NTN Report2014
for the year ended
March 31, 2014

Profile

Aerospace

Agricultural machinery

Jets, rockets, andsatellites around the world

Agricultural machineryworldwide

Wind turbine

Land-based andoffshore wind turbines
Construction
machinery

Resource mining
and civil engineering*

Medical equipment

CT scanners andartificial hearts*

Industrial Machinery
Applications

Rolling stockHigh-speed
railways aroundthe world

Machine tool

High-speed-rotation
machinery

Enabling highperformance in therotating parts of a range
of industrial machinery

Creative Technology Supports Worldwide Industry andand Energy-Saving Lifestyles

Outline (as of March 31, 2014)
Corporate name: NTN Corporation
Trademark:
Date founded: March 1918
Head Office:3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan
Representative:
Hiroshi Ohkubo, President

Editorial Policy
Number of employees:
Consolidated: 22,156
Non-consolidated: 5,050
Fiscal term: March
Capitalization: 54.3 billion yen
Net Sales:
Consolidated: 639.0 billion yen
Non-consolidated: 321.4 billion yen

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.

1

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.
This report has been edited with reference to theInternational Integrated Reporting Framework of
the International Integrated Reporting Council.

Automotive drive system

Aftermarket
Applications

More compact and lightweighttransmissions that are fuel efficient and safe

EV system

Automotive Applications

In-wheel Motor
System, various
module products

Sale of automotive repair
parts (auto parts)

Meeting the maintenanceneeds in the industrial
machinery andautomotive applications
MRO (Maintenance,

Expanding business
in Europe, theAmericas, and Asia

Repair, and Overhaul)business

Maintenance andreplacement ofbearings

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

Automotive wheel

Better fuel efficiency anda more comfortable ride

Product training

Technical support

Training on choosing
optimal bearings andtheir proper use

Mobile training units
offer technical services
for customers* Photos are cross-sectional models of products.

Provides People Everywhere with Safe, Dependable,

CONTENTS
Financial Highlights .............................. 3
Non-Financial Highlights ..................... 5
NTN’s Strengths ................................... 7
To Our Stakeholders ............................ 9Interview with the Top Management .... 11

Feature:Medium-Term Management Plan
“Revival 2014”—Progress
and Future ......................................... 17
1. Emergency Measures ................. 18
Short-Term Measures to Generate Profit

2. Centralization ofManagement Resources ............ 18
Centralization on Priority Fields

Research and Development ...... 31
CSR Activities Report .................. 32

3. Structural Reform ........................ 20

Corporate Governance ................... 33

Mid-Term Business Structural Reform

Focus ................................................. 41

4. Expansion of New Products
and New Business ....................... 21

Social andEnvironmental Responsibility ........ 44

Towards Further Growth

At a Glance ....................................... 23
Aftermarket ....................................... 25
Industrial Machinery Market .......... 27
Automotive Market .......................... 29

Third-Party Opinion ................................ 61
Financial Section .................................... 62
Report of Independent Auditors ............ 89
Investor Information ............................... 90
Global Network ...................................... 91

2

Financial Highlights
NTN Corporation and consolidated subsidiaries

Operating income

Net sales

639

33billion yen(Billions of yen)(against previous year)

Approx.

billion yen(Billions of yen)

800

4.5

543.5

530.1

times

40.0

40

33.0

660.0

639.0
600

Result

30

539.6

24.6

452.7

20.7

400

20

200

10

0

0

7.3
1.4

2010

2011

2012

2013

166.5 billion yen Result
3.8 times

Inventory
Turnover Ratio(Billions of yen)

(Forecast)Inventories (Billions of yen)
Inventory Turnover Ratio(Times)Inventories / Inventory turnover ratio
Inventories

ended2015 ( Years
March 31 )2014

(against previous year)

0.5

time
increase
8

155.1
150

126.7
100

163.3

166.5

3.5

3.3

2013

2014

Operating margin

5.2

Result(against previous year)

(%)

3.9

point
increase

8

6

4.6

4.0

3.8

ended
2015 ( Years
March 31 )(Forecast)

6.1
6

3.9

2012

165.0

137.0

3.6

2011

%

(Times)

200

2010

3.8

50

4

4

2

2

5.2

0.3
1.3
0

2010

2011

2012

2013

2014

0

(

2015 Years ended(Forecast) March 31)

Percentage of net sales by business sector

Industrial
Machinery

Aftermarket

Overseas sales ratio

Aftermarket
16 %

17%

(Years ended March 31)

Automotive

66%

3

2012

%

Aftermarket

Industrial
Machinery

2011

Automotive

%

2013

2010

2014
(Years ended March 31)

17%

68%

2014

ended
2015 ( Years
March 31 )(Forecast)

Industrial
Machinery
16 %

72

%

Asia and
OthersAsia and
Others

Japan

19%

18%

28%

Japan

33%
2013
Europe (Years ended March 31)

23%
Automotive

2013

Percentage of net sales by region

16 16 68%0Americas26%

2014(Years ended March 31)

Europe26%

Americas27%-14.6

Capital expenditures / Depreciation

Forecast (against previous year)

34.6

billion yen(Billions of yen)

20

billion yen
increase

CapitalExpenditures(Billions of yen)

20.0

60

33.2

billionyen
Depreciation

Capital Expenditures
Depreciation

39.3

billion
yen

54.4

14.4
10

Highlights

Net income ( loss)

49.0
6.0

40.7

40

35.9

39.3
39.6
35.0
33.2

34.8
34.2

29.7

0

21.5

-2.0
20
-10

-20

2010

2011

2012

-14.2

-14.6

2013

2014

ended
2015 ( Years
March 31 )%Forecast(against previous year)

(%)

3.0

4.2

2011

-7.3

point
increase

%

9.8

0.9

3.0
4.0

0

0

-0.3

2012

-4.0

-1.8

-1.9
2011

2013

2014

(

2015 Years ended(Forecast) March 31

)

-8.0

2010

2011

NTN-ROI*

4.6

1.27

2012

ended
2015 ( Years
March 31 )(Forecast)

1.0

Forecast(against previous year)

point
increase

8.0

1.37

1.27

5.6

6.0

1.21

1.11

4.6

4.2

0.92

3.4

4.0

0.50

2.0

0

0

0.2
2011

2014

2013

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

%

1.50

2010

-7.3

(%)

2.00

1.00

-1.1
-7.2

Net D/E ratio

1.00

point
increase(against previous year)

7.2

8.0

2010

ended
2015 ( Years
March 31 )(Forecast)

17.1

Forecast

(%)

1.0

-2.0

2014

2013

12.0

2.0

-1.0

2012

Net income / Average shareholders’ equity ( ROE )

2.4

2.3

2010

(Forecast)

Net income / Average total assets (ROA)

-1.8

0

2012

2013

2014

(

2015 Years ended(Forecast) March 31

)

2010

1.1
2011

2012

2013

2014

ended
2015 ( Years
March 31 )(Forecast)4

Non-Financial Highlights
Based on the International Integrated Reporting Framework of the International Integrated Reporting Council.

Manufacturing capital
Local procurement ratio

84

Overseas production ratio

49

%

(%)

%

(%)

90

60

87
85

84

81

42

82

80

80
0

47

50

40

0

2010 2011 2012 2013 2014 20152010 2011 2012 2013

Total CO2 emissions

Electricity consumption(NTN group companies in Japan)

272,000

tons/
year

(10,000 tons/year)

28.2(Years ended March 31)(GWh/year)496

Landfill waste(NTN group companies in Japan)

480,000

GWh

26.9

27.2

225

538

26.8

25.0

204

536

496

499

500

491

150

446

106

20.7
20.0

0

400

2010 2011 2012 20132015
2014 (Forecast)

0

tons/
year

(10,000 tons/year)

600

28.8

2015
2014 (Forecast)

Total CO2 emissions: Based on fixity coefficient (0.381) (See page 56.)

(NTN group companies in Japan)

30.0

43

80

(Forecast)(Years ended March 31)

Natural capital

42

51

49

75

2010 2011 2012 20130

2015
2014 (Forecast)(Years ended March 31)

62

58

48

2010 2011 2012 2013

(Years ended March 31)

33

2015
2014 (Forecast)(Years ended March 31)

Human capital
Percentage of
employees overseas

64

Japan
37%

Japan
36%

2013

2014

ended
( Years
March 31 )

%

ended
( Years
March 31 )Overseas64%

Overseas
63%

Percentage offemale managers(NTN Corporation only)

3.4

5

%

Men
97.5%

Women
2.5%

2013

ended
( Years
March 31 )

Men
96.6%

Women
3.4%

2014
ended
( Years
March 31 )

Highlights

Intellectual capital
Ratio of R&D expenditures to
net sales
R&D Expenditures (Billions of yen)

Ratio of R&D Expenditures to Net Sales (%)

R&D Expenditures Ratio of R&D
Billions Expenditures
to Net Salesof yen17.8(Billions of yen)

2.8%

(%)

20

6

17.2
15

14.7
3.2

10

0

2010

15.7

17.8
16.2
4

3.0

3.2

2011

2012

3.0

2013

2.8
2

2014

0

(Years ended March 31)

Water usage(NTN group companies in Japan)

1,930,000

m3/
year

(10,000 m3/year)

250

225

220
203

200

193

179

189

150

0

2010 2011 2012 20132014 2015(Forecast)(Years ended March 31)

Social capital
Overall assessment ofcustomer satisfaction surveys

NTN included in SRI Indices(NTN group companies in Japan)

Dow Jones Sustainability Asia Pacific Index
FTSE4 Good Global Index
Morningstar Socially Responsible Index“Very good” and “Good”
accounted for

89%

Needs slight
improvement
11%

Needs a lot of
improvement
0%

Very good
20%

2014
ended
( Years
March 31 )

Good
69%

6

NTN’s Strengths

Only NTN Can Do It

Research and Development

Procurement, Production

Developing High-Value-Added System Productsthat Incorporate Proprietary Materials, Design
Technology, and Electronic Control

Meeting Customer Needs around the Worldthrough Local Procurement, Local Production,and Local Provision

Key themes of NTN’s research and development include “environmental
protection” and “new energy contributions.” In recent years, we have been
moving from individual components to module and system products as wecome out with products with increasingly higher added-value.

NTN’s production system is geared to meeting regional needs aroundthe world. A consistent local manufacturing system from material
procurement all the way to assembly of finished products shortens
production lead time, reduces inventory of products in process, andlowers material costs.

R&D as percentageof net sales

Development system

4

Worldwide

R&D
bases

(Japan, Americas,
Europe, China)

2.8 84%(Fiscal year ended March 31, 2014)%(Fiscal year ended March 31, 2014)

Local procurement ratio (%)

4 Worldwide R&D Bases• ADVANCED TECHNOLOGY R&D CENTER• PRODUCTION ENGINEERING
R&D CENTER

Research

Local procurement
ratio

Japan

• NTN R&D CENTER• INDUSTRIAL TECHNICAL CENTER(Compared to 10 years ago)
Americas
China

EuropeGlobalOverseas production
ratio

49

%

(Fiscal year ended March 31, 2014)

Overseas production ratio (%)(Compared to 10 years ago)

ASEAN

China

Asia

7%

4%

(%)

Development

100

Europe

17%

84%

80

Share database

Europe74%

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

Americas

Development• NTN-SNR R&D Center

7

China

Development• NTN China
Technical Center

51%

Americas

Asia

China 1%
Europe

9%
18%

2004

2014

(Years ended March 31)

1%
Overseas

Americas

20

0

Japan

Fiscal year ended March 31, 2014

60

Development• NTN
Automotive
Center

49%

21%

40

Research

Overseas

29%

Japan

71%

Fiscal year ended March 31, 2004

NTN’s Strengths

Sales

Extreme Environments

Doing Business with Many Car and Industrial
Machinery Manufacturers through a Global
Sales Network

Providing Products that Withstand Harsh
Conditions in Industries Such as Aircraft
and Space

With a system of three business headquarters (Aftermarket, Industrial
Machinery, and Automotive), 37 sales bases in Japan and 94 overseas, anda network of distributors stretching around the world, we have an increasing
number of sales channels through which to market and sell our products. We
are improving our IT-driven sales system for distributors so that we can further
improve our service.

NTN is certified to supply the world’s four major jet engine manufacturers withbearings that are used in the engines of jumbo jets, where temperatures reach
200°C. We also provide products to a large number of high-speed railways
worldwide, whose trains operate at speeds of over 250km/h.

Share of world
marketHubbearings

1

No.

Overseas
sales ratio

Constantvelocity
joints

No.

2 72

%

(Fiscal year ended March 31, 2014)

Overseas sales ratio (%)

Aircraft

Certified as a supplier to theworld’smajor jet engine
manufacturers

4

Rolling stock

Supplying products to high-speed
railways incountries

10(Compared to 10 years ago)
Asia and
Others

Japan

28%

19%
Overseas72%
Hub bearings*

EuropeAmericas26%

27%

Fiscal year ended March 31, 2014

TGV

(France’s high-speed rail service)

Aircraft

Asia and
Others9%EuropeOverseas17%

Constant-velocity joints* Photos are cross-sectional models
of products.

51%

Japan

49%

Americas25%

Fiscal year ended March 31, 2004

8

To Our Stakeholders

Taking on Challenges Under a New System in
Aiming for the Next Stage of GrowthPresident’s Message
My name is Ohkubo, recently appointed as the
President of NTN. I plan on addressing thevarious issues that are present today with asense of speed and a spirit of challenge inorder to complete the two-year Medium-termManagement Plan “Revival 2014,” which has
been implemented since April 2013. We also
are aiming for continued growth through 2018,the year that the company celebrates its
100th anniversary since foundation, and wellinto the future.
I look forward to your understanding andsupport of NTN’s future efforts as we prosper
together in exciting new business fields.

President

History
1977: Joined NTN
1985: NTN USA Corp.
1995: Accounting Department
1996: NTN-BCA Corp.
2004: Deputy Manager,
Finance Department
2005: NTN Europe Corp.
2010: Executive Officer
2012: Director
2013: Managing Director
June 2014: President

9Corporate Philosophy

Interview with
the Top Management“We shall contribute to international society
through creating new technologies
and developing new products.”

For New Technology Network
1. Creation of original technologies.
2. Offering the technologies for additional values and service that are suitable for each customer
and end user.
3. Improvement of employees’ standard of living, distribution of fair returns to stockholders,and contribution to society 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.

NTN’s Accomplishments andChallenges
The NTN Group has made compliance a top priority and is
striving to strengthen its systems for complying with laws andregulations including Anti-Monopoly and competition laws.
NTN management expresses gratitude to all relevant personnel
including the shareholders for their understandings and theirprofessional efforts during the past period related to recent
investigations regarding Anti-Monopoly and competition law
issues in areas including Japan, Europe, and Singapore. The
NTN Group will continuously strengthen the system to thoroughly
comply with laws and regulations, social norms, ethics, andin-house regulations on a global basis, thereby further promoting
business activities through fair and sincere competition.
During the fiscal year under review, the Japanese economy
saw a moderate recovery reflecting the downward revision of
the yen and other factors. Looking at the overseas economy,
the U.S. economy continued a moderate recovery, theEuropean economy was also picking up gradually, and theChinese economy achieved a stable economic expansion,
while other emerging countries saw a continuing slump in theireconomic condition.
In such an environment, the NTN Group is aiming to “reformbusiness structure to generate profit” as part of the group’s
two-year Medium-term Management Plan “Revival 2014.” To

achieve this, NTN has been implementing various policies suchas expanding sales in the highly profitable aftermarket and theindustrial machinery market, and improving profits of theautomotive business based on the three core businesses - theAftermarket Business Headquarters that was established lastyear, the Industrial Machinery Headquarters, and the Automotive
Business Headquarters.

Growth Efforts
We follow our Corporate Philosophy in conducting a range ofefforts aimed at attaining medium- and long-term growth.
NTN aims to ensure ongoing profits by further increasing
business profitability and efficiency of assets, and bystrengthening the financial structure essential to ensure stable
returns to all stakeholders. As a company formed around theconcept of monozukuri, NTN will always remain at the forefrontof developing innovative new technologies and will back theseactions up with specific developments in monozukuri andhitozukuri (personnel development). Social responsibility, suchas compliance with legal standards and conservation of the
global environment, forms the backbone of a global company,
and will be strengthened even further as the foundation for theGroup’s management.
The NTN Group would like to take this opportunity to ask
for the continued support of our stakeholders.

10Interview with the Top Management

Overall performance in the fiscal year ended Marchis the current situation with NTN and
Q1 Whatthe Anti-Monopoly Act, and what is your policyon ensuring thorough compliance?

A

We have strengthened our control systems
in Japan and overseas in order to reconfirm
that we are abiding by all laws and regulations.

In June 2012, we received an indictment filed by the Tokyo
District Prosecutors Office (TDPO) on suspicion of having violated
the Japan Anti-Monopoly Act in relation to the domestic saleof bearings, and in March 2013, we received a cease and desist
order and surcharge payment order (for 7.231 billion yen) fromthe Japan Fair Trade Commission (JFTC). Because the assertions
by the JFTC and TDPO are greatly different from the company’s
views of the facts, we appealed the JFTC’s orders. And weare presenting a defense of the Company during the trial.
In March 2014, we underwent settlement procedures underEU competition law, and we received a notification to the effectthat it imposes fines of 201,354 thousand euros (yen equivalentof 27,023 million yen at the average rate during the consolidated
fiscal year ended March 31, 2014) on suspicion that our EuropeanGroup Companies violated the EU Competition Law. And weestimated a loss expected to occur in the future and included 35
million yen in extraordinary loss for the consolidated fiscal year
ended March 31, 2014 against the progress of an investigationof the Competition Commission of Singapore. In May 2014, weand our consolidated subsidiary in Singapore received a decisionfrom the Competition Commission of Singapore to the effectthat it imposes fines of 455 thousand Singapore dollars (yenequivalent of 37 million yen at the average rate during the current
consolidated first quarter).
There are ongoing investigations of the bearing industry by
the United States Department of Justice and the Korea Fair
Trade Commission but no charges against the company or its
subsidiaries have been filed in those jurisdictions. And we andour subsidiaries in the U.S. and Canada are defendants in a
number of class action suits.
Our management expresses gratitude to all relevant personnel

11

including the shareholders for their understanding and theirprofessional efforts during the past period.
As for our management system in Japan and overseas, in
April 2014, the Company newly established the CSR
Headquarters with the aim of strengthening a system forsupervising the sections (CSR Department, Legal Department,
Fair Trade Promoting Department) involved in the corporatesocial responsibility, developing global activities, and pursuingcompliance with legal norms and social responsibilities throughout
the Group. Overseas, the Company also newly launched theInternal Control Section within general managers’ offices in eachoverseas region in a bid to build and strengthen compliancesystems, including the strengthening of efforts to ensurecompliance with the Anti-Monopoly Act. Using this new
management system, the NTN Group will work as one to ensurecompliance with laws and the thorough implementation of CSR.

was the market environment and performance
Q2 Whatin the fiscal year ended March 31, 2014?

A

Net sales and operating income both madesignificant improvements.

In the fiscal year ended March 31, 2014, the Japanese
economy enjoyed moderate recovery thanks to factors including
a correction in the value of the yen. While newly emerging
countries continued to grow slowly, the U.S. enjoyed moderate
recovery, Europe bounced back, China steadied off, and theresult was an overall favorable market environment.
Against this background, the NTN Group has been
implementing numerous measures with the aim of “Reforming
Business Structure to Generate Profit” under our “Revival 2014”
medium-term management plan, which we launched in April
2013. The result was net sales of 639 billion yen (up 18.4%
over the previous year), a dramatic improvement over theprevious year. On the profit side, operating income was 33 billion
yen (up 353.5% over the previous year) and ordinary profit
was 28.7 billion yen (against 2.5 billion the previous year),both representing drastic improvements.
However, apart from 27 billion yen in losses related to theAnti-Monopoly Act, which was calculated as an extraordinary
loss, there were 2 billion yen in impairment losses, 1.6 billion
yen for provision of reserve for losses on support of affiliates,and 1.4 billion yen in reorganization expenses, all of which
added up to a net loss for the fiscal year of 14.6 billion (against
a 14.2 billion yen net loss last year).

was the situation in each region and
Q3 Whatwhat measures did you take?

A

We were able to increase sales and profits in all
world regions.

In Japan, sales were down for industrial machinery applications

31, 2014 and medium-term management plankind of market environment and business
Q4 Whatperformance do you forecast for the fiscal year
ending March 31, 2015?

We are aiming to continue increasing sales and profits
by implementing measures under “Revival 2014”.

A

For the fiscal year ending March 31, 2015, we expect the U.S.

Performance in the Fiscal Year Ended March 31, 2014 andForecast for the Fiscal Year Ending March 31, 2015
Net sales

Net sales(Billions of yen)

800

4.6%
1.8%

600

5.2%

3.8%
1.3%

0.3%
530.1

527.1

Operating income

543.5

639.0

Operating margin

6.1%
660.0
Operatingincome(Billions of yen)

539.6

50

452.7
40.0

400

33.0
24.6
200

40
30

20.7

9.5

20

7.3

10

1.4
0

2009

Medium-term
management plan

2010

2011

NTN 2010 for The
Next Step

2012

2013

Global Advance
2013

2014

2015

0

(Target)(Years ended March 31)

Revival 2014

Fiscal year ended March
31, 2014 (Results)
Net sales:
639 billion yen
Operating income: 33 billion yen
Operating margin: 5.2%
Net income:–14.6 billion yen
Full-year dividend: 2 yen (resumed)

Accomplish“Revival 2014”
Fiscal year ending March
31, 2015 (Forecast)*
Net sales:
660 billion yen
Operating income: 40 billion yen
Operating margin: 6.1%
20 billion yen
Net income:Full-year dividend: 5 yen
Note: Exchange rate for fiscal year ending March
31, 2015: 1$US=¥100 yen, 1€=¥130

Continue “Reforming Business Structure
to Generate Profit”

12Interview with
the Top Management

applications driven by a recovery in customer demand, as wellas the effects of exchange rates. Operating income was 2.1
billion yen (against the loss of 0.2 billion yen booked in the same
period in the previous year), driven by increased sales.
In Asia, while the aftermarket and industrial machinery
applications dropped, a recovery in business with Japanesemanufacturers in China in the automotive market, newly started
production from new orders, and the effect of exchange rates
resulted in net sales of 113.8 billion yen (up 32.7%). Operating
income was up significantly to 4.4 billion yen (up 517.8%)
thanks to the effects of increased sales.

but were up in the automotive applications due to increased
customer demand; the result was overall net sales in Japan of
323.6 billion yen, little changed from the previous year (up2.4% over the previous year). In operating income, meanwhile,the effect of exchange rates and a decrease in fixed costs
such as labor resulted in a large increase in profits, with
operating income of 25.6 billion yen (up 160.2% over theprevious year).
In the Americas, sales were up overall in the aftermarket
applications and automotive applications, and exchange rate
effects were positive, resulting in net sales of 171.8 billion yen(up 24.1% over the previous year). Operating income was 2.6
billion yen (against the loss of 3.2 billion yen booked in thesame period in the previous year), primarily due to theelimination of temporary costs resulting from an additionalburden imposed on production lines in coping with increased
sales to the automotive applications in the previous year.
In Europe, net sales were 182.4 billion yen (up 33.5% over theprevious year), due to increases in the aftermarket and automotiveInterview with the Top Managementand European economies to make a moderate recovery.
However, Japan may feel the effects of a higher consumption
tax and uncertainty looks to continue in emerging economies.
In this situation, in the second year of our “Revival 2014”
medium-term management plan we will continue implementing
numerous measures under our basic policy of “Reforming
Business Structure to Generate Profit.”
By carrying out these various measures, our forecast for theentire fiscal year ending March 31, 2015 calls for net sales of660 billion yen (up 3.3% over the previous year), operating
income of 40 billion yen (up 21.2% over the previous year),ordinary profit of 33 billion yen (up 15.1% over the previous year),and net profit of 20 billion yen (against the loss of 14.6 billion yen
booked in the same period in the previous year). Performance
estimates for the fiscal year ending March 31, 2015 are basedon an exchange rate of 1$US=¥100 yen, 1€=¥130.
Note: Consolidated subsidiaries of the Company in the United States and South
Korea have been investigated by the respective authorities in relation tocompetition law, and multiple civil action lawsuits (class action lawsuits)
have been launched against the Company and its American and Canadian
consolidated subsidiaries. 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, 2014?

A

The dividend was 2 yen per share.

The NTN Group considers rewarding its shareholders an

issue of foremost importance. Regarding dividends, from a
medium- and long-term perspective, the Company’s goal is toprovide a steady and sustainable dividend, which it will determineon the basis of its consolidated performance, dividend payout
ratio, and business environment.
The dividend for the fiscal year ended March 31, 2014 wasundecided at first, but based on performance trends andan overall assessment of factors including the management
environment, we have decided to resume the dividend at 2 yen
per share. As for the dividend for the fiscal year ending March
31, 2015, we intend to pay 5 yen per share (interim dividendof 2.5 yen, year-end dividend of 2.5 yen).

Q6 How is “Revival 2014” progressing?
A

We are working to reform business structure to
generate profit through the three key pillars of“Improving profitability,” “Improving asset
efficiency,” and “Better management framework.”

The NTN Group embarked upon its two-year medium-term
management plan, “Revival 2014,” to cope with changes inthe business environment. Based on the plan’s basic policyof “Reforming business structure to generate profit,” we are
pursuing profit-making in four key ways: carry out emergency
measures, centralize management resources, carry out
structural reform, and expand new products and new business.

Progress of Medium-Term Management Plan “Revival 2014”

1

Emergency
Measures

Structural Reform

Short-Term Measures to Generate Profit

Mid-Term Business Structural Reform

1 Reduce personnel costs andfixed costs
2 Limit capital expenditure
3 Reduce inventories

1 Greater profits in the

Automotive Business

2 Sales expansion for

1 Reforms to personnel costs

Completion of“Revival 2014”
Policies

Aftermarket

3 Strengthening Industrial Machinery

Business globally

2
13

3

Centralization ofManagement
Resources

Centralization of Resources to Priority Fields

2 Acceleration ofoverseas production
3 Selection of business

1 Strengthening developmentof module products andsystem products
2 Full operation of the EV systemproducts business
3 Development of composite material
products and market deployment

Expansion of New
Products and
New BusinessTowards Further Growth4

Towards the new growthframework
Improving profitability
Sales expansion for Aftermarket
Expansion for Industrial Machinery
Business
Greater profits in Automotive
Business

Improving asset efficiency
Improving capital investment
efficiency
Improving inventory turnover ratio

Better management
framework
Strengthening overseas production
and local procurement
Strengthening organizational
structure
Accelerating of new productdevelopment

These will allow us to achieve the new growth pillars of improving
profitability, improving asset efficiency, and better management
framework, and thus realize the main goal of “Revival 2014”:“Reforming Business Structure to Generate Profit.”
Below is an overview of progress on the aforementioned
three key pillars of “Revival 2014.”
Progress in “Improving Profitability”

For two consecutive years starting in the fiscal year ended
March 31, 2012, the automotive business was in the red, andimproving profitability there is a top priority. To this end, efforts
include revamping product design and production methods,
and increasing local procurement for pre-process items.
In the fiscal year ended March 31, 2014, positive effects
including recovery in Europe and China and growth in theAmericas helped us achieve a 22% increase in net sales in
automotive applications and an operating income of 12 billion
yen, putting us in the black for the first time in three years.
Our biggest focus in improving profitability is expanding sales
in the highly profitable aftermarket applications. To strengthen
our repair services for MRO (Maintenance, Repair, and Overhaul)business aimed at social infrastructure industries such as steel,mining, and paper, we are providing monitoring and technicalanalysis services for bearing operations, and technical classes
for customers via mobile training units, and we are reinforcing
our abilities throughout the supply chain.
Thanks to these measures, in the fiscal year ended March
31, 2014 the aftermarket applications enjoyed significant
improvement, with net sales of 103.8 billion yen (up 16% overthe previous fiscal year) and operating income of 17.7 billion
yen (up 20% over the previous fiscal year).
Also crucial to improving profitability is expansion for theindustrial machinery business. To expand sales in theaftermarket, it is important above all to use original parts, andwe will boost sales in growth sectors and step up business in
China and ASEAN.
In the fiscal year ended March 31, 2014, factors including
strong business for wind turbines in the Americas resulted inincreases in both net sales and operating income in the industrial
machinery business, with the latter showing particularly
remarkable improvement at 120% over the previous fiscal year.
Progress in “Improving Asset Efficiency”

Besides striving for capital investment with highbusiness efficiency, we are working to improve
the inventory turnover ratio.
“Improving Asset Efficiency” is crucial to corporate growth.
Under “Revival 2014,” we are carrying out measures focusedon capital investment and inventory.
We are totally revising our past policy on capital investment
as we proceed with reduction measures based on keeping
the investment amount within the allowance for depreciation.
As well, we are striving to achieve efficient management that
boosts productivity while making the most of less capital
investment: we are doing this through measures that include
responding to increasing world demand by raising the operational
efficiency of existing facilities, shifting facilities from Japan tocountries where production volume is expected to increase,revising facilities’ specifications, and reducing unit cost.

Product training session for customers

14

Interview with
the Top Management

We are stepping up efforts to achieve greater
profits in the automotive applications, and tostrengthen aftermarket applications andindustrial machinery applications.

Interview with the Top Management

In the fiscal year ended March 31, 2014, inventory was
166.5 billion yen, a slight increase over the previous year on amonetary basis; however, this was due partly to exchange
rate effects, and in fact we were able to decrease inventory
volume. The inventory turnover ratio improved from 3.3 times
in the fiscal year ended March 31, 2013 to 3.8 times in thefiscal year ended March 31, 2014. Our policy is to improve theinventory turnover ratio to 4 times.
Progress in “Better Management Framework”

Working towards “on local site with local
materials by local personnel”* by training humanresources and strengthening organizational
structure globallyFirst and foremost in “Better Management Framework” isworking towards achieving “on local site with local materials
by local personnel.”

The overseas production ratio in the fiscal year ended March
31, 2014 was 49%, a large increase over the 43% of two years
previous. The target for the fiscal year ending March 31, 2015 is
50% or more. We have also been working on local procurement,with a local procurement ratio of 84% in the fiscal year ended
March 31, 2014, up significantly over the 80% of two years
previous. However, to benefit from the current low yen, we areurging customers to accept a change to different materials as
we gradually do so in accordance with currency exchange rates.
We are also striving to strengthen organizational structure.
To strengthen the CSR capabilities of worldwide NTN Group
companies, in April 2014 we established the CSR Headquarters,
which encompasses the former CSR Department and Legal
Department, and Fair Trade Promoting Department. Also in
April 2014, we strengthened internal control functions in various
world regions by appointing an Internal Control Section in the
General Managers’ offices of overseas subsidiaries. To bettergo on the offensive in the aftermarket business, we increased
personnel in the Aftermarket Business Headquarters. We also
strengthened the systems for direct visits to customers andtechnical services by establishing three branches (East Japan,
Central Japan, West Japan) and new divisions in areas such as
sales and engineering and production planning and management.
Furthermore, because of the necessity of developing global
human resources who can implement our policy of “on local sitewith local materials by local personnel” in any country in theworld, we established the Global Human Resource Development
Department. This division will lead our efforts to train a diverse
range of personnel who can convey techniques and skills frommother factories in Japan to worldwide production sites.
* “On local site with local materials by local personnel”: Establish a system in which
NTN’s local employees manage business using locally sourced equipment
and materials.

Improving asset efficiency
Capital expenditures and depreciation

Inventories and inventory turnover ratio

Capital expenditures

Depreciation

Inventories

Revival 2014
Scope of depreciation
expenses(Billions of yen)

60

40

54.4

34.2

34.8

39.3
33.2

35.0

Revival 2014
• More stringent basic inventory• Better system for inventory(Times)management
5(Billions of yen)

• Increased operating rate of existing
equipment• Reduction in equipment unit costs

49.0

39.6

300

3.5 times
200

155.1

20

Inventory turnover ratio

3.8 times

4.0 times
4

3.3 times
163.3

166.5

165.0

3
2

100

1
0

2012

2013

2014

2015
(Target)15

ended( Years
March 31 )

0

2012

2013

2014

2015
(Target)0

ended( Years
March 31 )

Accelerating development of high-value-added
module and system products

Ball Screw Drive Module
for Electric Hydraulic Brake

Mechanical Clutch Unit (MCU) for Next-generation
Steering** Photos are cross-sectional models of products.

us about your thoughts for future CSR plans
Q7 Telland measures.

A

We will work towards the realization of asustainable society by meeting the public’s
expectations in economic, environmental, andsocial aspects.

NTN works towards the realization of a sustainable society bymeeting the public’s expectations to make CSR efforts, suchas boosting economic value, reducing environmental impact,
and contributing to communities, part of the company’sbusiness activities.
For example, we strive to achieve thorough corporate
governance, strengthen compliance, improve risk management,
and reduce environmental impact.
In April 2014, we revised our organizational structure throughthe establishment of the CSR Headquarters. To continue meetingthe expectations of our customers, suppliers, employees,
shareholders, local citizens, and other stakeholders, the entire
NTN Group will take on all necessary CSR challenges. (Seepage 42 for details.)

Better Management Framework (on local site with local materials by local personnel)
Overseas production ratio
Japan

Americas

EuropeLocal procurement ratio
Asia

Overseas production ratio

Americas

Europe

Revival 2014
43% 47%(Billions of yen)

Xiangyang NTN Yulon Drivetrain
Co., Ltd. Mass production
to start in April 201549% 51%

100

84%

400

80%

Accelerating of customer approval
Adjusting amount to switch due toexchange rates

60

200

(Target)(or endingMarch 31)

Second plant of NTN FUKUROICORP. Mass production started
in May 2014

40

87%

82%

NTN MANUFACTURING DE
MEXICO Mass production
to start in FY 20152014 2015 Years ended

Global(%)

80

2012 2013

China

Revival 2014

600

0

ASEAN

2012

2013

2014

2015
(Target)(Years ended
or endingMarch 31)16

Interview with
the Top Management

We are focusing on accelerating new product development.
For a manufacturer like NTN, the heart of the management
framework is the development of highly competitive products
for customers around the world. Under “Revival 2014,”
we are stepping up efforts in the areas of module andsystem products, composite material products, and EV
system products.
Key among these is the mass-production of moduleand system products. By moving from individual components
to module and system products, we are not only making
products smaller and lighter but also reducing the numberof parts and the amount of assembly labor. This also
creates barriers to companies infringing on our intellectual
property rights.
NTN has over the years made individual components
such as bearings and constant-velocity joints, along the way
adding peripheral components to its product lineup as itprogresses to products such as bearing units and hub
bearings. Today, we are focusing on module products withnew part combinations, such as bearings with sensors andIC tags. In doing so, we have earned a superb reputation for
products such as the “Ball Screw Drive Module for Electric
Hydraulic Brake” (released in April 2013), and “MechanicalClutch Unit (MCU) for Next-generation Steering” (released in
November 2013).
We are also working on new products and technologies that
support the future of NTN; for example, our Condition Monitoring
System (CMS) for wind turbines, the “Wind DoctorTM,” which
combines control technologies and bearings, and In-wheel
Motor Systems for compact EVs.

Feature

Medium-term Management Plan
“Revival 2014”—Progress and FutureWith the aim of “reforming business structure

Economic Effect against Operating Income of Main Policies
Emergency Measures (Personnel Costs + Expenses)
Centralization of Management Resources (Proportional Costs)
Structural Reform (Early Retirement + Logistics Reform)

to generate profit,” the NTN Group announced
its “Revival 2014” two-year medium-term(Billions of yen)

Proportional costs were far lower than targets.
Early retirees numbered 420 against the target of 600.
Remaining personnel was shifted to bolster
aftermarket business.

25

management plan in February 2013. All divisionsof the group are enacting measurements steadily

20

based on this plan to achieve targets for the

15

fiscal year ending March 31, 2015. This feature10

reports on progress thus far on “Revival 2014”

17.5

Emergency measures achieved
reductions ahead of schedule.

7.5

5.5

17.3

6.4

8.2
5.6

7.5

5.5
0

13.6

6.7

3.5

5

and at NTN’s outlook for future growth.

15.9

TargetResult

1

4.2

5.5

4.2

4.7

TargetResultInitial Plan

2014

2013

Emergency
g y Measures

Structural Reform

Short-Term Measures to Generate Profit

Mid-Term Business Structural Reform

1 Reduce personnel costs and fixed costs
2 Limit capital expenditure
3 Reduce inventories

25.0

25.0

3.5
Forecast
ended2015 Years
March 31(

3

1 Reforms to personnel costs

Medium-termManagement Plan

2 Acceleration of overseas production
3 Selection of business“Revival 2014”
1 Greater profits in Automotive

Business
2 Sales expansion for Aftermarket
3 Strengthening Industrial Machinery
Business globally

2(Announced February 2013)
Applicable Period
April 2013 to March 2015
(2 year period)

Centralization ofManagement
ResourcesgCentralization on Priority Fields

1 Strengthening development of module

products and system products
Full operation of the EV systemproducts business
3 Development of composite material
products and market deployment
2

Expansion of New Products
and New BusinessTowards Further Growth

Basic Policy

Reform Business Structure toGenerate Profit
17

4

)

1

Emergency Measures

Short-Term Measures to Generate Profit

Under “Revival 2014,” emergency measures aimed at generating
profit were begun in the second half of 2012 as short-term
measures. The main policies are reduction of personnel costs,
reduction of fixed costs, reduction of inventories, limitationof capital expenditure, and abolishment and sale of assets.
(Billions of yen)

Main Policies

Fiscal year ended
March 31, 2013
Plan
Result“Revival 2014” (2 Years)
Plan

2.0

3.0

28

Reduce fixed costs

3.5

4.5

Limit capital expenditure

48.0

49.0

74
Limit to 51 billion yen,under depreciation costs over two years

Reduce inventories

157.0(154.1)

Abolish, sell assets

10.0

121

163.3

*

Reduce up to 145 billion yen in two years—* Excluded exchange rates

1 Reduce personnel costs and fixed costs
To reduce personnel costs, we reduced salaries and bonuses,
mainly at NTN and existing group companies. We also offered
early retirement options to 600 employees, and 420 applied forthis. Remaining employees were mostly diverted to theaftermarket business that the company focuses on. These
measures resulted in personnel cost reductions of approximately
3 billion yen in the fiscal year ended March 31, 2013.
To reduce fixed costs, we looked at all divisions, mainly at NTN
and existing group companies, analyzing expenses that contributedirectly to profits and promoted to cut these. As a result, wewere able to reduce fixed costs by approximately 4.5 billion
yen, above our plan for the fiscal year ended March 31, 2013.

2 Limit capital expenditure
Under “Revival 2014”, we reviewed all past capital expendituresand decided on a policy of keeping investments to less thanthe value of depreciation. In the fiscal year ended March 31,
2013, as a result of measures that included utilizing existing
equipment, moving equipment in Japan to overseas sites,
increasing local procurement of equipment, and developing
inexpensive equipment, capital expenditures were 49 billion
yen, within our plan excluding exchange-rate effects. The result
for the fiscal year ended March 31, 2014 was even lower, 33.2
billion yen, and less than depreciation.
While continuing to meet increasing demand around theworld, we are doing everything possible to expand businesswhile enacting measures that minimize investment amounts.

3 Reduce inventories
To reduce inventories, we reduced inventory of products andproducts in process through company-wide projects and theuse of IT systems. Inventory was 163.3 billion yen in the fiscal

2Centralization ofManagement Resources

FeatureReduce personnel costs

year ended March 31, 2013, which included exchange-rate
effects, and on a volume base it was actually 154.1 billion yen,
2.9 billion yen below our plan of 157 billion yen. In the fiscal
year ended March 31, 2014, inventory was up slightly to 166.5
billion yen, but this includes exchange-rate effects and on a
volume base it represents a further decrease. The inventory
turnover ratio increased to 3.8 times, and we will continue to
strive to reduce inventory as well as boost the turnover ratio
to 4 times in maximizing capital efficiency.
We are also working to reduce capital through measures
such as booking impairment losses on unnecessary equipment
and buildings, and incurring extraordinary losses from soil
purification by selling the former site of TAKARAZUKA WORKS.

Centralization on Priority Fields

The second main policy of “Revival 2014” is centralization ofmanagement resources. We are proceeding with measures inthree areas that we have decided require crucial influxes ofmanagement resources: greater profits in the automotive
business, sales expansion for the aftermarket, andstrengthening the industrial machinery business globally.

1 Greater profits in Automotive Business
Reviewing design and manufacturing methods
To increase profits in products for the automotive business, weare reviewing our design and manufacturing methods. We arethoroughly reducing costs through efforts such as introducing
technologies to standardize parts and unify product models,and using reasonably priced materials. Figure 1
In product development, we are working towards greater
profit in the automotive business through early market
introduction of high-value-added products. These include theEBW Drive Shaft (released in May 2014), in which the inboard
outer ring, which was previously specifically designed andmanufactured for each model, is standardized, and in which thecup section and stem (shaft) section are welded using electron
beam welding; and the Press Connect Spline Hub Joint (released
May 2012), which allows for lighter weight and eliminatesbacklash in fittings through the use of a proprietary fitting method.

Expand local procurement of steel andpre-process parts
To increase profits in the automotive market, we are working
to procure more steel and pre-process parts locally. By using
locally procured materials and accelerating the local integrated
production of parts from pre-processes, we can reduce shipping
costs, avoid exchange-rate risks, reduce manufacturing
lead-time, and cut material costs.

18

Feature

Medium-term Management Plan “Revival 2014”—Progress and Future

Besides using more inexpensive, high-quality steel incountries like China and Korea, we are proceeding with cost
reductions made possible by free trade agreements. For
example, by importing steel to Thailand from Korea, andshipping products made in Thailand to around the world, weare reducing customs duties.
For forging and turning, we are accelerating the developmentof local manufacturers to take up pre-process production,
thus expanding local procurement of pre-process parts. We
currently have about 300 overseas suppliers (conducting forging
and turning, and making parts), a number that represents a
10-fold increase over 10 years.
We will continue to strengthen partnerships with local
manufacturers in order to manufacture more pre-process
parts locally through joint business. (Our initial target for the
global local procurement rate for the fiscal year ending March
31, 2015 was 90%; however, we are now aiming for an 87%
rate due partly to the benefits of the current weak yen.)

2 Sales expansion for Aftermarket
Establishment of the Aftermarket Business
Headquarters
In October 2013, we established the Aftermarket Business
Headquarters to expand sales in the aftermarket. Besides
increasing the number of aftermarket business personnel, weestablished three sales offices (East Japan, West Japan, Central
Japan), and new departments including Sales Engineering
Planning and Production Planning. We are also expanding
and reorganizing our sales network, and we will expand inflourishing demand markets such as Indonesia, Russia, Eastern
Europe, and China.
To strengthen our system of provision, we began operations
at the Kuwana-Inabe Plant in April 2013 to specialize inindividual products and multi-product small-lot production for
the aftermarket business. This will allow us to more quickly

and flexibly satisfy customer needs and thus expand sales.
Regarding distribution, we concentrated our best-selling
products at aftermarket stock centers in Japan. This allows
us to better provide these products to all regions and ensurethat we do not run out of them, thus ensuring we takeadvantage of all opportunities for sales.

Expand the auto parts business
The auto parts business is a key target of the aftermarket
business. In this field, we are focused on automotive bearingsand kit sales that combine peripheral components. We have a
product lineup that gives superior convenience to customers
with products such as axle kits and fan-belt kits, and it
represents our shift from general purpose items to high-quality,
high-value-added products and thus greater profitability. Utilizing
our years of experience in combining components, we areproviding kits for engine and wheel applications of passenger
cars and large trucks, constantly expanding our product lineup
to meet new application needs, as well as moving our marketing
activities beyond just the conventional markets of Europe andthe Americas to encompass Asia and other regions. Figure 2
Utilizing our dedicated auto parts catalogue, we areproposing combinations by unit in an easy-to-understandmanner, thus contributing to boosting our share of the world
market for the aftermarket.

Expand the MRO business
Another key target is the MRO* business, which covers bulk
contracts for equipment repair for customers in industrial fields
like steel, paper, port facilities, and mining. We strive to offer
our users and distributors technical diagnoses, training, andother guidance by providing timely maintenance proposals withequipment diagnostic technologies such as monitoring anddata analysis based on an NTN database of when our
industrial machinery customers need to change their bearings,

Centralization of Management Resources —Centralization on Priority Fields—
Figure 1

Example of standardized parts (drive shaft)
Customized to customer needs

Standardized

Figure 2

Auto parts kit

Providing a kit that combines
automotive bearings andperipheralcomponents

Figure 3

Technical
service unit
Visits customer sites andprovides services thatlead to new orders

Depending on parts differences between models, such as shaft lengthand shape, and on the degree of necessity, it is possible to combine parts
with a unified design

19and utilization of technical service units that visit our customers
with bearings and maintenance tools. Figure 3
In April 2013, our mobile training units embarked on toursof customer sites, providing technical services and support
for repair and maintenance using maintenance tools, and in
the process helped boost the brand image of NTN.
* MRO: Maintenance, Repair, and Overhaul

3 Strengthening Industrial Machinery
Business globally
Expand sales in growth industries

Expand sales in low-share regions
Another key effort in the industrial machinery business is toexpand sales in regions where we still have a low market
share. We are particularly strengthening business in target sectors

Figure 4

Sectors and strategies in the industrial
machinery business

Structural Reform
Mid-Term Business Structural Reform

With the aim of building a strong corporate structure, we arereforming our business structure with an eye on the medium
term under “Revival 2014”. The three pillars of these efforts arereforms to personnel costs, which accompany expansion ofoverseas production; acceleration of overseas production,
which is carried out medium to long term; and selection ofbusiness, which includes reform of distribution processes andwithdrawal from a part of business in precision equipment.

1 Reforms to personnel costs
Under strategies to expand overseas production, we areshifting the numbers of personnel between different regions
and reforming the personnel cost structure in order to reduce
personnel costs. As a result of increasing the number of
personnel overseas, the percentage of NTN employees

Aerospace• For world’s four major jet engine manufacturers• Increasing production capacity in Japan and Europe

Wind turbines

Rolling stock• Expansion of manufacturing
in Japan and Europe• High-speed technologies help
increase market shareConstruction
machinery• Manufacturing in Japan, China,
and Europe• Marketing the “Wind DoctorTM”
around the world

Robots, gear boxes• Four manufacturingbases* expands rangeof sales to local
manufacturers* In Japan,
the Americas,
Europe, and Asia

3

FeatureIn the industrial machinery business, a key effort involves
expanding sales in growth industries. We are conducting
marketing activities in earnest with a focus on sectors that are
expected to continue growing worldwide, including aerospace,rolling stock, wind turbines, machine tools, and agricultural
machinery. Figure 4
In aerospace, in October 2012 we were recognized as an
official supplier of Pratt & Whitney to mass-produce bearings
for the PurePower® family of jet engines, and mass-production
and delivery is scheduled to start in June 2014. In June 2013,
we received our first order to mass-produce bearings for theRolls-Royce Trent XWB new jet engine. This made us the firstand only bearing manufacturer in Japan to be certified to supply
products to the world’s four major jet engine manufacturers.
In the growing worldwide market for wind power systems,
we plan to further boost marketing of new products, such as
bearings for wind turbines, and our Condition Monitoring
System (CMS) for wind turbines, the “Wind Doctor TM,” aproprietary system developed by NTN.

such as wind turbines, construction machinery, machine tools,
and rolling stock in China and ASEAN. In the fiscal year ended
March 31, 2014, we took large-scale orders for contacts inrolling stock, including high-speed railways and light rapidtransit (LRT), and we delivered prototypes in anticipation of neworders. In machine tools and agricultural machinery as well, sales
were gradually expanding as we took new orders in China.
In China and ASEAN, quality standards are improving for
local products and customers are demanding bearings withhigh added value, and this is prompting us to step up marketing
to local manufacturers. Making use of the NTN China TechnicalCenter in Shanghai, we are matching design and development
to the demands of local customers so that we can shorten thetime it takes until we receive product orders.

Machine tools• Using high-speed andenvironmental technologies
to secure new orders• Expansion of bearings withsensors and composite
material products

Agricultural machinery• Four manufacturing bases, more applications
for constant-velocity joints

20Feature

Medium-term Management Plan “Revival 2014”—Progress and Future

overseas at the end of fiscal year ended March 31, 2014 wasapproximately 64%, with the Asian region adding about 500
people in a year. Overseas employees will continue to accountfor an increasing percentage of NTN as a whole.
And based on our philosophy of “on local site with local
materials by local personnel,” we will hire more local humanresources and increase and train local managers who will act
as key personnel.

2 Acceleration of overseas production
We are accelerating the move of our production to demandregions so as to establish a production system that is
unaffected by exchange rates. To make the most of existing
equipment, as a rule we produce local products at local
sites, and we are responding to new demand by moving
manufacturing equipment from Japan to overseas bases. In
the fiscal year ended March 31, 2014, the local production
rate increased by 2% to 49% year on year, and we willcontinue to increase this with a medium- and long-term view
and achieve greater profits in the automotive business.
As for items currently mass produced in Japan, to spread risk
and boost productivity through the latest Monozukuri, we aremoving production to newly established subsidiary plants. At
NTN’s own plants, we are boosting profitability through efforts
including focusing on the manufacture of high-value-added
products such as module products and system products.

3 Selection of business
Under our selection of business efforts, in April 2014 weestablished NTN LOGISTICS CO., LTD., a subsidiary that
integrates production logistics and sales logistics functions.
Logistics costs will be lowered through various efforts: more

efficient transportation through centralized management offinished products, semi-finished products, and procured parts;
elimination and consolidation of logistics centers; reviews andimprovements of packaging specifications; and elimination
various aspects of wasted work by visualization of logistics
costs. Furthermore, we are striving to provide services thatthoroughly satisfy customers, including improving logistics
quality and implementing safety and environmental measures,and we are striving to contribute to society.
To raise the profitability of the group as a whole, we arepulling out of some precision equipment products in the industrial
machinery business, and we are shifting employees in thesecategories to development and marketing functions in new productand business areas as we strive to restructure our business.

4

Expansion of New Products
and New BusinessTowards Further Growth

The fourth main part of “Revival 2014” is the expansionof new products and new business in order to achieve
further growth. Here, we are carrying out a range ofmeasures based on three pillars: strengthening developmentof module products and system products, full operation of
the EV system products business, and development ofcomposite material products and market deployment.

1 Strengthening development of module
products and system products
NTN is evolving towards what we call module products andsystem products. The module products we develop are new

Expansion of New Products and New Business —For Further Growth—Figure 5

Evolution of Module and System Products

For industrial
machinery

Figure 6

Module Products

Ball Screw Drive Module for Electric Hydraulic Brake”Wind DoctorTM”

Cooperative regenerative
braking system

Motorized linear
modulesAmountbrake pedal
is pressed

ECU

SystemBearing units

Hydraulic
brake
force

ModuleInverter

Product exterior

Unit
Bearings

Individual
products

For automotive

21

Vehicle drive
motor

In-wheel
Motor System

Clutch for seat lifter*

Constant-velocity joints

Regenerated
braking force

Hub bearings** Photos are cross-sectional models of products.

When the brake pedal in vehicles such as EVs is pressed, this energy
can be converted to electricity (regeneration). Our Ball Screw Drive
Module for Electric Hydraulic Brake, which is used in cooperative
regenerative braking systems, combines components such as ballscrews, bearings, and sintered materials, and is compact, highly
reliable, and contributes to several percent in fuel savings.

2 Full operation of the EV system products
business
NTN is creating future technologies by focusing on research anddevelopment in the EV field. We have an increasing number ofdemonstration businesses underway in which our next-generation
EV system products developed with proprietary technologies
are being used in actual vehicles and by commuters in tests on
public roads. Starting in October 2011, we teamed up with themunicipal government of Iwata City in Shizuoka for a social
demonstration test, and in June 2013 in Annecy City, France,

Figure 7

EV System Products

In-wheel Motor System

Figure 8

we began the first demonstration test in the world of a
microcompact EV equipped with the in-wheel motor as aregistered vehicle conducted on public roads. Figure 7
In Japan, in the fiscal year ended March 31, 2014,
microcompact EVs in Shizuoka Prefecture using NTN’s In-wheel
Motor System became the first such compact cars registeredin Japan and underwent
ent testing on public roads. In Ise City, Mie
Prefecture, the In-wheel
heel Motor System was used in the firstmicrocompact mobilityy car in Japan. As well, NTN’s technology
is used in converted EVs being used as official city vehicles
for the municipal government
ernment of Kuwana City, Mie Prefecture.
Through such demonstration
onstration businesses, we are moving more
quickly towards the practicalapplication
ourr EV system products.
acticall applica
ation off ou

3 Development
nt of composite material
products andd market deployment
NTN has built up a range
nge of material technologies, exemplified
by sintered bearings using metal powder, and plastic bearings
using high-performancece materials. We are now expanding ourbusiness into new spheres
heres with new and advanced functional
materials made possible
ble by combining these existing proprietary
technologies with the molding and manufacturing technologies
of NIPPON KAGAKU YAKIN Co., Ltd., which joined the NTNGroup in 2011. Amorphousrphous core is one of our flagshipcomposite material products,
roducts, and it is a focus of attention for
its use in reactors in thee rapidly expanding EV and hybrid market,
and as MRI choke coils
oils in increasingly highly functional
medical equipment. Figure 8
We are moving ahead
ead in developing numerous composite
material products that utilize the NTN Group’s range of material
technologies, taking these technologies to market and thus
further strengthening our management framework.

Composite Material Products

Plastic materials (BEAREE)

Low Torque Seal Ring

Corrosion Resistance
BEARPHITEFor EVsand HEVs

Used in converters for EVs

For medical
equipment

Used in MRI choke coils

Hybrid BEARPHITE HP

Magnetic Material (NIKAMET)

Injection Bond Magnet

Amorphous Core

Sliding Bearing Unit forHigh Load Applications

Sintered Metal (BEARPHITE)The In-wheel Motor System
incorporates an In-wheel
Motor and a control systemthat is linked to sensor
information. Incorporating a
motor into each wheel
makes the car’s interior more
spacious, and makes possible
a car capable of “pivot turn”
Demonstration business in Franceand “lateral move”.

Featurecombinations of our years of experience in individual products
such as bearings and constant-velocity joints and peripheral
components, along with products including sensors, actuatorsand other components. System products represent anadvanced integration of mechatronics technologies andcontrol technologies. Figure 5
Not only do these module products and system products
help reduce the number of components and help make finishedproducts smaller and lighter; they also reduce the amount ofassembly man-hours by customers and give products added
value. As exemplified by products like our Ball Screw Drive
Module for Electric Hydraulic Brake (released in April 2013),
we will continue to step up development of module products
through new combinations of components. Figure 6
We are also focusing on developing system products, likeour Condition Monitoring System (CMS), the “Wind DoctorTM,”
for wind turbines (released June 2012), that integrate ourproprietary advanced mechatronics technologies such as
sensor technologies and control technologies. This will boost
profitability and lead to the creation of new services and solutions
that help us achieve further growth.

High Performance
Magnetic Core

The amorphous core is made through theinjection molding of magnetic material
comprising a mixture of amorphous powder
and resin. Its applications include EVs andHEVs, and choke coils in medical equipment.

22

At a Glance

Net Sales in Each Business Application as Percentage of Total Sales

Aftermarket
Applications
Percentage of
total sales

16%(103.8 billion yen)

Industrial Machinery
Applications
Percentage of
total sales

16%(101.2 billion yen)

Automotive
Applications
Percentage of
total sales

68%(433.9 billion yen)This business covers
aftermarket bearing sales
for general machinery
through distributors, theaftermarkets 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

This business covers a
range of industrial machinery
sectors including
construction machinery,
agricultural machinery,
aerospace, office equipment,
wind turbines, machine
tools, and rolling stock.
We are working to expand
sales by integrating newtechnologies into all sizesof bearings.

Net Sales and Operating Income for the Industrial Machinery

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

Net Sales and Operating Income in Automotive Applications

Net sales

Net Sales
120

103.8

94.0

86.2
80

17.9

110.0

89.2

19.1

14.7

40

19.5

17.7

Operating
Income(Billions of yen)

20
10

0

2011

2012

2013

2014

2015

0

ended
(YearsMarch 31 )(Forecast)

Net sales

Net Sales

Operating income(Billions of yen)

120

106.6

99.5

80

101.2

93.7

101.0

4.0

3.3

3.1

40

0

2011

2012

2013

2014

2015
(Forecast)

Net sales

Net Sales(Billions of yen)

433.9
344.4

342.9

ended
(YearsMarch 31 )Operating income

449.0

356.6

Operating
Income(Billions of yen)

300

12.0
150

5.0
2.5

1.5

0

450

Operating
Income(Billions of yen)

4.8

16.5

20
10

3.5

0

0

-3.2
2011

23

Operating income(Billions of yen)

2012

2013

-9.0
2014

2015

-10

ended
(YearsMarch 31 )(Forecast)Reference: Net Sales by Region
Percentage
of total sales

Japan

28%

(Billions of yen)(Billions of yen)

250

200

166.3

186.6 193.4 177.5 179.1 181.0

200

Percentage
of total sales

Europe

150

156.4

26%

158.5

127.1 132.8 133.0 124.8

150
100
100
50

50
0

2010

2011

2012

2013 2014 2015

ended
(YearsMarch 31 )(Forecast)

In the aftermarket applications, sales were down due to a drop in the aftermarket
for industrial machinery. In industrial machinery as well, due to a drop in customer
demand in China and other Asian countries, sales were down in construction
machinery and other sectors. In the automotive applications, despite a drop
following the end of the Japanese government’s eco-car subsidy, sales were up
overall thanks to factors including increased customer demand.

27%(Billions of yen)

2011

2012 2013 2014 2015

(Forecast)

ended(YearsMarch 31 )In the aftermarket applications, sales were up on demand recovery from
customers in the automotive aftermarket sector. Sales in industrial machinery
applications were little changed from the previous year, although the automotive
applications saw a rise in sales thanks to a recovery in customer demand.

Percentage
of total sales

Asia and Others

19%(Billions of yen)

200

174.6

150

118.0
100

2010

At a Glance

Percentage
of total sales

Americas

0

124.6

189.0

150

131.5

119.0

120

141.6

90

90.0

95.8

92.7

92.4

2011

2012 2013 2014 2015

79.3

60
50

0

30

2010

2011

2012 2013 2014 2015

(Forecast)

ended(YearsMarch 31 )Sales were up in the aftermarket applications thanks to a recovery in customer
demand in the automotive aftermarket sector. Industrial machinery saw a drop,
particularly in sectors such as construction machinery. In the automotive
applications, however, sales were up overall thanks to factors including
increased customer demand.

0

2010

(Forecast)

ended(YearsMarch 31 )Aftermarket sales were down on decreases in industrial machinery aftermarket
products. In the industrial machinery applications, sales were up in China on thestrength of increased customer demand for wind turbines but were down in otherparts of Asia as customer demand decreased. In the automotive applications,sales were down due to slower customer demand in Asian countries, although
China saw a sales increase thanks to a recovery in business to Japanesemanufacturers in that country and mass production of new projects.

24

At a Glance

Aftermarket
Applications

Results in the Fiscal Year Ended March
31, 2014

We are Utilizing Our
Engineering Capabilities
to Expand the Aftermarket
Applications.
Net Sales and Operating Margin for the Aftermarket
Japan

Net Sales

Americas

Europe(Billions of yen)

Asia and others
Operating margin

17.1% 17.7%
120

20.8%

100

86.2

20.3%
94.0

16.5%

103.8

110.0

89.2

60
40
20

2011

2012

2013

2014

2015

(Forecast)

Overview of the Fiscal Year Ending
March 31, 2015
In the fiscal year ending March 31, 2015, we forecast an
increase in Asian countries for both industrial machinery andautomotive, which we will take advantage of by stepping up
our technical services via mobile training units to increase
MRO (Maintenance, Repair, and Overhaul) orders and byincreasing the number of new distributors for auto parts. We
are introducing new products for automotive in the Americas,
where we will work to boost sales through collaboration among
our three North American subsidiaries.

80

0

Net sales in the aftermarket applications were 103.8 billion
yen, up 14.6 billion yen (16.4%) over the previous fiscal year.
Amidst slumping demand worldwide in industrial machinery,sales were down in the aftermarket for industrial machinery, but
this was offset by strong sales in auto parts for the automotive
aftermarket sector in the Americas, Europe, and other regions.
Operating income was up 3 billion yen (20.4%) to 17.7 billion
yen thanks partly to positive exchange rate effects.

ended(YearsMarch 31 )Medium- and Long-Term Strategies

Fukumatsu Kometani
Executive Director

25

We are looking to expand MRO for industrial machinery, notjust in the focus markets of Europe and the Americas but alsoin Russia, Eastern Europe, Turkey, Africa, and other regions.
We still expect further growth in China, ASEAN, India, andother regions, and in Japan we will tap new demand for MRO
through methods including more direct visits to customers intarget segments. In the automotive applications as well, we
will step up sales activities in markets where we forecast large
growth in demand for car repair parts; that is, regions where
car ownership is dramatically increasing, including China,
ASEAN, India, Russia, Eastern Europe, and South America.
We will also continue boosting our engineering capabilities,
such as through the use of mobile training units conducting
technical services and on-site training courses. To boost supply
chain capabilities, we will commit to delivery due dates andboost inventory of top-selling products, and we will expand
the product lineup through efforts including expansion of
production at a dedicated plant, establishment of aftermarket
stock centers and maintenance of a global inventory
replenishment system. Under a strong organizational structure
for not just sales but also the production and engineering
divisions as well, we will focus on these various efforts as wework to expand our aftermarket business.

Main Product Lineups for the Aftermarket Applications* Photos are cross-sectional models of products.

For furnace body trunnion

Steel

Auto Parts
Rolling mill

Converter

Four row cylindricalroller bearings*

Super large-sized split
spherical roller bearings*

Double row tapered
roller bearings

Sealed four row tapered
roller bearings

Extensive lineupof parts kits

Oil and Gas

Parts kit for
North America

MiningThrust cylindricalroller bearings
Equipment at
oil and gas
including shale gas
production site

At a Glance

Bearingunits

Conveyor

Sealed sphericalroller bearings
bearings*

Crusher

TopicsNTN Develops Handy Type Failure
Detection Device
Using its years of experience in bearing diagnostic technology, NTN
has developed an industry first: a device with outstanding portability
for measuring and analyzing the vibration of bearings. The device
utilizes a smartphone to send vibration data via the internet to a server
for calculation and analysis. The input and output is also displayed on
the smartphone, which makes for an extremely compact and portablevibration measurement system.
The device boasts a range of functions, such as the ability to upgrade
to the latest usage environment through integrated processing andcontrol by data calculation and analysis software; determine damaged
parts of the bearings when there is a problem; and remotely monitor
the state of the equipment. This product will go on sale in Japansometime in 2014.
We will offer improved diagnostic and analysis devices andcontinue to expand our aftermarket business by strengthening ourtechnical services.

AD converter

Vibration pickup

Vibration measuring devices(sold by NTN)

Smartphone(provided by customer)

Handy Type Failure Detection Device
Vibration measurement device
Smartphone
Wireless
communications
Equipment
motorsand otherdevicesInternet

Vibration data

NTN server

Vibration data
• Data measurement
and analysis• Data storage

Diagnostics
Diagnostics
results
results
Wireless communications

26

At a Glance

Industrial Machinery
Applications
We are Focusing on
Expanding Sales in theWorld’s Growth Sectors.
Net Sales and Operating Margin for the Industrial
MachineryJapan

Net Sales

Americas

Europe(Billions of yen)

120
100

3.1%
99.5

4.5%
1.6%
106.6
93.7

3.2%
101.2

Asia and others
Operating margin

4.0%

60
40
20

2011

2012

2013

2014

2015

(Forecast)

Net sales in the industrial machinery market were 101.2 billion
yen, up 7.5 billion yen (7.9%) over the previous fiscal year.
Amidst slumping demand in construction machineryworldwide, in China this sector recovered and demand was
up in the wind turbine and rolling stock sectors as well. Strong
sales were recorded for rolling stock and aircraft in Japan andEurope, and for wind turbines in the Americas.
Operating income was 3.3 billion yen, up 1.8 billion yen(113.8%) over the previous fiscal year due to a decrease in fixed
costs such as labor and favorable effects of exchange rates.

Overview of the Fiscal Year Ending
March 31, 2015

101.0

80

0

Results in the Fiscal Year Ended March
31, 2014

ended(YearsMarch 31 )We are being cautious overall in our predictions for the fiscal
year ending March 31, 2015. This is due to a drop in demandwhen compared with the rush in demand for construction
machinery in the previous year in the high-volume market ofJapan, an expected delay in demand recovery in Europe due toinstabilities including the situation in the Ukraine, and decreased
demand in North America for agricultural machinery. At thesame time, we foresee new orders in machine tools, strong
sales in aircraft, and a rise in products for robotics.

Medium- and Long-Term Strategies

Kenji Okada
Executive Vice President

27

Our global business focus will continue to be on expanding
sales in growth industries. Against a background of increasing
population, energy supply issues, and economic development
in newly emerging countries, we will step up technologicaldevelopment in expected growth markets such as agricultural
machinery, wind turbines, machine tools, construction
machinery, rolling stock, aircraft, and robots. As well, by
expanding sales to local manufacturers demanding ever-higher
quality, and strengthening business in China and ASEAN regions
by maximizing the NTN China Technical Center, we are looking
to expand sales in regions where our market share is still low.
Regarding product strategy, we are expanding the lineup
of our ULTAGE Series, which boasts the world’s highest load
capacity and high-speed rotational performance for construction
machinery, wind turbines, gear boxes, and hydraulic equipment,
as well as a wide range of other general industrial machineryand aftermarket sectors. We are working to shift further fromindividual components to system products such as ourCondition Monitoring System (CMS) for wind turbines. And weare working behind the scenes to better satisfy the needs of arange of customers by offering them an even higher level of
QCDD (quality, cost, delivery, and development).

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

Condition Monitoring System (CMS)
for wind turbines: the “Wind DoctorTM”

Construction
machinery bearings

Agricultural machinery
bearings

At work in resource mining
and civil engineering

Contributing to food demandwith high quality products

Gearbox bearings

Aerospace bearings

Supporting industrial
machinery robots

At work in jet engines
around the world

Office equipment
bearings

Wind turbine bearings

Main Product Lineups
ineupssfor the Industrial
trial
Machinery Market
k t

Supporting smooth
operation incopiers andmultifunctional
printers

Meeting growing
demand in renewableenergy and other areas*
Rolling stock bearings

Machine tool bearings
High-precision support
for high-speedrotation

Providing safety for theworld’s high-speed
railways*
Medical equipment
bearings

Used for HDDs andthin fan motors

Used in CT scanners andartificial hearts

At a Glance

Hydrodynamic
bearings

Bearing Technical Calculation System
for Machine Tool Spindles (Image)Customer
Send by e-mailReceive by e-mailAvailable 24 hours a day,365 day a year

Motorized Linear Module
for Tracking System for Solar
Heat/Solar Light Power Generation

TopicsNTN Receives the 2013 “CHO” MONODZUKURI Innovative Parts and Components Award,
Nippon Brand Award
For its Parallel Link High Speed Angle Control Equipment, a compact
angle positioning device that allows high-speed, high-precision
positioning over two-degrees of freedom and a wide range of moving
angles, NTN received the Nippon Brand Award at the 2013 Cho
Monodzukuri Innovative Parts and Components Awards sponsoredby the Nikkan Kogyo Shimbun, Ltd.
The awards panel chose the NTN product for a number of reasons.
A proprietary parallel link mechanism* consisting of two spherical links
ensures a compact design and a wide range of movement, and the newly
developed drive mechanism allows coordinated control of the angles
of each of the stationary arms for high-speed positioning. The productallows high-speed application and application from various angles ofsubstances such as grease and adhesive, which means high-speed
processing of complex shapes. A special teaching console supports
superior operability. The product is expected to contribute to moreadvanced automation and robotics technologies in production equipment.
* Mechanism comprising of three sets of similar link systems between the moving and stationary link hubs. Each link system consists of a rotating L-shaped arm attached to the outercircumference of the moving and stationary link hubs, and a rotatable connected intermediate link connecting the axis of rotation of the end of each hub in a single location.

28

At a Glance

Automotive
Applications

Results in the Fiscal Year Ended March
31, 2014

We Have Successfully
Tackled the Challenge of
Improving Profitability.
Net Sales and Operating Margin for the Automotive
Japan

Net Sales

Americas

Europe(Billions of yen)

500

1.0%

-0.9% -2.5%

400

344.4

342.9

Asia and others
Operating margin

2.8%

3.7%

433.9

449.0

356.6

300
200

Overview of the Fiscal Year Ending
March 31, 2015

100
0

Net sales in the automotive applications were 433.9 billion
yen, up 77.3 billion yen (21.7%) over the previous fiscal year.
The increase in car production around the world boosted
customer demand in the Americas and Europe and pushed
up sales. In China, there was a major recovery in customer
demand particularly among Japanese manufacturers, while
demand was up in Japan as well.
Operating income was 12 billion yen (compared to an
operating loss of 9 billion the previous year). This was due tofactors including the effect of increased sales, decreased
proportional costs, the dissolution of temporal costs incurredin the previous year because of an increased burden on
production lines resulting from higher sales in the Americas
and exchange rate effects.

2011

2012

2013

2014

(

)

2015 Years ended(Forecast) March 31

For the fiscal year ending March 31, 2015, we anticipate a large
increase in sales due to newly secured orders from Japanesemanufacturers and local manufacturers, particularly in China
and other Asian countries.

Medium- and Long-Term Strategies

Yoshinori Terasaka
Managing Director

29

For the medium and long term, production volume will decreasein Japan as car makers move production overseas, while wealso forecast continued high production volume in the North
American market. We also anticipate that the market will
expand in ASEAN countries and India, and that China willcontinue its growth as the world’s largest market.
Against this background, we will not only expand sales
in these emerging regions but also successfully boost
profitability by continuing measures that include increasing
local procurement and increasing the use of local steel andlow-price steel.
In the area of product development, we will supplement
our strengths in axle bearings and constant-velocity joints byaccelerating development of module and system products, athird pillar of business that will distinguish us from ourcompetitors. And besides standardizing parts to further boost
productivity, we will strive to promptly provide customers withtechnology suggestions and samples that will make NTN an
indispensable partner.

Main Product Lineups for Automotive Market
Transmission

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

Steering

Seat

Constant-velocity joints for steering*

Clutch for seat lifter*

Third generation
hub bearings*

The world
No.1

CVT
Thrust needle
roller bearings

Wheel
applications
At a Glance

Hollow ballscrew units*

Engine, accessories

The world
No.2
High-load
resin pulleys

Auto tensioner
units*

Needle roller bearings
for rocker arm

Constant-velocity joints*

TopicsDevelopment of “Mechanical Clutch Unit (MCU) for Next-generation Steering”
NTN has developed and released the Mechanical Clutch Unit
(MCU) for Next-generation Steering, which went on sale in 2013and has been adopted by Nissan Motor Company for its Direct
Adaptive Steering.
The product contributes to the realization of a backup mechanism
for the Direct Adaptive Steering. The MCU has a compact layout
consisting of an electromagnetic clutch and roller clutch. The
electromagnetic clutch is energized when the Direct Adaptive Steeringfunction activates, which releases the roller clutch, which in turn transmits
steering input to the tires via electrical signals. If a malfunction is detectedin the Direct Adaptive Steering, power to the electromagnetic clutch
is turned off and the roller clutch is instantaneously connected totransmit steering input to the tires via a mechanical link. A high load
capacity design ensures a high level of reliability when the mechanicallink is active.
NTN is aiming for further market deployment of the MCU as a coretechnology product for next-generation steering systems.

Steering wheel

Mechanical Clutch Unit for
Next-generation Steering*

Tire[Example of application]

30

Research and Development

Worldwide Research and Development into New Products
and Technologies that Anticipate Market Needs
Development System Capable of Rapid Response to the Needs ofLocal Customers around the WorldThe NTN Group conducts global research and development atfour regionally independent, self-contained R&D bases. At the
R&D bases in Japan and Europe, we conduct elemental technology
and other basic research, as well as research into cutting-edge
technologies. At the same time, so that we can quickly respondto customer needs in various regions, the R&D bases are
self-contained centers that can carry out independent technologicalservices such as development of individual products, assessment
for certification, surveys, and analysis. We are stepping up thefunctions of the NTN China Technical Center in Shanghai, whichis central to collaborations with industry, academia, and government
in conducting development projects, and which hosts demonstration
testing related to environmental fields.
The research results and technological information garneredfrom NTN’s R&D bases are compiled on databases for sharing
among the worldwide NTN Group.

PRODUCTION
ENGINEERING
R&D CENTERADVANCEDTECHNOLOGY
R&D CENTERJapan

NTN R&D
CENTER

Share database

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

Americas

China

Development for the Industrial Machinery Market

Meeting Needs in a Range of Sectors
through Advanced Bearing Technologies

NTN-SNR
R&D Center

Besides the promising growth sector of wind power systems, we arealso positioning aircraft, machine tools, rolling stock, construction
machinery, robotics, and agricultural machinery as key sectors
where advanced bearing technology is in demand. For these sectors
we are developing new products and module systems that respondto market needs. One target area for NTN is offshore wind turbines,
which is seeing increasing numbers of installations worldwide.
For this market, we have developed and plan to introduce theworld’s smallest class of CMS*1, which remotely monitors thestate of the various parts of a wind turbine. We have alreadybegun selling the CMS for both practical use and demonstration
test purposes on land-based wind turbines around Japan.
In NTN’s core product area of spherical roller bearings, we are
expanding our ULTAGE*2 series, which boasts the world’s highest
standard. Besides increasing sales of ULTAGE in key sectors andthe steel industry, we are continuing to evolve this product series
and develop module and system products in response to newmarket needs.

Automotive Applications*1 CMS: Condition Monitoring System*2 “ULTAGE” (a name created from the combination of “ultimate,” signifying
refinement,and “stage,” signifying NTN’s intention that this series of products
be employed in diverse applications) is the general name for NTN’s new
generation of bearings that are noted for their industry-leading performance.

INDUSTRIALITECHNICALTCENTERCNTN China
NTN Automotive
Technical Center Center

Providing a Diverse Range of Productsthat Boost a Car’s Energy Efficiency
Besides module products such as Ball Screw Drive Module forElectric Hydraulic Brake for hybrid cars, and the MCU*3 fornext-generation steering systems, we have developed productsthat improve cars’ fuel efficiency, like a Low Torque Seal Ringthat allows transmissions to be smaller and have lower torque,and hub bearings with less friction loss.
For EVs, we have developed an In-wheel Motor System and anelectromechanical brake system, and we are working with system
suppliers to bring these products to market. We have also
conducted demonstration projects in Japan and France of
microcompact EVs eqipped with our in-wheel system. In the fiscal
year ending March 31, 2014, we began a similar demonstration
project in Ise City, Mie Prefecture and are aiming forcommercialization that will help local tourism promotion.
*3 MCU: Mechanical clutch unit

A Word from a Senior Executive Officer

Contributing to Worldwide Industry through the Power to Develop Proprietary Technologies
The NTN Group has always put the full force of its
capabilities into creating products and technologies
that are the best in the world and unrivalled among
our competitors. In recent years, we have stepped
up development of module products and systemproducts, which combine existing products likebearings and sintered materials with peripheral
components such as direct-acting parts, gears,
motors, and sensors, all of which are operated
with control technology. We are actively proposing
these module and system products to ourcustomers, who reap the benefits of shorter
man-hours for design and assembly, a shorter
development period, and lightweight, compact
products. We are also offering improved service

31

solutions through bearing diagnosis and analysis
on various types of equipment. An example isreleasing CMS, which remotely monitors thestate of a wind turbines.
Developments are proceeding at companies
in the NTN Group; for example, on magnetic
materials that will be used for the power unit ofhybrid cars; and on resins and sintered alloys
whose specific properties are exploited to makecomposite-material products. Through researchand development activities like these, we are giving
birth to high-precision, high-quality products andtechnologies that will contribute to the advancementof industries around the world.

Yukiyoshi Hagimoto
Senior Executive Officer

Corporate GovernanceG overnance· · · · · · · · · · · · · · · · · · · · · · · · · · 33

Governance, Compliance · · · · · · · · · · · · · · · · · · · · · 33
Disclosure of Information · · · · · · · · · · · · · · · · · · · · · · 39
Officers · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 40

Focus
Energy is a Key Management
1 Managing
Challenge · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 41

CSR Activities
Reporta Global CSR
2 Establishing
Implementation System to Strengthen

Management Foundation · · · · · · · · · · · · · · · · · · · · · · 42

for Our 100th Anniversary of Foundation
3 Targets
More Female Employees, More Female

Managers · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 43

Social and Environmental
Responsibility

S ociety········································

44

Quality Management · · · · · · · · · · · · · · · · · · · · · · · · · · · · 44
Supply Chain Management · · · · · · · · · · · · · · · · · · · 46
Human Resources Management · · · · · · · · · · · · 47
Contributions to Local Communities · · · · · · 49

E nvironment· · · · · · · · · · · · · · · · · · · · · 50

Environmental Management · · · · · · · · · · · · · · · · · · 50
Prevention of Global Warming · · · · · · · · · · · · · · · 56
Reducing Waste · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 58
Management and Reductionof Environmentally
Hazardous Substances · · · · · · · · · · · · · · · · · · · · · · · · · 59
Biodiversity · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 60
Small wind power system at NTN AKAIWA CORP.

32

G overnance

Governance, Compliance

We are stepping up corporate governance and compliancethroughout 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 moretransparent management.

Continuously Strengthening Management
Auditing Functions
NTN employs a corporate auditor-based governancesystem in which three of the four corporate auditors arefrom outside the company. Outside corporate auditors
bring specialized knowledge in areas such as finance,
management, and law, and they conduct audits incollaboration with in-house standing statutory auditors
and the Internal Audit Department.
The Board of Directors, which includes two outside
directors, makes decisions on important matters andoversees business execution, and corporate auditors sit on
the Board of Directors to give their opinions. In this way, we
strive to maintain and improve transparency and fairness of
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 thedesignation and cancellation of duties delegated todirectors. After director candidates are decided on at theBoard of Directors meeting, they are nominated andvoted in at the general shareholder meeting. This ensurestransparency and fairness.

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

Corporate Governance Structure
Executive Committee:

Shareholder Meeting
Assigns/
RemovesBoard
of Auditors

Assigns/
Removes

AuditsBoardof Directors

Assigns/
RemovesAccounting
Auditors(Audit firm)

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

Corporate Auditors:
Fair Trade
Monitoring
Committee

Business Strategy
Committee
Executive
Committee
Divisions, Subsidiaries

Board of Directors:
The role of the Board of Directors is to make decisions relating tofundamental 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.

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 theiropinions as part of their efforts to maintain and improve thetransparency and fairness of the Company’s management
supervision system. The system is structured to enable standing
auditors to participate and express their opinions during meetingsof 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 public auditing firm audits, and internal audits.
There are no special business relationships or interests between
the outside auditors and NTN.

Fair Trade Monitoring Committee:
Business Strategy Committee:
The Business Strategy Committee discusses fundamental
business policies and important management strategies, withmeetings held twice per month.

33

Chaired by the NTN President, the committee 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.

NTN’s Efforts to Comply with the Antimonopoly Act(1) The construction of systems to ensure compliancewith 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 chaired by
the president, with directors in charge of the sales andprocurement departments in Japan and overseas, andoutside directors and attorneys acting as committee
members. In the past two years, this committee has
convened 12 times.
In April 2014, CSR Headquarters were established inorder to improve our ability to expand global activities,
comply with laws and regulations, and implement the
NTN Group’s overall CSR. The Fair Trade Promoting
Department became a part of CSR Headquarters.

(2) Continuous compliance activities for
the Antimonopoly Act
The Fair Trade Promoting Department leads in-housetraining for directors, sales departments, andmanagers. In August 2012, it established fiveprinciples for preventing cartels and these were put
on cards for employees to recite. 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
by employees and in-advance applications by
employees to request an approval from the Fair
Trade Promoting Department to participate inmeetings with potential contacts with competitors,
such as customer/supplier situations 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 othercompanies, 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
in violation of the Antimonopoly Act. If such a topic
should arise, I will explain that I cannot take part insuch discussion and immediately excuse myself.” It isalso mandatory that NTN employees report any
contacts different from those on the in-advanceapplication and any unexpected contacts without anin-advance application so that we can have an overall
picture of contacts with competitors.
Any reports or consultations from directors andemployees are received through the consultation
services of the Fair Trade Promoting Department andthrough a helpline, and we can provide a prompt
answer or start investigation quickly.
The Audit Department also controls NTN’s compliancesystem 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 are establishing a system of responsibility for eachof our business regions under the guidance of the Fair
Trade Promoting Department, and our subsidiaries areholding compliance training for employees, conducting
audits on matters such as the in-advance applications
mentioned previously, and conducting self-audits toensure ongoing compliance.
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 andis striving to strengthen its systems for complying withlaws and regulations.
In June 2012, NTN and former executives received anindictment 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 views of the facts, NTN is currently asserting
our defense in both hearing and criminal proceedings.
Starting in November 2011, NTN consolidated
subsidiaries in Europe were suspected of violating EU
competition laws and cooperated in an investigation by theEuropean Commission. Following settlement procedures,in March 2014 the European Commission decided to impose
fines of 201 million euros for violating EU competition
laws with respect to sales of automobile bearings in
Europe. NTN’s Singapore subsidiary underwent aninspection from Competition Commission Singapore(CCS) starting in February 2013 and in May 2014 CCS
issued its decision to impose fines of 455,652 Singapore
dollars for the violation of Singapore competition law withrespect to sales of aftermarket bearings in Singapore.
NTN subsidiaries in the U.S. and Korea are also underinvestigation by the relevant authorities in those countries.
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 that may
have been caused to shareholders by these events.
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.

34

G overnance
Governance, ComplianceInternal 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 Practice Standards
for Management Assessments and Audits Concerning Internal
Control Over Financial Reporting (Council Opinions),” publishedby the Business Accounting Council, NTN has a basic policy forthe structure of internal control. Based on this policy, we havemade the creation and implementation of an internal control
system a top priority 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.

Risk Management System
Board of Directors
Chief Management Officer(Director in charge of risk management)

Risk Management
Department(CSR Department)

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

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

Determining the level

Pursuing Risk Management
Philosophy and System of Risk Management
System Implementation in Line with Basic Policy
and Management Rules
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 that prevents the occurrence of emergencies
and provides.

Risk Management Policy
NTN Corporation hereby establishes the basic policyof NTN group to precisely manage the risk prevention
and to quickly respond at the outbreak of various risks(i.e., the events that may prevent the accomplishmentof business purpose and the operation of business)surrounding the business of NTN group.
1 We shall make an effort to eliminate or reduce the various risks

to the stakeholders, such as customers, suppliers, shareholders,investors and local communities, and executives and employees.
2 We shall maintain the risk management system for prompt andproper measures against the risks and implement thecompany-wide and general risk management.
3 We shall implement the risk findings, risk analysis, risk assessment

and risk measures according to the risk management plan andtake proper preventive measures.
4 In the case of risk arising (emergency), we shall keep to minimize

the damage expansion by initial risk countermeasures including
the proper information transfer to inside and outside the Company.
5 We shall make an effort to keep and develop the stablebusiness by monitoring the proper structure and implementationof the risk management on a daily basis.

35

Evaluation of measures toaddress risk
Evaluation of effectivenessof risk management

Establishment ofcentral task force
and response

Response by
department
in charge

Measures toprevent reoccurrence

Setting Key Management Risks to Handle with
the PDCA Cycle
We established the Risk Management Committee as anadvisory body for managing risk. The committee leads
focused risk measures. In the fiscal year ended March 31,
2014, the committee held meetings in May and October,and it checked plans and progress in dealing with focusedrisk matters, and ensured that other risk matters were being
dealt with.

Main Focused Risks(Fiscal Year Ended March 31, 2014)
Violation of
Antimonopoly Act
Violation of
Subcontracting Act
Violation of labor-related
laws
Insider trading
IT problems

Risks stemming fromlarge-scale disasters
Default on contracts
Stoppage of distribution
Operational stoppage of
NTN facilities
Bottleneck/standstill on
the supply chain

Information security education
ucatione-learning site

Dealing with Key Risks
Legal Violations, etc.

Systems to Prevent Dishonesty and Ongoing Education
See pages 34 and 38 for NTN’s efforts to prevent dishonest
practices, including the violation of various laws.
IT Problems

Measures to Strengthen Information Security
In the fiscal year ended March 31, 2014, we formulated our
Basic Policy on Information Security in order to boost
in-house rules on information security.
All NTN employees, including temporary employees,
have access to the Information Security Guide on the NTN
intranet, and can also take e-learning courses in information
security, all as part of NTN’s efforts to make everyone fully
aware of our information management methods. As well,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.
Risks Stemming from Large-Scale Disasters

CSR Management
CSR a Key to Corporate Philosophy System
NTN’s corporate philosophy is “We shall contribute tointernational 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 directionof corporate activities.

Corporate
Management
Policies

Corporate
Philosophy
NTN’s
Basic
Policies

Considering Measures to Deal with Work Stoppages
Employee Code of
Conduct
Guideline
to encourage aggressive actions

Business Code of
Conduct

Corporate
GovernanceWith regards to hazard risks (external risks), assuming thata large-scale natural disaster causes work stoppage at
multiple sites, we have measures aimed at preventing
damage, minimizing damage, and restarting work. For
example, situations that could arise in a natural disasterinclude defective products, leakage of hazardous or
dangerous substances, damage or loss of IT equipment
and electronic information, cut-off of procurement supplies,
and stoppage of distribution functions. We are looking
individually at measures for each of these situations.
To make business continuity plans (BCPs) for the prompt
recovery and continuation of business following a natural
disaster, NTN divisions share their policies on current andpossible future BCPs and this cooperation leads to theformulation of updated measures. We also constantly
improve systems for confirming the safe whereabouts of
employees in case of a natural disaster.

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. Environmental Policy

Guideline
for compliance actions

CSR Policy
1 Legal compliance/Policy for activities: We shall comply withlaws and regulations, endeavor to engage in fair competition, andcarry out our business activities in an honest and ethical manner.
2 Customers: We shall strive to develop new technologies andnew products, as well as to provide safe and reliable products.
3 Business partners:

We shall engage in fair and freecompetition, and at the same time establish excellent
partnerships with our business partners.

4 Stockholders/Disclosure of information:

We shall work todevelop this corporation and increase stockholder return, whileat the same time communicating broadly with society andactively 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 shallwork 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 each region that we operate in; we shall also respect local
cultures and practices and contribute to local development.

36

G overnance
Governance, Compliance

Disseminating the Codes of Conduct Accordancewith Basic Policies

Chief Management
Officer
CSR Committee

CSR Management (CSR Dept.)

Corporate Planning
Department

Legal Department

General Affairs
Department

Personnel
Department

Environmental
Management Department

In 2006, we began our CSR activities in earnest with theestablishment of the CSR Management Rules and the CSR
Department. The CSR Department is a dedicated division foroverseeing the NTN Group’s CSR activities as well as advancing
and strengthening them. The CSR Committee is chaired by thehead of the CSR Department and made up of 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 Japanby appointing CSR managers and persons in charge of CSR

Quality Management
Department

CSR Department and CSR Committee Lead Activities

Intellectual Property
Planning Department

CSR Promotion Structure

Procurement
Department

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 ROULEMENTS in France formulated its Codes ofConduct in 2011 and put them in booklets that are distributed
to all employees.

Department in charge
and the Committee Office

Managing departments

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

Other Subcommittees

at all of our sites and at NTN Group companies in Japan.
In April 2014, the CSR Department was integrated into
the CSR Headquarters along with the Legal Department andthe Fair Trade Promoting Dept. It will collaborate with otherdivisions and play a key role in the robust management ofNTN. (See page 42 for details.)
CSR Manager Appointed to Overseas Officeof General Managers
NTN subsidiaries around the world plan and conduct CSR
activities according to their own particular situation.
With laws and regulations relating to competition, corruption,and bribes becoming increasingly stricter around the world,
starting in the fiscal year ending March 31, 2015 NTN has

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 and

8

norms
2 Pursuit of quality and safety
3 Compliance with theAnti-Trust Law
4 Fair trade with suppliers
5 Honoring agreements
6 Refusal to engage in improper

conduct with business partners
7 Proper labeling andspecification

37

9

Respect for intellectual
property rights

14 Promotion of environmental

Proper control of confidential
information

15 Positive contribution to society

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

accounting principles
13 Compliance with internationalrules

preservation
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

donationsHelpline screenon the NTN intranettdecided to strengthen internal control at overseas subsidiaries
under the guidance of the head office.
As a first step, in April 2014 we appointed an internal
control section in the Office of General Managers of overseas
subsidiaries. With the aim of improving the system ofcompliance at subsidiaries representing different world
regions, these internal control sections will work with the
CSR Department to help raise the group-wide level of CSR
activities at NTN. (See page 42 for details.)

Furthering Compliance
Philosophy and System of Compliance
NTN defines compliance as not only abiding by laws andregulations, 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
body under the CSR Committee. This subcommittee ischarged with comprehensively promoting and managing
compliance initiatives for the entire Group.

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 were revised so that calls to the helpline related tocompetition laws (Antimonopoly Act, Subcontract Act)
could be reported to the Fair Trade Monitoring Committee.
Besides the helpline, we also have a direct line for
consultation with the Fair Trade Promoting Department.
Compliance/Helpline Management System

NTN focuses on compliance-related education for bothofficers and employees. At NTN sites and Group
companies in Japan, chiefly CSR managers and persons
in charge of CSR plan educational activities and leadsessions on a range of topics for all levels of employees.
One focus is training for employees being promoted to
managerial positions, who take self-learning withcompany-provided textbooks and online CSR
comprehension tests. To ensure participants achieve adefined level of knowledge, they are required to take tests
until they get a passing grade.
In addition, employees can raise their awareness bystudying the latest news on compliance matters and casestudies of legal violations on the compliance database of theintranet. Besides 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.
In the fiscal year ending March 31, 2015, we areadministering periodic questionnaires to assess the resultsof our educational programs. The questionnaire data will be
used to compare changes since the last questionnaire,administered to about 4,000 NTN employees in Japan in
2010, to help us improve future programs.
Compliance education is a focus at our overseas bases
as well. In the fiscal year ended March 31, 2014, the Fair
Trade Promoting Department led education sessions on the
Antimonopoly Act. In the fiscal year ending March 31, 2015
and onwards, we plan to conduct compliance education led
by internal control sections which we established in April 2014.

Manages the Helpline

Compliance promotion

Chief Management Officer

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

Results of Compliance Education(Fiscal Year Ended March 31, 2014)

Type
Office(CSR Management
Department)

CSR Committee

Compliance Subcommittee
CSR
Management
Department

Legal
Department

Internal Help
Desk

External Help
Desk

New
employeetraining

Personnel
Department

CSR managers
Persons in charge of CSR
Corporate
Philosophy

Legal
Department

Officers and employees of NTN Group companies

CSR Policy

Employee Codeof Conduct

Business Codeof Conduct

Training for
employees
promoted to
managerial
positionsContent
As part of new employee
training, time is set aside toteach CSR basics and NTN CSR
activities.
The focus in on compliance,and participants are taught toplace high priority on CSR in allthat they do.
As key players in theimplementation ofcompliance-centered action,
managers reaffirm theirknowledge of necessary
compliance information.

Targets

Month

Number ofparticipantsAll
newemployees

April

81

Employees
promoted to
managerial
positions

JulyAugust

47

38

Corporate
GovernanceHelpline Established

Ongoing Education Includes ComplianceComprehension Checkups for Management

G overnance

Disclosure of Information

We strive to realize an open generalshareholder meeting and release accurateteinformation in a fair and timely manner.
General Shareholder Meeting

IR briefing in the Noto districtof Ishikawa Prefecture

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 seven days earlier
than that (three weeks prior).

Scheduling meetings
that avoid the dates
that most companies
set for such gatherings

To make it possible for as many shareholders
as possible to attend a shareholder meeting,
we avoid dates that most companies hold their
meetings, and we take into account factors
such as settlement and audit schedules.

Broadly notifyingof our generalshareholders meetingthrough the internet
and other media

We publicize notices of our general shareholder
meeting and other information through theTokyo Stock Exchange and our website toreach as many shareholders and investors
as possible.

Using electronic voting
via the Internet

Other efforts

1. We accept shareholder votes via mail andthe Internet through the 5:25 p.m. close ofbusiness up to the day before the generalshareholder meeting.
2. We have methods for dealing with cases inwhich there are overlapping votes by mailand the Internet, or where shareholders votemultiple times over the Internet.
3. We participate in the Electronic Voting
Platform, which is managed by Investor
Communications Japan (ICJ), an entity
formed by the Tokyo Stock Exchange andother bodies, and which makes it possiblefor institutional investors to vote.
At the general shareholder meeting, we present
some of the business report and settlement
data as graphs, photos, and other visuals tocomplement the meeting chairperson’s
explanations.

IR Activities
Disclosing Accurate Information in a Fair andTimely Manner
We respond to the desire of shareholders and investors toreceive 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 through theCompany Announcements Disclosure Service on the websiteof the Tokyo Stock Exchange. On the NTN website, we release39

timely information including our securities, quarterly report,
business results, the NTN Report, 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 our company.
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, 2014, we released
as much information in as many ways as possible both inJapan and overseas, holding IR technology briefings andfactory tours, and taking part in events sponsored by securities
companies. We plan to step up our IR activities with events
including an overseas IR roadshow.

NTN Included in SRI Indices
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 toprotect the environment and contribute to society.
SRI Indices (As of March 2014)

G overnance

Officers

Officers (As of June 25, 2014)
Officers

Yasunobu Suzuki

Fukumatsu Kometani

Hiroshi Nakano

Akio Imanishi

Chairman

Executive Director

Director

Corporate General Manager,
Aftermarket Business Headquarters
China, ASEAN & Oceania, India &West Asia, Americas, Europe & Africa

Corporate General Manager,
CSR Headquarters

Standing Audit &Supervisory Board Member

Hiroshi Ohkubo
President
Representative Director

Kenji Okada
Executive Vice President
Representative Director
Research and Development,
Quality Management,
Environmental Management
Corporate General Manager,
Industrial Business Headquarters

Hironori Inoue
Executive Director
Representative Director
Production, Procurement,
Logistics & Cost Planning

Yoshinori Terasaka
Managing Director
Corporate General Manager,
Automotive Business Headquarters
EV Module Business Headquarters

Keiji Ohashi
Managing Director
Administration

Itsuji Gotou

Hideaki Miyazawa
Director
Deputy Corporate General Manager,
Automotive Business Headquarters
Americas Region

Hisaji Kawabata(Outside)Mizuho Hikida
Standing Audit &Supervisory Board Member

Tadao Kagono

Director

Audit &
Supervisory Board Member

Outside Director(Outside)

Akira Wada

Norifumi Ishii

Director

Audit &
Supervisory Board Member

Outside Director(Outside)

Director
Corporate General Manager,
Finance Headquarters
Internal Audit Department

Executive Officers

Tetsuya Sogo

Etsu Harima

Alain ChauvinSenior Executive Officer

Senior Executive Officer

Executive Officer

Executive Officer

Research and Development,
Quality Management,
Environmental Management

General Manager, Americas Region
President, NTN USA CORP.

Deputy General Manager,
China Region
Director,
NTN (CHINA) Investment Corp.

General Manager,
Europe & Africa Region
President,
NTN-SNR ROULEMENTS

Pete Eich

Kazuki Kawashima

Executive Officer

Executive Officer

Deputy General Manager,
Americas Region
President,
NTN BEARING CORP. OF AMERICA

Deputy General Manager,
Industrial Business Headquarters
Manager,
Cost Development Department

Deputy General Manager,
Corporate Strategy Headquarters

Makoto Okasaka

Eiichi Nakamizo

Executive Officer

Executive Officer

Yoshinobu Akamatsu

Deputy General Manager,
Automotive Business Headquarters

Deputy General Manager,
Industrial Business Headquarters

General Manager,
Product Innovation Strategy Department

Kouji Kametaka

Yusuke Iyama

Executive Officer

Executive Officer

Toshinori Shiratori

Deputy General Manager,
China Region
Director,
NTN (CHINA) Investment Corp.

Manager, Secretarial Staff

Jianping Zhu

Deputy General Manager,
Americas Region

Tetsuya Kondo
Senior Executive Officer

Isao Ozako
Senior Executive Officer

Deputy Corporate General Manager,
Aftermarket Business Headquarters

Deputy General Manager,
Industrial Business Headquarters
General Manager, KUWANA WORKS

Hidefumi Tsuji

Takayuki Matsuo

Senior Executive Officer
General Manager, China Region
Chairman,
NTN (CHINA) Investment Corp.

Eiichi Ukai
Senior Executive Officer
General Manager,
ASEAN & Oceania Region
General Manager,
India & West Asia Region

Executive Officer

Executive Officer

Executive Officer

Takehiko Umemoto
Senior Executive Officer
Deputy General Manager,
Automotive Business Headquarters
General Manager,
EV Module Business Headquarters

General Manager,
Corporate Strategy Headquarters
Manager,
Information Technology Department

Isao Koiwai
Executive Officer

Natsuhiko Mori
Senior Executive Officer
General Manager,
New Product Development R&D Center
Composite Material Product DivisionCorporate
GovernanceYukiyoshi Hagimoto

Deputy General Manager,
Automotive Business Headquarters
General Manager, IWATA WORKS

Executive Officer
Deputy General Manager,
China Region
Director,
NTN (CHINA) Investment Corp.

Kazuki Hagihara
Executive Officer

Katsuaki Miyake
Executive Officer
Deputy General Manager,
Automotive Business Headquarters
General Manager, OKAYAMA WORKS

40

CSR Activities Report

1

Focus

Response to Energy Problems

Managing Energy is a Key Management
Challenge

With steep rises in electricity costs, we are looking long term in making
energy savings a key challenge in achieving business continuity.
The Most Important Environmental Challenge
The NTN Group uses large amounts of energy in processing metals, and since webegan company-wide environmental protection activities in the 1990s we havecontinued to make energy savings and CO2 emission reductions top environmental
priorities. Recent years have seen Japan struggle with achieving a stable supply ofenergy, and electricity costs have increased sharply due to nuclear power plant
stoppages and increases in fuel prices. Energy management has thus become aneven more important factor to business continuity, and in response we are putting
greater effort than ever into saving energy and reducing CO2 emissions.

Breakdown of Energy Sources Usedby NTN Group in Japan
Others 3%

Natural gas 5%
LPG 6%

Fiscal year
ended March
31, 2014

5,560
(MJ)

Long-Term Measures for Energy Savings and Adoption of Renewable Energy
In the fiscal year ended March 2014, we installed an EneMeter (energy usage meter)in our ADVANCED TECHNOLOGY R&D CENTER, allowing us to see how muchelectricity our air conditioning (a major consumer of power) is using on each floor of
the building. This data will be used to improve energy efficiency. We are also continuing
to study new energy-saving methods and technologies for our sites in Japan andaround the world. (See pages 56 and 57 for details.)
We are also installing solar power and other renewable energy equipment when
and where necessary. In the fiscal year ended March 31, 2014, while we did notinstall any new solar power generation equipment ourselves, we signed a contract
with a solar power producer to rent our factory roofs for solar power generationequipment totaling approximately 1,500 kW. This is one way we are contributing to
the spread of renewable energy in society as a whole.
NTN Energy-Saving and CO2-Reduction Efforts
1 Promote improved awareness of the NTN Group’s Environmental Policy

and set environmental targets.
2 Obtain ISO 14001 certification.
3 Install energy-saving equipment.
4 Install renewable energy equipment.
5 Contribute to energy savings and CO2 reductions in society as a whole;for example, collaborate in EV demonstration project, plant trees.

Solar panels at NTN AKAIWA CORP.

41

Purchased electricity
86%

Renewable Energy Generated
Solar power

Wind power(kWh)

600,000
500,000

501,071 504,100

536,725

1,384

3,379

499,687

500,721558,800

7,394

7,333

400,000
300,000

529,331551,466

200,000
100,000
0

2011

2012

2013

2014

(Years ended March 31)

A Word from a Staff Member at the ADVANCED TECHNOLOGY R&D CENTER

Aiming for Advanced Energy Savings throughAggressive Adoption and Development ofEnvironmental Technologies
At the ADVANCED TECHNOLOGY R&D
CENTER, we make as much use as possibleof renewable energy such as solar and wind
power as a way to reduce CO2 emissions.
In January 2014, we installed an EneMeter
to see how much each of our divisions was
consuming, and this allowed us to create
measures focusing on the equipment andbuilding sections consuming the most energy.
In December 2013, together with the Mie
prefectural government, we installedmicro-hydroelectric generation equipmenton irrigation canals and have been testingthem as power sources for outdoor lighting
in Kumano city and as possible emergency
power sources in natural disasters.

Tomoji Fukuzawa
Manager, Planning andControl Group,
ADVANCED TECHNOLOGY
R&D CENTERCSR Activities Report

2

Focus

Strengthening CSR Management

Establishing a Global CSR Implementation
System to Strengthen Management
Foundation

We’re establishing a worldwide system of corporate governance andcompliance so that we can steadily grow and contribute to society.
Urgent Need to Revise CSR Management System in Face of
NTN’s Expanding Organization

Strengthening Systems for Global
Governance and Compliance

Under our Corporate Philosophy we have striven for “contribution to society basedon the steady growth of our business” and “a corporate organization essential as aninternational company.” In recent years, however, as we establish more sites aroundthe world, these Corporate Philosophy efforts have achieved different degrees ofsuccess in different regions around the world. In particular, we urgently need tostrengthen our global corporate governance and compliance, both indispensable tominimizing management risk and building robust management. To this end, in April
2014 we established a new division, the CSR Headquarters, which encompasses
the former CSR Dept. and Legal Dept, and the newly established Fair Trade
Promoting Dept.

Europe,South America

CSR Headquarters
DivisionsNorth America

Internal Control Section
Office of General
Manager–Europe,
South America Region

Subsidiaries

Internal Control Section
Office of General
Manager–Americas
RegionSubsidiaries

Information exchange
Human resource
interaction

Subsidiaries

Key Challenges: Risk Management, Compliance, Fair Trade, andSocial Contribution

India
Internal Control Section
Office of General
Manager–India,
West Asia Region
Subsidiaries

ASEAN
Internal Control Section
Office of General
Manager–ASEAN,
Oceania Region

China
Internal Control Section
Office of General
Manager–China
RegionSubsidiaries

Subsidiaries

Key Efforts and Challenges
Strengthen risk management
Revise Risk Management Rules andCSR Management Rules
Establish a global system for risk management

Implement compliance
Establish and strengthen a global systemfor complianceUtilize FTAs and establish and improve a secure
export control system
Provide high-quality legal services
Improve employees’ knowledge of legal matters

Fair trade
Establish and strengthen a global system forcompliance with the Antimonopoly Act
Respond to criminal court action andadministrative hearings, and to regulatory
authorities in countries overseas

Contribute to society
Carry out social contribution activities

A Word from a Staff Member in an Internal Control Section

Confirm Overseas Company SituationsFirsthand and Formulate Effective
Response Measures
I am in charge of leading CSR activities,
such as strengthening the internal control
system, in the Internal Control Section of
the Office of General Manager–China Region
In doing so, I work closely with the CSR
Headquarters and the compliance divisionof NTN (China) Investment Corporation.
Because I am here in China, I can closely
gauge the situation and therefore plan andimplement effective control and monitoring
activities. I also help work on social
contribution activities.

Meeting in the internal
control section in China

Tetsuo Yamamura
Manager,Internal Control Section,
Office of General
Manager–China Region

42

Focus

CSR Headquarters is in charge of matters related to risk management, disseminationand implementation of compliance, fair trading, and social contribution. In April
2014, we appointed an internal control section in the Office of General Managers(the Americas, Europe/Africa, China, ASEAN/Oceania, India/West Asia). The job ofthese internal control sections is to monitor the state of CSR activities at NTN
subsidiaries in the respective regions, lead CSR education and training, and overallmake CSR an integral, widespread aspect of the subsidiaries’ business.
CSR Headquarters can now work with this new overseas internal control
sections to gauge the state of overall group activities, determine which activities
take priority, and promote action to improve the level of CSR. This will allow for
better information exchange and human resource interaction, and more widespreadawareness of CSR.

Japan

CSR Activities Report

3

Focus

Fostering Diversity

Targets for Our 100th Anniversary of Foundation
More Female Employees, More Female
Managers

The fiscal year ending March 31, 2018 is the target year for our new action plan.
We will make use of female employees’ talents company-wide to achieve
further growth.
Tap Into Diverse Viewpoints and Ways of Thinking
In April 2014, we launched the Diversity Team project. To adapt to today’s global
market, we often must update our traditional ways of doing things. To come up withdiverse ideas and points of view, it is essential that we utilize human resources who
possess a range of views and philosophies and not get trapped in conventional
thinking of men only or managers only. We believe that one way we can do this—and in the process solve the problem of a falling birth rate and boost corporate
value—is to make the most of the women who comprise about 10% of our workforce.
This is therefore the key target of our Diversity Team project.

Females as Percentage of All Employees
and as Percentage of All Managers(NTN Corporation only)
Percentage of female employees
Percentage of female managers
(%)

10.00

8.89

8.85

1.62

1.80

9.05

9.14

8.00
6.00
4.00
2.00

Double the Number of Female Managers by the Fiscal YearEnding March 31, 2018

8.95

0

0.84

2.52

3.40

2010 2011 2012 2013 2014
(Years ended March 31)

Under the Diversity Team project, we are working towards the target of doubling thenumber of female managers from the current 20 to 40 by 2018, the 100th anniversaryof our foundation.
To start off, we plan to increase the number of women we hire, particularly science
majors. We want to get these new young employees into product development assoon as possible and let them speak their opinions freely and aggressively so that they
will become more motivated and interested in pursuing a career. In fact, we havealready sent female engineers out on the front lines of sales. For example, in June2013 one of our female engineers had a business trip to U.K. and gave a technicalpresentation to the customer on the mass-production process of our highly reputed
aircraft bearings. We are also urging as many women as possible to participate in our
ongoing overseas training system* so that they will become capable of working in any
NTN global work setting.
In addition, we strive to change employees’ way of thinking through in-houseefforts such as training and seminars for both men and women. Work-life balance isanother area we are putting increasing emphasis on.
Diversity Team members

Three Pillars of Diversity(1) Diversity Team kickoff
Planning and implementation of training plan
Boosting of management capabilities
Increasing number of female managers(2) Plan to change male and female
employees’ way of thinking
Training sessions, seminars(3) Planning of work-life balance measures
Region-specific managers, maternity and childcare
support programs, Bear Kids Land (daycare facility
on premises of IWATA WORKS), etc.

* Overseas training system: Young employees are
selected from among applicants and sent to an
overseas subsidiary for one year so that they canexperience another country and learn how tocommunicate in a foreign culture.

A Word from a Diversity Team Member

Establishing a Gender-Neutral Workplace with
Flexible Work Schedules Where We Can Use
Our Talents to the Fullest
Under the Diversity Team project, my job isto get women more involved at NTN.
Companies have been focusing on
work-life balance and flexible working
schedules in recent years. I know firsthandabout these trends because I have been
taking advantage of NTN’s reduced working
hour system for child-rearing. I hope to use
my personal experience in this area to help
my team members create a range ofvaluable measures in support of diversity.

Aya Oota
Global Human
Resource Development
Dept.

43

S ociety

Quality Management

We’re working throughout the entire value
chain to ensure quality on a global scale.
Screen shot of G-QUICK website

Quality Management Policy
Basic Policy of Quality, Quality Management Policy

Major Certification Achieved in Fiscal Year Ended March 31, 2014
ISO 9001 Certified at 32 production bases, 2 sales bases
RegionBase

Stipulate Basic Policy and Formulate Annual
Management PolicyJapan

NTN HOUDATSU SHIMIZU CORP.

Japan

NTN AKAIWA CORP.

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, 2014, our target was
to reduce the number of complaints in Japan and overseas
to improve the NTN brand image and generate profit. By
conducting quality audits and confirming that work processes
were in line with our standards manual, we achieved our target
for the second half of the year. We will strive to eliminate thenumber of complaints and defective products.

Japan

NTN HAKUI CORP.

China

Nanjing NTN Corp.

Date of Certification
Fiscal year ended March 31,
2014
Fiscal year ending March 31,
2015 (scheduled)
Fiscal year ending March 31,
2015 (scheduled)
Fiscal year ended March 31,
2014

ISO/TS 16949 Certified at 24 production bases
RegionU.S.A.

Base
NTA PRECISION AXLE CORP.

Japan

NTN AKAIWA CORP.

India

Chennai Plant,
NTN NEI Manufacturing India Private LTD.

Date of Certification
Fiscal year ended March 31,
2014
Fiscal year ending March 31,
2015 (scheduled)
Fiscal year ending March 31,
2015 (scheduled)

Quality is our future —Quality paves the way for
our future.

Besides certification for the ISO 9001 quality management
system at production and sales bases in Japan and overseas,
we are aggressively working to achieve certification for
ISO/TS 16949, a quality management standard that automotive
manufacturers demand.
And 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. Together with the quality management certification of
the Association of American Railroads (AAR) received in 1986,
this shows we are a high-quality supplier to the railroad industry.
NTN has also been certified for the AS/JISQ9100 and NADCAP
standards for aerospace quality management.

Quality Management Policy in the Fiscal Year
Ended March 31, 2014

Global Quality Management

Basic Policy of Quality
Pursuit of appropriate quality that can suffice thefunctions and specifications required by customers.
Quality that meets diversified needs in markets(Conformable quality)
Superior quality to competitors’ (Competitive quality)
Quality that benefits producers (Economic quality)

Quality Slogan:

As we start operations at new production bases around the world,
we aim to contribute to the NTN brand and corporate profit byhaving all employees work towards our important quality themeof “Ensure global quality” and by eliminating all complaints.
Point
Verify quality assurance and regularly confirm target achievements amidst
increase in number of new bases as NTN globalizes.

With the basic goal of maintaining and boosting trust amongcustomers, we aim to improve the NTN brand value and contributeto corporate profit by having all employees strive to “ensure global
quality,” by eliminating all complaints, and by reducing the numberof defective products.

Quality Management System
Management Certification for Various
Production Items
Working Towards ISO 9001, ISO/TS 16949 andOther Standards
NTN Group works to achieve certification for quality
management standards for its various production items.

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.
In the fiscal year ended March 31, 2014, we added to thesystem a function that sends emails to registered users
prompting them to update their information so that we canperiodically compile on the system things like our complaint
responses and customer reactions to these.
Dissemination of Basic Policy of Quality throughout
Worldwide NTN GroupWe have published Japanese, English, and Chinese versions of
our Basic Policy of Quality and our Quality Control Handbook.
These have been distributed to approximately 100 companies
including NTN worldwide manufacturing, engineering, anddistribution divisions, and suppliers. In the fiscal year ended March
31, 2014, we added a Thai version of these publications, and weplan to make Portuguese and Spanish versions. We have also put
quality education materials on the e-learning section of our intranet.

44

Social and Environmental
Responsibility

Quality Management Policy for Fiscal YearEnding March 31, 2015

Electronic System for Integrated Management of
Quality Information

S ociety

Quality Management

Mobile training van

Working with Suppliers
NTN Group strives to boost quality by cooperating with the
suppliers who provide us with raw materials and parts.
Every November is Quality Month at NTN, when we holdsupplier quality improvement meetings to give suppliers theknowledge and know-how they need to improve their quality.
In the fiscal year ended March 31, 2014, 100 suppliers took part.
As well, quality audits are conducted by the suppliers
themselves using the NTN Group’s check sheet for quality
criteria. Based on these self-audit results, NTN conducts its
own on-site audits at the location of suppliers so that we
can help them continuously solve their quality issues. In thefiscal year ended March 31, 2014, we conducted on-site
audits at 264 suppliers.

company divisions to be reflected in improved products
and services.
In the fiscal year ended March 31, 2014, surveys werecompleted and sent in by 81 NTN customers worldwide.
Overall Assessment of Customer Satisfaction Surveys(Fiscal year ended March 31, 2014)

Very good

20%
11%

Needs
slightimprovement

Good

69%
0%

Needs
a lot ofimprovement

Enhancing Customer Satisfaction
Determining Customer Needs
NTN Sales Persons and Engineers for Each Customer

Strengthening Ties with Sales Agents around
the World

At NTN Group sales companies around the world, we appointa sales person and an engineer to be in charge of each of ourcustomers and sales agents. This allows us to quickly andaccurately determine the needs and problems of eachcustomer and thus offer the best responses and solutions.
We constantly work to improve the skills of these sales
people and engineers. In Japan, we conduct TQM (Total Quality
Management) activities, which include meetings and education
gatherings at which sales people reflect on their weekly dealings
with customers and think from the customer’s perspective as
a way to improve service. In the fiscal year ended March
31, 2014, we analyzed the situation of our customers in
the current environment of the industry and focused on
specifically how NTN could help them improve their situation.

Educating Sales Agents about NTN

NTN Engineers Provide Problem-Solving Opportunities

Information Exchange and Interaction at NTN Worldwide

NTN Group holds periodic sessions where customers can
get to know our products and technologies better andspeak directly about their needs with our engineers. NTN
companies hold traveling product exhibitions and technicalseminars. For example, NTN BEARING CORP. OF AMERICA(NBCA) tours customer sites around the U.S.A. to givetraining on bearing basics and bearing use. NBCA is
receiving an increasing number of requests for thesetraining sessions from customers.

In the fiscal year ended March 31, 2014, overseas groupcompanies held gatherings for information exchange andinteraction. An ASEAN-India sales agent meeting was heldin April and an India sales agent meeting was held in
February, each attended by 19 companies. In June, the 2nd
Global Industrial Machinery/Aftermarket Conference washeld, with representatives from Europe and the Americas,
Asia, and China discussing marketing activities and NTN
Corporation heads meeting with the management of threemajor sales agents from the Americas.
NTN (CHINA) Investment Corp. holds the Product Training
School every year, and the four sessions in the fiscal year
ended March 31, 2014 welcomed 87 members of 43 sales
agents. Participants learned basic bearing knowledge andtechniques such as how to mount and dismount bearings.

Customer Satisfaction Surveys
Once a year, we conduct customer satisfaction surveys on
our products and services in which customers choose oneof four levels of satisfaction in six survey items including
quality, cost, and delivery. Survey results go to relevant

45

NTN holds product briefings for its sales agents so thatthey can better convey information to NTN’s end users.
At various periodic training sessions for employees ofsales agents, we deepen understanding of NTN products
and technologies.
In the fiscal year ended March 31, 2014, we had largevans acting as mobile training units that toured bases inJapan and Korea, visiting sales agents to introduce
aftermarket products and conduct demonstrations ofmaintenance and repair techniques.
In July 2013, we held our Domestic Distributor Association
meeting in Japan with 61 sales agents. Besides honoring
the top performing 24 sales agents, we held a product exhibit.

S ocietySupply Chain Management

Based on fair and proper dealings, we strive
to build a partnership with suppliers.
Procurement Policy

Suppliers meeting
eting
RKS
at IWATA WORKS

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, 2014, we continued
our efforts from the previous year to cultivate multiple
suppliers and establish suppliers adjacent to production
bases. To spread and offset risk, we begin these efforts
whenever new bases are established.
* “On local site with local materials by local personnel”: Establish a system
in which NTN’s local employees manage business using locally sourced
equipment and materials.

Basic Procurement Policy

Conveying Policy through Briefings and Workshops
NTN holds suppliers meetings to explain NTN’s procurement
policy and production volumes at production bases, as well
as about how they can help in production activities andobtain ISO certification.
In the fiscal year ended March 31, 2014, we held two
meetings attended by a total of 57 suppliers, who wereasked to consider using new materials and new processes
in the face of market competition. We also invited suppliers
to join training workshops for NTN employees that were led
by outside instructors.
Besides these examples of work-related information
provision, we also took every opportunity possible forinteraction with suppliers; for example, joining them intree-planting activities at their sites in Japan.

1 We stress quality, cost advantage, and on-time delivery

from a global viewpoint, and we pursue stable procurement
through prompt response to market changes.

2 We abide by laws and ethics, and we promote fairness

and equality 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.

Promotion of CSR Procurement* Conflict Minerals Provision Act: Requires manufacturers to report and makepublic their use of four minerals (gold, tantalum, tin, and tungsten), as wellas their derivatives, that are mined in the Democratic Republic of the Congo(DCR) and nine surrounding countries.

Thorough Compliance with the Subcontract Act
Self-Audits and Workshops at 17 Bases
In January 1997, NTN formulated the Self-Audit Manual for
Subcontractors. NTN production bases conduct their own
self-audits using this manual, and when necessary, NTN’s
procurement division intervenes with periodic audits andguidance 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, 2014, self-audits were
held at 17 bases in Japan (16 production bases, 1 research
center). NTN’s procurement division intervened in all cases
to ensure thoroughness of the audits. We will work to
improve the compliance situation at bases that, for example,
require a better understanding of the Subcontract Act orhave failed to recognize its full importance.
We require all procurement staff to attend Subcontract
Act workshops held by the Japan Fair Trade Commission
as well as seminars held outside NTN. In addition, theprocurement division held Subcontract Act training to giveall factory staff a deeper understanding. In the fiscal year
ended March 31, 2014, workshops were held at 17 bases.
(See pages 34 to 38 for details on compliance education
matters including the Subcontract Act.)

46

Social and Environmental
Responsibility

We go through several stages in choosing suppliers who areearnest in putting CSR into business action.
In the fiscal year ended March 31, 2014, we revised thebasic contract, adding three clauses related to respect forhuman rights, rejection of relations with anti-social forces, andforbidding of bribes. We are also looking into methods formonitoring whether suppliers are abiding by our CSR Policy.
The U.S. Dodd-Frank Wall Street Reform and Consumer
Protection Act has a Conflict Minerals Provision*. To comply
with this, we have a database of the four minerals designatedin the act. We also have a 24-7 reception system in Japanand other countries regarding our use of these minerals. Asof the end of March 2014, we had received approximately
400 inquiries.

Fair and Appropriate BusinessS ociety

Human Resources Management

We respect diversity of employees and strive to build a safe
and comfortable workplace.
Occupational Safety and Health
Building a Management System Based on OSHMS
We work to create safe work environments based on a “safety
first” spirit that respects people. We have therefore created asafety and health management system based on the criteria of the
Occupational Safety and Health Management System (OSHMS).
As of March 2014, a total of eight bases had been certified
for OSHMS, and NTN KAMIINA CORP. began preparations forcertification.
Occupational Safety and Health Based on 5 Themes
In the fiscal year ended March 31, 2014, we strove toimprove occupational safety and health in five areas, with a
special focus on eliminating workplace accidents at NTN
subsidiaries. Unfortunately, there were 39 workplace
accidents, four more than the previous year.
In the fiscal year ending March 31, 2015, we are striving to

1. Elimination of workplace accidents (thorough management of work conduct risks and skills)
To improve hands-on safety education, more simulation devices were added at
Head Office,three works and newly installed at NTN HOUDATSU SHIMIZU CORP.
subsidiaries
Safety supervisors at 4 NTN works and 3 subsidiaries conducted cross-inspections ofoccupational safety and health at each other’s sites and shared outstanding case studies.

Head Office,subsidiaries

Diagnoses were conducted at 8 of 17 subsidiaries. Based on the results, training
was held twice at NTN MIE CORP.

Subsidiaries

Focused support was given to subsidiaries seen as operating at a relatively low level
Subsidiaries
of safety (for 2 years).
2. Thorough education on safety and health
Conducted training sessions related to laws and occupational safety and health.

Head Office

Provided occupational safety and health education to employees who are new to sites.

Head Office

Provided mental health education to managers and supervisors.

Head Office

Held back pain workshops; 45 participants.

Head Office

Risk assessment training was held, KUWANA WORKS, and NTN MIE CORP.

Head Office,subsidiaries

3. Health promotion
A public health nurse at the Head Office provided individual health guidance at all
NTN Group sales bases (Head Office, branches, and sales offices).

Head Office,subsidiaries

4,325 employees underwent specific health checkups, and 402 received specifichealth guidance.

Head Office

4. Mental health activities
Twice-monthly counseling service, Oasis NTN, was held.

Head Office

All employees underwent medical interviews to be checked for problems such as
depression, panic disorder, and obsessive-compulsive disorder.

Head OfficeMental health checks were conducted on employees before being sent overseas.

Head Office

5. Raise occupational safety and health standard of NTN Group overall
Focused on supporting NTN Group companies in Japan through measures mentioned above.

Incidence Rate/Severity Rate

1.6

Incidence Rate
Severity Rate

1.62

NTN
NTN

National average for Japanese industry
National average for Japanese industry

1.61
0.58

0.6

1.62

0.4
0.2
0

0.24

0.18
0.090
0.006
2010

47

0.090
0.011
2011

0.110
0.018
2012

1.58
0.29
0.16
0.100
0.100
0.011
0.005

1.59

2013

Building Systems that Support Mental Health CareNTN holds mental health training sessions for managers andsupervisors, while outside counselors offer counseling during
regular medical check-ups.
Employees can also receive counseling through NTN’s
in-house counseling service, called the “Oasis NTN” (heldtwice a month) and the “Mental and Physical HealthCounseling Service” by phone or email.

Respecting Human Rights and Diversity
A Workplace Free of Discrimination

Main Focuses and Activities
in Fiscal Year Ended March 31, 2014

1.8

step up occupational safety and health across the entire NTNGroup. We will revise work manuals and have managers
and supervisors conduct risk assessments at sites, and, forsubsidiaries that request them, give on-site guidance and training
sessions. Efforts will also continue in education related tooccupational safety and health, and physical and mental health.

2014 ( March 31 )Years ended

NTN Group strives to create a discrimination-free workplace
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 particularemphasis on measures against sexual harassment andpower harassment, and we have ongoing education onthese issues for new employees and newly appointed
managers. We also participate in the activities of regional
human rights organizations and take part in a variety ofhuman rights exhibitions and seminars. We also have
Helplines inside and outside the company that make it easy
for employees and others to seek advice when they feel thatsomeone’s human rights have been violated.
NTN Group companies overseas have also built systems
that help them continue to respect human rights.

Promoting Diversity in the Workplace
Hiring Women, the Disabled, and Seniors
Women are making up an increasingly larger percentage ofthe university graduates hired by NTN. In the fiscal year
ended March 31, 2014, women accounted for 16.9% of the
NTN Group in Japan, up 2.1 points from the previous fiscal
year. In April 2014, we launched the Diversity Team project,
whose main goal is to give women a more active role. (Seepage 43 for details.)
We are also giving people with intellectual disabilities the
chance to contribute to the company as much as anyone else.
To this end we created “Dream Workshops” at IWATA WORKS,KUWANA WORKS, and OKAYAMA WORKS, where 11 employeeswith intellectual disabilities work as of the fiscal year ended

Training for new employees at a
templeMarch 31, 2014. In response to revisions to Japanese law inApril 2013 raising the disabled persons employment rate for
a company from 1.8% to 2.0%, we are working with special
schools for the disabled, stepping up hiring over the Internet,
and working to make our equipment and workplaces moredisabled-friendly. As of March 2014, the entire Group
employed 117 people (a 1.87% employment rate).
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, 2014,
there were 72 employees working under this system.
Helping Employees Continue Working While Raising Children
NTN Group strives to support employees in both their workand 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; andthe Child-raising Support Declaration system, under which
employees write a child-raising plan and schedule that isshared with the entire workplace so that support is available.
We also provide support beyond legal requirements with oursystem for reduced working hours for childcare, which now
covers employees until their children have finished the second
grade of elementary school.
Number of Employees Using Support Systems
in Fiscal Year Ended March 31, 2014
Employees taking
child-care leave(including
2 men)

Employees using
Mom-back system

20 11

Human Resource Development and Evaluation
Global Human Resources Development
Of NTN’s worldwide employees, 36% are in Japan and 64%
are overseas, and our worldwide business expansion is set
to continue. That’s why we strive to develop the humanresources 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 scholarshipprograms for employees to acquire specialized skills andknowledge. NTN Group companies in Japan also hosttrainees from overseas companies on an ongoing basis.

In the fiscal
cal year ended March 31, 2014, we hosted a
total of 17 trainees
rainees from companies including Shanghai NTN
Corp. and Nanjing NTN Corp. We also provided employees
in Japan with internships and domestic study trips to boost
their skills. Overseas NTN Group companies also each haveits own training geared to its particular needs.

Promoting Self-Development and Higher Motivation
NTN Group does everything possible to boost employees’
job motivation and provide opportunities for learning anddevelopment. For example, in the fiscal year ended March
31, 2012, NTN Group began QC activities in which
employee teams work independently to boost productquality. The results of these efforts are presented at theannual Global QC Circle Convention.
In the fiscal year ended March 31, 2014, we sought toboost young employees’ motivation through activities suchas training at temples and a company volunteer effort inwhich young employees went to help out in areas stricken by
the March 2011 earthquake and tsunami. (See page 49 fordetails.) Employees also strive to boost their foreign language
skills through e-learning and correspondence courses.

Employment, Working Conditions,
Employee Evaluation
NTN strives to hire and treat employees as well as thecompany’s management situation allows. For example, we
require that all employees join the NTN labor union so thatthey can have the right to organize.
In evaluating our employees, all are subject to a uniform
evaluation standard that operates fairly regardless of
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 with aunique perspective on the individual being evaluated.

Rewards for Employee Inventions
To reward our employees’ inventions, we have established a
Patent Management Rule and a Patent Reward Rule and wehave clarified how patent rights are attributed and how thevalue of the award is calculated. Rewards are also made forforeign 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, 2014, 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, 380
employees (cumulative) were rewarded for obtaining rights
for 160 patents, 43 more than the previous year.

48

Social and Environmental
Responsibility

12

Employees using
Bear Kids Land

Drawing done by children representing theirfavorite memories from their stay at Bear
Kids Land daycare facilityS ocietyContributions to Local Communities

We strive to contribute to society as we conduct ongoing
activities that help local communities.
NTN Group Social Contribution Activities
Contributing to 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.
nities.

Based on the CSR Policy, business bases and Group
companies around the world plan and implement a range ofactivities that include disaster recovery support,international exchange, internship hosting, participation in
local events, and promotion of culture and sports.

Young Employees Assist in Post-Disaster Reconstruction Efforts (NTN Corporation)
In September 2013, 33 employees in their third year att NTN
Corporation volunteered for support activities in areas
stricken by the March 2011 earthquake and tsunami.
Realized with support from the NPO Ishinomaki Revival
vival
Support Network, this activity was aimed at having
participants think about how to best cooperate with others
hersnand interpret their feelings, and to provide them with anrked onopportunity to reevaluate themselves. Participants worked
reconstruction projects while seeing what has beenaccomplished so far and what still needs to be done.
After the three-day support activities, participantscommented on how shocked they were at the extent of theell asdamage and at the slow pace of reconstruction, as wellon how important an opportunity this was to understandother people’s feelings.

Cleaning air conditioner
filters at a tetemporary
housing com
complex

Making a float to be used
for oyster cultivation

Taking Part in Sports Events as Members of the Community (NTN-SNR, NTN NEI)NTN bases around the world take part in various events held in
their vicinity with the goal of promoting local education, art,and sports.
In the fiscal year ended March 31, 2014, NTN-SNR
ROULEMENTS (NTN-SNR) sponsored the Lake Annecy
Marathon in Annecy, France, presenting souvenirs to therunners and entering 12 of its own employees in the race.
NTN-SNR also sponsors other sports events in its community.
In India, a number of employees of NTN NEI Manufacturing
India Private LTD. (NTN NEI) were on a cricket team taking partin a local cricket tournament. Their team was victorious andhelped make the event a resounding success.

Cricket tournamentin the Stateof Haryana, India

The Lake Annecy Marathon

Participation in Blood Donor Clinic (Shanghai NTN Corp., NTN-BOWER
ER CORP.,., NTN NOTO CORP., others)
NTN Group companies in Japan and overseas take part inblood donor clinics sponsored by the Red Cross and otherorganizations.
In the fiscal year ended March 31, 2014, a municipal blood
donor organization operated a blood donor clinic at Shanghai
NTN Corp. (Shanghai NTN), with 105 NTN employees donating
blood. Employees at NTN bases in Japan, the U.S.A., and othercountries also took part in blood donor clinics in their areas.
Blood donor clinic at Shanghai NTN

49

Blood donor clinic
at NTN-BOWER CORP.

E nvironment

Environmental Management

Based on the NTN Group’s Environmental Policy, we manage
our environmental activities, including
those aimed at external certification.
Environmental Management System
Management System Based on
Our Group Environmental Policy
Building a Management System Based on NTN
Environmental Policy
Based on the NTN Group’s Environmental Policy, thepurpose of which is to reduce environmental impact andensure our company’s continuous development, we havebuilt an environmental management system centeredaround the Company-wide Environmental Management
Committee. We also create and revise rules and manuals
when necessary as part of ongoing improvement efforts.

ISO 14001
management
systemcertificate
and appendix

Operating Sites with ISO 14001 Certification
Date ofcertification

Operating site

RegionCompany

Plant

Multi-site certification

ISO 14001 Certification at 24 Bases in Japanand 16 Overseas
NTN is obtaining ISO 14001 certification in Japan undermulti-site certification so that it can build an environmental
management system consistent over all bases.
In September 2013, NTN NOTO Corp. was certified, andas of the fiscal year ended March 31, 2014, 24 of our 25
bases had been certified. And 16 of 18 NTN bases outside
Japan have been certified. NTN makes it a rule to have all
new bases certified within three years of the startup of
operations.
Below is the certification schedule starting in April 2014.

Japan

Operating site
NTN AKAIWA CORP.

U.S.A.

Germany

Date of certification(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 HOUDATSU SHIMIZU CORP., NTN HAKUI CORP.,NTN SHIKA CORP., NTN NOTO CORP.
NIPPON KAGAKU YAKIN CO., LTD.

2000

8

JQAEM0956

NTN TADO CORP.

2005

3

JSAE1058

JSA

2000

6

111994

LRQA

Elgin Plant
AMERICAN NTNBEARING MFG. CORP. Schiller Park Plant

CanadaOperating sites expected to be ISO 14001 certified
RegionJapan

France

Year

Month

2014

9

ThailandChina

NTN-LYC (Luoyang) Bearing Corp.

2014

12

China

BrazilNTN Driveshaft do Brasil

2015

11

India

Registration

Registration Registration
Year MonthNo.
body
1999 11
JSAE176
JSA

JQA

2000

9

112115LRQA

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

NTA PRECISION AXLE CORP.

2013

4

C0094458-EM1

NSF

NTN BEARING CORP. OF CANADA LTD.

1999

7

287

KPMG
LRQA

NTN-BOWERCORP.

NTN Kugellagerfabrik (Deutschland) G.m.b.H

1999

6

201167-2

NTN TRANSMISSIONS EUROPE

2003

1

19479

AFAQ

NTN-SNR ROULEMENTS*

2009

1

0448-4UTAC

NTN MANUFACTURING (THAILAND) CO., LTD. 2003

3

31634

TÜV

Guangzhou NTN-Yulon Drivetrain Co., Ltd. 2005

4104043247

TÜVShanghai NTN Corp.

2005

7

CH05/0489

SGS

NTN NEI Manufacturing India Private LTD.

2011

6

104071903

TÜV* Multi-site certification
Social and Environmental
Responsibility

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

11. Development and sales of environmentally-friendly products• NTN will contribute to world-wide energy conservation by
developing and providing eco-products using tribological
technologies and high precision processing technologies.

22. 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 use of
raw materials, and thorough application of the 3Rs (reduce, reuse,recycle).
• NTN will avert environmental pollution by rigorous management of
substances having an environmental impact that are used in
products or processes, and by active substitution of chemical
substances suspected of having harmful effects.

3. Observance of laws and regulations and implementation ofthorough 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 andinternal 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 andnatural environmental protection activities, NTN will interact with theimmediate community, aiming to develop together with the local region.

50

E nvironment

Environmental Management

Environmental Impact of Business Activities

and wastewater that are generated (the output).
In the fiscal year ended March 31, 2014, CO2 emissions
increased due to factors including an unusually hot summer.
However, we managed to decrease landfill waste by about
half. This was due to our recycling of incinerated ash, which
was previously landfilled, into roadbed material and otheruseful material, and the recycling of sludge from grinding.

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 try to
get an overall picture of the amount of raw materials, energy,
and water we use (the input) and the products, CO2, waste,

At operating site in Japan

Environmental Impact for Each Process

Raw materials

EnergyRaw materials
334,000 tons

INPUT

Steel materials: 330,000 tons
Non-ferrous materials: 4,000 tons
Purchased amount of
raw materials (10,000 ton/year)
38.6

39.3

28.8

35.3

33.4

2010 2011 2012 2013 2014

(Years ended March 31)

Material
recycling*2
Scrap metal
14,771 tons

Water

Fuel
(gasoline, gas)

Electricity*1
496 GWh

Purchased amount(10,000 kL/year)of fuelElectricity
consumption(crude oil equivalent)
19,100 kL

1.62

2.07

2010 2011

2.12

1.90

1.91

2012 2013 2014

(Years ended March 31)

Production process

446

538

OUTPUT

28.2

28.8

20.7

Total landfilledamountHeat
Treatment2010 2011 20122013 2014(Years ended March 31)

62(ton/year)

106

179

225

220

203

193

2010 2011 2012 2013 2014

(Years ended March 31)

Grinding
PolishingAssembly

Use of circulating water
50,000 m3

Products

Wastewater

Wastewater
164

204

(10,000 m3/year)

Water usage

Wastewater
1,690,000 m3

26.9 27.2

58

496(Years ended March 31)

Forging
Turning

Disposal ofindustrial waste
Total landfilled amount48 tons

CO2 emissions*4(10,000 ton/year)499

2010 2011 2012 2013 2014

Disposal ofindustrial waste

CO2 emissions
272,000 tons

(GWh/year)

536

Thermal recycling*3
Waste oil 4,527 tons

CO2

Water
1,930,000 m3

175

198

(10,000 m3/year)

174

169

48

2010 2011 2012 2013 2014

(Years ended March 31)

2010 2011 2012 2013 2014

(Years ended March 31)*1 Electricity: Include amount of renewable energy used *2 Material recycling: To recycle for use as a raw material *3 Thermal recycling: To recycle for use as fuel
*4 CO2 emissions: The value calculated between the fiscal year ended March 31, 2010 and the fiscal year ended March 31, 2014, based on the fixity coefficient (0.381)
introduced in the fiscal year ended March 31, 2013.

51

High-efficiency air conditioningat NTN POWDER METAL CORP.

Environmental Accounting
Large Investments
in Research and Development

EneMeter at the ADVANCED TECHNOLOGY R&D CENTER

The NTN Group uses environmental accounting toquantitatively assess its environmental protection activities.
Environmental preservation costs in the fiscal year ended
March 31, 2014 were approximately 4,726 million yen,
up 19% from the previous fiscal year. This consisted of
1,182 million yen in environment-related equipment
investment, up 20%, and related costs of 3,544 million yen,
up 18%. Contributing to this overall increase was low
environment-related equipment investment the previous
year coupled with aggressive investment in areas such asenvironment-protection-related investment (EV-related
business, for example) and renewable energy. There werealso costs for items like energy-efficient equipment andwaste recycling.

The economic benefit of environmental protection
activities was 869 million yen, due partly to making use ofwaste products such as metal sludge. As for impact onenvironmental preservation, CO2 emissions were 272,000
tons. Despite the effects of an unusually hot summer anda change in the make-up of our production items, we strove
to reduce CO 2 emissions and were able to limit the CO 2
emissions increase over the previous year to just 3,000 tons.
For example, we installed an EneMeter at the Advanced
Technology R&D Center to show the amount of electricity
being used. As well, at NTN KINAN CORP., we installedan air-handling unit, which allowed us to remove air
conditioning units. (See page 56 for details.)
At operating site in Japan(Millions of yen/year)

Environmental Preservation Costs
Equipment investment

Classification

Costs

AmountDetails

Costs

Details

8

Environmental equipment (dust collectors, particulate smoke
removal devices, and wastewater treatment equipment)

161

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

Expenses to preserve
the global environment

44

Energy-conserving equipment (upgrading of equipment
including compressors, lighting, and air conditioning)

154

Costs of switching to energy-saving equipment

Resource recycling expenses

1

566

Cost of recycling and waste reduction measures,
cost of processing regular and industrial waste

Upstream / downstream costs

02

Costs of analysis related to green procurement

Costs of management activities

3

374Work areas
internal costs

Pollution prevention costs

0

Costs of social activities
Environmental remediation expenses
Total
Reference: Total for fiscal year ended
March 31, 2013

R&D costs related to environmental preservation

15

Greening and beautification outside the company
Cost of soil sampling

0

5

1,182

3,544

4,726

985

2,995

3,980

Grand total

Financial Effect of Environmental
Preservation Activities

Impact on Environmental Preservation
Fiscal year ended
March 31, 2014

Fiscal year ended
March 31, 2013

Total CO2 emissions

272,000 tons

269,000 tons

Reduction of waste

Recycle rate 99.8%

99.8%

Indicator

2,267

Social and Environmental
Responsibility

1,125 R&D equipment related to environmental preservation

R&D costs

Labor costs related to the EMS and information disclosure(advertising and NTN reports) and the greening andbeautification of company grounds(Millions of yen/year)

Item

AmountDetails

Global environment preservation
expenses, effects
Resource recycling expenses,
effects
Total
Reference: Total for fiscal year
ended March 31, 2013

97

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

772
869
683

52

E nvironment

Environmental Management

Environmental Targets and Results for the Fiscal
Year Ended March 31, 2014
20 of 28 Targets Achieved
Every year, NTN sets and works towards the achievement oftargets in line with four items of our Group Environmental Policy.
In the fiscal year ended March 31, 2014, areas of focus

included reducing global warming impact, stepping up the
3Rs (reduce, reuse, recycle), and managing and reducing
environmentally hazardous substances. Although we achieved
targets for CO2 emissions overseas, we failed to do so for
reducing the CO2 emissions rate in Japan and overseas.
We were, however, able to achieve targets in Japan for
raising the recycling rate and reducing water used per unit.

Company-Wide Environmental Targets and Results for the Fiscal Year Ended March 31, 2014
NTN Group Environmental Policy
Environmental Purpose

Environmental Targets

Results

Evaluation

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

Develop environmentally friendly products to meet needs of expanding new energy and greaternumber of electric cars

R&D in progress in engineering andresearch divisions

Formulate and implement assessment and judgment criteria for environmental efficiency
in developing new products

Preparing to implement

2. Reduction of environmental impact(1) Prevention of global
warming

Wherever possible, save energy and cut peak energy use

Underway at sites

Make existing manufacturing equipment more energy efficient

Mainly young engineers working on thisunder guidance of Production Strategy& Control Dept.

Publish and use case studies

Currently compiling case studies

Reduce CO2 emissions

Reduction in CO2 emissions rate(2) Reduce, reuse, andrecycle(3) Preserve resources(4) Management andreduction ofenvironmentallyhazardous substances

Domestic 252,000 tons/year or less

272,000 tons/year

Overseas 340,000 tons/year or less

308,000 tons/year

Achieve a 20.3% improvement in CO emissions rate
Domestic over the fiscal year ended March 31, 21998-16.6%-20.3%
Achieve a 10% improvement in CO2 emissions rate
Overseas over the fiscal year ended March 31,
2007 -10%-8.1%

Domestic 99.8% or more

99.8%

Overseas 98% or more

96.5%

waste generation rate by 1% over the fiscal
Domestic Reduceyear ended March 31, 2011 -1%+1%Reduction in paper purchased per Domestic Increase by 5% paper consumption over the fiscal
year ended March 31, 2011 +5%
unit of production output+19%

Raise the recycling rate
Reduction in waste per unit ofproduction output

Reduction in water used per unitof production output

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

Reduction in use of Styrofoam

Styrofoam usage by 99% over the fiscal year -99.5%
Domestic Reduce
ended March 31, 2000 -99%

-7%

Begin manufacturing using phthalate esters substitutes

Switching to substitutes began on April 1

Establish technology for using substitutes for BNST and dibutyltin

BNST: Currently switching fromcontinuously demanded item
Dibutyltin: Substitutes exist

Reduce PRTR-designatedsubstances-82%

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

3. Observance of laws and regulations and implementation of thorough environmental management systems(1) Compliance withenvironmental laws

Create measures to prevent leak accidents, carry out improved and full-scale emergency drills

Completed at all sites

Continue strict management of poisonous materials

Strict management continuing

Start soil purification at former site of TAKARAZUKA Works

Under discussion with local residents

ISO 14000
certification(2) Improvement ofenvironmental
management systems

ISO 50001
certification
Promote green
procurement

Certification at NTN NOTO CORP.

Certification complete

Prepare for certification at NTN AKAIWA CORP.

Currently preparing

Trial introduction of energy review and other methods to confirm effectivenessSwitching in order to comply with Law
Concerning the Rational Use of Energy

Certify the environmental management systems of at least 95% of key suppliers

95%—

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

No complaints

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

In progress in various regions
Achieved

53

Not achieved

Environmental Targets for the Fiscal Years Ending March 31, 2015
NTN Environmental Action Policy for the Fiscal Year Ending March 31, 2015
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, 2015

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

NTN Group Environmental Policy
Environmental Purpose

Environmental Targets

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
Begin assessment of environmental efficiency in new product development

2. Reduction of environmental impact
Wherever possible, save energy and cut peak energy use
Improve energy efficiency of existing equipment by utilizing management standards
Reduce CO2 emissions rate in production restructuring(1) Prevention of global warming

Domestic 268,000 tons/year or less

Reduce CO2 emissions

Overseas 320,000 tons/year or lessa 17.8% improvement in CO2 emissions rate over the fiscal year
Domestic Achieve
ended March 31, 1998 -17.8%

Reduction in CO2 emissions rate

Achieve a 10% improvement in CO2 emissions rate over the fiscal year
Overseas ended March 31, 2007 -10%
Domestic 99.8% or more

Raise the recycling rate

Overseas 98% or more

(2) Reduce, reuse, and recycle(3) Preserve resources

Reduce waste generation rate by 0.8% over the fiscal year ended March
Domestic 31, 2011 -0.8%

Reduction in paper purchased per unit of production output

Increase by 10% paper consumption over the fiscal year ended March
Domestic 31, 2011 +10%

Reduction in water used per unit of production output

Reduce by 10% water usage rate over the fiscal year ended March
Domestic 31, 2011 -10%

Reduction in use of Styrofoam

Reduce Styrofoam usage by 99% over the fiscal year ended March
Domestic 31, 2000 -99%
Social and Environmental
Responsibility(4) Management and reductionof environmentally hazardous
substances

Reduction in waste per unit of production output

Manufacturing using phthalate esters substitutes in progress
BNST replacement in progress
Domestic Completely eliminate N,N-Dicyclohexylamine

Reduce PRTR-designated substances

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

Continue strict management of poisonous materials
Start soil purification and process management at former site of TAKARAZUKA WORKS
ISO 14000 certification

Certification for NTN AKAIWA CORP. and NTN-LYC (Luoyang) Bearing Corp.

Energy management

Strengthen energy management system to comply with the Revised Rationalization in Energy Use Law(2) Improvement of environmental
management systems

Certify the environmental management systems of at least 95% of key suppliers
Promote green procurement

Clarification of responsibilities for green procurement in each division
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 activities54

E nvironment

Environmental Management

Training related to
Revised Rationalization
in Energy Use Law
NTN’s EV used as a pace car at an ekiden
in Mie Prefecture

Environmental Audits
Two Types Internal Audits Conducted
The NTN Group in Japan has internal site audits (once ayear), 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 level ofenvironmental management systems are external audits by
ISO certification institutes.
In the fiscal year ended March 31, 2014, internal audits
were held at all bases and cross-audits were held at eightbases. ISO audits were held at seven bases in July 2013,
and since there were no violations of laws or internal NTN
regulations, these sites kept their multi-site certification
designation. Although there was one item cited, measures
had already been put in place to rectify it in the fiscal year
ended March 31, 2014. NTN FUKUROI CORP. underwent aninspection by the Agency for Natural Resources and Energy
as a designated energy management factory. It was found to
be conducting outstanding efforts in complying with relevant
standards of the Law Concerning the Rational Use of Energy.

Environmental Education
Education Geared to Workplace Needs
The NTN Group strives to raise environmental awareness byholding environmental education for all levels of employees
at the head office, business sites, and group companies,
gearing sessions to particular characteristics of each location.

TOPICS
Environmental Education for Suppliers(NTN ENGINEERING PLASTICS CORP.)

Reducing environmental impact requires not only the efforts of
NTN but also the efforts of all those involved in our business.
In November 2013, we invited our suppliers to a quality
conference, where we explainedd what both NTN and society
as a whole are doing toprotect the environment, andurged suppliers to cooperate
in developing and providing
products with low
environmental impact.

Number of Internal Environmental Auditors Reaches 278
The NTN Group in Japan held its first training session toincrease the number of internal environmental auditors.
In the fiscal year ended March 31, 2014, internal
environmental auditor training was held in November 2013and led by a top instructor from L.M.J. Japan, an institutethat trains ISO auditors. The training was attended by 23
members of 12 bases, including NTN AKAIWA CORP., which
is aiming for ISO 14001 certification. Participants got an
overview of ISO, acquired the skills needed by an internal
environmental auditor, learned points to keep in mind in
conducting audits, and used case studies to learn practical
auditing skills. This latest training brought the number of
NTN internal environmental auditors to 278.

Response to Laws
Training to Comply with Revised Rationalization
in Energy Use Law
The NTN Group keeps abreast of the latest environmental
laws and regulations and keeps relevant employees up todate with the necessary information.
In January 2014, we held training to prepare for the April
2014 enactment of the Revised Rationalization in Energy
Use Law. People in charge of energy management andother related employees joined as an outside expert spoke
about how to comply with the revised law.

Environmental Communication
Promoting NTN’s EV Technologies
NTN takes part in environment- and technology-related trade
fairs in order to promote its products and technologies that
contribute to protecting the environment.
In the fiscal year ended March 31, 2014, a microcompact
electric vehicle (EV) using NTN’s In-wheel Motor System
was unveiled at the “Mt. Fuji EV Festa.” This is the firstin-wheel motor vehicle in Japan to acquire registration of
microcompact mobility*. NTN also cooperated in ademonstration project of this microcompact EV in France.
The EV and its components were also shown at the“Shanghai Motor Show” and at the “Mie Environment Fair
2013” sponsored by the Mie prefectural government. In
other promotional use of this EV, NTN provided it for use
as a lead vehicle and publicity vehicle at marathons andekidens held in Wakayama Prefecture and Mie Prefecture.
NTN once again joined the “Leading Industry Exhibition
Mie” as last year, displaying bearings for wind turbines andthe Condition Monitoring System (CMS) for wind turbines,
and promoting environmental products and technologies forindustrial machinery.
* Microcompact mobility: For vehicles made for one or two persons;managed by Japan’s Ministry of Land, Infrastructure, Transport and Tourism.

55

E nvironment

Prevention of Global Warming

We are Reducing CO2 Emissions at All NTN Production
Bases Around the World.
Reduction of CO2 Emissions

LED floodlightht
TO CORP.
at NTN NOTO

CO2 Reduction a Key Environmental
Protection Theme
Since April 2013, the NTN Group has positioned the reductionof CO2 emissions as a key environmental protection theme
based on new environmental target. In the fiscal year ended
March 31, 2013, we revised our calculation method for CO2
emissions, using a fixity coefficient (0.381) instead of avariation coefficient for each power supplier. This has allowed
us to more accurately compare how effective our activities
are from year to year.

Efforts in Japan
CO2 Emissions Up 1% Over the Fiscal Year Ended
March 31, 2013
For the fiscal year ended March 31, 2014, we set targets of
CO2 emissions of 252,000 tons and CO2 emissions rate of
0.69 t-CO2 per million yen. However, despite efforts to saveenergy, including the installation of LED lighting, upgrading ofequipment including high-efficiency air conditioning, andmonitors showing the amount of electricity being used, we fell
short of both targets, with CO2 emissions of 272,000 tons andCO 2 emissions rate of 0.73 t-CO 2 per million yen. Main
contributing factors were the unusually hot summer and achange in the make-up of our production items.
For the fiscal year ending March 31, 2015, we are working
towards targets of CO2 emissions of 268,000 tons and CO2
emissions rate of 0.72 t-CO2 per million yen.
Energy Savings and Equipment Investment at NTN Sites

Results of Efforts in the Fiscal Year Ended March 31,
2014 (NTN Group in Japan)
CO2 emissions

CO2 emissions rate

272,000
0.73
tons/year
t-CO per2

million yen

implementation of energy-saving measures including insulation
for machinery and stoppage of conveyor belts not being used,participants spoke about how their efforts gave them a better
understanding of electricity use through actually measuring
electricity and adjusting equipment and revising programs.
Team members given certification with designations such as
electricity management engineers and energy managers.
There were other efforts as well. Numerous sites installed
LED lighting. NTN KINAN CORP. installed an air-handling unit
and removed it air conditioning units. An air handling unit uses
water to cool the air, which reduces electricity consumption.
CO2 Emissions*1 and CO2 Emissions Rate*2(NTN Group in Japan)
CO2 emissions(10,000 tons/year)

35.0

1.00

0.87

30.0

0.71

28.2

28.8

0.70

0.69

26.9

27.2

26.8

0.80

0.70

0.73

0.72

0.60

25.0
20.0

CO2 emissions rate

Emissions rate (t-CO2/million yen)

20.6

20.7

15.0

0.40

10.0
0.20

5.0
0

1998

2010

2011

2012

2013

2014

2015

0

(Target)(Years ended or ending March 31)*1 CO2 emissions: Based on fixity coefficient (0.381)*2 CO2 emissions rate: Per unit of production output

56

Social and Environmental
Responsibility

In the fiscal year ended March 31, 2014, we launched ateam dedicated to reducing energy consumption of
production equipment. Composed of 48 young engineersfrom 10 NTN Group sites in Japan, the team’s purpose isto reduce energy consumption while giving the engineers
valuable experience, and it spent the past year improving
the energy efficiency of NTN production equipment.
In February 2014, a meeting was held to share the results
and progress of the team’s efforts. Besides reports on the

Air handling unit at NTN KINAN CORP.

E nvironment

Prevention of Global Warming

NTN-SNR’s car-pooling website

Efforts Overseas
CO2 Emission Reduction Targets Achieved
For the fiscal year ended March 31, 2014, we set targets of
CO2 emissions of 340,000 tons and CO2 emissions rate of
1.11 t-CO2 per million yen. We achieved the CO2 emissions
target with a figure of 308,000 tons, but failed to do so forCO2 emissions rate, which was of 1.13 t-CO2 per million yen.
The main reason was a change in the make-up of production
items at a number of sites.
The target for the fiscal year ending March 31, 2015 istotal CO2 emissions of 320,000 tons and CO2 emissions rateof 1.11 t-CO2 per million yen.

Results of Efforts in the Fiscal Year Ended March 31,
2014 (NTN Group Overseas)
CO2 emissions

CO2 emissions rate

308,000
1.13
tons/year
t-CO perPursuing Modal Shifts
CO2 Emissions Reduced by 1.7% Over the Fiscal Year
Ended March 31, 2013

million yen
CO2 Emissions*1 and CO2 Emissions Rate*2(NTN Group Overseas)
CO2 emissions

40.0

1.10
1.23

26.0
19.3

1.12

1.17

30.0
20.0

CO2 emissions rate

Emissions rate (t-CO2/million yen)

50.0

27.5

1.13
30.1

1.40

1.13

1.11

1.20

30.8

32.0

1.00
0.80
0.60

19.3

0.40
10.0
0

0.20

2007

2010

2011

2012

2013

2014

2015

0

(Target)(Years ended or ending March 31)*1 CO2 emissions: Based on fixity coefficient (0.381)*2 CO2 emissions rate: Per unit of production output

Upgrading to Energy-Efficient Equipment to Reduce
Electricity Consumption and CO2 Emissions
NTN-SNR ROULEMENTS (NTN-SNR) formulated aneco-energy plan two years ago and has since then beensystematically conducting energy-efficiency activities.
In the fiscal year ended March 31, 2014, the company
converted its compressors and other equipment toenergy-efficient models. This is expected to reduce annual
CO2 emissions by 28 tons.

57

The company has also begun encouraging car-poolingfor employees driving to work. The company started a
dedicated website in February 2014 through which drivers
and passengers can match their commuter routes for
car-pooling. As of March 2014, 69 cars were registered andhad driven a total of 950 kilometers, which has reduced thecompany’s CO2 emissions from commuter cars by 14 tons.

Reducing CO2 Emissions During Distribution

2(10,000 tons/year)

NTN-SNR encourages
employees to car-pool

The NTN Group strives to reduce CO2 emissions and costs
through modal shifts: more environmentally friendly forms oftransport.
In November 2012, we began switching deliveries between
KUWANA WORKS and NTN NOTO CORP. from truck to rail.
In the fiscal year ended March 31, 2014, this reduced CO2
emissions by 42 tons and crude oil use by 15.7 kiloliters.
Making Container Transport More Efficient
We are striving to make truck transport more efficient by
reducing the cargo volume and shortening the delivery
distances.
In February 2013, the outgoing port for products from
Hakui County, Ishikawa Prefecture and bound for Germany
was changed from Nagoya to Kanazawa. This shortened
the distance trucks had to travel and as a result in the fiscal
year ended March 31, 2014, we reduced CO2 emissions by
23 tons and light diesel consumption by 8 kiloliters.
In September 2013, for shipments from Okayama to
Kobe to France, we achieved savings by using the empty
containers at the port that other companies had used toimport goods. In thefiscal year ended March
31, 2014, we shipped atotal weight of 1,088
tons using 122
containers (20-footsize). We plan to
Shipping goods from Kanazawa port to Germany
expand this effort.

E nvironment

Reducing Waste

We are Making Efficient Use of Raw Materials and Reducing
Waste in All Production and Distribution Processes.

Device for recovering
water-soluble
coolant in France

Zero Emissions
Raising the Recycling Rate at Production Bases
The NTN Group defines zero emissions as landfill waste
constituting 0.5% or less of total waste generated (arecycling rate of at least 99.5%) and we work towards thisby raising the recycling rate.

Efforts in Japan
Reducing Waste and Increasing Recyclingat NTN Bases
In the fiscal year ended March 31, 2014, the NTN Group in
Japan strove to maintain a recycle rate of at least 99.8%.
At NTN MIE CORP., incinerated ash that was previously
landfilled is now being melted and recycled as roadbed
material and civil engineering raw material. This has reduced
landfill waste by approximately 70%. NTN NOTO CORP. has
been recycling sludge from grinding and as a result
improved its recycling rate by 2.2 points.
These efforts allowed us to achieve our recycling ratio
target, which we plan to maintain in the fiscal year ending
March 31, 2015.
Results of Efforts in the Fiscal Year Ended March 31,
2014 (NTN Group in Japan)
Recycling rate

99.8%
Recycling rate
(%)

250

100

99.9

99.8

99.8

99.8

200

80

165.3

160.7

167.3

167.3

Recovery and Reuse of Water-Soluble Coolant Begins
in France
NTN TRANSMISSIONS EUROPE had previously been
disposing of industrial waste consisting of metal chips
generated in the lathing process and the water-soluble
coolant (cutting fluid) mixed in with this. To reduce thiswaste and make effective use of material, the company
installed a device that recovers the water-soluble coolant
from the carts that this industrial waste mix is placed in.
This has allowed the company to reuse water-soluble
coolant and as a whole consume 50% less of it.

164.0

150

60

100

40

Using Returnable Boxes
The NTN Group strives to reduce the amount of waste frompackaging resulting from the shipping of raw materials andproducts.
In October 2013, we began using returnable plastic
boxes as product packaging for customers in the Kanto
region who we deliver products to on a regular basis. This
has not only reduced the amount of cardboard used, but
thanks to modifying the shapes of the boxes, we were able
to eliminate the bands that are used to prevent productcases from being crushed during delivery.
Returnable plastic boxes used in the Kanto region

20

50

0

2011

2012

2013

2014

2015

0

(Target)(Years ended or ending March 31)

With lid

Without lid

58

Social and Environmental
Responsibility(Kg / million yen)

99.7

Efforts Overseas

Reducing Waste During Distribution

Recycling Rate and Waste Per Unit of Production Output(NTN Group in Japan)
Waste per unit of production output

Incinerated ash is recycled into
roadbed material like thisE nvironment

Management and Reduction of Environmentally Hazardous Substances

We are Managing and Reducing Environmentally Hazardous
Substances While Complying with Worldwide Laws
and Regulations.
Management of Environmentally Hazardousand Harmful Substances
Response to Environmental Regulations
The NTN Group complies with chemical substance restrictions
around the world by keeping a close watch on changing
restrictions and constantly testing for what substances arecontained in the raw materials, parts, and materials it
procures. We strive to manage and reduce the amount ofenvironmentally hazardous and harmful substances we use.

Testing emissions
at KUWANA WORKS

Meeting REACH and CLP Requirements

Switch Begun from Rubber Containing Phthalate Esters
In Europe, 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 designatedby these regulations and report to the relevant authorities
and to our customers. We also develop technologies forusing substitutes for the designated substances.
Under the REACH regulation, there are deadlines forswitching to substitutes for each designated substance.
The deadline for the elimination of phthalate esters,commonly used in rubber products, is February 2015. To
meet this deadline, in the fiscal year ended March 31, 2014
we began procuring rubber items from our suppliers that do
not contain phthalate esters.
Air Pollution Control Law

Survey of Emissions from Heating Furnaces
In July 2013, KUWANA WORKS tested emissions at its
heat-treatment plant in accordance with Japan’s Air
Pollution Control Law. The plant operates a heating furnace
used for product heat treatment and other processes, andthe furnace was tested for emission levels of sulfur oxide,
dust, and nitrogen oxide. Tests confirmed that levels of all
substances were within the limits of environmental laws andin-house standards.

Management of Other Environmentally
Hazardous Substances
Working towards Elimination of N,N-Dicyclohexylamine
The NTN Group in Japan continuously and voluntarily works
to reduce the amount of chemicals it handles that aredesignated under the PRTR (Pollutant Release and Transfer
Register) Law.
For the fiscal year ended March 31, 2014, we set a
company-wide target of reducing N,N-Dicyclohexylamine, a
PRTR designated substance contained in metal cutting andgrinding fluids, by 85% against the fiscal year ended March
31, 2011.
As of April 2013, as a result of efforts to replace the
N,N-Dicyclohexylamine used at NTN MIE CORP. and NTN
HAKUI CORP., NTN MIE CORP. completely eliminated thissubstance and the overall amount used was reduced by
82% against the fiscal year ended March 31, 2011. Our
target for the fiscal year ending March 31, 2015 is totalelimination at all sites.
Reducing Risk of Oil Leaks
In August 2013, NTN KINAN CORP. installed more oil separators,
which separate oil and water, at its No. 1 Plant. It also took
measures to lower the risk of oil leaks; for example, to beprepared for a possible oil leak, it installed an oil retaining
wall on its rainwater drainage channel.

Law Concerning Special Measures against PCB Waste

27 High-Voltage Capacitors Disposed ofHazardous Substance Audits

In accordance with the Law Concerning Special Measuresagainst PCB Waste, the NTN Group in Japan systematicallydisposes of PCB. In the fiscal year ended March 31, 2014,
IWATA WORKS disposed of 27 high-voltage capacitors
containing PCB.

The NTN Group in Japan conducts hazardous substance
audits internally for the specific purpose of determining thestate of environmentally hazardous substances. These audits
determine if substances are being properly managed on acontinuing basis. If problems are found, measures areformulated to solve them.
The hazardous substance auditors who conduct theseaudits take ongoing training. After training at NTN
HOUDATSU SHIMIZU CORP. and IWATA WORKS, there
were 142 auditors as of March 2014.

59

E nvironment

Biodiversity

NTN Group companies participate whenever possible
in local environmental protection activities andstrive to preserve a range of ecosystems.

Planting trees
at a factoryin India

Pl ti ttrees att NTN K
Planting
Komorebibi no MMorii
in Kuwana City

Forest management activity
in Nagano Prefecture

NTN employees help
the “Clean Beach Ishikawa”

NTN Kigyo no Mori Events Held Around Japan

Protecting Biodiversity
Preserving the Natural Environment
and Repairing Ecosystems
The NTN Group works to preserve nature and protect
biodiversity around its bases.
Continuing Progress at 6 NTN Kigyo no Mori Sites in Japan
Since 2002, the NTN Group in Japan has been using
mountainous areas near its sites for employees, theirfamilies, and local citizens to work to repair forests under
the NTN Kigyo no Mori initiative.
Total Area of Forests Cared For by NTN

43.9hectares
NTN Kigyo no Mori Activities(Fiscal Year Ended March 31, 2014)
Overview

Activity
start

Size
(hectares)“Mori-no-satooya”
program(Adopt-a-Forest)

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

since
April
2006

21.9

“Nagomi-no mori”(Forest of
Relaxation)

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

since
June
2007

1.0

“Shizuoka mirai-no
mori supporter”
system (Supportersof Shizuoka’s future
forest)Besides forest conservation activities suchas clearing underbrush, employees build
and maintain a hiking trail and manage aforest that is home to many birds. (Iwata
City, Shizuoka Prefecture)

since
April
2008

15.0

“Kigyo tono kyodo
no mori zukuri”
agreement(Public corporate
forest-planting)

Besides planting trees and conducting
forest conservation activities, employees
hold nature walks. (Mimasaka City,
Okayama Prefecture)sinceAugust2008

1.0“NTN Komorebi noMori”

At Tadoyama, employees plant trees andforest thinning, build and maintain ahiking trail, and hold nature walks.
(Kuwana City, Mie Prefecture)since
November
2010

4.5“NTN Okukawachi
Lakeside Forest”

since
Employees plant trees and forest thinning,
Novemberat Takihata Dam. (Kawachinagano City,
2012
Osaka Prefecture)

0.5

Volunteering for Environmental Protection Activities
NTN employees regularly take part in local environmental
events. In the fiscal year ended March 31, 2014, employees
from NTN HOUDATSU SHIMIZU CORP. and NTN SHIKA
CORP. joined in the “Clean Beach Ishikawa” event to pick up
litter along Chirihama Beach.
Planting Trees on the Factory Grounds in India
Every year since 2012 on June 5, Earth Day, NTN NEI
Manufacturing India Private LTD. holds a commemorative
tree-planting event.
In the fiscal year ended March 31, 2014, 40 employees
from all divisions took part to plant a total of 50 trees ofdifferent species such as blackberry, Indian rosewood, andGulmohar. Participants helped raise their own environmental
awareness by chanting the company’s environmental policy.

60

Social and Environmental
Responsibility

Activity

In March 2014, a total of 56 participants took part in atree-planting event at the NTN Komorebi no Mori in Kuwana
City, Mie Prefecture. Participants were from NTN bases in theregion including KUWANA WORKS, the ADVANCEDTECHNOLOGY R&D CENTER, NTN ENGINEERING PLASTICS
CORP., and NTN TADO CORP., as well as the local government.
This was the seventh tree-planting event and was led by Mori noKaze, a non-profit organization (NPO). The children in attendance
received instruction on forests and the importance of biodiversity.
At the NTN Kigyo no Mori in Komagane City, Nagano
Prefecture in May 2014, 34 employees and their family members
took part in a forest management activity. In this year’s edition, theeighth since starting in 2006, the Kamiina Forestry Union and the
Komagane Municipal Agricultural Division led forest management
activities and a lesson in growing shiitake mushrooms.
This activity was part of Nagano Prefecture’s Forest Promotion
Project, under which approximately 50 hectares of forest was
managed over eight years. In March 2014, NTN received a certificate
from the Nagano Prefectural government stating that its Kigyo
no Mori absorbs approximately 150 tons of CO2 per year. Overthe next three years we plan to manage a further 21.9 hectares.

Third-Party Opinion

NTN Report 2014 Third-Party Opinion
This is my third time presenting a third-party opinion on the social and environmental
aspects of the NTN Report. I would like to start by evaluating the progress NTN has
made on the suggestions I have made in the past.
First, with violations of the Anti-Monopoly Act continuing to have a major effect on thecompany’s performance, being thoroughly in compliance is at the top of NTN’s to-do list.
With regards to this, last year in this column I pointed out the need for NTN to raisecompliance awareness among everyone from top management to all levels of employees;
to strengthen the system of compliance conduct and improve compliance-related trainingof human resources in each of NTN’s worldwide business regions; and to improveinformation disclosure. And I praise NTN for taking a major step towards solving theseby creating a worldwide system to spearhead compliance efforts. In April 2014, NTN
established the CSR Headquaters, which integrated the CSR Department, the Legal
Department, and the Fair Trade Promoting Department; and it set up an internal control
section in each of the Offices of General Managers. In carrying out ongoing efforts thatmake use of this new system, it is crucial that top management continue to demonstrateunflagging resolve and leadership. The outside directors and outside auditors play animportant role. Also crucial is the Internal Audit Department, which assesses self-audits
in each department and supervises the progress of improvement measures. I thinkthat the Internal Audit Department’s role and systems should be strengthened andit should work closely with the CSR Headquaters. In proceeding with its global
efforts, I would like to see NTN draw a roadmap showing exactly how much it hopes
to accomplish by when, and disclose information on the progress with this roadmap.
Second, last year I also pointed out the need for NTN to stipulate key targets for
efforts on the social side. In response, the newly established CSR Headquaters
setting of action themes to strengthen risk assessment, disseminate and implement
compliance, practice fair trade, and contribute to society is a positive step. NTN also
set target values for the number of female managers. Beyond this, I would like to see
the company formulate a clear medium-term plan for CSR that covers all effortson the social side, including labor, human rights, supply chain management, andcommunity service. I am also concerned that the NTN Report only includes social
activities in Japan. It’s imperative that a company like NTN doing business around theworld report on its global social activities. Also limited in scope to suppliers anddomestic bases in Japan is information on supply chain management. In human rights
as well, I would like to see reports on how overseas companies perceive human rights
issues and what they are doing about it. In the environmental area, NTN has beensteadily moving ahead; for example, it is building a group-wide environmental
management system, reducing environmentally hazardous substances, and conducting
environmental protection activities.
Third, as I said last year, I look forward to seeing what NTN will do in the way of
establishing a dialogue with stakeholders. Unfortunately, I haven’t seen any progresson this front. This is because the key action themes that NTN set this past year are, as
far as I can see, those that the company sees as the most immediately pressing. In areas
I mentioned above, such as human rights and supply chain management, I hope to see
NTN engage with non-profit organizations and other groups that represent the company’s
stakeholders. And in the area of social contribution, I believe NTN can make even greater
advances and respond to the expectations of society by clarifying its basic policies.

61

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

800

Bearing
Constant-Velocity Joints
Precision Equipment and Other Product
Aftermarket
Industrial Machinery(Billions of Yen)
Automotive
800

600

600

600

400

400

400

200

200

200

(Billions of Yen)0

2009 2010 2011 2012 2013 201402009 2010 2011 2012 2013 2014

(Years ended March 31)

Americas

Japan
EuropeAsia and Others(Billions of Yen)

800

02009 2010 2011 2012 2013 2014

(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, 2014 consisted of
NTN Corporation and 65 consolidated subsidiaries (17 domestic
and 48 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(Four companies joining NTN Group)
NTN MANUFACTURING DE MEXICO,S.A.DE C.V.
Xiangyang NTN-Yulon Drivetrain Co., Ltd
NTN Technical Service Corp.
NTN LOGISTICS CO.,LTD.
(No decrease)
Affiliates(No change in number)

Summary of the Fiscal Year Ended March 31, 2014

Net sales: 639.0 billion yen, a year-on-year increase of
99.4 billion yen (18.4%)
Operating income: 33 billion yen (operating margin of 5.2%)
Interest-bearing debt: 381.8 billion yen, an increase of
21 billion yen from March 31, 2013
Capital expenditures: 33.2 billion yen, a year-on-year
decrease of 15.8 billion (32.2%)
Dividend: 2.0 yen (interim: 0 yen; year-end: 2.0 yen)

Sales Performance
Consolidated net sales for the fiscal year ended March 31, 2014
were 638,971 million yen, an increase of 99,376 million yen (18.4%)
year-on-year. Overseas sales totaled 459,889 million yen, an
increase of 97,766 million yen (27.0%) year-on-year. Overseas
sales accounted for 72.0% of net sales overall (Americas 27.3%,
Europe 26.0%, Asia and others 18.6%), an increase of 4.9
percentage points from the previous fiscal year.
Net Sales and Earning by Business Sector
In the aftermarket, net sales were 103,845 million yen on increased
customer demand in the automotive repair sector and exchangerate effects. Operating income was 17,725 million yen.
The industrial machinery market had net sales of 101,181 million
yen thanks to increased demand and exchange-rate effects.
Operating income was 3,279 million yen due to a reduction of
personnel costs and other fixed costs and exchange-rate effects.
In the automotive market, increased customer demand andexchange-rate effects resulted in net sales of 433,945 million yen.
Operating income was 11,999 million yen due to factors including
the effects of increased sales, decreased proportional costs, andthe dissolution of temporal expenses incurred in the previous year
because of an increased burden on production lines resulting fromhigher sales in the Americas.
Net Sales and Earning by Region
In Japan, aftermarket sales were down due to a drop in theaftermarket for industrial machinery. In industrial machinery as well, adrop in customer demand in China and other Asian countries resulted
in lower sales in construction machinery and other sectors. In theautomotive market, despite a drop following the end of the Japanese
government’s eco-car subsidy, sales were up overall thanks tofactors including increased customer demand. The result was net
sales of 179,082 million yen, up 0.9% over the previous fiscal year.
In Europe, sales were up in the aftermarket thanks to a recovery
in customer demand in the automotive repair sector. Industrial
machinery was little changed from the previous year, but in theautomotive market, sales were up overall thanks to factors including
increased customer demand. The result was net sales of 166,280
million yen (up 33.3%), helped partly by exchange-rate effects.
In the Americas, sales were up in the aftermarket thanks to arecovery in customer demand in the automotive repair sector.
Industrial machinery saw a drop, particularly in sectors such as

62

Financial Section

In the fiscal year ended March 31, 2014, Japan’s economy
enjoyed moderate recovery thanks to factors including acorrection of the high yen. Overseas, the U.S. economy
continued its moderate recovery and Europe made a movein the same direction. Although China steadied off, other
newly emerging countries saw slow economic growth.
Against this background, we have been implementing
numerous measures with the aim of reforming businessstructure to generate profit under our Revival 2014
medium-term management plan, which we launched in
April 2013.

Net Sales and Earnings
Net sales and operating income both increased. Targets wereachieved thanks to factors including increased customer
demand and sales, and exchange-rate effects.

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

Operating Income / Operating Margin
Operating income
Operating margin(Billions of Yen)

(%)

40

8

30

6

20

(Billions of Yen)

6

20

4

10

2

0

0

2

-10

-2

2009 2010 2011 2012 2013 2014

0

Capital expenditures
Depreciation(Billions of Yen)

60
50
40
30

-20

2009 2010 2011 2012 2013 2014

(Years ended March 31)

construction machinery. In the automotive market, however, sales
were up overall thanks to factors including increased customer
demand. The result was net sales of 174,566 million yen (up23.3%), helped partly by exchange-rate effects.
In Asia and other regions, aftermarket sales were down on
decreases in industrial machinery repair products. In the industrial
machinery market, sales were up in China on the strength ofincreased customer demand for wind turbine products but were
down in other parts of Asia as customer demand decreased. In
the automotive market, sales were down due to slower customer
demand in Asian countries, although China saw a sales increase
thanks to a recovery in business to Japanese manufacturers inthat country and mass production of new orders. The result was
net sales of 119,043 million yen (an increase of 24.3%), helped
partly by exchange-rate effects.
Cost of Sales and Selling, General and Administrative(SG&A) Expenses
The cost of sales was 525,935 million yen, down 3.3 percentage
points and representing 82.3% of consolidated net sales. This was
mainly due to decreased proportional costs.
Selling, general and administrative (SG&A) expenses were
80,032 million yen, representing 12.5% of consolidated net sales
and 0.5 percentage points down.
Earnings
Factors contributing to increased earnings included a decrease in
fixed costs such as labor, favorable effects of exchange-rates,
decreased proportional costs, and the dissolution of temporal
expenses incurred in because of an increased burden on productionlines resulting from higher sales in the Americas. As a result, theoperating income for the term was 33,004 million yen, up 25,726
million yen over the previous fiscal year.
Other expenses amounted to a net expense of 35,455 million
yen. Major contributing factors were income totaling 2,906 million
yen, including a gain on securities contributed to employees’
retirement benefit trust of 1,272 million yen, and expenses of
38,361 million yen, including losses related to the Anti-Monopoly
Act of 27,024 million yen, impairment losses of 2,013 million yen,provision of reserve for losses on support of affiliates of 1,600 million
yen, and business restructuring expense of 1,421 million yen.
As a result, the loss before income taxes was 2,451 million yen,
an improvement from the 13,898 million yen loss of the previous
fiscal year. The net loss per share was 27.54 yen for the year
under review.

63

(%)

30

4

10

0

Capital Expenditures and Depreciation

Net income (Loss)
Ratio of net income (Loss) to sales

-4

20
10
0

2009 2010 2011 2012 2013 2014

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

Although we have not yet decided on the dividend for the full
fiscal year, we plan to resume the dividend (after foregoing it lastyear) in view of overall factors such as performance trends andthe management environment, with an intended dividend of 2
yen per share.

R&D and Capital Expenditures
Increase in R&D Costs, Decrease in Capital Expenditures
R&D Costs
R&D costs for the fiscal year under review were 17,821 million yen,
up 1,647 million yen and representing 2.8% of consolidated net sales.
In the industrial machinery applications, NTN is positioning as key
business sectors wind turbine, 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 market, besides boosting productivity inbearings and constant-velocity joints, we are beginningmass-production and market introduction of module products suchas Ball Screw Drive Module for Electric Hydraulic Brake (which
dramatically improve the efficiency of hybrid cars) and the
Mechanical Clutch Unit (MCU) for Next-generation Steering, as wellas preparing to expand the market for these products.
Capital Expenditures
For NTN Corporation and its consolidated subsidiaries, the main
focus of capital expenditures was on increasing production
capacity, labor savings, and rationalization, maintaining andupgrading existing facilities, improving safety, and conducting
R&D for new products.
In Japan, capital expenditures were 8,757 million yen, withprojects including the expansion of plant buildings and constantvelocity joint production equipment at NTN FUKUROI CORP.
In the Americas, capital expenditures were 9,469 million yen,with projects including the expansion of plant buildings and the
expansion of bearing production equipment at NTN-BOWER
CORP., and the expansion of bearing production equipment at
AMERICAN NTN BEARING MFG. CORP.
In Europe, capital expenditures were 7,121 million yen, with

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

2009 2010 2011 2012 2013 20142009 2010 2011 2012 2013 2014

(Years ended March 31)

projects including the expansion of plant buildings at and the
expansion of bearing production equipment at NTN-SNR
ROULEMENTS, and the expansion of constant-velocity joint
production equipment at NTN TRANSMISSIONS EUROPE.
In Asia and other areas, capital expenditures were 7,818 million
yen. Projects included the expansion of bearing production
equipment at Shanghai NTN Corp., the expansion of
constant-velocity joint production equipment at Guangzhou
NTN-Yulon Drivetrain Co., Ltd., and the expansion of bearing
production equipment at NTN MANUFACTURING (THAILAND)
CO.,LTD. After adjusting for 4 million yen in equipment transfers
between segments, total capital expenditures for the fiscal year
under review were 33,162 million yen.
All expenditures were funded from internal funds and short-termloans. Depreciation for the fiscal year under review amounted to39,315 million yen (up 4,474 million yen from the previous fiscal year).

Financial Position and Cash Flows

outstanding over the end of the previous fiscal year, were 374.68
yen per share (a decrease of 1.16 yen per share over the end of
the previous fiscal year). Interest-bearing debt amounted to 381,767
million yen, an increase of 20,967 million yen 5.8%) from the endof the previous fiscal year. Factoring in the 14,427 million yen
increase from currency effects, the actual increase was 6,540
million yen. The ratio of interest-bearing debt to total assets was
45.0% (down 2.0 percentage points).
Net working capital was 152,530 million yen, an increase of
66,570 million yen from the end of the previous fiscal year. The
current ratio was 148.4% (up of 21.1 percentage point over theend of the previous fiscal year).
The inventory turnover ratio was 3.8 times (0.5 times up overthe end of the previous fiscal year), while the turnover ratio of total
assets was 0.8 times (up 0.1 times).
Net cash provided by operating activities was 69,058 million
yen, an increase of 48,553 million yen, or 236.8%, over the end of
the previous fiscal year. This mainly reflected inflows in the form ofdepreciation of 39,315 million yen, an increase of 27,024 million
yen in accrued liability related to losses related to the Anti-Monopoly
Act an increase in trade payables of 14,804 million yen, and adecrease in inventory of 9,105 million yen; offset against outlays of
payments related to the Anti-Monopoly Act of 7,231 million yen
and an increase in trade receivables of 7,197 million yen.
Net cash used in investing activities was 34,131 million yen(down 22,473 million yen, or 39.7%, over the previous fiscal year).
This was due mainly to outlays of 33,351 million yen through thepurchases of property, plant, and equipment.
Net cash provided by financing activities was 6,596 million yen,down 62,990 million (90.5%) over the previous fiscal year. This
mainly reflected an inflow from long-term loans of 83,694 million
yen, set against a payment of 65,710 million yen for long-termloans and a net decrease in short-term loans of 11,594 million yen.
Factoring in the 1,515 million yen increase due to the effect of
exchange-rate changes, along with an increase of 533 million yen
in cash and cash equivalents from newly consolidated subsidiaries,
cash and cash equivalents at the end of the fiscal year were
129,671 million yen, up 43,571 million yen (50.6%) over the endof the previous fiscal year.
Free cash flow, the difference between net cash provided byoperating activities and net cash used in investing activities,
amounted to 34,927 million yen.
The proportion of net cash provided by operating activities to
net sales was 10.8%.

64

Financial Section

Interest-Bearing Debt Increased by 21.0 Billion Yen. Free
Cash Flow was 34.9 Billion yen
Total current assets at the fiscal year-end amounted to 467,748
million yen, an increase of 66,427 million yen, or 16.6%, from theend of the previous fiscal year. This was the result of an increasein cash and cash equivalents of 43,571 million yen, an increase inaccounts receivable of 14,979 million yen, and an increase ininventory of 3,197 million yen. Property, plant, and equipment
were 309,391 million yen, up 11,238 million yen (3.8%) over theprevious fiscal year-end. This came mainly from an increase of
49,439 million in machinery, equipment and other vehicles. As aresult, total assets were 848,037 million yen, up 79,575 million yen(10.4%) over the end of the previous fiscal year.
Current liabilities were 315,218 million yen, about the same as
the previous year. Long-term liabilities were up 78,093 million yen(32.4%) over the end of the previous fiscal year to 319,450 million
yen. This was mainly due to an increase in long-term loans andlease obligations of 61,456 million yen. As a result, total liabilities
were 634,668 million yen, up 77,949 million yen (14.0%) over theend of the previous fiscal year.
Total net assets were 213,369 million yen, increased 1,626 million
yen (0.8%) over the end of the previous fiscal year. This was mainly
due to an increase in currency translation adjustments of 16,400
million yen and a decrease in retained earnings of 13,884 million yen.
The shareholders’ equity ratio was 23.5%, down 2.5 percentage
points. Total net assets per share, based on the number of shares(Years ended March 31)

Main Financial Indexes: 11-Year Summary
NTN Corporation and consolidated subsidiaries

Years ended March 31

2004

2005

2006

2007

2008

Net sales ....................................... (Millions of yen)

357,394

388,349434,837

483,818

533,985

Operating income .......................... (Millions of yen)

24,70933,20137,645

46,79349,612

Operating margin ........................................... (%)

6.9

8.5

8.7

9.7

9.3

Income (loss) before income taxes .... (Millions of yen)

18,181

26,58630,37045,17044,313

Net income (loss) ........................... (Millions of yen)

11,032

16,74019,55027,01427,431

Capital expenditures ...................... (Millions of yen)

38,092

49,67049,284

59,34759,504

Depreciation .................................. (Millions of yen)

23,97924,87028,58632,69339,547

R&D costs ..................................... (Millions of yen)

13,543

14,952

14,771

14,221

15,006

Total assets ................................... (Millions of yen)

460,341

516,578

561,494

611,944629,464

Net assets/Shareholders’ equity .... (Millions of yen)

142,487

157,952

183,247

215,815

216,401

Inventories ..................................... (Millions of yen)

83,565

93,167

107,047

107,131

109,969

Interest-bearing debt ..................... (Millions of yen)

164,090

176,185

183,198

197,911

212,874

Number of employees .........................................

11,885

12,788

14,631

17,306

18,960308.27341.93396.73445.61445.98- Basic ......................................................... (Yen)

23.54

35.83

41.94

58.34

58.43

- Diluted ....................................................... (Yen)

21.87

32.94

38.55

53.74

54.59

Cash dividends ............................................ (Yen)

5.50

8.50

11.00

16.00

19.00

Inventory Turnover Ratio ........................... (Times)

4.3

4.2

4.1

4.5

4.9

Net D/E ratio .......................................................

0.86

0.79

0.80

0.79

0.86

Net income (loss)/Average total assets (ROA) ... (%)

2.4

3.4

3.6

4.6

4.4

Net income (loss)/
Average shareholders’ equity (ROE) ............. (%)

8.0

11.1

11.5

13.8

13.1

NTN-ROI ....................................................... (%)

6.1

7.7

7.7

8.6

8.6

Shareholders’ equity ratio ............................... (%)

31.0

30.6

32.6

34.2

33.3

FOR THE YEAR DATAYEAR-END DATAPER SHARE DATA
Net assets ................................................... (Yen)
Net income (loss):

OTHER INFORMATION

Note 1: U.S. dollar amounts have been converted from yen, for convenience only, using the approximate exchange rate on March 31,2014, which was U.S.$1 = ¥102.92.

65

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

2010

2011

2012

2013

2014

2014

527,100

452,746

530,056

543,468

539,595

638,971$6,208,424

9,479

1,399

24,56020,724

7,278

33,004

320,676

1.8

0.3

4.6

3.8

1.3

5.2

5.2

(10,104)(1,838)22,855

16,357(13,898)(2,451)(23,815)(8,985)(2,015)

14,3995,993(14,196)(14,648)(142,324)

49,59421,50429,70054,44048,97933,162322,21145,75940,70235,93634,17534,841

39,315

381,996

17,402

14,687

15,697

17,157

16,174

17,821

173,154627,613618,802632,001

693,258

768,462

848,037

8,239,769

192,223

214,551

210,353

212,126

211,743

213,369

2,073,154

140,466

126,663

136,985

155,107163,287

166,484

1,617,606

275,996

231,638

223,284

271,978

360,802381,767

3,709,357

20,67917,95919,172

20,78921,39822,15622,156376.77374.19376.05370.19375.84374.683.64(19.14)(4.00)

27.08

11.27

(26.69)(27.54)

0.27

–

–

–

–

–

–

–

13.00

8.00

10.00

10.00

0

2.00

0.02

3.8

3.6

3.9

3.5

3.3

3.8

1.38

1.00

0.92

1.11

1.37

1.27

(1.3)

(0.3)

2.3

0.9

(1.9)

(1.8)

(4.3)

(1.1)

7.2

3.0

(7.2)

(7.3)

1.5

0.2

4.2

3.4

1.1

4.6

28.2

32.2

31.6

28.4

26.0

23.5

Financial Section

2009

66

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, 2014).
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.

676) 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, 2014 and 2013

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

2014

2013

2014

¥ 129,671¥ 86,100$ 1,259,920

2,076

692

20,171

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

12,357

10,590120,064

Accounts

123,001

108,022

1,195,113

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

(895)

(937)

(8,696)

134,463

117,675

1,306,481

166,484

163,287

1,617,606

7,952

7,377

77,264

27,102

26,190263,331467,748

401,3214,544,773

Land (Note 2(g))

32,63232,157

317,062

Buildings and structures (Note 2(g))

190,395

173,323

1,849,932

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

746,301

696,8627,251,273

Other current assets (Note 14)
Total current assets

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

19,91427,961

193,490989,242930,3039,611,757(679,851)(632,150)(6,605,626)

309,391

298,153

3,006,131

Investment securities (Notes 7 and 14)

30,41327,601

295,501

Investments in unconsolidated subsidiaries and affiliates (Note 14)

15,54013,690150,991

266

272

2,585

Deferred income taxes (Note 23)

16,97820,904

164,963

Other assets

7,701

6,521

74,82570,89868,988688,865¥ 848,037¥ 768,462$ 8,239,769

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

Investments and other assets:

Goodwill

Total investments and other assets

Financial Section

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

68Consolidated Balance Sheets
March 31, 2014 and 2013

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

2014

2013

2014

¥ 100,756¥ 105,706$ 978,974

29,23764,961

284,075

14,693

11,677

142,761

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):
Notes

91,71776,782

891,148

106,41088,4591,033,909

3,424

1,485

33,269

–

74

–

1,602

–

15,565

Provision for surcharge payments under the Anti-Monopoly Act (Note 21)

35

7,231

340

Provision for employees’ early retirement incentive plans (Note 20)

–

5,923

–

Accounts
Accrued income taxes (Notes 14 and 23)
Deferred income taxes (Note 23)
Provision for loss on support to a related company (Note 18)

Other current liabilities

73,754

41,523

716,615

Total current liabilities (Note 25)

315,218

315,362

3,062,747

253,192

191,7362,460,086

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

37,880–54,248–527,089

932

1,164

9,056

Deferred income taxes (Note 23)

3,479

3,174

33,803

Other long-term liabilities

7,599

7,403

73,834

Total long-term liabilities (Note 25)

319,450

241,357

3,103,868

Accrued retirement benefits for employees (Note 9)
Liability for retirement benefits (Note 9)
Provision for product defect compensation

Contingent liabilities (Note 11)
Net assets:
Shareholders’ equity (Note 10):
Common stock:
Authorized — 1,800,000,000 shares
54,34754,347

528,051

Capital surplus

67,37067,370654,586

Retained earnings

82,856

96,740805,052

(534)

(517)

(5,188)204,039

217,940

1,982,501

8,073

5,211

78,440Translation adjustments(1,728)(18,128)(16,790)

Retirement benefits liability adjustments(11,111)(5,119)(107,958)

Total accumulated other comprehensive loss, net(4,766)(18,036)(46,308)

Minority interests

14,096

11,839136,961

213,369

211,743

2,073,154¥ 848,037¥ 768,462$ 8,239,769

Issued — 532,463,527 shares in 2014 and 2013

Treasury stock, at cost:
619,746 shares in 2014 and 576,643 shares in 2013
Total shareholders’ equity
Accumulated other comprehensive income (loss):
Net unrealized holding gain on securities (Note 7)

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

69

Consolidated Statements of Operations
Years ended March 31, 2014 and 2013

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 contribution of securities to employee’s retirement benefit trust (Note 7)
Gain on bargain purchase of a subsidiary’s shares (Note 25)
Gain on sales of investment securities (Note 7)
Loss on surcharge payments under the Anti-Monopoly Act (Note 17)
Loss on impairment of fixed assets (Note 6)
Provision for loss on support to a related company (Note 18)
Reorganization expenses (Note 19)
Restructuring costs (Note 20)
Provision for surcharge payments under the Anti-Monopoly Act (Note 21)
Loss on valuation of investment securities
Casualty losses
Other, net
Loss before income taxes and minority interests
Income taxes (Note 23):
Current
Deferred
Loss before minority interests
Minority interests
Net loss

2014

2013

2014

¥ 638,971
525,935
113,036¥ 539,595
462,106
77,489$ 6,208,424
5,110,134
1,098,290

80,03233,00470,211
7,278

777,614
320,676

928(4,822)
706
1,272
–
–
(27,024)(2,013)(1,600)(1,421)
(301)
(35)
–
–
(1,145)(35,455)(2,451)820(4,069)
553
–
1,929
1,593
–
(2,693)–(3,027)(6,365)(7,231)(491)(126)(2,069)(21,176)(13,898)

9,017(46,852)
6,860
12,359––(262,573)(19,559)(15,546)(13,807)(2,925)(340)––(11,125)(344,491)(23,815)

6,744
4,887
11,631(14,082)(566)¥ (14,648)

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

65,52747,483113,010(136,825)(5,499)$ (142,324)

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income
Years ended March 31, 2014 and 2013

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

Total comprehensive income attributable to:Shareholders of NTN Corporation
Minority interests

2013

2014

¥ (14,082)¥ (13,718)$ (136,825)

2,863
15,3781,821

1,815
19,502(1,092)

27,818
149,417
17,694

1,980
22,042¥ 7,960

1,581
21,806¥ 8,088

19,238214,167$ 77,342¥ 6,226¥ 1,734¥ 5,662¥ 2,426$ 60,494$ 16,848

Financial Section

Loss before minority interests
Other comprehensive income (loss) (Note 22):
Net unrealized holding gain on securities (Note 7)
Translation adjustments
Retirement benefit liability adjustments
Share of other comprehensive income of affiliates accounted
for by the equity method
Other comprehensive income, net
Comprehensive income

2014

See accompanying notes to the consolidated financial statements.

70

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2014 and 2013

Millions of yen

Retainedearnings

Treasurystock,
at costNet
unrealized
Retirement
holdingbenefitgain onTranslation
liability
Minority
securities adjustments adjustments interests

532,463,527 ¥ 54,347 ¥ 67,370 ¥ 113,595

Number ofshares in
issue

Balance at April 1, 2012

Commonstock

Capitalsurplus

Total net
assets¥ (514)¥ 3,396¥ (37,263)¥ (4,027)

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

Other changes

—

—

—

—

—

1,815

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

16,475

Balance at April 1, 2013

¥ 15,222 ¥ 212,126

532,463,527

54,347

67,37096,740

(517)

5,211

(18,128)(5,119)11,839211,743

Net loss———(14,648)

—

—

—

—

—

(14,648)

Net effect of change in scope of consolidation

—

—

—

764

—

—

—

—

—

764

Purchases of treasury stock

—

—

—

—

(18)

—

—

—

—

(18)

Sales of treasury stock

—

—

—

—

1

—

—

—

—

1

Other changes

—

—

—

—

—

2,862

16,400(5,992)

2,257

15,527532,463,527 ¥ 54,347 ¥ 67,370¥ 82,856¥ (534)¥ 8,073

Balance at March 31, 2014

¥ (1,728) ¥ (11,111)¥ 14,096 ¥ 213,369

Thousands of U.S. dollars (Note 1)

Commonstock

Balance at April 1, 2013

CapitalsurplusTreasurystock,
at costRetainedearnings$ 528,051 $ 654,586

Net
unrealized
Retirement
holdingbenefitgain onTranslation
liability
Minority
securities adjustments adjustments interests$ 939,953 $ (5,023) $ 50,632

Total net
assets$ (176,137) $ (49,738) $ 115,031 $ 2,057,355

Net loss––(142,324)

–

–

–

–

–

(142,324)

Net effect of change in scope of consolidation

–

–

7,423

–

–

–

–

–

7,423

Purchases of treasury stock

–

–

–

(175)

–

–

–

–

(175)

Sales of treasury stock

–

–

–

10

–

–

–

–

10

–

–

–

–

27,808159,347(58,220)

21,930150,865

Other changes
Balance at March 31, 2014

$ 528,051 $ 654,586

See accompanying notes to the consolidated financial statements.

71$ 805,052 $ (5,188) $ 78,440$ (16,790) $ (107,958) $ 136,961 $ 2,073,154

Consolidated Statements of Cash Flows
Years ended March 31, 2014 and 2013

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

2014

2013

2014

¥ (2,451)¥ (13,898)$ (23,815)

39,315
2,197
134–(7,196)(5,860)
1,559
(122)
12
–
(255)
9,100
27,024
1,138(999)
10,698
7,231
(928)
4,822
(1,420)(706)–––(1,272)
1,864(7,197)9,105
14,804(4,039)96,558
1,576(4,912)(10,698)(7,231)(6,235)¥ 69,058

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

381,996
21,347
1,302–(69,918)(56,937)
15,148(1,185)
117–(2,478)88,418262,573
11,057(9,707)
103,945
70,258(9,017)46,852(13,797)(6,860)–––(12,359)
18,111(69,928)
88,467
143,840(39,245)938,185
15,312(47,726)(103,945)(70,258)(60,581)$ 670,987

Cash flows from investing activities:(Increase) decrease 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 upfront portion for sales of property, plant and equipment
Proceeds from sales of investment securities
Purchases of investments in subsidiaries
Decrease in short-term loans receivable
Other
Net cash used in investing activities(323)(33,351)(1,843)
–
–
1,251
–
(37)
–
172
(34,131)1,150(55,244)(1,536)
935
(893)
–
1,702
(3,927)
1,026
183(56,604)(3,138)(324,048)(17,907)––
12,155
–
(360)
–
1,671
(331,627)

Cash flows from financing activities:
Decrease 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(11,594)
83,694(65,710)
801
–
(277)
(318)
6,596

(3,013)89,248(13,471)230(2,659)(249)(500)
69,586(112,651)
813,195(638,457)
7,783–(2,691)(3,090)64,089Effect 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

1,515
43,038
86,100533¥ 129,671(208)
33,27952,606215¥ 86,100

14,720418,169
836,572
5,179$ 1,259,920

Financial Section

Cash flows from operating activities:
Loss 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(Decrease) increase in provision for surcharge payments under the Anti-Monopoly Act(Decrease) increase in provision for employees’ early retirement incentive plans
Increase in provision for loss on support to a related company(Decrease) increase in allowance for doubtful accounts
Increase (decrease) in allowance for directors’ and corporate auditors’ bonuses
Increase in accrued retirement benefits for employees(Decrease) increase in provision for product defect compensation
Increase in liability for retirement benefits
Increase in account payable for Anti-Monopoly Act
Increase in other current liabilities for reorganization expenses
Decrease in other current and long-term liabilities resulting from amendment of pension plans
Severance payments under early retirement incentive plans
Surcharge payment under Anti-Monopoly Act
Interest and dividend income
Interest expense
Translation adjustments and foreign exchange (gain) loss, net
Equity in earnings of affiliates
Loss on sales of fixed assets, net
Gain on sales of investment securities, net
Loss on valuation of investment securities
Gain on contribution of securities to employee’s retirement benefit trustContribution of securities to retirement benefit trust(Increase) decrease in trade receivables
Decrease in inventories
Increase (decrease) in trade payables
Other
SubtotalInterest and dividend income received
Interest paid
Severance payments under early retirement incentive plans
Payment for loss of Anti-Monopoly Act
Income taxes paid
Net cash provided by operating activities

See accompanying notes to the consolidated financial statements.

72

Notes to Consolidated Financial Statements
March 31, 2014

1. Basis of Preparation
The accompanying consolidated financial statements of NTN Corporation(the “Company”) and consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as requiredby the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain
reclassifications have been made to the consolidated financial statements
issued domestically in order to present them in a format which is 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 ¥102.92 = U.S.$1.00, the exchange rate prevailing on March 31, 2014.
This translation should not be construed as a representation that yen
can be converted into U.S. dollars at the above or any other rate.

2. Summary of Significant Accounting Policies(a) Principles of consolidation

assets by the declining-balance method, except for the buildings andassets of foreign consolidated subsidiaries to which the straight-line
method is principally applied.
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, 2014 and 2013 were reduced by the following amounts:
Thousands of
U.S. dollars

Millions of yen

Land
Buildings andstructures
Machinery,equipment
and vehicles

2014
¥ 799

2013
¥ 799

2014
$ 7,763

529

468

5,140

420

504

4,081

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.

(h) Provision for loss on support to a related company

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.

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

(b) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the rates of exchange in effect at the balance
sheet date. Revenues and expenses are translated at the rates of
exchange prevailing when the transactions were made.
Assets and liabilities of overseas consolidated subsidiaries 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 of changes
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.

Provision for loss on support to a related company is provided for the
possible loss on support provided to a related company due to thesubsidiary’s financial condition and other factors.

(i) Provision for surcharge payments under the Anti-Monopoly Act(j) Liability for retirement benefits
Liability for retirement benefits has been provided principally at an
amount calculated based on the retirement benefit obligation after
the fair value of the pension plan assets are deducted. The estimatedbenefit is attributed to each period by the straight-line method overthe estimated years of service of the eligible 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 in
the year following the year in which the gain or loss was recognizedprimarily by the straight-line method over a period of principally 15 years,
which is within the estimated average remaining years of service ofthe eligible employees.

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

(l) Leases(d) Allowance for doubtful accounts

For lease transactions involving the transfer of ownership, the leased assets
are depreciated by the same methods used for owned fixed assets.

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.

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.

(e) Short-term investments and investment securities

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.

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.

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

(g) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation iscomputed at rates based on the estimated useful lives of the respective

73(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.

(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.

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

(p) Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes in fair value
included in profit or loss in the corresponding period, except forderivatives meeting the criteria for deferral hedge accounting underwhich realized gain or loss, net of the applicable income taxes, isdeferred as a component of net assets. Receivables and payables
hedged by forward foreign exchange contracts meeting certain
conditions are translated at the corresponding foreign exchange contract
rates (the “allocation method”). Interest-rate swap transactions meetingcertain conditions for special treatment is accounted for as if the interest
rates applied to the interest-rate swap had originally applied to theunderlying debt (the “special treatment”). Cross currency swap meetingthe conditions of both the allocation method and the special treatment
are accounted for by translating the applicable interest rates theunderlying foreign currency debt at the corresponding contract rates.

be included in other comprehensive income and actuarial gains andlosses and past service cost that were recognized in other comprehensive
income in prior periods and then recognized in profit or loss in the current
period shall be treated as reclassification adjustments. In addition,
the new accounting standard allows a choice for the method of
attributing expected benefits to periods between either the straight-line
basis or the plan’s benefit formula basis. In addition, the method used
to determine the discount rate was revised.
The Company has adopted the revised accounting standard effective
March 31, 2014 as mentioned in “3. Accounting Change.” 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 effect of the change in the calculation method is estimated todecrease liability for retirement benefits and deferred income taxes by¥3,557 million ($34,561 thousand), ¥1,245 million ($12,097 thousand),
respectively, and to increase retained earnings at April 1, 2014 by¥2,312 million ($22,464 thousand). The effect of the change on the
consolidated statement of operations for the year ending March 31,
2015 is expected to be immaterial.

(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.

5. Inventories
Inventories at March 31, 2014 and 2013 consisted of the following:
Millions of yen

Finished goods
Work in process
Raw materials
and supplies

Thousands of
U.S. dollars

2014¥ 90,541
45,0972013¥ 92,771
41,9962014$ 879,722
438,175

30,846¥ 166,484

28,520¥ 163,287

299,709$ 1,617,606

3. Accounting Change
Accounting Standards for Retirement Benefits
Effective March 31, 2014, the Company and its domestic consolidated
subsidiaries adopted “Accounting Standard for Retirement Benefits”(Accounting Standards Board of Japan (“ASBJ”) Statement No.26
issued on May 17, 2012) and “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No.25 issued on May 17, 2012),
except provisions set forth in paragraph 35 of ASBJ Statement No.26
and paragraph 67 of ASBJ Guidance No.25.
In accordance with the adoption, the retirement benefit obligations after
the fair value of the pension plan assets are deducted, and actuarial
gains and losses and past service costs that have yet to be recognizedin profit or loss are recorded as “Liability for retirement benefits”.
The adoption of these standards follows transitional provisions set forthin paragraph 37 of the ASBJ Statement No.26. The effect of thischange is included in accumulated other comprehensive income as“Retirement benefit liability adjustments”.
As a result of this change “Liability for retirement benefits” was recordedin the amount of ¥54,248 million ($527,089 thousand), othercomprehensive income decreased by ¥7,604 million ($73,883 thousand)and net assets per share decreased by ¥14.30 ($0.14) as of March
31, 2014 from the corresponding amounts that would have beenrecorded under the previous method.
Financial Section

4. Standards Issued but Not Yet Effective
Accounting Standards for Retirement Benefits
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 AccountingStandard for Retirement Benefits,” which replaced the “AccountingStandard for Retirement Benefits” issued by the Business Accounting
Council in 1998 with an effective date of April 1, 2000 and the otherrelated practical guidance, being followed by partial amendments fromtime to time through 2009.
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 a liability
or asset. Actuarial gains and losses and past service cost that arosein the current period and have yet to be recognized in profit or loss shall74

Notes to Consolidated Financial Statements
March 31, 2014

6. Impairment of Fixed Assets
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 related losses on impairment of fixed assets of ¥2,013 million ($19,559 thousand) and ¥2,693 million in theaccompanying consolidated statements of operations for the years ended March 31, 2014 and 2013 respectively:
Thousands of
U.S. dollars

Millions of yen
Location

Usage

Production
equipment
Japan

Employeerecreational
facilities

Americas

Production
equipment

EuropeProduction
equipment
and other

Asia and other areas

Production
equipment

Classification

2014
¥–
167
453
–
52
15
0
1,040
185
101
–
–
–
–
–
–
¥ 2,013

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

2013
¥ 192
269
334
20
202
122
1
8
183
–
235
220
215
648
39
5
¥ 2,693

2014
$–
1,623
4,401
–
505
146
0
10,105
1,798
981
–
–
–
–
–
–
$ 19,559

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 ¥1,421 million ($13,807 thousand), which included loss on impairment of fixed assets in the amountof ¥184 million ($1,788 thousand) for the year ended March 31, 2014. The aggregate amount of ¥2,197 million ($21,347 thousand) of loss on impairmentof fixed assets included ¥2,013 million ($19,559 thousand) as shown in the above table and the ¥184 million ($1,788 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, 2014.
The Company recorded reorganization expenses of ¥3,027 million, which included loss on impairment of fixed assets in the amount of ¥145 million
for the year ended March 31, 2013. The aggregate amount of ¥2,838 million of loss on impairment of fixed assets included ¥2,693 million as shownin the above table and the ¥145 million, which was included in the reorganization expenses mentioned above, was presented as a component ofcash 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, 2014 and 2013 is summarized as follows:
Millions of yen

2014

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

2013

Carrying
value

Acquisition
costs

Unrealized
gain (loss)

Carrying
value

Acquisition
costs

Unrealized
gain (loss)¥ 26,129¥ 13,673¥ 12,456¥ 19,880¥ 11,213¥ 8,667

2,779
35,00037,779¥ 63,908

3,124
35,00038,124¥ 51,797

(345)
–
(345)
¥ 12,111

5,398
34,00039,398¥ 59,278

6,176
34,00040,176¥ 51,389

(778)
–
(778)
¥ 7,889

Thousands of U.S. dollars

2014

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

75

Carrying
value

Acquisition
costs

Unrealized
gain (loss)$ 253,877$ 132,851$ 121,026

27,001
340,070367,071$ 620,948

30,353340,070
370,423$ 503,274(3,352)–(3,352)$ 117,674

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

2013¥ 1,692
1,593

Sales
Aggregate gain

The Company contributed certain available-for-sale securities with a fair value of ¥1,864 million ($18,111 thousand) to the employee retirement benefit
trust for the Company’s contributory pension plan, and recognized gain of ¥1,272 million ($12,359 thousand) for the year ended March 31, 2014.

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 0.78% and 0.76% at March 31, 2014 and 2013,
respectively.
Long-term debt and lease obligations at March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Loans from banks and other financial institutions, due through 2023, at an averageannual interest rate of 1.3%
1.66% unsecured bonds due 2013
Lease obligations due through 2027
Less current portion

2014

2013

2014

¥ 281,011–
1,418
282,429(29,237)¥ 253,192¥ 245,096
10,0001,601
256,697(64,961)¥ 191,736$ 2,730,383–
13,7782,744,161(284,075)$ 2,460,086

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2014 are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2015
2016
2017
2018
2019
2020 and thereafter¥ 29,237
40,89069,41072,046
39,60931,237¥ 282,429$ 284,075
397,299
674,407700,020384,852
303,508$ 2,744,161

9. Retirement Benefits
1. Outline of retirement benefits for employees
The Company and certain domestic consolidated subsidiaries have defined benefit pension plans (i.e., corporate pension fund plans and lump-sum
payment plans), covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts of which are determined byreference to their basic rates of pay, length of service, and the conditions under which termination occurs. They also have defined contribution
pension plans and advance payment plans. Certain overseas consolidated subsidiaries also have defined benefit pension plans and/or defined
contribution pension plans.
2. Defined benefit pension plans for the year ended March 31, 2014
(1) The change in retirement benefit obligation is outlined as follows:

Thousands of
U.S. dollars

2014¥ 110,526
3,311
2,282
(658)
(13,204)
3,996¥ 106,253

2014$ 1,073,902
32,171
22,173(6,393)(128,294)
38,825$ 1,032,384

Financial Section

Retirement benefit obligation at April 1, 2013
Service cost
Interest cost
Actuarial loss
Benefits paid
Other
Retirement benefit obligation at March 31, 2014

Millions of yen*Certain domestic consolidated subsidiaries calculate the liability for retirement benefits based on the simplified method.

76

Notes to Consolidated Financial Statements
March 31, 2014

(2) The change in plan assets at fair value is outlined as follows:

Plan assets at fair value at April 1, 2013
Expected return on plan assets
Actuarial gainContributions by the employer
Benefits paid
Other
Plan assets at fair value at March 31, 2014

Millions of yen

Thousands of
U.S. dollars

2014¥ 56,541
1,769
3,096
4,111
(16,221)2,709¥ 52,005

2014$ 549,368
17,18830,082
39,944(157,608)
26,321$ 505,295(3) The balance of retirement benefit obligation and plan assets at fair value, liabilities and assets recognized in consolidated balance sheet are
outlined as follows:
Millions of yen

Thousands of
U.S. dollars

Unfunded retirement benefit obligation
Net amount of liabilities and assets recognized in the consolidated balance sheet

2014¥ 98,539(52,005)
46,534
7,714
54,2482014$ 957,433(505,295)
452,138
74,951
527,089

Liability for retirement benefits
Net amount of liabilities and assets recognized in the consolidated balance sheet

54,248¥ 54,248

527,089$ 527,089

Millions of yen

Thousands of
U.S. dollars

2014¥ 3,3112,282(1,769)2014$ 32,171
22,173(17,188)

2,566
(184)
¥ 6,206

24,931(1,788)$ 60,299

Funded retirement benefit obligation
Plan assets at fair value(4) The components of retirement benefit expenses are outlined as follows:

Service cost
Interest cost
Expected return on plan assets
Amortization:
Actuarial loss
Past service cost
Retirement benefit expenses(5) The amount of actuarial loss and past service cost recognized in other comprehensive income for the year before the deduction of the tax
benefit is outlined as follows:

Actuarial loss
Past service cost
Total

Millions of yen

Thousands of
U.S. dollars

2014¥ 2,0688¥ 2,0762014$ 20,093
78$ 20,171(6) The balance of unrecognized actuarial loss and past service cost recognized in accumulated other comprehensive income before deduction oftax benefit is outlined as follows:

Unrecognized actuarial loss
Unrecognized past service cost
Total

Millions of yen

Thousands of
U.S. dollars

2014¥ (17,084)55¥ (17,029)2014$ (165,993)
534$ (165,459)(7) The plan assets by major category consist of the follows:
Equities
Bonds
General accounts at life insurance companies
Other
Total

2014
51.3%
24.4
18.7
5.6
100.0%The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present and in the
future, and long-term expected rate of return from multiple plan assets.
(8) The assumptions used in accounting for the defined benefit plans are as follows:
Discount rate
Expected long-term rate of return on plan assets

77

2014
Principally 1.5%
Principally 2.5%

3. Defined contribution pension plans for the year ended March 31, 2014

Contributions to defined contribution pension plans

Millions of yen

Thousands of
U.S. dollars

2014¥ 1,2902014$ 12,534

4. Accrued retirement benefits for employees for the year ended March 31, 2013
The following table sets forth the funded and accrued status and the amounts recognized in the accompanying consolidated balance sheet atMarch 31, 2013 for the Company’s and consolidated subsidiaries’ defined benefit pension plans:Millions of yen

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

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
The components of retirement benefit expenses are outlined as follows:

Millions of yen

2013¥ 3,781
2,762(1,496)

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

2,208
(150)
7,105
1,203
¥ 8,308

The assumptions used in accounting for the defined benefit plans are as follows:2013
Principally 1.5%
Principally 2.5%

Discount rate (*)
Expected rate of return on plan assets*As a result of a review of discount rates by reference to bond market rates, the Company and its consolidated subsidiaries changed the discountrate 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 ($83,939 thousand) at March 31, 2014 and 2013.
(b) Movements in shares issued and treasury stock during the years ended March 31, 2014 and 2013 are summarized as follows:
Number of shares

2014
Increase

Decrease

March 31, 2014

532,463,527
576,643–
44,948–
1,845

532,463,527
619,746

April 1, 2012

Increase

Decrease

March 31, 2013

532,463,527
566,982–
19,171–
9,510

532,463,527
576,643

Financial Section

Shares issued:Common stock
Treasury stock:Common stock

April 1, 20132013
Shares issued:Common stock
Treasury stock:Common stock

The increases in treasury stock were due to purchases of shares of less than one voting unit and the decreases in treasury stock were due to salesof shares at requests of shareholders owning less than one voting unit for the years ended March 31, 2014 and 2013.

78

Notes to Consolidated Financial Statements
March 31, 2014

11. Contingent Liabilities
Arbitration for claim of damages
NTN-SNR ROULEMENTS (hereinafter referred as NTN-SNR), a consolidated subsidiary, has been involved in arbitration proceedings sinceNovember 2012. One automotive customer submitted a claim to arbitration and requested the payment in the amount of $57,774 thousand(¥5,946 million) for damages due to allegedly defective products provided by NTN-SNR.
With subsequent arbitration proceedings, the claim for damages has increased to $62,864 thousand (¥6,470 million) related to these products.
NTN-SNR continues to present counterarguments against this claim appropriately.
Depending on the results of the arbitration, the results of operations 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, 2014 and 2013, 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

2013

2014

Buildings and structures
Machinery, equipment and vehicles
Other assets

Acquisition
costs

Accumulated
depreciation

Net bookvalue

Acquisition
costs

Accumulated
depreciation

Net bookvalue¥ 1,4124
12¥ 1,428¥ 1,195
4
11¥ 1,210

¥ 217
0
1
¥ 218

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

¥ 273
1
3
¥ 277

Thousands of U.S. dollars

2014

Buildings and structures
Machinery, equipment and vehicles
Other assets

Acquisition
costs

Accumulated
depreciation

Net bookvalue$ 13,719
39
117$ 13,875$ 11,611
39
107$ 11,757$ 2,108010$ 2,118

Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to¥59 million ($573 thousand) and ¥65 million for the years ended March 31, 2014 and 2013, respectively. Depreciation of the leased assets computedby the straight-line method over the respective lease terms with a nil residual value amounted to ¥59 million ($573 thousand) and ¥65 million for theyears ended March 31, 2014 and 2013, respectively.
Future minimum lease payments subsequent to March 31, 2014 for finance leases accounted for as operating leases are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

20152016 and thereafter
Total

¥ 58
160
¥ 218

$ 563
1,555
$ 2,118

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, 2014 and 2013.

13. Operating Leases
Future minimum lease payments subsequent to March 31, 2014 for non-cancelable operating leases were as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

20152016 and thereafter
Total

¥ 790
4,074
¥ 4,864$ 7,676
39,584$ 47,26079

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 in support of operations related to the manufactureand sales of bearings, constant-velocity joints (CVJs) and precisionequipments. The Group utilizes bank borrowings for short-term
operating funds, and bank borrowings for long-term capital investments
and finances. Temporary surplus funds are managed by low-risk
financial assets. The Group utilizes derivatives to avoid or mitigate risks
as described in the later part of this note and does not hold them for
speculative purposes.

(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 denominatedin the same currencies.
Loans are mainly utilized for business operations of the Group. Short-termloans are mainly utilized for financing of operating activities. Long-termloans are mainly utilized for capital investments and financing. These
have maturity dates of less than 10 years, at the longest, subsequent
to March 31, 2014. Certain loans are exposed to fluctuation risk ofinterest rates and fluctuation risk of exchange rates and this risk ishedged by derivative transactions of interest rate swap agreements
and cross currency swap agreements.
The Group has a policy to utilize derivative transactions involving forward
foreign currency exchange contracts, currency option agreements,
currency swap agreements, interest rate swap agreements and interest
rate option agreements for the purpose of avoiding future fluctuation
risk of 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, interest
rate swap agreements and cross currency swap agreements for theyear ended March 31, 2014. Refer to “(p) Derivative financial instruments
and hedging activities” in Note 2. “Summary of Significant Accounting
Policies.”(c) Risk management for financial instruments(i) Monitoring of credit risk (the risk that customers or counterparties
may default)
In accordance with internal rules and manual, the credit management
section periodically monitors financial conditions of major customers,
manages collection due dates and balances of each customer and tries
to identify credit risk of customers with worsening financial conditions
at the early stage and mitigate the risk. Credit risk of securities is quite

low because the Group utilizes certificate of deposits with high credit
ratings, up to a limited amount, which is approved by the Company.
The Group believes credit risk of derivative transactions is almost nil
because counterparties are financial institutions with high credit ratings.
(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.
The Group utilizes interest rate swap agreements and cross currency
swap agreements to mitigate fluctuation risk of interest rates andfluctuation risk of loans principal due to floating exchange rates.
The Group continuously reviews securities holdings by monitoring
periodically the market value and financial condition of securities’issuers (companies with business relationships with the Group) 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, 2014 and 2013,
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

2014
Cash and cash equivalents
Short-term investments
Trade receivables
Investment securities
Short-term loans receivable included
in other current assets
Total assets(6) Short-term bank loans(7) Current portion of long-term debt
(8) Trade payables(9) Accrued income taxes(10) Long-term debt
Total liabilities
Derivative transactions (*)

Fair value

Difference

Carrying value

Fair value¥ 129,671
1,076
135,358
28,908¥ 129,671
1,076
135,358
28,913¥–––
5¥ 86,100
692
118,61225,278¥ 86,100
692
118,61225,282

¥–
–
–
4

29
¥ 295,042
100,756
28,992
106,4103,424
252,019¥ 491,601¥ (30)

29¥ 295,047
100,756
28,992
106,4103,424
251,787¥ 491,369¥ (30)

–
¥5
–
–
–
–
(232)
¥ (232)¥–310¥ 230,992
105,706
64,71588,4591,485
190,381¥ 450,746¥ (1,449)

310¥ 230,996
105,706
64,74588,4591,485
192,191¥ 452,586¥ (1,449)

–
¥4
–
30
–
–
1,810
¥ 1,840¥–

Difference
Financial Section

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

Carrying value

80Notes to Consolidated Financial Statements
March 31, 2014

Thousands of U.S. dollars

2014
(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) Short-term bank loans(7) Current portion of long-term debt
(8) Trade payables(9) Accrued income taxes(10) Long-term debt
Total liabilities
Derivative transactions (*)

Carrying value

Fair value$ 1,259,920
10,4551,315,177
280,878$ 1,259,920
10,4551,315,177
280,927

Difference

$–
–
–
49

282
$ 2,866,712
978,974
281,694
1,033,910
33,2692,448,688$ 4,776,535$ (291)282$ 2,866,761
978,974
281,694
1,033,910
33,2692,446,434$ 4,774,281$ (291)

–
$49
–
–
–
–
(2,254)$ (2,254)$–* 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) Short-term bank loans, (8) Trade payables and (9) Accrued income taxes
Since these items are settled in a short time period, their carrying value approximates fair value.
(7) 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

2014

2013

2014

¥ 15,540
287
1,218
1,000
¥ 18,045¥ 13,690
285
1,038
1,000
¥ 16,013$ 150,991
2,789
11,8349,716$ 175,330

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, 2014 and 2013 is as follows:
Millions of yen

2014

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¥ 129,671
2,076
135,35829¥ 267,134

¥–
–
–
–
¥–

¥–
–
–
–
¥–

¥–
–
–
–
¥–

Millions of yen

2013

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

81

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

¥–
–
–
–
¥–

¥–
–
–
–
¥–

¥–
–
–
–
¥–

Thousands of U.S. dollars

2014

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$ 1,259,920
20,171
1,315,177
282$ 2,595,550

$–
–
–
–
$–

$–
–
–
–
$–

$–
–
–
–
$–

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, 2014 and 2013 issummarized as follows:

Currency-related transactions
Millions of yen

2014Classification

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¥ 4,464
6,402
466
74
120

¥5
(38)
1
0
0

¥5
(38)
1
0
0

Buying:U.S. Dollars
Euro
Total

16
281
¥ 11,82302¥ (30)

02¥ (30)

Millions of yen

2013
Notional amount

Fair value

Valuation (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)

Classification

Over-the-counter transactions

Transaction

Thousands of U.S. dollars

2014Classification

Notional amount

Fair value

Valuation gain (loss)

Forward foreign currency exchange contracts
Selling:
U.S. Dollars
Euro
Thai Baht
Canadian Dollars
British Pounds$ 43,374
62,204
4,528
719
1,166

$ 49
(369)
10
0
0

$ 49
(369)
10
0
0

Buying:U.S. Dollars
Euro
Total

155
2,730
$ 114,876019$ (291)019$ (291)

Financial Section

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.

82

Notes to Consolidated Financial Statements
March 31, 2014(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, 2014 and 2013 is summarized
as follows.

Interest-rate related transactions

Millions of yen

2014
Method of hedge accounting

Swap rates applied to underlying
long-term debt

Transaction

Interest rate swaps
Receive / floating and pay / fixedContractual value
Notional amountMore than one year

¥ 27,000¥ 27,000Fair value(*)

Millions of yen

2013
Method of hedge accounting

Swap rates applied to underlying
long-term debt

Transaction

Interest rate swaps
Receive / floating and pay / fixedContractual value
Notional amountMore than one year

¥ 37,000¥ 19,000Fair value(*)

Thousands of U.S. dollars

2014
Method of hedge accounting

Swap rates applied to underlying
long-term debt

Transaction

Interest rate swaps
Receive / floating and pay / fixedContractual value
Notional amountMore than one year

$ 262,340$ 262,340

Fair value(*)* 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.

Interest-rate and currency related transactions

Millions of yen

2014
Method of hedge accounting

Swap rates and currency applied
to underlying long-term debt

Transaction

Cross currency swaps
Receive / floating US$ and pay / fixed yen

Contractual value
Notional amountMore than one year

¥ 1,500¥ 1,500

Fair value(*)

Thousands of U.S. dollars

2014
Method of hedge accounting

Swap rates and currency applied
to underlying long-term debt

Transaction

Cross currency swaps
Receive / floating US$ and pay / fixed yen

Contractual value
Notional amountMore than one year

$ 14,574$ 14,574

Fair value(*)* Because interest rate swap agreements and cross currency swap agreements are accounted for applying swap rates to underlying long-term debt,
their fair value is included in that of long-term debt disclosed in Note 14.

16. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses totalled ¥17,821 million ($173,154 thousand)and ¥16,174 million for the years ended March 31, 2014 and 2013, respectively.

17. Loss on Surcharge Payments under Anti-Monopoly Act
The Company and certain consolidated subsidiaries in Europe received a notice from European Commission regarding the imposition of surcharges
due to violations of EU Competition Law related to the automotive bearings business in Europe. Based on the notice from the European Commission,
loss on surcharge payments under the Anti-Monopoly Act in the amount of €201,354 thousand or ¥27,024 million ($262,573 thousand), at the averageexchange rate for the year ended March 31, 2014, was recorded. This decision was made through the settlement process with the European
Commission based on relevant laws.

18. Provision for Loss on Support to a Related Company
The Company’s related company in the Americas received a payment notice in connection with claims involving inappropriate import procedures inprior years. As a result, the liabilities of this related company were in excess of assets. Provision for loss on support to a related company in the amountof ¥1,600 million ($15,546 thousand) was recorded for the year ended March 31, 2014.

83

19. Reorganization Expenses
Reorganization expenses for the years ended March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Restructuring in the production system in its consolidated subsidiaries
Expenses for soil improvement work for TAKARAZUKA Works
Others2014¥ 1,421––¥ 1,421

2013
¥–
2,600
427
¥ 3,0272014$ 13,807––$ 13,807* Loss on impairment of fixed assets in the amount of ¥184 million ($1,788 thousand) and ¥145 million for the years ended March 31, 2014 and 2013
were included above respectively.

20. Restructuring Costs
Restructuring costs for the years ended March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars

Millions of yen

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

2014
¥ 301
–
–
–
¥ 301

2013
¥–
5,911
356
98
¥ 6,3652014$ 2,925–––$ 2,925

21. Provision for Surcharge Payments under Anti-Monopoly Act
The Company and its consolidated subsidiary in Singapore have been under investigation by the Competition Commission Singapore over suspicionsof violations of Singaporean Competition Law in connection with the bearings business involving Singaporean customers. With the progress of theinvestigations, the Company estimated the amount of loss expected in the future, and recorded a provision for surcharge payments under the
Anti-Monopoly Act in the amount ¥35 million ($340 thousand) for the year ended March 31, 2014.
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 for the year ended March 31, 2013.

22. Other Comprehensive Income (Loss)
The following table presents the analysis of other comprehensive income (loss) for the years ended March 31, 2014 and 2013.
Thousands of
U.S. dollars

Millions of yen

2014

2013

2014

¥ 5,676(1,272)
4,404(1,541)
2,863¥ 2,304
488
2,792
(977)
1,815

$ 55,150(12,359)
42,791(14,973)
27,81815,378–15,378–15,37819,48418
19,502–
19,502

149,417–
149,417–
149,417

2,296
718
3,014
(1,193)
1,821(2,018)603(1,415)323(1,092)

22,3096,976
29,285(11,591)
17,694

1,980¥ 22,042

1,581¥ 21,806

19,238$ 214,167

Financial Section

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

84Notes to Consolidated Financial Statements
March 31, 2014

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% for the years ended March 31, 2014 and 2013. Overseas subsidiaries are subject to the income
taxes of the respective countries in which they operate.
The details of the differences between the statutory tax rate and effective tax rates for the years ended March 31, 2014 and 2013 are omitted because
the Company and its consolidated subsidiaries recorded a loss before income taxes and minority interests for the year.
The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2014 and 2013
are presented below:
Thousands of
U.S. dollars

Millions of yen

2014

2013

2014

Deferred tax assets:
Liability for retirement benefits
Inventories
Tax loss carryforwards
Accrued expenses
Provision for employees’ early retirement incentive plans
Accrued retirement benefits for employees
Other
Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets¥ 20,147
1,787
14,567
3,044
–
–
8,688
48,233(5,011)
43,222¥–611
21,3592,036
2,179
14,8408,221
49,246(4,565)44,681$ 195,754
17,363
141,537
29,576––
84,416468,646(48,689)
419,957

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(14,558)(4,347)(550)(138)(2,178)(21,771)¥ 21,451(13,827)(2,806)(561)(147)(2,307)(19,648)¥ 25,033(141,450)(42,237)(5,344)(1,341)(21,161)(211,533)$ 208,424

The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 10 of 2014) was promulgated on March 31, 2014 and, as a result, the Company
is no longer subject to the Special Reconstruction Corporation Tax effective for years beginning on or after April 1, 2014.
In line with these revisions, the Company changed the statutory tax rate to calculate deferred tax assets and liabilities from 37.4% to 35.0% for temporary
differences expected to be realized after April 1, 2014.
As a result of this change, net deferred tax assets (after netting deferred tax liabilities) decreased by ¥203 million ($1,972 thousand), and income
taxes – deferred increased by ¥203 million ($1,972 thousand) as of and for the year ended March 31, 2014, respectively.

24. Amounts per Share
Amounts per share at March 31, 2014 and 2013 and for the years then ended were as follows:Yen

Net assets
Net loss:
Basic
Cash dividends

U.S. dollars

2014¥ 374.68

2013¥ 375.84

2014$ 3.64(27.54)2.00(26.69)–(0.27)
0.02

Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end.
Basic net loss per share is computed based on the net loss attributable to shareholders of common stock and the weighted-average number of sharesof common stock outstanding during the year. Diluted net income per share has not been presented because there were no potentially dilutive sharesof common stock for the years ended March 31, 2014 and 2013, and the Company and consolidated subsidiaries recorded net loss for the years
ended March 31, 2014 and 2013.
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 aftermarket, generalindustrial machinery market, and automotive market. 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.

85

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, 2014 and 2013.
Reportable segment information for the years ended March 31, 2014 and 2013 are summarized as follows:
Millions of yen

2014
Reporting segments
EuropeAsia and other areas

Japan

Americas

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¥ 190,819
132,763
323,582¥ 25,594¥ 487,759¥ 385,748¥ 167,899
3,944
171,843¥ 2,645¥ 164,059¥ 124,918¥ 175,423
6,927
182,350¥ 2,139¥ 171,366¥ 125,812

Other items:
Depreciation and amortization
Capital expenditures¥ 17,013¥ 9,684¥ 9,338¥ 9,648¥ 7,141¥ 7,303

Total

Adjustments

Consolidated¥ 104,830
8,977
113,807¥ 4,405¥ 145,870¥ 54,989¥ 638,971
152,611
791,582¥ 34,783¥ 969,054¥ 691,467¥–(152,611)(152,611)¥ (1,779)¥ (121,017)¥ (56,799)¥ 638,971–
638,971¥ 33,004¥ 848,037¥ 634,668¥ 5,823¥ 8,375¥ 39,315¥ 35,010¥–¥ (5)¥ 39,315¥ 35,005

Total

Adjustments

Consolidated

Millions of yen

2013
Reporting segments
EuropeAsia and other areas

Japan

Americas

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¥ 193,491
122,442
315,933¥ 9,837¥ 472,374¥ 359,873¥ 135,385
3,093
138,478¥ (3,218)¥ 151,710¥ 116,160¥ 132,177
4,367
136,544¥ (214)¥ 133,042¥ 78,327¥ 78,542
7,220
85,762¥ 714¥ 131,394¥ 51,840¥ 539,595
137,122676,717¥ 7,119¥ 888,520¥ 606,200¥–(137,122)(137,122)¥ 159¥ (120,058)¥ (49,481)¥ 539,595–
539,595¥ 7,278¥ 768,462¥ 556,719

Other items:
Depreciation and amortization
Capital expenditures¥ 18,789¥ 13,689¥ 7,094¥ 14,665¥ 5,325¥ 7,245¥ 3,633¥ 15,019¥ 34,841¥ 50,618¥–¥ (103)¥ 34,841¥ 50,515

Total

Adjustments

Consolidated

Thousands of U.S. dollars

2014
Reporting segments
EuropeAsia and other areas

Americas$ 1,854,052
1,289,963
3,144,015$ 248,679$ 4,739,205$ 3,748,037$ 1,631,354
38,321
1,669,675$ 25,700$ 1,594,044$ 1,213,739$ 1,704,460
67,305
1,771,765$ 20,783$ 1,665,041$ 1,222,425$ 1,018,558
87,223
1,105,781$ 42,800$ 1,417,314$ 534,289$ 6,208,424
1,482,812
7,691,236$ 337,962$ 9,415,604$ 6,718,490$–(1,482,812)(1,482,812)$ (17,286)$ (1,175,835)$ (551,875)$ 6,208,424–
6,208,424$ 320,676$ 8,239,769$ 6,166,615

Other items:
Depreciation and amortization
Capital expenditures$ 165,303$ 94,092$ 90,731$ 93,743$ 69,384$ 70,958$ 56,578$ 81,374$ 381,996$ 340,167$–$ (48)$ 381,996$ 340,119

Financial Section

Japan

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

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 ¥222,460 million ($2,161,484 thousand) and ¥193,691 million and the corporate assets of the groupof ¥101,443 million ($985,649 thousand) and ¥73,633 million for the years ended March 31, 2014 and 2013, respectively. The corporate assets areinvestments held by the Company, mainly cash and cash equivalents and investment securities.

86Notes to Consolidated Financial Statements
March 31, 2014

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, 2014 and 2013 are summarized as follows:
Millions of yen

2014

Sale to third parties

Aftermarket

Industrial
machinery

Automotive

Total¥ 103,845¥ 101,181¥ 433,945¥ 638,971

Millions of yen

2013
Aftermarket¥ 89,222

Sale to third parties

Industrial
machinery¥ 93,746

Automotive

Total¥ 356,627¥ 539,595

Thousands of U.S. dollars

2014

Sale to third parties

Aftermarket

Industrial
machinery

Automotive

Total$ 1,008,988$ 983,103$ 4,216,333$ 6,208,424(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, 2014 and 2013 aresummarized as follows:
Millions of yen

2014
Japan

Americas

EuropeAsia and other areas

Total¥ 179,082¥ 174,566¥ 166,280¥ 119,043¥ 638,971

Millions of yen

2013
Japan

Americas

EuropeAsia and other areas

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

Thousands of U.S. dollars

2014
Japan

Americas

EuropeAsia and other areas

Total$ 1,740,012$ 1,696,133$ 1,615,624$ 1,156,655$ 6,208,424“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 ¥149,677
million ($1,454,304 thousand) and ¥122,435 million for the years ended March 31, 2014 and 2013, respectively.
(b) Property, plant and equipment
Property, plant and equipment categorized by country and region within the group at March 31, 2014 and 2013 are summarized as follows:
Millions of yen

2014
Japan

Americas

EuropeAsia and other areas

Total¥ 117,027¥ 79,148¥ 52,286¥ 60,930¥ 309,391

Millions of yen

2013
Japan

Americas

EuropeAsia and other areas

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

Thousands of U.S. dollars

2014
Japan

Americas

EuropeAsia and other areas

Total$ 1,137,068$ 769,024$ 508,026$ 592,013$ 3,006,131

1. Property, plant and equipment in “Americas” in the amount of ¥72,557 million ($704,984 thousand) and ¥66,841 million is located in the U.S.A
at March 31, 2014 and 2013, respectively.
2. Property, plant and equipment in “Europe” in the amount of ¥40,043 million ($389,069 thousand) and ¥35,364 million is located in France at
March 31, 2014 and 2013, respectively.
3. Property, plant and equipment in “Asia and other areas” in the amount of ¥46,812 million ($454,839 thousand) and ¥40,719 million is locatedin China at March 31, 2014 and 2013, respectively.

87

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

2014
Japan

¥ 688

Americas

Europe¥ 1,325¥ 184

Asia and other areas

¥–

Total

¥ 2,197

Millions of yen

2013
Japan

Americas

EuropeAsia and other areas

Total¥ 1,285

¥ 191

¥ 670

¥ 692

¥ 2,838

Thousands of U.S. dollars

2014
Japan

Americas

Europe$ 6,685$ 12,874$ 1,788

Asia and other areas

$–

Total

$ 21,347

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 gain on bargain purchase in the amount of ¥1,929 million recorded in the “Japan” segment.

26. Sales of Fixed Assets
The Company approved a resolution on the sale of the site of the Takarazuka Works to Takarazuka City and a third party at the Board of Directors’
meeting held on October 22, 2013. However, subsequently, the Company approved a resolution on the suspension of the sale of the site to thethird party at the Board of Directors’ meeting held on November 27, 2013.
The Company then negotiated with a new party to sell the property and agreed on the sales conditions. On December 26, 2013, the Company
approved a resolution on the sale of the site to the new party at the Board of Directors’ meeting. The details of the sale are as follows:(1) Reason for sale
For more effective utilization of assets and an enhancement of asset efficiency, the Company had planned to sell the site of the Takarazuka Works
after soil improvement. Then, the Company negotiated with purchasers and reached an agreement on the sales conditions.
(2) Details of Asset
Location and details

Gain on sale (*)

Current status

1-1 Toyo-cho,Takarazuka city,
Hyogo Prefecture
86,800.02 square meters

Approximately,¥6,700 million($65,099 thousand)Unused site offormer Takarazuka Works

Under the confidentiality obligation required by agreement with the purchaser, the Company cannot disclose the sale price and book value of the site.
(*) Gain on sale represents an approximate amount of proceeds on sales less estimated costs and expenses of the transaction.
(3) Information about purchasers
The purchasers are Takarazuka City and a general business entity operating in Japan. Under the confidentiality obligation required by the agreementwith the purchaser, the Company cannot disclose the name of this general business entity. There are no capital, personal, or business relationships
between the Company and the general business entity.
(4) Future forecast
Upon the sale of the fixed asset, the Company expects to record a gain on sales of fixed assets in the amount of ¥6,700 million ($65,099 thousand).
However, this was not included in the Company’s consolidated statement of operations for the year ended March 31, 2014 and it will be recorded
during the year ending March 31, 2017 because the asset is scheduled to be transferred in April 2016.

Financial Section

88Report of Independent Auditors

89

Investor Information
As of March 31, 2014

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

Shareholders by Category
Financial Instruments Firms 2.02%

Investor Relations
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

Foreign Owners 21.28%

Financial Institutions
43.66%
Individuals 17.99%

Other Corporations 15.05%

Common Stock (As of March 31, 2014)
Authorized 1,800,000,000 shares
Issued and outstanding
532,463,527shares

Tokyo Stock Price Range
Stock Price (Yen)

Number of Shareholders(As of March 31, 2014)

Nikkei Stock Average (Yen)600

20,000400

15,000200

10,00027,768Transfer 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)

Independent Accountants

0Ernst & Young ShinNihon LLC

HighGeneral Meeting of Shareholders

Low

The General Meeting of Shareholders
was held on June 25, 2014 in Osaka

Stock Price Range in the Fiscal
Year Ended March 31, 2014
High: ¥537
Low: ¥218

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
2012
2013
2014
Closing
Opening

Opening
Closing

5,000

Nikkei stock averageMonthly Volume Traded (Million Shares)
300
250
200
150
100
50
Company and Investor
Information0

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
2012
2013
2014

90

Global Network
As of March 31, 2014

Consolidated Subsidiaries

Paid-in
CapitalHolding as
percentage (%)¥480,000,000

100

Paid-in
CapitalConsolidated Subsidiaries

Holding as
percentage (%)

21 AMERICAN NTN BEARING

Consolidated Subsidiaries
1 NTN BEARING SERVICE CORPORATION
2 NTN KONGO CORP.

¥1,000,000,000100

3 NTN ENGINEERING PLASTICS CORP.

¥100,000,000100

4 NTN POWDER METAL CORP.

¥400,000,000

100

5 NTN MIKUMO COMPANY LTD.

¥450,000,000100

6 NTN CASTING CORP.

¥450,000,000

100

7 NTN KINAN CORP.
8 NTN MIE CORP.

¥450,000,000

100¥3,000,000,000100

9 NTN OMAEZAKI CORP.

¥266,000,000

97.4

10 NTN KAMIINA CORP.

¥725,000,00080

11 NTN FUKUROI CORP.

¥1,500,000,000100

12 NTN HOUDATSU SHIMIZU CORP.

¥1,250,000,000

100

13 NTN AKAIWA CORP.

¥1,250,000,000100

14 NTN NOTO CORP.

¥1,000,000,000

15 NIPPON KAGAKU YAKIN CO., LTD.

¥100,000,000

16 NTN Technical Service Corp.

¥200,000,000

17 NTN LOGISTICS CO.,LTD.

US. $24,330,000

100

(100)

22 NTN-BOWER CORP.

US. $67,000,000

100

(100)

23 NTK PRECISION AXLE CORP.

US. $15,000,000

60

(60)

24 NTA PRECISION AXLE CORP.

US. $20,000,000

62.5(62.5)

MFG.CORP.

25 NTN BEARING

CORP. OF CANADA LTD.

CAN. $20,100,000

100

US. $700,000

100

BRL 79,479,763

100(13.37)

Mex. $ 66,105,190

100

(5)

EURO14,500,000

100(Deutschland) G.m.b.H

EURO 18,500,000100

31 NTE Gardelegen G.m.b.H.

EURO 1,500,000

100

26 NTN-SUDAMERICANA, S.A.
27 NTN Driveshaft do Brasil
28 NTN MANUFACTURING DE

MEXICO,S.A.DE C.V.
29 NTN Waelzlager (Europa)GmbH
30 NTN Kugellagerfabrik

100
98.1
100
(100)

¥10,000,000100

18 NTN USA CORP.

US. $131,120,000

100

19 NTN BEARING CORP. OF AMERICA

US. $24,700,000

100

(100)

20 NTN DRIVESHAFT,INC.

US. $54,580,000

100

(100)

32 NTN Antriebstechnik GmbHEURO 50,00075

33 NTN BEARINGS (UK) LTD.

STG. £2,600,000

100

34 NTN TRANSMISSIONS EUROPE

EURO76,531,592

100

EURO 9,000,000

100

(100)

TRY 12,000,000

100

(1)

(0.04)

35 NTN TRANSMISSINONSEUROPE CREZANCY
36 NTN MANiSA OTOMOTiV

LiMiTED Ş iRKETi

33
34 35

30 32 31
29
37

59

36

63 46

54
53
62 64 52
55
49
50
57
51 39
56

43

44

40

41
42

45

38
47 48

58

91

Paid-in
CapitalConsolidated Subsidiaries
37 NTN-SNR ROULEMENTSEURO11,359,542

Holding as
percentage (%)
100

38 NTN BEARING-SINGAPORE(0.969)(PTE) LTD.

S. $36,000,000

100

39 NTN CHINA LTD.

HK. $2,500,000

100

BAHT780,000,000

100(99.999)

BAHT1,311,000,000

100(99.999)

BAHT 600,000,000

75(0.02)INR 3,238,000,000

96.14(0.002)

INR 300,000,000

100

(0.1)

M. $10,000,000

60

(60)

Paid-in
CapitalConsolidated Subsidiaries
52 NTN-RAB (Changzhou) Corp.

US. $28,440,000

53 NTN-LYC (Luoyang) Bearing Corp.

US. $73,800,000

50

(50)

54 Nanjing NTN Corp.

US. $160,000,000

100

(85)

US. $13,600,000

60

(60)

100

55 Xiangyang NTN-Yulon

Drivetrain Co., Ltd.

40 NTN BEARING-THAILAND

CO.,LTD.

Holding as
percentage (%)

41 NTN MANUFACTURING

Affiliated Companies Accounted for by the Equity Method(THAILAND) CO.,LTD.
42 NTPT CO.,LTD.

56 TUNG PEI INDUSTRIAL CO., LTD.
57 TAIWAY Industry CO.,LTD.

43 NTN NEI Manufacturing India

Private LTD.

58 UNIDRIVE PTY LTD.

46 NTN KOREA CO.,LTD.

100

US. $7,300,000

100

US. $17,250,000

100

49 NTN (CHINA) Investment Corp.

US. $224,160,000

100

50 Shanghai NTN Corp.

40(6.67)

US. $7,100,000

28.2(28.2)

61 Seohan-NTN Driveshaft USA CORP.

US. $6,000,000

49

US. $166,500,000

95(15.72)

US. $12,500,000

60

(12)

63 Seohan-NTN Bearing CO.,LTD.

US. $6,600,000

40

WON 71,200,000,000

49

US. $1,460,000

25

(40)

64 NTN-DONGPAI (Shanghai) Bearing(0.006)

Sales Corp.

(25)

1. Of the above consolidated subsidiaries, NTN USA CORP., NTN DRIVESHAFT,INC.,
NTN-BOWER CORP., NTN TRANSMISSIONS EUROPE, NTN NEI Manufacturing India PrivateLTD., NTN (CHINA) Investment Corp., Nanjing NTN Corp., Shanghai NTN Corp. and NTN-LYC(Luoyang) Bearing 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.

51 Guangzhou NTN-Yulon

Drivetrain Co., Ltd.

US. $6,000,000

60 ASAHI FORGE OF AMERICA CORP.

Co.,Ltd.
(100)

48 PT. NTN MANUFACTURING

INDONESIA40

62 Nanjing Puzhen NTN Railway Bearing

WON500,000,000

47 PT. NTN BEARING INDONESIA

36.25

A. $5,000,000

Driveshaft Co., Ltd.

45 NTN BEARING-MALAYSIA

SDN.BHD.

27.35

NT. $160,000,000

59 Beijing NTN-Seohan

44 NTN BEARING INDIA

PRIVATE LTD.

NT. $1,257,232,620

25
18
21 19
24 23
20
22
60
61

28

26

27

14
12

13

16
2

8
3 17 415
5

10
11

Global Network

6

1

9

7

92

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

This report was printed withan environment-friendly printing
method using vegetable inks.
Vegetable inks have excellent
biodegradability, and printed
matter printed with vegetable
inks is easy to recycle.
2014.11. BC