmission

From bearings tostructural materials

New Functional Materials

High-strength
Sintered Gear(application) Reactors for
EV&HEV

From structural materials
to new functional materials

Industrialmachinery

Amorphous Core“Thin Type Hydrodynamic
BEARPHITE” for thinPC fan motors

Plastic Sliding Nut and Screw
with high load capacity“Multi Layer BEARPHITE” forconstruction machinery(application) Food machinery2013/2/18(application) Choke coil for MRI* All applications are examples of use 20

Objectives of “Revival 2014”
Operating margin

FY2012 (Forecast)
Net sales ： 530 billion yen

Net sales(100 million yen)

Operating income ： 7.5 billion yen“Emergency Measures”
Operating income(100 million yen)

“Structural Reform”“Centralization ofManagement Resources”
New Products andNew Business

FY2014 (Objective) (Compared to FY2012)
Net Sales ： 600 billion yen (+13%)
Operating Income： 40 billion yen(about 5 times)“Global Advance2013”2013/2/18“Revival 2014”

Toward business structure
to generate profit* Exchange rate for 2 years of “Revival 2014” ： 1US$=85 yen, 1Euro=110 yen

21

Objectives of “Revival 2014”[Net Sales and Operating Incomeby Business Sector][Net sales by Region]

・Decrease sales in Japan andincrease in overseas
・Increase sales ratio in overseas(comparedto FY2012)

Net Sales
7,000(100 million yen)

6,000

5,000

4,000

5,300
Asia
929
Europe
1,231

5,700
Asia
1,110

2,000

1,000

Asia
1,265+36%

Operating margin
Net Sales(100million yen)
7,000

Europe1,325

Europe1,350

Americas
1,535Americas1,680 +22%

+10%

6,000

4,000

Japan
1,730

Japan
1,705

-4%

5,300
Aftermarket/
Distributor
875

Industrial
machinery
915

5,700
Aftermarket/
Distributor
1,035

Industrial
machinery
1,015(compared6.7% to FY2012)

6,000+13%
Aftermarket/
Distributor
1,095

+25%

Industrial
machinery
1,085

+19%

3,000
2,000

Japan
1,768

4.9%

1.4%

5,000

3,000
Americas1,372

6,000 +13%

・Increase sales for Industrial machinery andAftermarket/Distributor
・Improve operating margin for AutomotiveAutomotive
3,510

Automotive
3,650

Automotive
3,820

FY2012FY2013

FY2014+9%1,00000

FY2012
2013/2/18

FY2013

FY2014* Exchange rate FY2012 : 1US$=81.2 yen, 1Euro=105.3 yen,
FY2013 and FY2014 : 1US$=85yen, 1Euro=110 yen.

22

II. Objectives and Effects of “Revival 2014”
Amount of improvement toprofits of each policyTerm

25 billion yen

17.5 billion yen

(136)

(64)
5.5 billion yen

(56)

(67)

(55)

(55)

(47)

FY2012 2H

FY2013

FY2014

Centralization ofManagement
Resources(variable costs)
Structural Reform
Emergency
Measures

AmountFY2012 2H5.5 billion yen

FY201317.5 billion yen

FY201425 billion yen

Total (2 yearsand half)(Revival 2014)

48 billion yen

Amount of improvement of each policy overa 2 year period by business type
Centralization ofManagement
Resources(variable costs)(a)Structural
Reform(b)Total(c=a+b)

Automotive

15.2

9.7

24.9

Industrial machinery/Aftermarket

4.8

2.6

7.4

Total

20

12.3

32.3

2013/2/18

42.5 billion yen(billion yen)

Emergency
Measures(d)

Total(c+d)

10.2

42.5

10.2

42.5

* Amount of every policy calculates as exchange rate : 1US$=75yen, 1Euro=100 yen 23

Analysis of Operating Income of “Revival 2014”＊All figures in 100 million yen.

Positive factors( 423 )

Negative factors( 98 )
Expenses(Depreciation -8, Other -10)18
Decrease invariable costs
Decrease in personal costs
Exchange rates
Scale
merits

FY2012
Full year

5880
187

Sales price levels

14+325164

FY2014
Full year
Operatingincome400

Operatingincome75

FY2012 Full year < Forecast >vsFY2014 Full year < Forecast >2013/2/18

24

Main Management Index of “Revival 2014”(100 million yen)

Forecast

Revival 2014

FY2012 (1)Net sales

FY2013

Year on year

FY2014 (2)(2) – (1)

5,300

5,700

6,000+700

Operating income

75280

400+325

Operating margin

1.4%

4.9%

6.7%

+5.3 point

Net income

-70

120

200+270

Inventories

1,570

1,500

1,450-120

3.4

3.8

4.1+0.7

ROA

-1.0%

1.6%

2.6%

+3.6 point

ROE

-3.6%

6.4%

10.5%

Net D/E ratio

1.44

1.46

+14.1 point
0.20
1.24 improvement

NTN-ROI (*)

1.2%

4.3%

6.4%

Inventory turnoverratio (times)

Exchange rate
2013/2/18$:¥81.2 €:¥105.3$:¥85 €:¥110$:¥85 €:¥110+5.2 point-* NTN-ROI = Net operating income after tax/(Inventories+ tangible fixed assets)25

2013/2/18

26