NTN Corporation

2016
NTN Reportfor the year ended
March 31, 2016

NTN is a precision equipment manufacturer that does business around the world
in bearings and other eco-products that reduce energy consumption by reducing
friction. NTN’s products are the choice of some of the most widely recognizedcompanies that make automobiles, rolling stock, construction machinery, aircraft,medical equipment and numerous other machines that are integral parts of lives
everywhere. With over 220 operating bases in 33 countries, employees more than
24,000, NTN passionately researches, develops, manufactures, sells and supports
good quality products so that NTN improves historic brands.

Corporate Philosophy“We shall contribute to international society through creating
new technologies and developing new products.”

For New Technology Network
Networking The World With New Technology

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.

Editorial Policy
NTN believes the active disclosure of management plans and business results, as well as its basic policy for corporatesocial 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 the fiscal year ended March
31, 2010 has combined the “Annual Report” and the “CSR Report,” is part of this active approach to information
disclosure. This report has been edited with reference to the International Integrated Reporting Framework of theInternational Integrated Reporting Council.
Disclaimer
This report contains future results and forecasts regarding NTN’s future plans, strategies, and business results.
Please understand that actual business results may vary from the forecasts made herein by the Company.

Outline (as of March 31, 2016)
Corporate name: NTN Corporation
Trademark:
Date founded:
Head office:1

March 1918
3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka-shi, Osaka 550-0003, Japan

Representative:
Hiroshi Ohkubo, President
Number of employees: Consolidated: 24,109
Non-consolidated: 5,154
Fiscal term:
March
Capitalization:
54.3 billion yen
Net sales:
Consolidated: 717.0 billion yen
Non-consolidated: 335.5 billion yen(Fiscal year ended March 31, 2016)

Contents

Bearings Equipments that support
industries and lifestyles

We will introduce all NTN’s activities
All about NTN
Creating values around the world
by contributing to every field of industry
NTN’s Line of Business

P.3

NTN’s Global Presence
NTN’s Value Creation Process
New Businesses for Supporting NTN’s Growth
for the Next 100 Years
Financial/Non-financial Highlights

Management Strategy Section
To Our Stakeholders

P.13

The View of Top Management on
the Progress of Our “NTN 100”
At a Glance

Review of Operations

Feature: Our Technologies

Activity Section
Strengthening GovernanceContributing to Society

Environmental Activities

P.39

Third-Party Opinion
Data Section
Financial Review............................................................ 77
Main Financial Indexes: 11-Year Summary..................... 79
Risk Factors................................................................... 81
Consolidated Balance Sheet.......................................... 82
Consolidated Statement of Income................................ 84
Consolidated Statement of Comprehensive Income...... 84

Consolidated Statement of Changes in Net Assets........ 85
Consolidated Statement of Cash Flows......................... 86
Notes to Consolidated Financial Statements.................. 87
Independent Auditor’s Report........................................ 105
Investor Information........................................................ 106
Global Network.............................................................. 107

P.77

2

NTN’s Line of Business
The NTN Group provides originaltechnologies and services for various
types of machinery to support the
global industry and lifestyle.
Aftermarket
Applications
NTN provides engineering
services that suit themaintenance needs of all
kinds of industrial machineryand automobiles and helps
customers keep theirequipment up and runningstably by enhancing productlineup and quick delivery.

Elemental
technologies
Analysis

Measuring

Designanddevelopment

Base technology

Intellectual
property

Tribology

Monozukuri

Precision
processing

Materials

Assessment
technologies

Production
technologies

Heat
treatment

Industrial Machinery
Applications
NTN supports rotating partsfor a wide range of industrial
machinery by ensuring
unyielding durability evenat temperatures over 300˚C,
speeds of 300 km/h andother extreme conditionsof use.

Aftermarket
Applications

Net sales

16%
Operating income

70%

51%

2016

(Year ended
March 31)

37%

12%
Automotive
Applications

3

Automotive
Applications

14%
Industrial Machinery
Applications

A single automobile iscomposed of more than
100 bearings. Therefore,
NTN supplies products thatserve the growing needsfor vehicle electrification,in addition to the standard
demands for safety, security
and comfort.

Auto parts

Maintenance tools

Technical training

Technical service units visit customers
around the world to provide technical services.
Industrial machinery aftermarket

Technical support

Construction machinery

Supplying bearings for major jet engine
manufacturers in the world
Aerospace＊Wind turbine

Supplying bearings for rolling stock
manufacturers around the world
Rolling stock＊

Machine tool＊

Agricultural machinery© PEDRO STUDIO PHOTO

Transmission＊＊

Hub bearing

World’s No. 1 share
Wheel applications

Driveshaft
Engine* Photos are cross-sectional models of products.

World’s No. 2 share
4

NTN’s Global Presence
In order to swiftly meet the needs of customers all over the world,
NTN operates “self-contained centers” that carry out the full operations
from research and development to production, sales and after-services.
Topics of the fiscal year ended March 31, 2016

Japan

● R&D bases: 6 ● Production bases: 27 ● Sales bases: 37
Building integrated production systems
The key to expanding business in the aftermarket is toenhance product lineup and shorten lead-time. NTN
decided to newly establish a heat treatment plant at
NTN NOTO Corp. Prior to this, all parts made in the
Noto area had to be shipped to other production bases
for heat treatment since there were no such facilities in
the area. The new heat treatment plant will establish an
integrated production system of bearings for industrial
machinery in the Noto area that will enable fasterproduction and a more stable supply of products.

Americas

Image of the heat treatment plant at NTN NOTO Corp.

● R&D bases: 2 ● Production bases: 15 ● Sales bases: 23
Stable driveshaft supply
Demand for NTN’s driveshafts continues to growin the North American automobile market thanks
to strong sales of SUVs, pickup trucks and otherpopular vehicles. Given the circumstances, NTN
established the third manufacturing company in the
USA (Anderson, Indiana) for producing driveshafts,
NTN Driveshaft Anderson, Inc. (NDA). By speeding
up local production, NDA is a part of the transformation
to realize“NTN’s driveshafts the world’s No.1 customer
satisfaction level.”

EuropeImage of NDA● R&D bases: 4 ● Production bases: 14 ● Sales bases: 26
First overseas production of precision bearings for machine tools

5

In 2016, NTN will start producing precision bearings
for machine tools at German subsidiary NTN
Kugellagerfabrik (Deutschland) G.m.b.H. (DMF) in
Mettmann, Germany. This will be the first time thesebearings will be made outside of Japan and will
shorten considerable time for deliveries that tookapproximately 2 months by marine shipping. It will
also assist machine tool manufacturers in shortening
their design time, as“Bearing Technical Calculation
Tool”will be deployed alongside production lines inthe demand area. In order to expand market shares,
NTN Kugellagerfabrik will differentiate itself from local
competing bearing manufacturers by providing highvalue-added services.

Precision bearings formachine tools

DMF that manufactures
precision bearings formachine tools

Asia
and
Others

● R&D bases: 1 ● Production bases: 22 ● Sales bases: 41
Strengthen driveshaft supply in China
Chinese demand for driveshafts continues togrow alongside the rise in automobile turnout inthat country. To keep up with that demand, NTN
established Xiangyang NTN-Yulon Drivetrain Co., Ltd.
(Xiangyang NTN) in 2014, as the third base in China
for manufacturing automotive driveshafts. Locatedin Xiangyang City, Hubei Province, Xiangyang NTN
started mass-production in April 2015 to strengthen
driveshaft supply to global automotive manufacturers
operating in China.

Ratio of overseas
production

Xiangyang NTN has started mass-production

Ratio of local
procurement

Percentage of
employees overseas

31%

50%

74%

87%

57%

66%

2006

2016

2006

2016

2006

2016

72.0
(Billions of yen)

65.5

800

63.0

54.6
600

50.4

50.7

57.2

51.1

701.9

72.8

717.0

690.0

639.0

483.8

530.1

527.1

■ Asia andOthers

543.5 539.6■ Europe

452.7

434.8

42.7

64.4

58.7

534.0

47.9

73.6

Ratio of overseas sales (%)

67.1
64.8

72.7

388.3

400
340.6

324.3

342.7 357.4■ Americas
200■ Japan
0
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 2017(Forecast)(Years ended/ending March 31)

6

NTN’s Value Creation Process
Increase of
Manufacturing
CapitalResearch &Development

Production

Intellectual
CapitalSocial issues
Global warming

Human
CapitalPrevention ofenvironmental
pollution
Employment
problemSocial and
Relationship
CapitalNoise reduction

..
..
..

NaturalCapitalFinancial
CapitalNTN’scapital assets
7

Corporate
Corporate

Increase ofValues provided
by NTN

non-financial capital

Governance
Philosophy

After-services

Contributing to a wide range of industries around the world

Sales

Reducedenergy loss

Coefficientof friction
0.001~0.005

Energy saving

Reductions of
CO2 emissions

Providing safety
and comfort

Reducedvibrations

Reducednoise

Improvedriding comfort

Proposal ofsustainable society
using natural energy

Water power

Wind power

Solar power

financial capital
8

New Businesses for Supporting
NTN’s Growth for the Next 100 YearsBusiness by NTN,
past and future

Natural Energy BusinessIn order to establish business in natural energy products as quickly
as possible, NTN newly created a Green Energy Products Divisionthat is in charge of developing, producing and selling compact windturbines, micro hydro turbines and other products that apply proprietary
technologies for rolling bearings and magnetic materials. In just thecompact wind turbine segment, technologies that allow power to begenerated efficiently with slight blow of wind are utilized.

EV Business

Bearing

In the electric vehicle (EV) business, NTN came out with more compact
and lighter “New In-wheel Motor System” that can be equipped withoutchanging the vehicle's suspension or steering structure, by rethinking
the structure of the reduction gear. This can be expected to enablereduction in cost and time of development. NTN also newly establishedan Electric Module Products Division for launching business in module
products such as “Electric Motor and Actuator” which is essential for theelectrification of the next generation automobiles.

Robot-related Business

Driveshaft

Under a theme of “Working and Living with People,” NTN accelerates
expansion of “Parallel Link High Speed Angle Control Equipment” that is
helping industries improve the productivity of their automated production
systems by enabling high-speed accurate positioning, and a seriesof “Microscopic Coating Applicators with Microgeometry Measuring
Function” that spray microscopic droplets to a high degree of accuracy
and measure all of coated shapes and volume.

＊

Hub bearing

Service, Solution Business
NTN is using proprietary big data technologies for monitoring,
diagnosing and sensing bearings to not only offer hardware products but
also to develop business in services and solutions. One example that
NTN has made available since 2015 is the “Condition Monitoring System(CMS) for Wind Turbines, Wind Doctor™” that continuously monitors theoperating conditions of large wind turbines.

* Photos are cross-sectional models of products.

Sep. 2008
World is engulfed ina global financial crisis.

Billion yen

Net sales of the NTN Group
Sep. 1985

World highlights

Japanese yen rises invalue after the Plaza
Accord corrected thehigh exchange rate
against the US dollar.

Nov. 1989
Berlin Wall is torn down.

534.0
2008

Jan. 1999“Euro” is created as the
new European currency.

347.9
Billion yen

2008

1998

Made SNR a
consolidated subsidiaryof NTN.

2003
Founding
1918

9Highlights at NTN

1981
Started producing Gen1
hub bearings

1988
Produced the 100
millionth driveshaft.

1996
Produced the 200
millionth driveshaft.

1963

1983

1989

Started producing
driveshafts.

Started producing Gen2
hub bearings

Renamed the company
NTN Corporation.

1999

Produced the 300
millionth driveshaft.

Started producing Gen3
hub bearingsHybrid Street
LightsCompact Wind
TurbineNew In-wheel Motor System

Parallel Link High Speed Angle
Control Equipment
Wind turbine nacelle

Condition Monitoring System
for Wind Turbines

Micro Hydro Turbine

Electric Motor and Actuator

Microscopic Coating Applicator with
Microgeometry Measuring Function

100th

anniversary
2018(Years ending March 31)

717.0
Billion yen

2016Mar. 2015
Medium-term Management Plan“NTN 100” is announced.

2013
Produced the 600
millionth driveshaft.

2011
Produced the 500
millionth driveshaft.

2008

The NTN Group will mark its 100th anniversary in 2018. But, in order to growsustainably for the next 100 years, NTN defined a long-term vision covering
the next 10 years and highlight the position.

Long-term Vision: “Our Vision”
1. A company where its corporate philosophy
is understood by all employees around theworld and where all employees think andact for themselve
2. A company with original new products andservices, appreciated for its high quality
and functions, and has a global presence
3. A company where everyone involved with
NTN has pride in the “NTN” brand

Produced the 400
millionth driveshaft.

10

Financial/Non-financial Highlights

Financial Capital

Net sales

Operating income, Operating margin

Net income (loss) attributable toshareholder (parent company)

Operating income
Operating margin (%)(Billions of yen)
800

639.0
600

701.9 717.0 690.0

6.7

6.2

5.2
3.8

60

543.5 539.6(Billions of yen)
40

(Billions of yen)
80

40

200

20

30

23.4

1.3

20

47.8

43.9
400

5.1

10

35.0

33.0

2012 2013 2014 2015 2016 2017

0

–10
–20

2012 2013 2014 2015 2016 2017–14.2 –14.6
2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)(Forecast)(Years ended/ending March 31)(Forecast)(Years ended/ending March 31)

6.0

0

20.7
7.3

0

15.0 16.0

Net income/Average shareholders’ equity(ROE)

Equity to capital ratio

Cash dividends

(%)
15

(%)
40

(Yen)
14

10.5
10

5

8.2

6.3

28.4

30

26.0

28.6

12

12

29.2 30.0

10

23.5

3.0

10

10

8
20

4

10

‒5
‒10

–7.2 –7.3
2012 2013 2014 2015 2016 2017

Capital expenditures/Depreciation
Capital expenditures

036.3 38.3

34.8 39.3
34.2

33.2

40.4

40.0

150

155.1

Net D/E ratio

Inventory turnover ratio (times)(Billions of yen)
200

54.4

30

Inventories

184.1
163.3 166.5

8(Times)
2.0

6

1.5

178.2 172.0

37.8

31.3
100

3.5

0

2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)(Forecast)(Years ended/ending March 31)

Depreciation

49.0

0

2012 2013 2014 2015 2016 2017

Inventories/Inventory turnover ratio(Billions of yen)
60

40

2

2

(Forecast)(Years ended/ending March 31)

50

6

6

0

3.8

3.8

4.0

1.37
1.11

4.0
4

1.0

2

0.5

0

0

1.27
1.11

1.11 1.10

3.3

20
50
10
0

2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

1102012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

Non-financial Capital
Human CapitalIntellectual Capital

Percentage of employees overseas

Percentage of hired female graduates
[NTN]

(%)

(%)

100

30

32

63

62

66

64

66

66

R&D expenditures
Ratio of R&D expenditures (%)(Billions of yen)
3.2
25

25

80

Ratio of R&D expenditures to net sales

22

21

20

172

20

60
15

14

15

17

3.0

162

2.8

2.6

2.6

178

181

185 180

2.6

15

10

40
10
20

0

5

5

2012 2013 2014 2015 2016 201702012 2013 2014 2015 2016 201702012 2013 2014 2015 2016 2017

(Forecast)(Joined in April)(Forecast)(Years ended/ending March 31)(Forecast)(Years ended/ending March 31)

Natural Capital
CO2 emissions[NTN Group companies in Japan]

CO2 emissions[Overseas NTN Group companies]

Water usage[NTN Group companies in Japan](10,000 tons)
40

Americas(10,000 tons)
40( 10,000 m3 )
250

30

28.8

26.9

27.2

27.9

27.5 27.3

30

27.5

Europe

30.1

30.8

Asia

31.5

China

33.0

228

34.6

211

200

202

196

196

193

150
20

20
100
10

10

0

50

2012 2013 2014 2015 2016 20170(Forecast)(Years ended/ending March 31)

2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

Manufacturing Capital2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

Social and Relationship Capital

Ratio of overseas production

Ratio of local procurement

(%)
100

(%)
100

80

0

80

Customer Satisfaction Surveys
As of year ended March 31, 2016

80

82

83

86

87

88

Needs improvement
much
Needs improvement
some

60

40

42

45

48

49

50

50

40

20

0

5

60

(Forecast)(Years ended/ending March 31)

0%
Excellent

%

28

%

Good

20

2012 2013 2014 2015 2016 201702012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

67

%

12

Management
Strategy
Section13

Messages from Top Management

P.15-23

At a Glance

P.24

Review of Operations

P.25-36

Feature: Our Technologies

P.37

Results in the fiscal year ended March 2016

Net sales

717.0

Billion yen

Operating income

47.8

2.2% UP

from the previous fiscal year

Billion yen

Yearly dividend

10.00

8.9% UP

from the previous fiscal year

4.00 yen UP

from the previous fiscal year

yen

14

To Our Stakeholders

President’s Message
My name is Ohkubo, President of NTN Corporation.
The fiscal year ended March 2016 was the first year of our Medium-term Management Plan “NTN 100” and, thankful to strong growth of automotive markets and favorable tailwinds in exchange rates, we posted the highest amount of net sales in our history. With that in mind, we will put greater efforts into executing the major themes of“NTN 100” in order to improve our competitiveness in international markets during thelead-up to our 100th anniversary in 2018.

15

Continuing our efforts to be known as a brandwith a global presence
Results and Outlook

Growth Efforts

During the fiscal year under review, the Japanese
economy saw a continued moderate recovery reflecting
improvement of employment and income environment,
coupled with effects of various government policies,
although weakness was confirmed in some areas.
Looking at overseas economy, the U.S. economy
continued recovering and the European economy
also showed a moderate recovery despite a somewhat
weak tone seen in some area, while economic
conditions in China and other emerging countries
further slowed down.
Under these circumstances, net sales of the NTNGroup posted a record high for the second year in arow, increasing by 2.2% from the previous fiscal year to717.0 billion yen on the strong growth of automotive
markets and favorable tailwinds in exchange rates.
Operating income was the second highest in our history
at 47.8 billion yen, because of cost reduction andfavorable exchange rates.
On the other hand, net income attributable toshareholder (parent company) decreased by 35.6%
from the previous fiscal year to 15.0 billion yen, largely
because of posted exchange-rates losses of 6.8 billion
yen caused by the yen’s sudden appreciation in thelatter half of the year and 13.0 billion yen in loss
associated with the arbitration award*.
Cash dividends were increased by 4 yen to 10 yen for
year, as initially announced for the year.
Forecast for the fiscal year ending in March 2017 arefor net sales of 690.0 billion yen and operating income of
35.0 billion yen.
Though major segments of the industrial machinery
markets are in a slump and a slowdown is continuing inemerging economies such as China and South America,on the positive side, our themes in the aftermarket
business are proving to be effective and new orders arecoming in from automotive manufacturers.
The most effective factor for decreasing sales is
exchange-rates. We are assuming exchange-rates of ¥105
to the US dollar and ¥120 to the Euro for the fiscal year
ending March 2017 which is a bigger swing towards astronger yen than was seen in the fiscal year ended March
2016, but after excluding the effect of the exchange-rates,
we are planning for increases in both net sales andoperating income in the fiscal year ending March 2017.
Assuming these business forecast, we plan to further raisecash dividends for the year by 2 yen to 12 yen.

The NTN Group is tackling the three-year Medium-termManagement Plan “NTN 100” that started in April lastyear and continues until March 2018 when marks theCompany’s 100th anniversary. We deem the three years
as the period for implementing transformation andbuilding the foundation aimed at realizing “Our Vision.”In this period we will work in accordance with the threebasic policies: “Manage Growth” to concentrate
resources (personal, materials and cash) on strategicareas, “Manage Profitability” to reform business structurefrom “volume” to “value” to generate profit, and “Manage
Foundation” that will strengthen management andfinancial foundations. Acting on these three policies weforge ahead with the major themes.
In one of the major themes of “Strengthen theManagement Foundations”, we are taking the steps
expected of a global corporation to ensure absoluteensure compliance, proper corporate governance anddiversity, in addition to permeating our “Corporate
Philosophy” throughout our entire employees as astandard code of conduct for all of our business sitesaround the world. We are also committed to serving thecommunities that host our business operations throughour corporate social responsibilities and will continue tobroaden our community contributions and environmental
activities intended to protect biodiversity and more, sothat we are accepted and appreciated as a business bythese local communities. Moreover, in 2015 we signed
onto the United Nation’s Global Compact, the international framework which provides businesses worldwide
to adopt sustainable and socially responsible practices.
We support the 10 principles set forth by the Global
Compact and, as a true global corporation, to aim atestablishing management foundations that are respectedby the international community.
The NTN Group would like to take this opportunity to
ask for the continued support of our stakeholders.

Hiroshi Ohkubo
President* In November 2015, NTN-SNR ROULEMENTS, our consolidated subsidiary, received a final award from the Arbitration Institute of the Stockholm Chamber ofCommerce (Sweden) in relation to the arbitration proceedings regarding the problem with the bearings between NTN-SNR and Volvo Powertrain AB of Europe thatorders NTN-SNR to provide compensation for damages. Due to this, we have recorded losses. We thoroughly examined the award and decided that there wasa flaw in such arbitration proceedings. Therefore, we challenged the award in the Stockholm District Court in February 2016.

16

The View of Top Management on the Progress of Our “NTN 100”Overview of Medium-term Management Plan“NTN 100”
The NTN Group will celebrate the 100th anniversary inMarch 2018. In order to continue growing for the next
100 years the Company has defined “Our vision.”In the April 2015 to March 2018 Medium-termManagement Plan “NTN 100” for implementing transformation and building the foundation aimed at realizing“Our Vision,” we will work in accordance with the threebasic policies: “Manage Growth,” “Manage Profitability,”and “Manage Foundation.” Acting on these threepolicies we will forge ahead with the major themes:

Long-term Vision: “Our Vision”
1. A company where its corporate philosophy isunderstood by all employees around the world andwhere all employees think and act for themselve
2. A company with original new products andservices, appreciated for its high quality andfunctions, and has a global presence
3. A company where everyone involved with NTN has
pride in the “NTN” brand

Main Themes of “NTN 100”

Basic Policies of “NTN 100”
Implement main policies based on 3 Basic Policies tobecome a co-creative partner company for customers
ASEA
N, etcChin.
aal
ion Eur
ope
Reg
Ame
r
ic
a
Japa
s
n

Concentrate resources (personnel,materials and cash) on strategic areas

Prod
Business unit

ucts

Bus
ine
Stra ss
tegy

th

row

G
age

n

Ma

ge
ana

ility

itab

Prof

M

ion

dat

Bu

un
e Fo
nag

Philoso sinessphy, policy, basic
busin
ess p
rocessMajor Themes

Reform business structure from“volume” to “value” to generate profit
Strengthen management andfinancial foundations

GrowthDevelop Businesses in New Areas
Expand Aftermarket BusinessProfitability

Structural Reform of the Driveshaft Business“Monozukuri” with Next-generation Technology

Foundation

Strengthen the Management Foundation
Strengthen the Financial Foundation

Ma“NTN 100”: Results for the First Fiscal Year and Outlook for the Second Fiscal Year
■ Net Sales (Left axis)■ Operating Income (Right axis)■ Net Income*First fiscal year
6.9%

(Billion yen)

1,000
900
800
700
600
500
400
300
200
100
0

US$
€

Second fiscal year

6.2%

(Billion yen)

5.1%
725.0

701.9

717.0

50.0

43.9

690.0

47.8
35.0

31.0

23.4

16.0

15.0

2015
Results“NTN 100”

109.8
138.7

110
130

2016

Results“NTN 100”

120.2
132.6

110
130

2017

* Net income for the year ended March 2016 and later shows the “Net income attributable to shareholder (parent company).”

17

8.8%

6.7%

(Forecast)

105
120

100
90
800.0
80
70.0
70
60
50
42.0
40
30
20
10
(Years ended/ 0
2018 ending March 31)“NTN 100”

110
130

The Progress of “Manage Growth”

Developing Business in New Areas
We continue to develop a steady stream of new businesses, such as
our Hybrid Street Light, which initiated sales in July 2016.
Under “NTN 100,” we are going beyond our conventional fields of bearings and driveshafts to promote
development in a range of new business areas.
In terms of the natural energy business, we focusedon developing, manufacturing, and sales “Micro Hydro
Turbines” and “Compact Wind Turbines.” On April 1,
2016, we formed our “Green Energy Products Division”
in order to develop this business without delay, and in
July 2016 we were able to achieve to release our“Hybrid Street Light,” which combines photovoltaic
power generation with a small windmill. Our microhydro turbine designed to be installed in irrigation
canals is scheduled to be introduced in December
2016. In addition, we plan to release our compact windturbine at the end of 2017. We have already received
many inquiries about these products and are
responding to the demand.

Hybrid Street Light

Compact Wind Turbine(vertical axis)

In terms of our EV business, we engage in productdevelopment to support safer driving for electricvehicles and other next-generation vehicles. Among the
products we offer is “New In-wheel Motor System.” This
product contributes to smaller, more lightweight designs
by taking a new approach to the structure of reduction
gears. It can be mounted in a vehicle without requiring
modification to the structure of the suspension or
steering mechanisms. We also offer our “Two Motor
On-board Drive System” that is capable of delivering
drive power to the right and left wheels independently.

New In-wheel Motor System

Four New Business Areas

Develop businesses in new areas fusing NTN’s technology and knowhow
Universities

Energy Business“Using Natural Energy”

EV Business“Electrifying Automobiles,
Revolutionizing Safety”

Othercompanies

Research
institutions

Robot-related BusinessGovernment
agencies“Working and Livingwith People”

Service,
Solution Business“Utilizing Big Data”

Government-industry-academia
collaboration
Tier 1 supplier collaboration

We have established “Green Power Park” at theAdvanced Technology R&D Center in Kuwana City in
Mie Prefecture. The facility is an energy circulation
model where uses these products. There, we conduct
tests to demonstrate how a low-carbon society can berealized. ⇒ See p. 38

Micro Hydro Turbine

Green Power ParkOn April 1, 2016, we established our “Electric
Module Products Division” in an effort to achieve earlycommercialization of our module products such as
our “Electric Motors and Actuator,” which has
become indispensable to powering next-generation
motor vehicles.
Through these initiatives, we are contributing to theaccelerated development of next-generation vehicles.

Two Motor On-board Drive
SystemElectric Motor andActuator18

In our robot-related business, under the theme of“Working and Living with People,” we are accelerating
our market expansion with products such as our“Parallel Link High Speed Angle Control Equipment,”
which helps to increase productivity at automatedproduction facilities through accurate, high-speed
positioning, and our “Microscopic Coating Applicatorwith Microgeometry Measuring Function,” which has
dual functions: measuring shapes after coating to allow
control of the application process and quality throughcomprehensive inspection; and ensuring highly
accurate coating with microscopic droplets.

Parallel Link High Speed Angle
Control Equipment

and sensing technology for bearings.
In 2015, we also launched sales of Condition
Monitoring System (CMS) for wind turbines “Wind
DoctorTM.” It continually monitors the operating conditions of large wind turbine facilities. CMS can also be
applied to infrastructure other than wind turbines. We
are committed to the continuous development of thisproduct, which will enable us to acquire greater accessto the aftermarket.

Wireless
Measuring Unit

Monitoring Service

Wind Turbine
NacelleCondition Monitoring System

Infrastructure

Microscopic Coating Applicator with
Microgeometry Measuring Function

In our Service, Solution Business, we are developing
business in order to provide services and solutions not
only provision of things but also by utilizing big data in
the form of condition monitoring, diagnosis technology,

The Progress of “Manage Growth”

Expand Aftermarket BusinessWe have improved our inventory and utilized system. As a result,
we can deliver products immediately as they are needed byour customers.
Results for the Fiscal Year under Review

19

In terms of Expansion of the Aftermarket Business, we
aim to achieve the “World’s No. 1 Customer Satisfaction
Level with Product Lineup and Engineering Services.”
We seek to strengthen our engineering services
through Aftermarket Academy (which includes technicalworkshops and bearing diagnosis) for the aftermarket
in Japan. Outside Japan, we are extending our
automotive aftermarket business in Europe, China andNorth America. In our industrial machinery aftermarket
business, we are strengthening our “caravan activities”
in which our technical service units visit distributors andtheir customers.
As for our achievements in the first year of our“NTN 100,” we can highlight the following three.
The first was the strengthening of our rapid delivery
system. To expand this system, we have identified
products that have become hot-selling products fromamong our staple products. We developed a global
automatic stock replenishment system for these staple
items. By enhancing our inventory and our utilization ofthis system, we have strengthened quickly delivery
system by which we can deliver products immediately,when customers need them. We have already introduced this system in Japan, elsewhere in Asia, Europe,and North America, but we have been also introducing
this system in China in the current term.
Our second achievement was the strengthening of
our service system. We go out on the road with ourtechnical service unit and present technical workshops
to our customers. This service is in operation in morethan 10 countries around the world. In addition, weoffered our Aftermarket Academy, through which ourcustomers visit us to undergo training. ⇒ See p. 27
Our third achievement was to globally increase ourmarket share by 0.5 percent points by strengthening
our supply capability and service system, though thevolume of sales decreased as a result of theeconomic slowdown in China and South America.
From now on, we willseek to further expand
our market share toincrease sales even in
the environment of
economic slowdown.
Technical Service Unit

Initiatives for the Second Fiscal Year
Under the theme of “Expand Aftermarket Business,”
we will address the following two issues in the second
fiscal year of the plan.
The first is to enhance the brand image. At first, we
will strengthen the relationship with our customers
around the global. We offered our customers technicalworkshops, which were discussed in the Results for
the Fiscal Period under Review, to a total of about 750
companies in more than 10 countries around the world.
A simple calculation reveals that training courses were
held at about two companies each day. Our customers
evaluated these training courses very highly, and we
intend to continue this initiative for the fiscal year
ending March 31, 2017.
We are also expanding input ULTAGE Series
bearings, which can boast world’s highest standard ofbearing function such as world-leading load capacity
and allowable number. ⇒ See p. 27 In terms of
quality, we intend to further promote our competitive
dominance over other companies while also extending
our rapid delivery system.
Moreover, we will take steps to increase NTN’s
market presence by expanding our industrial machinery
aftermarket to emerging countries. While increasing thenumber of new distributors as we enhance our support
systems, such as our technical support and supply
capabilities, and we will increase the order accuracy ofmaintenance, repair, and overhaul items by utilizing
databases and other information technology.
Through these initiatives, we intend to enhance
bland image.
Our second initiative is to expand our auto parts.
This business has continued its steady volume growth,with Europe and North America in particular driving the
growth of the business. We intend to enhance a greater
lineup of auto parts with a focus on continued growth,particularly in Europe and North America.

The Progress of “Manage Profitability”

Structural Reform of the Driveshaft BusinessProfits are expanding considerably thanks to our promotion ofvaluable cost reductions, including local production of components
even if exchange-rates do not affect the increased profit.
Results for the Fiscal Year under Review
In terms of structural reform of the driveshaft business,
we have identified expand profits as the most important
item on an agenda that includes quality, cost, delivery
date, and technical support. We are therefore revising
our constitution in an effort to gain the title of “WorldNo. 1 Customer Satisfaction Level” for NTN Driveshafts.
We can list two achievements for the first year of
our “NTN 100” related to structural reform of ourdriveshaft business.
The first is improving profit growth through stabilization of the North American driveshaft supply system
and advancement of decrease in valuable cost. Apartfrom the affects the increased profit effect of exchange
rates resulting from increased local production ofcomponents, profits have improved.

Currently, we are establishing new factories outside
Japan in response to increased automotive production
and the construction of new automaker’s plants and
we are strengthening our global supply system. In April
2015, mass production began at Xiangyang NTN-Yulon
Drivetrain Co., Ltd., which became our third driveshaft
production base in China. The factory of NTN
MANUFACTURING DE MEXICO, S.A. de C.V. alsobegan mass production in February 2016. Moreover,
we established NTN DRIVESHAFT ANDERSON, Inc. as
our third driveshaft production base in the USA. The
company is scheduled to start mass production in
April 2017. ⇒ See p. 5

20

The second achievement is starting deploying
high-value-added products in the market. For example,
our “Advanced Drive-Shaft Module” represents a new
approach to utilizing high-technology production bycreating a module comprising a hub bearing, anddriveshaft. This innovation contributes to significantly
lower weight and shorter lead-time development forcustomers. Furthermore, we have released a “Lightweight Driveshaft for FR Vehicles” that contributes thegreater fuel efficiency of the FR configuration that has
been adopted in many premium and luxury vehicles.

Initiatives for the Second Fiscal Year
Regarding future initiatives, we intend to push forwardwith further improvements low profitability product.
Regarding areas requiring strengthening in thesecond fiscal year, we are focused on further improving
valuable costs. We will seek local procurement of thesteel used in driveshaft components and will strengthen
centralized purchasing of boots and grease and thelike, thus reducing valuable costs. Moreover, we will
improve our product mix by expanding the sale ofproducts for large and premium vehicles, including
high-value-added products. Through such measures,
we intend to take strong measures to improve theprofitability of driveshafts.

＊＊

Advanced Drive-Shaft Module

Lightweight Driveshaft for FR Vehicles* Photos are cross-sectional models of products.

The Progress of “Manage Profitability”“Monozukuri” with Next-Generation Technology
Realizing integrated production system with new plant andexpansion of global standardization of Monozukuri
Following the theme of innovation with Monozukuri
methods toward next 100 years we plan to increase
our cost-competitive capabilities, reduce equipment
unit costs, shorten lead-times, eliminate stock inprocess, and adopt energy and resource efficient
process. What’s more, in view of the importance isstrengthen global quality control, we will establish aquality assurance system exhibiting globally consistent
standard quality assurance with “Made by NTN.”
For the current term, we decided to build a heat
treatment plant in the Noto region. This new plant will
be constructed on the site of NTN NOTO CORP. As theNoto region did not have any heat treatment facilities
previously, the factory in Kuwana City in Mie Prefecture
handled all its assigned heat treatment processes.
Once the new heat treatment facility is completed

21

in the Noto region, the region will benefit by having its
own integrated production system. In addition, we aresupporting the global standardization of Monozukuri
by developing such heat treatment plants worldwide
as model facilities.

Image of the heat treatment plant at NTN NOTO Corp.

The Progress of “Manage Foundation”

Strengthen the Management Foundation
We ensure all NTN Group employees are aware of our Corporate
Philosophy, which represents our globally common code of conduct.
One of the objectives of our “NTN 100” is to apply our
Corporate Philosophy to all NTN Group employees as a
globally common code of conduct while ensuring
compliance and strengthen efforts for governance, anddiversity as a global company.
In order to awareness our Corporate Philosophy
across the global, we distributed a corporate
philosophy chanting card in various languages to all
employees as a means of highlighting our corporate
philosophy globally and raising recognition. We also
formulated development and implementation of
education and training programs the understanding
and empathy of our employees in order to link thisphilosophy to actual practices. We are also considering
introducing the company award.

Corporate Philosophy chanting card
(multilingual version)

NTN Technical
Skills Competition

Our Compliance Committee is focused mainly on
ensuring compliance. The Fair Trade Monitoring
Committee is concerned with thorough compliancewith the Antimonopoly Act and Subcontracting Act.
Holding the “CSR Global Meeting” with theOverseas District Internal Control Section, we arestrengthening our global internal control system, while
enhance the governance system of affiliatedcompanies. ⇒ See p. 42
Furthermore, we are taking steps to strengthen ourrisk management system. Our Risk Management
Committee is concerned with reducing or eliminating
risks and promoting our Business Continuity Plan (BCP)
for large-scale natural disasters. ⇒ See p. 47
Regarding the issue of diversity, we havestrengthened our training global person who can play
an active role beyond their home countries and regions.
We promote continuous Hitozukuri to enhance on-site
capabilities through the NTN Technical Skills Competition and Global QC Circle Convention.
As for creating an environment that is morewelcoming for women, we are expanding our system ofoffering reduce working hours for childcare and are
improving our in-company day-care center for
employees’ children.

Global QC Circle Convention

22

The Progress of “Manage Foundation”

Strengthen the Financial Foundation
We are steadily promoting soundness of financial foundation.
One of the targets of our “NTN 100” is strengthening
profit control and improving asset efficiency. We aretaking steps to improve our financial foundation,
including reducing our interest-bearing debt, improving
our inventory turnover ratio, reducing obligations for
retirement benefits, and improving operating margin.

The targets for the final fiscal year of the plan
include equity to capital ratio of 30% or more andreduction of the net D/E ratio to 1.0 or less. A minimum
Return On Equity (ROE) of 14% is also targeted withstrengthening earning capacity, with sufficient free cash
flow generated in line with policies to achieve a 30%
dividend payout ratio. We are committed long-term andreliable returns of profits to shareholders.

Strengthening of the Financial Foundation: Results and Forecast(Years ended /ending March 31)

2016

2017

2018

NTN 100

ActualForecast

NTN 100
3-year period

Reduction of interest-bearing debt
(excluding foreign exchange impact)
Inventory reduction(inventory turnover)20.0 billion yen
reduction

26.2 billion yen
reduction

7.2 billion yen
reduction

60.0 billion yen
reduction/3 years

4.0 times/year

4.0 times/year

4.0 times/year

4.5 times/year

Capital expenditures

50.0 billion yen

36.3 billion yen

76.3 billion yen/
2 years

135.0 billion yen/
3 years

1. Strengthen asset efficiency

Sale of assets
FCF
Equity to capital ratio

Sale of assets with no prospective use
17.9 billion yen

12.5 billion yen

10.0 billion yen

67.0 billion yen/
3 years

30.0%

29.2%

30.0%

30.0% or more

1.0

1.1

1.1

1.0 or less

12.0%

6.3%

8.2%

Over 14%

6.9%

6.7%

5.1%*

8.8%

Annual 10 yen
Dividend payout ratioof 17%

Annual 10 yen
Dividend payout ratioof 35%Net D/E ratio
ROE
2. Improvement of
the profit margin on sales
Operating margin
3. Shareholder return
Dividends

Annual 12 yen
Dividend payout
ratio of 40%

Dividend payout ratioof 30% is basic idea

* If exchange rates are at the same level as the previous year: 6.6%

Implementing Our “NTN 100”
Looking to the economic environment in which the NTNGroup operates, the troubling trends such as the strong
yen is contributing to an increasing sense of uncertainty.
In such an environment, we are working steadily to
implement the measures of our “NTN 100” and are
implementing transformation and a building foundation
for company’s 100th anniversary and for sustainablegrowth for the next 100 years.

23

At a Glance

Changes in Consolidated Financial Results
Net Sales [Left axis]

Net income (Loss)*

Operating Income [Right axis]

Operating Margin (%)(Billion yen)(Billion yen)

1,000

6.2%

5.2%

3.8%

6.7%

100

5.1%

1.3%

800

80

717.0

701.9

690.0

639.0

600

543.5

60

539.6
47.8

43.9

400

23.4

20.7

200

40

35.0

33.0

20

16.0

15.0
7.3

6.0

0

0
‒14.2

2012

‒14.6

2013

2014

2016

2015

Forecast for 2017 (Years ended/ending March 31)* Net income for the year ended March 2016 and later shows the “Net income attributable to shareholder (parent company).”

Net Sales by Region
Japan

Americas

26.4%

29.6%

189.6 billion yen(Billion yen)

250

200

193.4

177.5 179.1

191.5 189.6 187.5(Billion yen)

250

250

202.6

212.6
195.0

250

200

200

166.3 171.2 169.0
150

124.6

145.9 billion yen(Billion yen)

174.6
141.6

20.3%

169.0 billion yen(Billion yen)

200

Asia and Others

23.6%

212.6 billion yen

150

150

Europe

133.0

159.0

124.8

119.0

100

100

100

100

50

50

50

50

0

2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)02012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

0145.9 148.5
136.7

150

2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

092.4 95.8

2012 2013 2014 2015 2016 2017

(Forecast)(Years ended/ending March 31)

24

Review of Operations

Aftermarket Applications
NTN’s aftermarket business involves selling bearings for general machinery through dealerships, MRO* for mining, paper-making,steel mills and other kinds of machinery, auto parts supply and engineering services. NTN is helping customers solve their problems
not only by selling a wide range of bearings via a global supply network but also by providing engineering services.
* MRO: Maintenance, Repair and Overhaul

Upping our market presence bystrengthening our engineering services
and increasing product lineup
Percentage of
total sales

16%

Operating Income/Operating Margin
Net Sales (Left axis)
Operating Margin (%)(Billions of yen)

20.3

150

100

Operating Income (Right axis)

16.5

17.1

103.8

94.0

17.1

113.6

112.4

45

15.6

14.8
110.0
30

89.2
19.1
14.7

50

17.7

19.2

17.7

16.3

15

113.6 billion yen

0

2012

2013

2014

2015

2016

0

2017 (Years ended/(Forecast) ending March 31)

Results in the Fiscal Year Ended March 31, 2016
This segment includes not only servicing of industrial machinery but also servicing
and parts supply for vehicles.
Net sales in the aftermarket applications were 113.6 billion yen, up 1.2 billion
yen (1.1%) over the previous fiscal year.
The impact from China's economic slowdown this fiscal year has been felt inJapan and other regions. A similar slowdown in the emerging economies of SouthAmerica effected, but owing to MRO (Maintenance, Repair and Overhaul)
engineering services and expanded sales of automotive parts, sales outside of
China exceeded the previous fiscal year's numbers.
Operating income was 17.7 billion yen effecte by exchange-rates, which was
1.5 billion yen (8.0%) less than the previous fiscal year.

Fukumatsu Kometani
Executive Director

Overview of the Fiscal Year Ending March 31, 2017
In Japan, though business is likely to be impacted by the continuing economic
slump, we will try to increase our market share amongst target customers bystrengthening our engineering services. In Americas, we will seek out MRO
projects by increasing cooperation with big name distributors, and add more
distributors to our network in order to expand sales channels for our auto parts.
In Europe and Asia, we will also hunt for MRO projects and expand sales channels
for our auto parts, but we expect customer demand is slowdown in some emerging countries in Europe. In China, the current economic slowdown is expected tocontinue, but we will build up our sales network by expanding our sales reach toparts of the country where we do not have a presence.

Comments of Director in Charge

25

In the aftermarket business, we are strengthening 4 pillar areas: 1. product supply force by shortening lead-time;
2. product appeal by expanding our ULTAGE series of world highest class quality bearings; 3. expanding global
inventories for industrial machinery aftermarket and strengthening product lineup by developing auto parts forautomotive aftermarket; 4. strengthening engineering services via technical workshops and technical service units.
Going forward, we will be working to strengthen our brand image by improving packaging and taking action against
imitation products, to achieve world’s No.1 customer satisfaction level.

PRODUCTS* Photos are cross-sectional models of products.

Mining＊Spherical roller
bearing withcompact seal

Bearing unit

Steel
＊

Super largesized split
spherical roller
bearing

Sealed four row
tapered roller
bearing

Paper-making

Oil and Gas

Constant
velocity joint forindustrial
machinery

The rust guard
series sphericalroller bearings

Food

Auto Parts＊

Spherical thrustroller bearings“PolyLube”
bearings

Maintenance Tools
Parts kit fortrucks
Arm shaped
self-centering
hydraulic puller

Induction
heating device

NEW PRODUCTS“ULTAGE Spherical Roller Bearings with Compact Seal” for Mining Transport Conveyors
Because they are used under harsh conditions where exposed to outdoor elements and dust,
spherical roller bearings for mining conveyors must prevent foreign matter from penetrating its internalmechanism, besides withstanding heavy loads. By adopting a specially designed compact seal andoptimizing the internal design of the bearing, NTN has realized a shielded spherical roller bearing of thehighest rated load in the world and the same size dimensions of a standard bearing.

26

Aftermarket Applications“NTN 100” strategy

Aiming world’s No. 1 customer
satisfaction level with product lineupand engineering services

Enhancing brand image
Enhancing our brand image is an important theme ingetting customers to buy our products. To do that on a
global scale, we are strengthening our relationship withcustomers. In the fiscal year ended March 2016, we
strengthening customer relations by visiting customers attheir place of business to hold technical workshop for
explaining technologies, and by having customers cometo the Aftermarket Academy staged at our offices. These
activities were held in more than 10 countries and drewsome 750 companies. Thus we were able to strengthen
relationship with customers. Those who actually attended
these programs highly applauded the outcome, so we will
be continuing these activities.

Another way that we are trying to enhance our brandimage is to launch our ULTAGE series of world’s highest
performance bearings onto more markets. Not only are
we making quick deliveries by keeping larger inventories
and putting the logistics in place, but we are also
working to establish our superiority over competitors ona quality basis.
Furthermore, to enhance our brand image, we will be
adding more new distributors in emerging countries by
upgrading our support structure from both technical andsupply perspectives.

Wider scope of auto parts
We are applying the knowhow of NTN-SNR
ROULEMENTS (NTN-SNR) to expanding our productlineups and sales of kits products of in-house developed
parts in the Americas and Europe. In Americas andEurope regions have been driving growth of ouraftermarket business with strong annual average growth
rates of 22% and 4%, respectively, since 2013. We
continue to position broader product lineups and new
distributors as important pieces of our strategy, and willtake the steps this year to accomplish that.

Technical workshop and the Aftermarket Academy

ULTAGE series

We impart training on the basics skills of how to use
bearings and maintenance techniques to customers anddistributors. For the technical workshop, we visit thecustomer or distributors in their place of business, while,for the Aftermarket Academy, they come to our offices.

“ULTAGE” is the name for NTN's new generation of theworld's highest standard of bearing series. The namewas coined from the words “ultimate” and “stage,” which
we intend to mean the best and versatile for any kind of
application.
* Photos are cross-sectional models of products.
＊＊

27

NTN ACTION TODAY
01 Global four-regional expansion

オートパーツJapan• Support distributors’ sales from various perspectives to enhance brand strength.
• Make more technical information available by upgrading sales tools (e.g., sector specificguidebooks, etc.) and staging the Aftermarket Academy.
• Improve packaging quality to gain the trust of customers.
• Establish an integrated bearing production system in the Noto area that enables speedy
production and stable delivery, by establishing a heat treatment plant at NTN NOTO Corp.
Improved packaging for a large
spherical roller bearing

Americas• Capture new customers in the mining, steel-making, oil and gas, machine tool, food and paperindustries by improving relations with large chain distributors.
• Expand product lineup in the auto parts business via parts kits for trucks and cars.
• Upgrade mobile engineering services that visit Central and South American customers in theirplace of business, by establishing an organizational structure that builds up the cooperation
with NTN-SNR.

Strengthening relations bymeeting with distributors

Europe• Develop activities from diverse angles that “enhance product lineup,” “improve customer
support” and “innovate services.”• For the automotive parts business, appeal the quality, safety and reliability of the many
OEM parts delivered to manufacturers. Further develop our “TechScaN’R” technicalinformation application for distributors and service shops, and use innovation to improveengineering services.
• For the industrial machinery business, better serve customers by launching user-safe greases
demanded in the food and pharmaceutical industries.

“TechScaN’R” technical information
application

Asia and Others• In China, strengthen MRO teams and enhance our presence in the steel, rolling stock andpower plant businesses. In the automotive parts business, improve customer support fromboth engineering and supply perspectives, and add new distributors as a means forboosting sales.
• In ASEAN, make NTN better known in the MRO field so as to expand sales. In eachcountry, set target industries and expand sales by offering technical seminars andtechnology proposals.

Instruction in how to use
maintenance tools

02 Automechanika Shanghai

NTN’s booth

In December 2015, the world's largest automotive aftermarket trade fair
“Automechanika Shanghai 2015” was held in Shanghai, China where NTN
ran a booth with the theme “Reliability and High-Performance.” Highly
reputed around the world, this tradeshow had amongst its exhibitors 5,300
aftermarket-related companies from 39 countries and, over the 4-day
period, saw upwards of a million visitors from 143 countries. At its booth,
NTN put on display a wide range of auto parts and appealed the high levelof quality.
The aftermarket industry in China has grown rapidly in just the past few
years. NTN saw an increased number of visitors to its booth, which wasindicative of the rising interest in NTN products.
NTN is looking forward to exhibiting at this tradeshow again in an effort
to enhance the company’s brand image in the Chinese market and expand
sales of its aftermarket products.

26
28

Review of Operations

Industrial Machinery Applications
The industrial machinery market covered a number of industry machinery sectors, including wind turbines, rolling stock,machine tools and more. To expand sales, NTN offers applying new technologies to the wide assortment of large andsmall bearings.

NTN is dedicating time and resources
to growth segments and creating new
business areas.

Operating Income/Operating Margin
Net Sales (Left axis)
Operating Margin (%)(Billions of yen)

150

5.7

4.5
1.6
106.6

Percentage of
total sales

14%

Operating Income (Right axis)

109.0

101.2

93.7

100

3.2

15

10

93.5

4.8

104.1 billion yen

4.0

104.1

6.3
50

5.4

5.6
3.7

3.3

5

1.5
0

2012

2013

2014

2015

2016

0

2017 (Years ended/(Forecast) ending March 31)

Results in the Fiscal Year Ended March 31, 2016
Net sales in the industrial machinery applications were 104.1 billion yen, down
4.9 billion yen (4.5%) over the previous fiscal year.
In Japan, NTN saw a decrease in sales for construction and mining
machinery, and similarly for related gearbox bearings. In Americas, productsales for wind turbines grew, but fell for construction and mining machinery
applications. In Europe and China, sales for wind turbines were strong.
Operating income was 5.6 billion yen. But, despite cost cutting efforts andfavorable exchange rates, income was down 600 million yen (10.3%) from theprevious fiscal year largely because of the decline amount of sales.

Kazuki Kawashima
Director

Overview of the Fiscal Year Ending March 31, 2017
The outlook in Japan is for a further decrease in product sales for construction
and mining machinery, and a projected slump in demand for steel millequipment, machine tools and other industrial machinery. In Americas, weforesee a further decline in sales for construction and mining machinery similar
to the current trend in Japanese market, but we expect an increase in sales of
products for wind turbines. On the other hand, in Europe we expected
increases in product sales for aircraft, gearbox, and general machinery. In Asiaand other areas, sales for construction machinery and machine tool applications will decrease in Korea, we expect a momentary decline in sales for windturbines in China as a backlash to the increased demand seen last year.

Comments of Director in Charge
In the industrial machinery business, we are stepping up our technological development, production capacity and sales
efforts in the wind turbine, aircraft, rolling stock and robot markets, which we view as growth areas. Moreover, we are
directing development not only at bearings but also CMS*, linear modules, and modular products that combine bearingsand sensors.
In applications for construction machinery, agricultural machinery, machine tools and other forte areas of industry
machinery applications, we are set on providing service support and solutions alongside a plethora of highly reliable
products as part of our commitment to industrial advancement.

29* CMS: Condition Monitoring System

PRODUCTS* Photos are cross-sectional models of products.

Wind turbine bearings
Meets growing demand in renewableenergy and other areas＊

Construction
machinery bearings

Agricultural
machinery bearings

Applications for resource mining andcivil engineering

Helping to ensure stable
food supplies

Aerospace bearings
Applications for jet engines
around the world＊

Gearbox bearings

Rolling stock bearings

Underlying support for high productivity
in robotic applications

Supports safety of the world’s
high-speed railways

Office equipment bearings
Supports smooth operation of copiersand multifunctional printers© PEDRO STUDIO PHOTO＊

Machine tool bearings

Hydrodynamic bearings

Fundamental components for ensuringhigh-precision processing

Used also for HDDs and thin fan motors

NEW PRODUCTS“Tapered Roller Bearings” with an early
failure detection function

Medicalequipment bearings
Used for CT scanners and artificial hearts

Flaking during bearing operation can ultimately damage
the shaft and gear components. This has long been aproblem because the risk of this occurring only gets
worse the longer bearings go without being replaced.
To prepare for this, NTN developed a product that
detects and prevents broken-off fragments from exiting
the bearing housing. This technology greatly helps toreduce the lifecycle costs of machinery.

30

Industrial Machinery Applications

Focus our target on growth areas andenhance product development.

“NTN 100” strategy

Shipped amount by industry (Benchmarked against 2013 figures)Construction
machinerySales share bybusiness area

100 100 100100 100
100 100
100
Construction
machinery

Other

80

89

80

89
80

68

65 68

Wind turbine
Hydrodynamic

Machine tool
Rolling stock
Aerospace

250

89
80

250

250

89
200

200

6568

250

217
68
65

150

65

150

200

155

150

203

Aerospace

150

217

200

0

50

0

50

0

127

50

155

150

0

0

0

150

150

150

Rolling stock

150

150

150

150

132
132 132 132
125 121124 119125 124125
124 119 124 119124 119
124 121
123121
123 124 123
123125124
121
114
114 114 114
100 100
100 100
100 100 100 100100 100
100 100 100 100100 100

217 217203 203 203

155 155

127 127
Agricultural
100 100
100 100 100 100100 100
machinery
9% 19% 19%19% 50
CAGR CAGRCAGCRAGR‒‒10 % ‒‒10 %‒‒10‒‒%
+1
+
+ +
10 %
50AGR 50 AG50R AGRAGR
50
Gearbox
C
C
C C

50

Office equipment

Wind turbine

127

0

0

0

50

50

50

50

0

0

0

0

+7% +7% +7%+7%
CAGR CAGRCAGCRAGR

50

50

50

0

0

0

%RC+5
%
+5
RA+5
GR%+5%AG
AGC
CAGR C201320142015 20172013
2014
2015 20172013
2014
2015 20172013
2014
2015 20172016 20172016 2017 2013 20142013
2016 2017 2013 20142013
2016 20172013 20142013
20152014
2013
2015
2017
2014
2015
2017
2013 20142013
20152014
2013
2015
2017
2014
2015
2017
20152014
2013
2015
2017
2014
2015
2017
20152014
2013
2015
2017
2014
2015
2017
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
(Forecast)(Forecast) (Forecast)(Forecast)(Years ended/ending(Years ended/ending(Years March
ended/ending(Years31) ended/endingMarch31) March 31)March 31)(Forecast)(Forecast) (Forecast)(Forecast)(Years ended/ending(Years ended/ending(Years March
ended/ending(Years31) ended/endingMarch31) March 31)March 31)(Forecast)(Forecast) (Forecast)(Forecast)(Years ended/ending(Years ended/ending(Years March
ended/ending(Years31) ended/endingMarch31) March 31)March 31)(Forecast)(Forecast) (Forecast)(Forecast)(Years ended/ending(Years ended/ending(Years March
ended/ending(Years31) ended/endingMarch31) March 31)March 31)* CAGR (Compound Annual Growth Rate): Average annual growth rate from the year ended March 2013 to the year ending March 2017

Reorganization of engineering divisions in the Industrial Business Headquarters
Against today’s backdrop of environmental issues, demandis growing for wind turbine, aerospace and rolling stock
applications that the NTN Group focus on. Product sales forthese applications have increased greatly while continuing tofall for construction machinery applications, which had until
recently accounted for a large share of our sales in the industrial machinery applications.
Because of these changes in the business environment,
the NTN Group reorganized its engineering divisions.
Effective April 1, 2016, the 4 engineering divisions

Beforeunderneath the Industrial Business Headquarters werereorganized into separate departments specialized respectively in robots, rolling stock, aerospace, CMS and largescale wind turbines. Each was named for their field of
business, therefore their roles and responsibilities are clear
and distinct. Moreover, product development operations
have been honed by focusing targets on growth fields andpromoting product and technology development in new
areas such as robotic applications.

After

Industrial Engineering Dept.

Industrial Engineering Dept.

Aerospace Engineering Dept.
(newly established)

Construction Machinery & Railway
Vehicle Engineering Dept.

Robot Engineering Dept.
(newly established)

CMS Engineering Dept.

Machining Tool/Aerospace
Engineering Dept.

Railway Vehicle Engineering Dept.
(newly established)

Product Design Engineering Dept.
(newly established)

CMS Engineering Dept.

New Energy Engineering Dept.

31

Wind Turbine Engineering Dept.
(renamed)NTN ACTION TODAY
01 Integrated production of industrial machinery bearingsin the Noto area

NTN established NTN HOUDATSU SHIMIZU Corp., NTN SHIKA Corp. and
NTN NOTO Corp. in the Noto area of Japan after opening NTN HAKUI Corp. in2007 as a second production base for making industrial machinery bearings,
its lone predecessor being located in Kuwana, Mie Prefecture.
Currently in the Noto area, NTN is producing large bearings for windturbines and a variety of bearings for the industrial machinery aftermarket. The
process typically involves forging, machining, heat treatment, grinding andassembly in that order. The heat treatment part is key to determining thebearing’s durability, but since there were no heat treatment systems in the
Noto area, products had to be shipped to the production base in Mie
Prefecture for heat treatment, which consumed much time after calculatingtransport in. However, a heat treatment plant is being built on the grounds of
NTN NOTO Corp., which will give the Noto area its own integrated production
system that will speed up production and stabilize supply.
The new heat treatment plant will serve as a model for additions at NTN’s
overseas production sites and will lead global standardization of Monozukuri.

Large bearing made in the Noto area

Large bearing during the manufacturing
process

02 Robot-related businessIn our robot-related business, we are applying our Group’s unique technology as seeds for developing products whichmatch those seeds to new needs and expand these products on a global scale.

Better and improved “Parallel Link High Speed Angle Control Equipment’
The positioning device that is used in production equipment must swiftly andaccurately position the unit over a wide range of moving angle, with only asmall amount of space to work with.
NTN seeks to improve that performance with its “Parallel Link High Speed
Angle Control Equipment.” An improved model has been downsized fromconventional product by about 10% in the overall height. Moreover, positioning
is 10% faster and more precise, so both tact time and down time are shorter,
which contribute to improve productivity for the customer.

Parallel Link High Speed Angle Control
Equipment

Microscopic Coating Applicator with Microgeometry Measuring Function
The need for quality control by measuring the shape of all applied adhesive or
the coating volume became apparent following developments in the mounting
field calling for even smaller electronic components. Until now separate
devices were required for application and measurement. Under this situation,
NTN has started proposing the “Microscopic Coating Applicator with Microgeometry Measuring Function” that adds the “3D Microgeometry measuring”
function, which measures 3D coated shapes, to the “Desktop Type
High-speed Microscopic Coating Applicator” that is capable of high-accuracy
coating of microscopic droplets of a few pl (picoliter)* at a high speed of 0.1
seconds. The developed product is capable of coating at a high speed of 0.7
seconds as well as conducting measuring, which contributes to greater
production efficiency.

Microscopic Coating Applicator with
Microgeometry Measuring Function* pl (picoliter): 1 trillionth of a liter

32

Review of Operations

Automotive Applications
Our business for automotive applications begins with us proposing new technologies and products, such as hub bearings,
driveshafts and needle roller bearings, to automotive manufacturers and supporting industries around the world.

Accurately grasping customer needs
is how we enhance brand value.

Operating Income/Operating Margin
Net Sales (Left axis)
Operating Margin (%)

Operating Income (Loss) (Right axis)(Billions of yen)

600

2.8
0.9

Percentage of
total sales

70%

400

2.5

4.9

3.8

499.3

480.5

3.1
486.5

433.9
40

356.6

342.9

60

24.4
18.4

200

499.3 billion yen

15.0

12.0

0
32
2012

2014

90
2013

2015

2016

20

0

2017 (Years ended/(Forecast) ending March 31)

Results in the Fiscal Year Ended March 31, 2016
Net sales of the automotive applications were 499.3 billion yen, up 18.8 billion
yen (3.9%) over the previous fiscal year. In Japan, compact vehicle sales werestymied by a tax hike, but NTN made up the difference via strong demand forvehicle exports to North America. Though demand in North America wasstrong, overall sales to the Americas were slightly down because of delays inthe mass-production launch of some new vehicles and market slumps in SouthAmerica. In Europe and China, customer demand grew.
After calculating in a decrease in variable costs and the effects of exchange
rates, operating income was 24.4 billion yen, a 6.1 billion yen (33.2%) increase
from the previous year. Operating margin also improved 4.9%.

Hideaki Miyazawa
Managing Director

Overview of the Fiscal Year Ending March 31, 2017
New vehicle sales in Japan are expected to recover, as our automotive
customers will be introducing new vehicle models. In Americas, sales of large
vehicles like SUVs and pickup trucks should remain strong because of theweaker price of crude oil. This is also expected to benefit sales by NTN
MANUFACTURING DE MEXICO, S.A.DE C.V., which commenced massproduction in December 2015. In Europe, the markets in Russia and other
Eastern European countries will likely decline, but the overall tone is for strong
sales to continue across the continent. In Asia, demand in China is projected tocontinue expanding customer demand, and sales of driveshafts and motorcycles parts are expected to increase in India and ASEAN.

Comments of Director in Charge
Today, there are continuous and drastic changes of automotive market needs as represented by “electrification” and“automated.” In this situation, our automotive business, pour a great amount of effort into “thinking from our customer’s
standpoint and foretelling the future,” and pursue customer satisfaction by “improving quality” rather than “increasing
quantity.” We are attentively focusing on growth areas and aggressively challenging new areas of business to achieve
our goal of sustainable growth.

33

PRODUCTS* Photos are cross-sectional models of products.
** MCU: Mechanical Clutch Unit

MCU ＊＊

Constant-velocity
joint for steering

Seat
＊

＊

＊

Transmission

Clutch forseat lifterBall screw drive
module for electric
hydraulic brakeSteering

Tapered roller
bearings
Thrust needle
roller bearings

Low torqueseal ringBrake

Hub bearing＊

Needle roller bearings
for rocker arm
Auto tensioner withthe variable damper
mechanism for
ISG-equipped engine

CVT

Engine,accessories＊

Hollow ballscrew unit

Wheel applications

Driveshafts＊

Low section
high strengthpress pulley

NEW PRODUCTS
Auto Tensioner with the Variable Damper Mechanism for ISG-Equipped Engine＊

An ISG is the mainstream in idling stop mechanisms that vehicle manufacturers are increasingly
adopting to improve fuel efficiency. The auto tensioner with the variable damper mechanism
for ISG-equipped engines we developed can automatically optimize the tensioner setting toengine status, thus providing for the first time in the world both stable engine starts and better
fuel efficiency when driving.
ISG (Integrated Starter Generator) : A motor with an integrated generator (power generator) and starter (starter motor)

34

Automotive Applications

Aiming at NTN driveshafts achieving
world's No.1 customer satisfaction level“NTN 100” strategy
Improving earnings in the driveshaft businessWe have expanded profits as a top priority of ourdriveshaft business. We are also moving forward withthe structural reform that goes as far as quality, costs,
deliveries and engineering, in order to achieve theworld’s No.1 customer satisfaction level.
With regard to sales and engineering, we arebuilding product lines of high added-value by developing “Advanced Drive-Shaft Modules” based on new
concepts and hi-tech manufacturing and “Lightweight
Driveshaft for FR Vehicles” that are optimally suited forrear-wheel drive adopted with many premium cars.
On the production, we are building new plants in

Driveshaft production bases

China, Mexico and the USA and strengthening ourglobal supply system, to keep pace with increasing
vehicle turnouts and to shadow automotive manufacturers who have expanded their production operations
overseas. We are also working to cut variable costs inorder to expand profits. Moreover, we are introducing
innovative manufacturing technologies, enhancing ourcost-competitiveness, reducing unit prices, shortening
lead-times, eliminating intermediate inventories andconserving energy and resources. And, we are tuning
globally consistent standard quality assurance with
“Made by NTN.”

Newly in China:

Xiangyang NTN Yulon Drivetrain Co., Ltd.
began mass-production in April 2015.

Newly in USA:NTN DRIVESHAFT ANDERSON, Inc. isscheduled to start mass-productionin April 2017.

Newly in Mexico:

NTN MANUFACTURING DE MEXICO,
S.A.DE C.V. began mass-production
in February 2016.

Lightweight Driveshaft for FR Vehicles

Advanced Drive-Shaft Modules

We successfully reduced driveshaft weight by 2.2 kg(approximately 30%) while ensuring the same load
capacity of conventional driveshafts. Rear-wheel drive
systems are widely used on luxury cars and future
demand is expected to grow.

The length and configuration of these next-generation
driveshafts differ according to the model of vehicle, butthey are assembled with standardized CVJs that havebeen designed to deliver the required torque. The driveshafts are lighter in weight and higher performing thanconventional driveshafts, and can halves the development
lead time of driveshafts.

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

35

NTN ACTION TODAY
01 Development of the “Electric Motorand Actuator” series

There is growing demand for automated driving and better fuelefficiency throughout the automotive industry in recent years,
with electrification and by-wire control in particular being
developed at a rapid pace as various systems are used more fordrive and control.
NTN combined core technologies of bearings and ballscrew
product technology, motor design technologies and electronicalcontrol technologies to develop highly versatile “Electric Motors
and Actuators” series which is essential to by-wire control
systems*. Moreover, because common components andspecifications and available with variations in shape and size
which eliminates the need for individual designs for a shorter
development time. In the future, NTN will apply these systems toother fields besides automotive market.
* A system such as brake-by-wire and shift-by-wire, where driver operations
are converted from mechanical systems to electrical signals, to drive
actuators.

“Electric Motors and Actuators”

Helping to promote the use of EV with

02 a “New In-Wheel Motor System”

The “New In-wheel Motor System” that NTN internally developed isa great contribution to the development of the next generation of EV,
because it is 25% narrower than earlier products and structurally
works with existing suspensions and brakes used on compact cars.
NTN lent out 3 converted EVs that had been retrofitted with the“New In-wheel Motor System” for the Ise-Shima Summit in May 2016
and 2 for the Junior Summit in Kuwana City.

“New In-wheel Motor System”

Converted EV used at the
Ise-Shima Summit

03 Automotive Engineering
Exposition 2016

In May 2016, the Automotive Engineering Exposition wasstaged at Pacifico Yokohama and Port Messe Nagoya. The
exposition showcases automotive technologies of engineers
and researchers active at the forefront of the automotive
industry. Over the 3 days in Yokohama, approximately 87,000
people visited the exposition.
NTN exhibited a wide range of its latest next-generation
technologies under a theme of “New Technology Transforms
the Next.”

NTN’s booth“Electric Motors and Actuators” on display

36

FEATURE

Our Technologies

We use original technologies to solve
R&D Activities
The NTN Group creates new technologies in andSpacearound our core technological fields of Monozukuri
rockets,
Wind
and tribology. We promote development into
artificial
turbines
satellites
Creating the
cutting-edge technologies, products and production
Technologies of the Future
Rolling
Aircraftstock
Preservation of the global environment,
engineering with the intention of leaving our competnew energy
itors behind. For the automotive, industrial machinery
Ultra-high speed &Longer working life
Construction
Medicaland aftermarket applications, we are seeking to
special environments(high reliability)
machineryequipment
lower torque demand and enhance other performance of our bearings and driveshafts. And we also
More lightweight
Lower friction
Precision& more compact(lower torque)
Electric
combine products with their peripheral components
equipment
vehiclesCustomer needs
into module and unit products on the other. These
approaches to development can provide products
MachineAutomobiles
toolsthat capable of high precision, high quality products“Elemental technologies,” “Design and development,”on the market at optimum prices, and continually“Production technologies,” “Assessment technologies,”“Intellectual property”
contribute to the industrial world. Also, we are
currently promoting our 3-year Medium-term
Base technology
Management Plan “NTN 100” that will take us from
Tribology
Monozukuri
April 2015 to March 2018, just prior to our 100th
anniversary. Under this plan, we are promoting
Surface finish
LubricantLathe turning
Forgingdeveloping business in new areas as a major theme
Injection molding
Polishing
Joining
Seals
Analysis
Diagnosis“Manage Growth.” For example, we developed
Evaluation
Materials
Powder
Surfacecompression
improvingCompact Wind Turbines and Micro Hydro Turbines
moldingthat are highly efficient, utilizing natural energy. And,
for EVs, we developed In-Wheel Motor Systems andElectric Motors and Actuators, and we are preparing
for commercialization.
In the our core business of automotive business, tougher fuel economy regulations, we release products which
realize lighter, smaller and greater fuel-saving such as Lightweight Driveshaft for FR vehicles, Auto Tensioner with
the Variable Damper Mechanism for ISG-equipped Engine. By marketing new products like these around the world,
we are making a major contribution to fuel economy and riding comfort. In the industrial machinery business, wehave developed high durability rolling bearings with a Condition Monitoring System unit for use with large offshore
wind turbines. We also have developed new products like tapered roller bearings sensors attached for detecting
minute quantities of metallic dust for construction machinery, etc. In applications for rolling stock, aircraft, robots,
and other machines, we are working to reduce the torque demand, size, weight and environmental load of bearings.
In addition to rolling bearings, we develop, manufacture and sell sliding bearings made of sintered and resin,magnetic products made of magnetic material. These strengths are applied to developing next generation products
such as, magnetic cores that support the high current and frequency of electric vehicle power units, and also we
use these strengths developing module products and system products, that differentiate us from competitors.

Message from the director of R&D
As major theme of our Medium-term Management Plan “NTN 100,”
we are developing business in new areas, energy business, EV business,robots-related business, and service, solution business. Regarding theenergy and EV businesses, new divisions were created in April 2016. In the
robot-related and service, solution businesses, we are promoting productdevelopment and have begun developing business.
Till now, most of our business has been B-to-B dealings centered on bearingsand driveshafts. However, going forward, we will be taking our core technologies
as a bearing manufacturer to new depths and levels of enhancement in order tofurther improve the performance and quality of our core products, expand into
the B-to-C realm, and make feel safe and reassured.

Yoshinori Terasaka
Managing Director

37

various demands of the global society
Global Four-region R&D system
Within our global R&D system, ourR&D bases in Japan conduct all
operations concerning advanced
technologies and guide activities forthe world’s markets. Our European
R&D bases handle research anddevelopment for locally produced
products. Efforts are also underway
in each Japan, Americas, Europe andAsia to expand sales and speed up
customer support via engineering
services, certification evaluations,marketing studies and analyses.

Japan
ADVANCEDTECHNOLOGY R&D
CENTERNTN R&D CENTER
INDUSTRIALTECHNICAL CENTER

PRODUCTION ENGINEERING
R&D CENTER

Design data/Testing data/
Experimental data/Production
technology data/Customer project
data etc.

EuropeAmericas

Share database information

NTN Automotive Center

China

NTN-SNR R&D Center

NTN China TechnicalCenterProduct development and modularization
We develop “module products” by combining bearings,
CVJs and other standalone products with their
peripheral components, sensors, actuators or otherparts. We then integrate these modules with mechatronics and control technologies to create “systemproducts” out of them. Modularization and systemization not only reduces the number of parts, size andMotorized linear modules

weight but also enhances the added-value of products
by reducing the customer’s assembly man-hours intheir manufacturing process. New typical products
are Electric Motors and Actuators for EVs andHybrid Street Lights that very efficiently generateenergy for industry machinery applications.

Tapered Roller Bearings with an
early failure detection function

Wind Doctor™

Hybrid street
light

Bearing unit

SystemBearing

Module
Unit
Standalone
product*

Driveshaft

Hub bearing*

Clutch for seat lifter

Two Motor On-board Drive
SystemElectric Motor andActuator

New In-wheel Motor
System* Photos are cross-sectional models of products.

“Green Power Park” – an energy circulation model of natural energy

FOCUS ON

We are promoting the natural energy business as major theme of our
Medium-term Management Plan “NTN 100.” As one part of that, thecompany established a “Green Power Park” on the grounds of theAdvanced Technology R&D Center in Kuwana, Mie Prefecture, as anatural energy circulation model that uses wind, water and solar power togenerate electricity for EVs, vegetable farms and other loads. The amountof power generated, stored and consumed by each unit is constantly
monitored and controlled in a control room as a low-carbon proposal forsociety. The facility is used for our in-house testing and is open to
students from elementary to high school so that it can be useful for
conserving energy and teaching about the environment.

38

Activity
SectionStrengthening Governance
We are enhancing systems that increase the efficiency andsoundness of our businesses.
Number of Board of Directors
meetings held in the Fiscal Year
Ended March 31, 201618

Ratio of non-Japanese top
executives at overseas subsidiaries*1

30%

Number of legal information bulletins

39

Customers
We are striving to increase customer satisfaction, startingwith the maintenance and improvement of product quality.
Quality management system
certification rate*2

100%

137

Promoting fair trade by developing business partners
both inside and outside Japan.

22

39

P.55-56

Number of participants in
Number of TQM activities implemented
specialized quality education courses

Business Partners

Number of business sites that had
independent subcontractor audits

P.41-50

Number of bases that had
Subcontract Act workshops given
by administrative departments

18

Micro hydro turbine

223

P.57
Rate of response regarding
conflict minerals

100%

Vegetable farm

Shareholders and Investors

P.58

Committed to disclosing accurate information in a fair
and timely manner.
Dividend payout ratio(consolidated)

Annual cash dividend per share

35.4% 10 yen

Number of accounting and businessbriefing sessions held by top
management (hosted by NTN)

5

Employees
We strive to maintain a welcoming work environment that
demonstrates respect for diversity and human rights.
Rate of workplace incidence(that require time off)

Number of female managers

0.33% 26

Employee three-year retention rate

94%

Local Communities
We are actively undertaking a wide range of activities that
contribute to society at our business sites around the world.
Number of blood donors*1

Number of cleaning participants*1

P.59-62

P.63

Number of participants in social
contribution activities*1

1,695 3,290 556
Environmental Activities
We are working to protect the environment, by developing
environmentally-friendly products and reducing environmental impacts.
Reduction of CO2 emissions(Japan)Reduction of CO2 emissions(Overseas)

P.64-75

Recycle rate
(Japan)275,000 tons 330,000 tons 99.9%*1 Extent covered: NTN Group*2 Extent covered: consolidated subsidiaries involved in manufacturing (excluding bases which havenot started mass-production)

Control room

EV

Background photograph: Green Power Park
See P.38 for details.

40

G

overnance

Strengthening Governance

We are aiming to become “A company where all employees around the world behave inaccordance with the corporate philosophy, comply with regulations and contribute to the
local community” as part of “Our vision” raised in the new Medium-term Management
Plan “NTN 100,” and are working on enhancing corporate governance to achieve this goal.

Philosophy and System ofCorporate Governance
We make the implementation of highly efficient
corporate governance a top management priority andwe build systems that are compatible with our
corporate governance code to make management
more efficient and robust.

We also strive to communicate with shareholders,investors, and other stakeholders by providing
information in a prompt and accurate manner. This
ensures more transparent management.

Corporate Governance Structure
Shareholders’ Meeting
Assigns/Removes
Accounting Auditors(Audit firm)

Cooperates

Assigns/Removes
Audit & Supervisory
Board

AuditsAssigns/Removes
Board of Directors

Committees
CSR Committee

Business Strategy
Committee

Risk Management Committee

Executive Committee

Compliance Committee
Fair Trade Monitoring Committee

Divisions, Subsidiaries

Board of Directors

CSR Committee

The role of the Board of Directors is to make decisions relating tofundamental business policies, statutory matters, important management 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. Moreover, with the goal of improving the function of the Board of
Directors, we are analyzing and evaluating their effectiveness.

Implements various measures aimed at effectively promoting CSR
activities.

Audit & Supervisory Board

Risk Management Committee
Identifies and analyzes the various risks that the NTN Group faces,and develops measures for preventing and managing those risks. In
addition, it is advancing Business Continuity Plans (BCP) andBusiness Continuity Management (BCM).

We have four Audit & Supervisory Board Members, two of who arestanding Audit & Supervisory Board Members (with three of the four
being outside Audit & Supervisory Board Members). The Audit &Supervisory Board Members are responsible for auditing the performanceof duties by members of the board. Audit & Supervisory Board Members
attend board meetings and other important meetings and express theiropinions as part of their efforts to maintain and improve the transparency
and fairness of the Company’s management supervision system.

Compliance Committee

Business Strategy Committee

Chaired by the NTN President, the committee is focused on comprehensive compliance with the Antimonopoly Act and Subcontracting
Act, and exerts practical control to ensure fair-trading by providing
advice regarding training and educational activities.

Discusses fundamental business policies and important management
strategies, with meetings held twice per month.

Executive Committee
We have introduced the Executive Officer System to enable swift
decision-making and business execution. Reviews of monthly performance are conducted by the Executive Committee, comprising Directors,
Audit & Supervisory Board Members and Executive Officers.

41

Compensation Advisory Committee

Oversees and provides advice for taking a preventative approach todeveloping internal rules, organizing training and educational activities,
and monitoring activities for global compliance risks other than thoserelated to the Japan Antimonopoly Act (Antimonopoly Act) and the Act
against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (Subcontracting Act).

Fair Trade Monitoring Committee

Compensation Advisory Committee
In order to increase the motivation of directors to improve mediumterm results and contribute to increasing shareholder value, we
adopted a performance-based stock compensation program for our
directors. For this purpose, we also established a Compensation
Advisory Committee, which has outside officers as over half its
members in June 2016.

Strengthening Management Auditing Functions
We employ a corporate auditor-based governancesystem in which three of the four Audit & Supervisory
Board Members are from outside the company. Outside
Audit & Supervisory Board Members bring specialized
knowledge in areas such as finance, management andlaw, and they conduct audits in collaboration with thein-house standing Audit & Supervisory Board Member
and the Internal Audit Department.
The Board of Directors, which includes twooutside directors, makes decisions on importantmatters and oversees business execution, and Audit& Supervisory Board Members 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.
All outside directors and outside Audit & Supervisory Board Members (5) are designated and registered as Independent Directors/Audit & Supervisory
Board Members in accordance with the regulations
set in place by the Tokyo Stock Exchange.
We also employ the Executive Officer System toensure swift decision-making and business execution.
The Board of Directors, based on set regulations,
makes decisions on the selection and dismissal of
representative directors and directors with special
titles, as well as the designation and cancellation ofduties delegated to directors. After director candidates are decided on at the Board of Directors, they
are nominated and voted in at Shareholders’Meeting. This ensures transparency and fairness.

Executive Compensation
The amount of compensation for executives has an
upper limit set by a decision of the Shareholders’Meeting. The compensation of directors is based on
the regulations of the Board of Directors with
reporting from the Compensation Advisory
Committee and determined by a decision of theBoard of Directors. The compensation of directors iscomprised of “base compensation” and “annual
incentives (bonuses),” and we have adopted a new
performance-based stock compensation program
additionally. On the other hand, Audit & Supervisory
Board Members decide their compensation after
consultation at their Board.

Internal Control

The Internal Audit Department is responsible forinternal audits, and has been established as anindependent auditing organization to audit businessexecution throughout the NTN Group.
To further enhance internal control throughout the
NTN Group, the Internal Audit Department, Five
Overseas Offices of the General Manager and auditors
at subsidiaries in Japan work together to audit subsidiaries and focus on strengthening internal control.

Compliance
We define compliance as not only abiding by laws
and regulations, but also complying with all social
norms and rules, and operates a system that ensuresthorough compliance in the global scope.

Compliance (Business Ethics) Promotion
Activities Establishment of CSR Headquarters
We recognize that thorough compliance is one of
the most important issues to address, and is
improving systems that ensure compliance withregulations and laws.
In April 2014, departments that covered efforts
related to corporate social responsibility (CSR
Department, Legal Department and Fair Trade
Promoting Department) were consolidated toestablish the “CSR Headquarters” that organizes
global activities and ensures that the NTN Group
maintains compliance and fulfills its corporatesocial responsibilities.
Within the CSR Headquarters, the CSR
Department chiefly covers risk management, theLegal Department covers compliance and the Fair
Trade Promoting Department ensures compliancewith the Antimonopoly Act, and all three departments work together closely to implement various
policies to ensure that we fulfill our corporatesocial responsibilities.

CSR Headquarters
CSR Department

Legal Department

Fair Trade Promoting
Department

Risk management

Compliance

Compliance with
Antimonopoly Act

In line with the basic framework for internal control as
outlined in “Standards and Practice Standards forManagement Assessments and Audits Concerning
Internal Control Over Financial Reporting (Council
Opinions),” published by the Business Accounting
Council, we have developed a basic policy for thedesign of internal control. Based on this policy, we
have made designing and implementing an internal
control system one of the priorities of our risk
management and compliance.

42

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overnance

In-house Rules Set for Compliance Promotion
Activities
In April 2015, we established “Compliance Promotion
Activities Rules” as our fundamental rules for activities topromote the compliance of the NTN Group globally.
In accordance with these rules, we launched aCompliance Committee in April 2015. In addition toconvene this committee regularly, the details of theiractivities are reported to the Board of Directors.

Activities of the Compliance Committee
From among the key management risks examined andset by the Risk Management Committee, theCompliance Committee handles the compliance risks
that might result in legal violations, prioritizing themsuitably and establishing and implementing measures toreduce them.
At present, responding to the recent global trend,
which includes a tide of corruption prevention worldwide
and the strengthening of various corruption regulations
and exposure efforts by authorities in various countries,
the Risk Management Committee has set violations oflaws related to bribery as the key type of management
risk second to the risk of Antimonopoly Act violation.
The Compliance Committee is undertaking education
and awareness-raising activities for the establishment
and implementation of rules within the NTN Group as
measures to prevent the violation of laws related tobribery. In the China region, the committee held anassembly workshop for executives of local subsidiaries
in July 2016. Based on the most recent legal trends, thecommittee sought to stimulate caution in daily businessactivities from the perspective of preventing bribery, andalso disseminated information about the bribery
prevention regulations that are planned to be executedand put into use in the China region during the first halfof fiscal 2016. Furthermore, bribery prevention regulations to be applied within Japan are also planned to be
executed during fiscal 2016, so the committee isconducting briefing sessions and training activities forrelevant divisions in Japan. With consideration for theCompliance Promotion Activity Structure
Board of Directors

Compliance Committee

laws, social and cultural backgrounds and businessconditions of other countries, the committee also plansto advance training activities and the establishment ofrules for other regions.
Moreover, from the perspectives of preventing“fraudulent accounting,” which leads to various
problems, as a unified group, and maintaining andimproving suitable working environments, theCompliance Committee is advancing efforts related to
the key management compliance risks of fraudulent
accounting and “violations of laws related to labor.”
The committee is also advancing these efforts in ourdomestic divisions and our subsidiaries in Japan andabroad, coordinating with the compliance promotion
activities supervisors of every domestic business site
and the Internal Control Sections of the Five Overseas
Offices of the General Manager.

Cooperative Efforts with the Internal Control
Sections of the Five Overseas Offices of theGeneral Manager
We established an Internal Control Section at each of its
Five Overseas Offices of the General Manager with theaim of developing and enhancing a system for ensuring
compliance at companies located overseas.
The Internal Control Sections cooperate with therelevant departments of the CSR Headquarters for each
topic related to the company’s social responsibility to
implement policies for each region and country to suitthe particular circumstances and characteristics there.
This system allows the policies developed by NTN for
corporate social responsibility to be shared globally
between group companies, while also implementing
individual policies on a global scale.
In January 2016, employees responsible for these
efforts gathered in Japan from every region and held
CSR Global Meeting, following the first in the previous
year. (See P.46 for details.) Compliance is an importantelement of CSR, so during this meeting we shared
information related to compliance promotion activities
conducted in every region in fiscal 2015. In addition,

Collaborating System with Internal Control Sections
Japan
Europe/South America
Internal Control
Section Office ofGeneral Manager–
Europe & Africa
RegionSubsidiaries

Compliance promotion activities
supervisors of each of NTN
and domestic subsidiaries

Internal Control Section at each of
the Five Overseas Offices of
the General Manager

Compliance divisions at
our overseas subsidiaries

Executives and employees at NTN
and domestic subsidiaries

43

Executives and employees atour overseas subsidiaries

India
Internal Control
Section Office ofGeneral Manager–
India & West Asia
RegionSubsidiaries

CSR Headquarters
Divisions

Subsidiaries

Information Exchange
Human Resources
Interaction
ASEAN
Internal Control
Section Office ofGeneralManager–ASEAN &Oceania Region
Subsidiaries

North America
Internal Control
Section Office ofGeneralManager–Americas
RegionSubsidiaries

China
Internal Control
Section Office ofGeneral Manager–
China Region
Subsidiaries

we had vigorous discussions about the creation of rules,
education and awareness-raising activities, monitoringand other issues relevant to the future advancement ofCompliance Committee efforts overseas, while considering the current conditions of each region.

Education and Awareness-raising Activities
Education and awareness-raising activities are continually being conducted at all business sites throughout
the NTN Group with the aim of improving broadranging and generalized knowledge and awareness
related to compliance. At business sites and groupcompanies in Japan, compliance promotion activities
supervisors are mainly in charge of creating educational plans and holding training by level, topic or othercategories for executives and employees.
In January 2016, as a new effort to realize thefurther expansion of compliance promotion activities
within the NTN Group, we held an assembly training forthe compliance promotion activities supervisors of ourbusiness sites and group subsidiaries in Japan. During
this training, the supervisors shared the knowledge andideas that had been gained at each business site fromeducation and awareness-raising activities. In addition,
they exchanged opinions about, for example, thetraining themes and methods that were thought torequire enhancement in the future and investigatedthese topics together.
Self-learning by distributing textbooks and comprehension tests through e-learning are also held every
year for employees promoted to project managers inparticular, to ensure thorough compliance throughout
the workplace. To ensure that this knowledge isingrained, employees are required to repeat these tests
until they reach a passing level.

Compliance information database

The latest information is also provided via theintranet compliance database and legal information
database, which outlines the latest trends related tocompliance and various regulations, as well as casestudies on violations of such regulations, all as a meansof improving awareness amongst employees.
Group companies overseas are also focusing theirefforts on compliance training. This is mainly coveredby the Internal Control Sections, which conduct
education and awareness-raising activities to suitregional characteristics and requirements while
conforming to NTN policies.
Moreover, in order to evaluate the results ofeducation and awareness-raising activities related tocompliance, we are continuing to implement awarenesssurveys once per year. These results are useful in
expanding our future promotion activities.

Group training for supervisors

Helpline
We have set up internal and external helplines to offer
consultation on matters related to compliance.
NTN’s “Helpline Management Rules” were revised
to ensure compliance, so that calls to the helpline
related to compliance could be reported to theCompliance Committee and calls related to competition laws (Antimonopoly Act, Subcontract Act) to the
Fair Trade Monitoring Committee. Based on faithfuladherence to confidentiality duties related to theconsultation, this system allows information included inwhistle-blowing to be utilized by both committees.
In addition to the helpline, we have also arranged adirect number for consultations with the Fair Trade
Promoting Department.

Legal information
database

Compliance/Helpline Management System
Chief Management Officer

Chief Management Officer

Chief Management Officer

Compliance Committee

Helpline Management
Department
Legal Department

Fair Trade Monitoring
Committee

Director in charge ofLegal Department

Director in charge ofLegal Department

Internal Help Desk

President

External Help DeskNTN Group company executives, employees, business partners, etc.

44

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overnance

NTN’s Efforts to Comply
with the Antimonopoly Act
The NTN Group recognizes that proper compliance is
one of the most important issues to address, and is
improving systems that ensure compliance withregulations and laws.
In June 2012, NTN and former executives
received an indictment filed by the Tokyo District
Prosecutors Office (TDPO) on suspicion of having
violated Japan’s Antimonopoly Act in relation to thedomestic sale of bearings. In March 2013, wereceived 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’sviews of the facts, NTN requested for resorting tohearing procedures beginning in September of thesame year. Furthermore, we appealed the guilty
judgment issued by the Tokyo District Court in acriminal proceeding in February 2015, but we
received from Tokyo High Court a judgment rejecting
our appeal in March 2016. NTN and the former
executives have made a final appeal to the Supreme
Court of Japan.
Overseas, consolidated subsidiaries in Korea
and other regions have been subject to investigations by the authorities in those regions. NTN and
its consolidated subsidiaries in the U.S. andCanada are defendants in a number of class action
suits for suspected price-fixing of bearing sales
with other businesses.
In February 2016, a lawsuit was filed against eightbearing manufacturers, including NTN, in The United
Kingdom Competition Appeal Tribunal. It sought thejoint payment of damages to Peugeot S.A. and its
total 18 group companies.
NTN or its affiliated companies may be filed thelawsuit similar to the abovementioned lawsuit etc.
We at NTN express gratitude to all relevant
personnel including shareholders for their understanding and their professional efforts during thepast period.
The NTN Group will continue strengthening
systems in place to ensure thorough compliancewith laws and regulations, social norms, ethics,
and in-house regulations on a global basis, tofurther drive business activities through fair andsincere competition.

The construction of systems to ensurecompliance with the Antimonopoly Act
To ensure compliance with the Antimonopoly Act
and the Subcontracting Act, activities are chiefly
conducted by the “Fair Trade Promoting
Department” under the supervision of the “Fair Trade
Monitoring Committee.”
The CSR Headquarters that we established in2014 covers the efforts of departments related tocorporate social responsibility, including the Fair
Trade Promoting Department, and ensures that theentire NTN Group complies with relevant regulations
and implements social corporate responsibility. It also
works more closely with the “Internal Control
Sections” established within Five Overseas Offices of
the General Manager to develop and enhancecompliance systems overseas.

Continuous compliance activities for the
Antimonopoly Act
The Fair Trade Promoting Department covers internal
training, and also self-audits related to compliancewith the Antimonopoly Act and mandatory applications submitted in advance to prevent and monitor
contact with competitor companies. This systemallows the overall state of contact with competitor
companies to be monitored.
Overseas, we work with the Internal Control
Section in each region to develop systems fortraining and advanced applications, as well as
self-audits organized by each region, and we areredesigning the system to ensure compliance withthe relevant competition laws in each region.
The NTN Group will use these various
systems to conduct continuous education andawareness activities that strengthen overall
control over our compliance.

Training on strict compliancewith the Antimonopoly Act

45

Strengthening Global Implementation

China

Europe/South America

North America

NTN Corporation
CSR
Headquarters
Internal Audit
Department
India/
West Asia

ASEAN/
Oceania

Five Overseas Offices of
the General Manager
Internal Control Section
Subsidiaries

CSR Global Meeting
We hold CSR Global Meeting with the goal of promoting a variety of CSR activities,
including establishing and strengthening compliance systems for the NTN Group
with global information exchange and personnel interaction.
CSR Global Meeting

1st Meeting: Build Foundation

2nd Meeting: Strengthen Connection

3rd Meeting: Step Together for Transformation

In 2015, in order to build the foundation
for promoting CSR activities globally, we
gathered the Internal Control Sections
from every region to our headquarters andexplained our plans for making efforts on
the global scale. This was followed bystatus reports from each internal control
section. By sharing this information, wewere able to identify and investigate
issues that require handling.

In 2016, progress reports were given on the year ofefforts made in each region. The meeting did not end
with just presentations, however. By providing even moretime for mutual discussions than the last meeting,vigorous exchanges of opinions occurred and we further
strengthened the horizontal connection across national
borders. As with the previous meeting, we identified andinvestigated issues that should be handled on the global
level, and efforts for them are being made in every
region. Although this meeting is held once a year, thosein charge from every department supervise the progresson these issues whenever necessary.

In 2017, focusing on the “transformation” in the NTN
100 plan, the theme of the meeting will be to advance
together as a unified corporate group. Moreover,together with each location, we are currently applying
creativity and making efforts related to the contents ofthe meetings and how they are conducted.

Participation in “United
Nations Global Compact”
In 2015, we endorsed (joined)
the United Nations Global
Compact, an international
initiative for developing a global
framework for sustainable
worldwide growth with the aimof becoming a company trusted
on the international stage.

The Ten Principles of the United Nations Global Compact
Principle 1

Business should support and respect the protection of internationallyproclaimed human rights; andPrinciple 2

make sure that they are not complicit in human rights abuses.

Principle 3

Business should uphold the freedom of association and the effective
recognition of the right to collective bargaining;

Principle 4

the elimination of all forms of forced and compulsory labour;

Principle 5

the effective abolition of child labour; andPrinciple 6

the elimination of discrimination in respect of employment
and occupation.

Principle 7

Business should support a precautionary approach toenvironmental challenges;

Principle 8

undertake initiatives to promote greater environmental responsibility;andPrinciple 9

encourage the development and diffusion of environmentallyfriendly technologies.

Principle 10

Businesses should work against corruption in all its forms, including
extortion and bribery.

Human Rights

LabourEnvironment

Anti-Corruption

46

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overnance

Philosophy and System of Risk Management
Setting Key Management Risks to Handle with
the PDCA Cycle

Pursuing Risk Management
We have developed the “Risk Management Policy”
and established “Risk Management Rule” which set
out the systems and standards to follow in case ofan emergency.

Risk Management Policy
NTN Corporation hereby establishes the basic policyof the NTN Group to precisely manage the risk
prevention and to quickly respond at the outbreak ofvarious risks (i.e., the events that may prevent theaccomplishment of business purpose and theoperation of business) surrounding the business of
the NTN Group.
1 We shall make an effort to eliminate or reduce thevarious risks to the stakeholders, such as
customers, suppliers, shareholders, investors andlocal communities, and executives andemployees.
2 We shall maintain the risk management system forprompt and proper measures against the risks
and implement the company-wide and generalrisk management.
3 We shall implement the risk findings, risk analysis,risk assessment and risk measures according to
the risk management plan and take proper
preventive measures.
4 In the case of risk arising (emergency), we shallkeep to minimize the damage expansion by initialrisk countermeasures including the proper
information transfer to inside and outside theCompany.
5 We shall make an effort to keep and develop thestable business by monitoring the proper
structure and implementation of the risk
management on a daily basis.

We established the Risk Management Committee as
an advisory body for managing risks. The Risk
Management Committee meets twice each fiscal year
and reports to the Board of Directors about thestatus of execution for corrective measures andimprovement measures related to risk management.
This committee conducts comprehensive
management of risks for the entire company andidentifies and analyzes risks. Based on this, it takes
measures to prevent key management risks with highlevels of impact and high frequencies and responds
to related dangers by executing countermeasureplans and result follow-ups.
Specifically, for risks that are subject to risk
management, we implemented a survey of officers
and division heads and identified the risks that they
foresee as posing enormous damage to company
businesses from the management perspective. We
set these as the NTN Group’s risks.
In addition, we located all of these set risks on arisk map (level of impact × frequency of occurrence),and selected the risks with the greatest impacts on
business and highest rates of occurrence. Fromamong these, taking the current status of theircountermeasures and the cost-effectiveness ofcountermeasures into account, we have set thehighest priority risks as key management risks.
Furthermore, at the committee meeting held in
October 2015, the decision was made to quantify the
progress levels and manage target levels for them.
Risk Matrix (Approach to risk mapping)
ImpactHigh

Risk Management System
Board of Directors

Identify key
management risks<Risk Management Committee>
Chairman

Chief Management Officer(Director in charge of risk management)

Risk Management
Department(CSR Department)

Chief Management Officer(Director in charge of risk management)
Vice-Chairmen Risk Management Manager
Emergency Management Manager
Members
Promotion Division Supervisors

Emergency
Management Department(General Affairs & Environmental
Management Department)

Low

Emergency
Management
CenterFrequency
High

Low

Philosophy and System of Risk Management
Promoting Divisions

Board of Directors
Risk Management
Committee
Promoting
Divisions47

Key Management Risks(Fiscal Year Ended March 31, 2016)
1 Violation of Antimonopoly Act
2 Violation of bribery-related laws
3 Window dressing settlements / fraudulent

BCP and BCM Cycles
Business Continuity Plan
(BCP)

accounting

4 Shortage of human resources
5 Violation of labor-related laws

Review andimprovement of plans

Education and training

6 Earthquakes, eruptions and tsunamis
7 Nuclear power accident

Monitoring

8 Fires and explosions
9 Operation stoppage due to disasterdamage at our facilities

10 Leakage of R&D information

Business Continuity Planning (BCP) andBusiness Continuity Management (BCM)
We are advancing BCP and BCM by continuously
striving to increase our abilities to respond to risks
and recover from them so that, even if disasters andother events that could disrupt business continuity
should occur, we can assure safety and prevent theinterruption of crucial work or resume such work assoon as possible.
Undertaking the advancement of BCM, we havecompleted the establishment of a BCP Documentthat includes NTN Domestic Subsidiaries with anticipated damages and a review of the cooperative
framework through deliberations of the Risk
Management Committee.

Global Risks Management
We are advancing the comprehensive managementof risks for the entire company. We have built a
database to manage global risks, and we are working
on measures for new risks.

Global Risk Management Database

From the Chief Management Officer (Director in charge of Risk Management)This is the third fiscal year of our CSR Headquarters, which we establishedin April 2014 to unify our CSR Department, Legal Department and Fair Trade
Promoting Department. For risk management in our company, we haveestablished countermeasure plans for the various risks that affect ourbusiness, and each of the promoting divisions is handling them. These risks
include large-scale disasters, environmental issues, workplace environments, occupational health and safety, bribery, fraudulent accounting andwindow dressing settlements.
By not limiting coverage to just our company and related subsidiaries inJapan but also including related subsidiaries overseas, we are striving to
improve our management level by advancing risk management on the
global scale.
Moreover, the expansion of BCP and BCM is a long-term issue for me as
the Chief Management Officer (Director in charge of Risk Management). I willcontinue to advance these efforts with “human life first, rapid recovery andbusiness continuity” as the fundamental policy.

Keiji Ohashi

Managing Director

48

G

overnance

Officers (As of June 24, 2016)

12

11

9

7

5

Directors
1

Hiroshi Ohkubo

2

Aftermarket Business
HeadquartersNTN KOREA CO., LTD.
Reason for being elected
He has operational experience in areas
such as Business Divisions for theaftermarket and Overseas Divisions
and broad knowledge based on theseachievements.

He has operational experience in areas suchas the Production Division and the Human
Resources Division and broad knowledge
based on these achievements.

5

Keiji Ohashi

Fukumatsu Kometani
Executive Director

Reason for being electedManaging Director

6Managing Director

Hideaki Miyazawa
Managing Director

Research, Engineering
Quality Management Department
Americas Region

Corporate General Manager, Finance
Headquarters
General Affairs, Environmental
Management Department
CSR Headquarters

Corporate General Manager,
Automotive Business Headquarters
Europe & Africa Region
Electric Module Products Division
EV Module Division

Reason for being elected

Reason for being elected

Reason for being elected

He has operational experience in areas
such as the Research Division, Engineering
Division and Business Division for the
automotive market and broad knowledge
based on these achievements.

He has operational experience in areas suchas the Finance Division and the General
Affairs Division and broad knowledge basedon these achievements.

He has operational experience in areas
such as Divisions for the automotive
market and Overseas Divisions and broad
knowledge based on these achievements.

Itsuji Goto

Managing Director

8

Hiroshi Nakano
Director

Human Resources
Cost Planning Department
China Region

Corporate General Manager, CSR
Headquarters
Internal Audit Department

Reason for being elected

Reason for being elected

He has operational experience in areas
such as the Finance Division and Overseas
Divisions and broad knowledge based onthese achievements.

He has operational experience in areas suchas the Legal Division and broad knowledge
based on these achievements.

10 Takehiko Umemoto
Director

49

3

Green Energy Products Division
Human Resources
Project Director, Driveshaft Business
Strengthening ProjectWith operational experience in areas suchas the Finance Division and Overseas
Divisions and broad knowledge based onthese achievements, he was selected toaim for the achievement of the Mediumterm Management Plan NTN 100 and thesustainable growth of corporate value.

7

Hironori Inoue

Executive Vice President
Representative Director

Reason for being electedYoshinori Terasaka

11 Toshinori Shiratori
Director

9

Hidefumi Tsuji
Director

Production
Procurement, Logistics
Department
ASEAN & Oceania, India &West Asia Region
Reason for being elected
He has operational experience in areas
such as the Production Division andOverseas Divisions and broad knowledge
based on these achievements.

12 Kazuki Kawashima
Director

Quality Management Department
Corporate General Manager,
EV Module Division
Deputy Corporate General Manager,
Automotive Business Headquarters

Corporate General Manager,
Corporate Strategy Headquarters
Project Director, Aftermarket Business
Strengthening Project

Corporate General Manager,
Industrial Business Headquarters
Composite Material Product
Division

Reason for being elected

Reason for being elected

Reason for being elected

He has operational experience in areas
such as the Human Resources Division and
the Corporate Strategy Division and board
knowledge based on these achievements.

He has operational experience inareas such as Business Divisions forthe automotive market and Business
Divisions for the industrial machinery
market and board knowledge based onthese achievements.

He has operational experience in areas
such as Business Divisions for the industrial
machinery market and technical divisions
and board knowledge based on theseachievements.

1

Outside Directors

President
Representative Director

4

3

13 Akira Wada

Outside Director
Reason for being elected
He has broad knowledge basedon extensive experience in the
management of other companies. In the
future, by securing validity and legalityof management through supervision ofmanagement of the Company from an
independent standpoint and receiving
appropriate advice and suggestions
utilizing this experience and knowledge,
etc., the Company aims to strengthen
management decision-making functionsin the Board of Directors.

14 Noboru Tsuda
Outside Director

Reason for being elected
He has broad knowledge basedon extensive experience in the
management of other companies. In the
future, by securing validity and legalityof management through supervision ofmanagement of the Company from an
independent standpoint and receiving
appropriate advice and suggestions
utilizing this experience and knowledge,
etc., the Company aims to strengthen
management decision-making functionsin the Board of Directors.

2

4

6

8

10

13

14

Audit & Supervisory
Board Members

Executive Officers

Kouji Kawahara

Eiichi Ukai

Natsuhiko Mori

Tetsuya Sogo

Isao Ozako

General Manager, ASEAN &Oceania Region
General Manager, India &West Asia Region

Corporate General Manager,
New Product and Business
Strategic Planning Headquarters
Research, Engineering
Composite Material Product
Division
Green Energy Products Division

General Manager, Americas
RegionPresident, NTN USA Corp.

General Manager, China
RegionPresident, NTN (China)
Investment Corp.
President, Guangzhou NTNYulon Drivetrain Co., Ltd.

Isao Koiwai

Koji Kametaka

Takayuki Matsuo

Yoshinobu Akamatsu

Production Strategy
Department
Deputy Project Director andProject Leader, Driveshaft
Business Strengthening
Project

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

Deputy Corporate General
Manager, Corporate
Strategy Headquarters

Deputy Corporate General
Manager, Automotive
Business Headquarters
General Manager, Iwata
Works

Etsu Harima

Pete Eich

Makoto Okasaka

Jianping Zhu

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

Director and Vice Chairman,
NTN Bearing Corp. of America

Deputy Corporate General
Manager, Automotive
Business Headquarters

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

Alain ChauvinEiichi Nakamizo

Kazuki Hagihara

Katsuaki Miyake

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

Corporate General Manager,
Aftermarket Business
Headquarters
Deputy Corporate General
Manager, Industrial Business
Headquarters
Deputy Project Director,
Aftermarket Business
Strengthening Project

Deputy General Manager,
Americas Region
Director and Vice Chairman,
NTN Bearing Corp. of
America

Deputy Corporate General
Manager, Automotive
Business Headquarters
General Manager, Okayama
Works

Masaki Egami

Koji Ishikawa

Kenji Nono

Satoshi Ueda

General Manager, New
Product Development R&D
Center

General Manager, Green Energy
Products Division

General Manager, Human
Resources Department
General Affairs, Environmental
Management Department
Global Human Resources
Development Department

Deputy Corporate General
Manager, Industrial Business
Headquarters
General Manager, Kuwana
Works

Masaaki Yamamoto Herve Brelaud
Executive Officer

Executive Officer

Ikuo Watanabe

Masayuki Nishiguchi

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

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

Deputy Corporate General
Manager, Automotive
Business Headquarters
General Manager, Business
Planning Department

Deputy Corporate General
Manager, Aftermarket
Business Headquarters

Standing Audit & Supervisory
Board Member(Outside)

Yusuke Iyama

Senior Executive Officer

Standing Audit & Supervisory
Board Member

Tadao Kagono

Audit & Supervisory Board
Member(Outside)

Ryo Kawakami

Audit & Supervisory Board
Member(Outside)

Senior Executive Officer

Executive Officer

Executive Officer

Executive Officer

Senior Executive Officer

Senior Executive Officer

Executive Officer

Executive Officer

Executive Officer

Senior Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Senior Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

50

S

ocial

Contributing to Society

Creating value for all of our stakeholders, including customers, business partners, shareholders, investors, employees and local community members, is indispensable for the
medium- to long-term growth of our company. As a business that grows together withsociety, the NTN Group is advancing proactive CSR activities.

Corporate Philosophy“We shall contribute to international society through creating new technologies and developing new products.”
For New Technology Network: Networking The World With New Technology
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 basedon 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.

Framework of Corporate Philosophy
Basic corporate values.
Show intended directionof corporate activities.

Corporate
Management
Policies

Corporate
Philosophy

Basic Policies

Employee Codeof Conduct

Business Codeof Conduct

Guideline to encourage
aggressive actions

Guideline forcompliance actions

1. Policy on Control of 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

We at NTN clearly recognize that, based on clear strategies for being competitive, producing efficiently, creating markets, extending sales and generating
profits are indispensable for the realization of our corporate philosophy. Beyond this, however, as a good corporate citizen, we seek to be a business thatis recognized by society for more than just pursuing profits. We also seek to be a business entity that, for employees in particular, provides the pride offulfilling honorable roles which contribute to society and that is a place for all individuals to pursue self-realization, not just for making a living.

CSR Policy
1

2
3

4

51

Legal compliance / Policy for activities: We shall comply
with laws and regulations, endeavor to engage in faircompetition, and carry out our business activities in an
honest and ethical manner.
Customers: We shall strive to develop new technologies andnew products, as well as to provide safe and reliable products.
Business partners: We shall engage in fair and freecompetition, and at the same time establish excellent
partnerships with our business partners.
Stockholders / Disclosure of information: We shall work todevelop this corporation and increase stockholder return,while at the same time communicating broadly with society
and actively disclosing information.

5

6

7

8

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.
The environment: With ample consideration to preserving the
global environment and protecting the ecosystem, we shallwork toward the creation of a sustainable, progressing society.
Society: We shall make every effort to interact meaningfully
with society on a local level, and to engage in activities that
contribute to society.
International activities: We shall, as a matter of course, obey
all international rules as well as the laws of each country andeach region that we operate in; we shall also respect local
cultures and practices and contribute to local development.

CSR Management
CSR as part of framework of corporate
philosophy
Employee Code of Conduct /Business Code of Conduct
We developed the “Employee Code of
Conduct,” which set out guidelines for
conducting CSR activities, and the“Business Code of Conduct,” which all
officers and employees must abide by.
We have distributed the CSR
Guidebook and a portable card withthis information to all employees of the CSR Guidebook
NTN Group in Japan. In addition, for
our corporate philosophy that is the foundation of these,
we also have distributed corporate philosophy cards andposters to employees around the world in 13 languages. In
these ways we are encouraging CSR activities efforts
during daily work.
New employees are provided with training together
with the guidebook and the cards. These codes are readout aloud during morning meetings and other opportunities, to ensure that employees are fully aware of them.

Corporate philosophy
poster on a bulletin board

implementing efforts to improve CSR. The “CSR
Committee” is chaired by the Manager 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 that span
all divisions.
We implement CSR activities throughout the NTNGroup by appointing CSR managers and staff in chargeof CSR at all of our business sites and at the NTNGroup companies in Japan.
In the NTN Group, along with advancing and focusing
CSR activities globally, in order to advance toward theachievement of our medium-term business plan targets,for each department we are setting key performanceindicators (KPI), which measure concretely the progressof their results toward their business targets. By quantifying targets and progress, we are working to make theprogress visible for each department.

Employee Code of Conduct
1

We respect social ethics and act as goodmembers of society.

2

We have noble ambitions and always makeefforts to brainstorm and achieve the set target.

3

We accept changes, have broad vision and act
voluntarily.

4

We deepen mutual understanding andenhance the vitality of our work site.

5Management 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.

Corporate philosophy cards(in multiple languages)

CSR Department and CSR Committee Lead
Activities
We have established the CSR Department that is
advancing CSR activities. It covers CSR activities
conducted by the NTN Group and is in charge of

CSR Committee and CSR Management System
Management Department/
CSR Committee Secretariat
CSR Department

Chief Management Officer
CSR Committee

Corporate Planning Department

Legal Department

General Affairs Department

Personnel Department

Environmental Management
Department

Quality Management
Department

Intellectual Property
Management Department

Procurement Department

Sales Management Department

Managing Departments
CSR Committee Members

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

Business Code of Conduct
1

15 Positive contribution to society

2

16 Compliance with labor-related

Compliance with laws and norms
Pursuit of quality and safety
3 Compliance with the Anti-Trust Law
4 Fair trade with suppliers
5 Honoring agreements
6 Refusal to engage in improper
conduct with business partners
7 Proper labeling and specification
8 Respect for intellectual property
rights9 Proper control of confidential
information
10 Ensuring security by strengthening
export controls
11 Compliance with industrial laws
12 Compliance with corporate
accounting principles
13 Compliance with international rules
14 Promotion of environmental
preservation

laws and company work rules
17 Realization of a safe and positive

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 forces
23 Proper utilization of our

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

entertainment and gifts
26 Lawful donations/political

donations

Subcommittee for designated topics (as required)

52

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ocial

Stakeholder Dialog
In order to reflect stakeholder opinions in sustainable business activities, we held a stakeholder dialog with experienced academics
and experts in different CSR fields on June 9, 2016, following on a similar meeting in 2015.
We had mutual discussions and received feedback on our Group’s CSR activities.

Stakeholder

Theme

1

CSR at NTN

Theme

Further coordination between businessactivities and CSR activities will be
important in the future.
● It is vital to include “Value Creation” as part ofcorporate activities for the further CSR development.
Opinion in

●

2015

Katsuhiko Kokubu

2Opinion in

2015

GlobalBuilding up a global
network is needed forthe mutual interaction
within the NTN Group.
●

Professor, Graduate School of Business
Administration, K obe University● In addition to energy conservation andglobal environmental protection in main
businesses, we are coordinating businessactivities with natural energy utilization and contributions tolocal communities even in the natural energy business andother new business fields.
● As a way of “value creation” through products, withconsideration for the global environment, local
communities, personnel and other factors, we areincorporating CSR activities in our business activities fromthe perspective of achieving a sustainable society.

Progress

Yoko Hiyama

Lawyer admitted in Japan and New York,
Ethos Law Office, Ethos LPC

Taking CSR priority level and direction
as CSR materiality indices, it is desirable
to disclose related progress using
nonfinancial KPI. Materiality should reflect changing
conditions and may be adjusted every three years.
● CSR targets (as well as business targets) should not
be just action plans. Maintaining them as benchmarks
is also important during times of low growth.
● As a form of value creation, it is important to assessmateriality in the medium and long term based on
major objectives.
● Advancing local production for local consumption isnecessary for energy as a whole in Japan. Businesses
that contribute to this area are admirable.
● Reporting should clearly communicate the key pointsof this year (not across the board).
Opinion in

●

2016

Kazuhiko Shiratori

Senior Manager, Sekisui Integrated Research Inc.

Facilitator

We hold Global
Management
Conferences and CSR
Global Meeting in English, and weadvance the sharing of information by
localizing various databases into English
and publishing “e-Talk21” in-houseelectronic news (combined English andJapanese editions) and the seasonal“Blue Horizon” in-house bulletin(combined English and Japanese).
We also engage in mutual personnel
exchanges, through overseas trainee andInternational Internship Programsystems, as well as by receiving trainees
from overseas factories.
Progress● The CSR Global
Meeting
is useful for2016
sharing the issues ofeach area as they are different inevery region.
● “For New Technology Network” isimportant for expanding
networking ties.

Opinion in

Eriko Nashioka

Certified Public Accountants /Representative Director, Institutefor Environmental Management Accounting

NTN Participants

53

Hiroshi Nakano

Toshiyuki Matsutani

Yasuyuki Kuroda

Director and Corporate General Manager,
CSR Headquarters

General Manager, General Affairs &Environmental Management Department

General Manager, CSR Department

Theme3

Opinion in

2015

Compliance

Theme

Sharing information withtransparency is crucial.

●

We established Internal Control
Sections in the Overseas Officesof the General Manager in every
region. As we strengthen the compliancepromotion structures of the NTN Group Overseas,
we are advancing measures for each region
based on their conditions and characteristics. For
these measures, we are conducting overallmanagement in the head office and monitoringthem in the Internal Auditing Department.
Progress

The corporate governancecode is being handled correctly.
It is originally a medium andlong term way of thinking, stating that it is forall stakeholders. Showing medium and longterm value creation is important.
● There might be some cases that thecompliance systems do not work properly.
Distance between workplaces andmanagement may result in a failure ofcompliance. Communication and feedback
processes are important to keep
encouragement from becoming pressure.
Opinion in

4

Opinion in2015

Environment
We would like to see more
information on environmentally friendly
products designed as “value creation.”●

We are advancing businesses in fields
that are “value creation” domains,
including natural energy, EV businessfor the electrification and safety revolution of
automobiles, robots that work and live with people,
and service and solution businesses that utilize big
data. In the natural energy field, we established GreenPower Park as an energy recycling model. Thisempirical experiment utilizes power generated byvertical axis wind turbines and micro hydro turbines, tocharge electric vehicles, to illuminate vegetable farms
and for other purposes.
Progress

Theme

5

100th anniversary
and future issues

Approaching your100th anniversary,
we want you todevise new ways to show “value
creation.” The corporate
philosophy is a place to return as
the company continues to thrive.
We hope that you approach the100th anniversary in a way thatmakes employees feel proud.
● Investigating, for example, theCSR consciousness of employees
in areas other than compliance on
a global scale could be valuable.
Investigation is necessary toconfirm the permeation of thephilosophy.
Opinion in

●

2016

●

2016

Green Power Park is a good effort
that strengthens public
infrastructure not only for thecompany but for the community. It also represent
a significant contribution to society.
● Bearings themselves, as the core business,probably still have considerable potential. We
believe there would be more added value inrotation and movement of bearings in terms ofease of turning and stopping, etc. We expect
them to have new functions as well.
Opinion in

●

2016

Looking 10–20 years ahead, we have set “Our Vision” and establishedmedium-term business plans. We also consider our CSR in spans longer than
three years and will investigate CSR materiality in the near future.
As a manufacturing business that has value to society, we will not just focus our efforts on thebusinesses that we have now, but rather we will look into the creation and provision of new value. We havestarted a project as we approach our 100th anniversary, and we want to communicate, “This is NTN, and thisis the value NTN creates,” as March 2018 nears. Moreover, regarding the opinions we received this time as in
the previous year, we will set priorities for the medium and long terms and continue to respond to them. In
addition, we will hold various stakeholder dialogs, and continue to grapple with issues, including thoserelated to the environment, society and governance.
2016 dialog summary

Hiroshi Nakano
Director and Corporate General
Manager, CSR Headquarters

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ocial

Customers

Business
partners

Shareholders/
Investors

Employees

NTN Group

Customers

We are striving to increase customer satisfaction, starting with the maintenance andimprovement of product quality.

Enhancing Customer Satisfaction
NTN Sales Persons and Engineers for Each
CustomerAt the NTN Group sales bases around the world, we
appoint a sales person and an engineer to be in charge ofeach of our customers and sales agents. This allows us toquickly and accurately determine the needs and problemsof each customer and thus offer the best responses andsolutions. We constantly work to improve the skills of thesesales people and engineers. In Japan, we implement TQM(Total Quality Management), which reviews weekly
activities through meetings and training events. TQM
develops the skills of sales representatives andencourages them to take action after adopting thecustomer’s perspective. For the year ended March 2016,
in addition to increasing the marketing abilities of thesepeople in charge, we have also placed emphasis on
improving the organizational management skills of the
managers who supervise them. Along with “customer
strategy training” and “change leader training,” we also
conducted “sales manager training.” In the future, our plan
is to focus efforts on implementing trainings that lookahead to meeting changing customer needs.

Sales manager training

NTN Engineers Provide Problem-Solving
Opportunities
The NTN Group holds periodic sessions where customers
can get to know our products and technologies better andspeak directly about their needs with our engineers. We
are expanding the utilization of technical service units andholding product explanations and lectures on the handlingof bearings using maintenance tools around the world.
About 14,000 people from 750 companies around theworld visited us in 2015, earning us a favorable reputation.

Customer Satisfaction Surveys
Every 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
company divisions to be reflected in improved products
and services.

Overall Assessment of Customer Satisfaction
Surveys (As of year ended March 31, 2016)*
Excellent28%

Needs some
improvement

5%

Good

Needs much
improvement67%
0%* We received responses from 90 companies in Japan and abroad.

Ensuring Global Quality
In order to meet the needs of our customers, our company
is arranging global production systems and is endeavoring
to produce in places around the world where there isdemand. In order to ensure stable quality from the very
first product off the line and establish quality assurance
systems with unified global standards at our overseas
business sites as well, we dispatch support staff tolocations from Mother Plants and the Quality Management
Department. They audit the subject workplaces, investigate past troubles and improve production lines.
Moreover, with the goal of rapidly obtaining quality
information from overseas business sites, we haveincorporated the G-QUICK global quality information
control system. This system allows related departments toshare quality information and investigate the validity of
causes and countermeasures, contributing to the minimization of impacts on customers and the prevention ofrecurrence companywide.

Quality inspection conducted abroad
Product and technology explanationin the United States

55

Local
communities

Quality Management Policy
Basic Quality Policy, Quality Management Policy
Under our Basic Quality Policy, which forms the basic
concept of all our manufacturing, we formulate quality

Basic Quality Policy

Pursuing right quality to meet functions and specifications
requested by our customers.
• Applicable quality
Our quality should immediately respond to the change of ourcustomer’s requirements.
• Competitive quality
We have to win quality competition.
• Quality for economy
Quality should benefit our company.

Quality Slogan

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

management policies for each fiscal year and define
policies for maintaining and raising product quality.

Quality Management Policy for Fiscal Year Ended
March 31, 2016
As we start the first year of our New Medium-Term Management
Plan which marks a significant milestone, the company’s 100th
anniversary, we will work to “overcome NTN’s weak points,”“achieve unrivaled quality compared with other products,” in order
to “improve NTN brand” and “ensure global quality,” under thebasic concept of laying the foundation of a company that willsurvive into the next century.

Quality Management Policy for Fiscal Year Ending
March 31, 2017
Continuing from the last year in which our New Medium-Term
Management Plan started, we will work on the “establishment of a
global quality assurance system,” “elimination of complaints” and“nurturing of human resources who specialize in quality” with an
aim to “improve NTN brand” under the basic concept of laying thefoundation of a company that will survive into the next century.

Quality Management System

Cultivating Strong Quality-Minded Personnel

Management Certification for Various Production
Items
Working Toward ISO 9001, ISO/TS 16949 and Other
Standards

We will promote our internal quality training for each levelof employee at each skill/knowledge level so that we may
cultivate strong quality-minded personnel.
All manufacturing sites will conduct quality training
using the “Quality Control Handbook” during the initial
employee training period. The handbook is available ineight languages including Japanese and is also utilized atoverseas offices. Three training courses, “QC Basic
Course,” “QC Management Course,” and “QC AdvanceCourse” have been continuously held as specialized
quality training. About 150 employees, both new andmid-level in manufacturing and engineering departments
have been participating in the courses every year. We will
put forth strong effort so that each individual is able toreinforce the importance of quality by understanding theseriousness of causing inconveniences to customers
including the past quality defects training.
We are not only promoting group training but also
promoting training utilizing e-learning and internal correspondence education system.

The NTN Group has been working to obtain the certification for quality management standards for its various
production items. Besides the certification for the ISO
9001 quality management system at production and sales
bases in Japan and overseas, we have been aggressively
working to obtain the certification for the ISO/TS 16949, a
quality management standard that automotive manufacturers demand.
In 2010, NTN became Japan’s first bearing manufacturer to obtain the certification under the International
Railroad Industry Standard (IRIS), the quality standard for
the European railway industry, and in 2014, NTN obtained
the certification from CRCC (China Railway test & Certification Center). Together with the quality management
certification of the Association of American Railroads(AAR) acquired in 1986, this shows that we are a supplierof high-quality bearings for rolling stock. NTN has also
been certified for the JISQ9100 and NADCAP standards
for aerospace quality management.
Major Certifications Acquired in Fiscal Year Ended March 31, 2016
ISO 9001 certification acquired at 39 bases
RegionJapan

Base
NTN NOTO CORP.

Date of Certification
Fiscal year ended March 31, 2016

ISO/TS 16949 certification acquired at 30 bases
RegionThailand
China
China

Base

Date of Certification

NTN MANUFACTURING (THAILAND) CO., LTD.
(Pinthong Plant)

Fiscal year ended March 31, 2016

NTN-RAB (CHANGZHOU) CORP.

Fiscal year ended March 31, 2016

Xiangyang NTN-Yulon Drivetrain Co., Ltd.

Fiscal year ending March 31, 2017
(planned)

56

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ocial

Customers

Business
partners

Shareholders/
Investors

Employees

Local
communities

NTN Group

Business Partners

Promoting fair trade by developing business partners both inside andoutside Japan.

CSR Procurement
Promoting CSR throughout the Supply Chain
By implementing various initiatives throughout the supply
chain, the NTN Group is addressing social issues such as
human rights, labor practices, the environment, anticorruption, and the eradication of anti-social forces. We
seek the cooperation of our trading partners in thisendeavor through briefing sessions and the information wepost on our website in line with our “CSR Procurement
Guidelines” and “NTN’s Green Procurement Standards.”
Under our CSR Procurement Guidelines, we are further
promoting our CSR initiatives by highlighting and seeking
our business partners’ cooperation on 28 issues including
compliance, anti-corruption, human rights, labor practices,
the environment, quality, safety, information security,business continuity, and contribution to society.

Responsible Mineral Procurement
We confirm that the materials and mineral resources
included in the components used for our products are notassociated with conflict minerals and have no adverse
effects on society from the perspective of human rights
and the environment. If adverse effects are assumed or
can be confirmed, we seek out manufacturing methods
that avoid the use of such conflict minerals.

Supply Chain Management
Building Partners Worldwide
We place priority on CSR procurement and Greenprocurement by engaging business partners who actively
implement CSR initiatives. With the Medium-termManagement Plan “NTN 100,” we promote Global
procurement in order to develop a system that allows for
greater production in customer regions.
For the fiscal period ended March 31, 2016, we sought
global sources for the steel used mainly in motor vehicle
production. We placed priority on procuring such material
mainly from local suppliers. However, if local sources
lacked sufficient supply, we promoted the use of steel
exported from Japan and elsewhere in Asia.

Clarifying Procurement Policy through Supplier
Meetings

57

For our business partners, we hold periodic Supplier
Meetings to clarify changes in our procurement policy andthe production volumes at production bases. We held thesemeetings twice during the fiscal year ended March 31,
2016. At these events, we sought the cooperation of the 57
participating companies regarding the priority measuresassociated with our Medium-term Management Plan “NTN100.” We also issued commendations to those business
partners who had demonstrated exceptional cooperation in
the area of cost reductions and the like.

Supplier Meetings

Thorough Compliance with the Subcontract Act
In January 1997, we formulated the Self-Audit Manual for
Subcontractors. Our production bases conduct their own
self-audits using this manual, and when necessary, ourprocurement division intervenes with periodic audits andguidance to ensure that Japan’s Subcontract Act iscomplied with.
Of our suppliers in Japan, 80% are subject to the
Subcontract Act, so it is crucial that we ensure these
suppliers are engaging their own subcontractors in a fairmanner. In the fiscal year ended March 31, 2016,self-audits were held at 22 bases in Japan (21 production
bases, 1 research center). Our procurement divisionintervened in all cases to ensure thoroughness of theaudits.
We require all employees who are in charge ofprocurement to attend Subcontract Act workshops heldby the Japan Fair Trade Commission as well as seminars
held outside NTN. In addition, the procurement division
held the “Workshop of Complying with Subcontract Act”
to give all employees in factory a deeper understanding.
In the fiscal year ended March 31, 2016, workshops were
held at 18 bases. Those that seemed to be lack of understanding or have incorrect views of the Subcontract Act
were provided with guidance, and are being monitored forcontinual improvements.

Working with Suppliers
The NTN Group strives to enhance quality by cooperatingwith the suppliers who provide us with raw materials andparts. During Quality Month in November every year, wehold the “Supplier Quality Improvement Challenge” toprovide knowledge and know-how on improving quality to
our suppliers through lectures and other events related toquality. Last year, 99 companies participated in thisChallenge.
Quality audits are also conducted by the suppliers
themselves using the NTN Group’s check sheet for quality
criteria. Based on the results of these self-audits, we
conduct our own on-site audits at supplier sites so that weare able to help them continuously solve their quality
issues. In the fiscal year ended March 31, 2016, weconducted on-site audits at 340 suppliers.

Communication with stakeholders
Customers

Business
partners

Shareholders/
Investors

Employees

Local
communities

NTN Group

Shareholders and Investors
An Open Shareholders’ Meeting
We have taken the following steps, such as making it easy
to take part in the Shareholders’ Meeting, to streamline
procedures for shareholders to exercise their voting rights.
Beginning in June 2016, as a courtesy to
our non-Japanese-speaking shareholders,
we issued an abridged English-languagetranslation of the convocation notice for the
Shareholders’ Meeting. This notice also
includes information about the election of
officers and lists the reasons for selecting
individual candidates.

Note: This document has been translated from a part of the Japanese original for reference purposes only. In
the event of any discrepancy between this translated document and the Japanese original, the original shallprevail. The Company assumes no responsibility for this translation or for direct, indirect or any other formsof damages arising from the translation.

Committed to disclosing accurate information ina fair and timely manner.

Listing Regulations.” On the NTN website, we also releasetimely 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 homepage.

(Stock Exchange Code 6472)
June 2, 2016

To Shareholders with Voting Rights:

Hiroshi Ohkubo
President and Director
NTN Corporation

3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka-shi, Osaka

NOTICE OF

THE 117TH ANNUAL GENERAL MEETING OF SHAREHOLDERS

Dear Shareholders:
We would like to express our appreciation for your continued support and patronage.
You are cordially invited to attend the 117th Annual General Meeting of Shareholders of NTN Corporation(the “Company”). The meeting will be held for the purposes as described below.
If you are unable to attend the meeting, you can exercise your voting rights via either of the methods below.
[If exercising voting rights via mail]Indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form and return it sothat it is received by the close of the business day (5:25 p.m.) on Thursday, June 23, 2016.
[If exercising voting rights via the Internet]
Utilize the log-in ID and provisional password printed on the Voting Rights Exercise Form to access the
Voting Web Site designated by the Company (http://www.evote.jp/) and indicate your vote for or against the
proposals in accordance with the guidance on the web. Additionally, when following the steps, please confirm
the details in “Guide to the Exercise of Voting Rights via the Internet” (page 21to page 22).
1. Date and Time:

Friday, June 24, 2016 at 10:00 a.m. Japan time

2. Place:

Within Corporate Head Office located at
3-17, 1-chome, Kyomachibori, Nishi-ku, Osaka-shi, Osaka

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
117th Fiscal Year (April 1, 2015 - March 31, 2016) and results of audits by
the Accounting Auditor and the Audit & Supervisory Board of theConsolidated Financial Statements
2. Non-consolidated Financial Statements for the Company’s 117th Fiscal Year
(April 1, 2015 - March 31, 2016)
Proposals to be resolved:
Proposal 1:
Distribution of Surplus
Proposal 2:
Election of Fourteen (14) Directors
Proposal 3:
Election of Two (2) Audit & Supervisory Board Members
Proposal 4:
Determination of Amount of Performance-linked Stock Compensation Scheme
for Directors, etc.
Proposal 5:
Revision to Amount of Compensation for Audit & Supervisory Board Members
Additionally, other matters regarding the convocation for this Annual General Meeting of Shareholders areindicated in “Guide to the Exercise of Voting Rights, etc.” (page 21 ).
When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the reception desk.
-1-

Convocation notice for
the Shareholders’Meeting

Measures to Streamline Shareholder Voting Rights
Issuing ourShareholders’ Meeting
notice at an earlier
date

We send notices regarding Shareholders’ Meeting toshareholders three weeks before it is held, which is seven days
earlier than the two weeks notification required by law.

Scheduling theShareholders’ Meetingoutside of common
dates that othercompanies use

To ensure that as many shareholders as possible can attend
the Shareholders’ Meeting, we schedule it outside of common
dates that most companies hold their meetings, and we take
into account factors such as settlement and audit schedules.

Shareholders’ Meetingand other notices listedon the company
homepage

We endeavored to provide information of listed notices of the
Shareholders’ Meeting on the Web earlier before mailing. At
the same time, we include an abridged English-languagetranslation of the convocation notice.

Voting rights over theInternet

1. We accept shareholder votes via mail and the Internet by the
5:25 p.m. close of business up to the day before theShareholders’ Meeting.
2. We have methods for dealing with cases in which there are
overlapping votes by mail and the Internet, or where
shareholders vote multiple times over the Internet.
3. We participate in the Electronic Voting Platform, which ismanaged by Investor Communications Japan (ICJ), an entity
formed by the Tokyo Stock Exchange and other bodies, andwhich makes it possible for institutional investors to vote.

Other efforts

At the Shareholders’ Meeting, certain sections of business
reports and settlement data are shown on monitors usinggraphs, photos and other visible data to complement themeeting chairperson’s explanations.

Explaining Policies at Seminars and Brieﬁngs
We provide as many opportunities as possible for stakeholders to hear about NTN management policy from thecompany’s top management.
At seminars for individual investors hosted by large
securities companies, NTN top management talk about ourcompany. They also host visits to production bases in Japan.
On a regular basis, our executives convene resultsmeetings, teleconferences, one-on-one gatherings, andother regular briefings for analysts and institutional investors.
In the fiscal year ended March 31, 2016, we held
business briefing sessions and plant tours in addition toparticipating in events sponsored by securities firms.
Moreover, we participated in an international road show forinvestors in order to provide information to potential investors both inside and outside Japan.
For the fiscal year ending March 31, 2017, we plan tofollow up on the previous year’s road shows by participating
in a variety of other investor events including businessbriefing sessions and meetings for individual investors.

Factory tour for investors

Disclosing Accurate Information in a Fair
and Timely Manner
We respond to the desire of shareholders and investors toreceive accurate information in a fair and timely manner.

Timely Disclosure on the Web
We focus on making information available for anyone toread by disclosing it on the Internet.
We disclose the required information through “theCompany Announcements Disclosure Service” on thewebsite of Tokyo Stock Exchange due to “the Securities

Briefing sessions on the latest
technologies

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

58

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Customers

Business
partners

Shareholders/
Investors

Localcommunities

Employees

NTN Group

Employees

We strive to maintain a welcoming work environment that demonstrates respect for diversity
and human rights.

Occupational Safety and Health

Incidence Rate/Severity Rate

1.7

Building a Management System Based on
OSHMS
The NTN Group in Japan works to create safe work
environments based on a “safety first” spirit that respects
people. We have therefore created a safety and healthmanagement system based on the criteria of the “Occupational Safety and Health Management System” (OSHMS).
In the fiscal year ended March 31, 2016, NTN Kamiina
Corp. received certification for its OSHMS. This brings tonine the number of subsidiaries that are OSHMS-certified.
As of the end of that fiscal year, other subsidiaries also
prepared to become eligible for OSHMS certification.
Moreover, in addition to implementing our conventionalsafety initiatives during the fiscal year under review, we
employed portable 3D safety simulation devices in order toincrease employee awareness of safety and gradually
introduce concepts at our various sites. Despite this effort,
however, the number of workplace incidents totaled 53
during the fiscal year, 15 more than had occurred during thepreceding fiscal year. Clearly, we have not managed tosuppress the rate of occurrence of accidents, and we havesurmised that employee safety awareness remains insufficient. In order to address this situation and strengthen ourdisaster eradication
efforts, we are taking
steps to further enhance
our risk assessment
capabilities throughsafety audits, patrols,and examination ofnear-miss incidents(risk prediction).
Safety simulation devices

Incidence RateNTN

National average for Japanese industry

Severity RateNTN

National average for Japanese industry

1.62

1.59

1.58

1.61

1.68

1.5
0.6
0.4
0.29

0.24

0.2
0.0

0.110

0.33
0.26

0.16
0.100

0.100

0.018

0.005

0.011

2012

2013

2014

0.09

0.07
0.04

0.06

2015

2016

(Years ended March 31)

For the fiscal year ending March 31, 2017, we arefocused on further strengthening our risk assessments inaddition to enhancing our safety audits and patrols as partof our effort to eradicate accidents. In addition, by taking
the lessons learned from past accidents, we are committed
to eradicating the possibility of recurrence of such
accidents and will continue to focus on improving healthand safety throughout our Group.

Major Initiatives and Achievements for the Fiscal Year Ended March 31, 2016
Initiatives for Fiscal Year Ended March 31, 2016

Elimination of workplace accidents (thoroughmanagement of work-related risks and skills)

Thorough education on safety and health

Health promotion

Mental health activities

Raised the occupational safety and healthstandard of the NTN Group59

Achievements

Scope

4 NTN works organized activities to reduce equipment risks at 4 subsidiaries in Ishikawa Prefecture, including special risk
assessments training for the staff

NTN Groupin Japan

Training with safety simulation devices was conducted for employees, by each of their levels, by improving the practical safety
education.

NTN Groupin Japan

Safety and health cross audits were conducted at 4 NTN works and 3 subsidiaries to provide guidance on issues identified during NTN Groupoutside audits and to work to develop solutionsin JapanSupervisor, who is in charge of safety / NTN Personnel Department, examined 7 out of 18 subsidiaries. As a result, safety
management training for management auditors was conducted at NTN TADO CORP.

NTN
Domestic
Subsidiaries

Focused on providing support to subsidiaries, low level of safety (for 2 years).

NTN
Domestic
Subsidiaries

Safety and health consultants conducted training related to laws to improve the level of safety and health at 18 subsidiaries

NTN
Domestic
Subsidiaries

Provided safety and health education to employees with poor experience

NTN

Provided mental health education to management staffs and supervisors

NTN

Held individual back pain workshops with applicants, amount to 36 participants in total.

NTN

Conducted risk assessment training at NTN, KUWANA WORKS, NTN MIE CORP. and others

NTN Groupin JapanGroup
Public health nurses from our head office provide personalized health advice for employees at all the sales bases of the NTN Group. NTN
in Japan
3,840 employees underwent specific health checkups, and 378 received specific counseling guidance

NTN

Held the “Oasis NTN” counseling service twice a monthNTN

The quick medical interview “MINI Diagnosis” was conducted for all employees to check for problems such as depression, panic
disorder, and obsessive-compulsive disorder

NTN

Mental health checks were conducted for employees before transferring overseas

NTN

Established a policy for our Stress Check System

NTN

Focused on supporting the NTN Group in Japan by conducting the above activities

NTN

Building Systems of Mental Health Care
We hold mental health training for managers and supervisors, 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.
In addition to ordinary mental health services, we willaddress issues using the Stress Check System in line withthe guideline of Ministry of Health, Labour and Welfare
throughout the fiscal year ending March 31, 2017.

Promoting Self-Development and Higher
Motivation
We provide a wide variety of education and training
opportunities so that our employees can cultivate a senseof purpose in their work and design their future career
paths by gaining a wider perspective. In the future, weplan to promote the early acquisition of business skills as ameans of further improving position-specific educationand strengthening language training while employing
innovations such as e-learning and distance education.
Major Achievements for the Fiscal Year Ended March 31, 2016
Position-specific education includes recommended
courses offered through distance education.
2 Expanding the campaign of monetary incentives forlanguage-based qualifications
3 Expansion of education by position: Additional
training for newly graduated employees in their
third year of employment with the company
4 Implementation of motivational training for young
employees• Implementation of training for freshman hires• Providing aid for the reconstruction of East Japan1

Human Resources Development
Global Human Resources Development
Currently, the employee composition ratio of the NTNGroup includes 66% from countries other than Japan. For
the fiscal year ended March 31, 2016, we focused on
developing talented individuals capable of playing anactive role anywhere in the world.
In the future, we will expand the number of bases
participating in the Global QC Circle Convention and the
NTN Technical Skills Competition and will promote active
intercommunication among personnel. By further
enhancing training in order to nurture global operational
expertise by work position for everyone from younger
employees to executives, we will foster personnel who canwork globally with ease.

Employee Composition Ratio(Inside and Outside Japan)

We are committed to training and interchanging our
personnel on a global scale.

Training of Top
Management at a
SubsidiaryNTN Technical
Skills Competition

Japan

34%

Employment training for freshman hires(hand-copying of Sutras at Daigo-ji Temple)

Overseas66%

Supporting the reconstruction of East Japan(construction of a raft for use in oyster cultivation)NTN School(Production Engineer
Training School)

Global QC Circle
Convention

Japanese-style Skills
Training for the employees
from Thailand

60

S

ocial

Employee Inventions

Employment and Working Conditions/Employee
Evaluation
We take employment working conditions and employee
evaluation into consideration. We recognize global efforts
to stamp out forced labor and child labor, and require thatall permanent employees join the NTN labor union so thatthey can have the right to organize.
In evaluating our employees, all are subject to uniform
evaluation standards, and multiple managers conduct
employee evaluations, each viewing the individual being
evaluated with a unique perspective. A self-certification
system and face-to-face interviews held twice a year areused to as ways to verify individual intentions in order toincrease transparency. Salary is composed of a basesalary combining age consideration and job ability, as wellas various allowances, however with greater diversity withwork styles and employees, we will be reviewing our
employee system so that it is in line with the most recent
employment and working situations.

2,000

1,976

17.9

1,842

Average number of paid holidays taken［Right axis］(Days)

17.4

1,845

17.4

20

1,500

15

1,000

10

500

5

0

2014

2015

Respecting Human Rights and Diversity
A Workplace Free of Discrimination

Total Number of Work Hours per Year / Average Number
of Paid Holidays Taken
Total number of work hours per year
［Left axis］(Hours)To reward our employees’ inventions, we have establishedthe Patent Management Rule and the Patent Reward Ruleand we have clarified how patent rights are attributed andhow the value of a reward is calculated. Rewards are also
made for foreign patents and for inventions — in the formof knowledge and expertise — considered to be trade
secrets. There is no upper limit to actual rewards.
In the fiscal year ended March 31, 2016, 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, 304
employees (cumulative) were rewarded for obtaining rights
for 135 patents.

2016 (Years ended
March 31)0

The NTN Group strives to create a discrimination-freeworkplace where all human rights are respected. At theNTN business sites and group companies in Japan, we
include human-rights education as part of training for new
employees, supervisors, and managers. We placeparticular emphasis on measures against harassments
such as sexual harassment and power harassment, andwe have ongoing education on these issues for new
employees and newly appointed managers.
We also participate in the activities of regional
human rights organizations and take part in a variety ofhuman rights exhibitions and seminars. We also have
“Helpline” (whistle-blowing) inside and outside thecompany that make it easy for employees and others toseek advice when they feel that someone’s humanrights have been violated.
The NTN Group Overseas has also built systems that
help them continue to respect human rights.

Diversity
Promoting the Employment of Women, Seniors,
Foreign Residents, and Persons with Disabilities

Compiling the Diversity News

Diver

61

sit y N

ews

Recruiting booklet

To promote the ongoing participation of women, thecompany has prepared a welcoming recruitment booklet
to increase the ongoing participation of women in
recruitment activity and create a foundation for success inencouraging women to play an active part in the company.
We have implemented a variety of measures with the goalof doubling the number of women in management position
between March 2015 and March 2018.
We plan to continue raising awareness through anumber of future initiatives including the periodic release ofdiversity messages, the distribution of our handbook, andtraining for management positions with the aim ofsupporting greater diversity in the future.

Ratio of Female Employees in Management Positions(NTN, nonconsolidated basis)
Ratio of female employees

(%)

10

9.05%

9.14%

Ratio of females in management positions

(%)

9.18%

2.5
9.56%

8

2.52%

3.40%

3.64%

4.12%

1.76%

1.93%

1.95%

2014

2015

2.05%

1.0
0.5

2
0

2.0
1.5

6
4

The employment rate of persons with disabilities(NTN, nonconsolidated basis)

2013

2014

2015

ended
2016 (Years
March 31)

Helping Employees Continue Working While
Raising Children
We strive to support employees in both their work andchild-rearing.
In Japan, for example, there are numerous suchprograms, including the Mom-back system to rehire
women who have retired to give birth or raise a child; andthe Bear Kids Land, an in-company day-care center for
employees’ children. We also provide support beyond
legal requirements with our system for reduced working
hours for childcare, which now covers employees until
their children have finished the third grade of elementary
school, and staggered work shifts in the Tokyo and Osaka
areas for those raising children. In addition, we areconsidering the introduction of a new system aimed atreforming our approach to work.

0

2013

2016 (Years ended
March 31)

Dream Workshops
Working in cooperation with special needs schools, weestablished three “Dream Workshops” at our Iwata,
Kuwana, and Okayama Works. These are workplaces thatencourage people with intellectual disabilities to play aleading role.

Dream Workshop in
Okayama Works, a facility
supporting people withintellectual disabilities

Major Initiatives and Achievements for the Fiscal Year Ended March 31, 2016
Initiatives for the fiscal year ended March 31, 2016

Achievements

Increasing awareness of diversity

Since last year, executives, those in management positions, and women had been lobbying for change from various perspectives, so a
number of seminar participants were assigned management positions. Notably, the number of women promoted to management was threetimes the number of the preceding fiscal year.

Proactively supporting womenAmong university graduates, the ratio of women increased 10.7 points from the preceding fiscal year, with the women accounting for31.9% of new hires during the fiscal year ended March 31, 2016. This ratio reached almost half for those hired for office positions.

Employing seniors and persons with disabilities

Our employment rate for people with disabilities for the fiscal year ended March 31, 2016, was 2.05% (130 persons), exceeding the legal
requirement.

Encouraging All Employees to Work with Enthusiasm
We believe that the full participation of women and all other employees
leads to the sustained growth of the company, optimal personnel training,
and the creation of an easier work environment. We consider increased
diversity to be one of our corporate strategies.
Through the training and seminars, we are taking steps to raiseawareness and reform the corporate culture, and are changing the way wework by improving relevant systems. The ratio of women in management
positions and the employment rate for persons with disabilities are now
gradually increasing.
It is important that our commitment to diversity be continuous and not atransient phenomenon.
In future, we will further address our goal of where anyone regardless ofsex, age, race, or ability can work with enthusiasm.

Tomoko Tanaka

Deputy General Manager, Global
Human Resources Development Dept.

62

S

Communication with stakeholders

ocial

Customers

Business
partners

Shareholders/
Investors

Employees

Local
communities

NTN Group

Local Communities
We follow the CSR Policy which states that we shall do all we can to interact with andcontribute to local communities. Based on this policy, the NTN Group is working together
with enthusiasm to participate in a wide range of activities, particularly in the areas oforganizing blood drives, local clean-up activities, and marathon races as common
activities that the NTN Group promotes globally.

Organizing Blood Drives

Clean-up Activities

Marathon Racing

The NTN Group conduct blood
drives at 27 bases in 6 countries. In
May 2016, NTN Manufacturing de
Mexico S.A. de C.V., only recently
established, hosted its first groupblood drive. According to a Mexican
blood donation agency, this was thefirst such drive to be suggested by
the company itself. As a result, thisinitiative gained coverage on local TV

With the aim of maintaining open
communication with local residents,
we have been engaged in cleaning
up our grounds and neighboring
communities for many years. For the
fiscal year ended March 31, 2016, a
total of 3,290 employees participated

The NTN Group believes thatparticipation and contribution inregional sporting activities areimportant. Marathon racing forcharity is especially popular, as 7
bases across 6 countries haveparticipated in various charity
marathons throughout the year. One
such event was the 36th Marathon of
Lake Annecy in France, held in April
2016. This popular competition
brought together more than 7,500
participants not only from France but
also from countries such as Kenya
and Ethiopia.
Additionally, since 2014, NTNSudamericana, S.A. (located in
Panama) has been an official
sponsor of a charity marathon
dedicated to raising awareness andsupport for children suffering fromat 34 of our bases in 6 countries.

and in print media.

Blood drive in Mexico

Indonesia

China (Changzhou)

CanadaJapan

incurable diseases.
Number of NTN Group Employees
Participating in Clean-up Activities

Number of NTN Group Employees
Participating in Blood Drives
2016/3(Results)

1,695

2016 /3(Results)

3,290

2017/3(Target)2,000

2017/3(Target)3,500

Collaborating with Our Local Communities
NTN Track and Field Club participates in domestic andinternational track and field competitions, including the
All-Japan Corporate Ekiden Championship (New Year
Ekiden). Through sports exchanges such as track and fieldclasses at elementary schools and communication withlocal residents at our sites who support us every day, we
are actively contributing to local communities and raising
the next generation.

New Year Ekiden Team

63

FrancePanamaEnvironment

NTN Technology for ECOLOGY

Environmental Activities

For the NTN Group to ensure continuous and sustainable growth, it is indispensable that we not only
generate profit but also adopt eco initiatives to address global environmental issues. Toward this end,
we aim to reduce the environmental impacts of all our business operations under our corporate
philosophy of “contributing to international society through creating new technologies anddeveloping new products.”

Medium- and Long-term CO2 Emissions Targets in JapanIn December 2015, at the “21st Session of the Conference of the Parties to the United Nations Framework
Convention on Climate Change (COP 21),” the “Paris Agreement” was adopted with the goal of mitigating theadverse effects of global warming, evidence of which is beginning to appear in all parts of the world. Japan has
committed to reducing its CO2 emissions with the specific goal of reducing CO2 emissions by 26.0% below fiscal
2013 levels by fiscal 2030.
In the future, it is likely that governmental authorities, customers, institutional investors and other stakeholders
will also require that we further reduce its CO2 emissions.
Japan’s commitment in the draft of the Paris Agreement was a 6.3% increase relative to fiscal 2013 levels by
fiscal 2030 as the assumption for energy consumption by the industrial division. In light of this situation, we haveestablished a medium- and long-term CO2 emissions targets in Japan with the goal of limiting our energy
consumption in fiscal 2025 to a mere 4.4% increase above fiscal 2013 levels.
In addition, we have adopted a new energy-efficient budget framework in order to aggressively and effectively
implement energy efficiencies in order to achieve this medium- and long-term target.
We intend to incorporate our medium- and long-term CO2 emissions targets in Japan into our annual environmental targets in addition to applying our energy-efficient budget framework. Moreover, we intend to continue
promoting a variety of such initiatives.

CO2 emissions*
CO2 emissions intensity*

NTN 100 Target (FY 2017)

Long-term Target (FY 2025)+1.7% relative to FY 2013 level(Compared to BAU** –5.0%)–20.3% relative to FY 1997 level+4.4% relative to FY 2013 level(Compared to BAU –15.0%)–28.7% relative to FY 1997 level* Target business sites: Business sites with ISO 14001 multi-site certification + KAMEYAMA Plant of NTN Advanced Materials Corporation (AMC)
Electricity emissions coefficient: Fixed at 0.381** BAU (business as usual): Assumed CO2 emissions if no reduction measures are applied to current conditions.

Our products minimize energy
consumption by reducing friction.

Low-Carbon
Society

Our products are “eco-products”
and are necessary in order toachieve a society committed to
Low-Carbon, Sound Material-Cycle
and Protecting Biodiversity.

Sustainable
SocietySound
Material-Cycle
Society

Protecting
Biodiversity

Through our bearing products, we are contributing to the emergence of a sustainable society.

64Environment

Company-Wide Environmental Performances
for the Fiscal Year Ended March 31, 201616 of 25 Targets Achieved
Every year, the NTN Group sets and works towards theachievement of targets in line with four items of NTN Environmental Policy, the purpose of which is to reduce environmental impact and ensure continuous development of society.
For the fiscal year ended March 31, 2016, as a result of
focusing our efforts on “development of energy-efficient
products,” “prevention of global warming,” “Reduce, reuse,
and recycle,” “management and reduction of environmentallyhazardous substances” etc., we achieved 16 out of 25 target
items including the reduction of the CO2 emissions etc.
We achieved our CO2 emissions target with a reduction of
12,000 tons/year (5,000 tons/year in Japan; 7,000 tons/year
overseas). For the fiscal year ending March 31, 2017, we arecommitted to minimizing global warming by achieving ouremissions target of 619,000 tons/year (273,000 tons/year inJapan; 346,000 tons/year overseas).

Company-Wide Environmental Results for the Fiscal Year Ended March 31, 2016
NTN Environmental Policy
Development and salesof environmentallyfriendly products

Environmental Purpose(1) Development of energyefficient products(1) Prevention of global
warming

Environmental Targets(2) Reduce, reuse, andrecycle(3) Preserve resources

Begin assessment of environmental efficiency in new productdevelopment

Preparing to implement

Wherever possible, save energy and cut peak energy use

Being implemented in eachbusiness site

Make existing manufacturing equipment more energy efficient

Disseminated examples of energy
efficiency and practices being
implemented in each business site

Reduction of CO2
emissions

Raise the recycling
rate

280,000 tons/year or less*1

275,000 tons/year

Overseas 337,000 tons/year or less

330,000 tons/year

Japan

Improvement over the fiscal year ended
March 31, 1998, –23.0%–21.2%

Improvement over the fiscal year ended
Overseas
March 31, 2007, –13.0%–12.8%

Japan

99.9%

Japan

99.8% or more

Overseas 98% or more

(2) Expansion andimprovement ofenvironmental
management systems

Reduction over the fiscal year ended
March 31, 2011, –4.8%

1.0%

Reduction in paperJapan
purchased intensity

Increase by +8.8% over the fiscal year
ended March 31, 2011

16.4%

Reduction over the fiscal year ended
Reduction in water Japan
March 31, 2011, –17.6%
consumption
Reduction over the fiscal year ended
intensity
Overseas
March 31, 2015, –3.0%

65(1) Protecting biodiversity–14.6%–5.3%

In comparison with the fiscal year ended–99.6%March 31, 2000, –99% maintained
Being implemented in eachbusiness site

Manage CFC emissions stringently according to the Act on Rational Useand Proper Management of Fluorocarbons

Being managed in each businesssite

Continue to create measures to prevent leak accidents and carry out
improved and full-scale emergency drills

Completed at all business sites

Continue strict management of poisonous materials

Strict management continuing

Follow-up operation of the soil purification and its completion at theformer site of TAKARAZUKA WORKS

Completed soil purification work

ISO 14001
certificate

Certification at NTN do Brasil Producão de SemiEixos Ltda. (as of December 2015)

Obtained in May 2016

Preparation forrevision in ISO
14001

Now collecting information at
Collection of information and preparation in view of
seminars and preparing to revise
the planned revision (in September)the Management manual

Promote green
procurement

Ensuring the understanding of the revision of theGreen Procurement Standards and the guidelines
for activities to preserve biodiversity
Clarification of responsibilities for green
procurement in each division
Zero complaints of environmentally hazardous
substances

Activities to contributeto society and protect
the natural environment

97.1%

Reduction in wasteJapangeneration intensity(4) Management and reduction
Manage and reduce PRTR-designated substancesof environmentallyhazardous substances

Observance of laws
and regulations andimplementation ofthorough environmental
management systems

Results
R&D in progress in engineeringand research divisions

Reduction in use ofJapan
Styrofoam(1) Compliance withenvironmental laws

Not achieved

Develop environmentally contributing products to meet needs ofexpanding new energy and greater number of electric cars

Reduction in CO2emissions intensity

Reduction inenvironmental impact

Achieved

NTN Kigyo no Mori and other greening and environmental protection
activities* The CO2 emissions factor of power suppliers is calculated with a fixed coefficient of 0.381.

Received an RoHS directive on
additional prohibited substances;
content is currently under review

No complaints from customers

Under way at each business site,
etc.

Evaluation

Company-Wide Environmental Targets
for the Fiscal Year Ending March 31, 2017
NTN Environmental Action Policy for the Fiscal Year Ending March 31, 2017
NTN Environmental Policy

Environmental Purpose

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

2. Reduction in environmental impact(1) Prevention of global warming(2) Reduce, reuse, and recycle(3) Preserve resources(4) Management and reduction of environmentally hazardous substances

3. Observance of laws and regulations and implementation ofthorough environmental management systems(1) Compliance with environmental laws
(2) Expansion and improvement of environmental management system

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

Company-Wide Environmental Targets for the Fiscal Year Ending March 31, 2017
NTN Environmental Policy

Environmental Purpose

Development and sales ofenvironmentally-friendly
products(1) Development of energyefficient products

Environmental Targets
Develop environmentally contributing products to meet needs of expanding new energy and greater number of electric cars
Begin assessment of environmental efficiency in new product development
Promote energy efficiency by using the new energy-efficient budget framework(1) Prevention of global
warmingJapan

273,000 tons/year or less**

Overseas346,000 tons/year or less***Japan

Improvement over the fiscal year ended March 31, 1998,–21.1%

Overseas

Improvement over the fiscal year ended March 31, 2007,–14.0%

Japan

99.8% or more

Overseas

98% or more

Japan

Reduction over the fiscal year ended March 31, 2011,
–0.1%

Japan

Reduction over the fiscal year ended March 31, 2011,–16.0%

Overseas

Reduction over the fiscal year ended March 31, 2015,–6.4%

Reduction in paper purchased intensity

Japan

Increase paper consumption by +13.6% over the fiscal
year ended March 31, 2011

Reduction in use of Styrofoam

Japan

In comparison with the fiscal year ended March 31,
2000, –99% maintained

Reduction of CO2 emissions

Reduction in CO 2 emissions intensity

Reduction in environmental
impact(2) Reduce, reuse, andrecycleRaise the recycling rate

Reduction in waste generation intensity

Reduction in water consumption intensity(3) Preserve resources(4) Management and reduction
Manage and reduce PRTR-designated substancesof environmentallyhazardous substances
Introduce management that reflects the Act on Rational Use and Proper Management of Fluorocarbons(1) Compliance withenvironmental laws

Continue to create measures to prevent leak accidents and carry out improved and full-scale emergency drills (Preventionof water pollution)
Continue strict management of poisonous materials

Observance of laws
and regulations andimplementation ofthorough environmental
management systems(2) Expansion andimprovement ofenvironmental
management systems

ISO 14001 certificate

Prepare to transfer the multi-site certification of AMC KAMEYAMA Plant

Accommodate revisions to ISO 14001

Begin operating the ISO 14001:2015 of the Management System
Ensuring the understanding of the revision of the Green Procurement
Standards and the guidelines for activities to preserve biodiversity

Promote green procurement

Clarification of responsibilities for green procurement in each division
Zero complaints of environmentally hazardous substances

Activities to contribute tosociety and protect thenatural environment(1) Protecting biodiversity** AMC KAMEYAMA Plant has been included.
*** NTN-LYC (Luoyang) Bearing Corp. has been included.

NTN Kigyo no Mori and other protecting biodiversity activities

66

E

nvironment

Environmental Impact of Business Activities
Reducing Environmental Impact in All Production Processes
The NTN Group strives to reduce environmental impact inall processes, from development, designing to logistics. For
that purpose, grasping the entire picture of the INPUT in the

manufacturing process (raw material, energy, water) and the
OUTPUT from the manufacturing process (CO2, waste,
wastewater), we are working to reduce them.

Environmental impact from production activities in Japan(Fiscal Year ended March 31, 2016)

Material
recycling*
Scrap metal

INPUT

15,570Raw materials

tons

Raw material 374,000 tons
Steel material

Production
process

Target: the NTN Group in JapanOUTPUT
CO2

Development
DesignCO2 emissions

275,000

369,000 tons

tons

Non-ferrous metal/
oils and fats, etc. 5,000 tons

Forging
Turning

EnergyThermalrecycling**

Electricity 586 GWh
LPG
City gas
Coal coke

Waste oil

8,912 tons
6,286 mDiesel fuelGasoline

tons

844,000 L
203,000 L
101,000 L

67* Material recycling : To recycle for use as a raw material** Thermal recycling: To recycle for use as fuel

tons

tons

Total landfilledamountGrinding
Polishing

66 tons

Wastewater

Assembly

Drainage

Use ofcirculatingwater

1,790,000 m

m

Rivers

50,0003

Groundwater 1,070,000 m3

740,000 m3
Industrial water150,000 m3

65,76665,7001,960,000 m3

Tap water

Generated amountof waste

Recycled amount

1,196 tons

Water
Usage Heat
Treatment

5,200

3

Heavy oil A 1,352,000 L
Kerosene

Disposal ofindustrial waste

Logistics

For business site-specific data, please refer to the site reports.

3

1,740,000 m3
Sewage50,000 m3

Environmental Accounting
Investment in Natural Energy Research and Development
The NTN Group in Japan uses environmental accounting toquantitatively assess its environmental protection activities.
Environmental preservation costs in the fiscal year ended
March 31, 2016 were 7,248 million yen, up 79% from theprevious fiscal year. This consisted of 1,580 million yen in
environment-related equipment investment, up 142%, andrelated costs of 5,668 million yen, up 67%. The total costs
increased mainly due to higher research and development
investments (including our businesses concerned withnatural energy) related to environmental preservation and byincluding the soil purification expense at the former site of
our TAKARAZUKA WORKS. This significantly increased thetotal amount invested. There were also costs for items likeenergy-efficient equipment and waste recycling.

LVD* lighting installed in the ball bearing plant (IWATA WORKS)* Low Voltage Discharge

Thermalinsulation
coating

Before coating

After coating

Thermal insulation coating applied
to roof (NTN HAKUI CORP.)

Environmental Preservation Costs(Millions of yen/year)

Equipment investment

Classification

Costs

Work areas
Expenses to preserve the global
internal costs
environment

AmountDetails

Costs

Environmental equipment (dustcollectors, particulate smoke removal
4 devices, and wastewater treatment
equipment)

Pollution prevention costs

Afterapplicationof coating

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

Details

Cost of maintaining, inspecting, etc.,
environmental facilities (including dust
184 collectors and wastewater treatment
equipment)
Cost of installing energy-conserving
204 equipment

0

Cost of waste-recycling and waste585 reduction measures; cost of treating
general and industrial waste

Upstream/downstream costs

0

Costs of analysis related to green
1 procurement

Costs of management activities

0

Resource recycling expenses

Disclosure of information on laborcosts related to the EMS (advertisingand NTN Reports) and the greening andbeautification of company grounds
R&D equipment cost related to2,444 environmental preservation
402

R&D equipment related to1,466 environmental preservation

R&D costs
Costs of social activities

0Greening and beautification outside the
3 company

Environmental remediation expenses

0

Cost of soil sampling
1,845 (Includes cost of soil purification offormer site of the TAKARAZUKA WORKS)

Total(Reference) Total amount for fiscal year ended
March 31, 2015

1,580

5,668

7,248

652

3,401

4,053

Impact on Environmental Preservation
Indicator
CO 2 emissions

Reduction of waste

Grand total

Financial Effect of Environmental
Preservation Activities

Fiscal year ended
March 31, 2015

Fiscal year ended
March 31, 2016

279,000 tons

275,000 tons

Recycle rate 99.9%

Recycle rate 99.9%(Millions of yen/year)

Item

AmountDetails

Global environment preservation
expenses, effects

99

Benefit from the use of energy-efficient
air conditioning, compressors, and lighting

Resource recycling expenses,
effects

428

Total

527

(Reference) Total for fiscal year
ended March 31, 2015

800

Profit from sealable materials such as
metallic sludge

68E

nvironment

Prevention of Global Warming
The NTN Group strives to reduce CO2 emissions generated during production and transportation.

Reduction of CO2 Emissions
Efforts in the NTN Group in Japan
CO2 emissions target achieved
For the fiscal year ended March 31, 2016, our CO2
emissions were 275,000 tons/year, exceeding ouremissions reduction target by 5,000 tons. As for our targetof reducing our emissions intensity by 23.0% (to 0.67 ton–
CO2/million yen) relative to that of the fiscal year ended
March 31, 1998, we couldn’t achieve our target; however,
we succeeded in reducing our emissions intensity (from0.70 ton–CO2/million yen of the previous fiscal year to 0.69
ton–CO2/million yen), which represented a 21.2% reduction
relative to that for the fiscal year ended March 31, 1998,
due to a decrease in our production scale.
For the fiscal year ending March 31, 2017, we set
targets of CO2 emissions of 273,000 tons/year and CO2
emissions intensity reduction of 21.1% as compared withthat of the fiscal year ended March 31, 1998, (0.69 tons–
CO2 / million yen).

CO2 Emissions and CO2 Emissions Intensity
CO2 emissions(10,000 tons/year)

35.0

0.87

30.0
25.0
20.0

20.6

CO2 emissions intensity

Emissions intensity (ton-CO2 /million yen)

1.00

28.8
0.69

26.9

27.2

27.9

27.5

27.3

0.80

0.70

0.73

0.70

0.69

0.69

0.60

15.0

0.40

10.0

0.20

5.0
0

1998

(Reference year)

2012 2013 2014 2015 2016 20170

(Target)(Years ended/ending March 31)

Conversion to a High-Frequency Induction Furnace
In December 2015, NTN CASTING CORP. introduced ahigh-frequency induction furnace. By switching to induction
furnace from cupola furnace using conventional coal coke,
we were able to reduce our CO2 emissions by almost half.
Moreover, we succeeded in reducing both energy
consumption and the quantity of dust generated.
In addition, we achieved a higher level of safety because
the new induction furnace no longer requires that material
be bailed out from the furnace.

High-frequency induction furnace

Two business sites of the NTN Group are awarded commendations as “Excellent Energy
Management Company.”69

NTN FUKUROI CORP. and NTN Advanced Materials
Corp. were commended by the chairman of the Chubu
Electricity Use Rationalization Committee as “Excellent
Energy Management Company.”
The Chubu Electricity Use Rationalization
Committee raises awareness about electricity andengages in activities to promote electricity utilization.
Every year, it commends individuals, companies, andgroups who promote rationalization and management of energy use.
NTN FUKUROI CORP. was a recipient of acommendation because it engaged in energy-efficiency
initiatives covering about 40 items, including adopting
inverters for machinery coolant pumps and grinder
coolant pumps and adjusting the operating schedulesof facilities with the cooperation of all divisions. In

addition, NTN Advanced Materials Corp. was evaluatedfor its various energy-efficiency initiatives, which included reducing the load on its air compressors anddecreasing overall energy consumption by 9%compared with the level of the preceding fiscal year.

Commendation ceremony (NTN representatives are fourthand fifth from the right)

Reducing CO2 emissions in logistics
For the fiscal year ended March 31, 2016, we achieved ourtarget for CO2 emissions reduction attributable to logistics
by emitting only 12,800 tons year (exceeding our reduction
target by 400 tons). Moreover, we reduced our logisticsrelated CO2 emissions intensity to 0.0345 tons- CO2/million
yen from 0.0349 tons-CO2/million yen, thus meeting ourtarget. As for the fiscal year ending March 31, 2017, we will
make efforts to achieve our target of CO2 emissions set to12,800 tons/year and of the emissions intensity to 0.0345
ton–CO2/million yen.

Extending Third-Party Verification to include
Scope 3 emissions
Continuing the achievement set the preceding fiscal year,
we received third-party verification of the “CO2 emissions
attributable to in-company practices (Scopes 1 and 2).” Wealso received third-party verification by SGS Japan Inc.

regarding the “CO2 emitted throughout the supply chain bypractices outside the company (Scope 3).”In the future, we will expand the verification range of
Scope 3 and will take steps to reduce CO2 emissions
throughout our supply chain.

CO2 Emissions and CO2 Emissions Intensity in logistics
CO2 emissions(10,000 tons / year)

2.00

0.03691.50

1.37

0.03461.35

0.0366

0.03701.32

1.30

0.03490.03450.0345

1.29

1.28

1.28

For the fiscal year ended March 31, 2016, our CO2
emissions totaled 330,000 tons/year, which satisfied ourtarget (exceeding our reduction target by 7,000 tons).
As for our target of reducing our emissions intensity by
13.0% (to 1.067 ton–CO2/million yen) relative to that of
the fiscal year ended March 31, 2007, we couldn’t
achieve our target; however, we did succeed in reducing
our emissions intensity (from 1.08 ton–CO2/million yen of
the previous fiscal year to 1.072 ton–CO2/million yen),which represented a 12.8% reduction relative to that for
the fiscal year ended March 31, 2007. For the fiscal year
ending March 31, 2017, we set targets of CO 2
emissions of 346,000 tons/year and CO2 emissions
intensity reduction of 14% as compared with that of the
fiscal year ended March 31, 2007, (1.06 tons – CO2/
million yen).

Introduction of Solar Power Generation in Shanghai
Shanghai NTN Corp. (Shanghai NTN) installed about
30,000 photovoltaic panels (representing an area of about
90,000 square meters) on the roofs of all six plants andbegan generating electricity from January 2016. Thissystem is expected to generate 7 million kWh annually at
a rated output of 5,200 kW, which will be devoted toabout 12% of the electricity consumption of Shanghai
NTN in future.
Moreover, by reducing CO2 emissions
by 7,000 tons
annually, this initiative will help to takemeasures to reduce
the summer heat.

Photovoltaic panels installed on plants

0.040

0.030

1.00

0.020

0.50

0.010

0

0

2011 2012 2013 2014 2015 2016 2017

(Target)(Years ended/ending March 31)

Efforts in the NTN Group Overseas
CO2 emissions targets achieved

CO2 emissions intensity

Emissions rate (ton-CO2/million yen)

CO2 Emissions and CO2 Emissions Intensity
CO2 emissions

Americas

Europe

Asia

China

CO2 emissions intensity

Emissions intensity (ton-CO2 /million yen)

(10,000 tons/year)

1.50

60
50

1.23

1.12

1.13

1.13

30.1

30.8

40

27.5

30
20

1.08

1.07

1.06

31.5

33.0

34.6

19.3

1.00

0.50

10
0

2007

(Reference year)

2012 2013 2014 2015 2016 20170

(Target)(Years ended/ending March 31)

One business site in Germany and two in France
obtained ISO 50001* registration
Since 2013, NTN Kugellagerfabrik (Deutschland) G.m.b.H.
(DMF) in Germany has been preparing for the introductionof the ISO 50001 standard. Under the leadership of its
management, it has pushed forward with company-wide
energy-efficiency initiatives and obtained a detailed understanding of energy management with respect to individual
processes. The company thus improved its energy
efficiency and reduced its costs, and as a result it wasable to obtain certificationof registration in December 2015. At the sametime, NTN-SNR ROULEMENTS (NTN-SNR) and
NTN TRANSMISSIONSEUROPE (NTE), both inFrance, obtained theMembers of the DMF Energy Management
same certification.
Committee and ISO certificate* ISO 50001 was published by the International Organization for Standardization in June 2011
as the international standard for energy management systems. It is intended to encouragecompanies to manage their energy consumption and implement continuous improvements.

70

E

nvironment

Protecting Biodiversity
The NTN Group conducts nature conservation activities and strives to preserve biodiversity around its
business sites in collaboration with local residents and NGOs, etc.
Volunteering to Maintain Firefly Habitat “Hotaru
no Sato”
A total of 102 volunteers, including the NTN Group employees in the Kuwana district and their family members, participated in a clean-up of protected firefly habitat in Kuwana,
Mie Prefecture. This event is sponsored by the “Hotaru toNakama Committee,” a local volunteer organization thatworks to protect fireflies and maintain a healthy habitat forthem. We have participated as a member of this groupsince 2010. On February 13, 2016, the volunteers took partin a clean-up to remove dead leaves, dead branches, andsilt from waterways while cooperating with local residents inthe clean-up of firefly habitat “Hotaru no Sato” in order tocreate an environment that supports the growth of fireflylarvae. In March, we released about 6,000 larvae andprepared for a firefly viewing session in June.

A Letter of Gratitude from Matsuzaka City
As part of its environmental protection activities, NTNMIKUMO CORP. has planted cherry trees and zelkova trees
in Matsugasaki Park in Matsuzaka City. On March 5, 2016,24 people (including NTN employees and their family
members) visited this park to take part in a commemorative
tree planting of two crepe myrtles standing about threemeters high and 100 Hirado rhododendrons standing about
50 centimeters high. In recognition of this, the ninth suchvolunteer activity by the company, the mayor of Matsuzakacity took the occasion topresent the company with aletter of gratitude for its longparticipation in thistree-planting activity. We
plan to continue engaging insimilar initiatives to protect
the natural environmental.

Biodiversity Initiatives of Our Plant in Germany

Cleaning up of waterways

Nakaumi Shinji-ko Lake Simultaneous Cleaning
2015
On June 14, 2015, a group of 7,500 volunteers — including
the governor of Shimane Prefecture, the mayor of Izumo
city, members of local governments, company employees,
and local residents — participated in a simultaneouscleaning of the shores of Nakaumi Shinji-ko Lake in Shimane
Prefecture. These lake regions have been registered as
wetlands under the Ramsar Convention. A total of 31
people (including employees of NTN CASTING CORP. andtheir children) participated in the lakeshore cleaning as anactivity for Environment Month. In the future, we will continue
to protect the natural environments of Nakaumi Shinji-ko
Lake so that we can preserve these lakes for posterity.

In order to create a natural preserve where small animals
could dwell, NTN Kugellagerfabrik of Germany planted
sawtooth oaks and other oaks and fir trees when construction began on its site in 1971. In 1998, the company
planted 80 cherry trees contributed by employees tocommemorate the 80th anniversary of NTN. In later years,
employees continued to improve the area by clearing
undergrowth, planting trees and thinning a forest while also
working to protect biodiversity.

A resident
hedgehog

Greenery on the factory site

So many
excellent cherry
blossoms
to enjoy
Employees and the family members participating incleaning activities

71

A row of cherry trees in bloom in 2016

Protection of Resources
We are working to reduce waste and water use as well as to make efficient use of resources in eachprocess including production and distribution processes.
Efforts in the NTN Group in Japan
Promote Recycling and Waste Reduction at EachBusiness Site
For the fiscal year ended March 31, 2016, we achieved arecycling rate of 99.9%, which met our target for the year.
However, due to the scrapping of some production facilities
and increased need for coolant replacement, the amount ofwaste generated totaled 65,800 tons (about 1,400 tons above
the target and an increase of 1.5% compared with the total forthe preceding fiscal year), while the amount landfilled totaled
66 tons (16 tons above the target, and a decrease of 6.3%
compared with the total for the preceding fiscal year). The
waste generation intensity increased 1.0%, although our target
was a decrease of 4.8% compared with the result for the fiscal
year ended March 31, 2011. As a result, we couldn’t achieve
three of our targets.
We will continue promoting recycling and waste reductionin the fiscal year ending March 31, 2017.
Generated amount of waste and recycled amount (Japan)(1,000 tons / year)

70
60
50
40
30

64.8

65.8

64.9

‒1.9%

1.0%

‒0.1%

99.8%

99.9%

99.9%

98.0%

60.6

62.1

64.7

65.7

64.8

2013

2014

2015

2016

2017

59.8

60.7

62.3

100 (Reference)

‒2.1%

1.6%

99.8%

59.6

2011

99.7%

Total landfilled amount
Reduction rate in waste generation intensity

Recycled amount
Recycling rate

0

(Target)(Years ended/ending March 31)

For the fiscal year ended March 31, 2016, our water
consumption totaled 1.96 million cubic meters (60,000
cubic meters above the target due to increased coolant
replacement and a decrease of 0.02% compared with thetotal for the preceding fiscal year). Our water consumption intensity declined only to 14.6%; thus, we couldn’t
achieve our target of a 17.6% reduction compared withthe rate for the fiscal year ended March 31, 2011. In bothinstances, we couldn’t achieve our targets.

234

200
100
(Reference)

Industrial water

Groundwater
Tap water
Reduction in consumption intensity

211

‒5.3%

202

Generated amount of waste and recycled amount (overseas)
100
80

77.5
100 (Reference)60

Total landfilled amount
Reduction rate in waste generation intensity

Recycled amount
Recycling rate

(1,000 tons/year)

77.6
‒8.5%

87.6
‒2.6%

88.2

‒9.0%

93.0

‒3.9%

91.1

96.8%

97.1%

98.0%

73.9

84.7

85.6

90.4

89.3

2013

2014

2015

2016

2017

94.6%

94.8%

20

73.4

2011

Generated amount‒10.5%

96.5%

40

Recycled amount(Target)(Years ended/ending March 31)

Achieving our Targets for Both Total Water
Consumption and Water Consumption Intensity
For the fiscal year ended March 31, 2016, our water
consumption totaled 1.236 million cubic meters (exceeding
our targeted reduction by 55,000 cubic meters) while ourwater consumption intensity declined by 5.3% against ourtargeted 3.0% reduction, which met our targets.
For the fiscal year ending March 31, 2017, we will focus
on meeting our targets of reducing our water consumption
intensity by 6.4% relative to the fiscal year ended March 31,
2015, and achieving total water consumption of 1.31 million
cubic meters.

‒7.5%

Americas
EuropeAsia
Reduction in consumption intensity(10,000 m3/year)

200

196

196

‒16.2%‒14.6%

193‒16.0%

100

100(Reference)

150

100

131
96

101

2012

2013

110

‒5.3%

124

China

‒6.4%

131

50

50
0

For the fiscal year ended March 31, 2016, our recycling
rate was 97.1%, and we couldn’t achieve our targeted
minimum of 98%. For the fiscal year ending March 31,
2017, we intend to continue working to meet our targeted
minimum recycling rate of 98%.

Water usage (overseas)

Water usage (Japan)(10,000 m3/year)

150

Pursuing an Improved Recycling Rate

Recycled amount

Promoting Reduced Water Consumption

250

Efforts in the NTN Group Overseas

0

20
10

Generated amountFor the fiscal year ending March 31, 2017, we will
work to meet our target of reducing our water
consumption intensity by 16.0% as compared withthose of the fiscal year ended March 31, 2011 and of
reducing our water consumption to 1.93 million cubic
meters (a decrease of 30,000 cubic meters relative tothe preceding fiscal year).

2011

2013

2014

2015

2016

2017

(Target)(Years ended/ending March 31)

0

2014

2015

2016

2017

(Target)(Years ended/ending March 31)

72

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
Hazardous and 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 are contained in the raw materials, parts, andmaterials it procures. We strive to manage and reduce the amount of environmentally hazardous and harmful
substances we use.

Workshop on the Act on Rational Use and Proper
Management of Fluorocarbons

Soil Purification Completed at Former Site of the
TAKARAZUKA WORKS

In order to strengthen our management following enforcement of the Act on Rational Use and Proper Managementof Fluorocarbons, NTN MIE CORP. held a workshop for all
maintenance workers in June 2015. Led by a specialist
supplier, the workshop familiarized employees with alllegal requirements and provided explanations of methodsof inspecting facilities and how to enter data into therecord book.

In March 2009, the TAKARAZUKA WORKS ended production and closed its operations. Following a soil survey
conducted as part of the sale of the site, it was determinedthat soil contamination exceeded the standard values
specified in the Soil Contamination Countermeasures Act.
As a result, soil purification work was conducted underadministrative guidance and was completed in the fiscal
year ended March 31, 2016. The site will now be used for
housing, commercial facilities, and relevant facilities of
Takarazuka city.
In the future, all business sites will conduct thoroughvoluntary soil surveys, manage any soil contamination
detected, and prevent contamination of the water and soil
through regular monitoring of plumbing and tank pits.

Disposal of Capacitors Containing High
Concentrations of PCBs
Workshop in progress

Expanding the Capacity of the Sewage
Treatment Facility
Guangzhou NTN-Yulon Drivetrain Co., Ltd. (Guangzhou
NTN), located in the city of Guangzhou, China, expanded
its sewage treatment facility as a means of reducing sludge
and treating its wastewater. Its sewage treatment processincorporates an oil-water separation system, a microbe
treatment system, and a phosphorus and manganeseremoval system. With this system, the company was able
to reduce its sludge volume by about 25%. The company iscommitted to strengthening its sewage management andtaking further steps to reduce the release of environmentallyhazardous and harmful substances.

To comply with the Law Concerning Special Measuresagainst PCB Waste, the NTN Group in Japan systematicallydispose of PCBs. In the fiscal year ended March 31, 2016,
the NTN Group disposed of 24 capacitors containing highconcentrations of PCBs and four storage containers
containing high concentrations of PCBs in the IWATA
WORKS. In the fiscal year ending March 31, 2017, theGroup is scheduled to continue with the disposal of 46
capacitors containing high concentrations of PCBs and 11
storage containers containing high concentrations of PCBs
in the IWATA WORKS.

Removal of capacitors containing PCBs

73

New sewage treatment facility

Environmental Management
The NTN Group strives to enhance the level of environmental activities throughout the Group by establishing and operating an Environment Management System (EMS) in line with the international standard
ISO 14001.

Environmental Management System
Building a Management System Based on “NTN
Environmental Policy”
Based on the NTN Environmental Policy, the purpose ofwhich is to reduce environmental impact and ensure
continuous development of society, the NTN Group has
built 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 Certifications Obtained at Business Sites
Outside Japan
Three of our business sites in Europe — NTN-SNR, NTE
and DMF — obtained certification of ISO 50001 registration
during the fiscal year ended March 31, 2016 (For details,
see P. 70). In May 2016,
NTN do Brasil Producão
de Semi-Eixos Ltda.
(NDB) in Brazil obtained
certification of ISO 14001
registration.

Accommodating Revisions to the ISO 14001
Standard
In September 2015, the 2004 version of the ISO 14001
standard was revised to the 2015 version; The NTN Groupin Japan is scheduled to undergo assessments in July 2017as part of the transition process. Because relevant data
must be revised during the first half of fiscal 2016 in preparation for the migration assessments, we must first prepare
to add or delete data as part of the revision of our Environmental Management Manual for compliance with the newstandard.
We will continue to promote certification of the NTNGroup overseas as well as the NTN Group in Japan.
Business Sites with ISO 14001 Certification
Name of the business site

Date ofcertification

Company

Year Month Registration No. Registration
body

Region
Plant

Multi-site certification

Japan

1999

JSAE176

JSA(Business sites included) Head Office, KUWANA WORKS, IWATA WORKS, OKAYAMA WORKS, NAGANOWORKS, NTN KONGO CORP., NTN ENGINEERING PLASTICS CORP., NTN ADVANCED MATERIALS 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., NTN AKAIWA CORP.
NTN ADVANCED MATERIALS CORP. KAMEYAMA
Plant

2000

8

JQAEM0956

NTN TADO CORP.

2005

3

JSAE1058

JSA

Elgin Plant

2000

6

111994

LRQA

Schiller Park Plant

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

112005LRQA

NTK PRECISION AXLE CORP.

2008

4

4000717LRQA

NTA PRECISION AXLE CORP.

2013

4

C0094458-EM1

NSF

Canada NTN BEARING CORP. OF CANADA LTD.
NTN do Brasil Producão de Semi-Eixos Ltda.
BrazilGermany NTN Kugellagerfabrik（ Deutschland）G.m.b.H.

1999

7

287

KPMG

2016

5

200668

DNV

1999

6

201167-2

LRQA

NTN TRANSMISSIONS EUROPE

2003

1

19479

AFAQ

NTN-SNR ROULEMENTS*

2009

1

0448-4UTACAMERICAN NTN BEARING
MFG. CORP.

U.S.A.

FranceNTN-BOWER CORP.

Thailand NTN MANUFACTURING（THAILAND）CO., LTD.

ISO 14001 management system
certificate (NDB)

11

Registration

China
India

JQA

2003

3

31634

TÜV

Guangzhou NTN-Yulon Drivetrain Co., Ltd.

2005

4

104043247

TÜVShanghai NTN Corp.

2005

7

CH05/0489

SGS

NTN-LYC（Luoyang）Bearing Corp.

2014

12

00615E20208R0M QAC

NTN NEI Manufacturing India Private Ltd.

2011

6

104071903

TÜV* Obtained through Multi-site certification

NTN 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.
1. 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 highprecision processing technologies.
2. Reduction of environmental impact• NTN will work to prevent global warming by improving energy efficiency
activities throughout the business process, from procurement ofmaterials 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 substancessuspected of having harmful effects.

3. Observance of laws and regulations and implementation of thoroughenvironmental management systems• In addition to observing laws, regulations and ordinances, NTN will
actively seek to comply with requests from regional communities andcustomers by imposing tighter self-determined standards and internal
rules, and keeping to them.
• NTN will establish an environmental management organization andoperational methods, and will conduct environmental audits to maintainand improve corporate environmental management systems. We will
also advance communication with society at large 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.

74

E

nvironment

Response to Laws
Response to Legal Reforms
The NTN Group keeps abreast of the latest environmental
laws and regulations and keeps relevant divisions andsections up to date with the necessary information.
During the fiscal year ended March 31, 2016, weestablished a system capable of managing the history of
implementation of simplified inspections and periodic
inspections of all target devices specified under the Act on
Rational Use and Proper Management of Fluorocarbons(put into force on April 1, 2015). This system applied toinspection and repair and quantity of refrigerant recharged
or recapture as a maintenance record. In this way, we haveenhanced our legal compliance.

Environmental Communication
Exhibit at the “4th International Wind Energy
Expo & Conference WIND EXPO 2016”
We take part in environment- and technology-related trade
fairs in order to promote its products and technologies that
contribute to protecting the environment.
From March 2 to 4, 2016, we presented an exhibit at
the Tokyo Big Sight exhibition facility under the theme “NTN
Transformation for Next 100 – Wind Power Revolution.”
Small wind turbine, Micro Hydro Turbine and Hybrid Street
Light that combines small wind turbine and solar power
panel were exhibited.
We have expanded our business into the field of naturalenergy by exploiting the technologies and expertise that wehave cultivated to date. We emphasized to exhibition
visitors that we would
continue to contribute tosolving both global environmental issues and energy
issues.

Natural energy-related equipment
exhibited at the NTN booth

In the fiscal year ended March 31, 2016, internal
audits were held at all business sites and cross-audits
were held at seven business sites. ISO audits were held at
8 business sites in July 2015, and these sites kept theirmulti-site certification designation up to date without any
indication of violation.

Number of Internal Environmental Auditors
Reaches 328
The NTN Group in Japan holds training once a year toincrease the number of internal environmental auditors. In
the fiscal year ended March 31, 2016, internal environmental auditor training with 24 participants from 14 businesssites was held in December led by a top instructor from
L.M.J. Japan, an institute that trains ISO auditors. This
training brought the number of NTN internal environmental
auditors to a total of 328.

Enhancing the Skills of Internal Environmental
Auditors
From November 2015 to January 2016, we held briefing
sessions at six districts in Japan in line with revision of “TheManual for Internal Environmental Auditors and Audits ofHazardous Substances”; moreover, we set out to enhance
the skills of our internal environmental auditors. The content
covered recent significant revisions to environmental laws,
items identified by external examining bodies, and details of
the manual revisions. Participants included a total of 113
auditors, who became thoroughly familiar with the content.

Environmental Education
Providing Environmental Education to Employeesof Distributors in Japan
We held environmental workshops for a total of 58 employees of distributors who work on the front lines with customers. These workshops were held in our WEST JAPANSALES OFFICE in August, in our EAST JAPAN SALESOFFICE in September, and in our CENTRAL JAPAN SALESOFFICE in November. In these workshops, we introduced
ways of responding to the presence of environmentallyhazardous materials, which are the main subject of customer inquiries for the latest environmental information. We
provided thorough explanations and requested their understanding and cooperation.

Environmental Audits
Two Types Internal Audits Conducted
The NTN Group in Japan has internal site audits (once ayear), which are conducted by each business site’s internal
auditors, and cross-audits (every three years), which areconducted between business sites. Also part of improving
the level of environmental management systems are external audits by ISO certification institutes.

75

Workshop at the WEST JAPAN SALES OFFICE

Third-Party Opinion
NTN Report 2016 Third-Party Opinion
Takeshi Mizuguchi
Professor, Faculty of Economics, Takasaki City University of Economics

ProfileAfter working at a trading company and auditing corporations, he became the lecturer in the Faculty of Economics
at Takasaki City University of Economics from 1997, and assumed his present position in 2008.
In 2015, he moved to London to study responsible investment and non-financial information disclosure in the
U.K. and Europe.
Other appointments include being a member of the Central Environment Council’s Special Committee on theEnvironment and Finance (2009 to 2010), chair of the Japanese Institute of Certified Public Accountants’ TechnicalCommittee on Environmental Accounting (2005 to 2010), and auditor-secretary of the Society for Environmental
Economics and Policy Studies (SEEPS) (2008 to 2014). His areas of expertise cover responsible investment,
disclosure of non-financial information and environmental accounting.
Major publications include “Responsible Investment” (Iwanami Shoten, winner of SEEPS Commentary Award)
and “The Environment and Financial/Investment Trends” (author/editor, Chuo Keizai-sha).

In this year’s report, “NTN’s Value Creation Process” hasbeen presented as a cycle that introduces human capital,
intellectual capital and natural capital that leads — throughthe creation of social value — to an increase in both financial
capital and non-financial capital. In the preceding fiscal year,
the indices of human capital and natural capital were
presented under the heading of “Value Creation,” but it
seems the concept of “integrated thinking” that relates social
value to shareholder value has become clearer this year.
On the other hand, looking internationally, two global
agreements closely related to CSR were entered into in
2015. These were the Sustainable Development Goals(SDGs) adopted by the United Nations and the Paris
Agreement adopted at the 21th Session of the Conferenceof the Parties to the United Nations Framework Convention
on Climate Change (COP 21). The Paris Agreement, incalling for standards intended to limit the rise in Earth’s
mean temperature to less than 2 degrees Celsius, aims toachieve a balance between the release and absorption ofmanmade greenhouse gasses in the latter half of thiscentury. It may be said that the real goal of achieving zero
emissions is to make significant changes in longstanding
business assumptions. We may be entering an era in which
the approach of integrated thinking is officially adopted.
Regarding climate change mitigation as presented in thisreport, I appreciate the steady steps that have been taken
toward reducing CO2 emissions in manufacturing processes
and logistics. But in order to achieve a real zero-emissions
society as a whole, a variety of approaches are required.
In this regard, I think it is quite appropriate for this report
to identify the company’s natural energy business andelectric vehicle business as the new enterprises that will
support the company for the next 100 years. The section
covering technical features explains a variety of technologies, but I expect that a breakthrough will be needed inorder to limit the rise in Earth’s mean temperature to lessthan 2 degrees Celsius.
I also appreciate that the company is focused on theaftermarket business. I believe this business will increase inimportance in the future, especially as the EU promotes its“Circular Economy.”
Alongside climate change is another social issue
attracting global attention, and that is human rights concerns
in the supply chain. The company’s CSR procurement
guidelines do address the issues of human rights and labor.
In particular, they specify employment and working conditions in the following terms: “We recognize global efforts tostamp out forced and compulsory labor and child labor.”
Therefore, my view is that the company’s response in thisregard is progressing. However, because the supply chain
can contain problems that are difficult to uncover, I hope thecompany will continue to monitor the situation.
I would also like to address the company’s initiatives tosupport its employees in both their work and in childrearing inlight of the social issue of declining birthrates. I think there
should be more disclosure of the results of this effort.
Moreover, the disclosure of the number of non-Japanese in
the upper management of overseas subsidiaries is anotherstep forward in the promotion of diversity. The stakeholder
dialog was a positive element as well that was continued fromlast year. I think that maintaining continuity of membership is
important too, but I think that it can be gradually expanded.

Responding to the Third-Party Opinion
I would like to express my sincere gratitude to Mr. Mizuguchi for once again submitting his invaluable
opinions following his previous effort last year.
We endeavored to reflect the third party opinions and the comments we received at the stakeholder dialog last year.
And “NTN Report 2016” represents the various initiatives we are implementing, including
prevention of global warming, our entry into the natural energy business, promoting CSR across the
supply chain, strengthening of our global network, promoting diversity, and our initiative involving
sustainable social contribution.
At the same time, we are visualizing the relationship between NTN’s value creation, operations andCSR initiatives. We give serious consideration to the invaluable opinions we received, including thoseaddressing our response to “climate change” and “protection of human rights in the supply chain,” andwe refer to these opinions as sources of informative advice on our future development. We intend to meet
our responsibilities as a manufacturing company in order to contribute further to international society.

Hiroshi Nakano
Director and Corporate
General Manager,
CSR Headquarters

76

Financial Review
Summary for the fiscal year ended March 31, 2016

Net sales: 717.0 billion yen, an increase of 15.1 billion yen (2.2%) year-on-year
Operating income: 47.8 billion yen (Operating margin 6.7%)
Interest-bearing debt: 325.2 billion yen, a decrease of 33.9 billion yen from the previous fiscal year end
Capital expenditures: 36.3 billion yen, an increase of 5.0 billion yen (16.1%) year-on-year
Dividends: 10 yen (5 yen at 2nd quarter end, 5 yen at fiscal year end)

Net Sales and Incomes

Sales Performance

Consolidated net sales for the fiscal year ended March 31, 2016
were 716,997 million yen, an increase of 15,097 million yen (2.2%)
year-on-year. Overseas sales totaled 527,440 million yen, an
increase of 17,000 million yen (3.3%) year-on-year. Overseas sales
accounted for 73.6% of net sales overall (Americas 29.6%, Europe
23.6%, Asia and others 20.3%), an increase of 0.9 percentage
points from the previous fiscal year.

Net Sales and Incomes by Business Sector

In the aftermarket applications, development of new demand,increased customer demand and exchange rate effects pushed up
net sales to 113,628 million yen. Meanwhile, operating income was
17,702 million yen.
In the industrial machinery applications, while customer demand
increased for wind turbine and others, decreases in construction
machinery and other applications resulted in net sales of 104,110
million yen. Operating income was 5,618 million yen.
In the automotive applications, increased customer demand inEurope and China coupled with exchange rate effects resulted in net
sales of 499,259 million yen. Operating income was 24,448 million
yen thanks to the effects of increased sales, reduced proportionalcosts, exchange rates and other factors.

Net Sales and Incomes by Region

In terms of sales in Japan, looking at aftermarket applications, there
was an increase in industrial machinery aftermarket applications inJapan, but exports decreased, resulting in almost the same level ofsales as the previous year, as a whole. As for sales of industrial
machinery applications, while construction machinery and otherapplications decreased, automotive applications grew thanks partly
to expanded demand from customers. As a whole, net sales
amounted to 189,557 million yen (down 1.0% from the previous
fiscal year).
In terms of sales in Americas, looking at aftermarket applications, there was an increase in industrial machinery aftermarket
applications. Regarding industrial machinery applications, sales
dropped in construction machinery applications. Sales ofautomotive applications also increased backed by increased
customer demand and other factors. As a whole, net sales grew to212,550 million yen (up 4.9% from the previous fiscal year), helped
partly by exchange rate effects.
In terms of sales in Europe, there was an increase in aftermarket
applications, which was mainly by increased customer demand forautomotive aftermarket applications. Meanwhile, sales of industrial
machinery applications saw declines in wind turbine, aircraft andother applications. Sales also fell in automotive applications. As awhole, net sales amounted to 169,039 million yen (down 1.3% fromthe previous fiscal year), due partly to exchange rate effects.
In terms of sales in Asia and other areas, there was anincrease in aftermarket applications thanks to increased customer
demand for industrial machinery aftermarket applications primarily
in the ASEAN region. Looking at industrial machinery applications,

Cost of sales and Selling, General and Administrative
Expenses

The cost of sales was 576,651 million yen, down 0.8 percentage
points and representing 80.4% of consolidated net sales. This was
mainly due to decreased proportional costs.
Selling, general and administrative expenses were 92,576 million
yen, representing 12.9% of consolidated net sales, or up 0.4
percentage points compared to the previous year.

Incomes

As for the profits of the fiscal year under review, factors contributing
to increased earnings included a decrease in proportional costs andfavorable effects of exchange rates. Meanwhile, factors that led todecreased earnings included sales price level and an increase inpersonal costs.
As a result, the operating income for the term was 47,770 million
yen, up 3,919 million yen from the previous fiscal year.
Other expenses amounted to a net expense of 20,827 million yen.
The major contributing factors were income totaling 8,078 million
yen, including a gain on sale of fixed assets of 2,880 million yen and again on change in equity of 1,552 million yen, and expenses of 28,905
million yen that included loss associated with arbitration award of
13,013 million yen and impairment losses of 2,688 million yen.
As a result, the net income before taxes and equity in earnings ofaffiliated companies for the previous fiscal year was 37,063 million
yen, and for the fiscal year under review it was 26,943 million yen.
Net income per share was 28.28 yen for the year under review.
Regarding annual dividends for the fiscal year under review, weplan to pay a year-end dividend of 5 yen per share, which, when
added to our interim dividend of 5 yen per share, totals 10 yen per
share for the full year.

R&D and Capital Expenditures

R&D Expenditures

R&D expenditures of the entire group for the fiscal year under review
were 18,481 million yen (up 393 million yen over the previous fiscal
year), representing 2.6% of consolidated net sales.
The NTN Group is proactively working to develop bearings,
driveshafts and other products, as well as to create new technologies centered on precision processing, material/heat treatment andtribology, which are our fundamental technologies, for the industrial
machinery, automotive and aftermarket applications. We seek todevelop unrivaled one-of-a-kind technologies and products,
advanced technologies and production technologies. For rolling
bearings and driveshafts, development is underway to enhancefunction by reducing torque demand, as well as to create module

Net Sales

Net Sales by Business Sector

Net Sales by Region

Operating Income / Operating Margin(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(%)

800

800

800

50

10

600

600

600

40

8

30

6

400

400

400
20

4

200

200

200

10

2

0

0

0

77

while sales of wind turbines and other products increased,
construction machinery and other applications decreased,
resulting in an overall decrease. Sales of automotive applications
increased thanks to mass-production in new projects andincreased customer demand in China. As a whole, net sales grewto 145,851 million yen (up 6.7% from the previous fiscal year),helped partly by exchange rate effects.

2011 2012 2013 2014 2015 2016
(Years ended March 31)

2011 2012 2013 2014 2015 2016
(Years ended March 31)■ Aftermarket ■ Industrial Machinery■ Automotive

2011 2012 2013 2014 2015 2016
(Years ended March 31)■ Japan ■ Americas ■ Europe■ Asia and Others02011 2012 2013 2014 2015 2016
(Years ended March 31)■ Operating income［Left axis］
Operating margin［Right axis］

0Net Income (Loss) Attributable to
Shareholder (Parent Company) /Ratio of Net Income (Loss) to Sales

Capital Expenditures
and Depreciation

Inventories /Inventory Turnover Ratio

Interest-Bearing Debt

(Billions of Yen)(%)

(Billions of Yen)

(Billions of Yen)

30

6

60

200

8

400

20

4

150

6

300

10

2

100

4

200

0

0

‒10

‒2

50

2

100

‒20

‒4

0

0

(Billions of Yen)

50
40
30

2011 2012 2013 2014 2015 2016
(Years ended March 31)■ Net income (loss) attributable to shareholder(parent company)［Left axis］
Ratio of net income (loss) to sales［Right axis］(Times)20
1002011 2012 2013 2014 2015 2016
(Years ended March 31)■ Capital expenditures ■ Depreciation

and units products by integrating bearings and peripheral parts.
Through these development efforts, we are contributing to industry
as we put products of high precision and high quality on the market
at fair prices.
Under the ongoing “NTN 100,” our 3-year Medium-termManagement Plan from April 2015 to March 2018, we are vigorously
creating new businesses to “Manage Growth.” For example, wehave developed and conducted demonstration tests on highefficiency compact wind turbines and micro hydro turbines utilizing
natural energy. Preparation for commercialization is also underway
parallel to that. In addition to these operations, we are aggressively
pushing forward with new businesses in new areas, such as
In-wheel Motor System for electric vehicles and car-mounted
Electric Actuator.

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 13,039 million yen, withprojects including the constant velocity joint (CVJ) production
equipment at NTN FUKUROI CORP., and the expansion of bearing
production equipment at NTN’s OKAYAMA WORKS.
In Americas, capital expenditures were 7,445 million yen, withprojects including the construction of bearing and CVJ production
equipment at NTN MANUFACTURING DE MEXICO, S.A.DE C.V. andthe construction of a new plant for newly established NTN DRIVESHAFT ANDERSON, INC.
In Europe, capital expenditures were 8,274 million yen, withprojects including the expansion of bearing production equipment at
NTN-SNR ROULEMENTS and NTN Kugellagerfabrik (Deutschland)
G.m.b.H.
In Asia and other areas, capital expenditures were 7,725 million
yen. Projects included expanding our bearing production equipmentat NANJING NTN CORP., CVJ production equipment at
XIANGYANG NTN-YULON DRIVETRAIN CO. LTD., bearing and CVJ
production equipment at SHANGHAI NTN CORP., and bearing
production equipment at NTN MANUFACTURING (THAILAND) CO.,LTD. and NTN NEI Manufacturing India Private LTD.
After adjusting for -185 million yen in equipment transfers
between segments, total capital expenditures for the fiscal year
were 36,300 million yen.
All expenditures were funded from internal funds and short-termloans. Depreciation for the fiscal year under review amounted to 38,278
million yen (down 2,114 million yen from the previous fiscal year).

Financial Position and Cash Flows

Interest-bearing debt decreased by 33.9 billion yen compared tothe previous fiscal year. Free cash flow came to 12.5 billion yen.
Total current assets at March 31, 2016 amounted to 422,293
million yen, a year-on year decrease of 38,687 million yen (or 8.4%).
Major factors included a 20,467 million yen decrease in cash
and cash equivalents, a 10,342 million yen decrease in notes
and accounts receivable-trade and a 5,908 million yen decrease
in inventories.
Total fixed assets at the fiscal year-end amounted to 296,401
million yen, a decrease of 19,651 million yen (or 6.2%) against theend of the previous fiscal year. Major factors included a decrease of
8,032 million yen in machinery, equipment and vehicles, and adecrease of 6,032 million yen in construction in progress.
As a result, total assets amounted to 794,651 million yen, a
year-on-year decrease of 61,626 million yen (or 7.2%).

02011 2012 2013 2014 2015 2016
(Years ended March 31)■ Inventories［Left axis］
Inventory turnover ratio［Right axis］

2011 2012 2013 2014 2015 2016
(Years ended March 31)

Current liabilities were 288,771 million yen, a year-on-year
decrease of 12,759 million yen (or 4.2%).
Major factors included a decrease of 7,232 million yen in
trade payables and a decrease of 3,683 million yen in accrued
income taxes.
Total long-term liabilities amounted to 257,375 million yen, a
year-on-year decrease of 34,813 million yen (or 11.9%). This ismainly due to a 35,768 million yen decrease in long-term debt andlease obligations, and a 2,060 million yen increase in liabilities for
retirement benefits. As a result, total liabilities were 546,146 million
yen, a year-on-year decrease of 47,572 million yen (or 8.0%).
Total net assets were 248,505 million yen, a year-on-year
decrease of 14,054 million yen (or 5.4%).
Major factors included a decrease of 16,438 million yen intranslation adjustments, a decrease of 6,008 million yen in net
unrealized holding gains on securities, a decrease of 1,105 million
yen in non-controlling interests and an increase of 10,516 million
yen in retained earnings.
The equity to capital ratio was 29.2%, up 0.6 percentage points.
Total net assets per share, based on the number of shares
outstanding over the end of the previous fiscal year, were 436.97
yen per share (a decrease of 24.24 yen per share over the previous
fiscal year). Interest-bearing debt amounted to 325,174 million yen,a decrease of 33,931 million yen (9.4%) from the end of the previous
fiscal year. Factoring in the 7,780 million yen decrease from currency
effects, the actual decrease was 26,151 million yen. The ratio ofinterest-bearing debt to total assets was 40.9% (down 1.0
percentage points compared to the end of the previous fiscal year).
Net working capital was 133,522 million yen, a decrease of
25,928 million yen from the end of the previous fiscal year. The
current ratio was 146.2% (down 6.7 percentage points over the endof the previous fiscal year).
The inventory turnover ratio was 4.02 times (0.21 times up overthe end of the previous fiscal year), while the turnover ratio of total
assets was 0.90 times (up 0.08 times).
Net cash from operating activities was 46,247 million yen (ayear-on-year increase of 21,126 million yen, or 84.1%).
Major items included proceeds of 38,278 million yen fromdepreciation and amortization, and 26,943 million yen from income
before income taxes. In contrast to these items, payments included
a disbursement of 14,441 million yen for income taxes paid and adecrease of 5,408 million yen in trade payables.
Net cash from investing activities was 33,771 million yen (ayear-on-year increase of 2,477 million yen, or 7.9%). This was
mainly due to expenditure of 34,441 million yen in the purchase ofproperty, plant and equipment.
Net cash from financing activities was 27,958 million yen (ayear-on-year decrease of 9,534 million yen, or 25.4%). Major factors
included expenditures of 45,039 million yen to repayment fromlong-term loans and decrease in short-term loans, net of 19,529
million yen, compared to 37,297 million yen in proceeds fromlong-term loans.
After adding a decrease of 172 million yen in translation adjustments and a decrease of 4,813 million yen in cash and cash
equivalents resulted from exclusions from consolidation to the abovechanges, cash and cash equivalents as of the end of the current
fiscal year were 67,311 million yen, a decrease of 20,467 million yen(23.3%) from the previous consolidated fiscal year end.
Free cash flow, the difference between net cash provided byoperating activities and net cash used in investing activities,
amounted to 12,476 million yen. The proportion of net cash
provided by operating activities to net sales was 6.5%.

78

Main Financial Indexes: 11-Year SummaryYears ended March 31

2006

2007

2008

2009

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

434,837

483,818

533,985

527,100

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

37,645

46,79349,612

9,479

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

8.7

9.7

9.3

1.8

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

30,37045,17044,313(10,104)

Net Income (loss) Attributable to
Shareholder (parent company) . . . . . . (Millions of yen)

19,55027,01427,431(8,985)

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

49,284

59,34759,504

49,594

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

28,58632,69339,54745,759R&D costs . . . . . . . . . . . . . . . . . . . . . . (Millions of yen)

14,771

14,221

15,006

17,402

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

561,494

611,944629,464

627,613

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

183,247

215,815

216,401

192,223

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

107,047

107,131

109,969

140,466

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

183,198

197,911

212,874

275,996

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

14,631

17,306

18,96020,679396.73445.61445.98376.77- Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  (Yen)

41.94

58.34

58.43

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

38.55

53.74

54.59

–

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

11.00

16.00

19.00

13.00

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

4.1

4.5

4.9

3.8

Net D/E ratio . . . . . . . . . . . . . . . . . . . . . . . . . .  (Times)

0.80

0.79

0.86

1.38

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

3.6

4.6

4.4

(1.3)

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

11.5

13.8

13.1

(4.3)

NTN-ROI*2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (%)

7.7

8.6

8.6

1.5

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

32.6

34.2

33.3

28.2

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

OTHER INFORMATION*1. In Financial Section, U.S. dollar amounts have been converted from yen, for convenience only, using the approximate exchange rate on March 31, 2016, which was U.S.$1 = ¥112.68*2. NTN-ROI = Net operating income after tax / (Inventories + tangible fixed assets)79

Thousands of US dollars*1(except per share amounts)

2010

2011

2012

2013

2014

2015

2016

452,746

530,056

543,468

539,595

638,971

701,900

716,997

6,363,126

1,399

24,56020,724

7,278

33,00443,85147,770423,944

0.3

4.6

3.8

1.3

5.2

6.2

6.7

6.7

(1,838)22,855

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

26,943

239,111(2,015)

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

23,353

15,037

133,449

21,50429,70054,44048,97933,162

31,26636,300322,151

40,70235,93634,17534,841

39,31540,392

38,278339,705

14,687

15,697

17,157

16,174

17,821

18,08818,481

164,013618,802632,001

693,258

768,462

848,037

856,277

794,651

7,052,281

214,551

210,353

212,126

211,743

213,369

262,559

248,505

2,205,405

126,663

136,985

155,107163,287

166,484

184,128

178,220

1,581,647

231,638

223,284

271,978

360,802381,767

359,105

325,174

2,885,818

17,95919,172

20,78921,39822,15623,36024,10924,109374.19376.05370.19375.84374.68461.21436.973.88(4.00)

27.08

11.27

(26.69)(27.54)

43.91

28.28

0.25

–

–

–

–

–

–

–

–

8.00

10.00

10.00

0

2.00

6.00

10.00

0.09

3.6

3.9

3.5

3.3

3.8

3.8

4.0

1.00

0.92

1.11

1.37

1.27

1.11

1.11

(0.3)

2.3

0.9

(1.9)

(1.8)

2.7

1.8

(1.1)

7.2

3.0

(7.2)

(7.3)

10.5

6.3

0.2

4.2

3.4

1.1

4.6

6.3

6.5

32.2

31.6

28.4

26.0

23.5

28.6

29.2

2016

80

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 27, 2016).
1) Economy
The NTN Group operates global production and sales
networks, and supplies customers in various industrial
sectors. Business results and the financial position of the NTNGroup operations may be affected by the economic conditionsin specific countries and business conditions in industries towhich 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 businessdevelopment of the NTN Group.
Overseas subsidiaries’ foreign currency-denominatedbusiness results and financial positions are converted to yen
for the preparation of consolidated financial statements.
Moreover, many export transactions with overseas customersof the Company are conducted in foreign currencies. Although
the NTN Group hedges risks through forward foreignexchange contracts and expansion of local procurement,
effects of exchange rate fluctuations on business results andfinancial 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 other emerging countries are
gaining ground, bearings have been partially affected by fallingmarket prices.
At the same time, against a backdrop of global pricecompetition, calls for price reductions are mounting in theautomotive industry, which accounts for over half of the NTNGroup sales. Although the NTN Group works continuously to
reduce costs while developing new products of high quality
and high 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 fromoutside sources. To deal with cost increases, especially ofsteel materials, which pose a high weighting in materials
costs, measures have been taken such as mark-ups on selling
prices to reflect higher materials cost. In addition, the Group istargeting cost reductions through enhanced production yields
and VA/VE methods. Nevertheless, business results and the
NTN Group’s financial position may be affected 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
from natural disasters such as earthquakes, floods, and fires.
Although the NTN Group has put into place crisis
management systems and stands ready to engage inmeasures to contain damage as much as possible, risks
cannot be completely eliminated. Business performance andthe financial status of the NTN Group may be affected by anatural disaster or by accidents.

816) Dependence on Specific Industries
The NTN Group’s Bearings Division derives approximately halfof its sales revenues from the automotive industry, which also
accounts for more than half of sales of components that theConstant-velocity Joints Division produces for automotive
power transmission to the drive axle. Dependence on theautomotive industry is therefore high. Although the NTN Group
works to increase sales of bearings and precision equipment
products to the industrial machinery sector and implements
policies to achieve a balanced sales structure, a rapid shift indemand 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 andproduct safety 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 and potentially affect businessperformance and the financial position of 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 NTNGroup may 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
with overseas sales exceeding 50% of consolidated sales.
Overseas business development is associated with thefollowing risks:a. Risks from unforeseen change in tax systems of or between
individual countries
b. Risks from unforeseen change in laws of individual
countriesc. 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 healthlaws, economic statutes such as antimonopoly laws andanti-dumping laws, trade and exchange laws, and securities
trading regulations) of the countries and regions in which itdoes business.
The NTN Group strives to abide by these laws and regulations and conduct fair business activities. However, if the NTNGroup is ever be subject to litigation or involved in legal
proceedings because of a violation of a law or regulation, andif the decision of such litigation or legal proceedings goesagainst the Group, this may have an affect on the businessperformance or the financial state of the Group. As well, if
these laws or regulations change, or if new unforeseen laws or
regulations are enacted, these also may have an affect on thebusiness performance or the financial state of the Group.

Consolidated Balance Sheet
March 31, 2016
Thousands of
U.S. dollars (Note 1)

Millions of yen
2016

2015

2016

¥   67,311¥   87,778$   597,364

924

1,321

8,200

AssetsCurrent assets:
Cash and cash equivalents (Note 15)
Short-term investments (Note 15)
Trade receivables (Note 15):
Notes

12,252

13,027

108,733

Accounts

121,944

131,511

1,082,215

Electronically recorded monetary claims

2,285

1,786

20,279Allowance for doubtful accounts

(899)

(939)

(7,978)135,582

145,385

1,203,249

178,220

184,128

1,581,647

Deferred income taxes (Note 23)

8,928

11,062

79,233

Other current assets (Note 15)

31,32831,306

278,026

422,293460,980

3,747,719

Land (Note 2(g))

33,48834,237297,196

Buildings and structures (Note 2(g))

197,815

198,483

1,755,547

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

777,730

785,762

6,902,112

Inventories (Note 6)

Total current assets

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

Construction in progress

15,705

21,737

139,377

1,024,738

1,040,219

9,094,232(728,337)(724,167)(6,463,765)

296,401

316,052

2,630,467

Investment securities (Notes 8 and 15)

30,21340,251

268,131

Investments in unconsolidated subsidiaries and affiliates (Note 15)

19,08916,734

169,409

139

193

1,234

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

Investments and other assets:

Goodwill
Deferred income taxes (Note 23)

12,449

9,377

110,481

Other assets

14,067

12,690124,840

75,957

79,245674,095¥  794,651¥  856,277$ 7,052,281

Total investments and other assets

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

82

Consolidated Balance Sheet
March 31, 2016
Thousands of
U.S. dollars (Note 1)

Millions of yen

2016

2015

2016

¥ 54,091¥ 75,097$  480,041

69,00045,833

612,354

Liabilities and net assets
Current liabilities:
Short-term bank loans (Notes 9 and 15)
Current portion of long-term debt and lease obligations (Notes 9 and 15)
Trade payables (Note 15):
Notes

1,349

1,300

11,972

Accounts

53,89859,791

478,328

Electronically recorded obligations
Accrued income taxes (Notes 15 and 23)
Deferred income taxes (Note 23)

56,39057,778500,444

111,637

118,869

990,744

4,236

7,919

37,59317

4151

Provision for loss on support to a related company

1,496

1,562

13,276

Other current liabilities

48,29452,246

428,594

288,771

301,530

2,562,753

Long-term debt and lease obligations (Notes 9 and 15)

203,688239,456

1,807,668

Liability for retirement benefits (Note 10)

47,13745,077418,326

308

940

2,733

1,073

2,564

9,523

Total current liabilities (Note 25)
Long-term liabilities:

Provision for product defect compensation
Deferred income taxes (Note 23)
Other long-term liabilities
Total long-term liabilities (Note 25)

5,169

4,151

45,873257,375

292,1882,284,123

Contingent liabilities (Note 12)
Net assets:
Shareholders’ equity (Note 11):
Common stock:
Authorized – 1,800,000,000 shares
54,34754,347482,313

Capital surplus

Issued – 532,463,527 shares in 2016 and 2015

67,351

67,370597,719

Retained earnings

116,644

106,128

1,035,179

Treasury stock, at cost:
795,969 shares in 2016 and 670,098 shares in 2015
Total shareholders’ equity

(616)

(559)

(5,467)

237,726

227,286

2,109,744

8,554

14,56275,914

Accumulated other comprehensive (loss) income:Net unrealized holding gain on securities (Note 8)
Translation adjustments(1,537)

14,901(13,640)Retirement benefit liability adjustments(12,421)(11,478)(110,232)(5,404)

17,985(47,958)

Total accumulated other comprehensive (loss) income, net

16,183

17,288143,619

Total net assets

Non-controlling interests

248,505

262,559

2,205,405

Total liabilities and net assets¥794,651¥856,277$7,052,281

See accompanying notes to the consolidated financial statements.

83Consolidated Statement of Income
Year ended March 31, 2016
Thousands of
U.S. dollars (Note 1)

Millions of yen

Net sales (Note 25)
Cost of sales (Note 17)
Gross profit
Selling, general and administrative expenses (Note 17)
Operating income (Note 25)
Other income (expenses):
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Gain on reversal of reorganization expenses
Gain on reversal of provision for product defect compensation
Foreign exchange loss
Gain on sales of fixed assets (Note 18)
Gain on change in equity (Note 19)
Loss on arbitration ruling (Note 20)
Loss on impairment of fixed assets (Notes 7 and 25)
Payment of prior year customs duties
Loss on surcharge payments under the Anti-Monopoly Act (Note 21)
Loss on liquidation of a subsidiary
Other, net
Income before income taxes
Income taxes (Note 23):
Current
Deferred
Net income
Net income attributable to:Non-controlling interests
Owners of parent

2016

2015

2016

¥716,997
576,651
140,346¥701,900
570,197
131,703$6,363,126
5,117,599
1,245,527

92,576
47,77087,85243,851

821,583
423,944

1,429(4,730)801760
656(6,824)2,880
1,552(13,013)(2,688)———(1,650)(20,827)
26,943

1,156(4,769)987——(2,335)
4,287———(3,567)(2,094)(432)(21)(6,788)37,063

12,682(41,977)
7,108
6,745
5,822
(60,561)
25,55913,773(115,486)(23,855)———(14,643)(184,833)
239,111

10,490405
10,895
16,04812,156888
13,04424,01993,096
3,594
96,690142,421(1,011)¥ 15,037(666)¥ 23,353(8,972)$  133,449

See accompanying notes to the consolidated financial statements.

Consolidated Statement of Comprehensive Income
Year ended March 31, 2016
Thousands of
U.S. dollars (Note 1)

Millions of yen

Net income
Other comprehensive (loss) income (Note 22):
Net unrealized holding (loss) gain on securities (Note 8)
Translation adjustments
Retirement benefit liability adjustments
Share of other comprehensive (loss) income of affiliates accounted
for by the equity method
Other comprehensive (loss) income, net
Comprehensive (loss) income
Total comprehensive (loss) income attributable to:
Owners of parent
Non-controlling interests

2016

2015

2016

¥ 16,048¥24,019$ 142,421(6,008)(17,345)
(934)

6,489
17,513(284)(53,319)(153,932)(8,289)(726)(25,013)¥ (8,965)

1,023
24,741¥48,760(6,443)(221,983)$ (79,562)¥ (8,352)¥   (613)¥46,104¥ 2,656$ (74,122)$  (5,440)

See accompanying notes to the consolidated financial statements.

84

Consolidated Statement of Changes in Net Assets
Year ended March 31, 2016

Millions of yen
Number ofshares in issue

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at cost532,463,527¥54,347¥67,370¥ 82,856¥(534)¥ 8,073

—

—

—

2,312

—

—

—

—

—

2,312

Restated balance atApril 1, 2014

532,463,527

54,347

67,37085,168

(534)

8,073

(1,728)(11,111)

14,096215,681

Cash dividends paid

—

—

—

(2,393)

—

—

—

—

—

(2,393)

Net income attributable toowners of parent

—

—

—

23,353

—

—

—

—

—

23,353Purchases of treasury stock

—

—

—

—

(25)

—

—

—

—

(25)

Sales of treasury stock

—

—

—

—

0

—

—

—

—

0

Balance at April 1, 2014
Cumulative effect of changein accounting principle

Other changes

Net unrealized
holding gain on Translation
securities
adjustments

Retirement
benefit liability
adjustments

Noncontrollinginterests¥ (1,728) ¥(11,111) ¥14,096

Total net
assets¥213,369

—

—

—

—

—

6,489

16,629

(367)

3,192

25,943

532,463,527

54,347

67,370106,128(559)

14,562

14,901(11,478)

17,288262,559

Cash dividends paid

—

—

—

(4,521)

—

—

—

—

—

(4,521)

Net income attributable toowners of parent

—

—

—

15,037

—

—

—

—

—

15,037Purchases of treasury stock

—

—

—

—

(58)

—

—

—

—

(58)

Sales of treasury stock
Change in equity resulting
from transactions with
non-controlling interests
Other changes

—

—

—

—

1

—

—

—

—

1

—
—

—
—

(19)
—

—
—

—
—

—
(6,008)—(16,438)

—
(943)

—
(1,105)(19)(24,494)

Balance at March 31, 2016 532,463,527¥54,347¥67,351¥116,644¥(616)¥ 8,554¥ (1,537) ¥(12,421) ¥16,183¥248,505

Retainedearnings

Treasurystock,
at costBalance at April 1, 2015

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

Balance at April 1, 2015

Capitalsurplus$482,313 $597,888 $  941,853 $(4,961)

Retirement
benefit liability
adjustments

Noncontrollinginterests

Total net
assets$129,233 $ 132,242 $(101,864) $153,426 $2,330,130

Cash dividends paid
Net income attributable to ownersof parent
Purchases of treasury stock——(40,123)

—

—

—

—

—

(40,123)————

133,449
—

—
(515)

—
—

—
—

—
—

—
—

133,449(515)

Sales of treasury stock
Change in equity resulting fromtransactions with non-controllinginterests
Other changes

—

—

—

9

—

—

—

—

9

—
—

(169)
—

—
—

—
—

—
(53,319)—(145,882)—(8,368)—(9,807)(169)(217,376)

Balance at March 31, 2016

$482,313 $597,719 $1,035,179 $(5,467)

See accompanying notes to the consolidated financial statements.

85

Net unrealized
holding gain on Translation
securities
adjustments$ 75,914 $ (13,640) $(110,232) $143,619 $2,205,405

Consolidated Statement of Cash Flows
Year ended March 31, 2016
Thousands of
U.S. dollars (Note 1)

Millions of yen

2016

2015

2016

¥ 26,943¥ 37,063$ 239,111

38,278
2,688
53
—
33
(6)

40,392
—
55
(35)
(40)
32

339,705
23,855
470
—
293
(53)

31
(632)
1,529
—
(2,412)—
11,651(1,429)(2,146)
4,730
1,433
(801)
(2,880)(1,552)—4,599(2,148)(5,408)32
72,586
2,396(4,789)—(11,651)—
2,146(14,441)¥ 46,24792
5(8,559)(27,926)(889)
30,058—(1,156)
—
4,769
459
(987)
(4,287)—5,000(6,892)(10,522)
11,794
2,644
71,0701,820(4,645)(30,058)—(5,000)—(8,066)¥ 25,121275(5,609)13,569—(21,406)—
103,399(12,682)(19,045)
41,977
12,717(7,108)(25,559)(13,773)—
40,815(19,063)(47,994)284
644,178
21,264(42,501)—(103,399)—
19,045(128,159)$ 410,428

Cash flows from investing activities:
Decrease (increase) in short-term investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of other assets
Proceeds from redemption of investment securities
Other
Net cash used in investing activities

336(34,441)
3,121(3,179)1,000(608)(33,771)(78)(31,131)
5,117(4,645)—(557)(31,294)

2,982(305,653)
27,698(28,213)
8,875(5,396)(299,707)

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 assigned to non-controlling interests
Cash dividends paid
Repayment of lease obligations
Other
Net cash used in financing activities(19,529)
37,297(45,039)
4,652(4,521)(249)(569)(27,958)(27,390)
29,524(37,463)980(2,393)(274)(476)(37,492)(173,314)
330,999(399,707)
41,285(40,123)(2,210)(5,049)(248,119)(172)(15,654)
87,778

1,772(41,893)
129,671(1,526)(138,924)
779,002(4,813)¥ 67,311—¥ 87,778(42,714)$ 597,364

Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of fixed assets (Note 7)
Amortization of goodwill
Decrease in provision for surcharge payments under the Anti-Monopoly Act
Increase (decrease) in provision for loss on support to a related company(Decrease) increase in allowance for doubtful accounts
Increase in allowance for directors’ and audit & supervisory board
members’ bonuses(Decrease) increase in provision for product defect compensation
Increase (decrease) in liability for retirement benefits
Decrease in account payable for Anti-Monopoly Act
Decrease in account payable for reorganization expenses
Surcharge payment under Anti-Monopoly Act
Payments for loss on arbitration rulingInterest and dividend income
Proceeds from insurance income
Interest expense
Translation adjustments and foreign exchange loss, net
Equity in earnings of affiliates
Gain on sales of fixed assets, net
Gain on change in equity
Contribution to employees’ retirement benefit trust
Decrease (increase) in trade receivables
Increase in inventories(Decrease) increase in trade payables
Other
SubtotalInterest and dividend income received
Interest paid
Payment for loss of Anti-Monopoly Act
Payment for loss on arbitration ruling
Payment for contribution to employees’ retirement benefit trust
Proceeds from insurance income
Income taxes paid
Net cash provided by operating activities

Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Decrease in cash and cash equivalents resulting from exclusion ofsubsidiaries from consolidation
Cash and cash equivalents at end of the year
See accompanying notes to the consolidated financial statements.

86Notes to Consolidated Financial Statements
March 31, 2016

1. Basis of Preparation
The accompanying consolidated financial statements of NTN
Corporation (the “Company”) and consolidated subsidiaries areprepared on the basis of accounting principles generally accepted inJapan, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards,
and are compiled from the consolidated financial statements preparedby the Company as required by the Financial Instruments andExchange Act of Japan.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated financial
statements issued domestically in order to present them in a format
which is more familiar to readers outside Japan. In addition, certain
notes included herein are not required under accounting principles
generally accepted in Japan but are presented as additional
information.
Certain amounts in the prior year’s financial statements have been
reclassified to conform to the current year’s presentation. Such
reclassification had no effect on consolidated net income or net
assets.
The translation of yen amounts into U.S. dollar amounts is included
solely for the convenience of readers outside Japan and has been
made at ¥112.68 = U.S.$1.00, the exchange rate prevailing on March
31, 2016. This translation should not be construed as a representationthat yen can be converted into U.S. dollars at the above or any otherrate.

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and the significant companies which it
controls directly or indirectly. Companies over which the Company
exercises significant influence in terms of their operating and financial
policies have been included in the accompanying consolidated
financial statements on an equity basis.
The financial statements of certain consolidated subsidiaries
whose fiscal year end is December 31 have been included inconsolidation on the basis of a full fiscal year closing on March 31 forconsolidation purposes.
(b) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the rates of exchange in effect at the balance
sheet date. Revenues and expenses are translated at the rates of
exchange prevailing when the transactions were made.
Assets and liabilities of overseas consolidated subsidiaries aretranslated into yen at the exchange rates in effect at the respectivebalance sheet dates, except for the components of net assets
excluding non-controlling interests which are translated at therespective historical rates. Revenue and expenses are translated at
the average rates of exchange for the respective years. Differences
arising from translation are reflected in “Translation adjustments” and“Non-controlling interests” in the accompanying 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.

87(d) Allowance for doubtful accounts
The allowance for doubtful accounts is computed based on the actual
historical percentage of bad debts and an estimate of uncollectible
amounts determined after an analysis of specific individual receivables.
(e) Short-term investments and investment securities
The accounting standard for financial instruments requires that
securities be classified into three categories: trading, held-to-maturity
or other securities. Trading securities are carried at fair value and heldto-maturity debt securities are carried at amortized cost. Marketablesecurities 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 isdetermined by the moving average method. Non-marketablesecurities classified as other 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 of theCompany and domestic consolidated subsidiaries is computed by thestraight-line method over the estimated useful lives of the respective
assets. Depreciation of foreign consolidated subsidiaries is principally
computed by the straight-line method over the estimated useful livesof the respective assets.
The principal estimated useful lives are as follows:
Buildings and structures
10 to 50 years
Machinery, equipment and vehicles	  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, 2016 and 2015 were reduced by the following amounts:
Millions of yen
2016
2015

Land
Buildings and structures
Machinery, equipment andvehiclesThousands of
U.S. dollars
2016¥  799434¥  799478$ 7,091
3,852

195¥1,428332¥1,6091,731$12,674(h) Provision for loss on support to a related company
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) Liability for retirement benefits
Liability for retirement benefits has been provided principally at an
amount calculated based on the retirement benefit obligation after thefair value of the pension plan assets are deducted. The estimatedbenefit is attributed to each period by the benefit formula method overthe estimated years of service of the eligible employees.
Past service cost is amortized as incurred primarily by the straightline method over a period of principally 15 years, which is within theestimated average remaining years of service of the eligible employees.

Net unrecognized actuarial gain or loss is amortized commencing
in the year following the year in which the gain or loss was recognizedprimarily by the straight-line method over a period of principally 15
years, which is within the estimated average remaining years of serviceof the eligible employees.

(q) 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 theparent company and its wholly owned domestic subsidiaries.

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

3. Accounting Changes(k) Leases
For lease transactions involving the transfer of ownership, the leased
assets are depreciated by the same methods used for owned fixed
assets.
For lease transactions not involving the transfer of ownership,leased assets are depreciated over the lease period using the straightline method with a nil residual value.
The Company continues to account for finance lease transactions
not involving the transfer of ownership that commenced prior to April
1, 2008 as operating leases.
(l) Goodwill
Goodwill is being amortized by the straight-line method over theestimated period of the economic benefits.
(m) 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 areamortized by the straight-line method over their respective estimateduseful lives, generally 5-year period.
(n) 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.
(o) Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes in fair value
included in net income for the period in which they arise, except forderivatives which meet the criteria for deferral hedge accounting
under which realized gain or loss, net of the applicable income taxes,
is deferred as a component of net assets. Receivables and payables
hedged by forward foreign exchange contracts which meet certain
conditions are translated at the corresponding foreign exchange
contract rates. Interest-rate swaps which meet certain conditions areaccounted for as if the interest rates applied to the interest-rate swaps
had originally applied to the underlying debt.
Interest-rate and cross currency swaps which meet certain
conditions are accounted for as if the interest rates and currencies
applied to the interest-rate and cross currency swaps had originallyapplied to the underlying debt.
(p) 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.

Accounting Standards for Business Combinations
The Company and its domestic subsidiaries adopted “Revised
Accounting Standard for Business Combinations” (AccountingStandards Board of Japan (“ASBJ”) Statement No. 21 of September
13, 2013), “Revised Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No.22 of September 13, 2013),“Revised Accounting Standard for Business Divestitures” (ASBJ
Statement No.7 of September 13, 2013) and other standards. These
revised accounting standards are applied from the fiscal year ended
March 31, 2016. Accordingly, differences resulting from changes inownership interest in a subsidiary when control over the subsidiary is
retained are recognized under capital surplus, and acquisition-related
costs are recorded as expenses for the period in which they arise. For
business combinations conducted on or after the beginning of theyear ended March 31, 2016, the accounting method has beenchanged to reflect adjustments of the allocation of acquisition costson the finalization of provisional accounting treatments in the
consolidated financial statements for the year in which the businesscombination occurs. In addition, the presentation method of net
income was amended, and “minority interests” were changed to“non-controlling interests.” Certain reclassifications were made to theprevious year’s consolidated financial statements to reflect thesechanges in presentation.
In the consolidated statement of cash flows for the year ended
March 31, 2016, cash flows related to the acquisition or sale of sharesof subsidiaries not resulting in a change in the scope of consolidation
are classified into “cash flows from financing activities”, while cash
flows related to expenses arising from acquisition of shares ofsubsidiaries resulting in a change in the scope of consolidation or
expenses arising from acquisition or sale of shares of subsidiaries not
resulting in a change in the scope of consolidation are classified into
“cash flows from operating activities.”
From April 1, 2015, these revised standards are applied
prospectively in accordance with the transitional treatment provided in
Article 58 – 2 (4) of ASBJ Statement No.21, Article 44 – 5 (4) of ASBJ
Statement No.22 and Article 57 – 4 (4) of ASBJ Statement No.7.
The effect on operating income, ordinary income, income before
income taxes and capital surplus for the year ended and as of March
31, 2016 was immaterial.

4. Changes in Accounting Policies Which are
Difficult to Distinguish from Changes in
Accounting Estimates
Change in Depreciation Method
Effective April 1, 2015, the Company and its domestic consolidated
subsidiaries have changed the depreciation method from thedeclining-balance method, which was previously applied to property,
plant and equipment, other than buildings (except for structuresattached to the buildings), to the straight-line method. In conjunction
with the formulation of the Mid-term Management Plan “NTN100,” theCompany reassessed the actual usage conditions and the operating
conditions of the manufacturing facilities of the Company and its
domestic consolidated subsidiaries. As a result, manufacturing
facilities are expected to operate stably over the long term because88the Company and its domestic consolidated subsidiaries areproceeding with the foundation of the global manufacturing system tosupply products stably and the domestic manufacturing system tosupply high-value added products stably through the strengthening of
the manufacturing system for growing markets where an increase indemand is expected, in the context of the expansion of the overseas
business. Accordingly, the Company and its domestic consolidated
subsidiaries determined that it is more appropriate to adopt thestraight-line method as the depreciation method.
The effect of this change was to increase operating income,ordinary income and income before income taxes by ¥2,979 million($26,438 thousand), respectively.

JICPA Report No.66, whereby companies are categorized into fivecategories and deferred tax assets are calculated based on each ofthese categories. However, the ASBJ conducted a necessary review
regarding the partial accounting treatments for the categorizing criteria
and recoverability of deferred tax assets and established the guidance
in applying “Accounting Standard for Tax Effect Accounting” (BusinessAccounting Council of Japan), regarding the recoverability for deferred
tax assets.
The Company expects to adopt the revised implementation
guidance from the beginning of the year ending March 31, 2017.
The Company is currently evaluating the effect of adopting therevised accounting guidance on the consolidated financial statements.

5. Standards Issued but Not Yet Effective

6. Inventories

Implementation Guidance on Recoverability of Deferred Tax
AssetsOn March 28, 2016, the ASBJ issued “Revised Implementation
Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance
No.26) which basically transferred the accounting guidance includedin the Japanese Institute of Certified Public Accountants Audit
Committee Report No.66 “Audit Treatment on Determining the
Recoverability of Deferred Tax Assets” (JICPA Report No.66) to the
ASBJ. The ASBJ basically continues to apply the framework of theInventories at March 31, 2016 and 2015 consisted of the following:
Millions of yen
2016
2015

Finished goods
Work in process
Raw materials and supplies¥103,195
45,80829,217¥178,220¥103,307
46,51234,309¥184,128

Thousands of
U.S. dollars
2016$  915,823
406,532
259,292$1,581,647

7. 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 theCompany and its consolidated subsidiaries do not expect any future use for them and do not expect them to be recoverable. Consequently, theCompany and its consolidated subsidiaries recorded related losses on impairment of fixed assets of ¥2,688 million ($23,855 thousand) in theaccompanying consolidated statement of income for the year ended March 31, 2016:

Location

Usage

Classification

Japan
Asia and other areas

Production equipment
Production equipment and otherConstruction in progress
Construction in progressMillions of yen
2016

Thousands of
U.S. dollars
2016¥  2262,462¥2,688$ 2,006
21,849$23,855

The recoverable value of the fixed assets presented in the above table has been measured primarily at net realizable value or value in use. If a
fixed asset is unlikely to be sold or diverted to other usage, such asset is valued at nil.

8. Securities(a) Information regarding marketable securities classified as other securities at March 31, 2016 and 2015 is summarized as follows:
Millions of yen

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

89

Carrying
value

2016
Acquisition
costs

Unrealized
gain (loss)

Carrying
value

2015
Acquisition
costs

Unrealized
gain (loss)¥25,002¥11,717¥13,285¥37,244¥16,170¥21,074

3,825
2,000
5,825
¥30,827

5,080
2,000
7,080
¥18,797(1,255)—(1,255)¥12,030595
10,00010,595¥47,839627
10,00010,627¥26,797

(32)
—
(32)
¥21,042Securities whose carrying value
exceeds their acquisition costs:
Equity securities
Securities whose carrying value does
not exceed their acquisition costs:
Equity securities
Other
Subtotal
Total

Carrying
value

Thousands of U.S. dollars
2016
Acquisition
costs

Unrealized
gain (loss)$221,885$103,985$117,900

33,946
17,74951,695$273,580

45,084
17,74962,833$166,818(11,138)—(11,138)$106,762(b) Sales and aggregate gain on investment securities are summarized as follows:
There were no sales of investment securities for the years ended March 31, 2016 and 2015.

9. 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 1.05% and 0.65% at March 31, 2016 and2015, respectively.
Long-term debt and lease obligations at March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Loans from banks and other financial institutions, due through 2025, at an averageannual interest rate of 1.39%
Lease obligations due through 2035
Less current portion

2016

2015

2016

¥271,083
1,605
272,688(69,000)¥203,688¥284,009
1,280
285,289(45,833)¥239,456$2,405,777
14,2452,420,022(612,354)$1,807,668

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2016 are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2017
2018
2019
2020
2021
2022 and thereafter¥ 69,000
72,04160,13017,392
27,02027,105¥272,688$  612,354
639,341
533,635
154,349
239,794
240,549$2,420,022

10. 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 lumpsum payment plans), covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts of which are
determined by reference to their basic rates of pay, length of service, and the conditions under which termination occurs. They also have defined
contribution pension plans and advance payment plans. Certain overseas consolidated subsidiaries have defined benefit pension plans and/or
defined contribution pension plans. The Company has also established an employees’ retirement benefit trust.

90

2. Defined benefit pension plans(1) The changes in the retirement benefit obligation for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation at the beginning of the year
Cumulative effect of change in accounting principle
Restated balance at the beginning of the year
Service cost
Interest cost
Actuarial gain and loss
Benefits paid
Other
Retirement benefit obligation at the end of the year

2016

2015

¥109,664—
109,664
3,340
1,994(2,821)(6,281)(918)¥104,978¥106,253(3,557)
102,696
2,995
1,993
6,437
(7,038)2,581¥109,664

2016$973,234—
973,234
29,641
17,696(25,035)(55,742)(8,147)$931,647*Certain domestic consolidated subsidiaries calculate the liability for retirement benefits based on the simplified method.

(2) The changes in plan assets for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

Plan assets at fair value at the beginning of the year
Expected return on plan assets
Actuarial gain and loss
Contributions by the employers
Benefits paid
Other
Plan assets at fair value at the end of the year

2016

2015

¥64,587
2,122(6,128)2,172(3,639)(1,273)¥57,841¥52,004
1,945
4,525
7,328
(3,964)
2,749¥64,5872016$573,190
18,832(54,384)
19,276(32,295)(11,298)$513,321(3) The balance of retirement benefit obligation and plan assets at fair value, liabilities and assets recognized in consolidated balance sheets asof March 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen
2016

2015

2016

Unfunded retirement benefit obligation
Net amount of liabilities and assets recognized in the consolidated balance sheet¥ 96,786(57,841)
38,945
8,192
47,137¥102,203(64,587)
37,616
7,461
45,077$ 858,946(513,321)
345,625
72,701
418,326

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

47,137¥ 47,137

45,077¥ 45,077

418,326$ 418,326

Funded retirement benefit obligation
Plan assets at fair value(4) The components of retirement benefit expenses for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization:
Actuarial loss
Past service cost
Retirement benefit expenses

2016

2015

¥ 3,340
1,994(2,122)¥ 2,995
1,993(1,945)$ 29,641
17,696(18,832)

2,500
(162)
¥ 5,550

2,210
(195)
¥ 5,058

22,187(1,437)$ 49,2552016(5) The components of retirement benefit liability adjustments included in other comprehensive income (before tax effect) for the years ended
March 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

Actuarial gain and loss
Past service cost
Total

91

2016

2015

2016

¥(808)(149)¥(957)

¥ 298
(203)
¥ 95

$(7,171)(1,322)$(8,493)

(6) The components of retirement benefit liability adjustments included in accumulated other comprehensive income (before tax effect) as ofMarch 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial loss
Unrecognized past service cost
Total

2016

2015

2016

¥(17,593)(297)¥(17,890)¥(16,785)(148)¥(16,933)$(156,132)(2,636)$(158,768)(7) The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2016 and 2015 are as follows:

Equities
Bonds
General accounts at life insurance companies
Other
Total

2016

2015

43.7%
19.7
17.1
19.5
100.0%

49.5%
20.7
16.2
13.6
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 andanticipated 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

2016

2015

Principally 1.2%
Principally 2.5%

Principally 1.2%
Principally 2.5%

3. Defined contribution pension plans
Thousands of
U.S. dollars

Millions of yen

Contributions to defined contribution pension plans

2016

2015

2016

¥1,568¥1,444$13,916

11. 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 capitalsurplus (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 by resolution of the shareholders or by the Board of Directors if certain conditions are met.
		 Retained earnings include the legal reserve provided in accordance with the provisions of the Law. The legal reserve of the Company
included in retained earnings amounted to ¥8,639 million ($76,668 thousand) at March 31, 2016 and 2015.
(b) Movements in shares issued and treasury stock during the years ended March 31, 2016 and 2015 are summarized as follows:

April 1, 2015

Shares issued: Common stock
Treasury stock: Common stock

532,463,527
670,098

Number of shares
2016
Increase
Decrease—
127,486—
1,615

March 31, 2016

532,463,527
795,969

2015
April 1, 2014

Shares issued: Common stock
Treasury stock: Common stock

532,463,527
619,746

Increase—
51,285Decrease—
933

March 31, 2015

532,463,527
670,098

The increase in treasury stock of 127,486 shares was due to purchases of 49,486 shares of less than one voting unit and the acquisition of
78,000 shares under provisions of Article 156 of the Law (the acquisition of treasury stock based on the resolution of the meeting of theshareholders) applied pursuant to Article 163 of the Law (the acquisition of treasury stock based on the resolution of the Board of Directors
meeting) for the year ended March 31, 2016. The increase in treasury stock was due to purchases of shares of less than one voting unit for theyear ended March 31, 2015. The decreases in treasury stock were due to sales of shares at requests of shareholders owning less than one
voting unit for the years ended March 31, 2016 and 2015.

92

12. Contingent Liabilities
Lawsuits, etc.
(1) In June 2012, the Company and its former executives received anindictment filed by the Tokyo District Prosecutors Office (hereinafterreferred as TDPO) on suspicion of having violated the AntiMonopoly Act of Japan in connection with the sales of bearings inJapan. In March 2013, the Company received a cease and desist
order and surcharge payment order for ¥7,231 million ($64,173
thousand) from the Japan Fair Trade Commission (hereinafterreferred as JFTC). Because the assertions by the JFTC and the
TDPO are different from the Company’s view of the facts, in April
2013, the Company requested the JFTC to initiate a hearing. As aresult, hearing proceedings for the JFTC orders were commenced
in September 2013. In addition, in respect of a criminal trial, theCompany had been appealing against the conviction declared in
February 2015 by the Tokyo District Court, but the High Court
rendered its judgment and rejected the appeal in March 2016. The
Company and its former executives have appealed to the Supreme
Court of Japan.
		 There are ongoing investigations by authorities into consolidated
subsidiaries in South Korea and elsewhere.

(2) In the U.S. and Canada, a number of class action suits have been
filed against the Company and its subsidiaries for suspected pricefixing of bearing sales with business competitors.
(3) In February 2016, a lawsuit was filed against eight bearing
manufacturers, including the Company, in the United Kingdom
Competition Appeal Tribunal. The suit sought the joint payment ofdamages of €507.8 million ($575,489 thousand, provisionalamount) to Peugeot S.A. and its total 19 group companies(hereinafter referred to as the Plaintiffs). The suit has been filed
because the Plaintiffs claimed damages incurred in connection
with the alleged violation of the European Competition Law, whichis the subject of a decision made by the European Commission on
March 19, 2014. The Company insists on the legitimacy of its
counter argument.
(4) The Company or its related companies may be subject to lawsuits
similar to the above mentioned lawsuits, etc. Depending on the
results of the above lawsuits, etc, the results of operations of theCompany and its consolidated subsidiaries could be affected.
However, it is currently difficult to make reasonable estimates ofthe future possible effects on the results of operations and financial
position of the Company and its consolidated subsidiaries.

13. 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 theCompany and its consolidated subsidiaries at March 31, 2016 and 2015, which would have been reflected in the accompanying consolidatedbalance 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

Buildings and structures

Buildings and structures

Acquisition
costs

2016
Accumulated
depreciation

Net bookvalue

Acquisition
costs

2015
Accumulated
depreciation

Net book
value¥1,412¥1,308¥104¥1,412¥1,252¥160

Acquisition
costs

Thousands of U.S. dollars
2016
Accumulated
depreciation

Net book
value$12,531$11,608$923

Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted
to ¥56 million ($497 thousand) and ¥58 million for the years ended March 31, 2016 and 2015, respectively. Depreciation of the leased assets
computed by the straight-line method over the respective lease terms with a nil residual value amounted to ¥56 million ($497 thousand) and ¥58
million for the years ended March 31, 2016 and 2015, respectively.
Future minimum lease payments subsequent to March 31, 2016 for finance leases accounted for as operating leases are summarized asfollows:
Years ending March 31,

20172018 and thereafter
Total

Millions of yen

Thousands of
U.S. dollars

¥ 57
47
¥104

$506
417
$923

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, 2016 and 2015.

93

14. Operating Leases
Future minimum lease payments subsequent to March 31, 2016 for non-cancelable operating leases were as follows:
Years ending March 31,

Millions of yen

Thousands of
U.S. dollars

20172018 and thereafter
Total¥1,023
4,427¥5,450$ 9,079
39,288$48,367

15. 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 nothold them for speculative purposes.
(b) Types of financial instruments and related risks
Trade receivables, notes, accounts receivable and electronicallyrecorded monetary claims, are exposed to credit risk of customers. In
addition, as a result of the business of the Group, which operates
globally, foreign currency trade receivables are exposed to currency
rate fluctuation risk, which is mitigated by utilizing forward foreign
currency exchange contracts. Securities are mainly composed ofstocks of the companies with which the Group has business
relationships and they are exposed to fluctuation risk of market prices.
Trade payables, notes, accounts payable and electronicallyrecorded obligations, are due within one year. Certain trade payables
resulting from the import of raw materials are denominated in foreign
currencies. These are exposed to fluctuation risk of foreign currencies.
However, the risk is mitigated because the trade payables, notes andaccounts payable denominated in foreign currencies are within therange of accounts receivable denominated in the same currencies.
Loans are mainly utilized for business operations of the Group.
Short-term loans are mainly utilized for financing of operating activities.
Long-term loans are mainly utilized for capital investments andfinancing. These have maturity dates of 9 years or less, at the longest,
subsequent to March 31, 2016. Certain loans are exposed tofluctuation risk of interest rates and fluctuation risk of exchange rates
and this risk is hedged 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 option
agreements and interest rate swap agreements for the purpose of
avoiding future fluctuation risk of foreign currencies trade receivables
and payables and mitigating future fluctuation risk of interest rate ofloans and corporate bonds. The Group utilized forward foreign
currency exchange contracts, interest rate swap agreements andcross currency swap agreements for the year ended March 31, 2016.
Refer to “(o) Derivative financial instruments and hedging activities” inNote 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 andtries 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 highcredit 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 crosscurrency swap agreements to mitigate fluctuation risk of interest rates
and fluctuation 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) and by
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 andmonitoring of the derivative transactions in accordance withmanagement policies and its consolidated subsidiaries apply thesame approach. Each derivative transaction of the Company isreported to the responsible director when entered into. The
consolidated subsidiaries are required to report the status of theirderivatives transactions to the Company on a monthly basis and arealso 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 on reports of each section.
(d) S upplementary 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 notionalamounts of derivatives in Note 16 “Derivative Financial Instruments
and Hedging Activities’’ are not necessarily indicative of the actual
market risk involved in the derivative transactions.

94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, 2016 and 2015, areshown in the following table. The table does not include financial instruments for which it is extremely difficult to determine the fair value. (Pleaserefer to Note 2 below).
Millions of yen
2015

2016

( 1 ) Cash and cash equivalents( 2 ) Short-term investments(3)N otes and accounts —trade receivables(4)E lectronically recorded monetaryclaims( 5 ) Investment securities(6)S hort-term loans receivable
included in other current assets
Total assets( 7 ) Short-term bank loans( 8 ) Current portion of long-term debt
( 9 ) Notes and accounts —trade payables(10) Electronically recorded obligations(11) Accrued income taxes(12) Long-term debt
Total liabilities
Derivative transactions (*)

Carrying
value

Carrying
value

Fair value¥ 67,311
924¥ 67,311
924

Fair value——¥ 87,778
1,321¥ 87,778
1,321

¥ —
—

134,196

134,196—

144,538

144,538—

2,285
28,8272,285
28,830—3

1,786
37,8391,786
37,844—5

2¥233,545
54,091
68,701

2¥233,548
54,091
68,701—¥    3——17¥273,279
75,09745,561

17¥273,284
75,09745,561—¥  5——

55,24756,3904,236
202,382¥441,047¥    480

55,24756,3904,236
205,662¥444,327¥    480

—
—
—
3,280
¥3,280¥ —61,091
57,778
7,919
238,448¥485,894¥(489)

61,091
57,778
7,919
239,362¥486,808
¥
(489)

—
—
—
914
¥914
¥ —

Difference¥

Difference

Thousands of U.S. dollars
2016( 1 ) Cash and cash equivalents( 2 ) Short-term investments(3)N otes and accounts —trade receivables(4)E lectronically recorded monetaryclaims( 5 ) Investment securities(6)S hort-term loans receivable
included in other current assets
Total assets( 7 ) Short-term bank loans( 8 ) Current portion of long-term debt
( 9 ) Notes and accounts —trade payables(10) Electronically recorded obligations(11) Accrued income taxes(12) Long-term debt
Total liabilities
Derivative transactions (*)

Carrying
value

Fair value$  597,364
8,200$  597,364
8,200

1,190,948

1,190,948—

20,279255,831

20,279255,858—27

17$2,072,639
480,041
609,700

17$2,072,666
480,041
609,700—$    27——

490,300

490,300—

500,444
37,593
1,796,077$3,914,155$    4,260

500,444
37,593
1,825,186$3,943,264$    4,260——
29,109$29,109$—

Difference$——*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) Notes and accounts-trade receivables, (4) Electronically recordedmonetary claim and (6) Short-term loans receivable included in other current assets
Since these items are settled in a short time period, their carrying value approximates fair value.
(5) Investment securities
The fair value of equity securities is based on quoted market prices.
(7) Short-term bank loans, (9) Notes and accounts-trade payables (10) Electronically recorded obligations and (11) Accrued income taxes
Since these items are settled in a short time period, their carrying value approximates fair value.

95

(8) Current portion of long-term debt and (12) Long-term debt
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 to be
applied assuming new loans under the similar conditions to existing loans are made.
Certain long-term loans with floating interest rates have been hedged by interest rate swap agreements and interest-rate and crosscurrency swap agreements. These have been accounted for as loans with fixed interest rates. The fair value of those long-term loans isbased on the present value of the total of the 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 16 “Derivative Financial Instruments and Hedging Activities” section of these Notes to Consolidated Financial
Statements.
Note 2: Financial instruments for which it is extremely difficult to determine the fair value are as follows:
Thousands of
U.S. dollars

Millions of yen

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

2016

2015

2016

¥19,089288
1,098—¥20,475¥16,734
291
1,121
1,000
¥19,146$169,409
2,556
9,744
—
$181,709

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are notincluded in the preceding table.
Note 3:	Redemption schedules for cash and cash equivalents, receivables and marketable securities with maturities at March 31, 2016 and2015 are as follows:

Withinone year

Cash and cash equivalents
Short-term investments
Trade receivables
Electronically recorded monetary claims
Short-term loans receivable included in other current assets
Total¥ 67,311
924
134,1962,285
2¥204,718

Withinone year

Cash and cash equivalents
Short-term investments
Trade receivables
Electronically recorded monetary claims
Short-term loans receivable included in other current assets
Total¥ 87,778
1,321
144,538
1,786
17¥235,440

Withinone year

Cash and cash equivalents
Short-term investments
Trade receivables
Electronically recorded monetary claims
Short-term loans receivable included in other current assets
Total$  597,364
8,200
1,190,948
20,27918$1,816,809

Millions of yen
2016
More than one year More than five years
and within five years and within ten years

¥—
—
—
—
—
¥—

¥—
—
—
—
—
¥—

Millions of yen
2015
More than one year More than five years
and within five years and within ten years

¥—
—
—
—
—
¥—

¥—
—
—
—
—
¥—

Thousands of U.S. dollars
2016
More than one year More than five years
and within five years and within ten years

$—
—
—
—
—
$—

$—
—
—
—
—
$—

More thanten years

¥—
—
—
—
—
¥—

More thanten years

¥—
—
—
—
—
¥—

More thanten years

$—
—
—
—
—
$—

Note 4:	The redemption schedule for long-term debt is disclosed in Note 9 “Short-Term Bank Loans, Long-Term Debt and Lease Obligations”
section of these Notes to Consolidated Financial Statements.

9616. 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, 2016 and 2015is summarized as follows:
Currency-related transactions

Classification

Over-the-countertransactions

Transaction

Classification

Over-the-countertransactions

Valuation gain (loss)

Forward foreign currency exchange contracts
Selling:
Euro
U.S. dollars
Other¥ 6,956
4,983
1,225

¥ 1,338
480

¥ 19
80
(6)

¥ 19
80
(6)

Interest-rate and cross currency swaps
Receive/fixed yen and pay/fixed Euro
Total

10,058¥23,222

10,058¥11,876

387
¥480

387
¥480

Classification

Over-the-countertransactions

Notional amountMillions of yen
2016
More than one year
Fair value

Transaction

Notional amountMillions of yen
2015
More than one year
Fair value

Valuation gain (loss)

Forward foreign currency exchange contracts
Selling:
U.S. dollars
Thai baht
British pounds¥12,370
392
92

¥—
—
—

¥(441)(13)3¥(441)(13)
3

Buying:
Euro
Total

6,131
¥18,985—¥—(38)¥(489)(38)¥(489)

Transaction

Notional amountThousands of U.S. dollars
2016
More than one year
Fair value

Valuation gain (loss)

Forward foreign currency exchange contracts
Selling:
Euro
U.S. dollars
Other$ 61,732
44,223
10,871$ 11,874
4,260$  169710(53)$  169710(53)Interest-rate and cross currency swaps
Receive / fixed yen and pay/fixed Euro
Total

89,262$206,088

89,262$105,396

3,434$4,2603,434$4,260The fair value of forward foreign currency exchange contracts are computed using prices provided by counterparty financial institutions.

97

(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, 2016 and 2015 issummarized as follows.

Method of hedge accounting

Transaction

Swap rates applied to underlying
long-term debt

Interest rate swaps
Receive / floating and pay / fixed
Swap rates and currency applied to Interest-rate and cross currency swaps
underlying long-term debt
Receive / floating U.S. dollars and pay / fixed yen

Method of hedge accounting

Transaction

Swap rates applied to underlying
long-term debt

Interest rate swaps
Receive / floating and pay / fixed
Swap rates and currency applied to Interest-rate and cross currency swaps
underlying long-term debt
Receive / floating U.S. dollars and pay / fixed yen

Method of hedge accounting

Swap rates applied to underlying
long-term debt

Transaction

Interest rate swaps
Receive / floating and pay / fixed
Swap rates and currency applied to Interest-rate and cross currency swaps
underlying long-term debt
Receive / floating U.S. dollars and pay / fixed yen

Notional amountMillions of yen
2016
More than one year

Fair value¥23,000¥18,500(*)¥ 1,500¥ 1,500(*)

Notional amountMillions of yen
2015
More than one year

Fair value¥27,000¥27,000(*)¥ 1,500¥ 1,500(*)

Thousands of U.S. dollars
2016
Notional amountMore than one year

Fair value$204,118$164,182(*)$ 13,312$ 13,312(*)*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 15 “Financial Instruments – Fair Value.”

17. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses totaled ¥18,481 million ($164,013
thousand) and ¥18,088 million for the years ended March 31, 2016 and 2015, respectively.

18. Gain on Sales of Fixed Assets
Gain on sales of fixed assets for the years ended March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Gain on sales of land at former TAKARAZUKA Works
Others

2016

2015

2016

¥2,694186¥2,880¥3,982305¥4,287$23,908
1,651$25,559

19. Gain on Change in Equity
In January 2016, PT.NTN MANUFACTURING INDONESIA changed from being a consolidated subsidiary to an affiliate due to the issuance of
new shares to a third party resulting in the decrease in ownership interest held by the Company and its subsidiary. As a result, the Company
recorded gain on change in equity in the amount of ¥1,552 million ($13,773 thousand) for the year ended March 31, 2016.

20. Loss on Arbitration Ruling
NTN-SNR ROULEMENTS (hereinafter referred to as NTN-SNR), a consolidated subsidiary, had been involved in arbitration proceedings with
Volvo Powertrain AB in Europe since November 2012. They submitted a claim to arbitration and requested a payment for damages due toallegedly defective products provided by NTN-SNR. In November 2015, NTN-SNR received the final ruling from the Arbitration Institute of theStockholm Chamber of Commerce (Sweden) that ordered NTN-SNR to provide compensation for damages. The Company and NTN-SNR
recorded loss on arbitration ruling in the amount of ¥13,013 million ($115,486 thousand), which is the final arbitration amount less the proceedsfrom insurance income, for the year ended March 31, 2016.

98

21. Loss on Surcharge Payments under Anti-Monopoly Act
In August 2014, the National Development and Reform Commission of China made a decision to impose on the Company a monetary penaltyof RMB119,160 thousand on charges of violating the Anti-Monopoly Act of China in connection with the sales of bearings in China. The
Company recorded ¥2,094 million as a loss on surcharge payments under the Anti-Monopoly Act for the year ended March 31, 2015.

22. Other Comprehensive Income (Loss)
The following table presents the analysis of other comprehensive income (loss) for the years ended March 31, 2016 and 2015.
Thousands of
U.S. dollars

Millions of yen

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

2016

2015

2016

¥ (9,038)—(9,038)3,030(6,008)¥ 8,838—
8,838(2,349)6,489$ (80,209)—(80,209)
26,890(53,319)(17,363)
18(17,345)—(17,345)

17,513—
17,513—
17,513(154,091)
159(153,932)—(153,932)(3,276)2,224(1,052)118(934)(2,223)
1,888
(335)
51
(284)

(29,073)
19,737(9,336)
1,047(8,289)(726)¥(25,013)

1,023¥24,741(6,443)$(221,983)

23. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporate tax, inhabitants’ taxes and enterprise tax which, inthe aggregate, resulted in statutory tax rates of 32.4% and 35.0% for the years ended March 31, 2016 and 2015. Overseas subsidiaries are
subject to the income taxes of the respective countries in which they operate.
The effective tax rate for the year ended March 31, 2016 differs from the Company’s statutory tax rate for the following reasons:
2016

Statutory tax rate
Permanent non-deductible expenses
Permanent non-taxable income
Elimination of dividend income
Equity in earnings of affiliates
Difference in overseas consolidated subsidiaries’ applicable tax rate
Increase in valuation allowance
Decrease in deferred tax assets due to change in statutory tax rates
Tax credit for research and development expenses
Gain on change in equity
Other
Effective tax rate

99

32.4%
0.9
(5.8)
7.9
(0.9)
(3.2)
10.6
2.5
(3.1)
(1.9)
1.0
40.4%

The details of the differences between the statutory tax rate and effective tax rate for the year ended March 31, 2015 is omitted because thedifference was less than 5% of the statutory tax rate.
The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2016 and2015 are presented below:
Thousands of
U.S. dollars

Millions of yen
2016

2015

2016

Deferred tax assets:
Liability for retirement benefits
Inventories
Tax loss carryforwards
Accrued expenses
Other
Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets¥ 18,594
3,237
13,2663,874
5,138
44,109(2,426)
41,683¥ 18,670
3,322
14,036
3,177
5,361
44,566(1,390)43,176$ 165,016
28,727
117,732
34,38045,598391,453(21,530)
369,923

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(14,757)(3,666)(1,329)(309)(1,335)(21,396)¥ 20,287(15,768)(6,697)(1,243)(134)(1,463)(25,305)¥ 17,871(130,964)(32,535)(11,794)(2,742)(11,848)(189,883)$ 180,040

The “Act for Partial Amendment of the Income Tax Act and Others” (Act No. 15, 2016) and “Act for Partial Amendment of Local Tax Act andOthers” (Act No. 13, 2016) were enacted in the Japanese Diet session on March 29, 2016.
In line with these revisions, the Company changed the statutory tax rate used to calculate deferred tax assets and liabilities from 32.4% to30.2% and to 30.0% for the temporary differences expected to be realized or settled in the years beginning April 1, 2016 and 2017, and for the
temporary differences expected to be realized or settled from April 1, 2018, respectively.
As a result of these changes, net deferred tax assets (after offsetting deferred tax liabilities) decreased by ¥609 million ($5,405 thousand),income taxes-deferred increased by ¥665 million ($5,902 thousand), net unrealized holding gain on securities increased by ¥183 million ($1,624
thousand) and retirement benefit liability adjustments decreased by ¥127 million ($1,127 thousand) as of and for the year ended March 31, 2016.

24. Amounts per Share
Amounts per share at March 31, 2016 and 2015 and for the years then ended were as follows:Yen

Net assets
Net income:
Basic
Cash dividends

2016

2015

U.S. dollars
2016¥436.97¥461.21

$3.88

28.28
10.00

43.91
6.00

0.25
0.09

Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end.
Basic net income per share is computed based on the net income attributable to shareholders of common stock and the weighted-average
number of shares of common stock outstanding during the year. Diluted net income per share has not been presented because there were no
potentially dilutive shares of common stock for the years ended March 31, 2016 and 2015.
Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective years together
with the interim cash dividends paid.

100

25. Segment Information
1. O utline 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 toallocate management resources and assess performance of
operations.
The Group’s main business lines consist of the manufacture andsales of bearings, CVJs and precision equipments for the aftermarket,
general industrial machinery market, and automotive market. Businessactivities 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 and strategies 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 andother areas. Each reporting segment engages in the manufacture andsale of bearings, CVJs, and precision equipments and other products.
2. Calculation methods used for net sales, income or loss, assets,
liabilities and other items on each reporting segment
The accounting policies of the segments are substantially the same as
those described in the significant accounting policies in Note 2. Intersegment sales and transfer are recorded at the same prices used intransactions with third parties.

(Accounting Standards for Business Combinations)
The Company and its domestic subsidiaries adopted “Revised
Accounting Standard for Business Combinations” and otherstandards. These revised accounting standards are applied from thefiscal year ended March 31, 2016. Accordingly, differences resulting
from changes in ownership interest in a subsidiary when control overthe subsidiary is retained are recognized under capital surplus, andacquisition-related costs are recorded as expenses for the period inwhich they arise. For business combinations conducted on or after
the beginning of the year ended March 31, 2016, the accounting
method has been changed to reflect adjustments of the allocation of
acquisition costs on the finalization of provisional accounting
treatments in the consolidated financial statements for the year inwhich the business combination occurs.
The effect of this change on the segment income for the year
ended March 31, 2016 was immaterial.
(Change in depreciation method)
Effective April 1, 2015, the Company and its domestic consolidated
subsidiaries have changed the depreciation method from thedeclining-balance method, which was previously applied to property,
plant and equipment other than buildings (except for structuresattached to the buildings), to the straight-line method.
The effect of this change was to increase segment income by¥2,979 million ($26,438 thousand) in the “Japan” segment.
3. Information as to net sales, income or loss, assets, liabilities, andother items for each reporting segment for the years ended March
31, 2016 and 2015

Reportable segment information for the years ended March 31, 2016 and 2015 are summarized as follows:
Millions of yen
2016
Reporting segments

101

Japan

Americas

EuropeAsia andother areas

Total

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¥200,106
137,579
337,685¥ 24,150¥552,813¥354,653¥203,881
4,498
208,379¥  5,774¥169,453¥121,245¥179,526
4,023
183,549¥  3,100¥143,964¥ 96,262¥133,484
14,676
148,160¥ 12,619¥160,124¥ 57,006

Other items:
Depreciation and amortization
Capital expenditures¥ 11,836¥ 16,179¥ 11,247¥  7,453¥  7,085¥  8,326¥  8,110¥  8,022

Adjustments

Consolidated¥  716,997
160,776
877,773¥   45,643¥1,026,354¥  629,166¥—(160,776)(160,776)¥   2,127¥(231,703)¥ (83,020)¥716,997—
716,997¥ 47,770¥794,651¥546,146¥   38,278¥   39,980¥—¥    (185)¥ 38,278¥ 39,795

Millions of yen
2015
Reporting segments
Japan

Americas

EuropeAsia andother areas

Total

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¥205,780
137,536
343,316¥ 27,557¥538,515¥373,039¥193,410
5,502
198,912¥  1,410¥188,125¥138,155¥181,642
5,564
187,206¥  3,701¥140,607¥ 84,647¥121,068
11,857
132,925¥ 10,082¥177,295¥ 62,928¥  701,900
160,459862,359¥   42,750¥1,044,542¥  658,769

Other items:
Depreciation and amortization
Capital expenditures¥ 15,708¥ 12,957¥ 10,379¥  5,186¥  7,278¥  6,072¥  7,027¥ 11,887¥   40,392¥   36,102

Thousands of U.S. dollars
2016
Reporting segments
Asia andEuropeother areas

Total

Adjustments

Consolidated¥—(160,459)(160,459)¥   1,101¥(188,265)¥ (65,051)¥701,900—
701,900¥ 43,851¥856,277¥593,718¥—¥    (190)¥ 40,392¥ 35,912

Adjustments

Consolidated

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$1,775,879
1,220,971
2,996,850$  214,324$4,906,044$3,147,435$1,809,381
39,918
1,849,299$   51,242$1,503,843$1,076,012$1,593,237
35,703
1,628,940$   27,512$1,277,636$  854,295$1,184,629
130,245
1,314,874$  111,990$1,421,050$  505,911$6,363,126
1,426,837
7,789,963$  405,068$9,108,573$5,583,653$—(1,426,837)(1,426,837)$     18,876$(2,056,292)$  (736,777)$6,363,126—
6,363,126$  423,944$7,052,281$4,846,876

Other items:
Depreciation and amortization
Capital expenditures$  105,041$  143,583$   99,814$   66,143$   62,877$   73,891$   71,973$   71,193$  339,705$  354,810$—$    (1,642)$  339,705$  353,168

The total amount of segment income is adjusted to operating income of the consolidated statement of income.
Other than those corresponding to segment assets, adjustments relate to the elimination of inter-segment transactions. The adjustments forsegment assets consist of inter-segment elimination of ¥276,943 million ($2,457,783 thousand) and ¥258,544 million and the corporate assetsof the Group of ¥45,240 million ($401,491 thousand) and ¥70,279 million for the years ended March 31, 2016 and 2015, respectively. The
corporate assets are investments held by the Company, mainly cash and cash equivalents and investment securities.
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, 2016 and 2015 are summarized as follows:

Sale to third parties

Sale to third parties

Sale to third parties

Aftermarket

Millions of yen
2016
Industrial
machinery
Automotive¥113,628¥104,110

Aftermarket

Millions of yen
2015
Industrial
machinery
Automotive¥112,433¥108,993

Aftermarket

Thousands of U.S. dollars
2016
Industrial
machinery
Automotive$1,008,413$923,944¥499,259¥480,474$4,430,769

Total¥716,997

Total¥701,900

Total$6,363,126

102

(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, 2016 and 2015 aresummarized as follows:
Millions of yen
2016
Japan

Americas

EuropeAsia andother areas

Total¥189,557¥212,550¥169,039¥145,851¥716,997

Millions of yen
2015
Japan

Americas

EuropeAsia andother areas

Total¥191,460¥202,561¥171,218¥136,661¥701,900

Thousands of U.S. dollars
2016
Japan

Americas

EuropeAsia andother areas

Total$1,682,259$1,886,315$1,500,169$1,294,383$6,363,126“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 include the sales to customers in the U.S.A. of¥188,391 million ($1,671,912 thousand) and ¥174,392 million for the years ended March 31, 2016 and 2015, respectively. The sales of the “Asiaand other areas” segment above include the sales to customers in China of ¥77,612 million ($688,782 thousand) for the year ended March 31,
2016.
(b) Property, plant and equipment
Property, plant and equipment categorized by country and region within the Group at March 31, 2016 and 2015 are summarized as follows:
Millions of yen
2016
Japan

¥111,877

Americas

Europe¥75,580¥46,400

Asia andother areas¥62,544

Total¥296,401

Millions of yen
2015
Japan

¥111,640

Americas

Europe¥85,242¥46,307

Asia andother areas¥72,863

Total¥316,052

Thousands of U.S. dollars
2016
Japan

Americas

EuropeAsia andother areas

Total$992,874$670,749$411,785$555,059$2,630,467

1.	Property, plant and equipment in “Americas” in the amount of ¥67,151 million ($595,944 thousand) and ¥77,890 million is located in the
U.S.A. at March 31, 2016 and 2015, respectively.
2.	Property, plant and equipment in “Europe” in the amount of ¥35,487 million ($314,936 thousand) and ¥35,565 million is located in France at
March 31, 2016 and 2015, respectively.
3.	Property, plant and equipment in “Asia and other areas” in the amount of ¥49,028 million ($435,108 thousand) and ¥57,143 million is locatedin China at March 31, 2016 and 2015, respectively.

103

5. Loss on impairment of fixed assets
Loss on impairment of fixed assets by reporting segment for the year ended March 31, 2016 is summarized as follows:
Millions of yen
2016
Japan

¥226

Americas

Europe¥—¥—Asia andother areas¥2,462

Total¥2,688

Thousands of U.S. dollars
2016
Japan

$2,006

Americas

Europe$—$—Asia andother areas$21,849

Total$23,855

26. Business Combination
Business Combination of a subsidiary company
PT.NTN MANUFACTURING INDONESIA, a former consolidated
subsidiary, implemented a capital increase through the issuance of
new shares to a third party on January 4, 2016. As a result, PT.NTN
MANUFACTURING INDONESIA changed from being a consolidated
subsidiary to an affiliate due to a decrease in ownership interests heldby the Company and its subsidiary.

2. Overview of accounting treatment applied
PT.NTN MANUFACTURING INDONESIA changed from being a
consolidated subsidiary to an affiliate due to a decrease in ownershipinterests held by the Company and its subsidiary. As a result, theCompany recorded gain on change in equity in the amount of ¥1,552
million ($13,773 thousand). In addition, the Company eliminated
PT.NTN MANUFACTURING INDONESIA from consolidation, andrevalued its securities owned by the Company and its subsidiary
based on the equity method.

1. Overview of business combination(1) Company name and business description of combined company
Combined company: PT.NTN MANUFACTURING INDONESIA
Business description: Manufacture of CVJs

3. Reporting segment which combined company belonged
Asia and other area(2) Main purpose for business combination
The Company aims to strengthen price competitiveness in ASEAN
markets by making PT.NTN MANUFACTURING INDONESIA a joint
venture company with said third party.

4. Operating loss of combined company recorded in consolidated
statement of income
Operating loss: ¥21 million ($186 thousand)(3) Date of the business combination
January 4, 2016(4) Legal description of business combination
Decrease of shares through the issuance of new shares to a third
party

27. Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated financial
statements as of March 31, 2016 and for the year then ended, was approved at the annual general meeting of the shareholders held on June24, 2016:

Year-end cash dividends (¥5.0 (U.S. $0.04) per share)

Millions of yen

Thousands of
U.S. dollars¥2,658$23,589104Independent Auditor’s Report105Investor Information
As of March 31, 2016

Head Office

Breakdown of Shareholders

NTN Corporation

Breakdown of Number of
Share Held

3-17, 1-chome, Kyomachibori,
Nishi-ku,
Osaka 550-0003, Japan

Total

Total

532,463

532,463

Investor Relations

Shares inthousands

Shares inthousands

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

Financial Institutions .... 45.85%
Foreign Owners ................ 16.84%
Individuals ............................. 17.96%
Other Corporations ........ 14.94%
Financial Instruments
Firms ............................................. 4.41%

NTN on the Internet
NTN’s Website offers a variety ofcorporate and product information,
including the latest NTN report andfinancial results.

1,000,000 and more .............................. 73.52%
Between 500,000 and 999,999....... 5.64%
Between 100,000 and 499,999....... 6.43%
Between 50,000 and 99,999 ............. 1.67%
Between 10,000 and 49,999 ............. 5.00%
Between 5,000 and 9,999 .................... 2.54%
Between 1,000 and 4,999 .................... 4.96%
Less than 1,000 .............................................. 0.24%

http://www.ntnglobal.com/en/

Common Stock
Authorized 1,800,000,000 shares
Issued and outstanding
532,463,527 shares

Number of Shareholders
27,120Transfer Agent for Common
Stock
Mitsubishi UFJ Trust Banking
Corporation 4-5, 1-chome,

Tokyo Stock Price Range
Stock Price (Yen)

Nikkei Stock Average (Yen)

800

25,000600

20,000400

15,000200

10,000Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

0

Stock Exchange Listings
First Section of Tokyo Stock Exchange

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
2014
2015
2016

High
Low

(#6472)

Closing
Opening

Opening
Closing

5,000

Nikkei stock average

Independent Auditor
Ernst & Young ShinNihon LLC

General Meeting of Shareholders
The General Meeting of Shareholders

Monthly Volume Traded(Million Shares)200

was held on June 24, 2016 in Osaka

Stock Price Range in the Fiscal
Year Ended March 31, 2016
High: ¥819
Low: ¥322

150

100

50

0

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2014
2015
2016

106

Global Network
As of March 31, 2016

Company Name

Paid-in Capital

Holding as
percentage (%)

Company Name

Paid-in Capital

21 AMERICAN NTN BEARING

Consolidated Subsidiaries

Holding as
percentage (%)

US. $24,330,000 100(100)

MFG. CORP.

1NTN BEARING SERVICECORPORATION¥480,000,000 100

22 NTN-BOWER CORP.

US. $117,000,000 100

(100)

2

NTN MIE CORP.

¥3,000,000,000 100

23 NTK PRECISION AXLE CORP.

US. $15,000,000

60

(60)

3

NTN KONGO CORP.

¥1,000,000,000 100

24 NTA PRECISION AXLE CORP.

US. $20,000,000

62.5(62.5)

4

NTN HOUDATSU SHIMIZU CORP.

¥1,250,000,000 100

25 NTN BEARING CORP. OF

5

NTN NOTO CORP.

¥1,000,000,000 100

6

NTN FUKUROI CORP.

¥1,500,000,000 100

7

NTN AKAIWA CORP.

¥1,250,000,000 100

8

NTN MIKUMO COMPANY LTD.

¥450,000,000 100

9

NTN OMAEZAKI CORP.

¥266,000,000¥100,000,000 100

11 NTN ADVANCED MATERIALS CORP.

¥400,000,000

12 NTN CASTING CORP.

¥450,000,000 100

13 NTN KINAN CORP.

¥450,000,000 100

14 NTN KAMIINA CORP.

¥725,000,000

15 NTN Technical Service Corp.

CANADA LTD.

29 NTN Wälzlager (Europa) G.m.b.H.

EURO14,500,000 100

30 NTN KugellagerfabrikEURO 18,500,000 100
EURO 25,000 100

32 NTN Antriebstechnik G.m.b.H.

80

(100)

(100)

19 NTN DRIVESHAFT, INC.

US. $54,580,000 100(100)

20 NTN DRIVESHAFT ANDERSON, INC.

US. $5,500,000 100

(100)

R&D

(13.37)(100)(Deutschland) G.m.b.H.

US. $24,700,000 100

Production and sales

BRL 79,479,763 100(Deutschland) G.m.b.H.

US. $186,620,000 100

Production(5)

31 NTN Mettmann

18 NTN BEARING CORP. OF AMERICA

Sales

Mex. $369,405,719 100

Semi-Eixos Ltda.

99.34¥10,000,000 100

17 NTN USA CORP.

US. $700,000 100

27 NTN MANUFACTURING DE
28 NTN do Brasil Producão de¥200,000,000 100

16 NTN LOGISTICS CO., LTD.

26 NTN-SUDAMERICANA, S.A.

MEXICO, S.A.DE C.V.

97.4

10 NTN ENGINEERING PLASTICS CORP.

CAN. $20,100,000 100

EURO 50,00075

33 NTN BEARINGS (UK) LTD.

STG. £2,600,000 100

34 NTN-SNR ROULEMENTSEURO 123,599,542 100

35 NTN TRANSMISSIONS EUROPE

EURO 82,843,207 100

36 NTN TRANSMISSIONSEURO 11,500,000 100(0.04)(100)

EUROPE CREZANCY
37 NTN BEARING-SINGAPORE (PTE) LTD.

S. $36,000,000 100(0.969)Others33
35 36

30 31 32
29
34 F
59
52
50
44
49 53

43

39

60 45
47

51

G
46
61
48 57
56

40
41

38

37
42 62

58

107

Company Name

Paid-in Capital

Holding as
percentage (%)(60)

Paid-in Capital

Holding as
percentage (%)

38 NTN BEARING-MALAYSIA SDN.BHD.

M. $10,000,000

39 NTN BEARING-THAILAND CO., LTD.

BAHT 780,000,000 100(99.999)

54 ASAHI FORGE OF AMERICA CORP.

US. $7,100,000

28.2

BAHT 1,311,000,000 100(99.999)

55 Seohan-NTN Driveshaft USA CORP.

US. $6,000,000

49

40 NTN MANUFACTURING

60

Company Name

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

BAHT 700,000,000

42 PT. NTN BEARING INDONESIA75

US. $7,300,000 100

43 NTN BEARING INDIA PRIVATE LTD.

INR 300,000,000 100

44 NTN NEI Manufacturing

INR 3,608,000,000

96.54

56 TUNG PEI INDUSTRIAL CO., LTD.

(10.73)(100)

59 Beijing NTN-Seohan Driveshaft Co., Ltd.

(0.001)60 Seohan-NTN Bearing CO., LTD.

India Private LTD.
WON 500,000,000 100

46 NTN (CHINA) Investment Corp.

US. $256,545,000 100

47 Nanjing NTN Corp.

US. $180,000,000 100

48 Shanghai NTN Corp.

US. $166,500,000

95(15.72)49 Guangzhou NTN-Yulon

US. $12,500,000

60

(12)

US. $34,000,000

60

US. $28,440,000 100

52 NTN-LYC（Luoyang）Bearing Corp.

US. $73,800,000

53 NTN CHINA LTD.

HK. $2,500,000 100

50

36.25

A. $5,000,000

40

US. $6,000,000

40
49(6.67)

US. $1,460,000

25

(25)

US. $55,415,050

28.8(0.002)

Sales Corp.
62 PT. TPI MANUFACTURING INDONESIA(86.67)

R&D Bases
A NTN R&D CENTER
B PRODUCTION ENGINEERING(60)

R&D CENTER

Drivetrain Co., Ltd.
51 NTN-RAB (Changzhou) Corp.

27.35

WON 75,780,330,000

61 NTN-DONGPAI (Shanghai) Bearing

Drivetrain Co., Ltd.
50 Xiangyang NTN-Yulon

NT. $160,000,000

58 UNIDRIVE PTY LTD.

(0.1)

45 NTN KOREA CO., LTD.

NT. $1,257,232,620

57 TAIWAY Industry CO., LTD.

(28.2)C INDUSTRIAL TECHNICAL CENTERD ADVANCED TECHNOLOGY(50)

R&D CENTERE NTN Automotive Center

Other than above, another 10 companies

F NTN-SNR R&D Center
G NTN China Technical Center

Notes 1. The scope of consolidation as of March 31, 2016 consisted of NTN Corporation and 63 consolidated subsidiaries (16 domestic and 47 overseas subsidiaries). A total of 9 affiliates (alloverseas affiliates) were accounted for by the equity method. The following changes to the scope of consolidation and application of the equity method were made during the fiscal year
under review.
◇ Consolidated Subsidiaries (3 companies decreased, one company increased)◇ Affiliates (One company increased)
2. Of the above consolidated subsidiaries, NTN USA CORP., NTN DRIVESHAFT, INC., NTN-BOWER CORP., NTN Wälzlager (Europa) G.m.b.H., NTN-SNR ROULEMENTS, NTN
TRANSMISSIONS EUROPE, NTN NEI Manufacturing India Private LTD., NTN (CHINA) Investment Corp., Nanjing NTN Corp., Shanghai NTN Corp. and NTN-LYC (Luoyang) Bearing Corp.
are specified subsidiaries.
3. Figures in curved brackets under “Holding as percentage” indicate the percentage of indirectly owned holdings, and are included in the total holding.

25
17
21 18 E
24 23
19
22
20 54
55

27

26

28

5
4
12
7

14
2
10 1611 A
15
B
3 DC 8
6 9

1

13

108

NTN Corporation
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.

2016. 10. 4000

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