NTN Report 2021
For the fiscal year ended March 31, 2021

Make the World "NAMERAKA"

Brand statement

NAMERAKA is a Japanese word that means smooth.
Bearing technology is used to smoothen the rotating parts of any type of machine.
With more precise bearing technology, shafts can rotate more smoothly,
minimizing energy loss as much as possible.

NTN has newly established “Make the world NAMERAKA”
as a brand statement in order to make the NTN Group's purposeof being widely recognized both in Japan and overseas,
and communicate globally our goal to realize a sustainable“NAMERAKA Society.”

Bearings are thus a technology for saving energy.
The technology developed with bearings will help make electric vehicles, robots
and even a natural energy-based society function more smoothly.

Overview for realizing a “NAMERAKA Society*”
The Frontier Spirit /The Coexistence andCo-prosperity Spirit

We shall contribute to international society
through creating new technologies anddeveloping new products.

Founders'
Spirits

Corporate
Philosophy

CredosChallenge

Collaboration

Commitment

1. A company where its corporate philosophy is understood by all employees
around the world, and where all employees think and act by themselves
2. A company that has a global presence with original new products andservices appreciated for high quality and functions
3. A company which everyone involved can be proud of the “NTN” brand

NTN SPIRITManagement
PolicyStance to Stakeholders

Guidelines
Buds appear when
we challengewith frontier spirit

We challenge passionately without being satisfied with thecurrent situation.
We respond quickly to any changes, emphasizing on-site verification.
We enrich our lives by thinking, acting with initiative and continuing
to grow.

Leaves grow throughthe spirit of collaboration
with coexistence andco-prosperity

We accept and respect differences in each other.
We help each other, treating all associates honestly.
We take care of the natural environment and maintain coexistencewith local community.

Flowers bloom and fruits
grow through fulfilling
our commitments

We maximize the quality of work aiming for first-class quality undersafety-first policy.
We intend to be the strongest partner delivering customer delightbeyond satisfaction.
We support improving lives of people around the world through our work.

NTN Group aims to realize a“NAMERAKA Society” throughpracticing its corporate philosophy.
As a company that is trusted andneeded by communities including
stakeholders, we engage inbusiness activities with anemphasis on respect of humanrights and compliance.

Our Vision

Realization of a
“NAMERAKA Society”

Employees

NTN Group respects diversity, individuality and a safe and healthy workplace environment
where employees can work successfully.

Customers

NTN Group seeks to maximize customer satisfaction and trust by providing products andservices of superior quality, safety and reliability.

Business partners

NTN Group, in a fair and free environment, builds good partnerships with its business partners andworks together for mutual growth and development.

Local communities

NTN Group respects cultures and customs in the local communities andbuilds long-term trust relationships by meeting their expectations through its business activities.

Shareholders

NTN Group focuses on return for shareholders by sustainable profitable growth andbuilds long-term trust relationships with shareholders through active communications.

Environment

NTN Group harmonizes its business activities with nature andcontributes to preserve the global environment by providing its technologies, products and services.

* NAMERAKA Society: A society where people can easily lead a secure and fulfilling life in harmony with nature.

01 NTN Report 2021

NTN Report 2021

02

CONTENTS
About Us

Editorial Policy

Sustainability Management

Business Strategies

5

A History of Challenge and Development

37

79 Aftermarket

7

Nurtured Business9

Value Creation Process

11

NTN's Strengths

13

19

Contribute to society through creation of original technologies
39

Risks and Opportunities Surrounding
NTN
Strengths and Materiality Initiatives
in the Value Chain
Financial and Non-Financial Highlights

Social Contribution through Original Technologies and Products

Form management systems / corporate organization which areessential for NTN, as a global company
42

Environment

50

Promote Safety and Health

New Medium-term Management Plan

52

Human Resource Development

27

Review of Management Plan

54

Promote Diversity

29

NTN’s Business Environment

55

30

Priority Measures

57

33

CFO Message

47

Value Creation Story
21

45

Management Commitment

Governance

85 Monozukuri
87 Research & Development

Financial Report
89 Consolidated Financial Indicators(Past 11 Years)
91 Management Performance/Financial
Analysis
93 Risk Factors
94 Consolidated Financial Statements
120 Independent Auditor’s Report

Thorough Compliance
Strengthen Governance

Company Data/
Investor Information
121 Global Network
124 Investor Information
125 SASB Index

Reporting Period

Organization Covered
NTN Group
Includes some reports about NTN only

03 NTN Report 2021

Disclaimer

We are enhancing disclosures with reference to the following
guidelines and others.

This report contains
outlooks and forecasts
regarding NTN's future plans,
strategies, and businessresults. Please understandthat actual business results
may vary from the forecasts
made herein by the Company.

International Integrated Reporting Council (IIRC)“International Integrated Reporting Framework”
Ministry of Economy, Trade and Industry“Guidance for Integrated Corporate Disclosure and Company-Investor
Dialogues for Collaborative Value Creation”
GRI (Global Reporting Initiative)“Sustainability Reporting Standards”
SASB (U.S. Sustainability Accounting Standards Board) Standards

Types of Information Provided by NTN
Overview

Details

NTN Report

Securities
ReportFinancial Information

Business Report(to shareholders)

Report on Corporate Governance

Financial Report

Sustainability Activities Information(on website)
Non-financial Information

This report presents both financial andnon-financial information, focusing on
especially important topics. More detailed
information is available in the Securities
Reports and Financial Reports. Detailed
information on the Company’s sustainability
activities is also available on our website.

SASB Index

Fiscal year ended March 31, 2021
(April 1, 2020-March 31, 2021)
Includes some activities for the fiscal
year ending March 31, 2022

Reference Guidelines

Company Data/Investor Information

Organization Covered andReporting Period

In the fiscal year ended March 31, 2021,
business activities were significantly stagnant
due to the impact of the spread of the newcoronavirus infections. In April 2021, Mr. Ukai
was newly appointed as President and the
new Medium-term Management Plan "DRIVE
NTN 100" Phase 2 has been started. We
will not change the business management
policy of accelerating the transformation of
the business structure shown in "DRIVE NTN
100." For the next three years, we will focus
on strengthening our financial structure anddevelop measures to plant seeds for future
growth. At the same time as the Phase 2
initiatives were formulated, we have newly
identified materiality (important issues).
Through the Group's business, we will work to
resolve global social issues and contribute to
the achievement of the SDGs.
This report describes these topics

Financial Report

123 Third-Party Opinion

Concepts behind the Production of“NTN Report 2021”

Business Strategies

49

Improve the Reliability of Products andServices (Quality Assurance, Stable Supply)
Procurement Activities with an Emphasis on
Environment and Society
Respect for Human Rights

Social83 Automotive Market

Respond to Climate Change
Resource Recycling and Pollution Prevention

44

81 Industrial Machinery Market

Sustainability Management

17

Identify Materiality

The NTN Group believes that building
trusting relationships with shareholders andinvestors, customers, business partners,
the international society, local communities,
and employees and contributing to theglobal environment will lead to enhancementof corporate value. In order to report ourbusiness activities and sustainability activities
to our stakeholders, we have published the“NTN Report (Integrated Report)” since thefiscal year ended March 31, 2010. We will
use this report as a means of communicatingwith our stakeholders to deepen theirunderstanding of us, thereby contributing to
the realization of a “NAMERAKA Society.”

Value Creation Story

About Us

https://www.ntnglobal.com/en/index.html

NTN Report 202104

About Us

A History of Challenge and Development
About Us

Since its founding, NTN has maintained the quality-first approach, and built up reputation and achievements with its highlevel of technological expertise.
We will continue to contribute to international society through creating new technologies and developing new products.

"Frontier Spirit" and "Coexistence andCo-prosperity Spirit" inherited since its
foundation
Start of ball bearing research andmanufacturing at Nishizono Ironworks

1960-1970s

The Deming Prize is one of the world’s mostprestigious awards for TQM (total quality
management). NTN is not only the first bearing
manufacturer, but also the first Japanese machinery
manufacturer to win the award. The Company was
one of the first machinery manufacturers to adopt
statistical quality control, and the quality
control was applied throughout the Company. Thiseffort was recognized, resulting in this honor.

Since 1950, we have enjoyed more opportunities
to expand exports of bearings. In 1961, NTN
established its first overseas sales company in
Dusseldorf, Germany, to create a system thatcan respond flexibly to local demand. In terms
of production, NTN established a manufacturingsubsidiary in Germany in 1971. It was the firstJapanese manufacturer in Europe. In the same
year, we established a bearing manufacturingsubsidiary in the U.S. Subsequently, we
strengthened the local production system by
establishing not only plants for finished products,
but also plants for the pre-production process.
Through these overseas expansions, we havepromoted the local production to manufacture
products for customers around the world in places
where they need our products.

NTN becomes the first Japanese machinery
manufacturer to win the Deming Prize**Deming Prize: A prize created by the Japanese
Union of Scientists and Engineers to honor theachievements of W. Edwards Deming, a U.S.
engineer, statistician, professor, author, lecturer,
and management consultant who popularized
statistical quality control in postwar Japan andbuilt the foundation needed to raise the quality ofJapanese products to world standards.

1963

Jiro Nishizono

1927

Establishment of NTN Mfg. Co., Ltd.
with capital of 50,000 yen

NTN supplies journal bearings for the first
0 Series Shinkansen

NTN has helped enable faster and lighter rollingstocks by developing technology tailored tothe evolution of high-speed rail and providing
high-quality, high-reliability products. NTN’s
products have been adopted for the first 0
Series Shinkansen as well as the latest model
Shinkansen. Our journal bearings for 0 Series
Shinkansen were recognized as Tribology
Heritage* by the Japanese Society of Tribologists.

Name changes to
the Toyo Bearing
Mfg. Co., Ltd.
Old head office building

Outer ring

Rolling elements(ball/roller)

Retainer

05 NTN Report 2021

1970s

Evolution of hub bearings

The latter half of the 1970s saw NTN release its
axle bearings (GEN1) that were the forerunnersof our hub bearings that now have the world’s
No.1 market share. In the 1980s, these products
evolved into hub bearings (GEN2) by combining theaxle bearings with peripheral components such as
knuckles in a single unit. The evolution into GEN3
was subsequently accomplished by packaging
additional parts such as hub bolts, flanges andknuckles into a single unit to improve ease of
assembly on automobile assembly lines. The
GEN3 began mass-production in Japan for the firsttime in the mid-1980s.
The lineup has continued to evolve.
Refinements are still being made today, such as byadding sensors and improving ease of assembly.

GEN1

GEN2

GEN3

About Bearings

Original Technologies
Current head officebuilding of NTN-SNR
ROULEMENTS

Name changes to NTN Corporation

In line with the company
name change, we alsochanged the meaning of
NTN to represent “For
New Technology Network,”
and adopted it as a new
direction moving into the
future.

2014

Provide bearings to the Hayabusa 2
asteroid probe

The H-IIA Launch Vehicle No. 26 with the Asteroid
Explorer Hayabusa 2 onboard was launched fromthe Tanegashima Space Center.
Our spherical plain bearings are used in
the hinges that open the solar panels on the
Hayabusa 2 in outer space, contributing to thesuccessful completion of its mission in outerspace.

Current head office building

Spherical plain bearing
adopted for Hayabusa 2

Quality

2000-

Technical service units
driving worldwide

At our sales bases around the world, we visit
customers by technical service units. Technicalservice units are completely custom-mademultifunctional vans equipped with productsamples and maintenance tools. We provide
technical diagnostics and technical workshops aswell as detailed support for resolving customer
issues.
Even after our products are delivered, we use
technical service units to support enhancement inproductivity and safe operation of our customers'
facilities. Through direct dialog with customers, we
are working to learn the problems of “customers
around the world” to resolve problems in society.

2018-

Company’s 100th anniversary
On March 1, 2018, NTN celebrated its 100th
anniversary and adopted a communication key
phrase: “Make the World NAMERAKA, NTN.”
We are putting out products including bearingson the market that move machines smoothly. We
will continue our efforts to realize a “NAMERAKA
Society” by making the lives of people and society
around us a bit smoother. In order to achievesustainable growth over the next 100 years, we
also established our long-term vision, and torealize it, created a Medium-term Management
Plan “DRIVE NTN100.”Services

SASB Index

Inner ring

* Tribology Heritage: Tribologyrelated technology and things
recognized by the JapaneseSociety of Tribologists
as having a particularly
important contribution to thedevelopment of science andtechnology.

Jet engine crosssection

Company Data/Investor Information

1937

1964

The late

P.11

Financial Report

Bearings at thetime of the startof the business

Germany
Mettmann Plant

SNR ROULEMENTS acquisition

Seeking to expand business in the European
market, NTN invested in French bearing
manufacturer SNR ROULEMENTS in 2007, making
it a consolidated subsidiary the following year.
The addition of SNR ROULEMENTS to the NTNGroup has boosted our European sales, making
our business development more geographicallybalanced, with sales from Japan, the Americas,
Europe, and Asia and other regions eachaccounting for approximately 25% of the total.

Business Strategies

Technology partnership was formed with UK
manufacturer Hardy Spicer to produce driveshafts(constant velocity joints), a promising productexpected to enjoy rapid future
growth in demand for automotive
applications, and production
started at the Kuwana Plant.

Jet engine main shaft bearings

1989

Start of driveshaft manufacturing

First driveshaft model
produced

Noboru Niwa

Overseas sales and production
strengthening/expansion

NTN has been producing bearings for aerospace
applications with high function and high quality.
We are a certified supplier of main shaft bearings
to the world’s four major jet engine manufacturers,
a currently unrivaled achievement among
Japanese manufacturers.

NTN’s Strengths(Competitive Advantages)

Sustainability Management

NTN's Founders’ Spirit, which has been valued
since its founding in 1918, consists of twoelements: "Frontier Spirit" that leads us to always
take on challenges and "Coexistence and Coprosperity Spirit" that leads us to develop together
with society. The Founders' Spirit has been
incorporated into NTN's corporate philosophy as
DNA, and it has been inherited over 100 years.
Young engineer Jiro Nishizono started the
Nishizono Ironworks in Kuwana, Mie Prefecture
in 1918 when he was 21 years old. Noboru Niwa
(later the Company’s first President) was runninga machinery and tool trading company called
Tomoe Trading Co. that he had started in Osaka
at the age of 22. In 1922, Tomoe Trading Co.
successfully bid for cargo of bearings that had
been loaded in a Swedish vessel that sank off
the coast of Japan. Niwa had transactions with
Nishizono Ironworks before, and asked Nishizono
Ironworks to refurbish the bearings. Niwa sold thebearings and bought grinders with the proceedsfrom the sale. Thus, bearing manufacturing got
fully underway. The Company’s products havecarried the NTN logo, which stands for Niwa,
Tomoe and Nishizono, since the start of the
production.

1954

Construction of Japan’s first aerospace
bearing plant

2008

Value Creation Story

1918

1986

Bearings are eco-products that reduce energy consumption by supporting various rotating mechanical parts andreducing friction.
The coefficient of friction of a smoothly rotating bearing is 0.001. This means that you can move a 1,000kg object
placed on the ground with a force of pulling an approximately 1kg object. Use of bearings makes it possible to movethings with light force, contributing to reduction of energy consumption.
Bearings are mounted inside machinery and are usually hidden from view. But they play a key role in improving thesafety and reliability of machinery, helping realize a “NAMERAKA Society.”
General-purpose bearings are composed of four types of components: inner rings, outer rings, rolling elements(balls/rollers) and retainers. While the structure seems simple, any irregularities or cracks in the rings or rolling
elements will prevent the bearings from turning smoothly. Every ball used in bearings must be manufactured with ahigh degree of technological expertise and enough precision to ensure that surface roughness is less than one ten
thousandth of a millimeter.

NTN Report 2021

06

About Us

Nurtured Business
About UsNet Sales
369.5

billionyen

Aftermarket applications(66 % )

91.5

billionyen(16 % )

Asia and Others

138.4

billionyenJapan(24 % )Net sales bybusiness sector

Fiscal year ended March 31, 2021

162.8

billionyen

Construction machinery

Gearboxes

Helping ensurehigh robot
productivity

Applications
for resource
mining and civilengineering

101.9(18 % )

Europe117.2

billionyen

Americas(21 % )

144.4

billionyen

Aftermarket applications
Metal industry
equipment

Aerospace

Rolling stock

Helping ensurestable foodproduction

Used for worldwide jet engine
applications

Meeting growing
renewable energy
demandOffice equipment

Electronic devices

Medical equipment(26 % )

P.79-80
Paper-making
machinery

Food processing
machinery

Helping ensurehigh machining
precision

Helping ensure
safety ofworldwide highspeed railways

Cement equipment

Helping ensure
precision operationof copier/multifunctional
printer

Used for hard discdrive and thin fan
motor applications

CT scanner andartificial heart
applications

Automotive applications
ULTAGE
sealed fourrow tapered
roller bearings
CROU..LLULTAGE
sphericalroller bearings
Type EA,
Type EM

Remote technical support services

PolyLubesealedbearings
for food
processing
machinery

PlummerblocksSplit needle roller bearings(for camshafts)

EnginesP.83-84
Auto tensioner withthe variable damper
mechanism for
ISG-equipped engine

High-density, high-strength sintered
gears for starter motors
Pulley bearings
for high-speed
rotation

Financial Report

ULTAGE
spherical roller
bearings withhigh-strength
cage
EMA Type

Business Strategies

Mining machinery

Wind turbines

Sustainability Management

Machine tools

billionyen

Agricultural machinery(29 % )Net sales byregionIndustrial machinery applications

P.81-82

Value Creation Story

Automotive applications

562.8 billion yen

Industrial machinery applications

Accessories

Mechanical clutch units fornext-generation steeringsystems

NTN PORTABLE VIBROSCOPE

Steering components
Seats

Clutches for seat
lifters

World’sNo.

Long-life series
TAB bearings

1

market share

World’s

Auto parts
Part kits with combinations of several
bearings

Induction heater

07 NTN Report 2021

Hub bearings2

market share

SASB Index

Automatic /manual transmissions

BrakesBall screw drive
modules for electric
hydraulic brakes

Self-centering hydraulicpuller with arms
Technical service units

No.

Axle/Drivetrain

Technical training / maintenance tools

Driveshafts

Transmissions
CVTs

ULTAGE tapered
roller bearings
for automotive
applications

BEAREE seal
rings

Thrust needle roller
bearings

Needle roller and cageassembly bearings forplanetary gear

NTN Report 2021

Company Data/Investor Information

Needle roller bearings forrocker arms

08About Us

Value Creation Process
About Us
Value Creation StoryNTN Group has identified materiality responding to SDGs in order to contribute to solving social issues. Taking advantage
of management capital developed over more than 100 years and the unique features of NTN, we conduct businessactivities based on our corporate philosophy through the value chain.
By providing products such as bearings and driveshafts as well as technical services, and creating environmental andsocial value, we aim to realize a "NAMERAKA Society" where people can easily lead a secure and fulfilling life in harmony withnature. We will continue to promote ESG management to achieve sustainable growth and contribute to solving social issues.

Contribute to solving social issues

NTN’s Business Model
Materiality

Business Activities

P.37
Form management systems /corporate organization
which are essential for NTN, as a global company(Reduce negative impacts)

Promote safety
and healthResource recycling
and pollution
prevention

Human resource
development

Improve the reliability of
products and services

Promote diversity

Procurement activities
with an emphasis on theenvironment and society

Thorough compliance

Respect forhuman rights

Strengthen governanceCorporate
Philosophy

Response toenvironmental issues

Management Capital

NTN SPIRIT

Shareholders’ equity
170.5 billion yen
Financial Interest-bearing debt
422.8 billion yen
Capital Cash and cash equivalents 147.2 billion yen

NTN’s Strengths

Challenge /Collaboration /Commitment

P.11

Contribute topopularization of thenext generation mobility

No.1 in Japan interms of the numberof wind turbines
monitored

Contribute to stable
operation ofwind turbines

New products utilizing
original technologies(i-WRISTTM,
microscopic coating
device, green energy
products)

Contribute to disasterprevention/mitigation
Provide safety/
security in the eventof disaster

23,292
62%

Number of patents
Intellectual for which reward was paid
149
Capitalbases
incountries
9
4
R&D bases

Social andsatisfaction survey 111 companies
Relationship Customer
Excellent + Good
92%
CapitalEnergy consumption 5,783 TJ/year
Water consumption 2,430 thousand m3

uk
n
Mo

Qualityoz

Performance Target(Target for Fiscal YearEnding March 31, 2024)

Net sales

700.0 billion yen or more

Services

Corporate Governance
P.57

Operating income

yen or more
42.0 billion(6% or more)

SASB Index

NaturalCapitalOriginal
Technologies

Contribute to progressof labor saving anddevelopment ofregenerative medicine

Company Data/Investor Information

Manufacturing Manufacturing bases 70 bases in 14 countries
Ratio of overseas production
51%
CapitaleslNumber of employees (consolidated)
Percentage of overseas employees

Sa

Human
CapitaluriGlobalizationof the businessWe shall contribute tointernational society throughcreating new technologies anddeveloping new products.

Contribute to CO2
reduction fromenvironmentcontributing products
1,323 thousand
tons/year

Financial Report

Changes indemographics

High performance
products for
EV/electrificationten

Response toparadigm shift

World No.2
Driveshafts

Pro
cu

&D

Make the world
NAMERAKA

Hub bearings

P.17

m
re

Provide safety and comfort

World No.1

Value Chain

R(Quality assurance, stable supply)

P.13

S to B-eco 51.6%

Business Strategies

Realize a sustainable society
using natural energy

New
Businesses

Realization of a NAMERAKA Society

Risks and
Opportunities
Surrounding NTN

Respond toclimate change

Environmentcontributing
products

Automotive
Business

Aftermarket
Business(Strengthen positive impacts)

Reduce energy loss

Industrial
MachineryBusiness

OutcomeSustainability Management

Contribute to society
through creation of originaltechnologies

OutputP.79

FCF

27.0 billion yen or more

Strengthen management capital

09 NTN Report 2021

NTN Report 2021

10

About Us

NTN's Strengths
About Us

Three Strengths of NTN

Future Direction

Development of Strengths in Each Business

Aftermarket business
Tribology technology

Sensing technology

Respond to new market needs of
CASE such as autonomous driving
and sharing
Develop and upgrade AI algorithm
to predict residual life
Develop "talking bearings" withbuilt-in sensors in the bearing toissue an alert for abnormalities

Industrial machinery businessStable supply of high-performance
products
Spread sophisticated quality
control practices using IoT/AI to
manufacturing divisions, including
suppliers

Responding to Robotization

Human resource development programs to pass on know-how, such as the Global
QC Circle Convention, NTN Technical Skills Competition, and TQM Convention
Promote the practice of the Corporate Philosophy through the "NTN PROUD
AWARD"

Strengthen the development of
human resources who “think andact by themselves” to achieve
workplace goals
The corporate philosophy isunderstood by all employees
around the world

Provide products and services to customers from approximately 200 bases in 34
countries around the world
Respond to market needs in various locations with R&D system in four regions

11 NTN Report 2021

No.1 domestic aftermarket share with the largest domestic distributor network
Provide remote technical support services globally
Contribute to solving all customer issues through detailed responses(From products to service-oriented (solutions))

Provide advanced preventive
maintenance services by using big
data
Expand remote technical support
services and on-line technicalworkshops for end-users

At manufacturing sites, there is a growing demand for manpower savingsand further efficiency improvements due to labor shortages.
NTN is contributing to labor saving and automation through the useof high value-added products such as bearings with built-in sensors andMulti Track Magnetic Ring in addition to Wrist Joint Module "i-WRISTTM" thatapplies CVJ-technology. We expect sales of related products to expand inline with the growing demand for robotization.

Automotive business

P.83

Responding to the shift to EVs
In the automotive market, as response to the environment is required, fuelefficiency and CO2 emission regulations have been strengthened in various
countries, and the government-driven adoption of EVs and electrification
has been accelerating.
NTN boasts the world's No. 1 market share for hub bearings, which
support tire rotations, and the world's No. 2 market share for driveshafts,
which pass the rotations of engines and motors to tires. NTN has its
strength in strong technological capabilities and overwhelming market
share for axle/drivetrain products.
Driveshafts and hub bearings are ourComposition of
automotive sales
mainstay products, which account for
approximately 80% of our net sales forautomotive applications, and are essential not
only for ICEV (internal combustion vehicles), but
Othersalso for HEVs and EVs. Demand is expected
Driveshafts
to continue expanding in the future. We will
About 45%
ensure superiority in the marketplace by
Hub bearings
pursuing even lighter weight, higher efficiency,
About 35%
and lower friction, and by providing highperformance products.

NTN Report 2021

SASB Index

Problem-solving customer responsiveness

Expand sales in the Middle East
and Africa

Introduction of renewable energy is expanding to achieve carbon neutrality
and realize a decarbonized society.
NTN has a strong position in large bearings for main shafts of windturbines, and has the largest market share for wind turbine's condition
monitoring systems (CMS) in Japan. We also sell green energy productsthat utilize our proprietary blade technologies. We expect these products
to grow along with the future growth of the market.

Company Data/Investor Information

Global network

Response to climate change

Financial Report

Quality of human resources and work

P.81

Business Strategies

High reliability demonstrated by the long-standing track record of developing thefirst quality control system that won the Deming Prize in the Japanese machineryindustry and supplying it for life-supporting applications such as the Shinkansen
and aerospace
Acquired world-class market share for axle/drivetrain products that support safe
driving of automobiles

Sustainability Management

Differentiation through advancesof cultivated technology, including
low friction and diversification offunctions of hub bearings, which havethe No. 1 global market share
Develop hydrogen-related and otherproducts to achieve carbon neutrality

Product quality

Services

In the aftermarket for all types of machinery, the need for maintenanceservices and solution businesses not for a single bearing but for the entire
facility is expanding, thanks to the popularization of AI and IoT.
NTN has achieved the top aftermarket share in Japan through its
leading distributor network and services, and has expanded its overseas
network. In the future, we will expand our services by utilizing our expertisein sensing technology, etc. as well as digital technologies, thereby further
capturing demand.

Our strengths in manufacturing technologies include heat treatment, precision
machining, and precision measurement, which are indispensable for the manufactureof bearings, and we pursue tribology technologies through R&D of bearings
Not only rolling bearings, but also a wide range of materials such as resins,
sintered metals, and magnetic materials, as well as advanced technologies suchas fluidic dynamic pressure type technology for the development of units andmodule products consisting of sliding bearings, and electrical and machine parts,
and we market them as composite material products

Develop and provide products and the Multi Track Magnetic Ring equipped witha high resolution rotational sensor developed based on NTN-SNR's ASB®(Active
Sensor Bearing), a global standard technology
Develop monitoring services for large wind turbines by CMSs (Condition Monitoring
System). Capture the top market share in Japan by providing enhanced support, as
the number of installed units exceeds 200

Quality

Expanding services through hardware and software

Value Creation Story

Original technologies

P.79

12

About Us

Risks and Opportunities Surrounding NTN
About UsNTN Group views the global trend of carbon neutrality (environmental impact reduction and decarbonization), the accelerating
electrification to achieve the carbon neutral goal, and a business environment facing labor shortages and human rights issues
from the perspectives of "Response to paradigm shift," "Response to environmental issues," "Changes in demographics,"
and "Globalization of the business." We will contribute to solving social issues while continually growing through our businessactivities by implementing countermeasures in line with the materiality of anticipated risks and opportunities.
Opportunities for the Company
Using driveshafts' patented technologies to propose products that aresmaller and lighter
Growing demand for high performance products for EVs
A possibility of growth in demand for parts replacement as car sharing
increases the operating rate of vehicles

Reduced use of bearings due to electrification of internal combustion and hydraulic equipment

Demand for high performance products such as higher efficiency products
Increasing demand for high value-added products such as bearings with built-in sensors

Spread of AI and IoT

Difficulty in securing digital talent, for which demand is increasing
Rationalization of distributor network
Securing of aftermarket demand using industrial IoT Platforms (PFs) (missed demand opportunities
outside PFs)

Advances in equipment-related manpower saving
Rising demand for bearings with sensors
Growing demand for analysis and analytical technologies

Spread ofinfectious diseases(COVID-19)

Decrease in scale of sales due to economic
stagnation
Crisis of business continuity
Damage to employees’ health and safety

Shutdown of business activities due to the spread of
infectious diseases within the workplace
Disconnection of supply chain

Growing demand for manpower-saving technologies
Utilizing microscopic coating technologies for drug discovery

Reduction in CO2emissions

Rising procurement and energy costs
Decline in product needs due to the declining
usage of general-purpose machinery
Requirements for carbon neutrality in businessactivities

Suspension of dealing with customers anddeterioration of corporate image in the event of
failure to respond to the demands of society

Requests for energysaving machinery

Decrease in the number of parts where bearings are used due to changes in the energy transmission typeand structure of machines
Establishment of a new mechanical structure that does not require bearings

Increasing demand for energy-saving products
Responding to new needs

Reduction inenvironmental impact

Decrease in corporate image/ESG rating when environmental impact cannot be reduced
Cost increase due to incurrence of costs by suppliers and limitation on suppliers that can meetenvironmental standards

Development of new customers through compliance with advanced
environmental and customers’ standards
Increasing demand for high-quality, long operating life products

Response to natural
disasters

Shutdown due to a disaster
Spillage of oil, chemical substances, etc. caused by natural disasters
Disconnection of supply chain

Increasing demand for emergency power source
Expansion of partnerships

Medium- to long-termlabor shortage

Impact of a human-dependent production system on stability of operations

Accelerating labor saving and automation of production lines

Growth of emerging
countries

Entry of emerging manufacturers
Soaring procurement prices due to the entry of competitors
Shortage of limited materials and resources

Expansion of sales opportunities due to increasing demand
Increasing demand for new driveshafts due to transition to front-wheel drive (FF) vehicles
Increasing demand for high performance products that meet environmental regulations

Issue of businesssuccession

Suppliers and sales distributor going out of businessStart of business with new suppliers

Trade friction andtariffs

Sluggish global demand
Disconnection of supply chain caused bydependence on one country (China risk, etc.)

Prevention of childlabor (human rights)

Stopping the supply of parts
Suspension of dealing with customers and deterioration of corporate image in the event of failure to
respond to human rights issues

Improvement of corporate image through active response to human rights issues

Response to conflictminerals

Deterioration of quality
Suspension of dealing with customers and deterioration of corporate image in the event of failure to
respond to conflict minerals issues

Improvement of corporate image through active response

Rise of low-cost
products

Intensified price competition due to aggressive
sales by emerging manufacturers

Loss of sales opportunities
Loss of brand value due to lower prices

Increasing needs for improvement of fuel efficiency (electricity
consumption efficiency)
Expansion of next-generation mobility (EVs, hydrogen-related)

Promotion of environment-friendly business activities
Pursuit of circular economy

Expanding opportunities to supply products and services utilizing global networks

SASB Index

Downward pressure on profits due to higher
tariff costs
Rapid exchange-rate fluctuations

Increasing demand for wind turbines, including offshore ones
Increasing demand for railways
Increasing demand for green energy products

Development of new fields
Introduction of smart factories in the company

Company Data/Investor Information

Globalization of thebusiness

Electrification ofindustrial machinery

Financial Report

Changes indemographics

Expansion of sales channels due to entry of new EV manufacturers
Expanding sales opportunities for driveshafts and hub bearings that
support not only gasoline-powered vehicles and HEVs but also axle/
drivetrain of EVs
Increase in ASP (average sales price) due to size-up of driveshafts
corresponding to the motor's output characteristics

Business Strategies

Response toenvironmental issues

Spread of nextgeneration mobility

Decrease in the total number of bearings used per unit
Demand for higher performance products such as lighter weight products
Reorganization of the automotive industry

Sustainability Management

Response to paradigm shift

13 NTN Report 2021

Risks for the Company

Value Creation Story

NTN's Business Environment

Growing demand for high performance, highly functional products due to lower quality of products on the market
Demonstrating competitive advantage through differentiation of products and services
NTN Report 2021

14About Us Risks and Opportunities Surrounding NTN
About Us

Contribute to society throughcreation of original technologies

Materiality

P.37(Strengthen positive impacts)

1 Reduce energy loss
a sustainable society
2 Realize
using natural energy

Form management systems /corporate organization
which are essential for NTN, as a global company(Reduce negative impacts)

3 Provide safety and comfort

Procurement activities with an emphasison the environment and society

5

Resource recycling andpollution prevention

8

Respect for human rights

6

Improve the reliability of products andservices (Quality assurance, stable supply)

9

Promote safety
and health

10 Human resource development
11 Promote diversity
12 Thorough compliance
13 Strengthen governanceElectrification ofindustrial machinery

Strengthen development of products for electrification and high value-added products
Provide next-generation mobility modules for industrial machinerySpread of AI and IoT

Provide service solutions through CMS
technology, etc.
Develop service-oriented businesses that lead to
product sales and transform into new businessformats

Spread ofinfectious diseases(COVID-19)

Life science-related R&D centered on microscopic coating technology
Provide robot-related modules such as i-WRISTTM in response to labor-saving issues
Promote the work style reform

Promote development of environment-contributing
products
Promote use of energy-saving production
equipment
Use renewable energy

Develop hydrogen-related products
Promote production reform and reorganization aimed at improving productivity
Strengthen the automotive aftermarket business

2

3

6

1
E-commerce based on the new IT core system
Realization of smart factories, including a new plant in Wakayama
Strengthen external collaboration

Develop lighter-weight, higher efficiency driveshafts and low friction hub bearings
Provide next-generation mobility modules
Develop hydrogen-related products

Reduction inenvironmental impact

Selection of business partners that can comply with green procurement and CSR procurement standards
Reduce environmental impact in manufacturing processes (conserve water, increase the recycling rate,
reduce the use of hazardous materials, etc.)

Response to natural
disasters

Formulation of BCPs and BCP drills at the NTN Group
Provide independent power supply utilizing renewable energy-based power generation and storage
technologies

Medium- to long-termlabor shortage

Provide robot-related modules such as i-WRISTTM in response to labor-saving issues
Realize smart factories, including a new plant in Wakayama
Promote and maximize the diversity of employees

Promoting production reform and reorganization
Promote the work style reform

Growth of emerging
countries

Stable supply of basic products

Global production supporting optimal supply

Realize the best mix of global and local procurement

Issue of businesssuccession

Support business continuity through dialog with
suppliers

Develop new business partners

Reorganize suppliers and shorten supply chain

Trade friction andtariffs

Realize the best mix of global and local procurement through variable cost reformation

Prevention of childlabor (human rights)

Promote human rights due diligence
Globalization of compliance

Response to conflictminerals

Promote human rights due diligence
Implement CSR questionnaire surveys of suppliers

3

3

9

10

1

2

4

5

6

7

2

3

9

3

6

9

10 11

12

1

Promote development of service-oriented
businesses
Active outsourcing of general-purpose products

Expand bearing refurbish business and MRO business

6

6

7

6
Start business with new suppliers
Acquire new human resources

6

7

8

Respond to conflict minerals surveys conducted by customers
Stable supply of adapted products

6

7

8

Integrated sales strategy in aftermarket and industrial machinery businesses
Differentiation by services

SASB Index

Implement various training programs in compliancewith laws and regulations in each region

Develop and provide long operating life products
Strict control of environmentally hazardous substances
contained in productsCompany Data/Investor Information

Globalization of thebusiness

Provide compact, lightweight and low-torque products
Product development utilizing original technologies

2

Financial Report

Changes indemographics

Requests for energysaving machinery

Expand product lineup and inventory
Develop markets for the aftermarket business

1

Business Strategies

Response toenvironmental issues

Increase sales of large bearings and CMSs forwind turbines
Increase sales for rolling stock
Expand sales of green energy products

Strengthen CAE analysis technology
Develop "talking bearings" (= use of sensors forbearings)
Provide robot-related modules such as i-WRISTTM in
response to labor-saving issues

Related Materiality

Sustainability Management

Response to paradigm shift

Provide lighter-weight, higher efficiency driveshafts and low friction hub bearings
Provide next-generation mobility modules for EVs
Concentrate production of high performance products for EVs (a new plant in Wakayama)

Rise of low-cost
products

15 NTN Report 2021

7

Main Measures

Spread of nextgeneration mobility

Reduction in CO2emissions

Respond to climate change

Value Creation Story

NTN's Business Environment

4

6
NTN Report 2021

16About Us

Materiality

Strengths and Materiality Initiatives in the Value Chain(Strengthen positive impacts)

NTN Group is promoting initiatives in line with materiality for responding to SDGs by leveraging our strengths in eachprocess of R&D, procurement, Monozukuri and sales. As we carry out our business activities based on our corporate
philosophy of "We shall contribute to international society by creating new technologies and developing new products,"
we create value in the value chain, leading to sustainable growth.

1

Reduce energy loss

About Us

Form management systems /corporate organizationwhich are essential for NTN, as a global company

Contribute to society throughcreation of original technologies(Reduce negative impacts)

4

Respond to climate change

2

Realize a sustainable society
using natural energy

53Provide safety and comfort

6

Resource recycling and pollution
prevention
Improve the reliability of products
and services (Quality assurance,
stable supply)

7

Procurement activities with anemphasis on the environmentand society

8

Respect for human rights

9

Promote safety and health

10 Human resource development
11 Promote diversity
12 Thorough compliance
13 Strengthen governanceValue Creation Story

Lead to new R&D themes
Sales

By researching and accumulating cutting-edge
technologies in core businesses, developing
products, and creating new products and services innew business areas, we are building a technologicalfoundation for sustainable growth and building afoundation for business transformation.
In the automotive field, responding to CASE
is a critical issue, and with regard to low fuelconsumption, autonomous driving and other features,
we are working to market the “Low Friction Hub
Bearing III” which aims to create further lower friction
and “Ra-sHUB” which allows the steering angle on
the rear wheels of automobiles to be controlled
separately for each of the left and right sides byintegrating hubs and motor control technologies.
In the industrial machinery field, it is desired to
improve productivity with products that make fulluse of low-torque and IoT features. We have begun
mass production of "Low Dust Generation Bearing
for Servo Motors" for robotic joints, whose rotational
torque is 50% less than that of our conventional
products, and are using the Wind Doctor®, whichmonitors the status of wind turbine bearings, tomonitor factors such as rotational vibrations andtemperatures. Thus, we are steadily expanding
our status monitoring service business for failure
prediction and periodic maintenance.

NTN is moving forward with procurement fromoverseas business partners, such as in China and
ASEAN and we are expanding our business globally.
In accordance with our Procurement Policy
established in line with each SDG in April 2021,
we are promoting local procurement and optimal
procurement from a global perspective. By pursuinginternational and open procurement, we will aim forstable procurement that is responsive to market
fluctuations while focusing on competitive quality andprice as well as certainty in delivery times. In addition,by complying with laws, regulations and ethicalstandards and conducting fair and impartial business
transactions, we will not only ensure the confidenceof our customers and society in us, but also improvethe competitiveness of our business partners, thereby
continuing "sustainable growth" together with ourbusiness partners.
We will contribute to the creation of a sustainable
society and environment by promoting Green
Procurement in which we procure from business
partners, who comply with environment laws andimplement measures to conserve the environment,with consideration given to the reduction ofenvironmental burdens.
We will deepen our mutual understanding withpartners through business, and strive for Coexistence
and Co-prosperity based on a relationship of trust.

We are working to improve throughput by smoothly
connecting goods and information to streamline
processes, and reducing lead times and in-process
inventory. Through the promotion of DX (Digital
Transformation), we will gather the information
efficiently and link all the information in the factory,
thereby replacing human work and speeding up
improvement through information analysis. Alongwith our efforts toward carbon-neutrality, we will
improve customers’ satisfaction and generate
income.
In addition, to ensure consistent quality at all
times, we are promoting the establishment of a
global quality assurance system by reinforcing rules
for transferring products and changing processes,
and enhancing risk analysis and data management
during prototyping. When starting manufacturing
overseas, we adopt remote auditing to improve
processes and provide quality-related guidance tolocal employees. We are enhancing NTN's proprietaryknow-how through in-house development or in-housemanufacturing of production equipment and are also
actively engaged in human resource development
activities aimed at transferring such know-how to thenext generation.

Sales representatives respond to customer needs
by proposing products and solving problems throughface-to-face and online communication, and conduct
consulting-type sales activities to respond precisely
to the problems of customers’ existing models
during mass production.
Sales engineering representatives provide
technical services required for solving problems byquickly grasping the technical needs of customers.
In the aftermarket business, we are working tofurther improve customer satisfaction by providing
technical services such as demonstrations and study
sessions on how to handle bearings. In FY2020,
due to the new coronavirus pandemic, we held
online technical seminars globally. The total numberof such seminars was 240, with a total of 3,785
participants.
Customers' needs are changing with the times.
We are striving to increase the confidence in the NTN
brand and satisfaction from the brand by responding
quickly to these needs and changes in the external
environment. We conduct annual customer
satisfaction surveys to directly listen to the opinionsof our customers concerning their satisfaction andrequests.

Results

Number of cases ofpatent publication

23

cases

9

2

3

64%

cases

CSR questionnaire tosuppliers

598

Contribute to a decarbonized society by
developing green energy products
Contribute to stable operation of wind turbines
by providing condition monitoring systems (CMS)

Contribute to automation and labor saving in the
manufacturing industry by providing robot-related
modules
Contribute to the field of regenerative medicine
by utilizing micro coating technology

51%business
partners

Maintain and promote mental and physical health of employees
Prevent occupational accidents
Create a safe and secure workplace

Contribute to energy loss reduction by providing
environment-contributing products
Contribute to the spread and expansion of EV/
HEV by developing and providing next-generation
mobility modules

Ratio of overseas
production

4

Reduce CO2 emissions from procured
components and materials

6

Create quality to improve customer satisfaction
Create a foundation for stable supply
Utilize digital technologies for stable supply

7

Promote green procurement
Advance CSR procurement8

Response to risks related to human rights inthe supply chain

10

Promote the work
style reform

Scope3

Quality management system
certifications at
consolidated subsidiaries

100%

11

Number of visitswith technicalservice units

127

Number of online Customer satisfaction survey
Ratio oftechnology"Excellent" and "Good"
seminars held

240

92%

Promote female advancement
Promote senior employee advancement
Promote employment of persons with disabilities

4

Reducing CO2 emissions in manufacturing

5

Scope1

4

Reduce CO2 emissions in logistics activities

Use sustainable resources
Manage and reduce environmentally hazardous
substances

5

Expand the bearing recycling business

6

Create quality to improve customer satisfaction
Create a foundation for stable supply
Utilize digital technologies for stable supply

6

Create quality to improve customer satisfaction
Create a foundation for stable supply
Utilize digital technologies for stable supply

8

Response to risks related to employees’ human rights

Scope2

Scope3

SASB Index

Efforts in accordance with materiality

1

Local procurement
ratio*

Company Data/Investor Information

625

Press release
related to our researchand technology

Financial Report

Monozukuri

Business Strategies

Procurement

Sustainability Management

Strengths that create value

R&D* From NTN Report 2021, the ratio of direct materials procurement in own country(region) is calculated and presented.

17 NTN Report 2021

NTN Report 2021

18

About Us

Financial and Non-Financial Highlights
About Us

Financial Data

Non-financial Data

Net Sales

Operating Income/Operating Margin-3.1

billion yen

683.6(Billions of yen)

60.0

744.7 733.8
660.0

652.0

600.0

-0.6

billion yen(Billions of yen)

800.0

Operating Margin

40.0

562.8

Operating income

Operating margin

5.3% 5.4%
35.9

-11.6

(Billions of yen)

30.0

30.0

20.0

-7.0
-44.0

(Fiscal years
ended/ending(Forecast) March 31)2017 2018 2019 2020 2021 2022

Net Income (Loss)/
Average Shareholders’ Equity (ROE)-2.00(Fiscal years
ended/ending(Forecast) March 31)2017 2018 2019 2020 2021 2022

Equity to Capital Ratio*1

–50.0

(%)

(%)

(yen)

15

40

18

10

30

8.4

28.7

(23.4) (24.7)

2.9

1.2

–25

-22.8
(Fiscal years
ended/ending(Forecast) March 31)

15

Inventory Turnover
Ratio

Inventories

176.8

Capital Expenditures /Depreciation and Amortization

billion
yen

3.2

300.0
240.0

4.1

171.5 179.7

3.8
194.5

182.9

3.2

Capital expenditures
Depreciation and amortization

57.7

40.0

180.0

176.8

30.0

120.0

0

35.4

38.9

35.5

23.8

1.62(1.28)

1.0(Fiscal years
ended/ending(Forecast) March 31)

0(Fiscal years
ended/ending(Forecast) March 31)*1 Figures in () take into account a part of the subordinated bonds through public offering that is recognized as equity (50%).

19 NTN Report 2021

0

92

%

80

‘Needs some
improvement’

63

64

64

59

60

40

40

20

20

2017 2018 2019 2020 2021 2022

(Forecast)‘Needs much improvement’

51

51

49

48

51

‘Excellent’

18%

8%

51

Japan
Scope 1

Japan
Scope 2

Overseas
Scope 1

Overseas
Scope 2Japan

thousand tons

thousand tons

thousand tons

thousand tons

70

50
1.62 1.54

1.05 0.93

198 44
Japan Scope 1
Overseas Scope 1

62.0

29.4

30

(1.28) (1.22)

20

Japan Scope 2
Overseas Scope 2

60.6
32.7

31.1

28.9

2017 2018 2019 2020 2021 2022

(Fiscal years
ended/ending(Forecast) March 31)

0

1,540

274

67.4

65.3

40

1.16

‘Good’(Fiscal years
ended/ending(Forecast) March 31)2017 2018 2019 2020 2021 2022

Water Consumption(10,000
tons)

1.87

0

(Fiscal years
ended/ending
March 31)

CO2 Emissions [Scopes 1 and 2]

55.6

27.4

890

Japan

326

300

128

31.9

5.7

4.6

22.9

23.8

24.2

22.6

19.8

21.9

4.9

4.9

4.8

4.5

4.0

4.4

2017

2018

2019

2020

4.4

Overseas132

1222021 2022(Fiscal years
ended/ending(Forecast) March 31)

0

213

177

113

154

96.9 %

Generated waste (Japan)
Generated waste (Overseas)
Recycling rate (Japan and Overseas)

98.0% 97.8% 97.4% 96.9% 96.9% 97.9%
177

177

10

63
(Fiscal years
ended/ending(Forecast) March 31)

0

109

109

131

101

93

80

5

172

2017 2018 2019 2020 2021 2022

100

162

155

15

243
89

194

Recycling rate

thousand
tons

163

5.1

195

(10,000
tons)

284

281
104

100

131
20

335

200
5.5

thousand
m3

400

323

Number of respondents: 111

Generated waste

Overseas

thousandm3

74%

Generated Waste and Recycling Rates(10,000 m3)

63.3

4.8

10
2017 2018 2019 2020 2021 2022

Either ‘Excellent’ or ‘Good’

0%

40

times

10.0

2017 2018 2019 2020 2021 2022

(Forecast)

Customer Satisfaction Survey
Responses*4

Ratio of Overseas Production%

64(Fiscal years
ended/ending
March 31)2017 2018 2019 2020 2021 2022

100

0(times)

22.0

0

(%)

(Fiscal years
ended/ending(Forecast) March 31)

2.0

37.0

(Fiscal years
ended/ending

51

60
37.3

2017 2018 2019 2020 2021 2022

100

0

45.2
36.6 37.6 37.5

5

5

(%)

2017 2018 2019 2020 2021 2022

3.0

20.0

60.0
0

(Billions of yen)

60.0
50.0

3.7

3.6

billion
yen

16

14

15

SASB Index

180.0

4.0

23.8 35.5
billionyen

Inventories
Inventory turnover ratio(Billions of yen)

Capital Expenditures

22
19

19

20

5

Net D/E Ratio*1

Depreciation andAmortization

25

63

62

(Forecast) March 31)%

63

20.4 21.7

0(Forecast) March 31)

60

10(Fiscal years
ended/ending(Forecast) March 31)

0(Fiscal years
ended/ending

2017 2018 2019 2020 2021 2022

80

122017 2018 2019 2020 2021 2022

64

Company Data/Investor Information

Inventories /Inventory Turnover Ratio

0

0

64

-7.1

2017 2018 2019 2020 2021 2022

-11.6

yen

10
-2.9

65

10

Ratio of Local Procurement*3

6
0

67

60

Financial Report

20

30

20

(Fiscal years
ended/ending(Forecast) March 31)

15
27.4

35

40

2017 2018 2019 2020 2021 2022

30.2

20.6
5

0

%

(%)

100

%

Business Strategies

20.4(23.4)

%

(%)

66

18.5

17.5

5.0

Cash Dividends

-7.1

20.0

10.0

0
-3.1

0

5

%

80

5.0

2.8

0

62

Sustainability Management

7.5
200.0

Percentage of Hired Female
Graduates*2

15.0

10.0

-0.6% 15.0%

R&D expenditures
Ratio of R&D expenditures to sales

21.0 21.7

19.2

20.0

3.1

billionyen

3.1% 3.1%
2.8% 3.0%
2.8%

2.8%

25.0

20.3

20.0

2.3%

1.2%

17.5

billion yen(Billions of yen)

3.7%

39.9

27.2
400.0

%

Ratio of R&D
expenditures to sales

R&D expenditures

Percentage of Employees Overseas

Value Creation Story

562.8

Operating income

R&D Expenditures;
Ratio of R&D Expenditures to Sales

Profit (Loss) Attributed to
Owners of Parent

68

68

62

50

61

2017 2018 2019 2020 2021 2022

(Fiscal years
ended/ending(Forecast) March 31)*2 Organization covered: NTN only
*3 From NTN Report 2021, the ratio of direct materials procurement in own country (region) is calculated and presented.
*4 Survey period: From October 2019 to September 2020

NTN Report 2021

20

Value Creation Story

Management Commitment
About Us

Taking over efforts and achievementsof the predecessor and driving forward
transformation of business structure

SASB Index

21 NTN Report 2021

Company Data/Investor Information

While my predecessor Ohkubo’s experience was basedin finance, I was deeply involved in manufacturing witha focus on quality assurance when I joined NTN. In
those days, training for new employees continued for

Financial Report

My confidence as a top executive
based on experiences in the forefront of
manufacturing and sales operations

Business Strategies

Eiichi Ukai

Sustainability Management

Director
Representative Executive Officer, President
CEO (Chief Executive Officer)

Value Creation Story

Steadily Implementing the
Medium-Term Management Plan
toward a Newly Reborn NTN
with a Focus on Attainment ofManagement Goals in the Final
Fiscal Year of the Plan

My name is Eiichi Ukai. I assumed the position ofRepresentative Executive Officer, President and CEO(Chief Executive Officer) on April 1st of this year. Amid
the very tough management environment, while being
aware of the great responsibility that goes with myrole, I will implement initiatives in a positive and logicalmanner by thinking globally and acting locally andmake every effort to produce results that meet yourexpectations.
NTN was established by placing importance on the
Frontier Spirit and the Coexistence and Co-prosperity
Spirit. Based on these, we uphold the corporate
philosophy “We shall contribute to international society
through creating new technologies and developing
new products.” For more than 100 years since its
inception in 1918, the Company has aimed to realizea “NAMERAKA Society” where people can easily leada secure and fulfilling life in harmony with nature. I
consider that these founders’ spirits and the corporate
philosophy go well with our current ESG management.
My predecessor, Hiroshi Ohkubo, worked on thetransformation for the next 100 years during his sevenyear term of office. As a part of the transformation, NTN
shifted to a company with a nominating committee,
etc. in 2019, and recently I was elected as a new
Representative Executive Officer, President and CEO asrecommended by the Nominating Committee consistingof 3 Outside Directors and 2 Directors and as decided
according to a resolution by the Board of Directors.
While accelerating the transformation of theGroup’s business structure by steadily implementing
the Medium-Term Management Plan “DRIVE NTN100”
Phase 2 of which final fiscal year will end in March
31, 2024, we will strengthen our financial structure.
Through these activities, we will make our utmost
efforts to build a business structure that can respondto changes in business environments.

about three years. In the first year, I learned the basics
of research and development in Kuwana Works in Mie
Prefecture and in the second year, I learned about heat
treatment, working under a day and night three-shiftsystem in Takarazuka Works in Hyogo Prefecture which
operated until 2009. There, I acquired knowledge about
all operations and inspections of more than ten types of
furnaces.
Thereafter, in the third year, I was entrusted with
operating a mass production line for ball bearings in
Iwata Works in Shizuoka Prefecture. The ball bearings
serve as our core products. I remember that four young
employees (including myself) with less experience
hustled under a day and night shift system. When I wasyoung, shift work was hard for me, but I still remember
what I learned in those three years by practicing until it
became automatic. This experience was helpful when
I learned theories on a later date and, moreover, wasa good opener for me to understand the real natureof manufacturing. Now that I hold the top position in
the Company, it is clear to me that gaining adequate
knowledge about the cornerstone to manufacturing
in my early days at the Company was a valuable,
indispensable experience. In addition, this experiencegives me confidence that I can cope with greatchallenges to be addressed in order to transform into a
newly reborn NTN.
After the three-year period, I engaged in quality
assurance and plant management in Japan, Canada
and China and in recent years, I’ve served as thegeneral manager of the ASEAN/India region and wasstationed in Singapore for two years since 2013 andin Thailand for two years. In doing so, I accumulated
management experience not only in manufacturing but
also in sales. The sales office in Singapore contributed
to generation of profits in the past but was in the red
for two years before I assumed the post there. Thisworsened situation affected the entire region. What I
have given importance to in my career is for a leader
pulling an organization together to get to the bottom ofa problem. I keenly felt it important in solving various
management issues that facing various problems
in sales activities, I myself discuss face-to-face withcustomers and on-site personnel to discover what thereal problem is until I am satisfied with the answer.

Urgent need for reformation of
cost structure in manufacturing
I have been deeply involved both in manufacturing and

NTN Report 2021

22

Value Creation Story Management Commitment
About Us

Improving availability andestablishing the pricing policy
to pursue an increase in the profit ratio

Company Data/Investor Information

Reformation to shift
to a new business model
based on service solutions
In “DRIVE NTN100” Phase 2, concentration of
resources on research and development activities forsustainable growth of NTN is yet another important
issue. The direction of our research and development
activities is to continue to respond to the carbon neutral
movement and pursue safety, security and comfort.

NTN Report 2021

SASB Index

In “DRIVE NTN100” Phase 2, strengthening the financial
structure is another important issue. We will move
forward with transformation to build a financial structurethat can stably secure profits without relying on the
demand environment. In Phase 1, we worked to reduce
fixed costs since the fiscal year ended March 31, 2020,
and, as a result, successfully lowered the break-evenpoint to a target value in the fiscal year ended March
31, 2021. However, due to external factors suchas U.S.-China trade friction, we cannot say we havesufficiently improved the profit ratio.

Financial Report

Improving the profit ratio
by lowering the break-even point

In Phase 2, we will devote our energy into
reducing variable costs through the variable costreformation and other measures, while working to
reduce investments and improve productivity throughproduction reorganization and production reformation.
More specifically, we will aim to further lower the breakeven point with a focus on reducing variable costs.
Meanwhile, of fixed costs, the ratio of variable fixed
costs that fluctuate with an increase in sales, suchas personnel, logistics and other expenses, is set at
15% or less relative to an increase in net sales, and anincrease in other fixed cost will be contained. Throughthose activities, we will aim to maximize the economy
of scale. In line with this, we intend to increase added
value by moving forward with reduction or withdrawal
from deficit businesses. Through these efforts, we areplanning to lower the break-even point for net sales
by 20 billion yen from 590 billion yen in the fiscal year
ended March 31, 2021 to 570 billion yen in the fiscal
year ending March 31, 2024.

Business Strategies

NTN is a bearing manufacturer with its sales ranked 4th
in the world. According to a quality survey conducted
regularly by the Company, however, its products do
not just have quality that is comparable to that of theworld’s top class manufacturers’ products; rather,
the Company’s products have better quality andperformance. In this respect, we will attach more
confidence to our strengths accumulated over many
years and further enhance our technological edge.
However, to pursue an increase in the profit ratio, weneed to overcome various issues. First, in relation to
the aftermarket, many areas for improvement in termsof “availability” of services and other items remain.
From the customers’ perspective, if a defect occurs in abearing of equipment, they want to replace the bearing
with a new one or one with appropriate specifications
and resume the operation of a production line as soon
as possible. By meeting such needs in a timely manner,
we can provide value sought after by customers.
Since 2013, I have closely watched front-line
sales operations in overseas markets. Each time I
learned about the actual circumstances, I pointed out
the importance of improving availability at a Global
Management Meeting and other occasions. We need to
be a manufacturer that can be of help to customers bydelivering their necessary products when the customers
are in trouble. This represents the provision of valueof availability and in “DRIVE NTN100” Phase 2, wewill channel our energy into strengthening our supply
capacity and services with the aim of accelerating thetransformation of our business structure.
From now on, we will aim to build a business modelthat can demonstrate availability. The Company sells
bearings for MRO of machinery for mining, paper
production and steel production and automotive
aftermarket parts called auto parts, as well as
aftermarket bearings for general machinery. For theaftermarket business, it is important to win OEM(direct sales) orders with appropriate profits secured,deliver products from the initial phase of installationof machinery and equipment by customers, thereby
securing an advantage in winning replacement orders
for bearings, and reduce production costs by utilizing
mass-production lines for OEM.
To strengthen coordination with the OEM businessfrom the above two perspectives, we will take measuresfor each of the following processes: buying materials,
then producing and selling products. With regard to
the process of buying materials and parts, we will
break away from self-sufficiency by implementing thevariable cost reformation and accelerate our efforts
to strengthen cost competitiveness, for example bycombining global procurement and local procurement
in an optimal manner. In the manufacturing sites,
production reformation will be carried out by introducing
overall optimization measures, thereby aiming toincrease throughputs.
In sales activities, we will negotiate prices withcustomers if it is necessary to do so even after
we have made our utmost efforts to reduce costs.
Although those negotiations are hard for frontline sales
personnel, I will also provide my utmost support. After
assuming my current post, I set up opportunities for me
to communicate information on those activities directly
to employees in Japan and abroad using my own words.
I recognize we cannot avoid this process if we reallyintend to obtain authentic customer trust and become atrue partner of customers.
As a manufacturer, we will enhance corporate
competitiveness by strengthening each of theprocesses for buying materials, then producing andselling products and generate profits by improving
availability.

Sustainability Management

23 NTN Report 2021

cultivate a corporate culture that takes on challenges
to transformation efforts. In line with the variable costreformation, our supply chain needs to be reviewed
but we will implement measures that basically aim toensure stable procurement with a focus on quality andcost under the spirit of Coexistence and Co-prosperity
with suppliers.

Value Creation Storysales for approximately 40 years. During this period, I
was transferred about 15 times in Japan and abroad.
I had opportunities to learn the real nature of NTN’s
manufacturing first hand in Japan, while I gained
knowledge and experience related to manufacturing andsales in overseas areas from the global perspective.
Based on these experiences, I believe that it is thestrengthening of the on-site frontline operations
that brings added value to businesses and I, as aperson holding the top position in the executive team,will straightforwardly tackle issues in the frontline
operations of manufacturing and sales.
To prepare for such activities, I think it isimportant that all officers and employees of NTN
share information on the potential and strengths of
the Company once again. Currently, approximately
70% of net sales of the Group come from automotive
businesses. Of those, approximately 80% are derived
from driveshafts and hub bearings. Times are rapidlychanging to electrification of automobiles but there is
no change in the fact that driveshafts and hub bearings
are important safety parts supporting the axle/
drivetrains of automobiles and they will continue to be
key parts even if it becomes common to use electricautomobiles. So, I think the Company can further exert
its potential by strengthening those core products interms of functionality, such as low torque, low vibrationand high rigidity.
Meanwhile, it is urgent to reform our cost structure
in manufacturing in order to survive the global
competition coming in the future. In the past, bearing
manufacturers including the Company strongly believedin self-sufficiency and the Made-in-Japan myth. Selfsufficiency is an approach you can boast to the world
because it enables products with reliable quality to bedelivered to customers. However, in a situation wherecost competition is intensifying due to the progress ofglobalization, a disciplined approach to ensuring not
only quality but also reduced costs is essential.
Going forward, we will continue to manufacture
products on our own that require high functionality,
such as low torque, low vibration and high rigidity,
but regarding standard products and general-purpose
products, we will break away from self-sufficiency
by outsourcing and reorganizing production andsimultaneously drastically revise procurement routes. In
short, we will employ a polarization strategy. To advancesuch reformation, it is essential for all employees of
the Company to enhance sensitivity to changes in thetimes. At the same time, it is important to remove
barriers of organizations that tend to be rigid, and24

Value Creation Story Management Commitment
About Us

Promoting ESG management towardmedium- to long-term sustainable growth

Only 20 to 30% progress to goals
However, the path is clear andgoals can be seen
Currently, the external business environment ischallenging but we will improve profitability by steadily
implementing “DRIVE NTN100” Phase 2 to transform
into a newly reborn NTN. I am determined to make every
effort to achieve the management goals without failin the fiscal year ending March 31, 2024, which is the
final fiscal year of the plan.
If using the summit of a mountain as an analogy forour transformation into a newly reborn NTN, we are stillat the second or third station on our way up. However,as described earlier, the path to climb is clear and thethird-year goal to be attained can be seen. If all 23,000
employees share issues with each other and take evenjust half a step forward, it will exhibit great power. I
believe that we can achieve net sales growth at anannual rate of 3% by overcoming each issue in areas
ranging from procurement to manufacturing and sales inthis fiscal year onward, and there is a good chance that
we can attain the goals of at least 700 billion yen in net
sales and at least 42 billion yen in operating income(with the operating income ratio being at least 6%) in
the fiscal year ending March 31, 2024.
We kindly request the continued understanding andsupport of all our investors and other stakeholders.

Business Strategies
Financial ReportCompany Data/Investor Information
SASB Index

Throughout “DRIVE NTN100” Phase 2, the top priority
issue is to pave the way for a newly reborn NTN.
However, I think it is also important to aim to balance
economic value and social value for the purpose ofachieving sustainable growth for a medium to longterm. In terms of three fields including the environment,
society and governance, NTN has identified 13 itemswith materiality and intends to steadily advance ESG
management by setting key performance indicators(KPI) going forward.
Regarding environmental conservation efforts
in particular, our products minimize energy loss ofrotating bodies in the first place, and as describedin the beginning, we pursue the realization of a
“NAMERAKA Society.” Therefore, I think we can make agreat contribution to meeting the needs of the times.
In addition, we will contribute to the realization of asustainable society using natural energy by offering
bearings for wind turbines and other products. NTN
manufactures a large bearing with a diameter of morethan three meters for wind turbines. By exhibiting
such potential in manufacturing, we will contributeto communities through development of our creativetechnologies from the viewpoint of “E (Environment)”of ESG management. As a company trusted bycommunities, we will work on various issues, such as a
response to climate changes, reduction of charge-in raw
materials, and sustainable use of resources throughreuse and recycling of waste materials. This May, we
announced our support of the Task Force on Climaterelated Financial Disclosures (TCFD) and will preparea management strategy by recognizing and factoring inclimate change risks and opportunities.
Regarding “S (Society),” we will endeavor to solve
social issues by offering safety and comfort. Morespecifically, we are moving ahead with developing
electric modules for electric automobiles and new
products related to drug discovery and diagnosis, aswell as robot-related modules for which a new market
is expected to be developed and expanded. In termsof personnel, we will continue our efforts to promote
diversity, foster and use a diverse range of humanresources regardless of nationality, culture, gender, age,disability, etc. and join various values together, thereby
accelerating transformation.
Turning to “G (Governance),” we worked tostrengthen our corporate governance framework
including compliance and risk management in Phase 1,
and will continue to thoroughly assure compliance andstrengthen governance in Phase 2 as well.
Our efforts to realize a “NAMERAKA Society”
contribute to attainment of sustainable development
goals (SDGs) adopted by the United Nations. Of SDGs,
17 development goals share many common interests
with efforts made by NTN in its history. Based on thosepast results, we will accelerate our efforts by clarifying
points that need to be strengthened. Furthermore, in2015 we endorsed the United Nations Global Compact
which aims to build a framework for the international
community to realize sustainable growth. We advocate
ten principles in four areas including human rights,
labour, the environment and anti-corruption. Goingforward, we will continue to promote activities to put
the ten principles of the United Nations Global Compact
into practice and achieve SDGs.

Sustainability Management

25 NTN Report 2021

as-needed basis and enabling us to take measures
such as reducing inventories of bearings, parts andmaterials, which will contribute to improvement of
profitability. Also, we will build a business model thatutilizes big data generated through such activities inorder to increase the brand value of NTN.

Value Creation Story

Target fields on which resources are concentrated are
the following six fields: service/solution; robot-related
module; next-generation mobility module; renewableenergy-related; hydrogen-related; and life sciencerelated.
For service solutions (one of the target fields), we
will attach sensors to bearings to make it possible tomonitor bearings. Our aim is to attach micro-sensors
to bearings and realize so-called “talking bearings,”
a mechanism for quickly recognizing and alerting any
abnormality that occurs during operation. For example,
sensors for measuring vibrations or temperatures are
installed in this mechanism so that an alert is issued
when a value exceeding a standard is detected. The
biggest problem with industrial machinery is suspensionof operation due to non-conforming parts and wehave accelerated technological development to solvethat problem. For these efforts, we go beyond inhouse development activities and are strengthening acooperative relationship with external bodies, such as
an academic-industrial partnership.
Service solutions for which we will accelerate ourefforts going forward aim not only to sell products but
also to rebuild the cornerstone of our businesses inorder to focus on solving troubles faced by customers.
In addition, we will channel energy into developing
software that controls sensors. Furthermore, thereplacement frequency of aftermarket bearings canbe estimated by using the software to collect andanalyze data on the operation status of machinery ofcustomers. This will lead to a pull manufacturing systemfor producing a necessary quantity of products on an

NTN Report 2021

26

Value Creation Story

New Medium-term Management Plan

Review of Management Plan
About Us

In 2018, when we celebrated our 100th anniversary, we launched the Medium-term Management Plan “DRIVE NTN100”
to drive forward transformation of the business structure for the new 100 years. For the three years from the fiscal year
ending March 2022 to the fiscal year ending March 2024, we are working on various measures as initiatives for the
Medium-term Management Plan “DRIVE NTN100” Phase 2.

April 2011
April
to2011Marchto2013
March 2013

(Billionsof yen)(Billionsof yen)

800.0

800.0

Revival
Revival20142014

NTN100
NTN100April 2013
April
to2013
Marchto2015
March 2015

717.0 717.0

683.6 683.6

600.0 543.5 543.5

539.6 539.60700.0 or700.0
more or moreor moreOperating margin
10% or more

3.7

2013 2013

Basic policy
Acceleration of globalization by “Onlocal sites with local materials by
local personnel”

1.2

2014 20142015 2015

Basic policy
Reform business structure to
generate profit

Review

Basic policy

Centralization of management resources

ASE
A
n Ch
gio
ina N, etc.
Re Eu
Ame rope
Japa ricasnStructural reform

Produ

ct

age

Busin
strat essegyBusineMan

age

Philo ss founbusinsophy, dation
ess p policy,
roces
s

Man

age

Man

ta
Profi

n

datio

Foun

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

2020 2020

Strengthen management andfinancial foundation

6

4

4

2

2

0

0

2024 2024(Fiscal years (Fiscal
ended/ending
years ended/ending
March 31) March 31)

Basic Strategy

Drive Forward Transformationof Business Structure for the
New 100 Years
DRIVE NTN Transformation
for New 100

Digitalization(latest digital technology)

Resources(Management resources that NTN has developed)

Innovation (development of innovative technologies, products and services)
Variable cost reformation (procurement reformation)
Efficiency improvement(achievement of the world’s No.1 productivity and quality/improvement of asset efficiency)

Reform business structure from“volume” to “value” to generate
profitBusiness Operating Policies

NTN’s Revitalization
Phase 2Phase 1

Phase 3

Crisis Response Period
Growth

1. Develop Businesses in New Areas
2. Expand Aftermarket BusinessProfitability

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

Foundation

5. Strengthen the Management
Foundation
6. Strengthen the Financial
Foundation

Expansion of new product and new businessMainthemes

Review
We were able to achieve numericaltargets, exceeding the plan, but
the benefits from exchange-rates
were also substantial, and withregard to the basic policy of"Reform business structure to
generate profit," issues remained
unaddressed. We also recognized
the need to create new businesses
in order to sustainably grow into thenext 100 years.

th

Grow

bilityMid-term business structural reform

Toward future growth

2019 2019

Foreign exchange sensitivity
50% reduction

Basic policy

Foundation building for Our Vision
Implement main policies based on 3 Basic Policies tobecome a co-creative partner company for customers

Short-term measure to generate profit

Centralization of resources to priority
fields2018 2018

6

Review
We took measures for transformation to cope with the majorchanges in the external environment, the strengthening ofbasic technologies and products, and the development of
new business areas. Through these initiatives, we recognizedthat the next challenge is to “drive forward transformation ofbusiness structure for the new 100 years.”(2021)

Improve profitability andinvestment efficiency of existingproducts and businesses

Ensure the health and safety of
employees

Improve profitability andinvestment efficiency of existingproducts and businesses

Materialize new business bycreating products and businesses

Secure cash and continue
business

Select new business and review
the allocation of management
resources

Establish management system
to facilitate reform of businessstructure

Prepare for future growth

Strengthen corporate governance(Rebuild management foundation)

Build newbusinesses andcore business area

CreateGrow
Harvest

SASB Index

The Great East Japan Earthquake
in March 2011 and Greece's fiscal
collapse that came to light in 2010
led to the European financial crisis
following the further downgradeof the Greek credit rating in July
2011. In addition, the impact of
the flooding in Thailand on theautomotive industry from the end of
October 2011 led to a turnaround in
business performance. As a result,
we had no choice but to change
direction.

Emergency measures

2017 20178

Company Data/Investor Information

Expand business globally with a focus
on growth markets
Establish world’s No.1 businesssegments
Establish new business segments
such as EV systems
Expand sales for Industrial machinery,
Aftermarket & Distributor
Expand sales in growth market
Expand local production andprocurement

2016 2016(%)

8

Financial Report

Priority measures
Priority measures

Total asset turnover
1.0 or more

-0.62021 2021(%)

NTN in the fiscal year ending
March 31, 2028
Net sales growth rate
GDP growth rate in each region+ something extra

6.0

5.4

1.3

2012 2012

Crisis Response
Crisis Response
Period Period

562.8 562.8
5.3

Business

0733.8 733.8* “Loyalty,” which was previously included in “non-operating income,” has been changed to be included in “net sales” from the fiscal year ended March 31, 2021.
The period for retroactive adjustment is after the fiscal year ended March 31, 2017, which is subjected to audit by an audit firm.

27 NTN Report 2021

Business Strategies

200.0

Phase 3Phase 3
From AprilFrom
2024
April 2024

652.0 652.0

3.8
200.0

Phase 2Phase 2
April 2021
April
to March
2021 to2024
March 2024

6.7

6.2
5.2

400.0

Phase 1Phase 1
April 2018
April
to March2018 to2021
March 2021

Sustainability Management

400.0

From April
From
2018
April 2018744.7 744.7

639.0 639.0
600.0

DRIVEDRIVE
NTN100
NTN100April 2015
April
to2015
Marchto2018
March 2018

Net Sales*
Net Sales*
OperatingOperating
Margin Margin

701.9 701.9

Value Creation Story

GlobalGlobal
Advance
Advance20132013

NTN Report 2021

28

Value Creation Story

New Medium-term Management Plan

NTN’s Business Environment

Value Creation Story

New Medium-term Management Plan

Priority Measures
About Us

NTN’s Business Environment

Electrification ofindustrial machinerySpread of AI and IoT

JapanMarket shrink due to thedepopulation(decreasing birthrate and aging
population)
Promoting response to climatechangeMaterialization of Society 5.0

Save labor
and reorganize
production
Use external
resources
R&D of electrificationand new products

Target Areas to Invest R&D Resources
Robot-related module

Next-generation mobility module

Renewable energy-related

Hydrogen-relatedLife science-related

Focus on 6 target areas
Strategic direction for R&D

Americas

Requests for energysaving machinery

Carbon neutrality(Environmental impact reduction
and decarbonization)
Strengthen products
for large vehicles
Expand aftermarket
business
Promote local
procurement

Rebuild Business Portfolio and Product Portfolio

Europe

China

Focus on products
for EV
Expand aftermarket
business
Develop Middle East /Africa market

World’s No.1 population(decreasing birthrate and aging
population over the long-term)
Economic policy for climatechange and next-generation
technology (Made in China 2025)
Social infrastructure investment
in inland areas
Significant strengthening of
regulations for fuel efficiency
and CO2

Expand volume
Focus on products
for EV
Focus on windturbines and rollingstocksStrengthen CMS
business

Creation sector
Establish new areas for
future growth

Trade friction andtariffs

Growth sector
Expand businesses
Concentrate resources

Harvest sector
Secure stable profit

Prevention of childlabor (human rights)

Automotive businessLife sciences (drug discovery
and regenerative medicine)
Hydrogen energy market
Expand market for wrist joint
robotsCondition Monitoring (CMS)

Expand sales in the Middle East
and Africa
Develop “Talking bearing” and“Thinking bearing”

Products adapting toelectrification
eHUB, sHUB
Electric brake

Green energy products
Robot / gearbox
Wind turbines (ultra-large size
bearing)
Machine tools (European market)
Rolling stock (Chinese market)

From product sales business toservice-oriented business
Strengthen MRO
Bearing refurbishment business
Failure detection

Products adapting toelectrification
Electric module products
Existing products fitting EV
Low friction, higher efficiency

Improve profitability byenhancing cost competitivenessConstruction machinery(electrification and highperformance products)
Agricultural machinery (sales
expansion of CVJ for industrial
machinery)
Aerospace

Secure saleable inventory
Highly competitive products(BU, etc.)
Use of overseas production andexternal procurement

Focus on the vehicle segment
where NTN’s strengths can beutilized
Optimize customers portfolio
Secure volume in growthmarkets

Reduce fixed cost and expand supply capacity by outsourcing manufacturing (breaking away from self-sufficiency)of standard products such as ball bearings
Fiscal year ended March, 2021

Business composition ratio

29 NTN Report 2021

Aftermarket business

SASB Index

Asia

Increase of population andmiddle-income group
Social infrastructure investment
Progress of digitization in
emerging countries

Expand volume
Utilize LCC products
to strengthen costcompetitiveness
Expand aftermarket
business

Industrial machinery businessCompany Data/Investor Information

Globalization of thebusiness

Trend of population declining
Economic policy for climatechange (European Green Deal)
Significant strengthening of
regulations for fuel efficiency
and CO2
Uncertainty due to Brexit

Financial Report

Changes indemographics

Issue of businesssuccession

P.79

We categorize NTN’s main businesses into a “Creation sector,” “Growth sector,” and “Harvest sector” and concentrate
management resources on these sectors. As to business portfolio, we focus on expansion of aftermarket business.

Medium- to long-termlabor shortage
Growth of emerging
countries

Business Strategies

Business Strategies

Reduction inenvironmental impact
Response to natural
disasters

Response to conflictminerals
Rise of low-cost
products

Pursuit of safety andcomfortSustainability Management

Response toenvironmental issues

Reduction in CO2emissions

P.87

Service / solution

Spread of infectious
diseases (COVID-19)

Moderate population andeconomic growth
Policy shift by the new president
Economic policy shift to respondto climate change
U.S. and China struggling forhegemony
Medium- to long-term decline incrude oil priceResearch & Development

Value Creation Story

Response toparadigm shift

Spread of nextgeneration mobility

NTN’s Main Strategies

Aftermarket businessIndustrial machinery business
Automotive business

Fiscal year ending March 2031

16%
18%
66%

Aftermarket businessIndustrial machinery business (OEM)
Automotive business

40%
60%

NTN Report 2021

30

Value Creation Story

New Medium-term Management Plan Priority Measures
About Us

Lower Break-even Point

CFO Message

Toward NTN’s revitalization(billion yen)

Net sales

Operating income
Phase 1

733.8
650.0

652.0

575.0

630.0

562.8

Break-even point net sales

Phase 2
660.0
610.0

Control Increase of Fixed Costs / Improve Assets Turnover
Environment

700.0

NTN

42.0
570.0

27.2
15.0

Decrease in workforce (Japan)

2020/3-3.1
2021/32022/3Declining production efficiency especially in Japan
Optimize overall production (Improve cash flow)
Reduce logistics cost / inventory assets by consolidating
and streamlining bases
Reduce manufacturing cost by leveraging external
partners and control investments for renewal

Reorganization of production

2024/3

P.85

Capital investment policy in Phase 2
1) Freeze, in principle, investment for capacity increase2) Invest in countermeasures for risks such as natural
disasters and safety measures3) Shift to investment for maintenance / renewal /efficiency improvement

7.5

2019/3

Monozukuri

Under

Value Creation Story

Further lower the breakeven point focusing on reducing
variable costs
Restrain a proportional increase in fixed costs to 15% orless and maximize scale effectDownsize or withdraw from unprofitable business andaim to increase added value

P.33

60 billion yen / 3 years

Production reform activities
Sustainability Management

Reduce Variable Cost / Procurement Reformation
Phase 2Develop information on global purchasing andanalyze categories (characteristics of parts / areas)
Start unification of contract operations (centralizedpurchasing)
Actively examine and adopt new partner
manufacturers (including LCC)

Realize the best mix of global and local procurement (optimal
procurement)
Strengthen category management (by function / specialization) and
implement strategies by category
Expand and accelerate unification of contract operations (centralizedpurchasing)
Reorganize partner manufactures and shorten supply chain

Promotion of DX (Digital Transformation)
Phase 2 (Increase efficiency / accumulate data)

1 New IT core system
Strengthen responsiveness to market changes by“visualization” of sales / production / procurement /logistics, and optimize inventory

Achievements of “DRIVE NTN100” and steady implementation of new measures
Achievements of reform

RPA: optimize routine operations, and go paperless forreports, utilizing IT core system
CAE: Streamline development / trial production / analysis
Introduce communication tools compatible with the workstylereformFinancial ReportCreate new business
Environmental business(to adapt to “carbon neutrality”), etc.

Company Data/Investor Information

Digital technology

3 Promote smart factory
Launch of a new plant in Wakayama
Optimize production by introducing IoT and AI into production process
Realize streamlined production by “visualization” of process condition

SASB Index

31 NTN Report 2021

Integrate accumulated data such as
sales / production / procurement /logistics/ finance / process / CMS

Upgrade business administration

2 Business reform with digital technology
designs and specifications and listening better to our
suppliers’ proposals for improvements.
The implementation of centralized procurementin our core regions during Phase 1 will enable theaccelerated deployment of a global purchasing policy, andoptimally combine local procurement, and developmentof global partners with the opportunity offered by NTN
to global markets. The centralization of purchases
and the globalization of volumes are essential vectors
for reducing costs. We intend to benefit from the highpotential of competitive areas, such as China and India.
Our purchasing strategy will be based on the logistics
reform already initiated, aimed at obtaining a shorter,
flexible, responsive and competitive supply chain.
NTN has built its history and development on aculture of strong partnership and mutual respect with its
business partners based on Co-prosperity Spirit. It is an
essential basis for developing value through technologicalinnovation, product quality, production improvement,
supply chain optimization and services. Finally weconsider the commitments requested to our business
partners, CSR, SDG, Green Procurement, Compliance, as
great opportunities for transformation, performance andinnovation.

Integrate data

Promote utilization of inventory within NTN Group

20.0 billion yen / 3rd year

Accelerate procurement reformation
The urgent need to reform our variable cost structure
and the economic cycles with less predictable andincreasingly brutal variations, of strong amplitude, makethe Transformation of Procurement a key factor to revivein the market. NTN must intensify its globalization,and Mr. Brelaud has been Head of Global Procurement
HQ since 2020 to accelerate expansion of overseas
procurement that accounts for more than 50%.
Transforming means fundamentally reviewing ourprocesses, our decision criteria, our procurement
routes and therefore requires a deep revision of ourview of procurement and the relationship that we
intend to develop with our business partners. Category
Management, central to transformation in Phase 1,
will be intensified, with a global deployment in thegroup and the establishment of a specific organizationand innovative methodologies. Firstly focused on our
first two product lines, Hub Bearings and driveshafts,
multidisciplinary Cost Reduction Task Forces were set up
in Japan, with mirror organizations in each Region.
The teams are physically gathered in one place, close
to production, for efficient decision-making and execution
and alignment of all sectors on the priorities decided as ateam. Priority areas of work: the accelerated introductionof new suppliers, standardization and simplification of

Phase 3Business Strategies

Phase 1

4 CMS (Condition Monitoring System)
Monitor operating condition of wind turbines, rolling stocks, etc.
Predict breakdowns in advance by using AI

NTN Report 2021

32

Value Creation Story

CFO Message

Toward Establishing a Management Baseto Realize Sustainable Growth
as a Global Company

Executive Officer
CFO (Chief Financial Officer)

Tetsuya Sogo

Points of financial results for the fiscal year
ended March 31, 2021

In the past two years, we successfully reduced fixed
costs by more than 40.0 billion yen according to the plan,but in the fiscal year ending March 31, 2022, almost allthat we gained from our fixed cost reduction efforts inthe past year is expected to be lost. For the fiscal year

Net sales
652.0(billion yen)

2020/3Results

2021/3Results

2022/3
Forecast

652.0

562.8

660.0

660.0
562.8

350.3
99.1

362.4

251.2

258.4

2019/32020/3

104.0

1.2

422.8
90.6

390.0
80.0

332.2

310.0

2021/32022/3

7.5

-3.1

15.0

(1.2%)(-0.6%)(2.3%)

Ordinary income

-1.7

-5.7

10.0

Extraordinary
income/loss

-32.3

4.5

0.0

Profit attributable toowners of parent

-44.0

-11.6

5.0

US$

108.7

106.0

107.0

EURO

120.8

123.7

128.0

Reduce16.1bn
2019/3(benchmark)

Reduce26.6bnIncrease
25.4bn42.7

16.1
2020/3(Result)

2021/3(Result)

2019/3Results
17.3

2022/3(Forecast)Main factors of increased fixed costs in 2022/3•Proportional increase with scale recovery (¥15.0bn=sales
increase×15%)•Including recent cost increase in logistics (¥4.0bn)•Normalization of salary increase, bonus and others (¥2.5bn)•Increased depreciation for core IT system and New Plant inWakayama (¥2.0bn)•Increased personnel costs and others for rapid demand recovery

2020/3Results

2021/3Results

2022/3
Forecast
390.0

Interest-bearing debt

350.3

362.4

422.8

(Overseas)(99.1)(104.0)(90.6)(80.0)(Japan)(251.2)(258.4)(332.2)(310.0)

266.9

291.3

275.6

270.0

Net Interest-bearing debt

SASB Index

Operating income
Operating margin

Exchange rate

(billion yen)

1.5

1.3

(billion yen)

Consolidated Statements of Operation

Net sales

Fixed Cost Reduction (Personnel Cost, Expenses etc.)

1.6

1.2

Company Data/Investor Information

In the fiscal year ending March 31, 2022,
semiconductors will continue to be insufficiently
supplied under the continuation of the COVID-19
pandemic. However, we assume recovery of demandin terms of all businesses and have a plan so that net
sales as a whole will return to the 660.0 billion-yen
level, which was recorded two years ago. Turning tooperating income, we have a plan for achieving 15.0
billion yen of operating income by factoring in plenty ofroom for personnel expenses, etc. in order to respondOverseasJapan
Net D/E ratio
Net D/E ratio (adjusted)*
1.9

In the “NTN Revitalization Scenario,” a mandatory goal is
to lower the net D/E ratio to 1.5 or less in three years, orby the fiscal year ending March 31, 2024. Furthermore,Financial Report

Points of forecasts for the fiscal year ending
March 31, 2022

Interest-Bearing Debt
(billion yen)

Improvement in the D/E ratio
Positive results of reduction in fixed
costs and issues

Business Strategies

For the fiscal year ended March 31, 2021, net sales
significantly decreased year-on-year due to the impact of
the COVID-19 pandemic and the operating loss amounted
to 12.3 billion yen in the first half. However, as a resultof our efforts to reduce costs with a focus on fixed cost
reduction, as well as recovery of demand, we achieved aturnaround in the second half with the operating income
coming to 9.2 billion yen. Due to this, we successfully
managed to drive down the full-year operating loss to 3.1
billion yen. Additionally, in the fiscal year ended March
31, 2020, we posted an extraordinary loss of 32.3 billion
yen including an impairment loss of 29.0 billion yen, but
in the fiscal year ended March 31, 2021 we recorded
an extraordinary income of 4.5 billion yen due partiallyto a gain on sales of investment securities. However,as a decrease in net sales resulted in poor businessperformance, deferred tax assets were written off and werecorded 11.6 billion yen of loss attributable to owners ofparent. Meanwhile, as net sales significantly decreased
amid the COVID-19 pandemic, we negotiated a priceincrease, reduced discount offerings, took thoroughmeasures to cut down fixed costs and inventory assets,
and reduced investments to the minimum required level.
Through these activities, we achieved a positive free
cash flow for the first time in three years and significantly
lowered the net D/E ratio.

to rapid recovery in demand in addition to recent surges
in steel material prices and logistics costs. In addition,
we expect extraordinary income and profit attributableto owners of parent to come to 0 billion yen and 5.0
billion yen, respectively by factoring in 4.0 billion yen of
extraordinary loss as business restructuring expenses
and costs related to the Anti-Monopoly Act and 4.0
billion yen of extraordinary income as proceeds fromsales of assets. However, because far more demandthan in the current plan is expected in the aftermarket
business of the Americas Region (where our profit
ratio is particularly high) and other regions, we needto strengthen our supply system to respond to suchdemand as much as possible. Therefore, critical issues
we need to tackle are: to achieve a reduction of variable
costs, which has been planned in each business site;
and to effectively allocate fixed costs (which have been
set with sufficient room for responding to a surge indemand) to activities for increasing aftermarket sales.

We estimate an approximately 4.0 billion yen increasein logistics costs due to frequent uses of emergency
air shipments, a rapid increase in sea freight rates
and other factors resulting from the current turbulent
situation surrounding marine transport. Even if theseexternal factors are taken into consideration, operating
income should amount to more than 20.0 billion yen.
However, taking into consideration internal factors, suchas an increase in depreciation costs due to the start ofoperation of new ERP system, in a conservative manner,
we forecast that operating income will come to 15.0 billion
yen. For the fiscal year ending March 31, 2022, personnel
expenses and other fixed costs are planned by leaving
plenty of room for margin so that our production andsupply system will not be disrupted as demand bounces
back. Therefore, our policy is that, by setting the amountof fixed costs planned this time as the upper limit, we will
work to reduce fixed costs with an eye on demand trends
at each business site and will allocate extra fixed costs
to activities for strengthening the production and supply
system in order to, among other purposes, respond to
demand recovery in the aftermarket business in particular
as much as possible, which recovery is significantly
greater than currently expected by us.

Sustainability Management

Actual results for the fiscal year ended
March 31, 2021 and forecasts for the fiscal
year ending March 31, 2022

33 NTN Report 2021

Negative factors for a fixed cost plan and ahandling policy

we have a plan so that we can reduce the net D/E ratio
to 1.0 or less in five years, or by the fiscal year ending
March 31, 2026. Meanwhile, the net D/E ratio was 1.6 in
the fiscal year ended March 31, 2021, which represents
a greater improvement than we initially forecasted. The
primary factor for the significant improvement of the
net D/E ratio is that the sales divisions, administrative
divisions and production divisions united as one to takethorough measures for managing and reducing inventory
assets; investments were curtailed by selecting only theminimum necessary investments; and 18.5 billion yen
of free cash flow was generated including proceeds fromsales of investment securities in a stepwise manner,
thereby reducing the net interest-bearing liabilities (thenumerator of the net D/E ratio) by 15.7 billion yen. Also,
the secondary factor is that the shareholders’ equity (thedenominator of the net D/E ratio) increased by 14.3 billion
yen due to external factors including yen depreciation anda rise in market value of investment securities held by
NTN. In particular, a reduction in inventory assets resulted
in improving cash flow by 13.5 billion yen. Based on theseresults, we have a plan to reduce the net D/E ratio to
1.5 in the fiscal year ending March 31, 2022, and the
mandatory goal regarding the net D/E ratio in the NTN
Revitalization Scenario is expected to be attained two
years ahead of schedule.
In addition, we made a public offering of andissued 50.0 billion yen of hybrid bonds as a five-year
temporary capital reinforcement measure which will be
implemented until the net D/E ratio is improved to 1.0
or less in five years. 50% of the issued amount of 50.0
billion yen is regarded as equity, and if an adjustment
is made with that portion taken into consideration, theactual net D/E ratio for the fiscal year ended March
31, 2021 and the forecast for the net D/E ratio for
the fiscal year ending March 31, 2022 are improved
significantly to 1.3 and 1.2, respectively.

Value Creation Story

In last year’s CFO Message, I explained the “NTN Revitalization Scenario”
that we are determined to achieve by the fiscal year ending March 31,
2024. In this message, I will focus on how we will achieve the scenario,
and hereinafter describe its progress based on actual results for the
fiscal year ended March 31, 2021, and issues to be addressed topromote the progress.

About Us

ending March 31, 2022, our sales size will increase byapproximately 100.0 billion yen, and if the current policyof “an increase in fixed costs must be limited to not
more than 15% of an increase in net sales” is followed,
an increase in fixed costs needs to be not more thanapproximately 15.0 billion yen. On the other hand, for aplanned increase in fixed costs, an additional increase of
10.0 billion yen is factored in and therefore fixed costs
are planned to increase by more than 25.0 billion yen.
As such, operating income for the fiscal year ending
March 31, 2022 should be theoretically estimated to beapproximately 25.0 billion yen instead of 15.0 billion yen.

*Taking into account a part of the subordinated bonds through public
offering that is recognized as equity (50%)

Lowering the break-even point
Changes in the break-even point
In the past two years, we mainly focused on reducing
NTN Report 2021

34

Value Creation Story CFO Message

Net sales

Operating income
Phase 1

733.8

575.0

630.0

562.8

660.0
610.0

700.0
42.0
570.0

27.2
15.0
7.5

2019/32020/3-3.1
2021/32022/32024/3(billion yen)

Operating income
575.0

Net sales 562.8

Variable cost
610.0

Net sales 660.0
15.0

Changes in the business environment
There is significant uncertainty in the businessenvironment, and we are no longer in the era when aBusiness Plan can be implemented as planned.
Therefore, even if ex-post analysis of a gap between
planned values and actual results is conducted, gaps
are just filled in an ad hoc manner and new gaps
continue to occur.
We are in the era when, to prevent the occurrence ofa gap, we need to continuously implement measuresand follow-up actions based on forecasts while
keeping an eye on preconditions (hypotheses) on
which a Business Plan is based.
Unless responsive measures for securing planned
business value are taken promptly according to theabove method without waiting for financial reports
and analysis results of financial numbers, we cannot
keep up with changes in the business environment.

Future approach
A Business Plan represents a scenario in which eachcompany and division in each region presents its
own business value improvement plan on its own

NTN Revitalization Scenario - Toward Corporate Value Creation (ROIC 5% or More)Net DE
Ratio
3.0

Break-even point
570.0

2.5

Net sales 700.0
42.0

2.0

Fiscal year ended March 31, 2018 (Results)

Fiscal year ending March 31, 2024 (new mid-term plan)

Net sales: 744.7 billion yen
Operating income: 39.9 billion yen

Net sales: 700.0 billion yen
Operating income: 42.0 billion yen (6% or more)*Dotted lines are
estimation when
formulating the scenario

0.0
Sales of assets"Selection and 1.
2. Business integration
Concentration"and closure

52.0%

Fiscal year ended March 31, 2021 (Results)
0.5

Operating income -3.1
2021/3294.0

0Net sales: 562.8 billion yen
Operating income: -3.1 billion yen
2018/3

2019/32020/3“Structural
Reform”
2021/3

Crisis Response Period2022/32024/3*Changes in each item include the effects of exchange rate fluctuations.

(%)
ROIC

5.0

1.0

293.0

ROIC

-5.0

SASB Index

53.3%

364.0

54.3%

260.0

Net DE Ratio

1.5
352.0

306.0

Fixed cost

In the fiscal year ending March 31, 2022 in particular,
it is critical for each business site to take thoroughmeasures for reducing variable costs, flexibly control
the fixed costs with a view to demand trends andincrease sales in the aftermarket business throughcoordination within the NTN Group as a whole. In asituation where it will become increasingly difficult tomake forecasts, no matter what changes occur to theenvironment, we will further accelerate establishment oforganizational culture where all regional business sites
and divisions autonomously pursue overall optimization
for survival by sharing the perspective of corporate
value maximization, in other words, establishmentof a global learning organization. For this purpose,each business site needs to enhance the autonomy
of its daily management and administration work topromptly respond to changes in a situation surrounding
the business site under close coordination within theentire NTN Group so that the business site can use its
relationship with the head office as a stepping stone
for making a leap forward. On the other hand, the head
office will focus on formulating and promoting a global
financial strategy, brand strategy, business portfolio
strategy, production/technology strategy, etc. andenhance the cohesion of the entire Group by steppingup the functions of the head office as a global strategic
headquarters.

Company Data/Investor Information

35 NTN Report 2021

Lower Break-even Point (MUST Achieve Revitalization Scenario)

The head office formulates a Business Plan andrequires each business site to achieve the plan.
Before the final version of a Business Plan isdecided, the head office may allocate additional profit
requests to each region. As such, each business siteshould not prepare a challenging plan on its own at
the beginning of the term.
Therefore, a Business Plan should be prepared asconservatively as possible.
As a result, management tends to be passive, justseeking to achieve numerical targets set by thehead office. It is difficult to foster commitment andaccountability in terms of business management.

Financial Report

The theoretical amount of fixed costs for the fiscal
year ending March 31, 2022 is roughly calculated asfollows based on the actual results for the fiscal year
ended March 31, 2021: because an increase in net
sales is approximately 100.0 billion yen, it is assumed
that fixed costs will increase by 15.0 billion yen (15%of that 100.0 billion yen) to 275.0 billion yen; 285.0
billion yen is obtained by adding 10.0 billion yen (which
is set as a margin to cope with an external factor
including an increase in logistics costs and internal
factors including normalization of pay raises, bonuses,
etc., an increase in depreciation costs for new ERP
system and the new plant in Wakayama and anincrease in personnel expenses, etc. for responding toa sharp recovery in demand) to that 275.0 billion yen;
however, 3.3 billion yen of fixed costs was recorded
as loss resulting from low operating capacity in theextraordinary loss category in the fiscal year ended
March 31, 2021 and therefore, if an adjustment ismade with this taken into consideration, the theoreticalamount of fixed costs is 288.0 billion yen; in addition,compared with the actual exchange rate ($1 = 106.0
yen; €1 = 123.7 yen) for the fiscal year ended March
31, 2021, a slightly weaker yen ($1 = 107.0 yen; €1= 128.0 yen) was adopted as an exchange rate for aplan for the fiscal year ending March 31, 2022 and theeffect of this arrangement is 5.0 billion yen; and we
forecast that the amount of fixed costs will be 293.0
billion yen in the fiscal year ending March 31, 2022.
2 Next, let’s take a look at how the theoretical amountof fixed costs for the fiscal year ending March 31,
2024 is roughly calculated based on the actual
results for the fiscal year ended March 31, 2021
on the assumption that exchange rates will be thesame as the actual ones. The calculation is madeas follows: because an increase in net sales is1

Conventional attitude

Business Strategies

Concept of the break-even point for achieving
mandatory targets of the “NTN Revitalization
Scenario”- To achieve mandatory targets of the NTN
Revitalization Scenario by forming a global
learning organization -Sustainability Management

650.0

652.0

Break-even point net sales

Phase 2

management responsibility.
Regarding preconditions (hypotheses) on which thescenario is based, it is important for each businesssite to share an understanding with the head office,distinguish between internal hypotheses and external
hypotheses and clarify management commitment andaccountability.
It is necessary to promptly and continuously
implement responsive measures for securingbusiness value and corporate value while keeping aneye on the gap between hypotheses and reality.
If a gap occurs between a hypothesis and reality,
thorough measures for KPI for achieving planned
EVA should be taken. Even if there is difficulty inmaintaining EVA, an attempt should be made toachieve planned ROIC as the minimum requirement
and capital invested should be reduced.

Transformation of each business site’s
attitude toward a Business Plan

Value Creation Story

Lower Break-even Point(billion yen)approximately 140.0 billion yen, it is assumed that
fixed costs will increase by 21.0 billion yen (15%of that 140.0 billion yen) to 281.0 billion yen; on
the assumption that 10.0 billion yen (by which fixed
costs will increase in the fiscal year ending March 31,2022) will remain as is, fixed costs will amount to291.0 billion yen; also, if an adjustment is made withloss resulting from low operating capacity, the amountof fixed costs will be 294.0 billion yen.
3 Meanwhile, if the theoretical amount of fixed costs
for the fiscal year ending March 31, 2024 is roughly
calculated based on a fixed cost plan for the fiscal
year ending March 31, 2022, the calculation is madeas follows: because an increase in net sales is 40.0
billion yen, it is assumed that fixed costs will increaseby 6.0 billion yen (15% of that 40.0 billion yen) to299.0 billion yen; 294.0 billion yen is obtained bydeducting 5.0 billion yen in adjustments related to
exchange rates for the fiscal year ending March 31,
2022 from that 299.0 billion yen.
4 In addition, regarding variable costs for the fiscal year
ending March 31, 2024, we assume that we will reduce
variable costs by 20.0 billion yen in the three-year period
as planned and lower the variable cost ratio to 52%.
On this assumption, operating income and the breakeven point are calculated. The break-even point at eachfiscal year in time is calculated in the following manner:
15% of net sales at each point in time is deducted as
variable fixed costs from fixed costs; and then variable
fixed costs are regarded as variable costs to calculate
the break-even point. In short, the figure below showsthat even if it is assumed that the fixed portion of fixed
costs that were increased by leaving plenty of room
for margin in the fiscal year ending March 31, 2022
cannot be reduced in any way, if the variable cost ratio
is reduced to 52% as planned, mandatory targets of
700.0 billion yen of net sales and 42.0 billion yen ofoperating income can be achieved.
5 As such, it is critical to carry out the variable costreformation and other variable cost reduction
measures as planned, and each business site needs
to strictly control the fixed costs that were set byleaving plenty of room for margin in the fiscal year
ending March 31, 2022. Separately, we will consider
significantly reducing fixed costs in the three-year
period through further sales of assets and eliminationand consolidation of businesses, but this is notincluded in the above trial calculations.

About Us

fixed costs and ensured that an increase in fixed costs
was 15% or less of an increase in sales whenever net
sales increase. In doing so, we continuously lowered
the break-even point. However, for the fiscal year ending
March 31, 2022, the break-even point is expected to risedue to increases in steel material prices and logistics
costs and an increase in fixed costs that were set withplenty of room for responding to a sharper increase insales than expected. Meanwhile, in the new Mediumterm Management Plan for the coming three-year period,
we will promote the variable cost reformation and othermeasures to thoroughly reduce variable costs.

1. Fundamental review of marketing and pricing strategy
2. Strengthen production control and inventory control
3. Break out of self-sufficiency

2022/32023/32024/3

New Mid-term Management Plan

Achieve ROIC 5% or more, maintain ROE 8% or more, return 4% to shareholders, and allocate the remaining 4% tosustainable growth in the future.
NTN Report 2021

36

Sustainability Management

Identify Materiality

Materiality
About UsIn March 2015, we signed the United Nations Global Compact, which is a global framework for theinternational community to achieve sustainable growth, and we are aiming to realize the SDGs.
In December 2020, we identified 13 items of materiality that our group should prioritize toward
the realization of the SDGs. This initiative has been resolved by the Board of Directors based on
consideration by the Sustainability Committee, which is organized across departments.

We aim to realize a “NAMERAKA Society” throughthe implementation of our corporate philosophy. This
pursues the same goal as SDGs that aim to realize asustainable society. The 13 items of materiality arelinked to the two perspectives of "Contribute to society

through creation of original technologies" and "Formmanagement systems / corporate organization which
are essential for NTN, as a global company" set forth inour corporate philosophy, and we will contribute to theachievement of SDGs by prioritizing these initiatives.

Corporate Philosophy

Identification
process
Extraction of materiality candidates

STEP 1

1. Creation of original technologies
2. Offering the technologies for additional value 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.

Sustainability Management

Extract social issues with reference to the GRI Standard, which is an internationalframework in the field of sustainability.
Extract items that are candidates for materiality based on the direction of structuralchanges that have a major impact on the economy / environment / society and thecompany's efforts.

Value Creation Story

We shall contribute to international society through creating new technologies
and developing new products

Materiality

Contribute to society through creation of original technologies (Strengthen positive impacts)
Evaluation and analysis of materiality candidates

Materiality
Environment
SocialRelated SDGs Detail page

Reduce energy loss
Realize a sustainable society using natural energy

Business Strategies

Evaluate the 99 items extracted in STEP 1 on a three-point scale from the perspectives of"expectations from society" and "relevance to our business."
Regard items with high evaluations as materiality proposals and organize them into
"positive impact" and "negative impact."

P.39

Provide safety and comfort

High

Materiality proposals

Form management systems / corporate organization which are essential
for NTN, as a global company (Reduce negative impacts)

Organize into two categories below in relation tosocial issues

Materiality

Items that strengthen positive impacts
Items that reduce negative impacts

Environment
Low

Relevance to our business

P.42

Resource recycling and pollution prevention

P.44

Improve the reliability of products and services (Quality assurance, stable supply)

P.45

Procurement activities with an emphasis on environment and society

P.47

Collect suggestions and opinions from academics and experts in the field of CSR /sustainability, as well as Outside Directors regarding ideas about materiality identificationand ESG strategies that should be focused on.

SocialRespect for human rights

P.49

Promote safety and healthP.50

Human resource development

P.52

Validity assessment in overseas affiliated companies

Promote diversity

P.54

Conduct a questionnaire survey targeting the presidents of our overseas affiliated companies
and confirm that all overseas affiliated companies agree with the materiality proposals.

GovernanceThorough compliance

P.55

Strengthen governance

P.57

Company Data/Investor Information

STEP 4

Respond to climate changeHigh

Dialog with academics and experts

STEP 3

Related SDGs Detail page
Financial Report

Expectations from society

STEP 2

SASB Index

Identify materiality

STEP 5The Board of Directors resolved 13 items of materiality.

Support for TCFD recommendations
We expressed our support of recommendations from “Task Force on Climate-related Financial Disclosures(hereafter TCFD)” in May 2021. Efforts in line with TCFD
recommendations will lead to materiality measures such as “Respondto climate change” and “Reduce energy loss,” and we will incorporate
those measures into our business activities by setting targets.

37 NTN Report 2021

NTN Report 2021

38

Contribute to society through creation of original technologies

Sustainability Management

39 NTN Report 2021

100

Green Power
Station60%
reduction

80
60
40
20
0

Conventional
hub bearings

3

In addition to land wind turbines, we expect to see
progress in offshore turbines in the future. In order tomeet the needs for stable operation of wind turbines, weare developing "Asymmetrical Spherical Roller Bearings"
for large wind turbine main shafts to improve theirservice life under actual load conditions. In addition, DLC(diamond like carbon) film, which is excellent in wear
resistance even under differential slip unique to sphericalroller bearings, has been treated on roller surfaces. This
has enhanced the reliability of the bearings.
Meanwhile, with the aim of improving wind turbine
utilization rates, we are developing a condition monitoring
system (CMS) business using the monitoring device "WindDoctorTM" that observes bearing vibration, temperatureand other factors. Such system offered by us is being
used by wind power generation companies. In the future,
the life expectancy forecast technology will be developed
using AI algorithms to help ensure planned
maintenance of bearings and prevent damage.
In addition, we have developed the“Green Power Station (GPS),” an independent
power supply unit equipped with a compact
wind turbine, which has been adopted by
local governments as
an emergency powersource in the eventof an accident. We
will contribute to therealization of being
carbon neutrality by
expanding sales of GPS.
Asymmetrical
Spherical Roller
Bearing

Reducing friction of hub bearings

Low friction
hub bearing

Provide safety and comfort

In the automotive field, attention is focused on electrified
products that are compatible with CASE. We havedeveloped the world's first high-performance module
products for next-generation automobiles, such as “eHUB”
which combines a hub bearing with a motor generator,and “sHUB” which combines hub bearing's mechanicaldesign, manufacturing technology, and motor control
technology and integrates a mechanism that adjusts thesteering angle of the tires into a hub bearing. In addition,
to improve vehicle driving performance and improvesafety when avoiding hazards, we have developed the"Ra-sHUB" which allows the steering angle on the rear
wheels of automobiles to be controlled separately foreach of the left and right sides. “Ra-sHUB” mounts on
the rear wheels of the front-wheel-drive (FF) vehicle andcontrols the optimal angular position for each of the left
and right wheels based on the steering angle at which thesteering wheel is turned and the vehicle speed. These
products are rated highly by automotive manufacturers
for their expected contribution to automated driving in the
future.
We will create new product value and provide
customers with safe andcomfortable products
by developing module
products that combine
core products with generalpurpose components suchas motors.

SASB Index

Strengthen positive impacts2

Low Friction
Hub Bearing III

Company Data/Investor Information

Provide safety
and comfort

Reduceenergy loss

Realize a sustainable society
using natural energy

Small and Lightweight
CVJ for Rear of Sub-axle

Financial Report

3

1

Low Dust Generation
Bearing for Servo
MotorsBusiness Strategies

Technical
Materiality
CircleIn the industrial sector, attention is focused on low-torqueproducts that contribute to reducing CO2 emissions andserve as a responsive measure for climate change. In theautomotive field, for hub bearings, for which we enjoy thelargest market share, "Low Friction Hub Bearing III" which
reduces friction by 60% compared to our conventional
products through developing a new low-torque grease
and optimizing seals geometry and internal preload has
been launched to market. "Ultra-low Friction Sealed
Ball Bearing" for transmissions which reduces friction
by 80% compared to our conventional products is also
being mass produced. In addition, for sliding constantvelocity joints, "Small and Lightweight CVJ for Rearof Sub-axle" which reduces weight by 29% comparedto our conventional products through a review of themax operating angle and optimized designs has beendeveloped, thereby moving forward with miniaturization
and weight reduction.
In the industrial machinery field, we are massproducing "Low Dust Generation Bearing for Servo
Motors" for robot joints, which have 50% less friction
than our conventional products.
We will contribute to saving energy in the entire
industry by further promoting higher efficiency,
miniaturization and weight reduction of these products.

Sustainability Management

Realize a sustainable
society using naturalenergyReduce energy loss

Friction ratio

2

1

Value Creation Story

Of the 13 materiality items, the 3 items for strengthening positive impacts are initiatives that contribute to society
through original technologies and products. In each item,
1. Reduce energy loss with low-friction products
2. Realize a society based on natural energy by providing main shaft bearings for large wind turbines and developing a
condition monitoring business to observe vibrations, temperatures, etc.
3. Provide safe driving and comfort for automobiles by developing module products that combine hub bearings withgeneral-purpose components such as motors
As part of our "Technical Materiality Circle" activities that leverage our core competencies, we aim to realize asustainable society by sharing and standardizing technologies to develop products.

About Us

Social Contribution through Original Technologies
and Products

Ra-sHUBNTN Report 2021

40

Form management systems / corporate organization which are essential for NTN, as a global company

Respond to Climate Change

Sustainability Management Environment

Development of environment-contributing product

Reduction of CO2 emissions

NTN develops business activities based on our corporate philosophy "We shall contribute to international society throughcreating new technologies and developing new products," and Paragraph 1 of the NTN Environment Policy "Technologies
to help prevent global warming."As bearings and driveshafts, which are main products of NTN, contribute to the
reduction of energy loss in final goods of our customers equipped with them, all of these products can be considered
as environmentally friendly products. They include products which are already commonly used in society because of theachievement of predecessors, as well as those with environmental contributions further enhanced by NTN’s engineeringand development capabilities. In addition, green energy products are environment-contributing products that contribute to
reduction of CO2 emissions by creating renewable energy.
NTN continues unwavering efforts to realize its corporate philosophy by developing and providing higher-grade
products that contribute to the environment while classifying the products according to environmental contribution levels
based on our standards.

The NTN Group is working to reduce CO2 emissions andemissions intensity throughout its business activities.
In order to ensure the reliability of the data, we undergo
third-party verification.
In addition, we are promoting the use of renewableenergy sources to accelerate the reduction of CO2
emissions.

About Us

Sustainability Management Social Contribution through Original Technologies and Products

Scope 2: Indirect emissions*1

Scope 1: Direct emission

Scope 1 (North and South Americas)*Liquefied
Petroleum Gas
Scope 1 (Europe)

Emissions intensity

Definition of environment-contributing product(10,000 tons)

Definition30

S-eco (Super eco)*
Products are classified according to environmental factor standards
specified for different products in line with technology standards acrossthe world.

A-eco (Advanced eco)
Environmentcontributing
product

B-eco (Brilliant eco)

Product value*2

2

Environmental
impact*3

41 NTN Report 2021

2017

2018

A-eco

B-eco

C-eco

0.1%

0.3%

2.0%

24.7%

D-eco

Net sales(Billions of yen)

600.0
347.9

200.0
0

Automobile business

1998

0.66

0.65

380.1
10

406.5

394.0

27.4%

5.9

4.9

4.9

288.1
4.5

4.0

year ended/
2017
2018
2019
2020
2021 (Fiscal
ending March
31)
1998*2 2017
2018
2019
2020
2021

(10,000 tons)

148.5

40.3%

33.8%

20.6%

24.0%

17.6%

2020

2021 (Fiscal year ended/ending March 31)

30.8%

60
0

104.1

2021

2020

2022 (Fiscal year
(Target) ended/ending
March 31)

Scope 1 (North and South Americas)

Scope 2 (North and South Americas)

Scope 1 (Europe)

Scope 2 (Europe)

Scope 1 (Asia)

Scope 2 (Asia)

121.3

127.5

2018

2019

29.4

31.1

32.7

28.9

27.4

4.4

4.8

5.4

5.7

4.6

4.4

31.9

0

0.6
0.4
0.2

2007*
2017
(Benchmark)

2018

2019

2020

2021

5.1

Scope
1

0
2022 (Fiscal year
ended/ending(Target) March 31)

50
0.6
0.4

4.4

1.19
0.97

40
30
20

Emissions intensity
Intensity (tons / million yen)

0.93
36.6

34.2

1.10

1.03

0.99
38.4

1.05

1.0
0.8

36.9

33.5

31.8

28.6

24.2

29.4

31.1

32.7

28.9

27.4

4.4

4.8

5.4

5.7

4.6

4.4

31.9

Scope
2

10
0

2022 (Fiscal year
(Target) ended/ending
March 31)

0

0.6
0.4
0.2

2007*
2017
(Benchmark)

2018

2019

2020

2021

5.1

Scope
1

0
2022 (Fiscal year
ended/ending(Target) March 31)* The first year of production is used as the benchmark for businesssites established after the fiscal year ended March 31, 2007.

Contribution to CO2 reduction*5

120

0.8
0.66

0.2

(Benchmark)*4 From the fiscal year ended
March 2017 to the fiscal year ended March
2020, loyalty has been included in net sales for all businesses only.

22.2%

2019

24.2

Scope
2

CO2 emissions/emission intensity [Overseas]

0.73

0.67

0

51.6%

17.2%

2018

28.6

10
0

2017

31.8

Okayama Works
City gas burner heating type furnace

Driveshafts, hub bearings, etc.

349.3
4.8

4.4

20

0.8

36.9

33.5

21.8

4.0

4.5

30

38.4

1.0

The Verification statement by SGS Japan can be viewed on our website.

28.5
27.7
28.9
27.0
27.0
26.2
733.8
744.7
683.6
23.7
652.0
562.8
508.6
491.3
20
480.2
437.3
24.1
22.5
22.8
23.6
369.5
21.1
21.8
19.7
30

800.0

400.0

0.69

All businesses

4.8

4.9

(10,000 tons)

Kuwana Works
Electrically heated vacuum carburizing furnace

Business sites subject to CO2 emission/emission intensity can beviewed on our website.

180

14.8%

2019

19.7

36.6

34.2

1.05

SASB Index

1998

22.5

40

0.93

1.10

1.03

0.99

Company Data/Investor Information

Trend in composition of environment-contributing products
by grade (driveshafts and hub bearings)

22%

26.2

23.7

0.97

*1 Japan figures are calculated using a fixed emissions factor of 0.381
for electricity.
*2 The first year of production is used as the benchmark for businesssites established after the fiscal year ended March 31, 1998.

Intensity (tons / million yen)

*4
Trend in net sales40

Driveshafts and hub bearings, which are our main
products and account for about 50% of our net sales,
and green energy products contributed 1,323 thousand
tons of CO2 reduction in the fiscal year ended March
31, 2021. Sales of S- to B-eco grade environmentallyfriendly products, which are the result of our recent
development efforts, comprised 51.6% of net sales in
the fiscal year ended March 31, 2021.

22%

0.6

1.19

Financial Report

1

Eco-efficiency =Trend in achievements and forecasts

42%

24.1

23.6

4.9

1998*2

0.87

43%

27.0

50

0

*1. D-eco product*2. Values are quantified by using the
QFD method (including CO2 reduction
contribution of finished products)*3. From the perspective of evaluating
contribution toward measures against
climate change, environmental impact is
calculated as CO2 emissions generated
throughout the process of raw materials
Scopemining
1: Directto
emission
Scope 2:theIndirectproduction (using
LCI emissions*1
calculation
Emissions
intensitytool by the Japan Auto Parts
Industries Association)(10,000 tons)

100%

28.9

0.66

Intensity (tons / million yen)

132.3

0

1998

2017

2020

year ended/2021 (Fiscal
ending March 31)

Calculation standard
JAPIA LCI Calculation Guidelines by Japan Auto Parts Industries Association(Consumer Use-phase LCI calculation tool)*5 Applicable to S to C-eco products

Business Strategies

Eco-efficiency ofdeveloped products
Environmental =factors
Eco-efficiency of benchmark
products*1

15%

28.5

0.8

0.73

0.2

(Benchmark)To quantify products' environmental friendliness, NTN adopted environmental
factors and eco-efficiency
that are defined in formula 1 and 2 as follows.

16%

22.8

5.9

Products that help to reduce energy loss of final goods at the same
performance level as that of around 1997

Calculation methods for environmental factors and eco-efficiency

24.2%

0.67

0.4
21.1

*Green energy products fall under the S-eco category.

21%

0.65

10

D-eco (Diffused eco)

19%

27.7

27.0

0.66

20

C-eco (Creative eco)

S-eco

0.69

Emissions intensity

Scope 2 (Asia)(10,000 tons)

40

Grade

Scope 2 (North and South Americas)
Scope 2 (Europe)

Sustainability Management

Classification

Scope 1 (Asia)

Intensity (tons / million yen)

0.87

Classification and grades of NTN products and their definition

Reduction of CO2 emissions in heat treatment processes
In order to reduce CO2 emissions from heat treatment
facilities, the NTN Group is switching to LPG* and city
gas as fuel, and is expanding the use of high-frequency
heating equipment and electric furnaces with superiorenergy efficiency. Kuwana Works has recently introduced
an electrically heated vacuum carburizing furnace. In
the future, we will consider the use of ammonia andhydrogen, which do not emit CO2.

Value Creation Story

CO2 emissions/emission intensity [Japan]

Energy conservation efforts in manufacturing
processess

NTN Report 2021

42

Form management systems / corporate organization which are essential for NTN, as a global company

Resource Recycling and Pollution Prevention

Sustainability Management Environment

Introduction of renewable energy

Initiatives for resource recycling

About Us

Sustainability Management Environment Respond to Climate Change

Overseas introductory example
Guangzhou NTN-Yulon Drivetrain Co., Ltd. (Guangzhou
NTN, China) installed a total of 7,810 solar panels on
its factory roof through a PPA. In September 2020, it
started power generation, which is expected to generate
2,212,000 kWh/year and reduce CO2 emissions by
1,265 tons-CO2/year.*

The NTN Group monitors the material flow in its business activities, and is working to ensure sustainable use ofresources by reducing and reusing input resources such as raw materials and water, and recycling production byproducts. We have set environmental targets for reducing water consumption and waste generation, which we are working
to achieve.
Specific initiatives can be viewed on our website.

Environmental impact (Scope: Japan and Overseas)

Raw Materials

LPG
City gas

Coal, coke

Guangzhou NTN

Heavy oil A*Greenhouse gas emissions reductions using the "Market-based
electricity emission factors”: 147 tons-CO2/year in Japan; 1,779 tonsCO2/year overseas.

Kerosene
DieselGasoline

20

CO2 emissions intensity (Japan)(tons-CO2/million yen)

0.035312.8

12.9

0.03580.03520.0358

13.9

14.0

13.3

0.0369

0.04
0.03

10.9
10

0.02

5

0.01

0

0
2016

2017

2018

2019

2020

2021 (Fiscal year ended/ending March 31)

126,566 tons

Use ofrecycled water

19thousand m

3

Assembly

860 thousand m
1,300 thousand m
270 thousand m

Final disposal quantity

4,071 tons

PRTR chemical
substance* release /transfer quantity

18.4 tons

2,090 thousand m

Wastewater
quantity

3

3

Tap waterIndustrial water

1,410 thousand m
680 thousand m

Rivers3

Logistics

3

3

Sewers3*Actual results in Japan are presented for NOx, SOx, PRTR chemical substances and the amount of materials recycled

Water consumption and water consumption intensity[Japan/Overseas]

Generated waste and recycling rates[Japan/Overseas]

Water consumption (Japan)

Generated waste (Japan)(10,000 m3) 4.29

400
300
200
100

323
128
195

Water consumption (Overseas)

Consumption intensity
Intensity (m /million yen)

3.96

4.17

326

347

132
194

134

3.87
281
104

213

177

3.97
243
89
154

3.80
284
113
172

0
2017

Generated waste (Overseas)

Recycling rate

3

2018

2019

2020

(10,000 m3) 98.0%

4

20

3

15

2

10

1

5

0

0

2021

2022 (Fiscal year
ended/ending(Target) March 31)
The results of the water stress analysis via Aqueduct and water
consumption by region can be viewed on our website.

16.3

97.8%

97.4%

17.7

17.7

10.9

10.0

6.8

6.3

2017

2018

10.9

96.9%
15.5
9.3

6.8

6.2

2019

2020

97.9%

96.9%

16.2
13.1
10.1

8.0

6.1

5.0

2021

year
2022 (Fiscal
ended/ending(Target) March 31)
Generated waste and recycling rates can be viewed on our website.

Initiatives for preventing pollution
For pollution prevention, we are working on measures
to prevent leaks of oil and other substances at our
workplaces, and to control and reduce environmentallyhazardous substances contained in our products.

Reducing the amount of PRTR chemical
substances used

We are working to reduce the use of substances subject
to PRTR Law* in our manufacturing processes in Japanand replace them with less hazardous substances. In
particular, we are focusing on reducing and replacing theuse of the six substances listed in the figure below.
*Act on Confirmation, etc. of Release Amounts of Specific Chemical
Substances in the Environment and Promotion of Improvements to theManagement Thereof

Amount of PRTR chemical substances used(fiscal year ended March 2021)
Other 8.9 %

1,2,4trimethylbenzene

Methylnaphthalen

3.1 %Molybdenum andits compounds

7.0 %SASB Index

15

0.0345

Grinding / Polishing3

Groundwater

Recycling quantity(Quantity of material recycled*: 16,726 tons)

2,430 thousand m

Water

130,637 tons

PRTR chemical
substances
handling quantity

68.0
tons/year

Water-soluble
zinc compounds

8.6 %

33.9%

Xylene28.0 %
Toluene10.5 %

Fiscal year ended March 2020: 82.5 tons/year
NTN Report 2021

Company Data/Investor Information

CO2 emission (Japan)

Heat treatment

Generated
waste quantity

Financial Report

The NTN Group is working to reduce CO2 emissions
during product transportation by improving logistics
efficiency. The main measures are shortening
transportation distances by integrating distribution
bases; increasing the loading ratio by expanding theuse of module outer boxes; improving the efficiency of
packaging operations by unifying distribution routes;
and promoting the reuse and recycling of wooden
pallets. In the fiscal year ended March 31, 2021, we
achieved a reduction of CO2 emissions from domestic
product transportation of 10.9 thousand tons-CO2/year(compared with our target reduction of 12.7 thousand
tons-CO2/year), and CO2 emissions intensity was
0.0369 tons-CO2/million yen (compared with our targetof 0.0345 tons-CO2/million yen). While we achieved
our CO2 emissions target, we did not achieve our CO2
emissions intensity target.

(thousand tons)

3

PRTR chemical substances* 68.0 tons

Reducing CO2 emissions in logistics

NOx*

Forging / Turning

Business Strategies

1,143 GWh
8,675 tons
25,133 thousand m
0 tons
189 kL524 kL290 kL
69 kL

Electricity

554 ktons
10.3 tons
36.9 tons

CO2 emissions
SOx*

EnergyCO2 emissions/emission intensity in logistics

43 NTN Report 2021

Development / Design

389 ktons
Non-steel materials, oils, etc. 14 ktons

Sustainability Management

Kuwana Works east wing of its extra-large bearing plant

404 ktons

OUTPUT
Atmospheric emissions

Steel materials

Installed onsite solar power generation equipment

Introductory example in Japan
Kuwana Works signed our first PPA in Japan, withMUL Utility Innovation Company Limited, under which
it installed a total of 900 solar panels on the roof ofthe east wing of its extra-large bearing plant. In April
2021, it started power generation, which is expected togenerate 344,630 kWh/year and reduce CO2 emissions
by 131 tons-CO2/year. *Manufacturing processes

INPUT*1 PPA (Power Purchase Agreement): A contract to install a solar power
generation system owned by a third party power generation company
on a roof, etc. and purchase the power from the system.
*2 CO2 emission reductions using the "Electricity emission factor basedon market standards": 280 tons-CO2/year in Japan; 8,184 tons-CO2/
year overseas.

The NTN Group is promoting the installation of solar
power generation equipment at its business sites
through self-investment and PPAs.

Value Creation Story

The NTN Group is working to reduce CO2 emissions(Scope 2) by installing power generation facilities forrenewable energy at its business sites and purchasing
carbon-free energy through PPAs*1.
In the fiscal year ended March 31, 2021, we
generated 619,614 kWh/year in Japan and 12,158,778
kWh/year overseas, achieving CO2 reductions of 236
tons-CO2/year in Japan and 6,393 tons-CO2/year
overseas.*244

Form management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

SocialImprove the Reliability of Products and Services

Quality creation to improve customer
satisfaction· Secure stable procurement of materials, processedmaterials, parts, etc.
· Change the operation shifts and secure personnel inline with changes in demand by verifying up-front load
at manufacturing sites· Prior implementation of production support andproduction transfers between multiple sites· Reduce inventory assets by promptly implementing
production adjustments (production cutbacks) when
demand declines

Utilization of digital technology forstable supply
Stabilization of the new core system

Quality month poster

45 NTN Report 2021

Our core system has been in operation for nearly
40 years and has become aging. Currently, we arepromoting company-wide project activities in order tostandardize business processes and systems using

Strengthening information security
We are promoting information security measures fromthe following viewpoints to ensure a stable supply of our
products to customers in response to computer viruses
and cyber-attacks aimed at companies that are becoming
increasingly complex and sophisticated every day.
· Establish an emergency response system for
information security· Protect critical data and expedite recovery response· Strengthen a detection mechanism to minimize
damage and a protection mechanism to reduce therisk of damage

We are also working to ensure thorough compliance withrules and governance. For example, we provide threat
information to all employees and provide information
security training through e-learning. In addition, telework
is expanding against the backdrop of work style reform
and the new coronavirus (COVID-19) pandemic, so that
employees can conduct operations safely and securely
without being limited by location constraints. To thisend, we have introduced a detection and defense
mechanism that reduces the risk of cyber-attacks evenwhile teleworking, and are strengthening information
security by monitoring everything on a daily basis.
NTN Report 2021

SASB Index

Going forward, we will work to ensure a more stablesupply of our products to our customers on a global
basis and to respond flexibly to changes in the market
and economic conditions.

*Abbreviation of Enterprise Resource Planning.
Package software that controls a company's core operations, including
sales, logistics, production, accounting, and human resources

Company Data/Investor Information

Every November (which is “Quality Month”), we conduct
a variety of activities with the aim of further raising
the quality awareness of all employees. This year's
theme is "The basics remain the same in these daysof rapid change. You shape NTN Quality." By setting thetheme, we provide an opportunity for each individual toreaffirm their basic quality behavior, and encourage eachindividual to take action to create NTN quality. Eachdivision is promoting priority measures and working to
improve quality at NTN globally.

In August 2020, we started the operation of a new coresystem in the supply chain management (SCM) field.
With this new core system, we will build an efficient
production system that generates the maximum output
by effectively utilizing the domestic resources (plants)
possessed by the Group.
Under the new system, in addition to orders and thelatest forecast information from domestic customers
and information from domestic and overseas Groupsales companies, we update demand information for thefollowing 12 months on a daily basis utilizing statistical
forecasts. We will implement the following measures
based on this demand data to realize an efficient
production system.

In conjunction with the restructuring of the core system,
we established the Supply and Demand Center (whichis independent from the sales and production divisions)at our headquarters. Until now, several organizations
were involved in the supply-demand adjustments, andbusiness processes were complicated. In the future,
however, in order to further ensure a stable supply of
products in line with customer and market demands,
we aim to have the Supply and Demand Center control
and adjust sales, production, and inventory across all
business divisions.
Using the system, we will verify the upfront loads
of manufacturing sites based on demand information
for the following 12 months, and in the event ofan overload, we will consider expanding production
capacity, scrutinize demand information and makeadjustments. Production and sales meetings are also
held as necessary, and based on the revised demand
information and the standard inventory set for each
item, production plans are automatically formulated
through the system and deployed as production
instructions to each plant. Through these measures,
we will transform from an optimum supply-demand
adjustments for individual business divisions to across-business division supply and demand adjustment
system that seeks overall optimization.

Financial Report

Improvement activities to improve quality

Building an efficient production system fordomestic plants

Controlling production, sales, and inventories
across business divisions

Business Strategies

To ensure the stable quality of new products, reviews
are conducted at each step from development to mass
production. All relevant divisions participate in thereviews and confirm and evaluate from their respective
perspectives to ensure early detection and prevention ofquality risks and reliable quality assurance.

Building a foundation for stable supply

Production plans for the new core system areautomatically drafted based on demand forecasts usingorder information and the latest demand informationfrom customers and statistical methods, as well as
logical "standard inventory" settings by item. Thesestandard inventory settings are calculated by combining
manufacturing lead times, production frequency, andsafety factors based on the accuracy of demandplanning. The master setting to the system is made foreach shipping item. By adhering to standard inventory,
we can respond to demand fluctuations by using reserve
inventory to ensure a stable supply to customers. We
will also prevent excessive inventory and curb inventory
assets. We will renew this masters periodicallymonitoring trends in sales results and the accuracy ofdemand planning

new package systems such as ERP*, improve businessspeed and service level, and improve businessefficiency and accuracy. Restructuring in areas suchas finance, accounting, personnel and salaries, andengineering had already been completed by 2020, andis being rolled out to domestic Group companies.
In August 2020, we launched a new system forsales, logistics, supply and demand management andinventory control of finished products in the SCM field,
which is the most important for the restructuring ofcore systems. We are currently promoting activities tointroduce this system into the production, procurement,
product process, work-in-process, and product costareas of our plants.
The operation of the new system in the SCM field
has enabled us to improve the efficiency of drawing andprototype management through the digitization of sales
activities and the introduction of a project management
system, to speed up price and delivery response, andto improve the accuracy of inventory management. In
addition to receiving customer demand and ordering
information using EDI, e-commerce, and other methods,
we aim to take flexible measures to ensure a stablesupply to customers and cope with fluctuations indemand by linking forward-looking demand plans using
statistical forecasts to plants based on fresh demand
information, inventory information, and sales results.

Sustainability Management

Secure stable quality

In order to improve customer satisfaction and provide
products/services in a consistent manner, the Group’s
domestic and overseas manufacturing sites haveacquired ISO9001 certification, which is an international
management system standard. We are steadily working
to acquire certification for new businesses and newly
launched plants. 100% of our domestic and overseas
consolidated subsidiaries related to manufacturing
have acquired certification for their quality management
systems.
We have also acquired IATF16949 certification, astandard for the automotive industry, and JISQ9100 andNadcap, standards for the aerospace industry, as wellas IRIS (Europe) and CRCC (China) certification for therailroad industry.

Establishment and maintenance of logicalinventory standards by part numbers

Value Creation Story

As customers pursue lightweight products, quietness,
low-torque products that lead to energy savings, long
operating life, etc., customer needs are changing withthe times. In order to satisfy our customers and ensurethat they use our products, it is important to respondswiftly to customer demands, which change over time,
and to build relationships of trust with customers.
We strive to maintain and improve product quality
globally in accordance with our Basic Quality Policy,
which constitutes the basic philosophy for all of ourmanufacturing practices, in order to create quality thatsatisfies our customers.
In addition, we conduct customer satisfaction
surveys to directly listen to the opinions of customers
on their satisfaction levels, requests, and othertopics. In a survey conducted in 2020, a total of 111
customers responded, and 92% of respondents said
that their overall ratings were "Excellent" or "Good."
Going forward, we will continue to provide quality thatis responsive to customer needs in order to further
improve satisfaction.

Quality management system

About Us

(Quality Assurance, Stable Supply)46

Form management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

SocialBasic approach to procurement activities

CSR Procurement Guidelines

Questionnaire items
1

Compliance2

Human rights and labor

3

Environment

4

Quality and safety

5

Information security

6

Business Continuity Management (BCM)

7

Social contribution

8

CSR procurement

Degree of achievement according to CSR questionnaire results
1 Compliance

100
8 CSR

procurement8060

2 Human rights

and labor

20

Procurement complying with environmental
regulations
In order to comply with environmentally-hazardous
substance regulations in Japan and overseas andcustomer standards, we, as a general rule, actively
switch regulated substances regardless of applications,47 NTN Report 2021

7 Social

contribution0

6 Business

3 Environment

4 Quality and safety

Continuity
Management (BCM)

From the viewpoint of risk management, we begin
transactions with our business partners after checking
their management structure, quality, and environmental
management.
We also conduct annual survey for business
partners, which we have already conducted transactions
with, to continuously monitor their business conditions.
If we determine that a transaction involves a high risk,
we strive to minimize our procurement risk and ensurestable procurement by implementing risk reduction
measures commensurate with the magnitude of the
impact, taking into consideration procurement parts,
transaction amounts, etc.
With regard to a natural disaster or an infectious
disease, we have established a risk management
database, and in the event of an emergency, we
immediately confirm the safety of business partners
and manage the risk associated with ensuring a stablesupply of our products throughout the supply chain.
In the fiscal year ended March 2021, a survey ofbusiness partners was conducted to check whether
there is any issue associated with the supply chain, etc.
Regarding business partners who answered that there
was an issue and for whom we judged that a follow-up
survey needs to be conducted, we are currently carryingout those checks.

Q: Have countermeasures been put in place against
the anticipated disaster risk at your production site
(at each site)?
FY2018

19%

20%

61%

FY2020
9%

22%

69%

Have already been put in place (documented)
Some countermeasures have been put in place
Have not been put in place

SASB Index

40

Risk management for suppliers

Supplier questionnaire results

Company Data/Investor Information

We have established NTN CSR Procurement Guidelines
to promote activities throughout the entire supply chain
in response to social issues such as human rights,
labor, the environment and anti-corruption. We request
our business partners to promote CSR activities inareas such as compliance and anti-corruption, humanrights and labor, the environment, quality and safety,
information-security, business continuity, and social
contribution. We promote procurement activities that
respond to social demands under a fair and freeenvironment.

CSR questionnaire for suppliers

We are promoting supply chain BCP activities involving
logistics companies and business partners in order toensure stable procurement.
We are strengthening crisis-management in
preparation for natural disasters such as earthquakes
and typhoons at our business partners and logistics
sites. In addition, in the event of a widespread crisis
such as a pandemic, we will cooperate with ourbusiness partners to ensure business continuity, andpromote infrastructure development such as on-line
business operations with our business partners, andsharing of safety information and the code of conduct.
As a future initiative, we aim to further stabilize
procurement by eliminating concentration in specificregions and promoting the use of double-track
procurement.

Financial Report

Failure to comply with environmental laws andenvironmentally-hazardous substance regulations in the
supply chain is a management risk that leads to shutdown of operations and compensation for damages tocustomers. We are promoting environmental control
throughout the supply chain by establishing green
procurement standards that require our business
partners to establish an environmental control systemand define the standards of environmentally-hazardous
substances, which constitute the important quality
characteristics of delivered products.

We conduct self-audits of subcontract transactions
with the aim of optimizing subcontract transactions. In
order to voluntarily audit the status of compliance with
the Subcontracting Act, each business site in Japan
has been responsible for implementing a certification
system for "subcontract transaction self-auditors" since2017. In 2020, when the first certified auditors finishedtheir 3-year term, an e-learning course was held and 34
employees renewed their term, bringing the total numberof self-auditors to 100.
In the fiscal year ended March 31, 2021, self-audits
were conducted at our 23 business sites in Japan, withthe self-auditors playing a leading role in such audits.
At the same time, 2,311 employees (including thosefrom affiliated companies) completed the e-learning
basic course on the Subcontracting Act in order towidely disseminate the contents of the Subcontracting
Act within the company. Even after the completion of
the training period, we have opened and operated a newe-learning course for self-development.
We will continue to conduct activities aimed atunderstanding and complying with the Subcontracting
Act and at ensuring proper subcontracting practices.

Business Strategies

Green Procurement Standards

We conduct annual survey of business partners tofurther raise awareness of “NTN CSR Procurement
Guidelines” and to confirm compliance.
In the current situation of business partners, theratios of human rights, labor, quality and safety are morethan 80% each, indicating that business partners arealso highly conscious. However, the ratios of business
continuity management (BCM), social contribution and
CSR procurement are still around 60%, and at thisstage, their awareness is not high.
In recent years, companies have been required to
not only achieve corporate performance (economic
value), but also to be an entity that is needed by society(social value). To help business partners understandthat social value is important, we will continue toengage in awareness-raising activities.

Supply chain BCP

Sustainability Management

Various procurement policy

CSR questionnaires for suppliers

Compliance with the Subcontract Act

Value Creation Story

In April 2021, we formulated a Procurement Policy
corresponding to each SDGs. Based on the perspectivesof "Fairness/impartiality," "Compliance with Laws andRegulations," "Green Procurement," and "Coexistence
and Co-prosperity," purchasing departments at ourhead office play a central role in building a relationshipof trust with business partners and we are conducting
purchasing activities. Based on the “NTN Group Green
Procurement Standards,” we are promoting green
procurement, which prioritizes environmental preservation
efforts and procurement from business partners withsuperior environmental quality. We have also established“NTN CSR Procurement Guidelines” and are requesting
active promotion of CSR activities. We are also working
to achieve local procurement at all of our manufacturing
sites, including those outside Japan, and to procurematerials from optimal locations globally.

destinations, or manufacturing locations. To comply with
the RoHS Directive which was revised in July 2019 andprohibits phthalates (DEHP, BBP, DBP and DIBP), we haveestablished a system for incoming inspection according
to the risks involved. We are promoting the switchingfrom lead-containing procured products that are currently
used for applications exempted from the RoHS Directive,
assuming future tightening of regulations.

About Us

Procurement Activities with an Emphasis on
Environment and Society

5 Information security

NTN Report 2021

48

Form management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

Respect for Human Rights

SocialForm management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

SocialPromote Safety and Health
About Us

Human Rights Policy

Basic approach to human rights

Human rights due diligence

Overview of human rights due diligence
United Nations Guiding Principles on Business andHuman Rights

P

D

July, 2020

Procurement
PolicyDecember,
2019

April, 2021

A
Information
disclosure

C

Additionalverification

Remedy[Responsibility to remedy human rights violations]

Building a framework that ensures access to remedies

49 NTN Report 2021

We strive to share the content of each measure
between labor and management in a forum where laborand management can exchange information with eachother. We hold quarterly “Labor-Management Roundtable
Meetings,” in which executive managers provide
thorough explanations about the Business Management
Policy, management environment, and other topics tothe labor union and listen to the views of the labor
union. In addition, we hold labor-management committee
meetings as appropriate according to each measurethat leads to improvement of "motivation to work" and"ease of work," with the aim of exchanging opinions
to deepen mutual understanding and deciding on work
styles that lead to improvement of attractiveness of aplace to work.

Responding to human rights risks in the supply
chain
Based on our Procurement Policy, we have provided
an item entitled "Human rights and labor" in our CSR
questionnaires for suppliers that is annually conducted
for business partners in an effort to identify humanrights risks in the supply chain. ( Details P.47)
In addition, we periodically investigate whether or notcertain minerals contained in materials or components
used for our products are sources of funds of armed
groups in conflict areas, which leads to human rights
violations, illegal mining and smuggling. In this way, we
verify that conflict minerals are not used in our products.

Safety and health efforts
Under the Safety and Health Basic Policy, we will
promote safety and health activities based on thefollowing 3 priority measures.
3 pillars of priority measures
Safety and health of all employees of NTN GroupWork environment where employees can work safely, healthily and actively

Nurturingstrong safety
consciousness

Intrinsic
safety ofequipment

Creating
structures
to support
safetySafety and Health Basic Policy
Creating structures to support safety
We are promoting the introduction of an occupationalsafety and health management system to develop
a framework that supports the Group's safety. By
continually implementing the management system,
we will strive to comply with laws and regulations andimprove the level of safety and health.
All of our manufacturing sites have completed
the acquisition of ISO45001*1 certification, which

Through in-house training, we train a number of risk
assessment (RA) trainers at each business site, andconduct RA implementation guidance by RA trainers
on a workplace-by-workplace basis to promote
the improvement of RA capabilities of employees.
Similarly, we have trained risk prediction (KY) trainers,
implemented KY training on a workplace-by-workplacebasis, and improved the KY capabilities of employees todevelop people who are well-versed in safety practices
and who do not act unsafely.
To prevent human error, we provide training to managers
with the aim of improving social skills that cannot be
attained only by providing systems or knowledge, such as
status awareness, decision-making, communications andleadership. In addition, we are using the Safety Assessor
qualification system to train engineers who can promote
the intrinsic safety of equipment.

Intrinsic safety of equipment
Risk assessment (RA) is conducted for equipment at
the time of installation, after a certain period of time
elapses after installation, when equipment or content
of work is modified, when something is pointed out asa result of safety patrols, or when near misses occur, inorder to improve the intrinsic safety of equipment.
To deal with risks that are identified in RAs,
we implement safety initiatives using engineering
measures, such as safety covers and interlocks, inaddition to intrinsic measures for reviewing operations.
Furthermore, we consider risk reduction by means ofmanagerial measures (procedures, rules, etc.) andprotective equipment. Remaining risks are recorded in
the residual risk management sheet in accordance withthe unified company-wide residual risk management
operation. Based on this, stickers indicating residual
risk levels are put on the equipment for visualization.
Furthermore, training on the residual risk of theequipment is provided to operators to make sure thatthey know where the hazardous risk lies.
NTN Report 2021

SASB Index

Complaint handlingSound labor-management relations based on labormanagement consultations

Nurturing strong safety consciousness

Company Data/Investor Information

Management
PolicyHuman Rights
PolicyIdentification andassessment of risks
Prevention andmitigation ofnegative impact

1. Compliance with laws and regulations
2. Promotion of continuous improvement throughthe operation of an occupational safety and healthmanagement system
3. Elimination and reduction of hazardous / harmful risks
4. Promotion of employee education and training
5. Maintain and promote mental and physical health
6. Create safety culture

Financial Report

Respect[Responsibility to Respect Human Rights]

Responding to human rights risks in employees

Outline of Safety and Health Basic Policy*1 ISO45001: International standard for occupational safety and healthmanagement systems*2 OSHMS: Japanese standard in compliance with the MHLW's“Guidelines on Occupational Safety and Health Management
Systems” (OSHMS Guidelines)*3 GSC: MHLW's project for assessing occupational safety and health ofsmall and medium-sized business sites (Good Safety Company)

Business Strategies

The Group works to establish a human rights due
diligence framework. We will prioritize "Responding tohuman rights risks in the supply chain," "Responding
to human rights risks in employees" and "Building aframework that ensures access to remedies" from thetwo perspectives of respect and remedy as set forthin the "Guiding Principles on Business and Human
Rights."1. NTN will respect internationally-recognized humanrights.
2. NTN will not violate the human rights of others.
3. NTN will respond appropriately to any negative
impacts its business activities may have on humanrights.

As the foundation of our management, ensuring
the health and safety of all employees is the mostimportant value that takes precedence over all of ourother business activities. Based on this basic stance,
we aim to realize a work environment where employees
can work safely, healthily and actively.
We have formulated a Safety and Health Basic
Policy based on the 6 items indicated below as basic
principles.
We will raise safety awareness of employees andorganization and further enhance corporate value by
presenting this basic policy to employees, shareholders,customers and business partners, etc.

is an international standard. Domestic affiliatedmanufacturers is first moving forward with theintroduction of OSHMS*2 (domestic standards), andcurrently three companies have acquired OSHMS
certification. In the future, we will proceed with thegradual acquisition of certification. We are also
promoting the acquisition of GSC*3 certification forsmall-scale affiliated companies, one of which has beenacquired. Three overseas affiliated companies have alsoacquired ISO45001 certification.

Sustainability Management

Outline of Human Rights Policy

Safety and Health Basic Policy

Value Creation Story

In accordance with the “United Nations Guiding
Principles on Business and Human Rights," we havecommitted to engaging in business activities with anemphasis on respect for human rights as set forth in
the Management Policy. (December 2019)
In July 2020, we established our Human Rights
Policy, in which we will work to establish a human rights
due diligence structure not only for our group, but also
for the entire supply chain.
We have set “Respect for human rights” as oneof the Group's materiality items, and will embody ourefforts to respect human rights and contribute to therealization of a sustainable society globally.

In order to further promote human rights initiatives,
we have formulated a Human Rights Policy in which
all Group employees share common sense of values
related to human rights and which serves as the basis
for their day-to-day activities and business activities. In
doing so, we are making efforts to ensure that humanrights are respected.
Based on the Human Rights Policy, we will addresshuman rights issues which are gaining more and moreglobal attention, as exemplified by the Sustainable
Development Goals (SDGs) and the UK’s Modern
Slavery Act, and fulfill our corporate responsibility for
respecting human rights.

50

Form management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

Socia

Promote Safety and Health

Sustainability Management

Human Resource Development

SocialAbout Us

Approach to Kenko Keiei(health management)*

NTN Non Smoking Declaration

Maintaining and promoting the health of
employees (health management)

Eiichi Ukai
Representative Executive Officer, President
CEO (Chief Executive Officer)
NTN CORPORATION*Kenko Keiei (health management) is a registered trademark of the NPO
Health Management Research Association.

The smoking rate is on a downward trend year by year,
but we promulgated the “Non Smoking Declaration”
with the aim of lowering the smoking rate of employees
to 20% or less by 2023. We will continue to promote
initiatives to reduce the health risk of smoking, including
passive smoking.

(%)

40.0 37.1

36.0

35.7

35.1

35.0

33.8

32.7

32.0

31.2

30.0

29.6

25.0

20.0

20.0

We are promoting measures to prevent infections andminimize the impact on our business activities, placing
top priority on ensuring the safety of employees andtheir families, in order to prevent an outbreak of the newcoronavirus.
We have gathered information from each country
and region, responded to requests from publicauthorities and implemented measures to temporarily
return employees on loan to Japan, as well as timely
responses in line with local circumstances and otherfactors.
In addition to thoroughly implementing basic
preventive measures, such as temperature
measurements before going to work, handsanitation, and avoidance of crowds, we are
implementing measures such as working-from-homerecommendations, which expanded teleworking, which
had been introduced as part of work style reform.
The new coronavirus vaccinations have also
progressed, and a trend toward convergence of the newcoronavirus is expected worldwide. We will continue
to implement measures in response to changes incircumstances by collaborating globally and gathering
information in a timely manner.

Fair evaluations and compensation
We have implemented a performance evaluation
system that aims to further revitalize employees andimprove management efficiency by evaluating thedegree of achievement of business objectives overa certain period, the degree of contribution made incarrying out work, and the degree of demonstrationof job performance capabilities, and properly reflect
them in salary increases, bonuses, promotions, careeradvancement, and education and training for the
purpose of ensuring fair management of personnel, as
well as “fostering the job skills of employees” for the*Education and training outside the workplace

NTN's human resource development
structure
In order to ensure that employees acquire the mindset,
knowledge, and techniques necessary to meetthe level of skills (such as qualifications) required
Training structure
New recruits
OJT

Mid-career employee

Manager

Systematic and continuous training in operations
Introductory training
Training for employees
promoted to supervisors

Pre-assignment training
Stratified
training
programs

Newly appointed
manager training

First-year training
Second-year training

Management training

Third-year training
Training for new employee trainers
Basic product education
Basic bearing technology education

Off-JT

Quality control education
Production engineering education
Education by
specialty andissue

SASB Index

Trends in smoking rate of NTN

Response to the expansion of the newcoronavirus (COVID-19) infections

Promotion of the work style reform

Company Data/Investor Information

Measures to protect employees from smokingrelated health hazards

We support a number of in-house club activities,
including skiing, snowboarding, tennis, and futsal.
We also hold regular sporting events for employees,
such as a marathon relay race andsoftball tournament, at our domestic
plants. We are also conducting radio
gymnastic exercises for employees
in our manufacturing divisions andpromoting standing meetings for
employees in our indirect divisions.
In recognition of these efforts, we
received the “Sports Yell Company
2021” certification from the Sports
Agency.

Financial Report

We recognize the health of our employees andtheir family members as the foundation of thesustained growth of the NTN Group. We hereby
declare that we will actively promote measures
aimed at improving health and preventing
disease and will strive to create lively workplaceenvironments in which each and every employee
works passionately, living up to their full potential.

Sports initiatives to promote healthBusiness Strategies

NTN Health Declaration

Executive Officer
Corporate General Manager for Safety and Health
NTN CORPORATIONOur human resource development is based on thebasic policy of realizing the NTN Corporate Philosophy
through activities of human resources who grow as selfsustaining individuals, and aims to cultivate humanresources that can achieve business objectives andswiftly respond to changes in the business environment.
To achieve this goal, we have adopted a basic policy
for human resource development that aims to develop
three types of human resources, namely: (i) Global, (ii)Self-support, and (iii) Creative. Our human resource
development is based on personal self-development
and on-the-job training (OJT). In addition to providing
opportunities and various support systems to promote
the above-mentioned development, we continuously
implement systematic, well-planned and organizational
training programs for employees as off-the-job-training(Off-JT)* on an as-needed basis from a long-term
perspective.

Sustainability Management

Certification mark of “Health and Productivity Management Organization
2021 Large enterprise category (White 500)”

Toshinori Shiratoriaccording to job grades and can enhance their ability
to perform their duties, we are implementing humanresource development programs at all levels thatenable employees to think and act for themselves. In
order to expand our business over the next 100 years,
it is essential to develop human resources capableof playing an active role not only in Japan but also
overseas. As a program to foster outstanding humanresources and international human resources by raising
the spirit of improvement, we are also utilizing overseas
studies and scholarships. Through in-house e-learning
programs, we are working to raise the education level ofall employees by enhancing contents such as corporate
knowledge and expertise courses.

Value Creation Story

In view of the fact that proactive efforts to maintainand promote the health of employees are importantmanagement factors that will affect the sustainablegrowth of the Company, we will promote workplace
health, mental health, and physical health based on our“Health Declaration” in collaboration with the healthinsurance association.
Moreover, in recognition of our efforts, we werecertified as a "White 500", one of the top 500
corporations in “Health and Productivity Management
Organization 2021 (Large enterprise category)”, and as
a company that practices excellent health management,by the Ministry of Economy, Trade and Industry and theJapan Health Council.

The NTN Group is actively promoting various
measures to encourage health improvementand disease prevention while creating vibrantworkplaces so that all employees can work
enthusiastically and maximize their capabilities.
As part of these efforts, we declare that wewill vigorously implement initiatives to reduce thehealth risks of smoking, including passive smoking.

Basic approach to human resource
development

Intellectual property education
Education for female
employees
Diversity education
Development of QC circle guidance supporters and leaders
Overseas trainee system
Study abroad and scholarship programs

15.0
2012

2013

51 NTN Report 2021

2014

2015

2016

2017

2018

2019

2020

2023
(Target)NTN Report 2021

52

Form management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

Socia

Human Resource Development

Sustainability Management

SocialPromote Diversity
About Us

Realization of diverse work styles

Balancing work and childcare

Assigning women to managerial positions
One of the biggest challenges in achieving diversity is
promoting female advancement in the workplace andclosing the gender gap.
Currently, the percentage of female managers at
the Company is 14.0% globally, and looking at such
percentage by region, the percentage in Japan is low.
Therefore, we believe that we need to further promote
female advancement. By assigning many women tohigh responsibility positions and encouraging them toparticipate in important judgments and decisions, we
expect that innovation will be created based on diverse
opinions and flexible ideas, resulting in the creation ofvalue and the strengthening of our organization.
The Global Human Resource Development has
introduced a leadership development program for female
employees and held seminars in a planned manner. Also,
the department holds an awareness-raising workshop
for superiors of female employees and an unconscious
bias seminar for managers, thereby establishing anenvironment where women can try to become a manager,so that the gender gap will be eliminated.
Trend in the number of female managers and supervisors
at NTN (employees belonging to NTN) / As of April 1
Female managers (belonging to NTN)

(Persons)

140
120
100
80
60
40
20
0

75

81

56

62

69

46

49

53

55

45
11

16

20

22

26

94

106

114

Female supervisors

123 127 127

75

82

92

96

64

98

30

31

32

31

31

29

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

In 2019, we obtained a "Kurumin" certification as acompany supporting child-rearing, and are implementing
initiatives to create a work environment to support
employees balancing childcare and work.
For both men and women, we distribute a handbook
summarizing in-house systems, laws and regulations
relating to child-rearing from the time they becomeaware of their pregnancy to the time they take maternity
leave, childcare leave, and return to work. In this way, we
disseminate the in-house systems within the Company.
In addition, in order to encourage men to participate inchildcare, we conducted awareness-raising activities,
including displaying posters to encourage men to takechildcare leave. In fiscal 2020, the rate of men taking
childcare leave was 5 times higher than the previous
year. Furthermore, as an initiative aimed at managers,
we distribute a childcare handbook for managers todeepen their understanding of childbirth and childcare,and create an environment where employees who givebirth and raise children can maximize their capabilities.

Promotion of employment of persons withdisabilities
As a workplace where people with disabilities cantake the lead and work safely, we have establishedthree "Dream Workshops" at Kuwana, Iwata andOkayama Works. In addition, we are working to create
a comfortable working environment for people withdisabilities, through actions such as promoting barrierfree workplaces.
"Collaboration" is being promoted in every
workplace, not only the manufacturing sites but also
various workplaces such as headquarters and sales
divisions, to utilize the strengths of a variety of people
and encourage them to play an active role.

NTN Report 2021

SASB Index

In Japanese society, where the shrinkage of workforce isunavoidable due to the decreasing birthrate and aging
population, improving productivity per capita is a major
issue.
In order to achieve sustainable growth amid thisenvironment, it is essential to promote work style reform
to improve productivity and increase operational results
more than ever before.
As part of this effort, we are reforming theoperations of indirect divisions through the rebuilding of
the core system.
In particular, we are working to improve timeefficiency and make a shift to high-value-added
operations by automating manual work through theuse of Robotic Process Automation (RPA) and bystandardizing company-wide common operations, suchas payroll processing and slip processing, which arecommon to each division.
Going forward, we will make maximum use of RPA
as a complementary mechanism to our core systems
in areas such as production control, which supports
manufacturing, and cost control, which is directly
linked to earnings. By thoroughly automating ourregular operations and streamlining and standardizing
our business processes, we will strengthen ourcompetitiveness and realize work style reform.

Encouraging more active roles for female
employees

Company Data/Investor Information

53 NTN Report 2021

Promotion of RPA utilization

As an excellent company in terms of the promotion of
female advancement in the workplace, we were awarded
the highest 3-star grade in “Eruboshi” certification by
the Minister of Health, Labour and Welfare. “Eruboshi”
certifies companies that have formulated and shared an
action plan based on the Act on Promotion of Women's
Participation and Advancement in the Workplace,and have excellent conditions regarding promotion of
women’s advancement. We were recognized for ourefforts to hold seminars to train
manager candidates, develop
their skills such as thoroughtime management and striking awork-life balance. Going forward,
we will further promote women's
active participation through thepromotion of diverse working
styles and the development ofa friendly work environment for
The “Eruboshi”
certification logo
women.

Financial Report

Immediately after the Declaration of State of Emergency
in April 2020, we encouraged employees to use
the flextime system, staggered working hours, andtelecommuting system to ensure employees’ security
and business continuity. We promptly developed a
network environment and communications tools fortelecommunicating, mainly at our head office and sales
offices.
As of April 2021, approximately 1,000 employees
had registered for the telecommuting system, up fromapproximately 300 registered employees prior to the
spread of the new coronavirus. After implementing thetelecommuting system on a trial basis, we have beenworking to make the system an official one at our works(mainly in the technical division).
In addition, in response to the closing of elementary
schools and other facilities due to the spread of the new

To promote the work style reform and prevent the
spread of the new coronavirus, we are developing
an environment that enables flexible telework that is
not restricted by location. With the aim of revitalizing
communication and improving productivity during
telework, we are introducing communication tools
with functions such as cloud-based web conferences,business chat, scheduling and file sharing. In fiscal
2020, we completed the introduction of these tools in
the head office and sales divisions.
We are also working to strengthen the informationsecurity capabilities of our communications tools sothat employees can conduct business safely and withpeace of mind anytime, anywhere.

The economic condition and social structure surrounding
us have been drastically and rapidly changing, including
the shrinkage of the labor force population and the
new normal lifestyle with/after the new coronavirus(COVID-19). We are working on “transformation” sothat we can respond flexibly and actively to such rapidchanges in the environment and continue to growsustainably. One of the important strategies for this“transformation” is diversity. By combining these diverse
values and creating flexible ideas, we will accelerate"transformation." We are working to create a workplaceenvironment in which a variety of people, irrespectiveof nationality, culture, gender, age, or disability, cancreate better ideas based on open-minded thinking, anddemonstrate his or her abilities to the fullest. We willrealize our corporate philosophy, "We shall contribute tointernational society through creating new technologies
and developing new products," by promoting diversity.

Business Strategies

Flexible response to the new coronavirus
pandemic

Introduction of communications tools to respondto the work style reform

Acquisition of certification mark "Eruboshi"

Basic approach to diversity

Sustainability Management

We have introduced telecommuting and flextime
systems to expand the flexibility of working hours andlocations and to create an environment where a diverse
range of employees can thrive. Since April 2021, we
have been expanding our telecommuting system,
centered in our head office and Tokyo office. We havealso expanded the flexible-time system to cover nonregular employees. In these ways, we are working tohelp as many employees as possible achieve a worklife balance. Work-life balance job ranks have been
established so that managers also can work shorter
working hours and under a flextime system, thereby
striking a balance between childcare and nursing careand their managerial duties. Through these measures,
we ensure that childcare and nursing care do not hinder
their career advancement.
In addition to these initiatives for existing
employees, we have introduced an NTN job-returnsystem that allows employees who have resigned due tofactors such as marriage, giving birth, fertility treatment,
nursing care, and career advancement to return to workat the Company. This environment enables us to utilize
the experience, knowledge, and know-how that they havecultivated while at work or after resignation.
We will promote the creation of workplaces where
many employees can fully thrive, and will realize diverse
work styles.

coronavirus infections, we encouraged employees whotake care of children to work from home. In addition,
as a temporary measure, we established a special
public holiday due to the closing of elementary schools.
Approximately 200 employees took advantage of thisspecial public holiday.
In response to the recent spread of the newcoronavirus, we are advancing initiatives with an eye
on the after-corona world to realize a variety of working
styles that are not bound by time or place.

Value Creation Story

development of the Company's business.
To ensure thorough implementation of this system,
we conduct annual performance appraisal trainings.
We are working to disseminate the mechanism throughwhich the results of the performance appraisals arereflected in compensation, and we link the appraisal
results to human resource development.

54

Form management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

GovernanceThorough Compliance
About Us

Basic approach to compliance

Major actions to enhance compliance
Category

Developmentof Structures/
Policies/Rules

Compliance promotion structure

Educational /Awarenessraising
activities

2015/04

Compliance Committee is held (twice a year)

2015/04“NTN CSR Procurement Guidelines” forbusiness partners, including compliance
contents are issued

2016/04

July 26 is designated as “Compliance Day”
and a message from President is delivered to
all NTN Group employees (once a year).

2016/07

Topic-specific training for important
departments which especially need to be
familiar with compliance by the Legal Dept.,
the Fair Trade Promoting Dept., Etc. (asneeded)2012/01

Compliance training for Operating Officer isimplemented (as needed)

2012/08

Rank-based compliance training for new
managers, new employees, Etc. by the Legal
Dept. (as needed)

2015/04

Original compliance training for each business
unit by compliance promotion activities
supervisors is implemented (as needed)

2015/04

Mass training meeting for compliance promotion
activities supervisors, and persons in charge by
the Legal Dept. is implemented (once a year)

2015/04

NTN's Compliance, which is a database forsharing compliance related information, such ascompliance-related incidents and introduction ofcompliance promotion structure is operated

2016/08

E-learning program about corruption prevention
and antimonopoly laws is implemented (once ayear)

2017/04

Audits on antimonopoly compliance are
implemented

2012/11

Audits on rules for corruption prevention are
implemented

2018/05

Percentage of employees who evaluated positively theattitude of senior executives as "good"

Structure

Compliance Committee

Board ofDirectors
Fair Trade Monitoring
Committee
Chairperson: President,
Executive Officer
Secretariat: Fair Trade
Promoting Department

55 NTN Report 2021

Each business siteof NTN

Compliancepromotion activities
supervisor

Domestic
subsidiaries

Internal Control
Section,
Office of General
Manager in fiveoverseas regions

Overseassubsidiaries

Officers
Employees

91.0

89.9

91.5

91.9

2018

2019

2020

year
2021 (Fiscal
ended March 31)

Corruption prevention initiatives
Initiatives in Japan

We have established and have been applying inhouse rules and regulations based on domestic andoverseas anti-corruption laws and social norms. Our inhouse rules and regulations not only prohibit bribery
from and to domestic and overseas public officials
and business partners, but also specify the rules andprocedures regarding provision of property or profit by
our officers or employees, and rules and procedures toprevent bribery via our business partners. In addition,
under the circumstance that some countries even
impose restraints on the transfer of property or profit
between private companies, we have established rules
and procedures for the receipt of property or profit inorder to prevent bribery by our officers and employees,
to thoroughly ensure the conduct of fair trade, and toprevent our officers and employees from engaging inconflicts of interest. Furthermore, we have made it apolicy to refuse to receive gifts and entertainment fromour business partners in principle.
We conduct in-house training and e-learning programs
to raise awareness of the contents of our in-house rules
and regulations, and conduct self-audits once a year toensure thorough awareness of the anti-corruption rules andregulations. Domestic subsidiaries have also establishedand have been applying their own internal regulations thatare consistent with the Company’s policies.

Overseas Initiatives

Our overseas subsidiaries have developed and havebeen operating in-house rules and regulations thatare localized to reflect relevant laws, regulations, andgenerally accepted standards and practices in each

Chief Management Officer
Executive Officer in chargeof Legal Division

Chief Management Officer
Executive Officer in chargeof Legal Division

Chief Management Officer
President, Executive Officer

Compliance Committee

Helpline Management
Department: Legal
Department

Fair Trade Monitoring
Committee

Internal Helpline

External Helpline

NTN Group company officers, employees, business partners, etc.

Antimonopoly law compliance initiatives
We think that all antimonopoly law violations represent a
potential risk for the whole NTN Group. To ensure thoroughantimonopoly law compliance, the Fair Trade Promoting
Department and the Internal Control Section in eachregion conduct education and awareness-raising activities
related to antimonopoly law compliance in accordance withlocal laws and circumstances.
In addition, we have established a system that requires
officers and employees to submit advance applications andfollow-up reports when there is a possibility of contact withcompetitors in any event, such as at exhibits or meetings.
Thus, we can ascertain whether and how employees
contact competitors. Furthermore, we strengthen thecompliance system by conducting annual self-audits andinternal audits. Based on those results, each department
proactively plans and implements improvement measures.
We work to put fair and free competition into practiceby continuing to upgrade our educational activities andraising the awareness of officers and employees.
NTN Report 2021

SASB Index

Chairperson: Executive
Officer in charge
Secretariat: Legal
Department

NTN businesssites/Domestic
subsidiaries

(%)

100
90
80
70
60
50

Company Data/Investor Information

Rules for management of compliancepromotion activities are established

In Japan, the whistle-blower system called Helpline
has been established within and outside the Company
and has been operated as a contact point for providing
consultation regarding violations of laws, Business Codeof Conduct, and in-house regulations. Helpline provides
consultation for cases such as suspected violationsof labor-related laws, including harassment, as well
as violations of in-house regulations, and conducts
investigation in accordance with Helpline Management
Rules that stipulate ensuring the confidentiality andprohibition of detrimental treatment against the whistleblower. Through provision of information in various
compliance training sessions and in the Code of
Conduct Guidebook, we have established a structure
where all employees can utilize Helpline, not only asa tool to report misconduct, but also as a meansof raising questions and expressing opinions andcomplaints regarding the Business Code of Conduct,
and maintaining satisfactory relationships between thecompany, officers, employees, and business partners.
Whistle-blower systems are being progressively created
and operated also in overseas regions, where they are
tailored to local needs and circumstances.

Financial Report

Audit/
Monitoring
activities

Commencement(YYYY/MM)

Helpline (whistle-blower system) andeducational activities

Business Strategies

We have established and have been operating theCompliance Committee and the Fair Trade Monitoring
Committee to promote compliance through the activities
of both committees. (See page 62 for details of theactivities of the two committees.)
Aside from the efforts made by the two committees,
the Legal Department in CSR Headquarters conducts
the rank-based training and the topic-specific training for
officers and employees as part of compliance-related
educational and awareness-raising activities. In addition,
we hold a group training session for Compliance
Promotion Activities Supervisors in Japan once a year.
By sharing information and exchanging opinions onimportant issues, we are enhancing the promotion
activities at each business site and providing support
for the initiatives at each business site. Furthermore,with regard to activities for global compliance risks
such as corruption prevention, we regularly exchange
information and opinions with the Internal Control
Section at each Office of the General Manager in the 5
overseas regions and legal/compliance departments ofoverseas subsidiaries, thereby confirming each other’s
ongoing activities and setting new agendas.
In addition, we have established the Fair Trade
Promoting Department in CSR Headquarters as an

Actions

As part of our fraud prevention efforts, we are examining
employees' assessment of the attitudes of affiliatedcompanies’ presidents and senior executives in the
manufacturing division.
It is said that improper actions within a company will be
more likely to occur when a triangle of motivations, pressures,
opportunities, and justification is formed. It is important todevelop rules and penalties, and at the same time, to develop
an internal corporate culture and environment.
By disclosing the survey results to senior executives,
we are making use of the survey results to create aninternal corporate culture that "does not cause fraud"
based on the awareness that fraud is constantly seen
within the company and by the head office, and to build
better relationships with employees.
In the fiscal year ended March 31, 2021, we
conducted a survey of approximately 2,100 employees
at 48 of our affiliates (12 in Japan and 36 outside
Japan) and approximately 1,700 employees inmanufacturing divisions.

country. They also conduct audit activities related tothese rules and regulations as needed. The Legal
Department is regularly sharing information andexchanging views with the Internal Control Section at the
Office of the General Manager in each region on related
initiatives, and maintaining and managing a structure inwhich the Group unites as one to prevent bribery.

Sustainability Management

We believe that earning the trust of society is essential
for us to contribute to the realization of a sustainable
society and to continue to be a company needed bysociety. Accordingly, we are placing importance oncompliance in our Management Policy. We formulated
the Business Code of Conduct to specify the policyof actions which officers and employees shouldobserve so that we can conduct business activities inaccordance with laws and regulations and generally
accepted standards and practices in each country, andour internal rules. We have also established and havebeen operating the compliance promotion structure that
includes rules related to compliance, a whistle-blower
system, the Compliance Committee, and the Fair Trade
Monitoring Committee.

Internal corporate culture survey

Value Creation Story

overall supervisory department for compliance with
antimonopoly law. Under the direction of the Fair Trade
Monitoring Committee, the department conducts various
activities (such as education, instruction and audit) for
relevant divisions. Additionally, overseas subsidiaries
are monitored for the implementation status ofcompliance with antimonopoly law in cooperation with
the Internal Control Section of the Office of the General
Manager in each region.

56

Form management systems / corporate organization which are essential for NTN, as a global company

Sustainability Management

Governance

Strengthen Governance
About Us

Members composing Nominating Committee,
Compensation Committee, and Audit Committee
Fiscal year ending March 31, 2022 (As of June 25, 2021)

Basic Approach

Nominating
Committee

Director

Nominating Committee, etc. in June 2019 with the aimof establishing a prompt decision-making structure andoperational execution organization, strengthening thesupervision of management, and improving managementtransparency and fairness. Under this structure, we will
work on further improvement of corporate value over the
medium- and long-term.

Hideaki Miyazawa
Toshinori Shiratori

1

Hiroshi Ohkubo
Noboru Tsuda(Non-standing)Kouji Kawahara
Ryo Kawakami(Non-standing)Tomonori Nishimura(Non-standing)

Yuriya Komatsu(Non-standing)Inside Director

Appointment /removal of Directors[Execution Organization]

2

Representative
Executive Officer
President,
Executive Officer

AdviseDelegate/
supervise

5 Management

Meeting(Decision-making
support)1(Supervise the execution of duties of Directors and Executive Officers)(Decide the management policy, etc.)

ReportReportNominating Committee

2
Direct6 Executive

Officers
Meeting

3Compensation Committee(Sharing information)

Directors

11

Compliance Committee
Fair Trade Monitoring
Committee

4

Audit
Audit

5
1 yearExecutive Officers

112

Direct4

DirectInternal Audit
Divisions

ReportReportStructure to support duties of
Audit Committee

Available (Internal
Audit Divisions)

Accounting auditor

Ernst & Young
ShinNihon LLC

Cooperate

4

Audit Committee

The Audit Committee audits the executionof duties of Directors and Executive Officers,
and decides on the content of a proposal
regarding appointment/removal of theaccounting auditor, which is submitted
to the General Meeting of Shareholders.
The majority of the members are Outside
Directors. Three out of the four members of
the committee are Outside Directors, and thecommittee is chaired by an Outside Director.
Also, assistants, including the
Audit Preparation and Support Office,are appointed from the Internal Audit
Divisions to support the duties of the Audit
Committee. Regarding matters relating
to appointment, personnel relocation,
disciplinary punishment, evaluation, etc.
of assistants, the approval from the Audit
Committee shall be required for decision.

SASB Index

Term of office of Directors

Audit Committee

The Compensation Committee decides on
the policy for compensation for Directors
and Executive Officers, and details ofcompensation for individual persons. The
majority of the committee are Outside
Directors. Three out of the five members of
the committee are Outside Directors, andthe committee is chaired by an Outside
Director.

Company Data/Investor Information

Sustainability Committee

Compensation Committee

Financial Report

Appointment/removal ofmembers of committees

Accounting auditor (audit firm)

Company with
Nominating
Committee, etc.

The Nominating Committee decides
on the content of a proposal regarding
appointment/ removal of Directors, which
is submitted to the General Meeting of
Shareholders. The majority of the members
are Outside Directors. Three out of the fivemembers of the committee are Outside
Directors, and the committee is chaired byan Outside Director.

3

Executive
Officers

ReportBoard of Directors

Nominating Committee
Business Strategies

Appointment/
removal of
Executive 0fficers

Appointment / removal

Organizational design

Of those, Executive Officers
who have the authority ofrepresentation
Executive Officers
concurrently serving as
Directors

Report/ProposeRisk Management Committee

Basic information

Of those, independent
Outside Directors

Chairperson[Supervision Organization]

ReportExecutive Officers
Executive Officers are elected by the
resolution of the Board of Directors, and arein charge of executional decision making
and execution of operations delegated by
the Board of Directors. Its term of officeis specified as a year by the Articles ofIncorporation. The number of Executive
Officers is 11 as of June 25, 2021.

Outside Director

General Meeting of Shareholders

Executive Officers Meeting

The Executive Officers Meeting is heldby President, Executive Officer under theattendance of all Executive Officers. Matters
resolved at the Board of Directors are
instructed, and each Executive Officer reports
about the status of operational execution.
This meeting is held once a month inprinciple, to make operational execution more
efficient and effective by sharing information
among Executive Officers.

are Chairpersons of

Sustainability Management

The Management Meeting discusses
important matters relating to operational
execution, as a supporting body fordecisionmaking of President, Executive
Officer. The meeting is composed ofPresident, Executive Officer, and Executive
Officers who are designated by him, andheld twice a month in principle.

are Outside Directors, persons withare members of committees.

The Board of Directors decides the basic
management policies, and supervises
the execution of duties of Directors
and Executive Officers. Except matters
stipulated by laws and regulations or the
Articles of Incorporation to be resolved
at the Board of Directors, the Board of
Directors delegated substantial authority
to Executive Officers with the aim tostrengthen the supervision of management,
and make decisions more promptly.
The Board of Directors is held once amonth in principle, but it is also held flexibly
as needed.
The Articles of Incorporation specify thatthe term of office of Directors shall be one
year, and the number of Directors shall bewithin 15. The number of Directors is 11
as of June 25, 2021, and five of them are
Outside Directors. The Board of Directors ischaired by Non-Executive Director.

Value Creation Story

Keiji Ohashi

Corporate governance structure (as of June 25, 2021)

Management Meeting

Board of Directors

Masaki Egami* Please note that persons withcommittees, and persons with

6

Audit
Committee

Eiichi Ukai

Strengthening and enhancing our corporate governanceis one of our top management priorities. We take steps
to make management more efficient and robust whileworking to increase management transparency bydisclosing information to shareholders and investors in
a prompt and accurate manner.
We made a transition from a Company with a
Board of Company Auditors to a Company with a5Compensation
Committee

Audit

57 NTN Report 2021

NTN Report 2021

58

Sustainability Management

Governance Strengthen Governance
About Us

Governance-strengthening transition

Nominating Committee

Start of Operating Officer System
The Board of Managing Directors is reviewed andrenamed as the Business Strategy Committee

2016

Compensation Advisory Committee is established

2006

CSR Committee is established2018

New corporate philosophy system is established

2008

Risk Management Committee is established
An Outside Director is appointed for the first time

2019

Transition to a Company with Nominating Committee, etc.
The number of Outside Directors is increased from 2 to 5
Sustainability Committee is established2011

The number of Outside Directors is increased from
1 to 2

2020

Woman appointed as an Outside Director

2012

Fair Trade Monitoring Committee is established

2021

Flattening Executive Officer System

Name

Board of Directors

The main areas of experience of Directors (Skill matrix)
Main areas of experience required of Directors

Eiichi Ukai
Hideaki Miyazawa

Corporate
management

Manufacturing

Technology
and R&D

Marketing

Finance andadministration

Globalexperience100%

4 times/4 times

Kouji Kawahara

Outside Director

100%

4 times/4 times

Tomonori Nishimura

Outside Director

100%

4 times/4 times

Hiroshi Ohkubo

Director

100%

4 times/4 times

Toshinori Shiratori

Director

100%

4 times/4 times

Experienceof otherindustries,
diversity

The Nominating Committee was established inconjunction with the transition to a Company with aNominating Committee, etc. in 2019. The committee
was held four times for the year ended March 31,
2021, with discussions and resolutions mainly on thestandards for selection of Directors, skill matrix related
to such standards for selection and the standards
regarding the independence of Outside Directors.

About Outside Directors

As of June 25, 2021, the Board of Directors consistsof 11 members, including six Inside Directors and fiveOutside Directors, and the ratio of Outside Directors
is 45%. In this way, we strengthen the supervision ofmanagement and improve management transparency
and fairness. In addition, in order to ensure appropriate
corporate governance, we have established our own
standards regarding the independence of Outside
Directors, stipulating qualification and independence
standards for them. These standards are used forappointing Outside Directors. Also, all the Outside
Directors are designated as Independent Officers as
defined by the rules of the Tokyo Stock Exchange, Inc.
(TSE), and are reported to TSE as such.
For Outside Directors, we have established anenvironment where active discussions can be held at theBoard of Directors through actions such as explaining
the issues as necessary prior to a relevant meetingof the Board of Directors. Moreover, we continuously
provide information necessary to effectively fulfill theroles and responsibilities of an Outside Director bycreating opportunities to deepen their understandingof our business through on-site inspection of businesssites and other means.
BackgroundToshinori Shiratori
Masaki Egami

Keiji Ohashi
Noboru Tsuda
Kouji Kawahara

OutsideDirector

45%

Management (2 persons)Financial institutions (2 persons)Lawyer (1 person)

Standards for Selection of Directors

Candidates for Directors will be selected from insideand outside the Company based on standards forselection of Directors as described below, considering
the diversity and balance of the Board of Directors(including gender and internationality), after careful
deliberation by the Nominating Committee.
• Must be in good condition both physically andmentally.
• Must have a high sense of ethics and a law-abiding
spirit.
• Must be able to engage in constructive discussion
from an objective viewpoint.
• Must be highly motivated to improve their abilities.
• Must have excellent decision-making skills from acompany-wide and medium- to long-term perspective.
• Must have excellent insight and foresight concerningchanges to the overall environment and to society.
• Must have a sufficient record of performance andexpertise in relevant fields. (Corporate manager orexpertise)• Outside Directors must (1) have sufficient time toaccomplish their duties, (2) satisfy the standards
regarding the independence of Outside Directors,(3) ensure diversity between the Outside Directors, and(4) have the requisite abilities to accomplish duties
as a member of any of the three Committees.

The appointment of Executive Officer
The appointment of an Executive Officer shall be
determined after careful deliberation by the Boardof Directors, comprehensively considering whether
they possess personalities, insights, capabilities,
experience/performance, etc. that are appropriate forfulfilling their duties. In addition, if it becomes clear thatan Executive Officer lacks the required qualifications,he/she will be promptly dismissed by the Board of
Directors.
Since June 25, 2021, the Company has removed theManaging Executive Officers and eliminates hierarchicalrelationships among Executive Officers and makes them
one team. It enables all Executive Officers to activate
discussions and respond to various issues quickly
toward further enhancement of its corporate value.

SASB Index

Hiroshi Ohkubo

Chairperson

Company Data/Investor Information

Name

Legal affairs,
internal
controls,
compliance

Outside Director

Noboru Tsuda

Financial Report

Assessment of effectiveness of the Board of Directors
We conducted a self-assessment of the Board of
Directors by sending out questionnaires to Directors
from the viewpoints such as role/structure/
management of the Board of Directors and managementof committees. The result was generally positive, butthere were comments regarding a succession plan of
top management (CEO) and others. Based on those,
discussions were held on future actions and others at
the Board of Directors. We will continue to analyze andevaluate the effectiveness of the Board of Directors ona regular basis to make improvements.

Corporate
and businessplanning

Number of attendances

Business Strategies

with experience in a different industry than ours willsupervise management. This will enable us to integrate
diverse values and accelerate transformation aimed atachieving sustainable growth.

Diversity of Directors
Upon the approval of the General Meeting of
Shareholders in the fiscal year ended March 2020, a
female Director (Outside Director) was newly appointed
for the first time at the Company. The female Director

Attendance

Discussions on Nominating Committee

Compliance Committee is establishedThe effectiveness of the Board of Directors is assessed

Approach of Board of Directors
Directors other than Outside Directors are appointed
from a wide range of fields, including manufacturing,marketing, technology, and administrative divisions.
In addition, Outside Directors are appointed after
considering diversity and balance, such as beinga person with knowledge of finance, experienced
management, and being a lawyer. We believe that thecurrent number of Directors is an appropriate size forstrengthening corporate governance and expanding ourglobal businesses.

Title

Sustainability Management

2015

Members, the number of meetings, and attendance

Value Creation Story

2004

Ryo Kawakami
Tomonori Nishimura
Yuriya Komatsu

59 NTN Report 2021

NTN Report 2021

60

Sustainability Management

Governance Strengthen Governance
About Us

Compensation Committee

Audit Committee

Members, the number of meetings, and attendance
Name

Members, the number of meetings, and attendance
Title

Attendance

Number of attendances

Name

Title

Attendance

Number of attendances

100%

6 times/6 times

Kouji Kawahara

Outside Director

93%

14 times/15 times

Outside Director

100%

6 times/6 times

Ryo Kawakami

Outside Director

100%

15 times/15 times

Yuriya Komatsu*

Outside Director

100%

4 times/4 times

Tomonori Nishimura*Outside Director

100%

10 times/10 times

Hiroshi Ohkubo

Director

100%

6 times/6 times

Keiji Ohashi*

Director

100%

10 times/10 times

Toshinori Shiratori

Director

100%

6 times/6 times

Chairperson

Chairperson

Value Creation Story

Outside Director

Noboru Tsuda

Ryo Kawakami*The number of attendances after becoming as a member of the Committee*The number of attendances after becoming as a member of the Committee

Discussions at the Audit Committee
Discussions at the Compensation Committee

Compensation Committee (April 1, 2020 to March 31, 2021)•Points granted for BIP Trust for compensation of Officers•Bonus for Executive Officers in 2020
•Directors’ and Executive Officers’ compensation reduction•Summer bonus for Operating Officers in 2020

3rd

•Decision of the order of substitution for the chairperson in the event ofan accident•Policy for determining the amount of compensation or the method of
calculating such amount•Director compensation•Annual activity plans

4th•New Medium-term Management Plan's medium-to long-term
performance-linked compensation system for Officers•Compensation for Officers stationed overseas•Examination of the level of compensation and compensation structureof Officers•Winter bonus for Operating Officers in 2020
•Compensation Committee report

5th•Compensation for Officers stationed overseas

6th•Executive Officer’s compensation determination•Performance indicators of New Medium-term Management Plan's
medium- to long-term performance-linked compensation system for
Officers

Policies for determining the amount, or methodof calculation, of compensation, etc., for Officers

Compensation for Executive Officers

Compensation for Executive Officers consists of fixedcompensation and performance-linked compensation,
which fluctuates according to performance. The ratio of

61 NTN Report 2021

6

4

Fixed compensation
Fixed compensation shall be determined based on arelevant Executive Officer's role and increased in thecase of, for example, Executive Officers who have theright to represent.
Performance-linked compensation
Annual incentives
For Executive Officers, the Company determines whether
or not to provide payment of monetary compensation thatreflects the performance of a single fiscal year, basedon consolidated financial results indicators, etc. of theprevious fiscal year and, in the case of providing suchpayment, the total amount. The payment or non-payment
to each Executive Officer, and in the case of payment, theamount, is determined within the total amount of provisionby considering the Executive Officer’s progress on priority
target measures. Indicators related to the calculationof bonuses are based on consolidated financial results:
net sales, operating income and net income from theperspective of emphasizing the achievement of earnings
growth. The provision is made once a year in June after thedetermination of the Compensation Committee.
Medium-to long-term incentives
The Company’s shares shall be issued based on theachievement level of major target figures in the Mediumterm Management Plan (money equivalent to theconverted amount of shares shall be paid for a certain
portion) as incentives to motivate them to achieve thetargets in the Medium-term Management Plan andcontribute to raising shareholder value, and in order topromote the holding of the Company’s shares.
Medium- to long-term performance targets include
key performance indicators (consolidated operating
margin, consolidated net sales, etc.) that take into
account the Company's management policies.

Compensation for Directors

Compensation for a Director consists only of fixedcompensation. Fixed compensation shall be calculated
by increasing basic compensation (which is determinedbased on his/her concurrent duties as an Executive
Officer and whether he/she works full-time or part-time),taking into account a committee to which a Director
belongs and his/her role at the committee.

Audit Status

The Audit Committee members attend meetings ofthe Board of Directors and other major meetings in

Overview of the Committees
Sustainability Committee

The Sustainability Committee is chaired by the
Executive Officer, who is in charge of the CSR
Division, and is vice-chaired by the corporate generalmanager of the division. Members of the committee
consist of the heads of ESG-and materiality-related
divisions. The committee stipulates that each
employee in our group should promote sustainability
activities based on the 3 fundamental principles
of our "Corporate Philosophy", "CSR Policy", and"Business Code of Conduct" in our day-to-day
business activities. The committee is responsiblefor identifying materiality and establishing targets
for achieving SDGs in order to examine initiatives
related to sustainability.

Risk Management Committee

To respond to various risks surrounding thebusinesses of the Group, we have established
the Risk Management Committee, chaired by the
Executive Officer (Chief Management Officer ofrisk management), who is in charge of the Global
Risk Management Department, as an advisory
body on risk management to prevent risks fromoccurring and to minimize damage in the eventof a crisis. The committee mainly consists of thegeneral managers of the promotion departmentsof the risk management. The committee regularly
checks activities including identification, analysis,
evaluation, and treatment with regard to risks thathave a major impact on the management of the
NTN Group. The result of discussion at the Risk
Management Committee is reported to the Boardof Directors and instructions are fed back to therelevant departments.

Compliance Committee

The Compliance Committee, chaired by the Executive
Officer in charge of CSR Headquarters (Overall Control
Administrator of Compliance Promotion Activities),
handles global compliance risks, excluding violation
risks of the Anti-Monopoly Act and the Subcontracting
Act. The committee members are comprised
primarily of the heads of related risk management
divisions. The committee members formulate andimplement risk mitigation measures in cooperation
with the Compliance Promotion Activities Supervisors
appointed at each business site in Japan and theInternal Control Section established at each Officeof the General Manager in 5 overseas regions, andreports to the committee on action plans and thestatus of implementation. The committee deliberates
on the contents of such reports and then reports thefindings to the Board of Directors.

Fair Trade Monitoring Committee

The Fair Trade Monitoring Committee is chaired by
the President and Executive Officer and consists of
Executive Officers in charge of sales and procurement
divisions, an Outside Director, external lawyer andso on. In principle, this meeting is held twice ayear to discuss the implementation plans andthe performance reports for compliance with the
Antimonopoly Act and the Subcontracting Act, andto provide supervision and guidance on effective
control for fair trade practices along with education
and awareness-raising activities. In addition, we haveestablished the Fair Trade Promoting Department
in CSR Headquarters as an overall supervisorydepartment for compliance with antimonopoly law.
Under the direction of the Fair Trade Monitoring
Committee, the department conducts various
activities (such as education, instruction and audit) for
relevant divisions. Furthermore, overseas subsidiaries
are monitored for the implementation status ofcompliance with antimonopoly law in cooperation with
the Internal Control Section in each region.

NTN Report 2021

SASB Index

The system and level of compensation for Officers,
compensation specified for each individual, etc. aredetermined in the Compensation Committee chairedby an Outside Director using objective information
including the level and trends of other companies asreference. Compensation for Executive Officers andcompensation for Directors are determined separately,
and if a Director also serves as an Executive Officer,
those compensations are added up.

Medium-to long-term
incentives

Annual incentives

Company Data/Investor Information

2nd

Performance-linked
compensation

Financial Report•Special measures regarding stock delivery, etc. of BIP Trust forcompensation of Officers

Fixed compensation

Business Strategies

1st

fixed compensation to performance-linked compensation
is approximately 6:4 as a standard.

accordance with auditing standards, policies, andplans determined by the Audit Committee. The Audit
Committee receives reports or hears from Directors,
Executive Officers, employees, etc. on the status of theexecution of their duties, and audits the execution ofduties by Directors and Executive Officers. In addition to
the Board of Directors and Executive Officers Meeting,members of the Audit Committee attend and monitor
the Sustainability Committee, the Risk Management
Committee, the Compliance Committee, and the Fair
Trade Monitoring Committee, which operate internal
control systems.

Sustainability Management

The Compensation Committee aims to improve fairness,transparency, and objectivity of procedures regarding
the decision making of compensation for Directors andExecutive Officers and enhance corporate governance.
Also, the committee passed resolutions regarding
the details of compensation (such as compensation
specified for each individual) of Officers.

Major items to be discussed at the Audit Committee
include the formulation of the Audit Committee’s
auditing standards, the formulation of auditing policies
and auditing plans, the evaluation of the content
of auditing plans of the independent auditors, theassessment of the selection of independent auditors,
and the assessment of the status of development andoperation of internal control systems.

62Sustainability Management

Governance Strengthen Governance
About Us

Internal Control/Internal Audit

Risk Management

Japan

Structural diagram
NTN Corp.
Individual business sites of
NTN
Domestic subsidiaries
Overseas subsidiaries

CSR
Headquarters

North America

Office of General Manager,
Europe & Africa Region

Office of General Manager,
Americas Region

Internal Control Section

Internal Control Section

Subsidiaries

Subsidiaries

Human Resources
Interaction
China
Office of General Manager,
China Region

Internal Control Section

Internal Control Section

Subsidiaries

Subsidiaries

2

Risks related to procurement and logistics

3

Risks related to production and inventory

4

Risks related to quality

5

Risks related to sales and marketing

6
7

Risks related to personnel and labor
Risks related to the environment and health & safety

8

Risks related to information systems

9

Risks related to finance and accounting

10

Risks related to legal affairs and compliance11

Risks related to fire and disaster prevention, etc.

12

OthersResponse to the new coronavirus (COVID-19)
In response to the spread of the new coronavirus, weestablished the Central Headquarters. Based on thebasic concept shown below, we are promoting necessary
measures globally.
1. Give top priority to ensuring the safety of employees
and their families
2. Thorough precautions should be taken to prevent anincrease of infected persons as much as possible
3. Efforts are made to ensure customer business
continuity

SASB Index

India
Office of General Manager,
India Region

Risks related to technology and R&D

Promotion of BCP/BCM
We have been developing a BCP/BCM structure
designed to respond to major earthquakes in Japanand are working to strengthen our disaster response
systems, including those of our group companies.
We have completed the formulation of BCP to enable
early disaster recovery at all domestic production sites.
Now we have also implemented BCP training to assess
the effectiveness of the formulated action plans andhave taken necessary advance measures. In doing so,
we are moving ahead with development of BCM. As partof our supply chain management, we are also working toformulate BCP at our logistics bases.

Company Data/Investor Information

Europe/South America

1

Board of Directors
Reporting

Financial Report

Cooperation

Information
Exchange

Chairperson: Executive Officer in charge
Secretariat: Global Risk Management Department
Members: Departments in charge of promotion of
Risk Management

Risk Category

DivisionsInternal Audit
Department

Composition

Risk Category
We have classified risks into the following 12 categories
from the perspective of ensuring completeness. After
that, an administrative manager and a promotion
department have been determined for each specific riskthat will have a significant impact on the management of
the NTN Group. Through these measures, we endeavor
to reduce risks.

Subsidiary

Audit Committee

Risk Management Committee

Business Strategies

Internal control system diagram

Basic approach to risk management
We have developed a Risk Management Policy that outlines our basic approach to prevention and handling of risks
that may hamper the execution of the Group's business, and the Risk Management Regulations that set forth risk
management organizations and their roles. Through these measures, we promote group-wide risk and crisis-management
and BCP/BCM (Business Continuity Planning/Business Continuity Management).
We convene the Risk Management Committee as an advisory body for risk management twice a year, in principle. The
committee regularly checks risk management process including identification, analysis, evaluation, and treatment withregard to risks that have a major impact on the management of the NTN Group in light of changes in the internal andexternal environment and other factors. The results of the discussion at the Risk Management Committee are reported
to the Board of Directors.

Sustainability Management

Internal audit activities
In our company, the Internal Audit Department is incharge of internal audit operations. The Internal Audit
Department, as an organization that is independentof executive organizations, conducts internal auditsof the status of the execution of operations by eachdivision of the Company and domestic and overseas
Group companies from the viewpoint of compliance withlaws and internal regulations, and the appropriateness,
effectiveness and efficiency of business activities.
Based on the results of internal audits, we provide
advice and recommendations on improvements to thedepartments subject to audits. We also confirm thestatus of implementation of improvement measures andconduct follow-up audits.
The results of internal audits are reported to the
President and the Audit Committee.
Outside Japan, an Office of the General Manager has
been established in each region to oversee and monitor
operations, each having an Internal Control Section
within it. The Internal Control Section works with theInternal Audit Department and CSR Headquarters to
implement policies specific to each region and country
in accordance with local needs and characteristics.
The Audit Committee, the Internal Audit Department
and the Accounting Auditor work to improve efficiency
and effectiveness of audits by regularly holding
meetings and exchanging information and opinions
about the policies, plans, and results of audits.

Value Creation Story

Basic approach to internal control
Based on the Internal Control Policy resolved by the
Board of Directors, we recognize risk management andcompliance as one of our most important managerial
issues and maintain and operate an internal control
system.
Regarding internal control over financial reporting,the evaluation is conducted in accordance with thegenerally accepted evaluation criteria for internal controlof financial reporting, which was announced by theBusiness Accounting Council.
In the fiscal year ending March 2021, we evaluatedthe effectiveness of the internal control for 50 domestic
and overseas companies of the Group.
With the aim of enhancing cooperation between
the Audit Committee and the internal audit divisions
and effectiveness of audit operations, we changed theorganization of the internal audit divisions in April 2021.
The general management function related to theinternal control system, which was previously handled
by the former Internal Audit Department, has beentransferred to the Internal Control Department newly
established in the CSR Headquarters, and a system
has been established to further promote control
improvements.
By reviewing the internal control system in responseto changes in the business environment, we will improve
the soundness and efficiency of the management of theentire NTN Group.

ASEAN
Office of General Manager, ASEAN,
Oceania, West Asia Regions
Internal Control Section
Subsidiaries

63 NTN Report 2021

NTN Report 2021

64

Sustainability Management

Governance Strengthen Governance
About Us

Officers (As of June 25, 2021)
5

Directors

Hiroshi Ohkubo

Number of years
as Director

9 years

Number of shares of theCompany held

6
134,100 shares

Keiji Ohashi

Number of years
as Director

11 months

Number of shares of theCompany held

117,400 shares(other than above, served as Director from June 2012 to June 2019)

Past experience
Joined the Company

Past experience

April 2004

Deputy General Manager, Finance Department

April 1979

Joined the Company

August 2009

Director, NTN Wälzlager (Europa) GmbH

April 2003

General Manager, Management Department, KUWANA WORKS

April 2010

Operating Officer

April 2006

General Manager, Management Department, IWATA WORKS

June 2012

Director

April 2007

June 2013

Managing Director

Deputy General Manager, IWATA WORKS (concurrently) General Manager,
Management Department, IWATA WORKS
General Manager, General Affairs Department

April 2014

Executive Vice President and Director

June 2014

President and Director

June 2019

Director (current position)
President, Executive Officer

January 2008
April 2010

Operating Officer

June 2012

Director

June 2014

Managing Director

June 2019

Senior Managing Executive Officer

July 2020

Director (current position)

Value Creation Story

April 1977

Sustainability Management

Outside Director
7

Noboru Tsuda

Number of years
as Director

2

8
5

7

1

9
4

10

3

6

Internal Director

Eiichi Ukai

Number of years
as Director

4 years2
Number of shares of theCompany held

62,000 shares

Past experience
April 1980
April 2001

Past experience

April 1973

April 1983

Joined The Sanwa Bank, Limited (currently MUFG Bank, Ltd.)

June 2010

June 2015

Executive Officer, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(currently MUFG Bank, Ltd.) (retired in June 2011)
Corporate Executive, Mitsubishi UFJ Financial Group, Inc. (retired in May 2011)
Managing Executive Officer, Mitsubishi UFJ NICOS Co., Ltd.
(retired in June 2015)
Standing Audit & Supervisory Board Member, the Company

June 2019

Director (current position)

June 2005

Joined Mitsubishi Kasei Industries Corporation (currently Mitsubishi Chemical
Corporation)
Executive Officer (retired in April 2009)

October 2005

Executive Officer, Mitsubishi Chemical Holdings Corporation

April 2009Managing Executive Officer

April 2013

April 2014

Senior Managing Executive Officer
Member of the Board, Mitsubishi Rayon Co., Ltd. (currently Mitsubishi Chemical
Corporation) (retired in April 2015)
Member of the Board, Senior Managing Executive Officer, Mitsubishi Chemical
Holdings Corporation
Member of the Board (Representative Director), Vice President, Executive Officer

June 2015

Advisor (retired in June 2016)

June 2016

Director, the Company (current position)
Outside Director, Tokyu Fudosan Holdings Corporation (retired in June 2018)3

7 years

Number of shares of theCompany held

April 1983

Joined the Company

October 2007

Deputy Corporate General Manager, Automotive Product Headquarters(concurrently) General Manager, Automotive Planning Department
Deputy General Manager, China Region

April 2011

Operating Officer

April 2014

Deputy Corporate General Manager, Automotive Business Headquarters(concurrently) General Manager, Business Planning Department
Operating Officer

April 2014

Managing Operating Officer

June 2014

Director

June 2017

Director (current position)

June 2015

Managing Director

June 2019

Managing Executive Officer

June 2019

April 2021

President, Executive Officer(current position)

June 2021

Director (current position)
Senior Managing Executive Officer
Executive Officer (current position)

6 years

October 20134
59,100 shares

11 months

Number of shares of theCompany held

Past experience

April 1982

Joined the Company

April 1980

Joined the Company

April 2005

General Manager, Production Planning Department, Production Headquarters

July 2009

General Manager, Element
Technology R&D Center
General Manager, Advanced
Technology R&D Center
General Manager,
Environment & Intellectual
Property Department
General Manager,
Environment & Intellectual
Property Department(concurrently) General
Manager, Product Innovation
Strategy Department

November 2007 General Manager, Human Resources Department, Human Resources
Headquarters
August 2010
Deputy Corporate General Manager, Corporate Strategy Headquarters
December 2010 Deputy Corporate General Manager, Corporate Strategy Headquarters(concurrently) General Manager, Information Planning Department
April 2011
Operating Officer
June 2015

Director (current position)

June 2019

Managing Executive Officer

June 2021

Executive Officer (current position)

April 2011
April 2012
August 2012

2 years

Number of shares of theCompany held

10 Tomonori Nishimura
0 shares

Number of years
as Director

11 months

Number of shares of theCompany held

Past experience

Past experience

April 1999

April 1979

Joined NEC Corporation

April 2008

Senior Vice President

April 2011

Registered as an attorney at law (Osaka Bar Association)
Osaka Nishi Law Office (currently Osaka Nishi Law Office, Legal Professional
Corporation) (current position)
Specially Appointed Professor, Osaka University Law School

April 2010

Executive Vice President

June 2015

Audit & Supervisory Board Member, the Company

April 2017

Advisor to the President (retired June 2019)

June 2019

Director (current position)

July 2019

Business Owner, NT Consul Biz. (current position)

April 2020

Professor, Osaka University Law School (current position)

July 2020

Director, the Company (current position)

800 shares

11 Yuriya Komatsu

Masaki Egami

Number of years
as Director

Ryo Kawakami

21,200 shares

Number of years
as Director

11 months

Number of shares of theCompany held

10,000 shares

SASB Index

Number of shares of theCompany held

October 20099

Number of years
as Director

Past experience

65 NTN Report 2021

81,600 shares

Deputy General Manager,
TAKARAZUKA WORKS(concurrently) General Manager,
Quality Assurance Department,
TAKARAZUKA WORKS
February 2009 General Manager, Quality
Assurance Department

Toshinori Shiratori

Number of years
as Director

June 2011

Company Data/Investor Information

General Manager, Quality
Assurance Department,
OKAYAMA WORKS
February 2003 General Manager, Quality
Assurance Department, IWATA
WORKS
January 2005 General Manager, Quality
Assurance Department
February 2006 General Manager, Quality
Assurance Department,
TAKARAZUKA WORKS

45,700 shares

Hideaki Miyazawa

Number of years
as Director

Past experience
January 2007

Joined the Company

Number of shares of theCompany held

Financial Report1

Members of Audit Committee
Chairperson of each committee

2 years

Past experience

June 2013

Members of Nominating Committee
Members of Compensation Committee

26,300 shares

Kouji Kawahara

Number of years
as Director

Business Strategies

11

5 years8
Number of shares of theCompany held

Past experience
April 1986

Joined Nomura Securities Co., Ltd.

August 2010

April 1988

Joined Credit Suisse Trust and Banking Co., Ltd.

August 2012

Advisor, DWANGO Co., Ltd.

April 1990

Joined SPARX Asset Management Co., Ltd. (currently SPARX Group Co., Ltd.)

January 2013

May 1996

Joined The Dreyfus Corporation

April 2015

Deputy Corporate General
Manager, Automotive
Business Headquarters
General Manager, New
Product Development R&D
CenterOperating Officer

April 2017Managing Operating Officer

September 2000 Joined IntellAsset, Inc.

June 2017

June 2019

Executive Officer (current
position)
Director (current position)

November 2004 Joined Worldeye Capital Inc.

July 2020

Advisor, Otsuka Chemical Co., Ltd. (current position
Executive Director, DWANGO Co., Ltd.
Director, KADOKAWA DWANGO CORPORATION (currently KADOKAWA CORPORATION)
Director, DWANGO Co., Ltd. (to be retired in June 2021)
Executive Officer, KADOKAWA DWANGO CORPORATION (currently KADOKAWACORPORATION) (retired in February 2019)
Director, the Company (current position)

June 2006

Joined Olympus Capital Holdings Asia

June 2021

Outside Director, Dream Incubator Inc. (current position)

July 2010

Joined Daiwa Quantum Capital Limited

April 2014
October 2014

July 2020

December 1999 Joined Fiduciary Trust Company International

October 2014

Executive Officer, Otsuka Chemical Co., Ltd.

NTN Report 2021

66

Sustainability Management

Governance Strengthen Governance
About Us

Directors

Hideaki Miyazawa

Masaki Egami

Keiji Ohashi

Kouji Kawahara

Yuriya Komatsu

100%

Board ofDirectors
Audit
Committee

100%

Board ofDirectors
Nominating
Committee
Compensation
Committee

92.8%
100%
93.3%

Board ofDirectors
Nominating
Committee
Audit
Committee

100%

Board ofDirectors
Audit
Committee
Compensation
Committee

100%
100%

Board ofDirectors
Nominating
Committee
Audit
Committee
Board ofDirectors
Compensation
Committee

6/6

10/10

14/14
4/4
6/6

10/10
10/10

14/14
4/4
6/6

13/14
4/4
14/15

14/14
15/15
6/6
10/10
4/4
10/10

10/10
4/4

Mr. Masaki Egami possesses operational experience in areas such as
the Engineering Division and Research Division, and broad knowledge
based on these achievements, among others. The Company selects
him with an aim to continuously improve corporate value, utilizing his
experience and knowledge, etc. for management.
Mr. Hiroshi Ohkubo possesses broad knowledge based on theachievements through his operational experience in areas such as the
Finance Division and Overseas Division, and also through his servingas President and Director of the Company since June 2014 and as
President, Executive Officer of the Company since June 2019 until
March this year. The Company selects him with an aim to continuously
improve corporate value, utilizing his experience and knowledge, etc.
for management.
Mr. Keiji Ohashi possesses operational experience in areas such as
the Finance Division and General Affairs Division, and broad
knowledge based on these achievements, among others. The
Company selects him with an aim to continuously improve corporate
value, utilizing his experience and knowledge, etc. for management.
Mr. Noboru Tsuda possesses broad knowledge, etc. based on
extensive experience in the management of other companies. The
Company selects him with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through his duties
such as providing appropriate opinions on the independent standpointfrom business executors.
Mr. Kouji Kawahara possesses extensive experience in banking overmany years and broad knowledge including finance, among others.
The Company selects him with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through his duties
such as providing appropriate opinions on the independent standpointfrom business executors.
Although Mr. Ryo Kawakami has not been directly involved in corporate
management, he possesses broad knowledge, etc. based on
extensive experience as a lawyer familiar with corporate legal affairs.
The Company selects him with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through his duties
such as providing appropriate opinions on the independent standpointfrom business executors.
Mr. Tomonori Nishimura possesses broad knowledge, etc. based on
extensive experience in the management of other companies. The
Company selects him with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through his duties
such as providing appropriate opinions on the independent standpointfrom business executors.
Ms. Yuriya Komatsu possesses broad knowledge, etc. based on
extensive experience in the management of other companies. The
Company selects her with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through her
duties such as providing appropriate opinions on the independent
standpoint from business executors.

10

8
4

1

Representative Executive Officer,
President, Executive Officer

2

Hideaki Miyazawa*

Eiichi Ukai*
CEO (Chief Executive Officer)

4

Executive Officer

Isao Ozako

Production Headquarters
Production Engineering R&D Center
Composite Material Product Division
Quality Assurance HeadquartersNTN Korea Co., Ltd.
ASEAN, Oceania & West Asia Region
India Region

7

Executive Officer

Masaki Egami*

Representative Executive Officer,
Executive Officer

7
1

9
3

11
5

Executive Officer

Yoshinori Terasaka

Europe & Africa Region

Corporate General Manager,
Automotive Business Headquarters

General Manager,
Office of General Manager-Europe & Africa Region

Global Procurement Headquarters

Americas Region

5

Executive Officer

Toshinori Shiratori*

Human Resources Headquarters
CSR Headquarters
Information Technology Department
General Affairs Department
EHS (Environment, Health & Safety) Integrated
Management Department

8

Executive Officer

Masayuki Kaimi

CTO (Chief Technology Officer)
Research Division
New Product and Business Strategic Planning
Headquarters
Green Energy Products DivisionCorporate General Manager,
Production Headquarters
Supply & Demand Center
Cost Planning Department
China Region

10 Executive Officer

11 Executive Officer

Corporate General Manager,
Aftermarket Business Headquarters
Industrial Business Headquarters

Corporate General Manager,
Corporate Strategy Headquarters

Etsu Harima

3

6
2

6

Executive Officer

Hiroyuki Ichikawa

Deputy Corporate General Manager,
Automotive Business Headquarters
General Manager, Global Strategy
Management Department,
Automotive Business Headquarters
General Manager, Iwata Works,
Automotive Business Headquarters

9

Executive Officer

Tetsuya Sogo

CFO (Chief Financial Officer)
Corporate General Manager,
Finance Headquarters

SASB Index

Tomonori Nishimura

100%

Board ofDirectors
Nominating
Committee
Compensation
Committee

4/4

Mr. Toshinori Shiratori possesses operational experience in areas
such as the Human Resources Division and Corporate Strategy
Division, and broad knowledge based on these achievements, among
others. The Company selects him with an aim to continuously improve
corporate value, utilizing his experience and knowledge, etc. formanagement.

Company Data/Investor Information

Outside Directors

Ryo Kawakami

100%

Board ofDirectors

14/14

Financial Report

Noboru Tsuda

100%

Board ofDirectors
Nominating
Committee
Compensation
Committee

14/14

Mr. Hideaki Miyazawa possesses operational experience in areas suchas the Business Division for the automotive market and Overseas
Division, and broad knowledge based on these achievements, among
others. The Company selects him with an aim to continuously improve
corporate value, utilizing his experience and knowledge, etc. formanagement.

Business Strategies

Hiroshi Ohkubo

of100% Board
Directors

14/14

Mr. Eiichi Ukai possesses operational experience in areas such as the
Quality Assurance Division and Overseas Division, and broad
knowledge of the management of the Company promoting businessglobally based on these achievements, among others, and has served
as President, Executive Officer of the Company since April this year.
The Company selects him with an aim to continuously improve
corporate value, utilizing his experience and knowledge, etc. formanagement.

Sustainability Management

Internal Directors

Toshinori Shiratoriof
100% Board
Directors

Executive Officers (As of August 1, 2021)
Reasons for selection

Value Creation Story

Eiichi Ukai

Number of Board of Directors
and Committee attended

Masaaki Yamamoto* Executive Officers concurrently serving as Directors

67 NTN Report 2021

NTN Report 2021

68

Sustainability Management

Governance Strengthen Governance
About Us

Outside Director Dialog

Noboru Tsuda

Yuriya Komatsu

Tomonori Nishimura

Topic 1

NTN's current issues

69 NTN Report 2021

Topic 2

Roles of Nominating Committee

The President was changed for the first time since wemigrated to a Company with a Nominating Committee, etc.
Please tell us about the process for the President change.
Tsuda: The Nominating Committee consists of 3
outside members, including myself (the chairman of thecommittee), and 2 inside members. One of the 2 insidemembers was the President, and the other was the
director in charge of human resources. The resignationof the President and appointment of their successor
were difficult to discuss at a meeting of all members,
and we held discussions among the 3 Outside
Directors and convened the Nominating Committee
after holding a dialog with the former President Ohkubo
and exchanging views with other Outside Directors.
After evaluating his execution, planning, and previous
NTN Report 2021

SASB Index

Tsuda: In the fiscal year ended March 2021, the main
factor of the decrease in profit was a major reductionin production by automotive manufacturers, our main
customers, due to the coronavirus pandemic. However,there were other factors: the investment in replacing
the core IT system has increased from the initialassumption; there is still a long way to shift toaftermarket and industrial machinery businesses,
which have a higher income; and impairment loss wasrecognized because returns from past capital
investments did not reach initial assumptions. These
do not easily produce positive results in numericalterms. Unfortunately, we must say that ourmanagement of capital investment has been
inadequate. Nevertheless, looking back over the past
year, cash flow turned positive. Inventory and fixed costhave also been reduced significantly. The break-evenpoint is also declining. I think we can applaud the fact

Company Data/Investor Information

Could you talk about the fact that results have not
kept pace while in the last few years internalconsolidation thinking has grown?

that the Company is producing results in terms of what
it has planned. We have not yet completed structuralreform that we should implement, including thereorganization of our domestic bases. Despite theimpact of the shortage of semiconductors, automotive
business is now recovering, and the Company will work
to resolve the issues while restoring its financial
strength. I feel this is where executive managers canshow their skills.
Nishimura: I praise the fact that in the past year, wehave cut fixed cost in order to lower the break-evenpoint, and I feel that things are breaking well in termsof management. On the other hand, there are twothings that I felt were essential challenges, although I
have less than one year of experience.
The first issue concerns the decision-making
process. I feel that while a decision is made at an
important meeting, management's consensus building
and sense of satisfaction are inadequate. Despite thefact that a decision applies to the entire Company,
actions are concentrated in some divisions andcompany-wide action is not taken. Therefore, even if we
can make progress in what can be improved throughthe efforts of specific divisions, we have not yet
generated any company-wide effects. I feel that it isFinancial Report

Every year, the NTN Report provides an opportunity for Outside Directors to discuss NTN's management and governancerelated issues. The content of discussion is published as "Outside Director Dialog." This year again, Director Tsuda, andDirector Nishimura and Director Komatsu, who were appointed to Outside Directors last year, had a frank and honest talkabout NTN's management issues including governance and ESGs.

Business Strategies

Outside Director

Sustainability Management

Outside Director

to enable immediate delivery. The President has
engaged in such activities. I hope that President Ukai
will boldly take on the challenges we face.
Komatsu: That's right. There is another thing I would
like to consider after becoming Outside Director. It is
the delay in updating management accounting in linewith the current situation. Management accounting is
still functioning at present, but I do not think that all
executives and employees share the same numbers,
can make business decisions quickly and accurately,
and operating income under financial accounting is
automatically increased. All employees want to proceedwith business after allocating all costs based on
criteria that employees are satisfied with,
understanding the costs correctly, and recognizing
immediately whether they are making money or not. I
think it would be better to pay attention to setting KPIs
for evaluation. There are many Japanese companies(other than us) that set income before allocation of
headquarter costs as KPI. However, if operating income
under financial accounting is not shared with
employees as a KPI, even though a department isachieving its goals, if the company-wide earnings aretight and the remuneration is reduced, employees atthe department will be strongly dissatisfied and theirmotivation will decrease. If we can quickly determine aseries of processes, such as allocating all costs asfairly as possible, sharing them as KPIs, and reflecting
those KPIs in evaluations, we will be able tounderstand costs in a timely manner and quickly
determine whether orders should be received. I thinkthat the mindset of employees will change andearnings will pick up faster. The accounting divisionknows the issues of management accounting. However,
we do not see any noticeable progress at present
because the start of operation of the core IT system
has been delayed across the company. As these issues
are shared by the Board of Directors, we believe that
progress will be made going forward.
In terms of the personnel system, we are also
moving forward with a plan for changing the evaluation
system for executives. I’m not sure if it can be
implemented during the period ending March 2022, but
discussions are proceeding.

Value Creation Story

Outside Director

necessary to dramatically change the direction ofmanagement to "team management" in the future. For
this reason, I think it is necessary to flatten theorganization as much as possible and change it so thatthe results of decision-making and consensus-building
can be shared swiftly throughout the organization.
The other is about investment. Currently, most of
the investment projects that are being discussed
internally are concentrated on capital investment. Until
now, the Company had been able to do business if it
manufactured bearings and their application products.
As a result, sufficient investment has not been made infurther enhancing the added value of the products.
Although technological research and development has
been conducted, there has not been sufficient market
research on the value of new products. This meansthat the Company is not fully aware of where its current
position in providing value lies. It may be necessary totake a birds-eye view to ascertain how we are seenfrom the customer's standpoint. In this sense, weshould invest a little more in marketing, technologicaldevelopment aimed at further enhancing added value,and product development. We have a variety of options,
including alliances with external specialist companies,
and technical cooperation or alliance with companies inother sectors. To this end, it is necessary to further
improve profitability, to clearly incorporate it into
investment items in the budget, and to select a person
responsible for promoting it.
Komatsu: From the investor's point of view, there may
be a problem with the business portfolio. Investment isbiased toward automotive OEMs, which are businesses
whose future growth is difficult to ascertain, and theyaccount for the majority of our portfolio. Even if wewould otherwise want to focus on aftermarket businessand other businesses with high gross profit, we would
be forced to devote personnel, investment, and otherresources to automotive OEMs, and we cannot takemeasures in a flexible manner. In addition, if we have ahigh level of internal reserves, we may be able to act
quickly with a sense of urgency in transforming ourbusiness portfolio, but we will only proceed slowly
because we currently have modest internal reserves.
While this is understandable, it is essential to make adecision on at least the direction and share it with all
employees in order to transform the Company. It may
not be at the speed that investors ask for, but if theCompany can transform itself at an adequate speed toachieve sustainable development, I think we will
become a company with high profit margins.
Tsuda: In terms of transformation, President Ukai, who
assumed his position this year, has been involved inindustrial machinery and aftermarket businesses formany years and has abundant experience in Southeast
Asia. In order to strengthen the high-margin aftermarket
business, he has a clear policy of discontinuing
operations and transferring resources to theaftermarket business if income cannot be achieved
even if the number of automotive OEM projects
increases. Of course, there have already been suchdiscussions, but things didn't go as we expected. For
inventories, rather than uniformly reducing them, wemust have a fixed number of products required for theaftermarket business, and must have a system in place70Sustainability Management

Governance Strengthen Governance
About Us

NTN's sustainability

What do you think about the trend toward linking theachievements of sustainability management withremuneration?
Komatsu: Discussion is currently underway on KPIs
related to ESGs. The Compensation Committee holds
discussion so that at least KPIs that have been set

Tsuda: I have spoken about the challenges of ourglobalization and the integration of Japan and overseas
in previous dialogs as well. CSR activities are becoming
a global initiative. Manufacturing and quality also
involve exchanges of opinions and technology withoverseas sites, but I don’t think that each department
at the head office regards itself as a part of the "global
headquarters" to a satisfactory extent. For example,
committees and the Board of Directors should include
overseas topics in their reports, but the main topics
are still domestic ones in some cases. I think we will
have to keep pointing this out for some time.
Topic 6

Contribution to NTN

Finally, what contributions will you, as Outside
Directors, make to NTN?
Nishimura: During the past year, as an Audit Committee
member, I visited the business divisions of the head
office and manufacturing plants and affiliatedcompanies nationwide wherever possible in order to
conduct operational audits. I have learned not only
issues at the front lines, but also a number of otheraspects, such as attractive human resources and theprogress made in significantly promising production
reforms. Overall, however, I have an impression that
communication and information sharing between
headquarters and plants, as well as between plants, isinadequate or scarce. We have no time to spare inachieving "team management," which aims for total
optimization rather than individual optimization. In my
previous job, I learned many things as a member of the
management team of a company that shifted from"charisma management" to "team management." I
believe that this experience will also be very helpful to

NTN Report 2021

SASB Index

Sustainability and executive
compensation

How is the progress of globalization and integrationof Japan and overseas, which have been emerging
as challenges for some time?

Company Data/Investor Information

71 NTN Report 2021

Topic 4Globalization/Integration of Japanand overseas

Financial Report

Komatsu: It is certainly true that we are seriously
committed to sustainability management. Since Mr.
Ukai assumed the position of the President in particular,
the Company has been working with a strong sense ofurgency on the world issue of decarbonization. I think
the entire Company is making serious efforts not only to
reduce emissions, but also to ensure our products
contribute to environmental conservation. On the other
hand, with regard to diversity and other issues, it seems
that the environment-related challenges are so greatthat those issues are placed on the back burner. Given
that it is difficult to cover all ESG issues and thatenvironmental conservation is an urgent issue, it is nota mistake to place emphasis on the environment.
However, what surprised me was that there are few
female managers. All of our male executives are notbiased against women, but when evaluating them, there
is a possibility that criteria for choosing managers are
unknowingly slanted in favor of male employees. There
may also be an idea that it would be a pity if we let
women do this kind of work, and that it would be a
tough job because women need to take care of theirfamily. Some women are happy with such treatment,
while others are not. If working styles change, there arecases where more women want to become managers. I
feel that it is necessary to talk to female employees
and managers about these matters.
It is also important that not only women but also
non-Japanese people play an active role. As with thecase of women, there is no desire to exclude
foreigners. The Company will be forced to change in the
future. No matter what the business model will be, I
believe that innovation will progress as humanresources from various countries and women come in.
Nishimura: This time, we expressed our support of
TCFD recommendations as part of our sustainability
management, which is a major business opportunity.

Topic 5the Company’s transformation. In addition to proposing
an ideal form of "team-based management" that is
appropriate for the Company, I am committed topursuing it together with employees.
Another issue I would like to mention is promoting
collaboration with companies in other sectors. In my
previous job, I worked actively in collaboration withgovernments, local governments, related organizations,and companies to build social infrastructure forcustomers such as government agencies andcompanies in the finance, healthcare, and broadcasting
sectors. While there is still a major hurdle for theCompany to aggressively enter the social infrastructurebusiness, I hope to play a key role in collaborating withcompanies in other sectors with regard to promising
new business fields, further expanding the social valueof the Company, and becoming a company that will leadthe next generation’s "global standard."
Komatsu: I think I can make a balanced proposal on
governance because I have experience in working for
an institutional investor in the global capitalism world
and working in the domestic entertainment publishingindustry. I would like to help the Company solve issues
related to diversity, ESGs and management accounting
as soon as possible by holding an interview andmaking proposals, even if I may be considered
intrusive. In doing so, I would like to contribute to theenhancement of corporate value. From pastexperiences, I also know all too well the importance ofmonitoring. If we properly perform monitoring, we canrevise our trajectory and respond in a timely manner.
Verification of investment results not only increases theprobability of future investment success, but also
makes it easier to take on challenges. I would like toconstantly ask "what happened after that?" in order toavoid a situation where no results are produced after
an investment or declaration is made.
Tsuda: We are not making much progress in terms ofmarketing in areas other than the automobiles andindustrial machinery sectors and collaboration such as
joint development with companies in other sectors.
Even if we try to enter new businesses, it is often
impossible for us to do so by ourselves, so we need totake slightly more aggressive measures. Since theCompany has conducted business with specificcustomers so far, I think that the Company may havedifficulty creating a connection. I know that "saying is
one thing and doing is another," but I must continue tosay that. I feel unhappy about what I, as an Outside
Director, have done over the past 5 years. I have longfelt that we have not been able to sufficiently evaluate
and analyze what we have planned and implemented. It
is important to analyze what results are produced andwhat is bad if you cannot produce results. Ms.
Komatsu also mentioned that, and I would like to ask
such questions persistently. Regarding items to bereported to the Board of Directors, information to bereported that is needed by directors must be sortedout a little more, so that more productive reports will
be submitted to directors. There are still many areas
for improvement, and this time again I feel I havebecome outspoken, but I would like to continue working
to realize a newly reborn NTN and increase its
corporate value.

Business Strategies

This year, NTN has identified materiality and are working
to promote sustainability management in earnest. How
do you see these developments?

should be linked to the assessment of executives.
Tsuda: Currently, equity-linked remuneration is includedin the medium- to long-term incentives of executives.
However, only economic indicators, such as
consolidated operating income rate and total assets
turnover rate during the period of the medium-term
management plan, have been used to assess theperformance of executives. We discuss in what
direction we should go in relation to how to incorporatesocial indicators in the assessment process and theirdirection. Furthermore, some pointed out that there isa need to set social indicator targets not only forexecutives but also at business sites, so that bonuses
will be raised if they are achieved. Since NTN is now
prioritizing the rebirth of NTN, it is difficult to work on
the publication of social indicator targets. However, we
recognize that it is necessary to present planned andactual figures.

Sustainability Management

Topic 3We are a global company with approximately 70% of its
sales coming from overseas. We have many production,
sales, and research bases in Asia, Europe, and theAmericas globally, and if those bases cooperate witheach other, we can continuously provide services
without interruption 24 hours a day. In other words, thisexpression of support means that we declare that wewill engage in the global standard business in which
services are continuously provided to our customers
through complementary collaboration between ourbases, even if there are risks arising from climatechange. To this end, we must promote global
standardization of procurement, manufacturing, sales,
and logistics, as well as information-sharing andstrengthening of governance. In this way, we must work
together as the "One NTN." We should be conscious of
the concept of the "global standard" from an earlystage and from a company-wide perspective, at least
with regard to new products and service businesses
that we will work on in the future.
In addition, it is expected that many countries andcompanies will change their direction significantly
toward the realization of a carbon-free society in the
future. We have continued to realize a NAMERAKA
society since our foundation. Taking advantage of thisstrength, we need to take a step further to lead society
in areas such as renewable energy, new energy, anddevelopment of new materials. On this occasion, we
should take one step closer to customers, aiming tosell higher-value-added products to them. Achievementof carbon neutrality will be very difficult in all countries
and companies in the future, and it is imminent that
supply will not keep pace with the demand for newenergy. This may be an opportunity to pursue an
unprecedented alliance. As we play a key role in thewind turbine business, I think it is important to aim tobecome a global company with a culture of openness.
Tsuda: In the future, proposals will come from theSustainability Committee, and it is important to holddiscussion with the question "what do we do and by
when?" in mind. How will we set goals, tackle them,and lead them to evaluation? It is the role of the Boardof Directors to discuss this point. At present, we arefocusing on climate change, but I believe that we needto pay attention to and visualize employees’ sense ofsatisfaction from work.
Komatsu: Materiality is also identified in the Social andGovernance segments other than Environment. It is
crucial that directors make sense of this well-balanced
identification of materiality, and penetrate it to thefrontline staff of the organization. It would be a pity if it
is not implemented.

Value Creation Story

experience, we decided unanimously that Mr. Ukai wassuitable for the position, and recommended him to theBoard of Directors.
Nishimura: I also exchanged views with former
President Ohkubo on the successor. As mentioned
earlier, I recognize that the transition to "teammanagement" is a major issue, and recommend
President Ukai because he is qualified as a person
capable of guiding the transformation with enthusiasm.
I have great expectations for his management skills.
Not only the President but also all other executives
have things they are not good at. By complementing
each other and functioning as a "team," management
can make firm management decisions that realize acompany-wide, long-term transformation. I think it will
be important in the future how he positions this as amanagement decision-making process, and how heleads not only executives but also capable humanresources to work as a team.

72

Sustainability Management

Governance Strengthen Governance
About Us

Engagement with Stakeholders
Stakeholders

Stance to
Stakeholders

Main Activities

Stakeholders

Stance to
Stakeholders

Employees

Activities that contribute to the local community(family tours, summer festivals, etc.)

Local communities

Incentive payment patent system

We are working to raise the motivation of employees
and encourage job inventions by establishing the"Patent Management Rule" as well as the "Patent
Reward Rule" and providing performance-based
compensation for job inventions.

Global QC Circle Convention

We strive to improve safety, quality, andproductivity on a global basis, and with theconvention as a forum for international exchange,
we exchange information on a variety of activities.

Technical service units

We run completely-tailored, multi-functional
technical service units worldwide, equipped withteaching materials and exhibits to introduce our
products, and hold bearing technical seminars forour customers.

Briefing for suppliers

Promotion of CSR procurement

Through CSR questionnaires based on the CSR
Procurement Guidelines, we promote activities
with our business partners to help themunderstand the importance of CSR procurement.

NTN Group
harmonizes its
business activities
with nature andcontributes topreserve the global
environment by
providing its
technologies, products
and services.

Shareholders' Meeting

The Shareholders' Meeting is a forum forcommunication to build long-term relationships oftrust with shareholders.

ESG briefing

In addition to holding results briefings forinvestors, we also hold ESG briefings to promote
understanding of our ESG initiatives. The
opinions we receive at the briefing are used to
improve our sustainability activities.

Reducing environmental impact in businessactivities

We are working to minimize harmfulenvironmental impacts by monitoring andreducing emissions of CO2 and regulated
chemicals in our business activities.

Sustainable resource use

We are striving for sustainable resource utilization
by reducing the use of resources such as raw
materials and water, and by thoroughly
implementing the 3Rs (reduce, reuse, andrecycle) of waste.

SASB Index

We share information on our globalization
initiatives and the business environment
surrounding our company with our business
partners and have external lecturers deliverlectures targeting the business partners.

Environment

NTN Group focuses on
return for shareholders
by sustainableprofitable growth andbuilds long-term trust
relationships withshareholders throughactivecommunications.

Conservation of biodiversity

In cooperation with local residents and NPOs, we
are working to protect the environment of
Satoyama (village forest) areas around ourbusiness sites and to protect endangered
species.

Company Data/Investor Information

73 NTN Report 2021

NTN Group, in a fairand free environment,
builds good
partnerships with its
business partners andworks together formutual growth anddevelopment.

We invite distributors from across Japan tobriefing sessions on account settlement overview
and aftermarket business measures tostrengthen our bond with distributors.

Shareholders andinvestors

NTN Rotating School

As an environmental education program forchildren who will lead the next generation, mobiletype schools have been opened in various places
to deepen regional development.

Financial Report

Business partners

NTN Group seeks tomaximize customer
satisfaction and trust
by providing products
and services ofsuperior quality, safety
and reliability.

Nationwide Distributors' Meeting

We hold family tours and summer festivals at
each business site as an opportunity to interact
with employees' families and neighboring
residents.

Business Strategies

Customers

NTN Group respects
cultures and customs
in the local
communities andbuilds long-term trust
relationships bymeeting their
expectations throughits business activities.

Sustainability Management

NTN Group respects
diversity, individuality
and a safe and healthy
workplaceenvironment where
employees can work
successfully.

Value Creation Story

Activities to spread the corporate philosophy

We hold interactive workshops to cultivate empathy
for and understanding of our corporate philosophy
among employees. In addition, we hold the NTN
PROUD AWARD as a forum for implementing ourcorporate philosophy and encourage employees totake on a “Challenge to transformation.”

Main Activities

Developing environment-contributing products

We are contributing to the realization of a carbonfree society by developing products that can help
reduce CO2 emissions during product use andnatural energy-related products.

NTN Report 2021

74

Sustainability Management

Governance Strengthen Governance
About Us

7th Stakeholder Dialog

Value Creation StoryTo reflect the opinions of our stakeholders in our sustainable corporate activities, we have annually held dialog withacademics and experts in various fields of sustainability since 2015. For this fiscal year, the 7th dialog was held in July.
Last year, we established the Human Rights Policy. We have also identified 13 items of materiality for responding to
SDGs and have begun working on them. In May of this year, we expressed our support of TCFD recommendations. In the
future, we will analyze the risks and opportunities posed by climate change in our business, set targets, and proceed withactivities.
In this dialog, we exchanged opinions with experts on the evaluation of the status of these activities and how toproceed in the future. Based on the recommendations we received, we will promote company-wide initiatives to further
increase corporate value.

Topic 1

Topic 2

Evaluation of sustainability activities over the past
year and proposals

Setting of materiality targets and integration
into management

Topic 3Topic 4

Human rights due diligence

Initiatives based on TCFD recommendations

Sustainability Management

Topics of the dialog

Topic 1

Katsuhiko Kokubu

Masaru Kaizaki

Hideki Matsuoka

Eriko Nashioka (Facilitator)

Professor, Kobe University
Graduate School of Business
Administration

General Manager in chargeof Sustainability Office,
OMRON Corporation

Special Project Manager,
Asia-Pacific Human Rights
Information Center

Representative Director of
Institute for Environmental
Management Accounting, CPA

Manager of EHS (Environment,
Health & Safety) Integrated
Management Department

Masayuki Yamazaki

Executive Officer and Corporate General
Manager of Corporate Strategy
Headquarters

Masaaki Yamamoto

Deputy Corporate General Manager of
Human Resources Headquarters andManager of Personnel Department

Toshiyuki Kawaguchi

Operating Officer and Corporate General
Manager of Human Resources
Headquarters and in charge of General
Affairs/EHS (Environment, Health &Safety) Integrated Management

Kenji NonoManager of Procurement/Logistics
Department, Global Procurement
Headquarters

Ryuma Mano

Corporate General Manager of CSR
Headquarters

Masaaki Masumoto

Manager of Corporate Value Promotion
Department, CSR Headquarters

Kouhei Iguchi

Deputy Corporate General Manager ofCorporate Strategy Headquarters andShumpei Kinoshita
Manager of Corporate Planning Department
Manager of Corporate Communications
Department, Corporate Strategy
Headquarters

75 NTN Report 2021

Youichirou Mochida

Kaizaki: Over the past year, I had the impression thatthe story has been successfully formed with factors
such as the corporate philosophy, the value creation
process, materiality, and NTN's strengths. How do you
link this to your business? In addition, if you are able tocomplete the story by achieving a resultant increase incorporate value, I think it will be even better.
Matsuoka: A framework for human rights initiatives isalso being formulated. What I always tell companies isthat it's hard to create a framework, but it gets evenharder after it's created. Efforts to disseminate thesystem within the Company and ensure that each

NTN: Last year, the Company identified 13 items ofmateriality for responding to SDGs. Currently, we aresetting targets for identified materiality and KPIs anddrafting specific measures. Regarding the setting oftargets and KPIs, we are advancing discussions,
including whether quantitative targets are necessary orwhether qualitative targets are acceptable depending on
the items. We are also seeking ways in which each
employee will regard targets for the identified materiality"as his/her own targets."
Kokubu: Many companies may misunderstandmateriality. They consider materiality as "important forthem." Materiality originally refers to how a company
has an impact on important social issues, and does notconstitute strategic importance for the company. In that
respect, NTN probably identified materiality without any
misunderstanding. However, it is still unclear what
specific involvement the Company will have.
Sustainability activities involve solving social issues
using the 6 types of capital a company possesses.
Important is a vision in which, even if a company does
not gain profit in the short term, society will gain
benefits from a long-term perspective.
Regarding the setting of targets, if you are seriously
addressing social issues as a company, qualitative
targets are also acceptable. However, from a strategic
perspective, qualitative information does not convey theactual status of activities. Quantitative information may

NTN Report 2021

SASB Index

Executive Officer in charge of Human
Resources, CSR, Information Technology,
Toshinori Shiratori
General Affairs, and EHS (Environment,
Health & Safety) Integrated Management

Setting of materiality targets and integration
into management

Company Data/Investor Information

NTN

Kokubu: It can be said that NTN's sustainability
activities are advanced with consideration given to its
industry type and the size of the Company. I think you
have the same level of strategic planning as other top
companies in terms of support of TCFD
recommendations and materiality identified. However, if
practice diverges from philosophy, the philosophy ismeaningless. Going forward, it will be important tosuccessfully link strategies and initiatives.

Topic 2Financial Report

NTN: The Sustainability Committee, which wasestablished 2 years ago, took the lead in establishing
the Human Rights Policy and identifying materiality inthe previous fiscal year. In May of this year, following theresolution by the Board of Directors, the Company also
expressed our support of TCFD recommendations. Firstof all, could you please give us an evaluation of ourefforts over the past year?

Business Strategies

Evaluation of sustainability activities overthe past year and proposals

Experts

individual understands it will become important in the
future.

76

Sustainability Management

Governance Strengthen Governance
About Us

also be useful to show that your efforts are not justwords on paper. In addition, setting quantitative targets
makes it easier for employees to tackle issues andmake it easier to understand the direction of activities.

NTN: We established the "Management Policy" inDecember 2019. The policy states that we conductbusiness by placing an emphasis on respect for humanrights. The "Management Policy" is the backbone of all
our policies. In other words, this means we respecthuman rights in all of our activities, including those of

77 NTN Report 2021

NTN: We have expressed our support of TCFD
recommendations in May of this year. Currently, a crossdepartmental team consisting of the Sustainability
Committee and the heads of related divisions is in theprocess of conducting scenario analysis. Please advise
us on how to proceed in the future.
Kokubu: Many Japanese companies express theirsupport of TCFD recommendations, and the revised
Corporate Governance Code now requires climatechange disclosures based on TCFD or its equivalentinternational framework. TCFD recommendations
originally called on financial institutions to disclose thefinancial impacts of climate-related risks andopportunities. Of course, even in the case of operatingcompanies, those that generate a large amount of CO2
also need to disclose information based on TCFD
recommendations. However, for a company like NTN
whose CO2 emissions are not so significant in society
as a whole, I think it would be better to consider
qualitatively showing both the risks and opportunities
related to climate change without focusing on disclosing
quantitative targets.
Kaizaki: OMRON expressed its support of TCFD
recommendations in February 2019. Accordingly, we
continue to discuss what business risks andKokubu: As with TCFD recommendations, in the past
year or two, the importance of disclosing ESG-related
information has significantly grown in society. On theother hand, it is also a matter of concern that various
guidelines may require more than what is reallynecessary. Many companies probably think that theyshould do something even bigger than what they should
do in the first place. Rather than trying to follow
developments in countries around the world on asuperficial basis, what is important is keeping an eye oneach of these trends, and to proceed with steady
initiatives that can be put into practice in-house. ESGs
should not be words on paper. I would like to lookforward to seeing initiatives produce actual results.

SASB Index

Human rights due diligence

Matsuoka: It is very difficult for the Company alone tocheck subcontractors and sub-subcontractors of its
primary suppliers. Procurement standards of many
companies seem to require the suppliers of a company
surveyed (secondary suppliers for the surveyor
company) to be verified. In a chain reaction, third andfourth suppliers will be surveyed, but up to end
suppliers cannot be investigated after all. In the case ofSMEs, the definition of words may not be correctly
understood, so it may be necessary to explain carefully

Initiatives based on TCFD recommendations

Company Data/Investor Information

Topic 3Topic 4

opportunities exist in accordance with the framework of
the recommendations. Last year, the Energy Solutions
Headquarters conducted scenario analysis of risks andopportunities. In addition to reflecting the results in its
business plan, the company included them as TCFD
initiatives in last year's integrated report and this year's
securities report. The company plans to disclose
information from the perspective of what risks andopportunities it has in other businesses, but thecompany is proceeding cautiously without focusing on
quantitative information.

Financial Report

Matsuoka: Regarding human rights issues, although it isa prerequisite to identify human rights issues across all
operations, we cannot watch all operations. The"Guiding Principles on Business and Human Rights"
also state that companies should prioritize their efforts.

Kaizaki: To ensure that awareness of human rights
permeates the entire Company, employees need to be
encouraged to understand the significance of humanrights initiatives, risks associated with human rights
issues, and the advantage that a company working onsuch issues can be chosen by customers. With regard
to penetration beyond the company, it is important tounderstand that human rights issues are connected
within the entire supply chain. Both NTN and theCompany may audit business partners, but on the other
hand, NTN and the Company are also suppliers andparties to be audited from the viewpoint of anothercompany. In this way, I believe it is important to beaware that human rights-related issues are connected
in operations from upstream to downstream throughout
the supply chain.

or to divide and simplify the content of thequestionnaire according to the size of a company.

Business Strategies

Kaizaki: With regard to human rights, it is difficult in
reality to look at all aspects of the supply chain, and it
is also necessary to narrow down to important suppliers
or otherwise set a certain range. For example, not only
employees of the Company but also employees from
temporary staff companies and subcontractors working
at the Company’s business sites can be set as targets.
I think that a scope can be set on the importance ofhuman rights issues by expressing that human rights
issues occurring within the Company's business sites
need to be proactively addressed by the Company.

Sustainability Management

NTN: We would like to review materiality once a yearwith the participation of management. However, humanrights issues and the like cannot be addressed by theCompany alone. The reality is that we are thinking about
how far we should go while taking measures.

Matsuoka: I think it is effective to link this with yourcorporate philosophy in order to instill your activities forrespecting human rights into overseas regions. In
conjunction with activities to disseminate NTN's
corporate philosophy at home and abroad, what about
taking measures so that the efforts to respect humanrights will take root throughout the entire NTN Group?
The point to note is that even if international humanrights standards are common, perceptions of humanrights may differ depending on the country, region,
religion, etc. Taking a look at NTN's CSR questionnaire
surveys, how respondents interpret concepts may differ
depending on the country and region. I think you should
proceed while being conscious of the necessity of
responding on a case-by-case basis.

Value Creation Story

Kaizaki: I think it is important to set materiality targets
and KPIs based on the time horizon with attention paid
to "by when." However, people will never focus only on
quantitative targets. If the Company provides a story ofwhat value will be created, even if it is qualitative, thestory will impress stakeholders. Conversely, evenquantitative information would not make sense if astory that impresses stakeholders could not bepresented. For example, regarding diversity, it isimportant to consider what the Company wants to be
like as a result of setting KPIs for the number of womenin managerial positions.
In addition, in order to disseminate materiality
throughout the Company, it would be better to link the
corporate philosophy with materiality. By showing thepath that the implementation of the corporate
philosophy is linked to materiality targets, I believe thateach and every employee can regard materiality targets"as his/her own targets. "our domestic and overseas group companies.
Subsequently, in July last year, we established the"Human Rights Policy" and announced that we will workto establish a mechanism for human rights due diligence
not only within the Company, but also across the entire
supply chain. We have also identified "Respect forhuman rights" as one of our materiality issues. In Aprilof this year, we redefined our "Procurement Policy" under
the Management Policy. We are currently revising our"CSR Procurement Guidelines" and asking our suppliers
to address human rights issues.
We have finally begun full-fledged efforts, but wewould like to hear your recommendations on how toproceed with human rights due diligence and on the
promotion of CSR by business partners.

NTN: We received an evaluation of our efforts over the
past year. We have indicated the path that we shouldtake going forward, and based on the content of therecommendations we received, we intend to continue
our activities by disseminating such philosophy andsystems throughout the Company, including Group
companies. Thank you very much.

NTN Report 2021

78

Business Strategies

Aftermarket

13.4%

16%

100.0

50.0

0

12.8%

11.6%

9.7%

11.9%

(Billions of yen)

45.0
104.5

116.7

109.4
91.5

15.0

14.0

2017

118.8

2018

15.2

2019

12.7

101.0

2020

2021

30.0

15.0

12.0

8.9

2022
(Forecast)

0(Fiscal year ended/ending March 31)

Sustainability Management“DRIVE NTN100” Phase 2 strategy
Increase in the role expected of bearing suppliers
by customers, such as the provision of a wide rangeof services

Aftermarket overseas: Strong brand presence ofEuropean and U.S. competitors in the marketplace

Expansion of the e-commerce market
Sophistication of counterfeit bearings

Our Vision
Transform from a “Manufacturing Company” into a “Company that Delivers Values to Customers throughProducts and Services.”

Net sales and operating income margin(Billions of yen)

1,500

By sharing sales strategies across different
types of businesses, concentrate resources onimportant industries
Strengthen organizational structure to improve
supply capacity, service response, and profitability
One of the issues we face in expanding ouraftermarket business is our low brand awarenessabroad. To improve brand value, we need to enhance
our competitiveness in aftermarket business from avariety of perspectives, including the promotion ofbusiness development in the service-oriented
business, such as bearing refurbish services, remote

2020

12.0%

2021-2023
Rebuild revenue base

9.3%

2024
From products to services

Increasing the brand value

2024

2028 (Fiscal year ended/

Expand bearing refurbish business
Use of NTN PORTABLE VIBROSCOPE(In addition to sales of devices, analysis report business)

Commercialize the condition monitoring ofcustomers’ equipment by utilizing sensor
technology and IoT and grasp the demandfor bearing aftermarket

Strengthen
service response

Strengthen technical support functions in overseas sales
companies (ASEAN and India regions)Technical service units activities and technical seminars
for distributors
Further strengthen measures against counterfeit bearings

Develop andexpand technicalservice throughthe use of remotesupport cameras

Strengthen theability to supply

Maintain available stock for aftermarket
Prioritize production capacity for aftermarket(use of new IT core system)
Expand use of overseas manufacturing sites andexternal procurement

Accelerate “Made by NTN” by actively
utilizing products manufactured overseas
Strengthen the network system with
distributors and expand e-commerceStrengthen
structure andorganization

Expand sales in growing industries through integrated response
from OEM to aftermarket
Improve profitability by short-term concentration through task
force activities for key market
Strengthen sales structure in the Middle East and Africa(A sales company established in UAE in January 2021)

Relocate automotive aftermarket's
headquarters functions to Europe
Expand sales in potential markets suchas China through the use of resources in
Europeending March 31)

Results for the fiscal year ended March 31, 2021 and forecast for the fiscal year ending
March 31, 2022
yen, largely due to a decline in demand, despite efforts
to reduce fixed costs such as personnel costs andexpenses as well as variable cost. For the year ending
March 31, 2022, we expect net sales of 101 billion yen
and operating income of 12 billion yen based on theassumption of normalization of economic activities andrestoration of demand after the end of the pandemic.

NTN Report 2021

SASB Index

Strengthen
product-and-service
business

Company Data/Investor Information

500
2021

technical support services, reinforcement of technicalsupport such as on-line seminars, reinforcement of
supplying capabilities by securing available stock foraftermarket, and reinforcement of our system andorganization to focus on priority industries throughintegrated actions from OEM to aftermarket. Over the
next three years, we will focus on these measures.

Initiatives to strengthen for sales expansion (medium-to long-term)

1,000

0

Strengthen e-commerce
Promote business development in the serviceoriented business

Financial Report

the operation status of customer’s equipment andbearings, prediction of replacement timing utilizing
know-how including sensing technology and digitaltechnology such as AI and IoT, and bearing refurbish
business. In this way, we will further enhance our brandvalue and aim to be No.1 in customer satisfaction in
the aftermarket business.

Efforts to focus on in three years

Business Strategies

Rise of LCC products (improvement in quality of
products made in China, etc.) throughcommoditization of general-purpose bearings

In the fiscal year ended March 31, 2021, net sales was
91.5 billion yen which was below the previous year's
level due to a substantial drop in demand andadjustments for distributor inventory due to poor market
conditions in both industrial aftermarket and automotive
aftermarket that were heavily impacted by the newcoronavirus. Operating income also fell to 8.9 billion

12.9%

Operating income margin

150.0

Etsu Harima

The business environment such as the development ofAI, IoT, and other digital technologies, environmental
issues, and demographic shifts has been changing
continually and companies are required to be flexible inaccommodating new market needs to ensure sustained
growth. In the aftermarket business of bearings,
suppliers are faced with new expectations in addition to
traditional requirements, including high-quality products,
broad product lineups and timely delivery. The role ofsuppliers, particularly those in the equipment
aftermarket business for steel, paper and otherindustries, is gradually changing from a bearing supplier
into a provider of comprehensive maintenance services
for equipment and peripheral components.
In addition to utilizing remote technical support
services and the “NTN PORTABLE VIBROSCOPE,” wealso provide new business models such as monitoring

Operating income (right axis)(Billions of yen)

91.5 billion yen

Business environment

79 NTN Report 2021

Trend in business performance
Sales (left axis)

Value Creation Story

Executive Officer

Percentage of total sales

About Us

NTN provides various products for industrial machinery and automotive
maintenance needs. In industrial aftermarket applications, we provide
bearings for general machinery and bearings for equipment repairs suchas in mining, papermaking, steel, cement and food industries. In
automotive aftermarket applications, we satisfy customer needs with aproduct lineup of repair parts (auto parts) composed of bearings andperipheral components.
Since our visits to customers are restricted due to the coronavirus
pandemic, our activities go beyond delivering products and include
holding the “NTN Aftermarket Academy” to help customers learn aboutbearings through online lectures and practical training as well as
promoting remote technical support services. Also, we contribute toimprovement of productivity and stable operation of customers’ facilities,
for example, by providing a condition monitoring system utilizing the NTN
PORTABLE VIBROSCOPE and bearing refurbish services.

80

Business Strategies

Industrial Machinery Market
Trend in business performance
Sales (left axis)

18%(Billions of yen)101.9 billion yen

1.6

2017

Operating income margin

0.3%
101.9

105.0

0.4

2019

10.0
5.0

3.1

2.8

2018

1.0% (Billions of yen)
15.0

-2.0
2020

2021

1.0
0
2022
(Forecast)(Fiscal year ended/ending March 31)

Sustainability Management“DRIVE NTN100” Phase 2 strategy
Increased needs for automated machine operationand sensing

Increased demand for robot-related products

Competition to develop high value-added products
Intensified competition due to influx of low cost products

rapid progress in IT-related technologies including IoT and
AI. Under these circumstances, we will utilize digitaltechnology based on bearing technology in the industrial
machinery business, thereby continuing to be an
indispensable company in the industry, and will support thedevelopment of the world industry.

(Billions of yen)

1,500

4.0%

Net sales related to renewableenergy(Wind turbine Brg+CMS+green energy products)

We will reorganize our business into the following 3
fields and restructure our business and productportfolios by throwing management resources in aconcentrated manner.
“Create sector”: Establish new business areas
for Wrist Joint Module “i-WRISTTM”, servicing
solutions (CMSs) and hydrogen-energy

2020

Creation
sector1,000

02021-2023
Rebuild the revenue base

300

(Fiscal year

2021 2024 2028 ended/ending
March 31)

0

2021

2024

(Fiscal year

2028 ended/ending
March 31)

Growthsectordemand. As a result, net sales was 101.9 billion yen.
Operating income was 400 million yen due to a review of
unprofitable products and a reduction in variable cost.
For the year ending March 31, 2022, the impact of newcoronavirus is expected to continue for aircrafts and rollingstock, but demand recovery is expected for construction
machinery and gearboxes. We forecast net sales of 105
billion yen and operating income of 1.0 billion yen.

HarvestsectorVS FY2020

Growth strategy to respond to market change

Robot-related business(i-WRISTTM)

Expand overseas business
Develop new applications andderivatives

Service /solution business (CMS)

Establish maintenance service for wind turbine
bearings and overseas expansion

Gain bearing demand byleveraging CMS technology

GearboxDevelop RV gearbox bearing
Expand sales of elastic bearings for wave motion gears

Expand sales in China(Follow changes in the industry)

Wind turbine

Focus on capturing demand in China
Drive sales and profit increase

Improve profitability by capturing
aftermarket demand
Expand production capacity

Machine tools

Expand sales of machine tools in China and India
Utilize products manufactured in a plant in Germany
to sell them on the European market

Expand CMS needs due tospread of IoT
Expand sales of bearings withsensors

Rolling stock

Promote drastic cost reduction measures
including local production in China

Capture demand for railway network
expansion and subway in China

Construction machinery

Utilize competitive materials and components
Adapt to electrification, shift to high function products

Agricultural machinery

Expand sales of high value-added products
Expand sales of CVJ for industrial machinery

Follow changes in social
structure and infrastructure
Make sure to capture demandfor electrification

Aerospace

Withdraw from or reduce unprofitable projects
Improve profitability by concentrating productionin NTN-SNR (France)

SASB Index

Results for the fiscal year ended March 31, 2021 and forecast for the fiscal year ending
March 31, 2022

2024-

Gain large customers
Promote acquisition of overseas certified
standard

150

500“Grow sector”: Focus on wind turbines and rollingstock in response to decarbonization trend to
expand business and throw management
resources in a concentrated manner“Harvest sector”: Secure stable earnings fromsales of products for construction machinery andagricultural machinery by adding more value andstrengthen cost-competitiveness.

Initiatives to strengthen by industry (medium- to long-term)(Billions of yen)

-1.0%

Expand sales of Wrist Joint Module “i-WRISTTM”
Expand service / solution business (CMS)
Expand renewable energy-related productsCompany Data/Investor Information

Net sales and operating
income margin

Select target areas
Improve selling price and reduce or withdraw
from unprofitable areas
Reduce costs by procuring materials and parts
from optimal locations (actively utilize materials
from China and India)

Financial ReportCompany that customers rely on most for its exceptional technological competence

Efforts to focus on in three years

Business Strategies

monitoring systems will increase.
Under this environment, we will escape competitionin the field of low-priced products and focus on highvalue-added products based on our proprietary
technologies such as the i-WRISTTM, magnetic rings, andsensor bearings in order to meet customer needs inline with changes in the social structure.

Our Vision

81 NTN Report 2021

105.1

0

Increased demand for social infrastructure such as
wind turbines and rolling stocks

In the fiscal year ended March 31, 2021, sales increased
for wind turbines in China, which swiftly overcame theeffects of new coronavirus impact and for agricultural
machinery in North America and Europe because of thesteady worldwide demand for grains even in the pandemic.
On the other hand, sales for construction machinery fell
sharply due to a decline in economic activity following the
spread of the new coronavirus infections. Sales for aircrafts
and rolling stock declined due to a decrease in passenger

123.4

98.6

50.0

Business environment

The industrial machinery market is comprised of a variety ofindustries, and bearings are used in a wide range ofmachinery. We supply bearings with a wide range of sizes,
from miniature sizes of several millimeters in outer diameterused in electronic machinery to ultra-large sizes of several
meters used in wind turbines and large mining equipment.
In addition, products used in aircraft and high-speed
railways require extremely high reliability because thestoppage of machinery affects human lives. We haveaccumulated product and manufacturing technologies formany years, and we utilize these technologies to respond toa variety of market needs. In recent years, the external
environment has been constantly changing due to factors
such as increasing awareness of the global environment
issues and changes in population dynamics, and changes
in the industrial structure can also be seen as a result of a

-1.9%
119.1

100.0

2.5%

2.4%

150.0

Etsu Harima

Against the backdrop of trends toward the realization ofa decarbonized society, the demand for social
infrastructures for wind turbines and rolling stock willcontinue to grow, and as the labor force population
declines, the demand for robot-related products thatrealize labor saving will expand, and the need forautomated operation of machinery and condition

1.6%

Operating income (right axis)

Value Creation Story

Executive Officer

Percentage of total sales

About Us

We are responding to the demands of our customers for long operating life,
improved loading capacity, and higher speed, all of which are required by all
types of industrial machinery, with the world's highest standard newgeneration bearings, the ULTAGE Series. In addition, through constant R&D
efforts, we will launch bearings with even lower torque, more compactness
and lighter weight to the marketplace, enabling environmental impact
reduction in a variety of industrial machinery fields. Looking ahead to thenext generation, we will promote modularizations and intelligentization by
deepening bearing technologies and integrating sensors and precisionequipment technologies. In addition to developing high value-added products,
we will develop new products and services by utilizing the abnormality
detection technology, condition monitoring system (CMS), and IoT. Specifically,
we will promote sales expansion of the Wind DoctorTM condition monitoring
system for wind turbines and the i-WRISTTM, a Wrist Joint Module that
contributes to automation and labor saving at manufacturing sites. By
providing these products and services, we will contribute to the developmentof industry and the creation of a sustainable society.

Earn profits in MRO market
Expand sales for space industry
NTN Report 2021

82

Business Strategies

Automotive Market
Trend in business performance
Sales (left axis)
4.2%

66%

480.2

8,810 9,090 9,344 9,563 9,757

9,857 9,932

2020 2021 2022 2023 2024 2025 2026 2027 2028 (Fiscal year

ended/ending
March 31)

Up to FY2026: IHS Markit Since FY2027: NTN Forecast

Acceleration of EV, HEV, and electrification

400.0

396.5 billion yen

40.0

21.8

20.0

200.0

-3.4%
369.5

20.0

8.7

2.0

0

0

-3.7
2017

2018

2019

2020

-12.4
2021

2022
(Forecast)Accelerate the shift to EVs and electrification due to the fuelefficiency and CO2 regulations and government-led targets forelectrification in various countries
Reduce CO2 through a highly efficient product lineup, contributeto Well-to-Wheel, expand sales of electric module productIncreasing need for carbon-free products
Supply through a short supply chain utilizing global bases
and carbon-free responses at its own plants
Increased demand for compact, lightweight, high-speed,
low-torque, less noise, and low vibration
Enhance high performance products and technologicalcapabilities(Fiscal year ended/ending March 31)

Efforts to focus on in three years
1 Strengthen the profit structure

EV

HEV

ICE

4.7%

5,000
-4.4%
2,500

Driveshafts (CVJ)

Axle / hub bearings

2024(Fiscal year ended/
2028 ending March 31)

not grow due to reduced production from the shortage ofsupplying semiconductors. As a result, operating income
fell by 12.4 billion yen. For the year ending March 31,
2022, we expect net sales to be 454 billion yen andoperating income to be 2 billion yen.

New areas (Electrification)

Deepen production reforms (streamlining) under
way in Japan
Horizontal expansion of production reforms to
global manufacturing bases
Concentrated investment in high-performance
products and automation

2024Strategy for sustainable growth
Shift to large-sized SUV/PUP and EVs
Secure volume in growth markets
Advantage Small, lightweight, highefficiency, low vibration

Carefully select capital investments that are directly
linked to differentiation and competitivenessDevote energy into enhancing cost-competitivenesswith a focus on variable cost
Develop differentiated products complying withregulations for EVs, fuel efficiency and CO2

Develop differentiated high valueadded products
Realign portfolio based on
customers and vehicle segments

Strengthen sales activities especially for highperformance applications
Focus on enhancing production capacity and costcompetitiveness especially in Japan and China
Promote use of external partners on production ofstandard type products

Invest resources in highperformance bearings through theselection

Increase production of gearboxes for electric
hydraulic brakes
Promote cost reduction (Shorten assembly CT /Promote production in China / Use Chinese materials)
Develop new products for integrated electricalmodulesAdvantage Super low friction

Advantage Super high speed, ultra-

low friction

Expand sales of electric oil pumps
Commercialize eHUB/ sHUB
Commercialize electric brakes

Estimated
effects of EV/
electrification

No effects,
stablegrowthNo effects,
stablegrowthSASB Index

2021

2021-2023

Promote earning improvement NOT relying on the merit of scale

Bearings0

Expand sales of electrification products
Order winning activities aimed at portfolio
optimization and concentrated investment infocus segments

Company Data/Investor Information

Net sales and operating income margin

Results for the fiscal year ended March 31, 2021 and forecast for the fiscal year ending
March 31, 2022
Net sales was 369.5 billion yen due to the impact of theoutbreak of the new coronavirus infections and the sharp
decline in demand following the shutdown of automotive
manufacturing in various regions. Demand began torecover in the second half of the fiscal year, but sales did

2020

comfort. By capturing these dynamic changes in thebusiness environment as opportunities, we will provide
value that exceeds customer expectations through productdevelopment and advanced technical services that areahead of market needs. By doing so, we aim to become
the leading manufacturer in the drivetrain component
segment essential to the automotive market.
(Billions of yen)

Develop high performance and high valueadded products responding to theenvironment, EVs, and electrification

Initiatives to strengthen by product (medium- to long-term)

Basic products

The rise of electrified vehicles throughout the world’s
automotive markets calls for functional automotive
components with different characteristics or more rigorous
performance requirements than are required for conventional
internal combustion engine vehicles. We will accommodate
these needs by offering differentiated technical expertiseand lineups of advanced products providing features such as
size/weight reduction, higher speed rotation, lower torques
and less noise/vibrations in order to secure a competitive
advantage over our competitors.
Another major wave, Ride Sharing and MaaS, is basedon the absolute reliability of the driving system responsiblefor driving, turning, and stopping vehicles. Carmakers are
shifting the focus and resource of their development workfrom the tangible (vehicle performance) to the intangible(services), creating an expanding range of areas in which
NTN can contribute to vehicle safety, reliability andgrowthFinancial Report"Top supplier in the Power/Drive Train system"
Company with No. 1 proposal ability that makes customers happy with an overwhelming speed × solution

2 Optimize portfolio to support sustainable

Promote variable cost reduction throughprocurement reformation
Reduce manufacturing fixed cost by reforming
Monozukuri and improving productivity
Reduce fixed cost by utilizing RPAs and improving
the organizational structure and systems
Thorough selling price management, reduction andwithdrawal from unprofitable areas (regions andproducts)

Our Vision

83 NTN Report 2021

437.0

Business Strategies

5,000
0

491.3

Sustainability Management

7,680 8,404

508.6

0.4% (Billions of yen)
60.0
454.0

-0.8%

“DRIVE NTN100” Phase 2 strategy

ICE(units)

10,000

1.8%

600.0

Hideaki Miyazawa

Trends in global vehicle production
HEV

Operating income margin

4.3%(Billions of yen)

Business environment

EV

Operating income (right axis)

Value Creation Story

Executive Officer

Percentage of total sales

About Us

In response to the rapidly expanding trend toward CASE in theautomotive market, we are responding to the needs of our customers asa specialist in the power/drive train system by developing highperformance products, such as lower-friction, lighter-weight and morecompact, durability-improved general bearings, hub bearings anddriveshafts, which are our core products.
In addition to these basic products, we are combining products with
peripheral components and integrating our core technologies. We willcontribute to the creation of safe, secure, and comfortable future cars
for our customers by continuously developing and proposing new
products that deliver precise and smooth control, such as mechanicalclutch units (MCUs) for electric oil pumps and next-generation steeringsystems, and hub bearings with steering assist functions.

Flat sales,
Toward highperformance
products

IncreasevolumeGrow
together

NTN Report 2021

84

Business Strategies

Monozukuri
About Us

Establishment of PT. Astra NTN Driveshaft Indonesia (ANDIN)

Concept of Monozukuri

Executive Officer

production in March 2021.
Thanks to NTN locally producing for the first time inIndonesia, we will speed up the response to customer
and shorten delivery lead times, thereby increasing its
presence and increasing its market share in theIndonesian automotive market.

Value Creation Story

The NTN Group vision is a realization of a “NAMERAKA Society.” In
Monozukuri (manufacturing) as well, we will smoothly connect andstreamline and information to shorten lead times and increase
throughput by reducing in-process inventory. In addition, through theintroduction of digital technology, we will realize a paradigm shift in
manufacturing. By efficiently collecting information such as quality, cost,and inventory within the plant and substituting manual work withunmanned operations, we will shift our operations to speed up the
improvement cycles and prevent the occurrence of problems through theanalysis of such information. Furthermore, we will strengthen our efforts
toward carbon neutrality to respond to the environmental issues that arebecoming increasingly serious.

We established Astra NTN Driveshaft Indonesia (ANDIN)
PT., a joint venture that manufactures constant velocity
joints with Inti Ganda Perdana (IGP) of Astra Group withthe aim of expanding the supply of constant velocity
joints, which are essential for front-wheel drive vehicles(FF vehicles), for which demand is growing in theIndonesian automotive market, and started mass

Production reform
Realize streamlined
production and increase
throughput

Promote overall optimization (rationalizationof overall SCM) and break away from partial
optimization (rationalization by process)Lead by specialized organization
Expand lean production method horizontallyDevelop human resources to promote reforms

Isao Ozako

Priority measures of “DRIVE NTN100” Phase 2
We will also use external partners to reduce
manufacturing costs. In terms of our capital investment,
we will, in principle, freeze investment in expansion of
capacity and shift to investment for risk and safetymeasures such as natural disasters, as well as
measures to maintain and upgrade facilities andimprove efficiency. Costs will be kept to 60 billion yen orless for the next 3 years. Based on this assumption, we
will promote production reorganization and production
reformation activities in order to control the growth in
fixed cost and increase assets turnover.

Reorganization of production
Reorganize domestic
production bases ofradial bearings

Outsource production of standard type products to Taiwanesebearing manufacturer (Break away from “self-sufficiency”)
For special products, implement reorganization of production
with a new plant established in Wakayama playing a central role

Basic policy in production reorganization“DRIVE NTN100” Phase 2 will accelerate thecreation of a foundation for a future manufacturingsystem by first implementing production restructuring ofradial bearings, one of NTN's basic products, and thenusing the created space to promote restructuring ofother products as well.

Monozukuri using AI and IoT
The "NTN NAMERAKA Factory" has the vision of a "NAMERAKA Factory" that delivers "satisfaction" tocustomers “rapidly.” We are also promoting DX (Digital Transformation) and smart factories that NTN aims for.

Coordination of information through installing equipment with intelligence
Using a new plant in Wakayama as a model, we willlink manufacturing information and automate the"visualization, analysis, and response" cycle byimproving the intelligence of plant introduced
through the use of AI and IoT. We will improvecustomer satisfaction and create income byreforming our product lineup with emphasis on

quality (improved traceability, inspection
automation, reduced defect rate), environment(saving energy, reduced CO2 emissions), facilities(failure prediction, preventive maintenance), andmanufacturing (shortened lead times, reduced
inventory, and visualized cost).

Company Data/Investor Information

With the aim of strengthening profits by maximizing
production efficiency, we will promote production
reorganization to reduce inter-site logistics costs andinventories by consolidating and reorganizing existingsites, to strengthen product supply capabilities byutilizing external partners, and to reduce investment inmaintenance and renewal of facilities.

Financial Report

Concentrate management
resources in products / processes
where NTN can leverage its
strengths

practical training on reform methods and plant tour
sessions. Awareness reform is also necessary for
production reform, and we have launched a website for
employees that provides information on activities andeducational materials, and is also engaged in PR activities.
We have already implemented production reforms at
many of our domestic manufacturing sites, and there
are some cases where we have achieved half in-process
inventory and half lead time. In the future, we will
standardize and horizontally expand the number ofsuccessful cases and promote activities with the goal ofachieving an inventory turnover ratio of 4.1 times ormore by the end of March 2024.
First, we will promote activities mainly on domestic
manufacturing bases, and realize the new foundation ofMonozukuri in "DRIVE NTN100" Phase 2 and then
expand the content abroad.

Business Strategies

As a decreasing birthrate and aging population
progresses particularly in developed countries, thedecline of the workforce population is expected toaccelerate in the future. While there are concerns about
a mid- and long-term shortage of labor all over theworld, we are currently facing the issue of lowering
domestic production efficiency in particular.
In “DRIVE NTN100” Phase 2, we need to urgently
improve the cash flow by optimizing production as awhole, and we will reduce logistics costs and inventory
assets by consolidating and organizing business sites.

Since 2019, we have been promoting production reform
activities aimed at reducing lead times and improving theinventory turnover ratio across the entire supply chain,from materials procurement to sales to customers.
Production reform is "management reform," and inorder to promote three-pronged activities among
management, promoters, and practitioners, we haveestablished a specialized organization to promote andsupport the creation of new Monozukuri systems, suchas planning and promotion of the content of production
reform activities and setting of a new KPI, with thecooperation of external consultants.
Monozukuri is the development of human resources,
and we work together with our human resource
development divisions, including level-specific training in
the Lean Production System, which serves as thefoundation for production reform activities, as well as

Sustainability Management

Creating a new Monozukuri system

Production reorganization of radial bearings

85 NTN Report 2021

production site for medium-sized radial bearings, in order toimprove productivity and strengthen price-competitivenessby introducing the latest production technologies.
With regard to standard products, we will strengthen
collaboration with NTN's affiliate, TUNG PEI INDUSTRIAL
CO., LTD. (Taiwan), and expand outsourcing of production(approximately 5 million products/month). In this way, we
will strengthen product supply capabilities by realizing
higher efficiency production, curtail investment inmaintenance and upgrading of equipment, reduce fixed
costs, and reduce costs by utilizing local components tostrengthen earnings. The expansion of outsourcing to
TUNG PEI INDUSTRIAL CO., LTD. will start in October 2021
with the gradual transfer of production from domestic
bases and be expected to be completed in October 2024.

Built-in Quality
To maintain and improve quality, “Built-in Quality” is essential to incorporate quality into the production process,from the development stage through the manufacturing process to the delivery of products to customers, bybuilding conditions and systems that ensure that quality is maintained at all times.

SASB Index

The environment surrounding NTN's radial bearings is
expected to see growth in the market for high-performance
products specialized in quietness and low vibration andhigh-speed rotation as a rapid shift is made to EVs andelectrification. On the other hand, standard products are
expected to face further price competition in themarketplace due to the rise of manufacturers in emerging
countries. In this business environment, NTN will
aggressively enter growing markets and strengthen its
price-competitiveness. In order to expand sales, we will
promote the reorganization of production of radial bearings.
First of all, we will concentrate our high-performance
products, including products responding to automotive
electrification, into a new plant in Wakayama which wascompleted in October 2019, and the Ball Bearing Plant in
Iwata Works, and NTN Mie Corp., which is the main

A new plant in Wakayama
A new plant in Wakayama will implement "Buildingin quality" by introducing IoT, thereby achieving evenhigher levels of quality control. Using IoT, we aim tocreate a system that ensures stable quality at all

times and enables us to promptly identify the rangeof impact and implement countermeasures in theevent of a problem.

NTN Report 2021

86

Business Strategies

Research & Development

NTN's basic approach to research anddevelopment

1

Executive Officer CTO (Chief Technology Officer)

Pursue competitive
advantages(overother suppliers)

4

Service/solution
Wind DoctorTM

TM

Pursuit of safety and comfort

Renewable energy-related

Regarding core products, main shaft bearings for wind turbines are becoming larger aswind turbines becomes larger. It is essential to develop manufacturing technologies, suchas higher efficient heat treatment technology. We have commercialized a product applying
roller with DLC coating to enhance its robustness.
As new products, we have developed and sell the “Green Power Station (GPS)”, which
is an independent power supply using highly efficient original wings with the highest
quietness and the “N3 N-CUBE” to supply mobile power in emergencies due to disasters.
By developing these green energy products, we will contribute to the realization of adecarbonized society.

DLC Coating
Spherical Roller
Bearing

Green Power Station
(GPS)

5

i-WRISTTM for visual inspection

i-WRISTTM
IWS-Series

Hydrogen-related

Hydrogen is drawing attention as a next-generation energy source, and many peripheraldevices are being studied and developed. Bearings and seals, which are used not only in
fuel-cell vehicles (FCVs) but also in infrastructural system such as compressed pumps,
are crucial for our company. Pressure in these devices is higher than that of conventional
nitrogen. Higher reliability and higher durability are required for mechanical elements
such as bearings and seals.
This is a field in which we can utilize our composite materials technologies in addition
to rolling bearings, which is the core competence of our core products, so we are also
developing module products, including those peripheral to bearings.

Financial Report

Hydrogen embrittlement
resistant radial bearing

Hydrogen embrittlement resistantthrust bearing

6

Company Data/Investor Information

Life science-related(Development of drug discovery support cell chip by micro-lamination technology utilizing iPS cells)

eHUB

sHUB

Ra-sHUB

We are applying the technology of repair equipment torepair minute defects in liquid crystal panels and color
filters to develop the application of microscopic coating
applicator that can laminate high-viscosity fluids. As a partof these activities, we are developing the drug discovery
support cell chip which features three-dimensional coatingof human iPS-derived cells on the plate.
There is a possibility that it will be a substitute foranimal experimentation using mice, etc., and the nextgeneration drug discovery is expected to become highly
efficient.

SASB Index

87 NTN Report 2021

Carbon neutrality(Environmental impact
reduction and decarbonization)

N3 N-CUBE

Next-generation mobility module

Responding to CASE, which is said to be a big change once every 100 years, and the realizationof a carbon neutral society are urgently needed, and further saving energy and higher functionality
are required.
Regarding the hub bearings of which we have the No. 1 market share, we have received a lot oforders for the “Low Friction Hub Bearing III” developed by using the strength of our core technology.
In addition, we market the “eHUB” and “sHUB” multi-functional HUB modules, which combine HUBs
with motors, actuators, controllers, and other components. “eHUB” is a product that contributes toa carbon neutral society by regenerating the energy generated when automotive slows down.
“sHUB” and “Ra-sHUB,” which applies technology of “sHUB” to the rear wheels enable steering
angle of the wheels to be controlled separately for each of the left and right sides. “sHUB” and“Ra-sHUB” provide high driving performance and riding comfort, which we expect to contribute toautomated driving in the future.
We will continue to utilize our core competencies, incorporate next-generation technologies, andfurther incorporate technologies on the market into our products in order to develop products
responding to CASE in the automotive market and a carbon neutral society.

Strategic direction for R&D

Business Strategies

3

Sensorintegrated
bearing unit

Robot-related module

We market the i-WRISTTM, a Wrist Joint Module for robots that applies the joint of driveshaft, one of
our core products. Due to the decline in the working population caused by the decreasing birthrate
and aging population, demand for manpower-saving measures is rising rapidly at manufacturing
sites. As one of the alternatives to the manual work that has been done so far, we proposed avisual inspection system with a camera attached to the “i-WRISTTM,” which has been adopted bymany production sites.
In the future, we will propose low-friction, lightweight, and compact modular products compatible
with next-generation robots in addition to the “i-WRISTTM” series, which will contribute to thepromotion of automation at production sites, as well as the reduction of cycle time and theimprovement of quality.

ESG
Profit creation
Pursue high productivity and quality
Improve efficiency in asset
management

Utilize core competence
and cooperation withexternal organizations

We shall contribute to international society throughcreating new technologies and developing new products(Utilization of IoT and sensing technology, and condition monitoring service for predictive
maintenance of bearings and equipment)

2

Management bases that
support our businesses

2

Developbusinesses
in new areas

Corporate philosophy

Masaki Egami

We developed the “Wind Doctor ” which monitors the conditions around bearings in the wind turbine, andthis system has been adopted by many power producers. In the field of machine tools, we have improved
the “Sensor Integrated Bearing Unit,” which is produced by adding a sensing function to the bearing. We
have made the unit wireless to create a product that has a built-in load detection sensor. The product has
been launched into the market and it has been favorably evaluated for its function to monitor the load on
the bearing and a change in the load in real time even when far from the actual operation site.
In the future, we will make further progress in AI analysis technology to enable prediction of theoperating life of bearings. By utilizing our development products, we will expand our condition monitoring
service business and transform from a “Manufacturing Company” into a “Company that Delivers Value toCustomers through Products and Services.”

SustainablegrowthInput of R&D resources

into 6 target areas

Sustainability Management

1

Strengthen coretechnologies andproducts“DRIVE NTN100” Phase 2

Value Creation Story

We are creating high-performance products for the realization of a carbon
neutrality by strengthening our core technologies and developing our coretechnologies that we have cultivated into new area. NTN is actively
promoting the use of external collaboration such as introducing nextgeneration technologies (like AI and IoT) acquired at NTN Next Generation
Research Alliance Laboratory in Osaka University. In the new Medium-termManagement Plan, we have newly identified 6 areas that go well with SDGs
and growth strategies of the Japanese government and in which we can takeadvantage of our core technologies. We will accelerate our contribution to
the international community through our developed products and services.

About Us

Our vision toward a new 100 years
10 year targets

Microscopic coating
applicator

Development of
three-dimensional
cell chipDevelopment of
test kit

NTN Report 2021

88

Financial Report

Consolidated Financial Indicators (Past 11 Years) (Fiscal years ended March 31)
About Us

Thousands of U.S. dollars*1(Excluding per-share values)

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2021

Financial Data*2(Millions of yen)

530,056

543,468

539,595

638,971

701,900

716,997

683,636

744,699733,846

651,957

562,847

5,100,100

Operating Income(Millions of yen)

24,56020,724

7,278

33,00443,85147,77035,92939,93527,222

7,517(3,139)(28,443)

5.2

6.2

6.7

5.3

5.4

3.7

1.2

(0.6)

(0.6)

4.6

3.8

1.3

22,855

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

26,943

14,89026,906

2,939(33,950)(1,257)(11,391)

Net Income (Loss) Attributable to Shareholders (parent company) (Millions of yen)

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

23,353

15,037

2,831

20,374(6,958)(43,993)(11,642)(105,491)

Capital Expenditures(Millions of yen)

29,70054,44048,97933,162

31,26636,30035,39837,58945,172

57,67523,817

215,812

Depreciation and Amortization(Millions of yen)

35,93634,17534,841

39,31540,392

38,27836,62937,50638,92637,30735,479321,484

R&D expenditures(Millions of yen)

15,697

17,157

16,174

17,821

18,08818,481

19,19621,007

21,661

19,962

17,486

158,445

Total Assets*3(Millions of yen)

632,001

693,258

768,462

848,037

856,277

794,651

798,891

839,427

840,751

757,822836,564

7,580,319

Net Assets(Millions of yen)

210,353

212,126

211,743

213,369

262,559

248,505

245,050

269,760

246,405

168,378

183,751

1,665,014

Inventories(Millions of yen)

136,985

155,107163,287

166,484

184,128

178,220

171,482

179,738

194,505

182,923

176,847

1,602,456

Interest-bearing Debt

(Millions of yen)

223,284

271,978

360,802381,767

359,105

325,174

320,170

320,832

350,345

362,417422,8033,831,125

Income (loss) before Income Taxes(Times)

3.9

3.5

3.3

3.8

3.8

4.0

4.0

4.1

3.8

3.6

3.2

Net D/E Ratio(Times)

0.92

1.11

1.37

1.27

1.11

1.11

1.05

0.93

1.16

1.87

1.62

Net Income (loss)/Average Total Assets (ROA)

(%)

2.3

0.9

(1.9)

(1.8)

2.7

1.8

0.4

2.5

(0.8)

(5.5)

(1.5)

Net Income (loss)/ Average Shareholders’ Equity (ROE)

(%)

7.2

3.0

(7.2)

(7.3)

10.5

6.3

1.2

8.4

(2.9)

(22.8)(7.1)

NTN-ROI*4

(%)

4.2

3.4

1.1

4.6

6.3

6.5

5.1

5.7

4.0

1.0

(0.5)

Equity to Capital Ratio

(%)

31.6

28.4

26.0

23.5

28.6

29.2

28.7

30.2

27.4

20.6

20.4

Net Assets(Yen)

376.05370.19375.84374.68461.21436.97431.66477.17433.32294.00321.04

2.91

Net Income (Loss)

(Yen)

27.08

11.27

(26.69)(27.54)

43.91

28.28

5.33

38.36

(13.10)(82.83)(21.92)(0.2)

Cash Dividends

(Yen)

10.00

10.00

0

2.00

6.00

10.00

10.00

15.00

15.00

5.00

0.00

0.00

Business Strategies

Inventory Turnover Ratio

Sustainability Management(%)(Millions of yen)

Operating Margin

Value Creation StoryNet Sales

PER-SHARE DATA

Financial Report

Non-Financial Data

20,78921,39822,15623,36024,10924,66525,49324,98824,19923,292

61

63

63

64

66

66

66

66

65

64

62

Percentage of female employees (non-consolidated)
Average years of continuous employment

(%)

9

9

9

9

9

10

10

10

10

10

10

(Years)

19.0

19.0

18.5

17.7

17.6

17.5

17.5

18.6

19.0

19.3

19.5

12

13

12

11

11

14

14

14

14

11

11

Number of Directors

1

2

2

2

2

2

2

2

2

5

5

(10,000 tons)

53.1

53.9

56.7

59.3

61.7

60.5

62.0

65.3

67.4

60.6

55.6

Energy consumption*5

TJ/year

5,943

5,857

6,134

6,331

6,463

6,336

6,493

6,849

6,978

6,326

5,783

Water consumption*6(10,000 m3)

225.2

219.7

210.9

201.8

197.3

319.7

323.0

326.4

347.1

281.1

243.0

Generated waste(10,000 tons)

13.2

15.0

14.1

15.0

15.4

15.9

16.3

17.7

17.7

15.5

13.1

USD Average

85.74

79.08

82.91

100.17109.76120.15108.39110.85110.88108.73106.01

EUR Average

113.13109.02106.78134.21138.69132.60118.80129.64128.41120.84123.66

USD at fiscal year end

83.15

82.19

94.05

102.92120.17112.68111.85106.49110.64107.85110.36

EUR at fiscal year end

124.92117.57109.80120.73141.65130.32

127.70119.48131.00124.21129.32

Number of Independent Outside Directors
CO2 emissions

Company Data/Investor Information

19,172(%)

Number of employees (consolidated)
Percentage of employees overseas

Exchange Rate Data

89 NTN Report 2021

SASB Index*1 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 ¥110.36 = U.S. $1.00, theexchange rate prevailing on March 31, 2021.
*2 “Loyalty,” which was previously included in “non-operating income,” has been changed to be included in “net sales” from the fiscal year ended March 31, 2021.
The period for retroactive adjustment is after the fiscal year ended March 31, 2017, which is subjected to audit by an audit firm.
*3 The figures for the fiscal year ended March 31, 2018 have been retroactively revised by “Partial Revision of the Accounting Standard for Tax Effect Accounting.” Before thefiscal year ended March 31, 2018, no retroactive application was made.

*4 NTN-ROI =Net operating income after tax/(tangible fixed assets + inventories)*5 The energy of electric power is 3.6 MJ/kWh in physical quantity, and the energy of fuel is calculated using the emission factor described in “Emission intensity databasefor calculation of greenhouse gas emissions of organizations through the supply chain (Ver.3.1)” (Ministry of the Environment).
*6 Regarding water consumption (millions of m3), the data includes Japan only until the fiscal year ended March 31, 2015, and global data since the fiscal year ended
March 31 2016.
NTN Report 2021

90

Financial ReportManagement Performance/Financial Analysis
About Us

Net sales and income
Sales performance

IncomeAt the NTN Group (NTN Corporation and its consolidated
subsidiaries), we make capital investments primarily for
improvement of production capacity, rationalization bylabor-saving, maintenance and upgrading of existing
facilities, improvement of safety environment, and R&D of
new products.
In Japan, we invested 11,099 million yen in theconstruction of a new plant in Wakayama and theinstallation of bearing manufacturing facilities. In theAmericas, capital expenditures totaled 6,345 million yen due
to the expansion of constant velocity joints manufacturing
facilities at NTN DRIVESHAFT, INC. and the expansion of
constant velocity joint manufacturing facilities at NTN
DRIVESHAFT ANDERSON, INC. In Europe, we invested 3,481
million yen in additional bearing manufacturing facilities in
NTN-SNR ROULEMENTS . In Asia and other countries, weinvested in 2,891 million yen by expanding our bearing
manufacturing facilities at NTN MANUFACTURING (THAILAND)
CO. LTD. After adding adjustments of minus 0 million yen,including inter-segment equipment transfers, the amount of
capital expenditures in the consolidated fiscal year underreview was 23,817 million yen.
The required funds are self-financed and borrowed.

Financial position and cash flow

NTN Report 2021

SASB Index

Current assets increased by 79,956 million yen (up 19.7%)
from the end of the previous fiscal year and came to485,756 million yen. This was mainly due to an increase of
77,400 million yen in cash and deposits and an increase of
13,233 million yen in notes and accounts receivable. Fixed
assets decreased by 1,214 million yen (down 0.3%) andcame to 350,808 million yen compared to the end of theprevious fiscal year. This was mainly due to a decrease of
8,287 million yen in construction in progress and anincrease of 3,811 million yen in machinery, equipment andvehicles. As a result, total assets increased by 78,742
million yen (up 10.4%) from the end of the previous fiscal
year, amounting to 836,564 million yen.
Current liabilities increased by 5,382 million yen (up1.9%) from the end of the previous fiscal year and came toCompany Data/Investor Information

Despite a decrease in personnel expenses, a decline invariable costs , and an increase in income due to the impactof selling prices, certain factors, such as the scale effectand the impact of exchange rates, caused a decline in profit.
Consequently, operating loss for the fiscal year under review
was 3,139 million yen (compared with operating income of
7,517 million the previous fiscal year). Ordinary profit margin
was minus 0.6% (an operating loss, compared with anoperating profit margin of 1.2% in the previous fiscal year).
As for other revenues and expenses, 2,604 million yen of
net expense was recorded. This is roughly broken down to
7,645 million yen of revenues including 2,733 million yen of
foreign exchange gain, net, 569 million yen of dividend
income, 853 million yen of interest income, and 344 million
yen of equity in earnings of affiliates ; and 10,248 million yen
of expenses including 3,506 million yen of interest expenseand 2,919 million yen of loss on valuation of derivatives.
As a result, the Company recorded an ordinary loss of
5,742 million, (compared with an ordinary loss of 1,698
million in the previous fiscal year). Ordinary income margin
was minus 1.0% (an ordinary loss, compared with minus
0.3% in the previous fiscal year).
In addition to these amounts, the Company recorded
5,769 million yen in subsidy income and 5,700 million yen
of gain on sales of investment securities as extraordinary
income, and extraordinary loss including 3,344 million yen
of loss resulting from low operating capacity , 2,462 million
yen of loss on impairment of fixed assets , and 1,176
million yen of loss on surcharge payments under the
Antimonopoly Act . As a result, loss attributable to owners ofparent was 11,642 million yen, down 32,351 million yen
compared to the previous fiscal year. Also, net loss per
share amounted to a loss of 21.92 yen.
Regarding annual dividends, we regret to announce that,in view of business performance for the fiscal year underreview and the current state of our operations, we will not bepaying a dividend for the fiscal year ended March 31, 2021.

Capital expenditures

Financial Report

91 NTN Report 2021

In the fiscal year under review, cost of sales was 477,667
million yen, and its ratio to net sales was 84.9%, up 0.6
percentage points from the previous fiscal year.
The amount of selling, general and administrative
expenses was 88,319 million yen, and its ratio to net sales
was 15.7%, up 1.1 percentage points from the previous
fiscal year.

Groupwide R&D expenditures for the fiscal year under review
amounted to 17,486 million yen, (down 2,476 million yen
year on year) and the ratio of R&D expenditures to net sales
was 3.1%.
Since 2018, when we celebrated our 100th anniversary,
we have worked to implement our “DRIVE NTN100” mediumterm management plan with its basic policy of driving
forward a transformation of our business structure for the
new 100 years. We will contribute to solving various social
issues by researching and accumulating cutting-edge
technologies in our core businesses, developing products,
and creating new products and services in new businessareas. At the same time, we will build a technologicalfoundation and a foundation for business transformation for
the next 100 years.

Business Strategies

Net sales by region
Regarding sales in the Japanese market, sales decreased inall business divisions, due to the impact of the coronavirus
pandemic. Sales for aftermarket applications decreased in
the industrial machinery aftermarket, sales for industrial
machinery applications decreased in construction machineryand machine tools, and sales for automotive applications
decreased due to sluggish customer demand and otherfactors. As a result, net sales declined sharply to 162,814
million yen (down 17.8% year on year).
Regarding sales in the Americas, sales decreased
significantly due to the impact of the coronavirus pandemic,
although some business divisions saw a recovery. Sales foraftermarket applications increased for the automotive
aftermarket, but decreased for the industrial machinery
aftermarket. Sales for industrial machinery applications
decreased for construction machinery and wind turbines,
and also decreased for automotive applications due tosluggish customer demand and other factors. As a result,net sales declined sharply to 144,432 million yen (down
17.1% year on year).
Regarding sales in Europe, sales decreased in all
business divisions, due to the coronavirus pandemic. Sales
for aftermarket applications decreased both for theindustrial machinery aftermarket and automotive
aftermarket. Also, sales for industrial machinery applications
decreased for airplanes and wind turbines, while sales for

Cost of sales, selling, general and administrative
expenses

R&D expenditures

292,346 million. This was mainly due to an increase of
6,792 million yen in notes and accounts payable, a decreaseof 5,870 million yen in electronically recorded monetaryclaims, and an increase of 4,560 million yen of short-termloans. Long-term liabilities increased by 57,987 million yen(up 19.2%) from the end of the previous fiscal year andended to 360,467 million yen. This was mainly due to anincrease of 50,000 million yen in bonds. Consequently, total
liabilities increased by 63,369 million yen (up 10.8%) fromthe end of the previous fiscal year and amounted to652,813 million yen.
Total net assets increased by 15,373 million yen (up9.1%) from the end of the previous fiscal year to 183,751
million yen. This was mainly due to an increase of 13,135
million yen in translation adjustments, a decrease of 9,353
million yen in retained earnings, an increase of 7,031 million
yen in accrued retirement benefits adjustments, and anincrease of 3,553 million yen in net unrealized holding gainon other securities.
The equity ratio was 20.4% (down 0.2 percentage points
from the end of the previous fiscal year), and net assets per
share based on the total number of issued and outstanding
shares at the term-end was 321.04 yen (up 27.04 yen fromthe end of the previous fiscal year). Interest-bearing debt
increased by 60,386 million yen (up 16.7%) from the end of
the previous fiscal year and came to 422,803 million yen.
Accounting for an increase of 4,275 million yen due to theeffects of exchange rates, the actual increase in interestbearing debt was 56,111 million yen. The ratio of interestbearing debt to total assets was 50.5% (up 2.7 percentage
points from the end of the previous fiscal year).
Net working capital was 193,410 million yen, up 74,574
million yen from the end of the previous fiscal year. The
current ratio was 166.2% (up 24.8 percentage points fromthe end of the previous fiscal year).
Inventories turnover ratio was 3.18 (down 0.38 from theend of the previous fiscal year) and total assets turnoverratio was 0.67 (down 0.19 from the end of the previous
fiscal year).
Net cash from operating activities was 36,473 million
yen (down 7,277 million yen, or 16.6% from the end of theprevious fiscal year). This was mainly due to proceeds of
35,479 million yen of depreciation and amortization.
Net cash used in investing activities was 17,939 million
yen (down 43,869 million, or 71.0% from the end of theprevious fiscal year). This was mainly due to outflow of
21,900 million yen in purchases of property, plant andequipment, outflow of 7,724 million yen in purchase of otherassets, and 9,465 million yen in proceeds from sales ofinvestment securities.
Net cash from financing activities was 54,672 million yen (up47,259 million yen, or 637.5% from the previous fiscal year).
This was mainly due to 58,833 million yen in proceeds fromlong-term loans, 50,000 million yen from bonds, and outflow of
38,774 million yen due to repayment of long-term loans and
14,729 million yen of net decrease in short-term loans.
As a result of including a translation difference of 2,878
million yen in these changes, cash and cash equivalents
was 147,249 million yen, an increase of 76,084 million yen(106.9%) from the end of the previous fiscal year.
Free cash flow, which is net cash from operating activities
less net cash from investing activities, was 18,534 million
yen. The cash flow return on sales ratio was 6.5%.

Sustainability Management

Net sales and income by business sector
In aftermarket applications, net sales fell sharply to 91,493
million yen (down 16.4% year on year) due to lower customer
demand and other factors. Despite efforts to reduce fixed costs,
operating income was 8,904 million yen (down 30.2% year onyear) due to a decline in sales volume and other factors.
In industrial machinery applications, net sales was
101,853 million yen (down 3.2% year on year) due to a
decline in sales for construction machinery and airplanes.
Despite a decrease in sales volume and other factors, 355
million yen of operating income was recorded, comparedwith operating loss of 1,863 million yen in the previous fiscal
year, reflecting efforts to reduce fixed costs.
In automotive applications, net sales fell sharply to369,501 million yen (down 15.5% year on year) due to lower
demand stemming from the shutdown of customer
operations and other factors. Operating loss of 12,398
million yen was recorded, compared with operating loss of
3,370 million in the previous fiscal year, mainly due to a
decline in sales volume, despite efforts to reduce fixed costs.

R&D and capital expenditures

Value Creation Story

Net sales for the fiscal year ended March 31, 2021 was
562,847 million yen, down 89,110 million yen, or 13.7%,
from the previous fiscal year. Accounting for a decrease of
3,464 million yen due to the effect of exchange rates, theactual decrease in net sales amounted to 85,646 million yen.
Net sales overseas was 400,033 million yen, down 53,823
million yen or 11.9% from the previous fiscal year. Net sales
overseas accounted for 71.1% of net sales (Americas 25.7%,
Europe 20.8%, and Asia and other regions 24.6%), up 1.5
percentage points from the previous fiscal year.

automotive applications decreased due to lower customer
demand. As a result, net sales decreased sharply to117,235 million yen (down 16.8% year on year).
Regarding sales in Asia and other countries, sales
decreased only slightly compared with the previous fiscal
year due to the contribution of the recovery from thecoronavirus pandemic in the Chinese economy. Sales foraftermarket applications decreased for both the industrial
machinery aftermarket and automotive aftermarket, but
sales for industrial machinery applications increased forwind turbines and construction machinery, while sales forautomotive applications also increased due to growth indemand. As a result, net sales was 138,366 million yen(down 0.2% year on year).

92

Financial Report

Risk Factors(1) Risks Related to External Business Environment

2021

2020

Thousands of
U.S. dollars(Note 1)2021

¥ 147,249¥ 71,165$1,334,261

7,720

6,403

69,953

Notes

3,871

4,298

35,076

Accounts

112,734

99,074

1,021,511

Electronically recorded monetaryclaims

4,996

4,788

45,270Allowance for doubtful accounts(1,011)(1,061)(9,161)

120,590

107,099

1,092,696

Inventories (Note 7)

176,847

182,923

1,602,456

Other current assets (Note 15)

33,35038,210302,193

485,756

405,800

4,401,559

32,44332,370293,974

225,560

214,6212,043,856

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

772,727

767,4097,001,876

Construction in progress

22,231

30,518201,441

1,052,961

1,044,918

9,541,147

Less accumulated depreciation(792,517)(782,274)(7,181,198)

Property, plant and equipment, net(Note 3 and 22)

260,444

262,6442,359,949

Notes
Accounts
Electronically recorded
obligations
Accrued income taxes(Notes 15 and 22)
Other current liabilities
Total current liabilities (Note 24)$ 610,257

56,183

41,121

509,088

721

836

6,533

54,747

47,840496,076

22,96520,923208,092

Investments in unconsolidated
subsidiaries and affiliates (Note 15)

20,872

20,862

189,126

Deferred income taxes (Note 22)

2,438

6,036

22,091
399,50290,36489,378818,811¥ 757,822$7,580,319

2,126

1,828

19,264

48,40649,223438,620

292,346

286,9642,649,021

307,357

249,510

2,785,040

39,921

46,727361,734

1,082

1,118

9,804

5,856

276

53,063

Other long-term liabilities

6,251

4,849

56,643

360,467

302,480

3,266,284

Shareholders’ equity (Note 12):
Common stock:
Authorized – 1,800,000,000
sharesIssued – 532,463,527 shares in
2021 and 2020

54,34754,347492,452

Capital surplus

67,97067,970615,893

Retained earnings

52,786

62,139478,307

(784)

(788)

(7,104)

174,319

183,668

1,579,548

Contingent liabilities (Note 13)

Net assets:

Treasury stock, at cost: 1,299,641
shares in 2021 and 1,314,946
shares in 2020 (Note 6)
Accumulated other comprehensive
income (loss):
Net unrealized holding gain on
securities (Note 9)

8,647

5,094

78,353

Translation adjustments(6,863)(19,998)(62,187)

Retirement benefit liability
adjustments (Note 11)
Total accumulated othercomprehensive loss, net(5,576)(12,607)(50,526)(3,792)(27,511)(34,360)

Non-controlling interests

13,224

12,221

119,826

183,751

168,378

1,665,014¥ 836,564¥ 757,822$7,580,319

Total net assets¥ 836,564

569,183
1,071,792

Total liabilities and net assets

NTN Report 2021

SASB Index

41,557

68,685
117,361

Deferred income taxes (Note 22)

Total shareholders’ equity

44,08962,815
118,283

Company Data/Investor Information

Investment securities(Notes 9 and 15)

Total assets (Note 24)¥ 77,431

Long-term liabilities:

Total long-term liabilities (Note 24)

Investments and other assets:

Total investments and other assets¥ 67,348

Financial Report

Buildings and structures (Note 2(g))

Other assets

Short-term bank loans(Notes 10 and 15)
Current portion of long-term debt
and lease obligations(Notes 10 and 15)

Long-term debt and leaseobligations(Notes 10 and 15)
Liability for retirement benefits(Note 11)
Provision for product defectcompensation

Property, plant and equipment, atcost (Note 8):
Land (Note 2(g))

2021

Trade payables (Note 15):

Trade receivables (Note 15):

Total current assets

2020

Current liabilities:

Current assets:

Short-term investments (Note 15)

2021
Liabilities and net assets

AssetsCash and cash equivalents (Note 15)

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

Business Strategies

93 NTN Report 2021

Millions of yen

Sustainability Management(2) Risks Related to Business Operations
1) Dependence on Specific Industries
The NTN Group’s bearing division derives approximately half of its sales
revenues from the automotive industry, which also accounts for more thanhalf of the sales of components that the constant velocity joint division
produces for automotive power transmission to the drive axle. Dependence
on the automotive industry is therefore high. Although the NTN Group works
to expand sales of bearings and precision equipment parts to the industrial
machinery sector and implements measures to achieve a balanced sales
structure, a rapid shift in demand in the automotive industry could
potentially affect the NTN Group’s financial position, business results, andcash flows.
2) Product Defects
To ensure product quality, the NTN Group works to satisfy customers’
requirements concerning product functions and specifications, and strives toprovide appropriate quality and product 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

Consolidated Balance Sheet

Value Creation Story

1) Economy
The NTN Group operates global production and sales networks, and supplies
customers in various industrial sectors. The financial position, businessresults, and cash flows of the NTN Group may be affected by a change ineconomic conditions in a specific country or region or a change in conditionsin industries to which our customers belong.
2) Foreign Exchange Fluctuations
Overseas sales of the NTN Group account for over 50% of consolidated
sales. This percentage is expected to increase further due to continued
acceleration in the global business development of the NTN Group.
Overseas subsidiaries’ foreign currency-denominated business results
and financial positions are converted to yen for the preparation of
consolidated financial statements. Moreover, many export transactions of
the Company with overseas customers are conducted in foreign currencies.
Although the NTN Group hedges risks through forward foreign exchange
contracts and expansion of local procurement, effects of exchange rate
fluctuations in foreign currency and yen exchange rates on the financial
positions, business results, and cash flows 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 andother emerging countries are gaining ground, bearings have been partiallyaffected by falling market prices. At the same time, against a backdrop of
global price competition, calls for price reductions are mounting in theautomotive industry, which accounts for over half of the NTN Group’s sales.
Although the NTN Group works continuously to reduce costs while developing
new products of high quality and high added value the financial position,business results, and cash flows may be affected by downward pressure on
market prices.
4) Rise in Raw Materials Prices
The NTN Group procures a wide range of raw materials from outside
sources. To deal with cost increases, especially of steel materials, whichhave a high weighting in material costs, we have taken measures such as
mark-ups on selling prices to reflect higher material costs. In addition, theGroup is targeting cost reductions through enhanced production yields and
VA/VE methods. Nevertheless, the financial positions, business results, andcash flows may be affected by stronger-than-expected increases in raw
material costs.
5) Risk of Disasters and Spread of Infectious Diseases
The business sites of the NTN Group and our business partners may beaffected by natural disasters such as earthquakes, flooding, fires, and the
spread of infectious diseases. In preparation for large-scale disasters, theNTN Group has introduced a safety confirmation system and conductedemergency drills. In order to combat the spread of infectious diseases, wehave taken various measures, such as stockpiling masks. We are prepared
to minimize damage by taking immediate action in the event of a crisis.
However, it is difficult to completely avoid risk, and as a result, the financial
position, business results and cash flows may be affected.
In response to new coronavirus infections, the NTN Group is striving toprevent infections by utilizing telework, staggered work, and prohibiting
business trips and visits in principle. We also promote telecommuting
overseas and take other measures in accordance with the circumstances ofeach country.

costs and potentially affect the financial position, business results, and cash
flows of the NTN Group. Although the NTN Group has taken out global
product liability insurance, complete coverage for loss (including
compensation for damages) is not possible.
3) Intellectual Property
The NTN Group generates substantial portion of its new technologies andexpertise through new product development, utilizing these as management
resources. However, there is a possibility that a third party might violate ourintellectual property rights, or that we might unexpectedly violate a third
party's intellectual property rights. We are striving to thoroughly implement
intellectual property rights management, such as protecting rights throughpatent applications. However, the infringement of intellectual property rights
as described above could have an impact on the Group’s financial position,business results, and cash flows.
4) Global Operations
The NTN Group develops its business operations worldwide with overseas
sales accounting for more than 50% of consolidated sales. Overseas
business development is associated with the following risks:a. Risks from an unforeseen change in tax systems of or between individual
countries
b. Risks from an unforeseen change in laws of individual countries
c. Difficulty in hiring and retaining appropriate personnel
d. Evolving technology levels and unstable labor relations in emerging
economiese. Political instability in emerging economies
The NTN Group collects information on these risks within the Group andstrives to prevent and avoid them. However, if these risks occur, they may
affect the Group’s financial position, business results and cash flows.
5) Information Security
The NTN Group is taking action to ensure that our employees are thoroughly
aware of appropriate methods of managing information through conducting
trainings for our employees as well as establishing internal regulations.
However, in the event of information leakage the destruction or, alteration ofimportant data, or system shutdown of important data are occurred, etc. dueto a cyber attack, unauthorized access, and computer virus intrusion, they
may lead to a deterioration in the NTN Group's credibility loss, anddisruptions to production and sales activities, thereby affecting the Group's
financial position, business results, and cash flows.
6) Statutory Regulations
The NTN Group is subject to the various laws and regulations (tax laws,
environmental laws, occupational safety and health laws, economic statues
such as antimonopoly laws, anti-dumping laws and bribery-related laws, tradeand exchange laws, and stock exchange listing regulations of the countries
and regions where it does business.
The NTN Group strives to abide by these laws and regulations and conduct
fair business activities. However, if the NTN Group is ever subject to litigation
or involved in legal proceedings because of a violation of a law or regulation,and if the decision of such litigation or legal proceedings goes against theGroup, this may have an effect on the business performance or the financial
position of the Group. Furthermore, if these laws or regulations change, or if
new unforeseen laws or regulations are enacted, these also may have aneffect on the financial position, business performance, and cash flows of theGroup. NTN Group is currently subject to the following actions.
a. There is an ongoing investigation by the competition authority in India in
relation to overseas sale of bearings.
b. A lawsuit has been filed against the Company and its two consolidated
subsidiaries in Europe before the France Tribunal de Commerce de Lyon
by Renault S.A. and its group companies, which are 15 in total (hereafter,“Renault”), seeking compensation of 66.7 million euros (provisionalamount) for damages. In December 2020, Renault changed the claiming
amount for damages to 32.5 million euros (provisional amount). In
addition, a lawsuit has been filed against the Company and its two
consolidated subsidiaries in Europe before the United Kingdom
Commercial Court by Fiat Chrysler Automobiles N.V. and its groupcompanies, which are seven in total (hereafter, “FCA”), seeking
compensation for damages. This lawsuit was transferred to the United
Kingdom Competition Appeal Tribunal on July 14, 2020.
These lawsuits were filed by Renault and FCA alleging that they
suffered damages in connection with the infringement of the European
competition laws, which was subject of the decision adopted by theEuropean Commission dated March 19, 2014.
c. The NTN Group may be subject to claims for compensation for damages inconnection with the violation of competition laws and continue to addressthese claims. However, it is currently difficult to make reasonableestimates of the future possible effects on the results of operations andfinancial position of the NTN Group.

Consolidated Financial Statements (March 31, 2021)
About Us

Business results and the financial position of the NTN Group are subject tothe following risks.

Financial Report94Financial Report Consolidated Financial Statements (March 31, 2021)

Consolidated Statement of Changes in Net Assets
Thousands of U.S. dollars(Note 1)Millions of yen
2020

2021
Net sales (Note 24)477,667

549,398

4,328,262

85,180102,559

771,838

88,31995,042

800,281(3,139)7,517(28,443)

Interest and dividend income

1,422

2,072

12,885Interest expense(3,506)(3,952)(31,769)

Cost of sales (Note 17)
Gross profit

Selling, general and administrative expenses (Note 17)
Operating income (Note 24)

Other income (expenses):Foreign exchange gain (loss), net
Gain on sales of property, plant and equipment344(1,210)

3,117

2,733

(3,826)

24,764627—(2,919)—(26,450)

Subsidy income (Note 19)

5,769

—

52,274Gain on sales of investment securities (Note 9)

5,700

1,353

51,649—(2,389)—Loss resulting from low operating capacity (Note 20)(3,344)(2,097)(30,301)

Loss on impairment of fixed assets (Notes 8 and 24)(2,462)(29,001)(22,309)

Loss on surcharge payments under the Anti-Monopoly Act (Note 18)(1,176)(745)(10,656)

Loss on valuation of investment securities

Other, net

Loss before income taxes(679)(2,299)(6,152)

1,882(41,467)

17,052(1,257)(33,950)(11,391)

Income taxes (Note 22):
3,221

3,220

29,186

Deferred

6,113

6,925

55,391

9,334

10,14584,577Loss(10,591)(44,095)(95,968)

Loss attributable to: Non-controlling interests(1,051)102¥ (11,642)¥ (43,993)

Retainedearnings

532,463,527¥54,347¥67,970¥112,778¥(789)¥12,020¥(7,271)¥(8,900)¥16,250¥246,405

—

—

—

(1)

—

—

—

—

—

(1)

532,463,527

54,347

67,970112,777(789)

12,020(7,271)(8,900)

16,250246,404

Cash dividends paid

—

—

—

(6,645)

—

—

—

—

—

(6,645)

Loss attributable to ownersof parent———(43,993)

—

—

—

—

—

(43,993)

Purchases of treasury stock

—

—

—

—

(1)

—

—

—

—

(1)

Sales of treasury stock

—

—

—

—

2

—

—

—

—

2

Other changes

—

—

—

—

—

(6,926)(12,727)(3,707)(4,029)(27,389)

532,463,527

54,347

67,97062,139

(788)

5,094

(19,998)(12,607)

12,221

168,378

Cash dividends paid

—

—

—

—

—

—

—

—

—

—

Loss attributable to ownersof parent———(11,642)

—

—

—

—

—

(11,642)

Effect of change of scope ofequity method

—

—

—

2,289

—

—

—

—

—

2,289

Purchases of treasury stock

—

—

—

—

(1)

—

—

—

—

(1)

Sales of treasury stock

—

—

—

—

5

—

—

—

—

5

Other changes

—

—

—

—

—

3,553

13,135

7,031

1,003

24,722532,463,527¥54,347¥67,970¥52,786¥(784)¥8,647¥(6,863)¥(5,576)¥13,224¥183,751

Balance at April 1, 2019
Cumulative effect of changein accounting principle
Restated balance at April 1,
2019

Balance at April 1, 2020

Balance at March 31, 2021

(9,523)$(105,491)

Thousands of U.S. dollars (Note 1)

See accompanying notes to the consolidated financial statements.
Commonstock

Consolidated Statement of Comprehensive Income

Balance at April 1, 2020

2020

2021

2021

CapitalsurplusTreasurystock,
at costRetainedearnings

Net unrealized
holding gain
on securities

Translation
adjustments

Retirement
Non-controlling
benefit liability
interests
adjustments

Total net
assets$492,452$615,893$563,057$(7,140)$46,158$(181,207)$(114,235)$110,738$1,525,716

Cash dividends paid

—

—

—

—

—

—

—

—

—

—

—

—

(105,491)¥ (10,591)¥ (44,095)$ (95,968)

Loss attributable to ownersof parent——(105,491)——

Net unrealized holding gain (loss) on securities

3,553(6,926)32,195

Effect of change of scope ofequity method——

20,741——

Translation adjustments

15,057(13,710)

136,435

Purchases of treasury stock

—

—

—

(9)

—

—

—

—

(9)

Retirement benefit liability adjustments

7,024(3,749)63,646

Share of other comprehensive loss of affiliates accounted for by the equity
method

(514)

(44)

(4,657)

Sales of treasury stock

—

—

—

45

—

—

—

—

45

25,120(24,429)

227,619

Other changes

—

—

—

—

32,195

119,020

63,7099,088

224,012¥ 14,529¥ (68,524)$ 131,651$492,452$615,893$478,307$(7,104)$78,353$(62,187)$(50,526)$119,826$1,665,014

Loss
Other comprehensive income (loss) (Note 21):Comprehensive income (loss)

Balance at March 31, 2021

20,741

SASB Index

Other comprehensive income (loss), net

Company Data/Investor Information

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

Financial Report

Current

Capital surplus

Business Strategies—

Loss on valuation of derivatives

Total net
assetsCommonstock

Sustainability Management

Equity in earnings (losses) of affiliates

Retirement
NonNet unrealized
Translation
Treasury stock,benefit liability controllingholding gain
adjustments
at costadjustmentsinterests
on securities

Number ofshares in issue

Value Creation Story$ 5,100,100¥ 562,847

Millions of yen

2021¥ 651,957

Owners of parent

About Us

Consolidated Statement of Operations

See accompanying notes to the consolidated financial statements.

Total comprehensive income (loss) attributable to:
Owners of parent¥ 12,268¥ (67,353)$ 111,163

Non-controlling interests¥ 2,261¥ (1,171)$ 20,488

See accompanying notes to the consolidated financial statements.

95 NTN Report 2021

NTN Report 2021

96

Financial Report Consolidated Financial Statements (March 31, 2021)

Thousands of U.S. dollars(Note 1)Millions of yen
2020

2021

2021

Cash flows from operating activities:
Loss before income taxes¥(1,257)¥(33,950)$(11,391)

Adjustments for:35,47937,3072,462

29,001

22,309Subsidy income(5,769)—(52,274)

Loss resulting from low operating capacity

3,344

2,097

30,301

Loss on surcharge payments under the Anti-Monopoly Act

1,176

745

10,656

Decrease in allowance for doubtful accounts

(148)

(22)

(1,341)

(7)

(119)

(63)

Decrease in provision for directors’ and audit & supervisory board members’
bonuses

321,484

(50)

22

(453)

(Decrease) increase in liability for retirement benefits

(188)

1,754

(1,704)(1,422)(2,072)(12,885)

Interest expense

3,506

3,952

31,769Translation adjustments and foreign exchange (gain) loss, net(2,943)

1,040(26,667)

Gain on valuation of derivatives, net

2,919

—

26,450Equity in (earnings) losses of affiliates

(344)

1,210

(3,117)

Interest and dividend income

Gain on sales of fixed assets
Gain on sales of investment securities
Loss on valuation of investment securities

—

(627)

—

(5,700)(1,353)(51,649)

2,389—(7,903)25,012(71,611)

Decrease in inventories

13,492

3,994

122,254

Decrease in trade payables(1,193)(13,681)(10,810)

Other

2,259

(6,156)

20,469Subtotal

37,71350,543

341,727

1,866

2,586

16,908Interest paid

(3,488)(3,955)(31,606)

Subsidy received

4,896

—

44,364

Payments for loss resulting from low operating capacity(2,250)(1,546)(20,388)(991)(1,233)(8,980)(1,273)(2,645)(11,534)¥ 36,473¥ 43,750$ 330,491¥¥$

Surcharge payments under the Anti-Monopoly Act
Income taxes paid

Cash flows from investing activities:
Increase in short-term investments, net

(618)

(142)

(5,600)(21,900)(59,009)(198,441)

Purchases of other assets(7,724)(10,075)(69,989)

Proceeds from sales of investment securities

9,465

2,411

85,765Purchase of investments in affiliated company

(31)

(497)

(281)

2,869

5,504

25,996(17,939)(61,808)(162,550)

Other
Net cash used in investing activities
Cash flows from financing activities:(Decrease) increase in short-term bank loans, net(14,729)

6,213

Proceeds from long-term debt

58,83329,795533,101

Repayment of long-term debt, including current portion(38,774)(19,145)(351,341)

Proceeds from issuance of bonds

50,000—453,063

Cash dividends paid

(133,463)(6,645)—(1,677)(1,370)(15,196)

Proceeds from sale and leaseback transactions

2,270

—

20,569Other(1,251)(1,435)(11,336)

Net cash provided by financing activities

54,672

7,413

495,397

Effect of exchange rate changes on cash and cash equivalents

2,878(1,596)(26,079)

Net increase (decrease) in cash and cash equivalents

76,084(12,241)

689,417

Cash and cash equivalents at beginning of the year

71,16583,474

644,844

—

(68)

—

¥ 147,249¥ 71,165$ 1,334,261

Decrease in cash and cash equivalents resulting from exclusion of subsidiaries
from consolidation
Cash and cash equivalents at end of the year
See accompanying notes to the consolidated financial statements.

97 NTN Report 2021

(c) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks
withdrawable on demand, and short-term investments which are readily
convertible to cash subject to an insignificant risk of any change in theirvalue and which were purchased with an original maturity of threemonths or less.
(d) Allowance for doubtful accounts
The allowance for doubtful accounts is computed based on the actual
historical percentage of bad debts and an estimate of uncollectible
amounts determined after an analysis of specific individual receivables.
(e) Short-term investments and investment securities
The accounting standard for financial instruments requires that
securities be classified into three categories: trading, held-to-maturity orother securities. Trading securities are carried at fair value and held-tomaturity 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

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 sheet at March
31, 2021 and 2020 were reduced by the following amounts:
Thousands of
U.S. dollars

Millions of yen

Land
Buildings and structures
Machinery, equipment and vehicles

2021

2020

¥

¥

773
367

2021

799
404

$

7,004
3,325

58

71

526

¥ 1,198¥ 1,274$ 10,855(h) 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 service of theeligible employees.
(i) Provision for product defect compensation
Provision for product defect compensation is provided at an estimatedamount in order to cover the anticipated compensation.
(j) Leases
For lease transactions involving the transfer of ownership, the leased
assets are depreciated by the same methods used for owned fixed
assets.
For lease transactions not involving the transfer of ownership, leased
assets are depreciated over the lease period using the straight-line
method with a nil residual value.

SASB Index—

Repayment of lease obligations(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 the respective historicalrates. 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 sheet and statement ofchanges in net assets.

The principal estimated useful lives are as follows:
Buildings and structures
10 to 50 years
Machinery, equipment and vehicles
5 to 12 years

Company Data/Investor Information

Purchases of property, plant and equipment(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 in consolidation on
the basis of a full fiscal year closing on March 31 for consolidation
purposes.

(g) Property, plant and equipment (other than leased assets)
Property, plant and equipment are stated at cost. The Company and its
domestic consolidated subsidiaries calculate depreciation by thestraight-line method over the estimated useful lives of the respective
assets. The foreign consolidated subsidiaries principally calculated
depreciation by the straight-line method over the estimated useful livesof the respective assets.

Financial Report

Interest and dividend income received

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

Business Strategies—(Increase) decrease in trade receivable

The accompanying consolidated financial statements of NTN Corporation(the “Company”) and consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as requiredby the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated financial
statements issued domestically in order to present them in a format
which is 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 profit 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 madeat ¥110.36 = U.S. $1.00, the exchange rate prevailing on March 31,
2021. This translation should not be construed as a representation thatyen can be converted into U.S. dollars at the above or any other rate.

taxes, included directly in net assets. Cost of securities sold isdetermined by the moving average method. Non-marketable securities
classified as other securities are carried at cost based on the moving
average method.

Sustainability Management(Decrease) increase in provision for product defect compensation

1. Basis of Preparation

Value Creation Story

Depreciation and amortization
Loss on impairment of fixed assets

Net cash provided by operating activities

About Us

Notes to Consolidated Financial Statements

Consolidated Statement of Cash Flows(k) 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 cost savings. Suchexpenditures are capitalized as assets and are amortized by thestraight-line method over their respective estimated useful lives,
generally a 5 to 10-years period.
NTN Report 2021

98

Financial Report Consolidated Financial Statements (March 31, 2021)

Impairment of Fixed Assets
Impairment loss recorded for the fiscal year ended March 31, 2021.
Millions of yen

Thousands of
U.S. dollars

2021$

22,309Property, plant and equipment

260,4442,359,949

Intangible assets

40,364

365,748(iii) Impact of the adoption of accounting standard and implementation
guidance
The Company currently evaluated that the effect of the adoption of theaccounting standard and the implementation guidance on its
consolidated financial statements is insignificant.

Change in presentation method due to change in classification of royalty“Royalty,” which was previously included in “Other” under “Other income”
has been included in “net sales” from the first quarter of the fiscal year
ended March 31, 2021. In addition, accounts receivable in “Other
current assets” under “Current assets” were reclassified as “Trade
receivables – accounts.” This change was made in order to appropriately
present the results of the Company’s operating activities, as theCompany positioned increasing income from technology licensing as oneof its main operating activities in the fiscal year ended March 31, 2021.
To reflect this change in presentation, information for the fiscal year
ended March 31, 2020 has been reclassified.
As a result, ¥137 million of accounts receivable, which was included
in “Other current assets” under “Current assets” in the fiscal year ended
March 31, 2020, was reclassified as “Trade receivables – accounts,” inthe amount of ¥99,074 million while “Other current assets” amounted
to ¥30,518 million. Also, ¥461 million of “royalty,” which was included in“Other” under “Other income” in the fiscal year ended March 31, 2020,
was reclassified to “Net sales,” and operating income increased by ¥461
million with “Net sales” totaling ¥651,957 million while “Operating
income” was ¥7,517 million. There was no impact on “Loss before
income taxes” for the fiscal year.
In addition, as a result of the change in accounts receivable, thecorresponding amount in “Other” under “Cash flows from operating
activities” in the fiscal year ended March 31, 2020, was included in“(Decrease) increase in trade receivables” due to the change in theclassification of “royalty.” As a result, ¥133 million of accounts
receivable, which was included in “Other” in consolidated statement ofcash flow of the fiscal year ended March 31, 2020 was reclassified as(ii) The Company’s shares remaining in the trust
The Company’s shares remaining in the trust are recorded as treasury
stock in the net asset section, based on their book value (excluding theamount of incidental expenses) recorded in the accounts of the trust.
The book value and number of shares of such treasury stock at March
31, 2021 totaled ¥145 million ($1,314 thousand) and 456,169 shares,
and at March 31, 2020 totaled ¥150 million and 472,666 shares,
respectively.
Impact of Spread of Novel Coronavirus on Accounting Estimates
With regard to the spread of the novel coronavirus, there is a high degreeof uncertainty regarding the future spread and the timing of its
containment. However, while there is a possibility that it will continue tobe a significant risk in the future, the Company and its consolidated
subsidiaries have made accounting estimates based on the assumptionthat the situation will improve from the fiscal year ending March 31,
2022.

7. Inventories
Inventories at March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Finished goods
Work in process
Raw materials and supplies

¥

2021

2020

91,849¥ 96,616 $

832,267

48,601

48,928440,386

37,379329,80336,397¥ 176,847

2021¥ 182,923 $ 1,602,456

SASB Index¥

99 NTN Report 2021

2,462

2021

Loss on impairment of fixed assets(ii) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal year ending
March 31, 2022.

5. Change in Presentation(i) Overview of transactions
The Scheme adopts a mechanism known as an officer remuneration BIP(Board Incentive Plan) trust (hereinafter referred to as the “BIP Trust”).
The BIP Trust is an incentive plan for officers based on the performance
share scheme and the restricted stock scheme in the U.S., and has asystem in which the Company’s shares acquired by the BIP Trust andfunds equivalent to the proceeds received when converting into cash or
disposing of such shares are distributed and paid according to theofficers’ positions and the degree of achievement of performance targets
disclosed in the mid-term management plan, and other factors.

Company Data/Investor Information

3. Significant Accounting Estimates and Judgments(iii) Impact of the adoption of accounting standard and implementation
guidance
The effect of the adoption of the accounting standard and theimplementation guidance on its consolidated financial statements is tobe decided.

Performance-linked stock compensation scheme
The Company introduced a performance-linked stock compensation
scheme (hereinafter referred to as the “Scheme”) for its executive
officers (excluding executive officers who do not reside in Japan; thesame applies hereinafter), which serves as an officer remuneration
system that is closely linked to corporate performance targets in the
mid-term management plan and which is highly transparent and objective
in nature.

Financial Report(p) Adoption of tax effect accounting for transition from consolidated
taxation system to group tax sharing system
The Company and certain domestic subsidiaries calculated the amountsof deferred tax assets and deferred tax liabilities based on the Japanese
Income Tax Act prior to amendment in accordance with the treatment
under Paragraph 3 “Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to
the Group Tax Sharing System” (Accounting Standards Board of Japan(hereinafter referred to as the “ASBJ”) Practical Issues Task Force No.39
March 31, 2020) instead of adopting the provision of Paragraph 44 of“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No.
28, February 16, 2018), regarding the transition to the group tax sharing
system established in the “Act for Partial Amendment of the Income Tax
Act, etc.” (Act No.8 of 2020), related to items for which the nonconsolidated taxation system has been reviewed in accordance with thetransition to the group tax sharing system.

Accounting Standard and Implementation Guidance for Revenue
Recognition(i) Overview
On March 31, 2020, ASBJ issued “Accounting Standard for Revenue
Recognition” (ASBJ Statement No.29), “Implementation Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance
No.19). On March 26 2021, ASBJ issued “Implementation Guidance on
Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30).
The International Accounting Standards Board (hereinafter referred to as
the “IASB”) and the Financial Accounting Standards Board (hereinafterreferred to as the “FASB”) in the United States co-developed
comprehensive accounting standards for revenue recognition and issued“Revenue from Contracts with Customers” (issued as IFRS 15 by the
IASB and Topic 606 by the FASB) in May 2014. The ASBJ developed
comprehensive accounting standards on revenue recognition and issued
them in conjunction with the implementation guidance based on the factthat IFRS 15 was applied from fiscal years starting on or after January 1,
2018 and Topic 606 was applied from fiscal years starting after
December 15, 2017.
As the basic policy in developing accounting standards for revenue
recognition, the ASBJ defined the accounting standard starting withincorporating the basic principle of IFRS 15 from a standpoint ofcomparability between financial statements, which is one benefit ofensuring consistency with IFRS 15. Furthermore, the ASBJ added
alternative accounting treatment without impairing comparability when
there are matters to be considered related to accounting practices, etc.
common in Japan.

6. Additional Information

Business Strategies(o) Consolidated taxation system
The Company and certain domestic consolidated subsidiaries adopted
the consolidated taxation system, which allows companies to file tax
returns based on the combined profits or losses of the parent company
and its wholly owned domestic subsidiaries.

4. Standards Issued but Not Yet Effective(ii) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal year ending
March 31, 2022.

“(Decrease) increase in trade receivables,” and “(Decrease) increase intrade receivables” was ¥25,011 million and “other” was ¥(6,155)
million.

Sustainability Management(n) 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 forthe period do not reflect such distributions.

Accounting Standard and Implementation Guidance for Fair Value
Measurement(i) Overview
On July 4, 2019 the ASBJ issued “Accounting Standard for Fair Value
Measurement” (ASBJ Statement No.30), “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No.9), “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10),“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No.31) and “Implementation Guidanceon Disclosures about Fair Value of Financial Instruments” (ASBJ
Guidance No.19). Based on the fact that the IASB and FASB haveestablished almost the same detailed guidance for fair value
measurement (issued as IFRS 13 “Fair Value Measurement” in IFRS and
Topic 820 “Fair Value Measurement” by the FASB), the ASBJ worked on
ensuring consistency between Japanese GAAP and IFRS regarding theguidance and disclosure on fair value of financial instruments and issued“Accounting Standard for Fair Value Measurement” etc.
As the basic policy in developing accounting standards for Fair Value
Measurement, the ASBJ incorporates the rules of IFRS 13 from astandpoint of improving the comparability between financial statementsof Japanese companies and overseas companies by using the unified
calculation method. Furthermore, the ASBJ defined the other accounting
treatment for the particular matters without impairing comparability
considering accounting practice, etc. common in Japan.

Value Creation Story(m) Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes in fair value
included in profit for the period in which they arise, except for derivatives
which meet the criteria for deferral hedge accounting under which
unrealized gain or loss, net of the applicable income taxes, is deferred
as a component of net assets. Receivables and payables hedged byforward foreign exchange contracts which meet certain conditions aretranslated at the corresponding foreign exchange contract rates. Interestrate swaps which meet certain conditions are accounted for as if theinterest rates applied to the interest-rate swaps had originally applied tothe underlying debt.
Interest-rate and cross currency swaps which meet certain conditions
are accounted for as if the interest rates and currencies applied to theinterest-rate and cross currency swaps had originally applied to theunderlying debt.

The Company and its subsidiaries (collectively, the “Group”) confirm
whether indication that an asset or each asset group may be impaired
based on information inside the company which are profit and loss
statement or business plan.
The Group also identifies indications of impairment based on
information from outside the Company, including the businessenvironment or fair value of assets.
The Group determines recognition of impairment loss, such aswhether there is concern about recovery of the book value due tochanges in the corporate environment or the economy. If it is determinedthat an impairment loss should be recognized, the book value is reduced
to the recoverable amount.
When the amount of the undiscounted future cash flow exceeds bookvalue of an asset or each asset group impairment loss recognition is
unnecessary, The main assumption used to calculate undiscounted
future cash flow is the expansion of sales volume in the business planand the expected proceeds from sales of property less costs ofdisposal. In addition, for measuring impairment loss at the subsidiary in
the U.S. in the fiscal year ended March 31, 2021, the main assumption
used in calculating the recoverable amount was expansion of the sales
volume included in business plan and subsequent future cash flows,market growth rate and discount rate.
If these assumptions are changed due to changes in the businessplan, market environment or management environment, there is apossibility that impairment losses may be recognized in the fiscal year
ending March 31, 2022.

About Us( l ) 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.

NTN Report 2021

100

Financial Report Consolidated Financial Statements (March 31, 2021)

Usage

2021

Classification¥

Buildings and structures

Japan

EuropeProduction equipment

Production equipment and other

Short-term bank loans principally represent short-term notes with average annual interest rates of 0.81% and 1.03% at March 31, 2021 and 2020,
respectively.
Long-term debt and lease obligations at March 31, 2021 and 2020 consisted of the following:

2020

2021

¥

$

4,360

—

—

16,355

—

Land

—

400

—

Construction in progress

—

249

—

Other

—

591

—

Buildings and structures

471

—

4,268

Machinery and equipment

1,787

5,518

16,192

Land

174

—

1,577

Construction in progress

30

—

272

Buildings and structures

—

273

—

Machinery and equipment

—

1,220

—

Other

—

35

—

¥ 2,462¥ 29,001$ 22,309

The recoverable value of the fixed assets presented in the above table has been measured at fair value for the consolidated subsidiaries in the U.S. and at
net realizable value or value in use for other consolidated subsidiaries. If a fixed asset is unlikely to be sold or diverted to other usage, such asset is valued
at nil. Fair value under U.S. GAAP is mainly measured using the income approach, and calculated as the sum of anticipated future cash flows discounted at a
certain rate. Value in use is measured as the sum of anticipated future cash flows by each business units mainly discounted at rate of 6%.

9. Securities

2020¥ 275,456¥ 254,986$ 2,495,976

0.405% unsecured bonds due 2025

10,00010,00090,6130.490% unsecured bonds due 2027

10,00010,00090,6130.430% unsecured bonds due 2028

10,00010,00090,613

2.5% unsecured bonds due 2051

50,000—453,063

Loans from banks and other financial institutions, due through 2029, at an average annual interest rate of 0.78%

Lease obligations due through 2053
Less current portion

8,084

5,645

73,250363,540

290,6313,294,128(56,183)(41,121)(509,088)¥ 307,357¥ 249,510$ 2,785,040* 2.5% rate is fixed interest rate from March 19, 2021 to March 18, 2026. After March 19, 2026, the interest rate will be variable interest rate.
The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2021 are summarized as follows:Year ending March 31,

Millions of yen

2020

2021
Acquisition
costs

Unrealized gain
(loss)

Carrying
value

Acquisition
costs

Unrealized gain
(loss)

Securities whose carrying value exceeds theiracquisition costs:
Equity securities¥ 21,340¥ 9,069¥ 12,271¥ 17,124¥ 8,986¥ 8,138¥ 56,182

2023

53,310Equity securities
Total

449

487

(38)

3,512

4,372

(860)

¥ 21,789¥ 9,556¥ 12,233¥ 20,636¥ 13,358¥ 7,278

483,055

2024

77,459701,8762025

53,891

488,3202026

40,716368,9382027 and thereafter

81,982742,860¥ 363,540$ 3,294,128

1. Outline of retirement benefits for employees
The Company and certain domestic consolidated subsidiaries have defined benefit pension plans (i.e., corporate pension fund plans and lump-sum payment
plans), covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts of which are determined by reference to theirbasic rates of pay, length of service, and the conditions under which termination occurs. They also have defined contribution pension plans and advancepayment 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.
2. Defined benefit pension plans(1) The changes in the retirement benefit obligation for the years ended March 31, 2021 and 2020 are as follows:

2021

2020

2021

¥ 101,349¥ 102,441$ 918,349

Service cost

3,724

3,553

33,744

Interest cost

1,660

1,705

15,042$ 193,367$ 82,176$ 111,191

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

4,069

4,413

(344)

$ 197,436$ 86,589$ 110,847

Retirement benefit obligation at the beginning of the year

Actuarial gain

1,218

166

11,036

Benefits paid

(6,436)(5,500)(58,318)

Other
Retirement benefit obligation at the end of the year

1,584

(1,016)

14,353¥ 103,099¥ 101,349$ 934,206

SASB Index

Unrealized gain
(loss)

Securities whose carrying value exceeds theiracquisition costs:
Equity securities

Thousands of
U.S. dollars

Millions of yen

2021
Acquisition
costs

509,079

11. Retirement Benefits

Thousands of U.S. dollars

Carrying
value$

Company Data/Investor Information

Securities whose carrying value does not exceed
their acquisition costs:

Thousands of
U.S. dollars

2022

Millions of yen

Carrying
value

2021

Financial Report(a) Information regarding marketable securities classified as other securities at March 31, 2021 and 2020 is summarized as follows:

2021

Business Strategies

Machinery and equipment

Thousands of
U.S. dollars

Millions of yen

Sustainability Management

Americas

Production equipment and other—10. Short-Term Bank Loans, Long-Term Debt and Lease Obligations

Thousands of
U.S. dollars

Millions of yen
Location(b) Sales and aggregate gain on investment securities are summarized as follows:
The Company sold certain available-for-sale securities with a fair value of ¥9,505 million ($86,127 thousand), and recognized gain of ¥5,700 million($51,649 thousand) for the fiscal year ended March 31, 2021.

Value Creation Story

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, and group fixed
assets on an individual basis when they do not expect any future use.
The Company and its consolidated subsidiaries wrote down the following assets to their respective net recoverable values because the Company and its
consolidated subsidiaries do not expect them to be recoverable. Consequently, the Company and its consolidated subsidiaries recorded related losses on
impairment of fixed assets of ¥2,462 million ($22,309 thousand) and ¥29,001 million in the accompanying consolidated statement of operations for theyears ended March 31, 2021 and 2020, respectively:

About Us

8. Impairment of Fixed Assets* Certain domestic consolidated subsidiaries calculate the liability for retirement benefits based on the simplified method.

101 NTN Report 2021

NTN Report 2021

102

Financial Report Consolidated Financial Statements (March 31, 2021)(6) The components of retirement benefit liability adjustments included in accumulated other comprehensive income (before tax effect) as of March 31,
2021 and 2020 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

2021

2020

2021

¥ 54,622¥ 60,551$ 494,944

1,315

1,434

11,916

8,834(5,153)80,047

Contributions by the employers

3,345

3,357

30,310Benefits paid

(5,629)(4,240)(51,006)

691(1,327)

6,261¥ 63,178¥ 54,622$ 572,472

Other

Thousands of
U.S. dollars

Millions of yen

2020

2021

¥ (3,838)¥ (12,500)$ (34,777)

—

(209)

—

¥ (3,838)¥ (12,709)$ (34,777)

2021
Unrecognized actuarial loss
Unrecognized past service cost
Total(7) The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2021 and 2020 are as follows:
2021

2020

40.0%

29.9%

(3) The balance of retirement benefit obligation and plan assets at fair value, liabilities and assets recognized in consolidated balance sheets as of March
31, 2021 and 2020 are as follows:

Bonds

33.1

41.2

General accounts at life insurance companies

13.6

15.1

Thousands of
U.S. dollars

Other

13.3

13.8

Total

100.0%

100.0%

2020

2021

Funded retirement benefit obligation¥ 96,288¥ 94,896$ 872,490

Plan assets at fair value(63,178)(54,622)(572,472)

33,11040,274300,018

Unfunded retirement benefit obligation

6,811

6,453

61,716

Net amount of liabilities and assets recognized in the consolidated balance sheet

39,921

46,727361,734

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

39,921

46,727361,734¥ 39,921¥ 46,727$ 361,734

The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present and anticipated 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:
2021

2020

Discount rate

Principally 1.2%

Principally 1.2%

Expected long-term rate of return on plan assets

Principally 1.5%

Principally 1.5%

Business Strategies

2021

Sustainability Management

Equities

Millions of yen

Value Creation Story

Actuarial gain or loss

Plan assets at fair value at the end of the year

About Us

(2) The changes in plan assets for the years ended March 31, 2021 and 2020 are as follows:

3. Defined contribution pension plans(4) The components of retirement benefit expenses for the years ended March 31, 2021 and 2020 are as follows:
Millions of yen

2021

Service cost

¥ 3,724¥ 3,553$ 33,744Interest cost

1,659

1,705

15,033

Expected return on plan assets(1,315)(1,434)(11,916)

1,046

1,219

9,478

134

67

1,214

¥ 5,248¥ 5,110$ 47,553

2021
Contributions to defined contribution pension plans¥ 1,3042020¥ 1,6292021$ 11,816

Financial Report

2020

2021

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Amortization:
Actuarial loss
Past service cost
Retirement benefit expenses

Company Data/Investor Information(5) The components of retirement benefit liability adjustments included in other comprehensive income (before tax effect) for the years ended March 31,
2021 and 2020 are as follows:
Thousands of
U.S. dollars

Millions of yen

2020

2021
Actuarial gain or loss
Past service cost

103 NTN Report 2021

¥ 8,662¥ (2,567)$ 78,488

209

24

1,894

¥ 8,871¥ (2,543)$ 80,382

SASB Index

Total

2021

NTN Report 2021

104

Financial Report Consolidated Financial Statements (March 31, 2021)

14. Operating Leases(a) The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (otherthan 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 inretained earnings amounted to ¥8,639 million ($78,280 thousand) at March 31, 2021 and 2020.

Future minimum lease payments subsequent to March 31, 2021 for non-cancelable operating leases were as follows:

Decrease

March 31, 2021

Shares issued:——532,463,527

1,314,946

1,241

16,546

1,299,641

2020
April 1, 2019

Increase

Decrease

March 31, 2020

Shares issued:
Common stock

$

7,086
24,674¥ 3,505$ 31,760——

532,463,527

1,320,628

1,413

7,095

1,314,946

The increase in treasury stock of 1,241 shares was due to purchases of shares of less than one voting unit and the decrease in treasury stock of 16,546
shares was mainly due to disposal of shares by the “Officer Remuneration BIP Trust” for the year ended March 31, 2021 (Please refer to Note 5).
Additionally, the Company included 456,169 shares held by the “Officer Remuneration BIP Trust” in the number of treasury stock at March 31, 2021.
The increase in treasury stock of 1,413 shares was due to purchases of shares of less than one voting unit and the decrease in treasury stock of 7,095
shares was mainly due to disposal of shares by the “Officer Remuneration BIP Trust” for the year ended March 31, 2020 (Please refer to Note 6).
Additionally, the Company included 472,666 shares held by the “Officer Remuneration BIP Trust” in the number of treasury stock at March 31, 2020.

13. Contingent Liabilities(3) The Company and its related companies may be subject to claims for compensation for damages in connection with the past violation of the AntiMonopoly Act of Japan or the European Competition Law, etc. and continue to address these claims. Depending on the results of the claims, the resultsof operations of the Company and its consolidated subsidiaries could be affected. However, it is currently difficult to make reasonable estimates of the
future possible effects on the results of operations and financial position of the Company and its consolidated subsidiaries.

(c) Risk management for financial instruments(i) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with internal rules and manual, the credit management section periodically monitors financial conditions of major customers, manages
collection due dates and balances of each customer and tries to identify credit risk of customers with worsening financial conditions at the early stage
and mitigate the risk. Credit risk of securities is quite low because the Group utilizes certificate of deposits with high credit ratings, up to a limited
amount, which is approved by the Company. The Group believes credit risk of derivative transactions is almost nil because counterparties are financial
institutions with high credit ratings.
(ii) Monitoring of market risks (the risks arising from fluctuations in foreign 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 Group utilizes forward foreign currency exchange contracts for forecasted export transactions with amaximum period of 6 months.
The Group utilizes interest rate swap agreements and interest-rate and cross currency swap agreements to mitigate fluctuation risk of interest rates
and fluctuation risk of loan 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 complies fully withthese guidelines. Derivative transactions are entered into by the Company’s Accounting Department and certain consolidated subsidiaries. The Company
carries out mutual supervision and monitoring of the derivative transactions in accordance with management policies and its consolidated subsidiaries
apply the same approach. Each derivative transaction of the Company is reported to the responsible director when entered into. The consolidated
subsidiaries are required to report the status of their derivatives transactions to the Company on a monthly basis and are also required to consult with
the Company when they enter into derivative transactions other than forward foreign currency exchange contracts.

Company Data/Investor Information(2) In Europe, a lawsuit has been filed against the Company and its two consolidated subsidiaries in the France Tribunal de Commerce de Lyon. The suitseeks the payment of damages of €66.7 million (provisional amount) to Renault S.A. and its total 15 group companies (hereinafter referred to as“Renault”). In December 2020, Renault changed the amount claimed for damages to €32.5 million (provisional amount). In addition, another lawsuit has
been filed against the Company and its two consolidated subsidiaries in Europe in the United Kingdom Commercial Court by Fiat Chrysler Automobiles
N.V. and its total 7 group companies (hereinafter referred to as “FCA”). This lawsuit was transferred to the United Kingdom Competition Appeal Tribunal
on July 14, 2020.
These suits have been filed because Renault and FCA claimed damages incurred in connection with the alleged violation of the European Competition
Law, which is the subject of a decision made by the European Commission on March 19, 2014.

(b) Types of financial instruments and related risks
Trade receivables, notes, accounts receivable and electronically recorded 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 byutilizing forward foreign currency exchange contracts. Securities are mainly composed of stocks 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 electronically recorded obligations, are due within one year. Certain trade payables resulting from the importof 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 and accounts payable denominated in foreign currencies are within persistently the range 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 and financing. These have maturity dates of 10 years or less, at the longest, subsequent to March 31, 2021.
Certain loans are exposed to fluctuation risk of interest rates and fluctuation risk of exchange rates and this risk is hedged by derivative transactions ofinterest rate swap agreements and interest-rate 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 tradereceivables and payables and mitigating future fluctuation risk of interest rate of loans and corporate bonds. The Group utilized forward foreign currency
exchange contracts, interest rate swap agreements and interest-rate and cross currency swap agreements for the year ended March 31, 2021. Refer to “(m)Derivative financial instruments and hedging activities” in Note 2 “Summary of Significant Accounting Policies.”

Financial Report

Lawsuits, etc.
(1) There are ongoing investigations by the authorities into consolidated subsidiaries in Brazil and elsewhere on suspicion of violating competition laws ofeach country in connection with overseas sales of bearings.

Overview(a) Policy for financial instruments
The Company and its subsidiaries (collectively, the “Group”) raise necessary funds in accordance with management plans mainly by bank borrowings andissuance of corporate bonds in support of operations related to the manufacture and sales of bearings, constant-velocity joints (CVJs) and precisionequipments. The Group utilizes bank borrowings for short-term operating funds, and bank borrowings and issuance of corporate bonds for long-term capital
investments and finances. Temporary surplus funds are managed by low-risk financial assets. The Group utilizes derivatives to avoid or mitigate risks as
described in the later part of this note and does not hold them for speculative purposes.

Business Strategies

532,463,527

Treasury stock:
Common stock

782
2,723

Sustainability Management532,463,527

Treasury stock:
Common stock¥Thousands of
U.S. dollars

15. Financial Instruments

2021

Common stock

2023 and thereafter

Millions of yen

Value Creation Story

Number of shares

Increase

2022

Total

(b) Movements in shares issued and treasury stock during the years ended March 31, 2021 and 2020 are summarized as follows:

April 1, 2020

Years ending March 31,

About Us

12. Shareholders’ Equity

SASB Index(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 ofeach section.

105 NTN Report 2021

NTN Report 2021

106

Financial Report Consolidated Financial Statements (March 31, 2021)
About Us(d) Supplementary explanation of the fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value isreasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result indifferent fair value. In addition, the notional amounts 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.

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 recorded monetary claims 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.

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, 2021 and 2020, are shown in
the following table. The table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note 2 below).

Value Creation Story(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.

Millions of yen

Carrying value

Fair value

Difference¥ 147,249

7,720

7,720

(3) Notes and accounts – trade receivables

116,605(4) Electronically recorded monetary claims

4,996(5) Investment securities¥

Carrying value—¥

71,165

Fair value¥

71,165Difference

¥

—

6,403

6,403

116,605—

103,372

103,372

—

4,996

—

4,788

4,788

—

21,78921,789—20,636

20,638

2

68

68

—

2,652

2,652

—

¥ 298,427¥ 298,427—¥ 209,016¥ 209,018(7) Short-term bank loans

67,34867,348—77,431

77,431—(8) Current portion of long-term debt

54,48854,488—39,84539,845—(9) Notes and accounts – trade payables

55,46855,468—48,676

48,676—(10) Electronically recorded obligations

62,81562,815—68,68568,685—(11) Accrued income taxes

2,126

2,126

—

1,828

1,828

—

(12) Long-term debt

300,967

301,982

1,015

245,140

248,523

3,383

Total liabilities¥ 543,212¥ 544,227

¥

1,015

¥ 481,605¥ 484,988¥ 3,383

¥

¥

¥

—

¥

¥

¥

(6) Short-term loans receivable included in othercurrent assets
Total assets

Derivative transactions (*)(1,523)(1,523)

¥

1,331

1,331

—

¥

2

—

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:

Stocks of subsidiaries and affiliates
Other
Total

—

1,056,587

1,056,587—(5) Investment securities$

45,270——

197,436

197,436

—

616

616

—

(7) Short-term bank loans

610,257

610,257—(8) Current portion of long-term debt

493,730

493,730—(9) Notes and accounts – trade payables

502,609502,609—(10) Electronically recorded obligations

569,183

569,183—(11) Accrued income taxes

19,264

19,264—(12) Long-term debt

2,727,138

2,736,336

9,198

Total liabilities$ 4,922,181$ 4,931,379$ 9,198$$$(13,800)(13,800)$——* Assets and liabilities arising from derivative transactions are shown at net value with the amount in parentheses representing net liability position.

Short-term investments
Trade receivables
Electronically recorded monetary claims

Total

10,657$ 199,783

Within one year

More than one
year and within
five years

More than five
years and within
ten years¥ 147,249

¥—

¥—

¥—

7,720

—

—

—

116,605———

More thanten years

4,996

—

—

—

68

—

—

—

¥ 276,638

¥—

¥—

¥—

Within one year

More than one
year and within
five years

More than five
years and within
ten years¥ 71,165

¥—

¥—

¥—

2020

Cash and cash equivalents

More thanten years

6,403

—

—

—

103,372———

Electronically recorded monetary claims

4,788

—

—

—

Short-term loans receivable included in other current assets

2,652

—

—

—

¥ 188,380

¥—

¥—

¥—

Short-term investments
Trade receivables

Total

107 NTN Report 2021

287
¥ 21,149

NTN Report 2021

SASB Index$ 2,704,123

Derivative transactions (*)

Cash and cash equivalents

Short-term loans receivable included in other current assets$ 2,704,123

Total assets

1,176¥ 22,048

Company Data/Investor Information(6) Short-term loans receivable included in othercurrent assets$ 189,126

2021

69,95345,270¥ 20,862

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in thepreceding table.

Difference

69,953(4) Electronically recorded monetary claims¥ 20,872

Financial Report

Fair value$ 1,334,261(3) Notes and accounts – trade receivables

2021

Millions of yen$ 1,334,261(2) Short-term investments

2020

Unlisted stocks

2021(1) Cash and cash equivalents

2021

Note 3: Redemption schedules for cash and cash equivalents, receivables and marketable securities with maturities at March 31, 2021 and 2020 are as follows:

Thousands of U.S. dollars

Carrying value

Thousands of
U.S. dollars

Millions of yen

Business Strategies—(2) Short-term investments

Sustainability Management¥ 147,249(1) Cash and cash equivalents(8) Current portion of long-term debt and (12) Long-term debt
Long-term debt is composed of corporate bonds and long-term loans. The fair market value of corporate bonds is based on quoted market prices.
The fair value of long-term loans 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 cross currency
swap agreements. These have been accounted for as loans with fixed interest rates. The fair value of those long-term loans is based on thepresent value of the total of the principal, 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.

2020

2021

108

Financial Report Consolidated Financial Statements (March 31, 2021)

2020

2021

Cash and cash equivalents
Short-term investments

Electronically recorded monetary claims
Short-term loans receivable included in other current assets
Total

Within one year

More than one
year and within
five years

More than five
years and within
ten years$ 1,334,261

$—

$—

$—

69,953———

1,056,587———

45,270

—

—

—

616

—

—

—

$ 2,506,687

$—

$—

$—

More thanten years

Classification

Transaction

Notional
amountMore than
one year

Forward foreign currency exchange contracts
Selling:¥Euro

Over-the-counter transactions

4,676

¥

Other

2,751

—

268

268

15,264

7,874

1,403

1,403

—

(294)

(294)

¥ 7,874¥ 1,331¥ 1,3312021
Transaction

¥

(73)

¥

(73)

U.S. dollars

16,978

—

(860)

(860)

Other

2,620

—

(80)

(80)

Receive/fixed yen and pay/fixed Euro

12,292

6,187

(411)

(411)

Receive/fixed yen and pay/fixed U.S. dollars

9,467

—

(99)

(99)

—

—

—

—

¥ 46,919¥ 6,187¥ (1,523)¥ (1,523)

$

(661)

$

(661)

—

(7,793)(7,793)

Other

23,740

—

(725)

(725)

Receive/fixed yen and pay/fixed Euro111,381

56,062(3,724)(3,724)

Receive/fixed yen and pay/fixed U.S. dollars

85,783

—

(897)

(897)

—

—

—

—

$ 425,145$ 56,062$ (13,800)$ (13,800)

Interest-rate and cross currency swaps

Total

Financial Report

Interest-rate and cross currency swaps—

153,842

Other

Other

$

50,399U.S. dollars
Over-the-counter transactions

Selling:

Total$

Valuation gain
(loss)

Fair value

Business Strategies

Euro

Valuation gain
(loss)

Fair value

Forward foreign currency exchange contracts

Over-the-counter transactions

More than
one year

Selling:2021—

Notional
amountForward foreign currency exchange contracts

Millions of yen¥

Sustainability Management

3,285¥ 39,614

Thousands of U.S. dollars

Classification¥ 5,562

17
(63)

Other

Currency-related transactions

Euro

¥

(63)

(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, 2021 and 2020 issummarized as follows:More than
one year

17

—

Total

Notional
amount¥13,638

Receive/fixed yen and pay/fixed Euro

16. Derivative Financial Instruments and Hedging Activities

Transaction—

U.S. dollars

Interest-rate and cross currency swaps

Note 4: The redemption schedule for long-term debt is disclosed in Note 10 “Short-Term Bank Loans, Long-Term Debt and Lease Obligations” section ofthese Notes to Consolidated Financial Statements.

Classification

Valuation gain
(loss)

Fair value

Value Creation Story

Trade receivables

About Us

Millions of yen

Thousands of U.S. dollars

The fair value of forward foreign currency exchange contracts is computed using prices provided by counterparty financial institutions.

Company Data/Investor Information
SASB Index

109 NTN Report 2021

NTN Report 2021

110

Financial Report Consolidated Financial Statements (March 31, 2021)

Millions of yen

About Us(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, 2021 and 2020 is summarized asfollows.

19. Subsidy Income
The Company recorded subsidy income in the amount of ¥5,769 million ($52,274 thousand) for the year ended March 31, 2021. This represents the income
such as subsidies for employment adjustment recorded during the period attributable to the Company and certain consolidated subsidiaries that had
temporarily suspended operations due to the spread of the COVID-19 infection worldwide.

2021
Method of hedge accounting

More than
one year

Fair value

Interest rate swaps
Receive / floating and pay / fixed¥ 2,500¥ 2,500

(*1)

—

—

(*2)

Forward foreign currency exchange contract
Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable

Selling:
U.S. dollars

20. Loss Resulting from Low Operating Capacity
The Company recorded loss resulting from low operating capacity in the amount of ¥2,097 million for the year ended March 31, 2020. This represents fixed
costs recorded during the period attributable to some overseas consolidated subsidiaries that had temporarily suspended operations due to the spread of
the COVID-19 infection worldwide.
The Company recorded loss resulting from low operating capacity in the amount of ¥3,344 million ($30,301 thousand) for the year ended March 31,
2021. This represents fixed costs recorded during the period attributable to the Company and certain consolidated subsidiaries that had temporarilysuspended operations due to the spread of the COVID-19 infection worldwide.

21. Other Comprehensive Income (Loss)
The following table presents the analysis of other comprehensive income (loss) for the years ended March 31, 2021 and 2020.

Millions of yen

Swap rates applied to underlying long-term debt

Transaction

Notional
amountMore than
one year¥ 6,000¥ 2,500(*1)

Selling:

66

U.S. dollars

—

(*2)

¥ 10,765¥ (8,526)$ 97,544(5,699)(1,353)(51,640)

Before tax effect

5,066(9,879)45,904

Tax effect(1,513)

2,953(13,709)

Total

3,553

(6,926)32,195

15,057(13,710)

136,435———

15,057(13,710)

136,435

Notional
amountMore than
one year

Fair value

—

—

—

15,057(13,710)

136,435

Amount arising during the year

7,438

(5,258)67,397

Reclassification adjustments for gains included in profit

Tax effect$ 22,653$ 22,653(*1)

Forward foreign currency exchange contract

Total

—

—

(*2)

*1 Because interest rate 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.”*2 Because forward foreign currency exchange contracts are accounted for applying forward foreign exchange rate to underlying accounts-trade receivable,
for the years ended March 31, 2021 and 2020, respectively, their fair value is included in that of accounts-trade receivable.

17. Research and Development Costs

18. Loss on Surcharge Payments under the Anti-Monopoly Act

2,810

12,3698,803(2,448)79,766

Tax effect(1,779)(1,301)(16,120)

Total

7,024

(3,749)63,646

29

(44)

263

(543)

—

(4,920)Share of other comprehensive loss of affiliates accounted for by the equity method:Amount arising during the year
Reclassification adjustments for gains included in profit
Total
Other comprehensive income (loss), net

(514)

(44)

(4,657)¥ 25,120¥ (24,429)$ 227,619

Company Data/Investor Information

Research and development costs included in cost of sales and selling, general and administrative expenses totaled ¥17,486 million ($158,445 thousand)and ¥19,962 million for the years ended March 31, 2021 and 2020, respectively.

1,365

Before tax effectFinancial Report

Retirement benefit liability adjustments:

Selling:
U.S. dollars

Reclassification adjustments for gains included in profit
Before tax effectInterest rate swaps
Receive / floating and pay / fixedBusiness Strategies

Amount arising during the year

2021
Transaction

Amount arising during the year

Translation adjustments:

Thousands of U.S. dollars

Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable

2021

Reclassification adjustments for gains included in profit

Forward foreign currency exchange contract

Swap rates applied to underlying long-term debt

2020

Net unrealized holding loss on securities:

Receive / floating and pay / fixed

Method of hedge accounting

2021

Fair value

Interest rate swaps

Forward foreign currency exchange contracts
applied to underlying accounts-trade receivableThousands of
U.S. dollars

Millions of yen

Sustainability Management

2020
Method of hedge accounting

Value Creation Story

Swap rates applied to underlying long-term debt

Transaction

Notional
amount111 NTN Report 2021

SASB Index

The Company has negotiated the compensation of damages with a part of customers in association with investigations by the authorities about thecompetition laws. Nevertheless, in overall consideration of the effects to operations of the Company and its consolidated subsidiaries due to extended
negotiations, the Company reached the conclusion to pay the settlement amount because the Company considered that an amicable and early resolution
would accord with the overall benefits for both parties for the year ended March 31, 2020.
In the U.S., the Company and its consolidated subsidiaries reached a settlement with the direct purchasers regarding the class action suit that was filed
in the U.S. District Court for the Eastern District of Michigan in November 2020. This settlement agreement will end the class action suit in the UnitedStates. In addition, in March 2021, the Conselho Administrativo de Defesa Econômica decided to impose fines of 9,318,311.31 Brazilian reals on the
consolidated subsidiary in Brazil for violating the Brazilian competition law in connection with sales of bearings in Brazil, and the subsidiary paid the fines in
May 2021.
As a result, the Company and its consolidated subsidiaries recorded loss on surcharge payments under the Anti-Monopoly Act in the amounts of ¥1,176
million ($10,656 thousand) and ¥745 million for the years ended March 31, 2021 and 2020, respectively.

NTN Report 2021

112

Financial Report Consolidated Financial Statements (March 31, 2021)
About Us

22. Income Taxes

Thousands of
U.S. dollars

Millions of yen

Millions of yen

2021
Year ending March 31,
2022

Tax losscarryforwards (*1)

¥

410

2023

339

2024
2025

Valuation allowance Deferred tax assets
for tax loss
for tax loss
carryforwards
carryforwards

¥

(237)

¥

173

(72)

267

324

(7)

317

550

(146)

404

2020

2021

¥ 25,653¥ 19,467$ 232,448

Liability for retirement benefits

16,63918,647150,770

Impairment loss

9,601

11,491

86,997

Accrued expenses

2,785

2,975

25,236Inventories

691

1,011

6,261

2020

Valuation loss on investment securities

458

1,452

4,150

2,432

4,941

22,037

Valuation allowance Deferred tax assets
Tax lossfor tax loss
for tax loss
carryforwards (*1)
carryforwards
carryforwards

58,25959,984

527,8992021

Valuation allowance for tax loss carryforwards(23,531)(17,387)(213,220)

2022

514

(169)

345

Valuation allowance for taxable temporary differences(26,400)(23,153)(239,217)

2023

386

(64)

322

(49,931)(40,540)(452,437)

2024

437

—

437

8,328

19,44475,462

2025

120

(2)

118

Tax loss carryforwards

Other
Gross deferred tax assets

Total deferred tax assets

1,017

(588)

429

2027 and thereafter

23,013(22,481)532¥ 25,653¥ (23,531)(*2) ¥ 2,122

Millions of yen

Year ending March 31,

¥

¥

(401)

¥

257

17,352(16,751)

601¥ 19,467¥ (17,387)(*2) ¥ 2,080

2026 and thereafter
Deferred tax liabilities:

658

Unrealized holding gain on securities(3,685)(2,172)(33,391)

Gain on contribution of securities to retirement benefit trust(3,046)(3,046)(27,601)

Depreciation and amortization(2,195)(6,459)(19,889)

2021

Reserve for deferred gain on property included in retained earnings(1,113)(1,143)(10,085)

Other(1,707)(864)(15,467)

Valuation allowance Deferred tax assets
Tax lossfor tax loss
for tax loss
carryforwards (*1)
carryforwards
carryforwards(11,746)(13,684)(106,433)2022¥ (3,418)¥ 5,760$ (30,971)

2023

3,071

(652)

2,419

Note 1: Valuation allowance increased ¥9,391 million ($85,094 thousand) in the year ended March 31, 2021. The main reason for this increase is that thevaluation allowance for tax loss carry forwards increased ¥6,144 million ($55,672 thousand).
Note 2: Tax loss carryforwards and related deferred tax assets as of March 31, 2021 and 2020 expired or will expire as follows:

2024

2,935

(63)

2,872

2025

4,984

(1,323)

3,661

2026

9,215

(5,328)3,887

Net deferred tax assets

Thousands of U.S. dollars

Year ending March 31,

3,716

$

(2,148)$

1,568

208,527(203,706)

4,821$ 232,448$ (213,220)(*2) $ 19,228

Company Data/Investor Information

2027 and thereafter$

Financial Report

Total deferred tax liabilities

Business Strategies

Less: valuation allowance2026

Sustainability Management

2021
Deferred tax assets:

Value Creation Story

Income taxes applicable to the Company and its domestic subsidiaries comprise corporate taxes, inhabitants’ taxes and enterprise taxes which, in theaggregate, resulted in statutory tax rates of 29.9% and 29.9% for the years ended March 31, 2021 and 2020, respectively. Overseas subsidiaries are
subject to the income taxes of the respective countries in which they operate.
The details of the differences between the statutory tax rate and effective tax rate for the years ended March 31, 2021 and 2020 are omitted because
the Company and its consolidated subsidiaries recorded a loss before income taxes for the years.
The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2021 and 2020 are
presented below:(*1) The tax loss carryforwards in the above table are measured using the statutory tax rates.
(*2) The balance of deferred tax assets of ¥2,122 million ($19,228 thousand) and ¥2,080 million arising from tax loss carryforwards of ¥25,653 million($232,448 thousand) and ¥19,467 million calculated after multiplying the loss amount with the statutory tax rates as of March 31, 2021 and 2020,
respectively. A certain portion of tax loss carryforwards was considered to be recoverable in future income taxes because it is probable that futuretaxable profit would be available.

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113 NTN Report 2021

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Financial Report Consolidated Financial Statements (March 31, 2021)
About Us

23. Amounts per Share

3. Information as to net sales, profit or loss, assets, liabilities, and other items for each reporting segment for the years ended March 31, 2021 and 2020
Reportable segment information for the years ended March 31, 2021 and 2020 is summarized as follows:

Amounts per share at March 31, 2021 and 2020 and for the years then ended were as follows:

Millions of yen
Yen

2021

2021

2020

¥ 321.04¥ 294.00$ 2.91(21.92)(82.83)(0.20)

—

5.00

—

2021

Reporting segments
Asia and other
areas

Japan

Americas

Europe¥ 168,281¥ 142,228¥ 126,777¥ 125,561

98,690

706

2,421

7,859

Loss attributable to owners of parent:
BasicCash dividends

Sales, profit and assets or
liabilities by reporting
segments:
Net sales:
Sales to third parties
Inter-segment sales andtransfers

266,971

142,934

Segment profit or loss

¥ (10,793)¥ (2,803)¥

Segment assets¥ 644,492¥ 161,917

Segment liabilities¥ 479,412¥ 118,725

Depreciation and amortization¥ 12,876¥

Capital expenditures¥ 18,475

¥

Total

¥

562,847¥

109,676
672,523—¥ 562,847(109,676)—

129,198

133,420(2,428)¥ 12,306¥¥ 129,992¥ 187,411¥ 1,123,812¥ (287,248)¥ 836,564¥ 84,609¥ 38,394¥

721,140¥ (68,327)¥ 652,813

8,931

¥

7,232

¥

6,440

¥

35,479¥—¥ 35,479

6,380

¥

3,494

¥

3,082

¥

31,431¥(0)¥ 31,431(3,718)(109,676)¥

579

562,847¥(3,139)Other items:

Millions of yen

2020
Reporting segments
Japan

Americas

EuropeAsia and other
areas

Total

Adjustments

651,957¥

Consolidated

Sales, profit and assets or
liabilities by reporting
segments:
Net sales:

2. Calculation methods used for net sales, profit 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 Note 2 “Summary of Significant Accounting Policies.” Intersegment sales and transfers are recorded at the same prices used in transactions with third parties.

Sales to third parties¥ 205,832¥ 169,879¥ 152,582¥ 123,664

Inter-segment sales andtransfers

126,685

1,194

3,069

11,266

Total

332,517

171,073

155,651

134,930(Changes in Presentation Method)

Segment profit¥413¥ 11,419¥

Segment assets¥ 584,431¥ 161,409¥ 128,354¥ 170,303¥ 1,044,497¥ (286,675)¥ 757,822

Segment liabilities¥ 417,340¥ 112,518¥ 101,592¥ 38,182¥

669,632¥ (80,188)¥ 589,444

Depreciation and amortization¥

13,424

¥

9,719

¥

7,363

¥

6,801

¥

37,307¥—¥ 37,307

Capital expenditures¥

38,754¥18,047

¥

6,097

¥

4,692

¥

67,590¥(41)¥ 67,549

2,138¥(6,438)¥¥—¥ 651,957

142,214(142,214)—

794,171(142,214)

651,957

7,532

¥

(15)

¥

7,517

Company Data/Investor Information“Royalty,” which was previously included in “Other” under “Non-operating income”, has been included in “Net sales” from the current fiscal year. In addition,accounts receivable in “Other” under “Current assets,” were reclassified as “Trade receivables.”The Company made this change in order to appropriately present the results of the Group’s sales activities, as the Company positioned acquiring licensing
income as one of its main sales activities from the first quarter of the current fiscal year.
Regarding segment information in the previous fiscal year, it has been presented after reflecting this change. Therefore, net sales and segment profit
increased ¥3,421 million in Japan and ¥11 million in Europe compared with the amounts before the change.

Financial Report

1. Outline of reporting segments
The Company and its subsidiaries’ (correctively, the “Group”) reporting segments are divisions of the Group for which separate financial information isavailable, and whose operating results are reviewed regularly by the highest management decision-making body (the Board of Directors meeting of theCompany) in order to allocate management resources and assess performance of operations.
The Group’s main business lines consist of the manufacture and sales of bearings, CVJs and precision equipments for the aftermarket, general industrial
machinery market, and automotive market. Business activities in Japan are controlled by the Company (the Head Office), and overseas business activities
are controlled by the General Manager responsible in each region. Business entities in each region prepare their own plans and strategies to conductbusiness activities while analyzing profitability and the investment efficiency of operations.
Accordingly, the Group has four reporting segments based on geographic business segmentation controlled by the Head Office or the General Managers:
Japan, the Americas, Europe, and Asia and other areas. Each reporting segment engages in the manufacture and sale of bearings, CVJs, and precisionequipments and other products.

Consolidated

Business Strategies

24. Segment Information

Adjustments

Sustainability Management

Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end.
Basic loss attributable to owners of parent per share is computed based on the profit or attributable to owners of parent of common stock and theweighted-average number of shares of common stock outstanding during the year. Diluted profit attributable to owners of parent per share has not beenpresented because there were no potentially dilutive shares of common stock, and the Company and consolidated subsidiaries recorded loss attributable toowners of parent for the years ended March 31, 2021 and 2020.
The Company recorded shares held by the “Officer Remuneration BIP Trust” (Please refer to Note 6) as treasury stock in the consolidated financial
statements as of March 31, 2021 and 2020. Accordingly, to compute “net assets per share,” the Company’s shares held by the trust (456,169 shares and472,666 shares at March 31, 2021 and 2020, respectively) are included in treasury stock that is excluded from the number of shares outstanding as ofMarch 31, 2021 and 2020. In addition, to compute “Loss attributable to owners of parent per share,” the Company’s shares held by the trust (461,245 and474,565 average number of shares for the years ended March 31, 2021 and 2020, respectively) are included in treasury stock that is excluded from thecomputation of the average number of shares for the years ended March 31, 2021 and 2020.
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.

Total

Value Creation Story

Net assets

U.S. dollars

Other items:

SASB Index

115 NTN Report 2021

NTN Report 2021

116

Financial Report Consolidated Financial Statements (March 31, 2021)
About Us

(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, 2021 and 2020 are summarized
as follows:

Thousands of U.S. dollars

2021
Reporting segments
Japan

Americas

EuropeAsia and other
areas

Total

Adjustments

2021

Net sales:
Sales to third parties$ 1,524,837$ 1,288,764$ 1,148,759$ 1,137,740$ 5,100,100

894,255

6,397

21,937

71,2132,419,092

1,295,161

1,170,696

1,208,953

Total(97,798)$(25,399)$(22,001)

111,508$ 5,100,100

993,802(993,802)—

6,093,902(993,802)

5,100,100(33,690)$

5,247

Segment assets$ 5,839,906$ 1,467,171$ 1,177,890$ 1,698,179$ 10,183,146$ (2,602,827)$ 7,580,319

Segment liabilities$ 4,344,074$ 1,075,797$$$ 6,534,433$$ 5,915,305(619,128)$(28,443)

Americas

EuropeAsia and other areas

Total¥ 162,814¥ 144,432¥ 117,235¥ 138,366¥ 562,847

Millions of yen

2020
Japan

Americas

EuropeAsia and other areas

Total¥ 198,101¥ 174,309¥ 140,839¥ 138,708¥ 651,957
Sustainability Management$

347,898$—

Segment profit or loss

766,664

$

$

Japan

Value Creation Story

Sales, profit and assets or
liabilities by reporting
segments:

Inter-segment sales andtransfers

Millions of yen

Consolidated

Thousands of U.S. dollars

2021
Other items:
Depreciation and amortization$

116,673$

80,926$65,531$58,354$321,484$—$

321,484

Capital expenditures$

167,407$

57,811$

31,669$27,927$

284,813$(9)$284,804

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, 2021 and 2020 are summarized as follows:

Americas

EuropeAsia and other areas

Total$ 1,475,299$ 1,308,735$ 1,062,296$ 1,253,770$ 5,100,100“Americas” includes the U.S.A., Canada and Central and South America. “Europe” includes Germany, France, the U.K. and others. “Asia and other areas”
include China, Thailand, India and others. The sales of the “Americas” segment above include the sales to customers in the U.S.A. of ¥123,096 million($1,115,404 thousand) and ¥146,644 million for the years ended March 31, 2021 and 2020, respectively. The sales of the “Asia and other areas” segment
above include the sales to customers in China of ¥79,534 million ($720,678 thousand) for the year ended March 31, 2021.
(b) Property, plant and equipment
Property, plant and equipment categorized by country and region within the Group at March 31, 2021 and 2020 are summarized as follows:
Millions of yen

2021

Millions of yen

Sales to third parties¥ 91,493

Industrial
machinery

Automotive¥ 101,853¥ 369,501

Total

Japan

Americas

EuropeAsia and other areas

Total¥ 100,948¥ 75,696¥ 44,944¥ 38,856¥ 260,444¥ 562,847

Financial Report2021
Aftermarket

Business Strategies

The total amount of segment profit is adjusted to operating income of the consolidated statement of operations.
Other than those corresponding to segment assets, adjustments relate to the elimination of inter-segment transactions, etc. The adjustments forsegment assets consist of inter-segment elimination, etc. of ¥313,207 million ($2,838,048 thousand) and ¥307,596 million and the corporate assets of
the Group of ¥25,959 million ($235,221 thousand) and ¥20,922 million for the years ended March 31, 2021 and 2020, respectively. The corporate assets
are mainly long-term investment funds (investment securities) for the years ended March 31, 2021 and 2020.

Japan

Millions of yen

2020
Millions of yen

2020
Aftermarket¥ 109,429

Automotive¥ 105,210¥ 437,318

Americas

EuropeAsia and other areas

Total¥ 100,474¥ 78,120¥ 45,225¥ 38,825¥ 262,644

Total
Thousands of U.S. dollars¥ 651,957

Company Data/Investor Information

Sales to third parties

Industrial
machinery

Japan

2021

Aftermarket
Sales to third parties

Japan

Americas

EuropeAsia and other areas

Total

2021

$ 914,715$ 685,901$ 407,249$ 352,084$ 2,359,949

Industrial
machinery

Automotive

Total$ 922,916$ 3,348,143$ 5,100,100

1. Property, plant and equipment in “Americas” in the amount of ¥67,760 million ($613,991 thousand) and ¥70,347 million is located in the U.S.A. at
March 31, 2021 and 2020, respectively.
2. Property, plant and equipment in “Europe” in the amount of ¥28,429 million ($257,602 thousand) and ¥29,688 million is located in France at March 31,
2021 and 2020, respectively.
3. Property, plant and equipment in “Asia and other areas” in the amount of ¥27,655 million ($250,589 thousand) and ¥27,623 million is located in China
at March 31, 2021 and 2020, respectively.

NTN Report 2021

SASB Index

117 NTN Report 2021

$ 829,041

Thousands of U.S. dollars

118

Financial Report Consolidated Financial Statements (March 31, 2021)

Financial Report

Independent Auditor’s Report
About Us

5. Loss on impairment of fixed assets
Loss on impairment of fixed assets by reporting segment for the years ended March 31, 2021 and 2020 is summarized as follows:
Millions of yen

2021
Americas

Europe¥—¥ 2,462¥—

Asia and other areas¥—

Adjustments

¥—

Total
Value Creation StoryJapan¥ 2,462

Millions of yen

2020
Japan

Americas

Europe¥ 21,955¥ 5,518¥ 1,528

Asia and other areas¥—

Adjustments

¥—

Total

¥ 29,001

Sustainability Management

Thousands of U.S. dollars

2021
Japan

Americas

Europe$—$ 22,309$—

Asia and other areas$—

Adjustments

$—

Total

$ 22,309

25. Subsequent Event

Business Strategies

1. Business combination due to acquisition
The Company has concluded a basic agreement on June 9, 2021 regarding the additional acquisition of shares of Taira Forging Co., Ltd., currently anequity-method affiliate.
1. Outline of business combination

Financial Report

1) Name and business description of acquired company
Name of acquired company:
Taira Forging Co., Ltd.
Business description of acquired company: Manufacturing and sales of forged rings
2) Main reason for business combination
The aim of the acquisition is to expand the business by strengthening integrated bearing production system and competitiveness of bearings forindustrial machineries in the Noto region and continuing and enhancing business of the oil casing pipe connectors and construction machineries
parts utilizing forging technology of Taira Forging Co., Ltd.
3) Date of business combination
June 28, 2021
4) Legal form of business combination
Acquisition of shares in exchange for cash5) Name of company after the business combination
No change
6) Percentage of acquired voting rights
Voting rights before business combination:
46.67%
Voting rights acquired on the date of business combination: 10.00%
Voting rights after business combination:
56.67%
7) Main reason for decided on acquired company
As a result of acquisition of more than one half of the voting rights of the acquired company by acquiring the shares in exchange for cash

Company Data/Investor Information

2. Cost of acquisition of the acquired company and breakdown of the type of consideration
The consideration of additional acquisition of shares by cash: ¥2,000 million* Acquisition cost and gain or loss on step acquisition are undetermined
3. Amount of goodwill recognized, reason of its recognition, and method and period of amortization
Undetermined

119 NTN Report 2021

SASB Index

4. Amounts of acquired assets and liabilities, breakdown of them by main type
Undetermined

NTN Report 2021

120

Global Network (March 31, 2021)

Company Data/Investor Information

About Us

Japan

EuropeCompany namePaid-in capital

1 NTN SALES JAPAN CORP

E

10

7

IV VIIV5

II

2 13 D

A

B

C

31
28

JPY 1,250,000,000 100

4 NTN NOTO CORP.

JPY 1,000,000,000 100

5 NTN FUKUROI CORP.

JPY 1,500,000,000 100

6 NTN AKAIWA CORP.

JPY 1,250,000,000 100

7 NTN Advanced Materials Corp.

JPY 266,000,000

8 NTN Advanced Materials Corp.

JPY 400,000,000

99.34

9 NTN CASTING CORP.

JPY 450,000,000100

10 NTN KINAN CORP.

JPY 450,000,000100

11 NTN KAMIINA CORP.

JPY 725,000,00080

12 NTN TECHNICAL SERVICE CORP.

JPY 200,000,000

100

13 NTN LOGISTICS CO., LTD.

JPY 10,000,000

100

New Product Development R&D Center

B

Production Engineering R&D CenterC

CAE R&D Center

D

Advanced Technology R&D CenterE

NTN Next Generation Research Alliance Laboratory

15

F

18
19
20 16
21
17 26
27

24

44

Paid-in capital

Holdings aspercentage (%)

17 ANDERSON, INC.

USD 119,000,000 100(100)

AMERICAN NTN BEARING
18 MFG. CORP.

USD 54,300,000

100

(100)

19 NTN-BOWER CORP.

USD 167,000,000 100(100)

20 NTK PRECISION AXLE CORP.

USD 30,000,000

60

(60)

21 NTA PRECISION AXLE CORP.

USD 40,000,000

62.5(62.5)USD 700,000

38 39
40

42

NTN-SNR R&D Center37

41 55 56

SGD 36,000,000 100
MYR 1,000,000

100

(100)

38 NTN BEARING-THAILAND CO., LTD.

THB 780,000,000

100(99.999)

39 NTN MANUFACTURING (THAILAND) CO., LTD.

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

40 NTPT CO., LTD.

THB 700,000,00075(10.73)

USD 7,300,000

100

(100)

INR 300,000,000 100(0.1)

BRL 390,739,432 100(2.72)USD 10,100,000

19.8(19.8)USD 6,000,000

49

NTN Automotive Center

INR 4,808,000,000

97.4 (24.96)

44 NTN KOREA CO., LTD.

KRW 500,000,000100

45 NTN (CHINA) Investment Corporation

USD 388,547,500 100

46 NANJING NTN CORP.

USD 180,000,000 100

47 SHANGHAI NTN CORP

USD 166,500,000

95

(95)

48 Guangzhou NTN-Yulon Drivetrain Co., Ltd.

USD 12,500,000

60

(12)

49 Xiangyang NTN-Yulon Drivetrain Co., Ltd.

USD 34,000,000

60

(60)

50 NTN-RAB (CHANGZHOU) CORP.

USD 28,440,000

100

Production

Production and sales

R&D base

Others

(86.67)

HKD 2,500,000 100

52 TUNG PEI INDUSTRIAL CO., LTD.

TWD 1,257,232,620

27.35

53 TAIWAY LTD.

TWD 160,000,000

36.25

54 NTN-DONGPAI (Shanghai) Bearing Sales Co, Ltd.

USD 1,460,000

25

55 PT. TPI MANUFACTURING INDONESIA

USD 55,415,050

28.8 (0.002)

56 PT. Astra NTN Driveshaft Indonesia

IDR 120,000,000,000

57 Shanghai Tung Pei Enterprise Co., Ltd.
H

USD 36,000,000

(25)

49
17.86 (17.86)

NTN China Technical Center

SASB Index

One consolidated subsidiary in addition to the Group companies aboveSales(0.97)

43 NTN NEI Manufacturing India Private LTD.

51 NTN CHINA LTD.
(5)

Holdings aspercentage (%)

37 NTN BEARING-MALAYSIA SDN.BHD.

42 NTN BEARING INDIA PRIVATE LTD.

36

Paid-in capital

36 NTN BEARING-SINGAPORE (PTE) LTD.

41 PT. NTN BEARING INDONESIA100

MXN 594,205,718 100

26 ASAHI FORGE OF AMERICA CORP.

F

43

CAD 20,100,000 100

NTN do Brasil Producão de
25 Semi-Eixos Ltda.

Seohan-NTN Driveshaft

46
45
50 H
54 47
57
49
52 53
48 51

USD 493,895,440 100(100)

27 USA CORP.

G

(100)

Company Data/Investor Information

25

100

Company name

USD 128,800,000 100

NTN MANUFACTURING DE100

EUR 11,500,000

Asia and Others

16 NTN DRIVESHAFT, INC.

24 MEXICO, S.A.DE C.V.

EUR 39,988,327

NTN TRANSMISSIONS

35 EUROPE CREZANCY

(100)

(100)

23 NTN-SUDAMERICANA, S.A.

34 NTN TRANSMISSIONS EUROPE(0.04)

97.4

100

22 CANADA LTD.

100

Six consolidated subsidiaries in addition to the Group companies above

USD 24,700,000

NTN BEARING CORP. OF

23

100

EUR 123,599,542

33 G

15 OF AMERICANTN DRIVESHAFT

GBP 2,600,000

33 NTN-SNR ROULEMENTS(100)

Financial ReportNTN BEARING CORP.

32 NTN BEARINGS (UK) LTD.

30

34

100

3 NTN HOUDATSU SHIMIZU CORP.

14 NTN USA CORP.
22

JPY 480,000,000

JPY 3,000,000,000 100

A

29

35

2 NTN MIE CORP.

Company name

14

100

Business Strategies

Americas100

EUR 50,000

Sustainability Management

I1

EUR 25,000

31 NTN Antriebstechnik G.m.b.H.

Value Creation Story

32

VIII Composite Material Product Division, Engineering Plastics Works

8

30 (Deutschland) G.m.b.H.

NTN Mettmann

VII Automotive Business Headquarters Mikumo Works

12 VIII100

NTN Kugellagerfabrik

VI Automotive Business Headquarters, Okayama Works

6 VI

100

EUR 18,500,000

28 NTN Wälzlager (Europa) G.m.b.H.

29 (Deutschland) G.m.b.H.

I Automotive Business Headquarters, Iwata Works

9

EUR 14,500,000

I NTN Corporation (parent company)
II Industrial Business Headquarters, Kuwana Works
IV Industrial Business Headquarters, Kongo Works

11
III

Holdings aspercentage (%)

Company name

III Industrial Business Headquarters, Nagano Works

4
3

Paid-in capital

Holdings aspercentage (%)

One consolidated subsidiary in addition to the Group companies above

NOTES 1. The scope of consolidation as of March 31, 2021 consisted of NTN Corporation and 57 consolidated subsidiaries (13 domestic and 44 overseas subsidiaries). A total of 11affiliates (10 overseas 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: No additions/No removal
Affiliates: 1 additions/No removal
2. Of the above subsidiaries, the following companies are specified subsidiaries: NTN USA CORP., NTN DRIVESHAFT, INC., NTN-BOWER CORP., AMERICAN NTN BEARING MFG.CORP.,NTN DRIVESHAFT ANDERSON, INC., NTN do Brasil Produção de Semi-Eixos Ltda., NTN-SNR ROULEMENTS (‘NTN-SNR’), NTN NEI Manufacturing India Private LTD., NTN (CHINA)INVESTMENT Corporation, Nanjing NTN Corp., and SHANGHAI NTN Corporation.

121 NTN Report 2021

3. Figures in curved brackets under “Holding as percentage” indicate the percentage of indirectly owned holdings, and are included in the total holding.
4. None of the companies has submitted a securities registration statement or securities report.
5. Of the above subsidiaries, NTN-BOWER CORP. is a company with excess of debts and the amount of excess of debt is 10,008 million yen as of March 2021.
6. Of the above subsidiaries, NTN BEARING CORP. OF AMERICA and NTN-SNR have sales (excluding internal sales between consolidated companies) accounting for more than 10% ofconsolidated sales.
Figures for NTN-SNR are consolidated figures encompassing eight NTN-SNR subsidiaries.
7. Of the above subsidiaries, I to VIII are NTN Corporation business units, 1 to 25 and 28 to 51 (in symbols) are consolidated subsidiaries, and 26, 27 and 52 to 57 (in symbols) are affiliates subject to the equity method.

NTN Report 2021

122Company Data/Investor Information

Third-Party Opinion

Company Data/Investor Information

Investor Information (March 31, 2021)
About UsNTN Report 2021 third-party opinion
Vice Dean and Professor, School of Business
Administration, Kwansei Gakuin University

Chika Saka

Common Stock
Authorized: 1,800,000,000
Issued and Outstanding: 532,463,527

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

Stock Price Range in the Fiscal Year
ended March 31, 2021
High: 349 yen
Low: 165 yen

Number of Shareholders
48,773

Independent Audit Firm
Ernst & Young ShinNihon LLC

Breakdown of Shareholders
Financial instruments firms

0.97%

1.13%

Between 50,000
and 99,999

532,463,000

2.42%

sharesshares

Between 100,000
and 499,999

1,000,000 or more

7.41%

Individuals

25.80%

68.70%

Between 500,000
and 999,999

3.96%
Recent Stock Price Range

Close
Open

Stock price (yen)

High
Low

Monthly Volume Traded

Open
Nikkei Stock
Close
Average

Nikkei Stock Average (yen)900

30,000600

20,000(Millions of shares)

200

150

100
300

10,00050

04 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2020

Status of inclusion in
ESG indexes

2021

0

0

Company Data/Investor Information

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2019

2020

2021

*1 Inclusion status as of the end of July 2021.
*2 The inclusion of NTN Corporation in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute asponsorship, endorsement, or promotion of NTN Corporation by MSCI or any of its affiliates.
The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

MSCI Japan Empowering
Women (WIN) Select Index

MSCI Japan ESG
Select Leaders Index*2

S&P/JPX Carbon
Efficient Index

Inquiries
SASB Index

123 NTN Report 2021

43.44%

532,463,000

Less than 1,000

Financial Report

We would like to thank Professor Saka for her valuable opinions.
Through the practice of our corporate philosophy, we aim to contribute to the resolution ofsocial issues surrounding the world and realize a "NAMERAKA society" where people caneasily lead a secure and fulfilling life. In fiscal 2020, we identified that we should prioritizemateriality in order to achieve the SDGs targets. We received evaluations about how toapproach each materiality, and were confident in our efforts so far. We will utilize therecommendations that should be important to promote ESG in future initiatives.
In addition, regarding the expression of our support of TCFD recommendations,by utilizing
scenario analysis, we will link it to materiality measures and targets, such as efforts to achievecarbon neutrality in our business and contribution to a carbon-free society through our products
and services. We will sincerely listen to the valuable opinions we have received and strive toincrease corporate value over the medium- to long-term.

5.67%

7.53%

Financial institutions

13.83%
15.96%

3.18%
Between 10,000
and 49,999

Other corporations

Foreign owners

Between 1,000
to 4,999

Between 5,000 and 9,999

0.00%

2019

Response to the third-party opinion

Breakdown of Number of Shares Held
National and local governments

Business Strategies* ESG rating by FTSE Russell. Assessment of the business's ESG risks andthe company's commitment to them.

General Meeting of Shareholders
The General Meeting of Shareholders
was held on June 25, 201 in Osaka

Sustainability Management

Fiscal 2020 was a challenging business environment for many
companies. Under such circumstances, NTN identified
materiality and established its Human Rights Policy in fiscal
2020. In addition, NTN launched the new Medium-termManagement Plan and supported TCFD recommendations
under the leadership of the new President in fiscal 2021 ,and
accelerated its transformation.
13 items of materiality were identified in light of the United
Nations Global Compact signed in 2015. By clearly
distinguishing between positive (Strengthen positive impacts)
and negative (Reduce negative impacts), opportunities are
acquired through the creation of original technologies, social
cost reductions and risk aversion, and social contribution bysteadily achieving the expectations of society as a global
company is included in a well-balanced manner. It seems
favorable that 10 out of 13 items are allocated to reducing
negative impact, and for each of the 10 items, the "NTN
Report 2021" reports on one or two pages of substantial
efforts. Another feature is that 7 out of 13 materiality items
are "social." Japanese companies tend to have lower scoresfor social items than overseas companies, but 10 pages areincluded in social items in the NTN Report 2021. In particular,
various responses throughout the supply chain based on the
newly established Human Rights Policy are advanced.
As shown on page 102 of the NTN Report 2021, NTN is
included in many SRI/ESG indexes. As of July 2021, FTSE
Russell ESG Ratings*, NTN's overall ESG score is ranked in the
top 28% of Japanese assessed companies. Among ESG, NTN
has earned a great reputation for the environment, and interms of materiality, NTN emphasizes on society, therefore weTransfer Agent for Common Stock
Mitsubishi UFJ Trust and Banking Corporation
4-5, 1-chome, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Value Creation Story

ProfileAfter working as a full-time lecturer and assistantprofessor (associate professor) at the School ofBusiness Administration, Kwansei Gakuin
University, she has been a professor since 2008.
Currently, she is a member of the Science Councilof Japan, a member of the Osaka Prefecture
Environmental Council, a member of the Osaka
City Environmental Council, and a managing
director of the Accounting and Economic
Association of Japan. She received the Japan
Accounting Association Award. Her publications
include "Environmental Accounting" (Tokyo Keizai
Publishing Co., Ltd.), etc. in the book.

expect to see an improvement in the "Social " evaluation in thenear future.
Meanwhile, the trend toward mainstreaming ESG
investments has increased the demand for both financial
performance and ESG performance. The strong market
capitalization of NTN's shares reflects the valuation for NTN's
ability to generate future income that can be expected throughthe detailed value creation story that top management talks
directly, and a detailed analysis of the risks and opportunities
surrounding NTN and its countermeasures. Furthermore, inorder to realize NTN's social contribution through creating
technologies and developing new products over DRIVE
NTN100's long term, we expect to communicate how to seize
new business opportunities and strengthen the financialbase. For that, scenario analyses that have already beenaddressed in line with TCFD recommendations are also
useful. Carbon neutrality is a growth strategy as well as ameasure to combat global warming, and is expected topromote domestic industries. The draft of the government's
Basic Energy Plan, announced in July 2021, indicates that
renewable energy will account for 36-38% of total power
generation in fiscal 2030. While remaining uncertain, NTN's
wind power generation products, other natural energy
products and EV related products which are expected to
expand, have significant potential to bring new business
opportunities involving other companies.
In addition to the Comparison Table for GRI Standards web
disclosure, NTN Report 2021 also has begun disclosing
information based on the disclosure standards of SASB
Standards, making it easier to obtain KPI information. With
regard to ESGs and SDGs, rather than responding to all of therelated requirements, I think it is increasingly important to
identify which demands to focus on and respond to andexpress this to stakeholders in order to achieve thecompany's philosophy. Looking ahead to the next 100 years,
we are in an age of increasingly demanding management
based on purpose, and I look forward to NTN's initiatives
being developed based on the “Frontier Spirit” and the“Coexistence and Co-prosperity Spirit” that have been valued
over the past 100 years.

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

Corporate Communications Department
T E L : 06-6449-3528
F A X : 06-6443-3226
E - m a i l : irmanager@ntn.co.jp
Executive Officer
CSR Headquarters

Toshinori Shiratori

Sompo Sustainability Index

FTSE4GoodNTN on the Internet
NTN’s website offers a variety of corporate andproduct information, including the latest NTN Reportand financial results.
https://www.ntn.co.jp/

NTN Report 2021

124

SASB Index
About Us

TRANSPORTATION SECTOR-AUTO PARTSRESOURCE TRANSFORMATION SECTOR-INDUSTRIAL MACHINERY & GOODS

Sustainability Disclosure Topics and Accounting Metrics

Sustainability Disclosure Topics and Accounting Metrics
Topic

Accounting MetricFiscal year ended
March 31, 2021

TJ*

P.89-90 Consolidated
Financial Indicators (Past
11 Years)

Topic

SASB Code(1) Total energy consumed

https://www.ntnglobal.
NAMERAKA is a Japanesethat means smooth.
MWh* wordcom/en/csr/environment/
RT-IG-130a.1(2) Percentage grid electricity

sitereport/total.html

Energy Management

Unit of Measure

Fiscal year ended
March 31, 2021

(1) Total energy consumed

TJ*

P.89-90 Consolidated
Financial Indicators (Past
11 Years)(2) Percentage grid electricity

MWh*https://www.ntnglobal.
com/en/csr/environment/
sitereport/total.html(3) Percentage renewable

KWh*

https://www.ntnglobal.
com/en/csr/environment/
climate-change.html

Accounting Metric

Brand statement

Bearing technology is used to smoothen the rotating parts of any type of machine.
(3) Percentage renewable

KWh*

https://www.ntnglobal.
com/en/csr/environment/
climate-change.html

With more precise bearing technology, shafts can rotate more smoothly,

Employee Health & Safety(2) Fatality rate

RT-IG-320a.1
Bearings are thus aRate
technology Not
fordisclosed
saving energy.

Near miss frequency
rate (NMFR)
Not vehicles,
disclosed
The technology(3) developedwithbearings will help Ratemake electricrobots(1) Total amount of waste from manufacturing

Waste Management

Galloms
per function more smoothly.
and even a natural energy-based1,000
society
N/A
RT-IG-410a.1
ton-miles(3) Percentage recycled(1) Sales-weighted fleet fuel efficiency formedium- and heavy-duty vehicles

Galloms per hour(3) Sales-weighted fuel efficiency for stationary
generators

Watts per gallon

Overview for realizing a “NAMERAKA Society*”
Fuel Economy & Emissions in
Use-phase

Sales-weighted emissions of:(1) nitrogen oxides (NOx) and (2) particulatematter (PM) for: (a) marine diesel engines, (b)locomotive diesel engines, (c) on-road mediumWe shall contributeto internationalsocietyand heavy-duty
engines, and (d)other non-roadenginesthrough creatingdiesel
new
technologies and

The Frontier Spirit /The Coexistence andCo-prosperity Spirit

developing new products.

Materials Sourcing

Description of the management of risks
associated with the use of critical materials

RT-IG-410a.2

N/A

RT-IG-410a.3

Grams perkirowatt-hour

N/A

Discussion andAnalysis

Not disclosed

Qualitative
information*

https://www.ntnglobal.
com/en/csr/environment/chemical.html

NTN SPIRIT

RT-IG-410a.4

RT-IG-440a.1

Management
RT-IG-440b.1
PolicyTopicCollaboration

Commitment

Guidelines

Accounting Metric

Unit of Measure

Buds appear when
we challengewith frontier spirit

We challenge passionately without being satisfied with thecurrent situation.
We respond quickly to any changes, emphasizing on-site verification.
We Numberenrich ourlives bythinking,withinitiative and continuingof units
producedbyacting
product
category
Numberto grow.

Leaves grow throughthe spirit of collaboration
with coexistence andco-prosperity

We accept and respect differences in each other.
We help each other, treating all associates honestly.
We take care of the natural environment and maintain coexistencewith local community.
Number of employees
NumberFlowers bloom and fruits
grow through fulfilling
our commitments

We maximize the quality of work aiming for first-class quality undersafety-first policy.
We intend to be the strongest partner delivering customer delightbeyond satisfaction.
We support improving lives of people around the world through our work.

Activity Metric

Number

N/A

Total units recalled

NumberN/A

Revenue from products designed to increase fuelefficiency and/or reduce emissions

Reportingcurrency

P.40 Reduce energy loss

TR-AP-410a.1

Discussion andAnalysis

N/A

TR-AP-440a.1%

N/A

TR-AP-440b.1%

N/A

TR-AP-440b.2

Reportingcurrency

P.94-97 Consolidated Financial Statements

TR-AP-520a.1

Fiscal year ended
March 31, 2021

SASB Code

1. A company where its corporate philosophy isDescription
understoodbymanagement
all employeesof theof risks associatMaterials Sourcing
ed withandthe usecriticalmaterials
around theworld, and where all employees think
actofbythemselves
2. A company that has a global presence with original
new
products
Percentage
of products
sold andthat are recyclable
services appreciated for high quality and functions
Materials Efficiency
Percentage of input materials from recycled or
3. A company which everyone involved can be proudof the “NTN” brandremanufactured content
Competitive Behavior

Stance to Stakeholders

Total amount of monetary losses as a result of legal proceedings associated with anti-competitive
behavior regulations

Our Vision

TR-AP-250a.1

Realization of a
“NAMERAKA Society”

Fiscal year ended
NTN Group
to realize a SASB CodeMarch aims
31, 2021“NAMERAKA Society” throughpracticing its corporate philosophy.
As a company that is trusted and
N/A
RT-IG-000.A
needed by communities
includingstakeholders, we engage inbusiness activities with anemphasisonCreation
respect of human
P.9-10 Valuerightsand compliance.
Process
P.89-90 Consolidated
Financial Indicators(Past 11 Years)

RT-IG-000.B

Employees

NTN
Group respects diversity, individuality
and aMetricsafe and healthy workplace
Topic
Accounting
Unit of environment
Measurewhere employees can work successfully.

Customers

NTN Group seeks to maximize
satisfaction and trust by providingNumber
products andP.85-86 Monozukuri
Numbercustomerof parts produced
services of superior quality, safety and reliability.

Business partners

NTN Group, in a fair and free environment, builds good partnerships with its business partners andgrowthof andpartsdevelopment.
produced
Activity Metric works together for mutualWeights

Local communities

M/T

N/A

TR-AP-000.B

NTN Group respects cultures and customs in the local communities andbuilds long-term trust relationships by meeting their expectations through its business activities.
Area of manufacturing plants

Shareholders

TR-AP-000.A

SASB Index

Challenge

Design for Fuel Efficiency

Number of recalls issued

Activity Metric

Activity MetricCredos

Product Safety

Company Data/Investor Information

Founders'
Corporate
Remanufacturing Design & Services
Spirits
Philosophy

Revenue from remanufactured products andremanufacturing services

N/A

P.44 Resource Recycling

Prevention
NTN has newly established “Make andthePollution
world NAMERAKA”
as a brand statement in order to makethe NTN Group's purpose
https://www.ntnglobal.
ton*com/en/csr/environment/
TR-AP-150a.1
of being widely recognizedboth in Japanand overseas,climate-change.html
and communicate globally our goal to realize a sustainable
P.44 Resource Recycling“NAMERAKA Society.” %and Pollution Prevention

Financial Report(2) Sales-weighted fuel efficiency for non-road
equipment(2) Percentage hazardous

ton*

TR-AP-130a.1

Business Strategies

Rate loss as much
Not disclosed
minimizing energy
as possible.

(1) Total recordable incident rate (TRIR)SASB Code
Sustainability Management

Unit of Measure

Make the World "NAMERAKA"
Energy Management

Value Creation Story

We enhance information disclosure from “NTN Report 2021” based on the “SASB standards” issued by SASB
(Sustainability Accounting Standards Board). We disclose information according to the requirements of the Industrial
Machinery & Goods sector of the Resource & Transformation industry and the Auto Parts sector of the Transportationindustry, which are classified by SASB.
Although some indicators are not applicable to our company and indicators that we have not been able to disclose
are included, we disclose as much as possible and will continue to make efforts to enhance the disclosure of these
SASB topics.

number of bases*

NTN Group focuses on return for shareholders by sustainable profitable growth andbuilds long-term trust relationships with shareholders through active communications.

P.9-10 Value Creation
Process

TR-AP-000.C*Information is disclosed in units different from those required by SASB.

Environment

NTN Group harmonizes its business activities with nature andcontributes to preserve the global environment by providing its technologies, products and services.

* NAMERAKA Society: A society where people can easily lead a secure and fulfilling life in harmony with nature.
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NTN Report
NTN Report

NTN Report 2021126

1-3-17, Kyomachibori, Nishi-ku, Osaka 550-0003, Japan
https://www.ntnglobal.com/en/
CAT. No.1000-2/E 21.09.40 TK/TK