Contents
1

Progress Toward the Future: Our Products

2

Progress Toward the Future: Our History

4

Ten-Years Summary

6

To Our Shareholders and Investors

8Interview with the President

14

Corporate Governance17

Risk Information

19

Topics20

Consolidated Subsidiaries and Equity-Method Affiliates

22

Corporate Information

23

Shareholder Information

24

Financial Section

Annual Report 2014

Year Ended March 31, 2014

Progress Toward the Future
KYB Corporation

Forward-Looking Statements
This annual report contains forward-looking statements, including
KYB’s plans and strategies, as well as statements that report historicalresults. Forward-looking statements involve such known and unknown
risks and uncertainties as economic conditions; currency exchange
rates; laws, regulations, and government policies; and politicalinstability in principal markets.

KYB Corporation

Annual Report 2014

Progress Toward the Future Our Products

IN THE SKY, ON THE SEA,AND ON THE GROUND
KYB’s advanced technologies deliversafety and comfort

In 2015, KYB will celebrate the 80th anniversary of its establishment. Over the years, we haveused pioneering technologies involving hydraulics to meet a diverse array of customers’
needs involving automobiles, motorcycles, construction machinery, railroad cars, aircraft,ships and other applications. We also manufacture many products that combine hydraulictechnologies with electronics, control and other technologies. KYB will use these skills toachieve more progress in order to earn the trust and support of customers worldwide.
» www.kyb.co.jp/english/

5

KYB Holding Company
Production Base
Sales Office

Shock Absorbers

1

Steer-by-wire

Vane Pumps for CVT
Hydraulic Systems

Aircraft Components

2

6

Railroad Equipment

Vibration Control Devices

KYB Holding Company
Production Base
Sales Office1

Vibration Control Dampers
Actuators

Special-purpose Vehicles

46

Building Equipment

2

Construction Machinery
Semi-active Suspension
Systems for Bullet Train Cars

DLC Coated Front Fork

3

7

5

Automotive Components
7

Motorcycle Components

Rear Cushion Units
Hydraulic Cylinders

3

8
4

Hydraulic Valves

3

Concrete Mixer Trucks

Marine Equipment
8

Hejacules (Self Propelled
Hydraulic Jack)

1

KYB Corporation

Annual Report 2014

Progress Toward the Future Our History

A HISTORY OF PROGRESSThe KYB Group is constantly evolving.

Since starting operations in 1935, KYB has always been evolving to reflect changes inmarkets and the world. During this process of constant evolution, KYB has grown from apurely Japanese company into a global corporate group. To continue evolving on a global
scale, the KYB Group remains dedicated to working as a unified team to quickly meetcustomers’ needs and to providing technologies and products that make people’s lives safe
and comfortable.
Asia
1970
1976
1983
1996
2002

Japan
1935
1943
1956
1968
1971
1975
2004
2005
2006
2008
2011

2012
2013

Established Kayaba Manufacturing Co., Ltd.
Established Gifu Works (presently Gifu South Plant)
Established Kayaba Auto Service Co., Ltd. (presently KYB Engineeringand Service Co., Ltd.)
Established Gifu North Branch Plant (presently Gifu North Plant)
Established Kumagaya Plant and Mie Plant
Established Sagami Plant
KYB Trondule Co., Ltd., became a subsidiary.
Established Kayaba System Machinery Co., Ltd.
Unofficial company name was changed to KYB, new corporate
philosophy and vision were established.
Takako Industries Inc., became a subsidiary.
Established Gifu East Plant
Yanagisawa Seiki MFG Co., Ltd., became a subsidiary and changed its
name to KYB-YS Co., Ltd.
Established KYB Developmental Experiment Center and Machine Tools
CenterEstablished Electronics Technology Center
Established KYB Motorcycle Suspension Co., Ltd., for the manufactureand sale of motorcycle hydraulic shock absorbers (66.6% KYB
ownership)

2004
2005
2008
Gifu North Plant■ Electronics Experiment
Building

2010
2012
2013

Gifu South Plant■KYB Kanayama Co., Ltd.

Invested in Yung Hwa Machinery Industrial Co., Ltd., of Taiwan(55.1% KYB ownership)
Established shock absorber manufacturing company in Indonesia (30.0%
KYB ownership)
Established shock absorber manufacturing company in Malaysia(33.4% KYB ownership)
Established shock absorber manufacturing company (67.0% KYB
ownership) and automobile hydraulic components manufacturing
company in Thailand
Established motorcycle shock absorber manufacturing company inVietnam and automobile shock absorber manufacturing company in China
Established industrial-use hydraulic equipment manufacturing and sales
companies in China
Established sales company in Thailand
Established railroad equipment and motorcycle shock absorber
manufacturing and sales company in China
Established Regional Headquarters in China
Established motorcycle shock absorber manufacturing and sales
company in India (66.6% KYB ownership)
Acquired shares of concrete construction equipment maker in India andestablished a subsidiary (51.0% KYB ownership)
Established hydraulic components manufacturing and sales company inIndonesia (75.0% KYB ownership)

KYB (China) Investment Co., Ltd.

■ KYB Motorcycle Suspension

KYB Steering (Thailand) Co., Ltd.

■ PT. KYB Hydraulics

India Pvt. Ltd.

Manufacturing Indonesia■KYB-Conmat Private Limited

Americas
1974
1986
2001
Gifu East Plant■ Kayaba System MachineryCo., Ltd.

2004
2011

2012
Kumagaya Plant■KYB Trondule Co., Ltd.

2013

Established sales company in the United States
Established shock absorber manufacturing company in the United States
Automobile shock absorber manufacturing company in the UnitedStates became a wholly owned subsidiary.
Established sales company in Mexico
Established aftermarket hydraulic shock absorber sales company in Panama
Established joint venture company in Brazil with Mando Corporationof Korea (50.0% KYB ownership)
Merged U.S. subsidiary and its subsidiary, renamed KYB Americas
Corporation
Established hydraulic components manufacturing and sales company
in Mexico
Established aftermarket product sales company in Brazil

KYB Americas Corporation■KYB Mexico S.A. de C.V.

KYB-Mando do Brasil
Fabricante de Autopeças S.A.

■ COMERCIAL DE AUTOPEÇAS

KYB EUROPE
HEADQUARTERS GmbH■ KYB CHITA Manufacturing

KYB Manufacturing Czech s.r.o.

■LLC KYB Eurasia

KYB DO BRASIL LTDA.

Europe
1983
1989
1996
Sagami Plant■KYB-CADAC Co., Ltd.

2003
2008
2009
2012

Notes: 1. KYB ownership is as of March 31, 2014. Companies with no ownership shown		 are wholly owned subsidiaries.
2. A ■ mark represents sites that have been newly established or have increased
		 capacity.

2■ Production Technology
R&D Center / Machine
Tools Center■KYB-YS Co., Ltd.

2013

Acquired shock absorber manufacturing company in Spain
Established sales company in Germany
Established automobile hydraulic components manufacturing
company in Spain
Established automobile hydraulic shock absorber manufacturing
company in the Czech Republic
Established automobile shock absorber manufacturing and sales
company in Spain (66.7% KYB owned)
Established European Regional Headquarters in Germany
Established Regional Headquarters in the Netherlands; establishedsales company in Russia
Established aftermarket automobile suspension spring manufacturing
and sales company in the Czech Republic (70.0% KYB ownership)

Europe s.r.o.

3

KYB Corporation

Annual Report 2014

Ten-Years Summary
Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31,

Thousands of
U.S. dollars

Millions of yen

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2014

Net sales¥352,711¥305,752¥337,159¥320,083¥252,021¥329,262¥387,080¥356,083¥290,456¥270,329$3,424,379

Cost and expenses

334,541

295,279

315,621295,931

248,125

329,212368,809341,510

283,733

260,687

3,247,971

Operating income

18,17010,473

21,53824,152

3,896

50

18,271

14,573

6,723

9,642

176,408

5.2

3.4

6.4

7.5

1.5

0.0

4.7

4.1

2.3

3.6

5.2

Income (loss) before income taxes and minority interests

21,032

12,994

21,76024,4401,671(4,300)15,21813,481

8,009

10,138204,194

Net income (loss)

12,761

7,789

13,89817,014661(5,230)

8,398

6,959

2,917

5,501

123,893

Comprehensive income

20,31016,061

14,997

14,406

—

—

—

—

—

—

197,184

Return on equity (ROE)

9.7

7.3

14.8

21.1

0.9

—

9.9

8.7

4.0

8.0

9.7

Cash flows from operating activities

28,78818,984

17,39935,43322,655

8,499

19,707

20,35813,821

9,000

279,495

Cash flows from investing activities(36,078)(36,125)(20,000)(7,233)(12,828)(26,505)(20,166)(18,323)(15,960)(14,778)(350,272)

Cash flows from financing activities

5,709

8,529

(3,455)(16,968)(6,646)32,200

4,192(3,157)

2,966

192

55,427

R&D expenses

6,917

5,468

4,035

3,218

2,817

3,268

3,367

3,707

3,705

3,533

67,155

Depreciation and amortization

17,294

14,554

13,50813,427

15,31816,552

14,973

12,28910,407

9,997

167,903

Capital expenditure

29,90839,21527,173

8,916

10,082

24,96823,564

19,735

15,67814,070290,369

Working capital¥ 39,303¥ 22,179¥ 42,006¥ 46,023¥ 48,701¥ 43,513¥ 29,120¥ 23,758¥ 21,392¥ 26,492$ 381,583

Total net assets

153,997

116,435

102,762

89,96478,48976,45191,73987,81776,71870,656

1,495,117

Total assets

361,083

327,912301,349

285,134

269,361

269,655

289,739

285,146

247,966

222,224

3,505,660

Cash and cash equivalents at end of period

38,13235,21542,01048,12337,66434,272

20,073

16,651

14,963

13,960370,214

41.2

34.5

33.2

30.6

27.3

26.6

29.8

29.1

30.9

31.8

41.2

For the year:

Operating income margin [%]At year-end:

Equity ratio [%]Yen

U.S. dollars

Per share data:
Net income (loss)
Net worthCash dividends applicable to the year
P/E ratio [Times]
Number of employees

35.24¥ 62.87

582.28512.18453.00

9.00

8.00

7.9
13,033¥ 55.26

¥

¥

77.54

¥

3.03

¥ (23.62)

¥

37.72

¥

31.33

395.18336.55327.97387.45372.60

9.00

8.00

2.50

3.50

7.00

13.1

8.0

8.6

113.9

—

12,306

11,975

11,44010,977

11,370

¥

12.63

¥

24.15

$0.54

343.99316.64

5.65

7.00

6.00

6.00

0.09

10.2

20.8

35.2

15.2

7.9

11,546

10,596

8,387

8,186

Note: U.S. dollar amounts were translated from Japanese yen, for convenience only, at ¥103=U.S.$1, the approximate exchange rate prevailing on March 31, 2014.							

4

5KYB Corporation

Annual Report 2014

To Our Shareholders and Investors

SPEEDING UP GROWTHTO ACHIEVE OUR VISION
Solidifying ties with customers rooted in mutual trust

Outside Japan, we constructed a continuously variable

Distributing a suitable amount of earnings to shareholders

hydraulic cylinder plant for mid-sized hydraulic excavators

is one of our most important priorities. Our basic policy isin Indonesia to serve customers in the ASEAN region.

to pay a dividend that is at least 2% of our consolidated

We established joint ventures in India, one for motorcycle

shareholders’ equity.

shock absorbers and the other for concrete mixer trucks.

The dividend applicable to fiscal 2013 was ¥9 (US$0.09)

In Brazil, we established a company that imports and sells

per share, the sum of a ¥4 interim dividend and a ¥5

aftermarket automotive shock absorbers.

year-end dividend. Increasing retained earnings is also

To give the KYB Group a more powerful R&D

important in order to fund capital expenditures and R&D

infrastructure, we constructed a new building for our

expenditures. Our goal is to maximize shareholder value

Fiscal 2013 Business Climate

Production Technology R&D Center and Machine Tools

through sustained growth.

In fiscal 2013, year ended March 31, 2014, economies

Center at Gifu East Plant.

In December 2013, we issued new shares by way ofthird-party allotment. Proceeds will be used to expand ourin Japan, the United States and Europe began to show
signs of a recovery. However, the economic outlook in

Fiscal 2013 Performance

consistent earnings base, fund investments to support

China became increasingly uncertain as growth of capital

The KYB Group’s net sales increased ¥47.0 billion, or

sustained growth and improve financial soundness as theexpenditures slowed. Furthermore, the pace of economic

15.4%, to ¥352.7 billion (US$3,424 million). Growth

KYB Group continues to grow. Specifically, investments

recoveries slowed in some emerging countries due towas attributable mainly to higher sales of automotive

to enlarge and reinforce the Group’s manufacturing

weakening currencies and other reasons.

components outside Japan and to the weaker yen.

infrastructure will be the primary use of these proceeds.

Earnings benefited from structural reform initiatives

These new facilities will give us an even sounder base forsource of demand for our products, sluggish sales were

throughout the Group, chiefly cost reduction programs. As

generating long-term earnings growth.

foreseen because of the end of the previous fiscal year’sa result, net income increased ¥5.0 billion, or 63.8%, toeco-car subsidy. However, fiscal 2013 new car shipments¥12.8 billion (US$124 million).

In Japan’s automobile industry, which is one major

KYB will celebrate its 80th anniversary in March2015. Our organization has had to overcome countlesschallenges in Japan and overseas during the past eight

reached the highest level since fiscal 2006. Introductionsof new models and a rush to buy before the April 2014

Fiscal 2014 Outlook

decades. The KYB Group of today is the result of theconsumption tax hike were the main reasons.

In fiscal 2014, the year ending March 31, 2015, we will start

hydraulic technologies, monozukuri (manufacturing

In the construction machinery industry, which also

a new medium-term business plan that will continue toexpertise) skills and global network that our predecessors

accounts for a significant share of our sales, demand

March 2016. This plan is the second phase of our activities

created. Everyone at the KYB Group has a strong

was strong in Japan mainly due to purchases prior to thefor achieving our vision for fiscal 2020 that we announced incommitment to tackling more challenges and fulfilling

consumption tax hike and upcoming tighter restrictions

fiscal 2011: Compete and Win on the Global Stage with theour medium-term targets so that we can pass on an

on emissions. In China, there was only a small upturn

Power of the KYB Group. We have reached a critical period

even stronger organization to the next generation. Ourin construction machinery demand in part because thefor speeding up growth to achieve our vision.

significant accomplishments in recent years put us in an

expected rebound in excavator demand did not happen assoon as anticipated.

Masao Usui

Earnings Distributionstransmission (CVT) vane pump plant in Mexico and a

The economic outlook remains unclear. Economies in

excellent position for even more progress in order to meet

North America and Europe are likely to remain healthy in thethe expectations of shareholders, investors and all otherfiscal year. On the other hand, there are concerns about astakeholders.

Fiscal 2013 Investments

downturn in demand in emerging countries. In Japan, theThe KYB Group has been taking numerous actions toeconomy is expected to continue improving, but the higher

enlarge and upgrade manufacturing, sales and productconsumption tax may have a negative impact.

development capabilities. All investments were aimed

We forecast higher sales in the automotive components

at meeting demands of customers worldwide with evensegment, including sales of aftermarket products, primarily

more speed.

due to growth in automotive shock absorber sales. We

July 2014

In Japan, we constructed plants for mini-excavator

also anticipate higher sales in the hydraulic components

Masao Usuihydraulic cylinders, castings for mono-block valves and oil

segment, mainly for construction machinery components,

Representative Director, President Executive Officer

dampers for seismic isolation systems. Additionally, we

because of the expected recovery in demand forused part of the motorcycle shock absorber business toconstruction machinery in China.

form a jointly owned company with Yamaha Motor Co., Ltd.

67

KYB Corporation

Annual Report 2014

Interview with the President

PROGRESSTOWARD THE FUTURE

11
314
10

Earning Trust from Customers and Capturing Orders

5

2 7

17

26

14

The KYB Group started a new medium-term business plan in April 2014 (hereinafter the2014 mid-term plan) that covers the three-year period ending March 31, 2017. KYB president
Masao Usui talks about the new plan, which shifts the Group’s focus to strategies for growthamid the current challenging operating environment.

4
13 21
6
25

23
22

12

27

20

1 16 18 19 24

9
8

Newly established

Q. What is your assessment of KYB’s performancethe 8.0% target. But we also made progress. As aresult, I believe the 2011 mid-term plan gave us aduring the 2011 mid-term plan which ended

base for adopting a more aggressive stance as we

March 31, 2014?

start our new medium-term business plan.

A. This was a period of “planting seeds” and“building a stronger foundation.” The KYB Group
concentrated on building an infrastructure
capable of meeting the demands of ourcustomers around the world.

Q. What were the primary investments during the2011 mid-term plan?

A. We added new manufacturing and sales bases in

Our vision for fiscal 2020, ending March 31, 2021,

Japan and overseas. We also made investments

is to be a highly reliable organization that supplies

to increase output at existing plants. Overall,

products to all of the world’s major automobile andthese investments give us an infrastructure that

construction machinery manufacturers. The 2011

can rapidly respond to customer demand.

mid-term plan that just ended was a phase for us
to plant seeds and build a foundation for taking theAchieving sustained growth will require assembling

actions needed to make this vision a reality. Thea global network with our operations in the bestplan’s slogan was “Compete and Win on the Global

possible locations. Then we must use our resources

Stage with the Power of the KYB Group.” Numerous

in each region of the world to create a steady stream

actions were taken to set the stage for growth,of innovative products and systems.

including substantial up-front investments. Initially,
we planned on capital expenditures of ¥77.7 billion

development and production activities at Kayaba

during the plan’s three years. But these expenditures

System Machinery and increased mini-excavator

totaled ¥96.3 billion as we moved swiftly to respondcylinder output at KYB-YS. Furthermore, weto shifts in market conditions.

constructed new plants at KYB Trondule for high-The past three years were extremely difficult.

8

In Japan, we expanded seismic isolation productperformance electric power steering (EPS) electronic

The Great East Japan Earthquake, flooding incontrol units, at KYB Kanayama for EPS parts and a

Thailand, slowing economic growth in China andcontinuously variable transmission (CVT) hydraulicthe prolonged economic crisis in Europe were justpumps, and at KYB-CADAC for control valve castings.

a few of the events that created challenges for the

Two more major projects were the construction

KYB Group. Due to these challenges, net sales wereof a test course and an Electronics Experiment¥352.7 billion (US$ 3,424 million) compared with the

Building. Outside Japan, we constructed a CVT

medium-term plan target of ¥400.0 billion and thehydraulic pump plant in Mexico (production to start inoperating income margin was 5.2% compared with

September 2014), and a motorcycle hydraulic shock

15

Increased capacity

Major KYB Group Investments
Development and Manufacture of Shock Absorbers
1
Developmental Experiment Center (new building)2
Technical Center (new building)3
Plant expansion
4
Increase R&D personnel
5
Increase R&D personnel

KYB Corporation
KYB Americas Corporation
KYB Manufacturing Czech s.r.o.
KYB (China) Investment Co., Ltd.
KYB EUROPE HEADQUARTERS GmbHJapan
America
Czech Republic
China
Spain

Manufacture and Sales of Aftermarket Shock Absorbers
Increase productivity
7
Increase productivity
8
Increase productivity
9
New sales company
10
New plant (spring)11
New sales company

KYB Industrial Machinery (Zhenjiang) Ltd.
KYB Americas Corporation
KYB-Mando do Brasil Fabricante de Autopeças S.A.
COMERCIAL DE AUTOPEÇAS KYB DO BRASIL LTDA.
KYB CHITA Manufacturing Europe s.r.o.
LLC KYB Eurasia

China
America
BrazilBrazilCzech Republic
RussiaManufacture of CVT Pumps
New plant
13
New plant
14
New plant

KYB Steering (Thailand) Co., Ltd.
KYB Industrial Machinery (Zhenjiang) Ltd.
KYB Mexico S.A.de. C.V.

ThailandChina
MexicoElectronics Technology and Product Development
Electronics Technology Center (new building)
16
Machine Tools Center (new building)17
New plant

KYB CorporationKYB Corporation
KYB Trondule Co., Ltd.

Japan
Japan
Japan

KYB CorporationKYB Corporation
PT. KYB Hydraulics Manufacturing Indonesia

Japan
Japan
Indonesia

KYB Hydraulics Industry (Zhenjiang) Ltd.

China

KYB-CADAC Co., Ltd.
KYB-YS Co., Ltd.

Japan
Japan

Manufacture and Sales of Motorcycle
New company
25
New company

KYB Motorcycle Suspension Co., Ltd.
KYB Motorcycle Suspension India Pvt. Ltd.

Japan
India

26

Manufacture and Sales of Concrete Mixers
New company

KYB-Conmat Pvt. Ltd.

India

Manufacture and Sales of Seismic Vibration Dampers
New plant

Kayaba System Machinery Co., Ltd.

Japan

6

12

15

Manufacture of Hydraulic Equipment for Excavators
Increase productivity (cylinders for large-sized excavators)
19
New plant (cylinders for mid-sized excavators)
20
New plant (cylinders for mid-sized excavators)
New plant (cylinders for mid-sized excavators and motors for21
mini excavators)
22
New plant (control valve casting for mid-sized excavators)
23
New plant (cylinders for mini excavators)
18

24

27

9

KYB Corporation

Annual Report 2014

Interview with the President

Automotive Components Operations

Hydraulic Components Operations

For CVT pumps, we have established a global supply

For components used in construction machinery,

network with facilities in Japan, China, Thailand andwhich accounts for the majority of sales in thisMexico to meet the needs of our customers. Our

business, we must become more cost competitive

CVT pump output was 3.36 million units in fiscal

on a global scale and increase our market share.

2012 and I expect that this will increase to 5.16
million units in fiscal 2014.

KYB Developmental Experiment Center (test course)

absorber plant (production to start in April 2015)
and a special-purpose vehicle plant (joint venturewith Conmat Systems Pvt. Ltd.) in India. There areseveral other new overseas plants: an aftermarket
spring plant in the Czech Republic (production
started in January 2014); a hydraulic cylinder plantin Indonesia (production to start in December 2014);
an aftermarket shock absorber sales company (sales
started in January 2013) in Russia; and a shock
absorber plant and aftermarket shock absorber sales
company (sales started in February 2014) in Brazil

Q. Please explain the strategic goals of the 2014For hydraulic cylinders, we must overcome fierce
competition from companies in China, Korea andWe plan to increase shock absorber sales to

India. We are cutting costs wherever possible. For

U.S. and German automakers by offering high-example, we are developing lower-cost cylinders,

performance shock absorbers and other innovativelowering the cost of materials purchased overseas,products. Non-Japanese automakers accounted forand performing more production processes internally.

18% of our shock absorber sales in the past fiscal

Our target is a cost reduction of 30% by fiscal 2016,

year. Our goal is to raise this to 20% in the current

the final year of the 2014 mid-term plan. We wantfiscal year and to 34% by fiscal 2020.

to increase our market share for drive motors and

For aftermarket shock absorbers, we raised sales

other products as well. We plan to receive orders

from 14 million units in fiscal 2010 to 18.9 million

consistently and raise sales by promoting Group

mid-term plan and the activities planned in eachunits in fiscal 2013. We plan to raise these sales toin-house production to cut the variable expense ratio

business of the KYB Group.

28 million units by fiscal 2020.

and by increasing local procurement of parts and

A. The plan has three central elements: become

In 2013, we established KYB Motorcycle
Suspension with Yamaha Motor Co., Ltd. I wantmaterials.
In China, we have sold hydraulic components

even more competitive, develop new

this new company to use the advantages of its joint

mainly to Japanese companies. Now, our goal istechnologies and products, and enter new

ownership to offer benefits to customers in Japanto triple our sales to Chinese companies between

markets and business fields. By focusing on theseand other countries while tapping the know-how of

now and fiscal 2016. We plan to accomplish this bygoals, we aim to earn the trust of customers

Yamaha Motor. As one part of these activities, I wantincreasing output capacity while continuing to train

worldwide and capture more orders.

to see this company supply components for many

our workforce in China. Demand is growing for mini

new products, like Yamaha’s TRICITY three-wheeland small-sized excavators. In this category, thescooter that is sold in Thailand.

KYB Group will heighten its presence as a supplierwith Mando Corp. All of these investments give us
a broad foundation for rapidly meeting the needs ofIn the 2014 mid-term plan, we are advancing from

customers in Japan and around the world.

the phase of “planting seeds” and “building aof a comprehensive lineup of high-quality cylinders,stronger foundation” to the pursuit of a growth

valves, motors and pumps.
In fiscal 2013, parts for construction machinery

strategy. We are determined to achieve much more
growth and progress during this three-year period.

accounted for 83% of our sales of hydraulicWe want to ensure that the investments wecomponents. To maintain steady growth in thismade during the previous medium-term businessbusiness, as well as from the standpoint of risk

plan generate growth for the KYB Group. To achieve

management, we need to increase sales ofthis growth, we will fully utilize our products,

components used in other products like agricultural

technologies, human resources, sales channels

machinery, railway cars and aircraft.

and production sites. Improving quality and raising
Targets for Increasing Non-construction Machinery Sales

manufacturing efficiency to become more costcompetitive are two more goals. Additionally, every
group company will focus on developing products

TRICITY (2014 Thailand Model)

quickly to prevent missing any opportunities,

36%

20%

17%

supplying distinctive products, extending sales tocompanies and regions we do not currently serve,and starting operations in new business fields and

83%

80%

64%

industries. Our ultimate objective is to earn the trustof customers worldwide and capture more orders.
The 2014 mid-term plan establishes the following
goals for each business operations.

2013

2016

2020 (Fiscal)

Non-Construction Machinery
Construction Machinery

10

11

KYB Corporation

Annual Report 2014

Interview with the President

Q. What are the KYB Group’s main goals other thanfor the three business units?

A. We will continue to concentrate on the themes ofmonozukuri and human resources development.

Q. Capital expenditures were very high during the

Q. What is the earnings target of the 2014 mid-term

2011 mid-term plan. What are your plans for theplan?

2014 mid-term plan?

A. We established an earnings target that covers the

A. We will make investments for streamlining

shortfall of the previous plan and shifts our focus

operations, performing more in-house production
The central goal of the 2014 mid-term plan is

to growth.

and improving productivity.

earning trust and orders from customers around the

Our goals for fiscal 2016 are net sales of ¥430 billion

world by unifying the KYB Group’s functions. One

We plan to make capital expenditures of ¥83

and an operating margin of 7%. We are starting to

objective is growth by speeding up the expansion

billion during the 2014 mid-term plan. Developing

see encouraging developments in Europe and theof our operations on a global scale. Our activities

new technologies and products and upgrading theUnited States. However, there is uncertainty about

will also recognize the vital importance of the

production infrastructures will be the primary uses ofthe effects of instability in the Ukraine, Thailand andpeople who work in monozukuri (manufacturing

these expenditures. There will also be investments

the Middle East. KYB will take the actions needed

and North America, where demand is growing.

expertise) operations and people who support thesefor streamlining operations and performing more

to improve productivity and develop products in a

For railway cars, our plan is to target opportunities

operations.

production processes internally. Aging equipment

timely manner regardless of changes in our operating

For agricultural machinery, we will target China

created by the resumption of China’s production of

The KYB Group is concentrating on monozukuri

will be updated or replaced as well. All of theseenvironment. I am determined to cover the earnings

high-speed trains. We want to start or increase sales

and human resources development in unison as it

investments will contribute to improving productivity

shortfall of the 2011 mid-term plan and maketo China’s two major manufacturers and the big threeconsiders these issues to be priorities in order tofor the entire KYB Group.

progress during the new plan toward our goal—sales

rolling stock manufacturers of the world. For aircraft,

resolve problems involving quality control, secure

we plan to extend sales of hydraulic components

cost competitiveness and come up with new

to manufacturers other than Boeing for commercial

products in a timely manner to win the trust ofplanes. For public-sector aircraft, we will establish acustomers.

of ¥600 billion in fiscal 2020.

position as a Tier I (system supplier) company
in Japan.

Monozukuri
The KYB Group will continue the campaign to cut

Special-purpose Vehicle Business,lead times in half. Until now, these activities were

System Products and Electronics Components

mostly executed in Japan. We are now extending

For special-purpose vehicle business, we arethis campaign to overseas group companies andincreasing sales in Oceania and India, mainly forsuppliers. Shortening lead times will also improve

concrete mixer trucks. In Oceania, we are targeting

the Group’s productivity. Furthermore, we are

new sources of demand following the launch ofworking on reducing logistics expenses by

our energy-efficient e-Mixer truck. In India, we areupgrading our distribution activities in Japan andmanufacturing concrete mixer trucks at a company

other countries.

jointly owned with Conmat Systems. Our goal isa market share of 20% in fiscal 2016. In Japan,

Human Resources Development

earthquake recovery activities and projects for the

To continue to grow, the KYB Group must have a

upcoming Tokyo Olympics are expected to support

workforce with a global perspective, and that isdemand for concrete mixer trucks. We will build

highly skilled. This is why we are reinforcing oura production framework, including an automatedtraining programs throughout the Group. We are also

welding line, capable of meeting the anticipatedenabling our people to move among different jobs

growth in demand.

and companies. Developing management personnel

For system products, we foresee demand

who will handle overall Group management isassociated with the Tokyo Olympics, mainly for

another goal. In addition, the KYB Group will reformseismic isolation products. All KYB Group companies

our personnel rating system. We will establish awill share information and create a variety ofsingle evaluation system for the entire Group, create

proposals to capture orders.

rules for transferring people from one country to

A vehicle undergoes testing in the radio wave darkroom

Forecast for Capital Expenditures

Targets for the 2014 Mid-Term Plan

(Billions of yen)(Billions of yen)
31.0

30.0

Strengthen the global revenue base for fiscal 2020

22.0

2014

2015

2016 (Fiscal)¥83.0 billion forthe 2014 mid-term plan
Note: Capital expenditures from fiscal 2014 to
fiscal 2016 is on a forecast basis.

2013(Actual)2016(Targets)

2020(Targets)

Net Sales¥352.7¥430.0¥600.0Operating
Income

¥18.2

¥30.0

¥48.0

Operating Income
Margin

5.2%

7.0%

8.0%

another, and enact other reforms.

12

13

KYB Corporation

Annual Report 2014

Corporate Governance

Basic Policy for Corporate Governance

The KYB Group positions the upgrading of its corporate

Group Company Management Committee

3. Risk management

This council discusses important matters concerning

Head office departments are responsible for theof the KYB Group are managed by the Board of Directors,

the management of business operations at groupmanagement of risk as well as for monitoring issues

Board of Executive Officers and other units. When a major

companies in Japan.

involving risk management and responding as needed to a

problem occurs, KYB establishes an Emergency Response

governance as one of its highest priorities in order to

Risks associated with the businesses and investments

natural disaster or other such event. KYB has established

Headquarters led by the company President. This

increase corporate value as the Group’s activities become

Global Strategy Committee

rules and guidelines for risks associated with compliance,

headquarters collects and analyzes information about themore global. In addition, we regard making contributions toThis committee discusses important mattersthe environment and safety, natural disasters andevent and oversees actions aimed at minimizing damage

society, including stakeholders, as our primary mission.

concerning the management of group companies in

accidents, product quality, information security, export

and other losses.

other countries.

controls, and other items. KYB also supervises, evaluates,

Management Principles

and provides guidance for the implementation of these

The KYB Group contributes to society by providing

Operation Review with the President

technologies and products that make life safe andThese meetings are held at each site, with KYB’s

comfortable.

president reviewing problems involving the quality of

1.	Challenge higher objectives and construct a livelier

products and issues concerning management.

corporate cultural climate.
2.	Maintain grace and good faith, and pay attention tonature and the environment.
3.	Always seek creative ideas and contribute to theBoard of Corporate Auditors

Compensation

This board consists of four standing auditors, including
two outside auditors (one of whom is an independent

progress of customers, shareholders, suppliers, andauditor). KYB believes that audits performed bysociety.

these auditors provide for the effective oversight ofmanagement and create an effective framework forgovernance. There are no personal, financial, business,

Corporate Governance Systems

rules and guidelines.

or other relationships involving financial or otherinterests between KYB and the outside auditors.

1.	Compensation for directors and corporate auditors and the number of applicable individuals
Category

Total compensation(millions of yen)Compensation by category (millions of yen)
Basiccompensation

Stock options

Number ofapplicable
individuals

Retirement
payments

Bonuses

Directors

346

265

—

81

—

7

Standing auditors(excludes outside auditors)

43

43

—

—

—

2

Outside auditors

41

41

—

—

—

2

1. Overview of the corporate governance system

Audit Department

2. Compensation paid to the independent auditor

KYB uses the Board of Auditors system and has

The Audit Department performs internal audits. This

2. Compensation paid to the independent auditor

the following units for the purpose of ensuring thedepartment performs audits of all business sites and2014

effectiveness of corporate governance. In addition, we aregroup companies in accordance with the rules fortaking actions to strengthen the framework for overseeinginternal audits. To ensure that audits are performed

KYB Corporation

57

22

62

efficiently, there are periodic meetings with the Board

Consolidated subsidiaries

20

—

8

—

77

22

70

21

group management activities.

of Corporate Auditors to share information about
Board of Directors

annual audit plans, discuss matters involving audits,

The Board of Directors has seven members and,exchange opinions about internal controls, and discuss

in principle, meets once each month. Directors

other matters.

reach decisions about items prescribed by laws andregulations as well as policies and other important

2. Internal controls

matters involving management. The directors also

KYB positions internal controls as a vital base for theoversee the management of business operations.

effective functioning of corporate governance. Internal
controls contribute to heightening the transparency ofBoard of Managing Executive Officers/Board ofbusiness operations as well as to making these operations

Executive Officers

effective, efficient, and reliable.

KYB uses the executive officer system for theEvery year, the Board of Directors approves resolutions

purposes of separating the role of management

regarding the Basic Policy for Internal Controls, which

supervision and the management of businesscovers systems for compliance, information management,

operations, speeding up decision-making, andand group management.

Category

Compensation foraudit certification

Total

Millions of yen
2013
Compensation for
non-auditing services

Compensation foraudit certification

Compensation for
non-auditing services
21

Thousands of U.S. dollar (Note)2014
Category

Compensation foraudit certification

Compensation for
non-auditing services

KYB Corporation

553

Consolidated subsidiaries

194

—

748

214

Total

214

Note: U.S. dollar amounts were translated from Japanese yen, for convenience only, at ¥103=US$ 1, the approximate exchange rate prevailing on March 31, 2014.

3. Other Significant Compensation
Three consolidated subsidiaries, including KYB Americas
Corporation, have paid ¥100 million to KPMG International,
which belongs to the same network as the independent
auditor used by the Company, for audit certification andother services for fiscal 2013.

improving the efficiency of management.
Executive officers meet to hold discussions about
important matters associated with management.
14

15

KYB Corporation

Risk Information

Corporate GovernanceThis section explains the major risk factors involving

Management Structure and Internal Controls

the KYB Group’s results of operations and financial

Elect / Dismiss

Elect / Dismiss

Audit

Cooperation

Audit
Department

Internal
audit

Auditing

and hydraulic components operations depend greatly

1. Risks Relating to the Economic Environment

Board of Managing
Executive Officers

Legal Affairs Dept.
(In charge ofcompliance)

Sales of the KYB Group’s automotive componentsof March 2014.

on the global production volume of automobiles andBoard of Executive
Officers

construction machinery. The profitability of these
two businesses fell sharply due to the decline indemand for these products during the global economic

Quick report

Executive
Officer for CSR

Opinions andcomplaints

Certified Public Accountant

Executive
Officer for
Legal Affairs

1. Demand Trends

represent the judgments of the KYB Group as of the end

LawyerBoard of Directors

Representative
Director, President
Executive Officer

ReportCooperation

by investors. Forward-looking statements in this section

Elect / Dismiss

Board of Corporate Auditors(including two outside auditors)

2. Risks Relating to Business Operations

position that may have a significant effect on decisions

Annual Shareholders’ Meeting

Cooperation

Annual Report 2014

Operation
Review with
the President

GlobalStrategy
Committee

Group
Company
Management
Committee

1) Economic Climate

downturn caused by the financial crisis. Future

Consolidated net sales consist primarily of parts thatchanges in demand, including shifts associated withare sold to makers of automobiles and motorcycles,

government economic stimulus measures, may haveconstruction machinery, and commercial vehicles.

a significant impact on results of operations. In the

Manufacturers of these parts are expanding overseas

special-purpose vehicles business, which involves

operations even faster in response to the growing

primarily concrete mixer trucks, demand may beoverseas manufacturing activities of their customers.

significantly influenced by changes in the volume of

The KYB Group supplies parts to customers outside

construction activity, which is closely linked to theJapan from plants in the Americas, Europe and Asia.

economic outlook, as well as by changes in laws andThese overseas plants are vulnerable to fluctuations

regulations, such as restrictions on vehicle emissions.

in demand, and the resulting changes in customers’(whistleblowing)production volume, caused by changes in the

Head Office Divisions, Departments, Group Companies, Branches, Representative Offices

2) Prices and Quality

economies in the regions where these plants are

The KYB Group’s products are subject to intense

located. As a result, there may be a significant impact

price-based competition in Japan and other countries.

on the KYB Group’s results of operations and financial

Customers are always asking for cost cuts and lower

condition.

prices. Quality is also critical. The Group supplies
vital automotive parts, such as shock absorbers,2) Fluctuations in Exchange Rates and Interest Rates
Management (As of June 25, 2014)
Representative Director,
ChairmanTadahiko Ozawa

Representative Director,
President Executive Officer

Masao Usui

Representative Director,
Executive Vice President
Executive Officer

Kazuhisa Ikenoya

16

Member of the Board of
Directors, Executive Vice
President Executive Officer

Akiyoshi Tanaka
Members of the Board of
Directors, Senior Managing
Executive Officers

Yasusuke Nakajima
Keisuke Saito
Morio Komiya
Managing Executive Officers

Keiichi Handa
Takafumi Shoji
Kazuhiro Ogata
Eiji Hisada
Tadao Ogoshi
Takaaki Kato
Yasuo Ooe
Masao Ono

Executive Officers

Shigeo Kidokoro
Hitoshi Arakawa
Hiroshi Ogawa
Hideki Nonoyama
Kenji Yamanouchi
Kazuaki Shoji
Shizuka Sakai
Ikuo Inagaki
Sadaaki Hara
Toshihiko Hatakeyama
Osamu Kunihara

Standing Auditors

Haruki Ubukata
Tomoo Akai
Michio Tani *Osamu Kawase ** Outsidewhich maintain a vehicle’s stability, and power

Overseas sales are 52.0% of the KYB Group’s total net

steering systems. For construction machinery andsales. As a result, changes in foreign exchange rates

commercial vehicles, the Group supplies key functional

may have a significant impact on the Group’s exports

components such as hydraulic cylinders and motors.

from Japan as well as the performance of group

Consequently, if the Group supplies a defective

companies in other countries.

product, there may be substantial expenses due to

An increase in interest rates in Japan or othercustomers’ demands for the payment of damages andcountries may have a significant impact on the KYB

other events. Furthermore, sales volume and prices forGroup’s results of operations.

aftermarket automotive shock absorbers will probably
be influenced by changes in the health of regional
economies and the actions of competitors.
3) Procurement of Materials and Parts
The KYB Group purchases materials and parts froma large number of suppliers. Prices of materials andother items are closely linked to prices on internationalcommodity markets. If the Group is unable to fullyreflect an increase in the cost of materials or parts in
its selling prices, or if the Group is unable to reduce
prices of materials and parts sufficiently to reflect a
reduction in selling prices, there may be a significant
impact on results of operations.
17

KYB Corporation

TopicsRisk Information

4) Fund procurement
The KYB Group uses loans from financial institutionsin Japan and other countries to meet requirements

Annual Report 2014

3. Risks Relating to Significant Litigation
or Other Legal Action

The Future of Hydraulic Systems– Seismic Isolation Dampers

involving capital expenditures and working capital. The
Group takes out these loans while carefully monitoring

If the KYB Group is the defendant in a law suit and the

The government of Japan, a country with manyfinancial markets. However, the Group may not be

outcome is unfavorable, the resulting demands andearthquakes, has established the goal of raising theable to procure funds in a timely manner at favorable

requirements may have a significant impact on thepercentage of earthquake-resistant houses and buildings

terms if there is broad decline in prices of the Group’sGroup’s results of operations.

with many occupants to 90% by 2015. Following Tokyo’s

products, an economic recession, a credit crunch,selection to host the 2020 Olympics, demand fora decline in the Group’s credit rating, or for otherearthquake-resistant structures is expected to become

reasons. Any of these events may affect the Group’s
financial condition and results of operations.

4. Risks Relating to Fires, Accidents
and Natural Disasters

even higher. KYB has supplied seismic isolation dampers
for many structures in Japan, including the Tokyo Skytree,
the tallest tower in the world, and Tokyo Station. KYB
seismic isolation dampers were chosen for another new5) Worsening Overseas Business Conditions
If there is a bankruptcy at a KYB Group overseas

Many plants of the KYB Group produce hydraulicTokyo landmark, the Toranomon Hills Building that was

manufacturing base caused by a decline in orders,

products that utilize the properties of oil. In addition,completed in June 2014. A total of 516 of KYB’s largest oil

falling earnings or some other reason, there may be aplants often have coating equipment that uses organic

dampers were used in this building to absorb the energy

significant impact on the Group’s results of operations.

solvents and storage tanks for various oils, chemicalsof tremors covering a broad range of intensities. KYB will

and other substances. If there is a fire or a leak of acontinue to utilize its hydraulic technologies to contributehazardous substance, manufacturing activity may haveto the safety of buildings and structures.

6) Counterparty Credit Risk
The KYB Group sells its products to automobile andconstruction machinery makers and many other

Toranomon Hills

Oil damper

to be suspended temporarily.
In Japan, many plants of the KYB Group and its

customers. An unexpected problem involving credit

suppliers are located in the Chubu area (central area ofrisk of a customer may affect the Group’s results ofJapan’s mainland). If there is a major earthquake in thisoperations.

region or other disaster that prevents these plants fromThe Future of Electronics
Electronics
Experiment
Building– The New KYB Electronics Experiment Building

operating, there may be a substantial decline in theGroup’s production capacity.

Meeting the needs of customers requires developing

In addition, if an earthquake, fire, conflict, act ofautomotive and construction machinery components

terrorism or other event outside Japan occurs wherethat use electronics as well as hydraulic technologies.

the KYB Group has a plant, there may be a substantial

This is why KYB constructed the Electronics Experimentdecline in the Group’s production capacity.

Building, which brings together people and equipment forelectronics and electrical testing. Completed in February
2014, the new facility is located at the KYB Developmental
Experiment Center (test course). One feature is KYB’s
first large electromagnetic wave testing facility that has
an anechoic chamber with the highest possible blockingof these waves. The new building is environmentally
responsible with equipment that minimizes electricity
consumption during tests. KYB will use this facility todevelop electronics products that are even friendlier to theenvironment.

18

In a laboratory

19

KYB Corporation

Annual Report 2014

Consolidated Subsidiaries and Equity-Method Affiliates
As of March 31, 2014

Consolidated Subsidiaries

Japan
Name

Location

Principal business

Established

Ownership

Kayaba System Machinery Co., Ltd.

Tokyo, Japan

Manufacturing and sales of stage
equipment and seismic base isolationand vibration control dampers

Jul. 2004

100.0%KYB Trondule Co., Ltd.

Niigata, Japan

Manufacturing and sales of electronicequipment

Jun. 2004

100.0%KYB-YS Co., Ltd.

Nagano, Japan

Manufacturing and sales of shock
absorbers and hydraulic equipment

Apr. 1953

100.0%

Name

Location

Principal business

Established

Ownership

KYB CHITA Manufacturing
Europe s.r.o.

Chrudim,Czech Republic

Manufacture of suspension springs forautomobiles

Jan. 2013

70.0%

LLC KYB Eurasia

Moscow, Russia

Import and sales of shock absorbers

Jul. 2012

100.0%KYB Suspansiyon Sistemleri
Sanayi ve Ticaret, A.S.

Adapazari,Turkey

Import and sales of shock absorbers forautomobiles

May 2000

100.0%KYB Middle East FZE

Dubai,
United Arab Emirates

Sales of shock absorbers

May 2005

100.0%

Name

Location

Principal business

Established

Ownership

KYB (China) Investment Co., Ltd.

Jiangsu, China

Headquarter of KYB's China baseNov. 2010

100.0%

Wuxi KYB Top Absorber Co., Ltd.

Jiangsu, China

Manufacturing and sales of shock
absorbers for motorcycles

Aug. 2008

100.0%Asia

KYB-CADAC Co., Ltd.

Nagano, Japan

Manufacturing and sales of casting andmetal mold products

Mar. 1996

100.0%KYB Kanayama Co., Ltd.

Gifu, Japan

Manufacturing of shock absorbers andhydraulic equipment

Jul. 1970

100.0%

100.0%

Manufacturing and sales of shock
absorbers for motorcycles

Oct. 2013

66.6%

Manufacturing and sales of shock
absorbers for automobiles

Dec. 2002

Gifu, JapanKYB Industrial Machinery(Zhenjiang) Ltd.

Jiangsu, China

KYB Motorcycle Suspension Co., Ltd.

100.0%

Manufacturing and sales of hydraulicpump components and electronic
machine parts

Apr. 1973

100.0%

Manufacturing and sales of hydraulicequipment for industrial use

Feb. 2004

Kyoto, JapanKYB Hydraulics Industry(Zhenjiang) Ltd.

Jiangsu, China

Takako Industries, Inc.

KYB Trading (Shanghai) Co., Ltd.

Shanghai, China

Sales of shock absorbers and supplies
components

Nov. 2004

100.0%KYB Engineering and Service Co., Ltd.

Tokyo, Japan

Sales of shock absorbers and hydraulicequipment

Mar. 1956

100.0%KYB Steering (Thailand) Co., Ltd.

Chonburi, Thailand

Manufacturing and sales of pumps for
power steering

Oct. 1996

100.0%KYB Logistics Co., Ltd.

Gifu, Japan

Packaging and delivery of shock
absorbers and hydraulic equipment

Jul. 1987

100.0%KYB (Thailand) Co., Ltd.

Chonburi, Thailand

Manufacturing and sales of shock
absorbers

Jan. 1996

67.0%

KYB Asia Co., Ltd.

Samutprakarn,
Thailand

Sales of shock absorbers

Jan. 2005

100.0%KYB Motorcycle Suspension
India Pvt. Ltd.

Chennai, India

Manufacturing and sales of shock
absorbers for motorcycles

Dec. 2012

66.6%

KYB-Conmat Pvt. Ltd.

Gujarat, India

Manufacturing and sales of concreterelated construction equipment

Feb. 2013

51.0%

The Americas
Name

Location

Principal business

Established

Ownership

KYB Americas Corporation

Indiana, U.S.A.

Headquarters of KYB’s Americas base
Manufacturing and sales of shock
absorbers for automobiles

Oct. 2011

100.0%TSW Products Co., Inc.*

Kansas, U.S.A.

Manufacturing and sales of hydraulicequipment

Mar. 1990

100.0%

PT. KYB Hydraulics Manufacturing
Indonesia

Bekasi, Indonesia

Manufacturing and sales of hydraulicequipment for industrial use

Nov. 2013

75.0%

KYB Mexico S.A. de C.V.

Guanajuato, Mexico

Manufacturing and sales of pumps for
CVT

Oct. 2012

100.0%KYB Manufacturing
Vietnam Co., Ltd.

Hanoi, Vietnam

Manufacturing and sales of shock
absorbers for motorcycles

Oct. 2002

100.0%KYB Latinoamerica, S.A. de C.V.

Mexico D.F., Mexico

Sales of shock absorbers

Dec. 2004

100.0%TAKAKO Vietnam Co., Ltd

Binh Duong, Vietnam

Feb. 2003

100.0%KYB PanamA, S.A.

Panama City, Panama

Sales of shock absorbers

Sep. 2010

100.0%

Manufacturing of internal parts forhydraulic equipment

COMERCIAL DE AUTOPEÇAS KYB DO
BRASIL LTDA.

Curitiba, Brazil

Sales of shock absorbers

Dec. 2013100.0%KYB Manufacturing Taiwan Co., Ltd.

Taoyuan, Taiwan

Manufacturing and sales of shock
absorbers

Jun. 1963

55.1%

Name

Location

Principal business

Established

Ownership

TOWA MANUFACTURING CO., LTD.

Gifu, Japan

Manufacturing of hydraulic jacks andcylindersOct. 1948

33.4%

P.T. Kayaba Indonesia

Jakarta, Indonesia

Manufacturing and sales of shock
absorbers

Feb. 1976

30.0%

KYB-UMW Malaysia Sdn. Bhd.

Selangor, Malaysia

Manufacturing and sales of shock
absorbers

Jun. 1983

33.4%*Changed name to Takako America CO., INC. as of April 2014

EuropeName

20

Location

Equity-Method Affiliates

Principal business

Established

Ownership

KYB Europe Headquarters GmbH Krefeld, Germany

Headquarters of KYB’s European baseSep. 2009100.0%KYB Europe GmbH

Krefeld, Germany

Sales of shock absorbers

Jun. 1989

100.0%KYB Europe Headquarters B.V.

Limburg,
The Netherlands

Supervising European business

Apr. 2012

100.0%KYB Suspensions Europe, S.A.

Navarra, Spain

Manufacturing and sales of shock
absorbers for automobiles

Jul. 1975

100.0%KYB Steering Spain, S.A.

Navarra, Spain

Manufacturing and sales of pumps for
power steering

Jun. 1996

100.0%KYB Advanced Manufacturing Spain,
S.A.

Navarra, Spain

Manufacturing and sales of shock
absorbers for automobiles

Oct. 2008

66.7%

KYB-UMW Steering Malaysia
Sdn. Bhd.

Selangor, Malaysia

Manufacturing and sales of pumps for
power steering

Sep. 1995

33.4%

KYB Manufacturing Czech s.r.o.

Pardubice,
Czech Republic

Manufacturing and sales of shock
absorbers for automobiles

Aug. 2003

100.0%

KYB-Mando do Brasil Fabricantede Autopeças, S.A.

Paraná, Brazil

Manufacturing and sales of shock
absorbers for automobiles

Jun. 2011

50.0%

21

Corporate Information

Shareholder Information

As of March 31, 2014

As of March 31, 2014

Company Name:	Kayaba Industry Co., Ltd. (Use KYB Corporation as its popular name)Common Stock Issued:

257,484,315 shares

Head Office:	World Trade Center Bldg., 4-1, Hamamatsu-cho 2-chome,

Number of Shareholders:

18,018Transfer Agentand Registrar :Mizuho Trust & Banking Co., Ltd.
2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8670, Japan

Major Shareholders:

Name

		

Minato-ku, Tokyo 105-6111, Japan		

Tel: 81-3-3435-3511

		

URL: http://www.kyb.co.jp

Date of Establishment:

November 25, 1948

Fiscal Year:

April 1 to March 31

Paid-in Capital:¥27,647.6 million

Number of Employees:

13,033 (Consolidated basis)

Securities Traded:
Plants:Fax: 81-3-3436-6759

KYB Corporation

Annual Report 2014

Shareholdings(Thousands)

Percent of Total
Shares Issued

Toyota Motor Corporation

19,654

7.63

The Master Trust Bank of Japan, Ltd. (Trust Account)

13,256

5.15

11,846

4.60

Tokyo Stock Exchange (First Section)

NORTHERN TRUST CO. (AVFC) SUB A/C BRITISH CLIENTS (Standing
Proxy: The Hong Kong and Shanghai Banking Corporation Limited,Tokyo Branch, Custody Business Department)

Sagami, Kumagaya, Gifu North, Gifu South, Gifu East

Meiji Yasuda Life Insurance Company

10,046

3.90

Hitachi Construction Machinery Co., Ltd.

8,920

3.46

Japan Trustee Services Bank, Ltd. (Trust Account)

7,542

2.93

Trust & Custody Services Bank, Ltd. as trustee for Mizuho Bank, Ltd.
Retirement Benefit Trust Account re-entrusted by Mizuho Trust andBanking Co., Ltd.

6,115

2.37

KYB suppliers’ stock ownership

6,011

2.33

Ogaki Kyoritsu Bank, Ltd.

5,914

2.30

Mizuho Bank, Ltd.

4,905

1.92

Total

94,21036.59

R&D Centers:

Basic Technology R&D Center, Electronics Technology Center,		

Production Technology R&D Center, Machine Tools Center,		KYB Developmental Experiment Center

Sales Branches:

Automotive Components Operations Sales Department No. 2, Nagoya,		Osaka, Fukuoka, HiroshimaComposition of
Shareholders:

1,979 (0.8%)(Thousands)

44,396 (17.3%)

Financial institutions

88,410 (34.4%)

Other domestic companies
Individuals and others

62,679 (24.4%)

Foreign companies

59,449 (23.1%)

Monthly Stock
Price Range:(Tokyo Stock Exchange)

Treasury stock

Stock price (¥)
800
700
600
500
400
300
200
100
Trading volume(Share)090,000,000
60,000,000
30,000,000
022

FY2009FY2010FY2011FY2012FY2013High (¥)

356

745

690

508

675

Low (¥)

127

309

333

245

402

At year-end (¥)

345

669

503

460

436

23

KYB Corporation

Financial Highlights

Operating Income

Net Income (Loss)
17.0(Billions of yen)

R&D Expenses

2009

2010

2011

Consolidated Balance Sheets		

30

Consolidated Statements of Income		31

Consolidated Statements of Comprehensive Income		32

Consolidated Statements of Changes in Net Assets		34

Consolidated Statements of Cash Flows35

Notes to Consolidated Financial Statements

55

2009

2010

2011

2013 (Fiscal)

12.8

2012

2013 (Fiscal)

2009

2010

2011

2012

2013 (Fiscal)

2009

2010

2011

2012

2013 (Fiscal)

Independent Auditor’s Report

Total Net Assets and Total Assets

Return on Equity (ROE)*

(%)

41.2

361.1

327.9

301.3

285.1

Equity Ratio

33.2

(%)

21.1

34.5
14.8

30.6
27.3

2010

2011

Total Net Assets
Total Assets

2012

7.3

154.0

102.8

2009

116.4

90.0

9.7

78.5

269.4

(Billions of yen)

24

29.9

27.2

2012

8.9

28

10.1

Financial Statements

2011(Billions of yen)

39.2

6.9
5.5

Financial Review

28

2010

3.2

Financial Highlights

26

2.8

25

2009

Depreciation and Amortization(Billions of yen)

4.0

Contents

2013 (Fiscal)

Capital Expenditure(Billions of yen)

		

2012

17.3

2013 (Fiscal)

14.6

2012

13.5

2011

13.4

2010

15.3

2009

0.7

3.9

10.5

7.8

18.2

21.5

352.7

305.8

337.2

(Billions of yen)

252.0

320.1

(Billions of yen)

13.9

Net Sales

24.2

Financial Section

Annual Report 2014

0.9

2013 (Fiscal)

2009

2010

2011

2012

2013 (Fiscal)

2009

2010

2011

2012

2013 (Fiscal)* ROE = Net income/(Net assets – Minority interests
in consolidated subsidiaries)

25

KYB Corporation

Annual Report 2014

Financial Review

Summary

Operating income increased 79.2% in the automotive
components segment, 87.9% in the hydraulic components

Cash Flows

segment and 28.9% in the other segment. Total operating
In the automotive components segment, sales increased

income was up ¥7,696 million, or 73.5%, to ¥18,170 million

Net cash used in operating and investing activities was

18.5% to ¥218,948 million (US$2,125,709 thousand).

(US$176,408 thousand).

¥7,290 million (US$70,777 thousand). The main reason

Sales of automotive shock absorbers were higher in

Non-operating income and expenses resulted in net

for the negative cash flow was expenses associated withJapan. Overseas, there was a recovery in shock absorbers

non-operating income of ¥2,862 million (US$27,786

up-front investments to expand and upgrade productionin Europe, mainly in Germany and Scandinavia, and thethousand). Foreign exchange gain, net, was down ¥1,481

facilities. Net cash provided by financing activities wasvolume of shipments was strong in the United States.

million but there was a ¥216 million increase in dividends¥5,709 million (US$55,427 thousand). As a result, cash andSales of aftermarket shock absorbers also increased.

income, a ¥108 million decrease in interest expenses, andcash equivalents at end of year increased ¥2,917 million to

The result was an increase in total shock absorber sales.

gain of ¥1,255 million (US$12,184 thousand) on sale of¥38,132 million (US$370,214 thousand).

Sales of motorcycle shock absorbers were about theinvestment in affiliates.

Net cash provided by operating activities increasedsame as one year earlier. Sales of automotive hydraulic

Income before income taxes and minority interests

components, mainly for power steering, were also higher.

was ¥21,032 million (US$204,194 thousand). After income

was used by a ¥17,028 million increase in notes andThere were new orders for electric power steering

taxes of ¥7,834 million (US$76,058 thousand) and minority

accounts receivable–trade, but cash was provided by a

products and higher sales of CVT vane pumps.

interests, net income was ¥12,761 million (US$123,893¥15,402 million increase in notes and accounts payable–

In the hydraulic components segment, sales increased

thousand).

trade, income before income taxes and minority interests

9.9% to ¥115,485 million (US$1,121,214 thousand). Salesof industrial hydraulic components, mainly for construction
machinery, increased in Japan as companies rushed to51.6% to ¥28,788 million (US$279,495 thousand). Cashof ¥8,038 million, depreciation and amortization of ¥2,740
Financial Condition

make purchases prior to the April 2014 consumption

million, and other items.
Net cash used in investing activities decreased 0.1% to¥36,078 million (US$350,272 thousand). The main use wastax hike and before the enactment of tighter emissions

Current assets increased mainly because of an increase inpayment for acquisition of property, plant and equipment

restrictions. Overseas sales of industrial hydraulicnotes and accounts receivable–trade, which were higher

totaling ¥35,550 million (US$345,146 thousand).

components were also higher. This was mainly the result

due to the growth in sales. The increase in noncurrent

Net cash provided by financing activities was ¥5,709

of higher construction machinery shipments in China

assets was primarily attributable to growth in property,

million (US$55,427 thousand). There were proceeds ofand a small sales increase in the ASEAN region because

plant and equipment that resulted from speedy capital¥17,068 million (US$165,709 thousand) from issuanceof the negative effects of sluggish oil prices and weaker

expenditures to expand and upgrade manufacturingof common stock, a net decrease of ¥3,251 million

currencies. Sales of hydraulic equipment for aircraft

facilities. As a result, total assets increased ¥33,171 million(US$31,563 thousand) in short-term loans payable, and net

increased because of an increase in orders for spare parts.

to ¥361,083 million (US$3,505,660 thousand).

repayments of ¥12,923 million (US$125,466 thousand) forIn the other segment, which consists of special-

Total liabilities decreased ¥4,391 million to ¥207,086

purpose vehicles, system products, electronic devices andmillion (US$2,010,544 thousand). The main changes wereother products, sales increased 15.1% to ¥18,276 million

an increase in notes and accounts payable–trade because(US$177,437 thousand). This strong growth was backedof sales growth and a decrease in loans payable.

by growth in sales of special-purpose vehicles, mainly

Net assets increased ¥37,562 million to ¥153,997 million

concrete mixer trucks, due to the combined benefits(US$1,495,117 thousand) mainly because of increases inof demand associated with earthquake reconstructioncommon stock, capital surplus and retained earnings.

activities and replacement demand for older vehicles.
As a result, consolidated net sales increased 15.4% to

long-term loans payable.

The increase in net assets raised the equity ratio 6.7
percentage points to 41.2% at the end of March 2014.

¥352,711 million (US$3,424,379 thousand).

26

27

KYB Corporation

Annual Report 2014

Financial Statements
Consolidated Balance Sheets

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
As of March 31, 2014 and 2013

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

ASSETS
Current assets:
Cash and time deposits (Notes 11 and 13)
Notes and accounts receivable—trade (Notes 5 and 13)
Inventories (Note 4)
Deferred tax assets (Note 17)
Short-term loans receivable
Other
Less—allowance for doubtful accounts    Total current assets

Property, plant and equipment:
Buildings and structures, net (Note 5)
Machinery, equipment and vehicles, net (Note 5)
Land (Note 5)
Leased assets, net
Construction in progress
Other, net (Note 5)    Total property, plant and equipment

2014

2013

2014

¥ 39,505
86,444
46,577
4,816
46
8,854
(193)
186,049¥ 33,531
77,83442,069
4,195
3,051
9,597
(436)
169,841$  383,544
839,262452,204
46,757447
85,961(1,874)
1,806,301

47,362
54,847
26,6192,789
13,013
3,007
147,637

39,41747,19824,335
2,037
15,687
2,796
131,470

459,825
532,495
258,437
27,078126,340
29,194
1,433,369

Millions of yen

Thousands of
U.S. dollars(Note 1)

LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable—trade (Note 13)
Short-term loans payable (Notes 5 and 13)
Lease obligations
Accounts payable—other
Income taxes payable (Note 17)
Notes payable—equipment
Provision for product warranties
Allowance for directors’ and corporate auditors’ bonuses
Other    Total current liabilities

2014

2013

2014

¥ 62,584
44,207585
11,702
5,501
2,966
5,221
174
13,806
146,746¥ 58,558
47,200402
11,637
1,466
9,453
3,606
148
15,192
147,662$ 607,612
429,194
5,680
113,61253,40828,796
50,6891,689
134,039
1,424,719

Noncurrent liabilities:
Long-term loans payable (Notes 5 and 13)
Lease obligations
Deferred tax liabilities for land revaluation
Employees’ severance and retirement benefits (Note 16)
Retirement benefits for directors and corporate auditors
Allowance for environmental measures
Liability for retirement benefits (Note 16)
Asset retirement obligations (Note 18)
Other    Total noncurrent liabilities    Total liabilities

41,395
2,272
3,965
—
74
220
9,949
386
2,079
60,340207,086

45,7191,683
3,965
10,404
70
223
—
391
1,360
63,815
211,477

401,893
22,05838,495—718
2,136
96,592
3,748
20,185585,825
2,010,544

27,648

19,114

268,427

29,54378,323(565)
134,949

21,00967,217(549)
106,791

286,825
760,417(5,485)
1,310,184

4,354
5,317
3,651
506
13,8285,220
153,997¥361,083

3,122
5,317
(2,021)
—
6,418
3,226
116,435¥327,912

42,272
51,62135,447
4,912
134,252
50,6801,495,116$3,505,660

Contingent liabilities (Note 8):
Intangible assets:
Goodwill
SoftwareOther    Total intangible assets

Investments and other assets:
Investment securities (Notes 13 and 14)
Asset for retirement benefits (Note 16)
Deferred tax assets (Note 17)
OtherLess—allowance for doubtful accounts    Total investments and other assets    Total noncurrent assets    Total assets

622
157
1,392
2,171

20,713
95
1,935
2,540
(57)
25,226
175,034¥361,083

4
114
1,130
1,248

21,104
—
2,452
1,860
(63)
25,353
158,071¥327,912

6,039
1,524
13,51521,078201,097922
18,786
24,660(553)
244,912
1,699,359$3,505,660

Net assets (Note 7):
Shareholders’ equity   Common stock:    Authorized—491,955,000 shares    Issued—
257,484,315 shares in 2014  	
222,984,315 shares in 2013   Capital surplus   Retained earnings   Treasury stock, at cost    Total shareholders’ equity
Accumulated other comprehensive income   Net unrealized holding gains on securities, net of taxes   Revaluation reserve for land (Note 4)   Foreign currency translation adjustments   Accumulated adjustments for retirement benefit    Total accumulated other comprehensive income
Minority interests    Total net assets    Total liabilities and net assets

See accompanying notes.

28

29

KYB Corporation

Annual Report 2014

Financial Statements

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2014 and 2013

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2014 and 2013

Millions of yen

Net sales
Cost of sales (Note 10)    Gross profit
Selling, general and administrative expenses (Note 10)    Operating income
Other income (expenses):
Interest income
Dividends income
Royalty income
Equity in earnings of affiliates
Interest expenses
Foreign exchange gain, net
Gain on sale of investment securities
Gain on sale of investment in affiliates
Loss on sale and disposal of fixed assets, net
Impairment loss on fixed assets (Note 9)
Loss on valuation of investment securities
Loss on sale of investment securities
Loss on change in equity
Special retirement expenses
Other, net    Income before income taxes and minority interests
Income taxes (Note 17):   Current   Past   Deferred
Income before minority interests
Minority interests    Net income

2014

2013

2014

¥352,711
282,466
70,24552,075
18,170¥305,752
250,693
55,05944,585
10,474$3,424,379
2,742,389
681,990
505,582
176,408

232
518
843
276
(1,577)
485
—
1,255
(164)
(356)
(13)
(21)
(32)
(26)
1,442
21,032

132
302
785
537
(1,685)
1,966
1
—
(354)
(56)
(9)
—
—
(148)
1,049
12,994

2,252
5,029
8,184
2,680
(15,311)
4,709—
12,184(1,592)(3,456)
(126)
(204)
(311)
(252)
14,000204,194

8,124
—
(291)
13,199438¥ 12,761

4,054
810
(139)
8,269
480
¥   7,789

78,873—(2,825)
128,1464,253$  123,893¥55.26
9.00

Millions of yen

Income before minority interests
Other comprehensive income:Net unrealized holding gains on securities, net of taxes
Foreign currency translation adjustment Share of other comprehensive income of affiliates accounted
for using equity method    Total other comprehensive income (Note 6)
Comprehensive income
Comprehensive income attribute to:Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥13,199¥ 8,269$128,146

1,233
5,763

1,014
6,563

11,971
55,951

115
7,111¥20,310215
7,792¥16,061

1,116
69,038$197,184

19,664646

15,069992

190,9126,272

See accompanying notes.

U.S. dollars(Note 1)

Yen

Amounts per share of common stock:
Net income
Cash dividends applicable to the year

Thousands of
U.S. dollars(Note 1)¥35.24
8.00

$0.54
0.09

See accompanying notes.

30

31

KYB Corporation

Annual Report 2014

Financial Statements

Consolidated Statements of Changes in Net Assets
Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2014 and 2013

Thousands

Millions of yen
Shareholders’ equity

Balance at March 31, 2012
Cash dividends paid
Net income
Acquisition of treasury stock
Disposal of treasury stock Net change of items otherthan shareholder’s equity
Balance at April 1, 2013
Issue of new shares
Cash dividends paid
Net income Increase resulting from change
in scope of consolidation
Acquisition of treasury stock
Disposal of treasury stock Net change of items other thanshareholder’s equity
Balance at March 31, 2014

Accumulated other comprehensive income
Net unrealized
holding gains
on securities,
net of taxes

Revaluation
reservefor landForeigncurrency translation
adjustment

Accumulated
adjustments
for retirement
benefit

Total
accumulated othercomprehensive
incomeMinority
interests

Total
net assets

Number ofshares ofcommon stock

Commonstock

CapitalsurplusRetainedearnings

Treasury stock,at costTotal
shareholders’equity222,984————¥19,114————¥21,009———0¥61,417(1,989)7,789——¥(544)——(6)
1¥100,996(1,989)
7,789
(6)
1

¥2,107————¥5,317————¥(8,284)
—
—
—
—

¥—
—
—
—
—

¥   (860)————¥2,626————¥102,762(1,989)
7,789
(6)
1

—
222,984
34,500———19,1148,534———
21,0098,534———
67,217—(1,768)12,761

—
(549)
—
—
—

—
106,791
17,068(1,768)12,761

1,015
3,122
—
—
—

—
5,317
—
—
—

6,263
(2,021)
—
—
—

—
—
—
—
—

7,278
6,418
—
—
—

600
3,226
—
—
—

7,878
116,435
17,068(1,768)12,761

—
—
—

—
—
—

—
—
0

113
—

—
(16)
0

113
(16)
0

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

113
(16)
0

—
257,484—¥27,648—¥29,543—¥78,323—¥(565)—¥134,949

1,232¥4,354—¥5,317

5,672¥ 3,651

506
¥506

7,410
¥13,828

1,994¥5,2209,404¥153,997

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Balance at April 1, 2013
Issue of new shares
Cash dividends paid
Net income Increase resulting from change
in scope of consolidation
Acquisition of treasury stock
Disposal of treasury stock Net change of items other thanshareholder’s equity
Balance at March 31, 201432

Accumulated other comprehensive income
Net unrealized
holding gains
on securities,
net of taxes

Revaluation
reservefor landForeigncurrency translation
adjustment

Accumulated
adjustments
for retirement
benefit

Total
accumulated othercomprehensive
incomeMinority
interests

Total
net assets

Commonstock

CapitalsurplusRetainedearnings

Treasury stock,at costTotal
shareholders’equity$185,573
82,854——$203,971
82,854——$652,592—(17,165)
123,893$(5,330)———$1,036,806
165,708(17,165)
123,893$30,311———$51,621———$(19,621)———$    ————$ 62,311———$31,320———$1,130,437
165,708(17,165)
123,893

—
—
—

—
—
0

1,097
0
—

—
(155)
0

1,097
(155)
0

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

1,097
(155)
0

—
$268,427—$286,825—$760,417—$(5,485)—$1,310,184

11,961$42,272—$51,62155,068$ 35,447

4,912$4,912

71,941$134,252

19,360$50,680

91,301$1,495,116

33

KYB Corporation

Annual Report 2014

Financial Statements

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2014 and 2013

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2014 and 2013

Millions of yen

2014

2013

1

Basis of Presenting Consolidated Financial Statements

Thousands of
U.S. dollars(Note 1)

The accompanying consolidated financial statements of Kayaba

2014

Industry Co., Ltd. (“the Company”) and its consolidated subsid-

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Loss on sale and disposal of fixed assets, net
Loss (gain) on sale of investment securities
Loss on write down of investment securities
Gain on sale of investment in affiliates
Impairment loss on fixed assets
Amortization of goodwill
Amortization of negative goodwill
Decrease in allowance for doubtful accounts
Decrease in employees’ severance and retirement benefits
Increase in liability for retirement benefit
Increase in provision for product warranties
Increase (decrease) in retirement benefits for directors and corporate auditors
Increase (decrease) in allowance for directors' and corporate auditors’ bonuses
Decrease in allowance for environmental measures
Interest and dividends income
Interest expense
Equity in earnings of affiliates
Increase (decrease) in notes and accounts receivable—trade
Increase in inventories
Increase (decrease) in notes and accounts payable—trade
Increase (decrease) in accounts payable—other
Other, net    Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Income taxes refunded    Net cash provided by operating activities¥21,032
17,294164
21
13(1,255)
356
156
(1)
(349)
—
241
1,308
3
26
(3)
(750)
1,577
(276)
(3,936)(1,747)520
277(1,279)33,392
1,304(1,719)(4,189)—28,788¥12,994
14,554
354
(1)
9
—
56
1
(2)
(32)
(146)
—
43
(196)
(12)
—
(433)
1,685
(537)
13,092(925)(14,882)(1,092)
2,069
26,599906(1,679)(6,885)43
18,984$204,194
167,903
1,592
204
126
(12,184)
3,456
1,515
(10)
(3,388)—2,340
12,69929
252(29)(7,282)
15,311(2,680)(38,214)(16,961)
5,049
2,689
(12,418)
324,194
12,660(16,689)(40,670)—
279,495

Cash flows from investing activities:
Increase in time deposits
Decrease in time deposits
Payment for acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payment for acquisition of investment securities
Payment for acquisition of investment in affiliates
Proceeds from sale of investment in affiliates
Payment for investments in capital of affiliates
Payment disbursement of loans receivable
Proceeds from collection of loans receivable
Other, net    Net cash used in investing activities

(839)
871
(35,550)859(1,475)
(474)
1,794
—
(252)
279
(1,291)(36,078)(616)
928(31,683)114(606)(3,621)
—
(298)
(187)
187
(343)
(36,125)(8,146)8,456(345,146)
8,340(14,320)(4,602)
17,417—(2,447)
2,709(12,533)(350,272)(c) Capitalized expenditures for research and development
activities

iaries (together “the Companies”) have been prepared in accor-(d) F air value measurement of investment properties anddance with the provisions set forth in the Financial Instruments

revaluation of property, plant and equipment and intan-

and Exchange Law and its related accounting regulations, andin conformity with accounting principles generally acceptedin Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements fromInternational Financial Reporting Standards (“IFRSs”).

gible assets(e) A ccounting for net income attributable to minority
interests
The accompanying consolidated financial statements havebeen restructured and translated into English from the consoli-

The accounts of consolidated overseas subsidiaries have

dated financial statements of the Company prepared in accor-

been prepared in accordance with either IFRSs or U.S. gener-

dance with Japanese GAAP and filed with the appropriate Local

ally accepted accounting principles (“U.S. GAAP”), with adjust-Finance Bureau of the Ministry of Finance as required by thements for the specified five items as applicable. Japanese

Financial Instruments and Exchange Law. Certain supplemen-

GAAP requires that accounting policies and procedures applied

tary information included in the statutory Japanese language

by a parent company and its subsidiaries to similar transactions

consolidated financial statements, but not required for fairand events under similar circumstances should be unified forpresentation, is not presented in the accompanying consoli-

the preparation of the consolidated financial statements. Japa-

dated financial statements.

nese GAAP, however, as a tentative measure, allows a parent

The translations of the Japanese yen amounts into U.S.

company to prepare consolidated financial statements using

dollars are included solely for the convenience of readers

foreign subsidiaries’ financial statements prepared in accor-

outside Japan, using the prevailing exchange rate at March 31,

dance with either IFRSs or U.S. GAAP. In this case, adjust-

2014, which was ¥103 to U.S.$1. The convenience translation

ments for the following five items are required in theshould not be construed as representation that the Japaneseconsolidation process so that their impacts on net income are

yen amounts have been, could have been, or could in theaccounted for in accordance with Japanese GAAP unless the

future be, converted into U.S. dollars at this or any other rate

impact is not material.

of exchange.

(a) Goodwill not subject to amortization(b) E xpensing actuarial gains and losses of defined-benefit

Cash flows from financing activities:
Net decrease in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of common stock
Proceeds from stock issuance to minority shareholders
Purchase of treasury stock
Sale of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders    Net cash provided by financing activities

3,251
(477)
12,265(25,188)
17,0681,015(17)
1(1,768)
(441)
5,709

7,018
(427)
22,822(18,497)——(6)
1(1,989)
(392)
8,530

31,563(4,631)
119,078(244,544)
165,708
9,854
(165)
10
(17,165)(4,281)
55,427

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from changes in scope of consolidation
Cash and cash equivalents at end of year (Note 11)

1,837
256
35,215
2,661¥38,132

1,816(6,795)42,010—¥35,215

17,835
2,485
341,894
25,835$370,214

retirement plans

2

Summary of Significant Accounting Policies

1. Consolidation

2. Equity Method

The consolidated financial statements of the Company include

Investments in 5 affiliated companies in 2014 and 2013 (20%the accounts of the Company and its significant subsidiaries

to 50% owned and certain others less than 20% owned) are(40 in 2014 and 32 in 2013), which are controlled throughaccounted for by the equity method and, accordingly, are statedsubstantial ownership of majority voting rights or the existence

at cost adjusted for equity in undistributed earnings and lossesof certain conditions.

from the date of acquisition.

All significant intercompany balances and transactions havebeen eliminated in consolidation.

Investments in the other affiliated companies and unconsolidated subsidiaries are stated at cost or less.

Financial statements of certain consolidated subsidiaries thathave the fiscal year ending December 31 were consolidated

3. Goodwill

with adjustments made for material transactions that took place

The difference between the cost of investments and equity

in the three-month period between the balance sheet date ofin their net assets at the date of acquisition is recognized assuch subsidiaries and that of the Company.

goodwill and is amortized using the straight-line method overtheir estimated useful lives (5 years).

See accompanying notes.

34

35

KYB Corporation

Annual Report 2014

Financial Statements

If derivative financial instruments are used as hedges andAccording to the revised law, the Company and a certain

The liabilities and expenses for employees’ severance

Receivables and payables denominated in foreign currencies

meet certain hedging criteria, the Companies defer recognition

subsidiary are not permitted to revalue the land at any time,and retirement benefits are mainly determined based on theare translated into Japanese yen at the year-end rates withof gains or losses resulting from changes in the fair value ofeven if the fair value of the land declines. Such unrecorded

amounts obtained by actuarial calculations.

the resulting gain or loss included in the current statements

derivative financial instruments until the related losses or gains

revaluation loss amounted to ¥6,300 million (US$61,165 thou-of income.

on the hedged items are recognized.

sand) and ¥6,175 million as of March 31, 2014 and 2013.

4. Foreign Currency Translation

The balance sheets of consolidated overseas subsidiaries

The Company and certain consolidated subsidiaries mainly
recognize the liabilities for employees’ severance and retirement benefits based on the amounts of projected benefit

However, if a forward foreign exchange contract is executed

are translated into Japanese yen at the year-end rates except

to hedge a future transaction denominated in a foreign cur-

13. Allowance for Doubtful Accounts

obligation and the fair value of the plan assets as of eachfor shareholders’ equity accounts, which are translated at therency, the future transaction will be recorded using the con-

Allowance for doubtful accounts is provided in an amountbalance sheet date.

historical rates. The statements of income of consolidated

tracted forward rate and no gains or losses on the forwardsufficient to cover probable losses on collection. It consists ofoverseas subsidiaries are translated at average rates.

foreign exchange contract are recognized.

the estimated uncollectible amount with respect to certain

attributing expected benefit to the accounting period is based

identified doubtful receivables and an amount calculated using

on a straight-line basis.

The resulting foreign currency translation adjustments are

Also, if interest rate swap contracts are used as hedges

the actual historical rate of losses.

In calculating the retirement benefit obligation, the method of

Actuarial gains and losses are recognized in the consolidated

presented in “Foreign currency translation adjustments”

and meet certain hedging criteria, the net amount to be paidand “Minority interests in consolidated subsidiaries” in theor received under the interest rate swap contract is added toconsolidated balance sheets.

or deducted from the interest on the assets or liabilities for

14. Provision for Product Warranties

estimated remaining service lives (11 to 15 years), commencing

which the swap contract was executed.

Provision for product warranties is provided for the aggregatewith the succeeding period.

statements of income in equal amounts over the average of theamount of the estimated cost of certain identified claims from

5. Cash and Cash Equivalents
In preparing the consolidated statements of cash flows, cash

9. Property, Plant and Equipment

customers and an amount calculated using the historical rate

(Change in Accounting Policy)

on hand, readily available deposits and short-term highly liquid

Property, plant and equipment are stated at cost except forof sales to warranty.

Effective from the year ended March 31, 2014, the Company

investments with maturities not exceeding three months at

certain land used for business operation, which has been

the time of purchase are considered to be cash and cash

revalued. Depreciation is computed by the declining-balance

equivalents.

method at rates based on the estimated useful lives, except

and its domestic subsidiaries have applied the Accounting
15. Allowance for Directors’ and Corporate Auditors’
BonusesStandard for Retirement Benefits (ASBJ Statement No. 26,
May 17, 2012 (hereinafter, the “Statement No. 26”)) andfor buildings acquired on and after April 1, 1998, which are

Allowance for directors’ and corporate auditors’ bonuses is

Guidance on Accounting Standard for Retirement Benefits

6. Inventories

depreciated using the straight-line method. Consolidated

provided bonuses for the estimated amounts which the(ASBJ Guidance No. 25, May 17, 2012 (hereinafter, theInventories are stated at the lower of cost, determined mainly

overseas subsidiaries mainly use the straight-line method over­Company is obligated to pay to directors and corporate auditors­“Guidance No. 25”)), except the article 35 of the Statementby the periodic-average method, or net realizable value.

the estimated useful lives.

subject to the resolution of the shareholders’ meeting.

No.26 and the article 67 of the Guidance No. 25 and actuarial

7. Securities

10. Intangible Assets

16. R
 etirement Benefits for Directors and Corporate

The Companies examine the intent of holding each security

Intangible assets are amortized using the straight-line method.

gains and losses and past service costs that are yet to be
Auditors

retirement benefit obligations and plan assets has been recognized as a liability for retirement benefits.

and classify those securities as (a) equity securities issued by

Software costs used internally are amortized using the

The directors and corporate auditors of certain consolidated

subsidiaries and affiliated companies and (b) available-for-salestraight-line method over the estimated useful lives mainly of

subsidiaries receive lump-sum payments upon termination

securities. The companies do not have trading securities and5 years.

of their services under unfunded termination plans. The fullthe effect of the change in accounting policies arising fromamount of such retirement benefits for directors and corporate

initial application has been recognized in accumulated

11. Leased Assets

auditors is accrued in accordance with the internal rules. The­adjustments for retirement benefit in accumulated othernies that are not consolidated or accounted for using the equity

Finance leased assets that are not deemed to transfer owner-

payments to directors and corporate auditors are subject to­comprehensive income.

method are stated at moving-average cost. Available-for-saleship of the leased property to the lessee are depreciated using

the resolution of the shareholders’ meeting.

securities with available fair market values are stated at fairthe straight-line method over the lease term with zero residual

market value. Unrealized gains and losses on these securities

value.

held-to-maturity debt securities.
Equity securities issued by subsidiaries and affiliated compa-

In accordance with the article 37 of the Statement No. 26,

As a result of the application, an asset for retirement benefits
in the amount of ¥94 million (US$913 thousand) and a liability

17. Allowance for Environmental Measures

for retirement benefits in the amount of ¥9,949 million

Allowance for environmental measures is provided based(US$96,592 thousand) have been recognized and accumulated

component of net assets. Realized gains and losses on sales

been accounting for as operating leases, continue to beon estimated costs for the disposal of “PCB (Polychlorinatedother comprehensive income has increased by ¥506 millionof such securities are computed using moving-average cost.

­accounted for as operating leases with disclosure of certain

Biphenyl)” as mandated by the Law Concerning Special(US$4,913 thousand), at the current fiscal year.

Other securities with no available fair market value are stated“as if capitalized” information.

­Measures against PCB Waste.

12. Land Revaluation

18. Accounting Policy of Net Defined Benefit Liability

Expenses relating to research and development activities are

8. Derivative Transactions and Hedge Accounting

Pursuant to the Law Concerning Revaluation of Land enacted

The Company and certain consolidated subsidiaries provide twocharged to the statement of income as incurred.

Derivative financial instruments are stated at fair value andon March 31, 1998, land owned by the Company for businesstypes of employees’ severance and retirement benefit plans,

gains or losses are recognized for changes in the fair value

operations was revalued at fair value as of March 31, 2002. Dueunfunded lump-sum payment plans and funded noncontributory

20. Stock Issue Expense

unless derivative financial ­instruments are used for hedging

to the revaluation, the related unrealized gain, net of applicablepension plans, under which all eligible employees are entitled

Stock issue expense is charged to the statement of income

purposes.

income taxes, was reported as “Revaluation reserve for land”

to benefits based on the level of wage and salary at the time of

as incurred.

in shareholders’ equity. The revaluation reserve for land in net

retirement or termination, length of service and certain otherassets is not available for dividends under the law.

factors. Some subsidiaries have pension plans of their own.

are reported, net of applicable income taxes, as a separate

Finance leases commenced prior to April 1, 2008, and have

19. Research and Development

at moving-average cost.

36

recognized have been recognized and the difference between

37

KYB Corporation

Annual Report 2014

Financial Statements

21. Income Taxes

23. Change in Presentation

Income taxes comprise corporation, enterprise and inhabitants

Consolidated Statement of Income

taxes.

“Subsidies income” was presented as a separate account of

5

The Companies recognize the tax effects of timing differ-“Other income (expenses)” for the previous fiscal year, butences between the financial statement basis and the tax basis

because its importance in monetary terms was decreasedof assets and liabilities.

for the current fiscal year, it was changed to be included in

Short-Term Loans Payable and Long-Term Loans Payable

Short–term loans payable are generally represented by short-term notes and overdrafts from banks, and bearing average interest
as of March 31, 2014 and 2013 at 2.0% and 1.7% per annum, respectively.
Short-term loans payable as of March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars

Millions of yen“­Other” account. In order to reflect this change in presentation

2014

2013

2014

22. Amounts per Sharemethod, the consolidated financial statements of the previous

Secured¥   133¥ 1,607$   1,291

In computing net income per share of common stock, thefiscal year have been reclassified. As a result, in the consoli-

Unsecured

30,66824,768297,748

average number of shares outstanding during each fiscal year

dated statements of income for the previous fiscal year,

Total

30,801

26,375

299,039

has been used. Diluted net income per share is not presented¥422 million yen that was presented in “Subsidies income”

13,406

20,825130,155

since the Company had no securities with dilutive effect.

of “Other income (expenses)” has been reclassified to be¥44,207¥47,200$429,194

Cash dividends per share represent cash dividends declared

included in “Other”.

applicable to the respective years.

Current maturities of long-term loans payable

Long-term loans payable as of March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars

Millions of yen

3

2014

2013

2014

Secured¥   133¥ 1,607$   1,291

Unsecured

54,66864,937530,757

Total

54,801

66,544532,048(13,406)(20,825)(130,155)¥41,395¥45,719$401,893

Accounting Standards Issued But Not Yet Applied– Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012)– Guidance on Accounting Standard for Retirement Benefits(ASBJ Guidance No. 25, May 17, 2012)(2) Effective dates
Amendments related to determination of retirement benefit
obligations and current service costs are effective from the
beginning of fiscal year ending on March 31, 2015. However,(1) Summary

no retrospective application of the accounting standard to

Accounting treatment for actuarial gains and losses and pastconsolidated financial statements in prior periods is required.

service costs, determination of retirement benefit obligations(3) Effect of application of the standard

and current service costs, and enhanced disclosures have been

The Company and its consolidated domestic subsidiaries areamended.

in the process of measuring the effect of applying the revised
accounting standard on the consolidated financial statements.

Loans from banks and others, due through 2026 with interest rates ranging
from 0.39% to 13.90%:

Less: Current maturities

As of March 31, 2014 and 2013, the following assets were pledged as collateral for short-term loans payable and long-term loans
payable:Thousands of
U.S. dollars

Millions of yen

4Inventories

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

Finished goods¥24,643¥21,815$239,252

Work in process

13,566

11,647

131,709

Total

2013

2014

¥    —$2,369Buildings and structures

220

1,226

2,136

Machinery, equipment and vehicles

227

29

2,204

Land

56

709

544

Other

13

—

126

   Total¥760¥1,964$7,379Millions of yen

Thousands of
U.S. dollars

2015¥13,406$130,1552016

14,782

143,5152017

15,424

149,748

2018

9,049

87,854

2019

1,900

18,447

Property, plant and equipment:

Inventories as of March 31, 2014 and 2013 consisted of the following:

Raw materials and supplies

2014

¥244

Notes receivable—trade

8,368

8,607

81,243¥46,577¥42,069$452,204

The aggregate annual maturities of long-term loans payable as of March 31, 2014, were as follows:Year ending March 31,

Thereafter

38

240

2,329

¥54,801$532,048

39

KYB Corporation

Annual Report 2014

Financial Statements

69Notes to Statements of Comprehensive Income

Impairment Loss on Fixed Assets

Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in the current

For the years ended March 31, 2014 and 2013, the Companies recognized impairment loss on fixed assets on the following groups

or previous periods and tax effects for each component of other comprehensive income are as follows:of assets:
Thousands of
U.S. dollars

Millions of yen

2014

2013

2014

Net unrealized holding gains on securities, net of taxes:
Amount arising during the year

¥1,895¥1,543$18,398000   Before tax effect

1,895

1,543

18,398   Tax effect

(662)

(529)

(6,427)   Net unrealized holding gains on securities, net of taxes

1,233

1,014

11,971

Reclassification adjustments

Foreign currency translation adjustments:

0

Amount arising during the year

5,730

6,563

55,631

Reclassification adjustments

33

—

320

5,763

6,563

55,951

—

—

—

5,763

6,563

55,951

Amount arising during the year

115

215

1,116

Total other comprehensive income¥7,111¥7,792$69,038   Before tax effect   Tax effect   Foreign currency translation adjustments
Share of other comprehensive income of affiliated accounted for using equity method:

7

Net Assets

For the year ended March 31, 2014
Location

Use

Category

Kani-shi, Gifu, Japan

Idle assets

Machinery

Higashi-Chikuma, Nagano, Japan

Idle assets

Building and structure, Land

Location

Use

Category

Kani-shi, Gifu, Japan

Idle assets

Machinery

Zhenjiang, China

Business assets

Machinery

Zhenjiang, China

Business assets

Automobiles

For the year ended March 31, 2013

The companies classified their fixed assets by each plant. Each of idle assets was treated as an individual asset.
The book value of idle assets, that are not used for business operation and are not expected to generate cash flow in the future,
was written down to the recoverable amounts. As a result, loss on impairment of fixed assets were recognized ¥356 million(US$3,456 thousand) and ¥26 million for the years ended March 31, 2014 and 2013, respectively.
The book value of business assets was written down to the recoverable amounts, due to a significant decline in profitability.
As a result, loss on impairment of fixed assets were recognized ¥30 million for the year ended March 31, 2013.

10

Research and Development Costs

Net assets comprise three subsections, which are sharehold-reserve is included in retained earnings in the accompanying

Research and development costs charged to the cost of sales and selling, general and administrative expenses for the years ended

ers’ equity, accumulated other comprehensive income, andconsolidated balance sheets.

March 31, 2014 and 2013 were ¥6,917 million (US$67,155 thousand) and ¥5,468 million, respectively.

minority interests.
Under Japanese laws and regulations, the entire amount paid
for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board ofUnder the Law, legal earnings reserve and additional paid in
capital could be used to eliminate or reduce a deficit, or could
capitalize by a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may

Directors, designate an amount not exceeding one-half of the

not be distributed as dividends. Under the Law, however, allprice of the new shares as additional paid-in capital, which isadditional paid-in capital and all legal earnings reserve may be

included in capital surplus.

transferred to other capital surplus and retained earnings,

Under the Japanese Corporate Law (“the Law”), in cases

11

Cash and Cash Equivalents

The reconciliation of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents shown in the
consolidated statements of cash flows as of March 31, 2014 and 2013 was as follows:
Millions of yen

respectively, which are potentially available for dividends.

where a dividend distribution of surplus is made, the smaller of

The maximum amount that the Company can distribute as

an amount equal to 10% of the dividend or the excess, if any,

dividends is calculated based on the non-consolidated financial

Deposits with maturities more than three monthsof 25% of common stock over the total of additional paid-in

statements of the Company in accordance with Japanese

capital and legal earnings reserve must be set aside as addi-

laws and regulations.

Purchases of commercial paper under repurchase agreements(Short-term loans receivable)

tional paid-in capital or legal earnings reserve. Legal earnings

8

Cash and time deposits

Cash and cash equivalents

Thousands of
U.S. dollars

2014

2013

2014

¥39,505¥33,531$383,544(1,373)(1,314)(13,330)

—

2,998

—

¥38,132¥35,215$370,214

Contingent Liabilities

As of March 31, 2014, the Companies were contingently liable for trade notes receivable discounted amounting to ¥26 million(US$252 thousand) and trade notes receivable endorsed amounting to ¥554 million (US$5,379 thousand).
The Company was also contingently liable under guarantees of indebtedness of unconsolidated subsidiaries and affiliated­companies amounting to ¥1,771 million (US$17,194 thousand) as of March 31, 2014.

40

41

KYB Corporation

Annual Report 2014

Financial Statements

12

Lease Transaction

13

Financial Instruments

As discussed in Note 2, finance leases commenced prior to April 1, 2008 which do not transfer ownership to lessees are accounted

1. Qualitative information on financial instruments

for as operating leases.

1) Policies for using financial instruments

A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value of buildings, machinery andequipment and other assets as of March 31, 2014 and 2013 was as follows:

expenditure through cash flows from operating activities andMillions of yen
Acquisition Accumulated
cost
depreciation

Net bookvalue

Acquisition Accumulated
cost
depreciation

Net bookvalue

of a contract obligation by a counterparty, etc.)

loans from banks and others. Temporarily surplus funds are	In accordance with the Company’s internal administrative2014

mainly invested in short-term deposits, eligible repurchaserules, the appropriate department of each business unit

agreements and similar instruments. Derivative financial instru-

regularly monitors the status of all major customers, manag-

ments are mainly used in order to hedge the risk of interesting due dates and balances on an individual customer basis.

Acquisition Accumulated
cost
depreciation

Net book
value

Buildings

¥   5

¥   4

¥ 1

¥   5

¥   3

¥   2

$    48$    39$   9Machinery, equipment
and vehicles

rate fluctuation risk and not used for speculative purposes.

In this manner, every effort is made to ensure early detec-

415

367

48

705

581

124

4,029

3,563

466

2) Details of financial instruments and the related risks

tion and the mitigation of concerns regarding collection due

Other assets

25

20

5

59

48

11

243

194

49

Trade notes and accounts receivable are exposed to credit risk

Total

¥445

¥391

¥54

¥769

¥632

¥137

$4,320$3,796$524

of customers. Furthermore, the Companies are vulnerable toforeign exchange rate volatility risk because of foreign currencydenominated receivables related to overseas operations.

Future minimum lease payments as of March 31, 2014 and 2013 were as follows:
Millions of yen

Securities and investment securities are mainly long-term

Thousands of
U.S. dollars

holdings of stock and the stock issued by business partner.
These securities are exposed to market price volatility risk.

2014

2013

2014

Due within one year

¥54

¥ 84

$524

Due after one year

1

53

10

¥55

¥137

$534

Total

Almost all trade notes and accounts payable are due within
one year. Foreign currency-denominated payables are vulnerable to foreign exchange rate volatility risk. However, theamount of exposure is within the balance of receivables in the

Lease payments and the assumed depreciation charge for the years ended March 31, 2014 and 2013 were as follows:same foreign currency. Loans are used primarily to raise funds

Thousands of
U.S. dollars

Millions of yen

2014

2013

2014

Lease payments

¥84

¥160

$816

Assumed depreciation charge

84

160

816

The assumed depreciation charge is computed using the straight-line method over lease terms assuming no residual value.
Since the portion of the future minimum lease payments is minor compared to the balance of property, plant and equipment
as of March 31, 2014 and 2013, interest expense has been included in the assumed amount of acquisition costs and depreciation
expense.
Future lease payments for operating leases that cannot be terminated for the years ended March 31, 2014 and 2013 were as
follows:
Millions of yen

Due within one year
Due after one year
Total

42

instrumentsi)	Management of credit risk (risk relating to non-performance

Thousands of U.S. dollars

2013

2014

The Companies raise necessary funds including their capital3) Risk Management systems relating to financial

Thousands of
U.S. dollars

2014

2013

2014

¥  578¥  944$ 5,612

1,138

1,572

11,048¥1,716¥2,516$16,660

for capital expenditure. Since certain loans carry floating interest rates, the Companies are exposed to interest rate volatility
risk. Derivative financial instruments (interest rate swaps) areused to hedge this risk.
Derivative financial instruments used by the Companies areforward exchange contracts to hedge foreign exchange rate
volatility risk and interest rate swap transaction to hedge
interest rate volatility risk related to loans. For information about
hedging methods, items hedged, hedging policies and theto deterioration in financial standing or other factors.
ii)	Management of market risks (risks associated with fluctuations in foreign currency exchange as well as interest rates,
etc.)	The Company utilizes forward exchange contracts to hedge
foreign exchange rate volatility risk and interest rate swap
transaction to hedge interest rate volatility risk related toloans.
	  With respect to investment securities, the Company
regularly monitors fair values as well as taking into consideration its relationship with counterparties.
iii)	Management of liquidity risks associated with the procurement of funds (the risk of being unable to make paymentson due dates)
	The Company manages liquidity risk by preparing and­updating cash flow plans at departments responsible forthese plans, using reports from other departments of theCompany, and by maintaining an adequate level of liquidity
and taking other actions.
4) Supplemental explanations for fair values, etc. of­Financial Instruments

evaluation of hedging effectiveness, please refer to “Derivative

The fair values of financial instruments are determined bytransactions and hedge accounting” described in Note 2

market prices. If no market price is available, the fair value­“Summary of Significant Accounting Policies”.

contains variable factors, and the adoption of wide ranging
and differing assumptions may cause values to change.

43Annual Report 2014

KYB Corporation
Financial Statements

2. Fair Values of Financial Instruments

3. The aggregate maturities subsequent to March 31, 2014 and 2013 for financial assets are as follows:

The following were book value, fair value, and difference between them as of March 31, 2014 and 2013. Certain financial instru-

Millions of yen

ments were excluded from the following table as the fair values were not available (see Note 2).
Millions of yen

2013

2014

(1) Cash and time deposits

Book value

Fair values

Differences

Book value

Fair values

Differences¥ 39,505¥ 39,505¥   —¥ 33,531¥ 33,531¥   —(2) Notes and accounts receivables—trade86,44486,444—

77,834

77,834—(3) Investment securities

15,903

15,903—

12,874

12,874—

Assets141,852

141,852—

124,239

124,239—(4) Notes and accounts payables—trade62,58462,584—58,55858,558—(5) Short-term loans payable

30,80130,801—

26,37526,375—(6) Long-term loans payable (including current portion)

54,80155,000199

66,544

66,764220¥148,186¥148,385¥199¥151,477¥151,697¥220

Liabilities

Due within
one year

Cash and time deposits
Notes and accounts receivables—trade
Total(1) Cash and time deposits$  383,544 $  383,544

¥—

¥—

¥—

¥ 33,531 ¥ —¥—¥—86,444———

77,834 ———¥125,949

¥—

¥—

¥—

¥111,365 ¥ —

¥—

¥—

Total

Differences

Due after Due after
one year five years
and within and within Due over
five years ten years ten years$  383,544$—$—

839,262———$1,222,806

$—

$—

$—

Notes and accounts receivables—trade$—$     —

839,262

839,262—(3) Investment securities

154,398

154,398—

1,377,204

1,377,204—(4) Notes and accounts payables—trade607,612607,612—(5) Short-term loans payable

299,039

299,039—(6) Long-term loans payable (including current portion)

532,048

533,980

1,932$1,438,699 $1,440,631$1,932

Liabilities¥ 39,505

Due within
one year

Cash and time deposits(2) Notes and accounts receivables—trade
AssetsDue within
one year

Due after Due after
one year five years
and within and within Due over
five years ten years ten years

2014

2014
Fair values

Due after Due after
one year five years
and within and within Due over
five years ten years ten years

Thousands of U.S. dollars

Thousands of U.S. dollars
Book value

2013

2014

14

Securities

The following tables summarize acquisition costs, book values and the fair value of securities with available fair values as ofMarch 31, 2014 and 2013.
Available-for-sale securities: Securities with book values exceeding acquisition costs
Millions of yen

Notes: 1.	Method of calculation of fair value of financial instruments and information concerning securities and derivative transactions
		 Assets:		 (1)	Cash and time deposits, and (2) Notes and accounts receivables—trade
			 The fair value approximates the book value because of their short-term maturities. Therefore, the fair value is recognized using the book value.
		 (3) Investment securities
			 The fair value of these securities is based on their stock market price.
		 Liabilities:		 (4) Notes and accounts payables—trade, and (5) Short-term loans
			 The fair value approximates the book value because of their short-term maturities. Therefore, the fair value is recognized using the book value.
		 (6) Long-term loans payable (including current portion)			The fair value of long-term loans payable is based on the present value by discounting expected repayments of principal and interest in the remaining period using an assumed interest rate on an equivalent new loan. The fair value of interest rate swaps for which the special treatment is applied
is included in the fair value of long-term bank loans, as such swaps are treated as a single item incorporating the hedged long-term bank loans. The
special treatment under Japanese GAAP may be applied for interest rate swap contracts that meet certain hedging criteria (see (7) below). In thespecial treatment, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on debts
for which the swap contract is executed.
		 Derivatives:
		 (7) Derivative transactions
			Interest rate swaps that use the special treatment are processed as a single unit with long-term loans payable that have been hedged.
Consequently, the fair values of these swaps are included in the fair values of the applicable long-term loans payable (see (6) above).
2. Financial instruments for which obtaining an estimated fair value is deemed to be extremely difficult
Millions of yen

Equity securities

Acquisition
cost

Book
value

¥7,144¥14,005

2014

2013

2014

Unlisted equity securities¥    57¥    95$   553

Securities in unconsolidated subsidiaries and affiliates

4,753

8,135

46,146

	  The above stocks are not included in “(3) Investment Securities” due to the extreme difficulty of determining a fair value because there are nomarket prices.

Difference

Acquisition
cost

Book
value

¥6,861¥6,344¥11,248

2014
Difference

Acquisition
cost

Book
value

Difference¥4,904$69,359$135,971$66,612Available-for-sale securities: Securities with book values not exceeding acquisition costs
Millions of yen

Equity securities

Acquisition
cost

Book
value

¥2,084¥1,897

Thousands of U.S. dollars

2013

2014
Difference

Acquisition
cost

Book
value

¥(187)¥1,743¥1,6262014
Difference

Acquisition
cost

Book
value

Difference¥(117)$20,233$18,417$(1,816)

Unlisted equity securities (consolidated balance sheet amount of ¥57 million (US$553 thousand) and ¥95 million for the years
ended March 31, 2014 and 2013) are not included in the above table due to the extreme difficulty of determining a fair value­because there are no market prices.
The following table summarizes the proceeds from sales of available-for-sale securities in the years ended March 31, 2014
and 2013.
Millions of yen

Thousands of
U.S. dollars

Category

Thousands of U.S. dollars

2013

2014

Equity securities

Thousands of U.S. dollars

2013

2014

2014

Proceeds
from sales

Gain onsales

Loss onsales

Proceeds
from sales

Gain onsales

Loss onsales

Proceeds
from sales

Gain onsales

Loss on
sales

¥13

¥—

¥21

¥1

¥1

¥—

$126

$—

$204

Impairment loss on securities
There was an asset impairment loss of ¥13 million (US$126 thousand) and ¥9 million for equity securities included in other­securities for the years ended March 31, 2014 and 2013, respectively.

44

45

KYB Corporation

Annual Report 2014

Financial Statements

15

Derivative Transactions

16

Retirement Benefits for Employees

Derivative financial instruments used by the Companies are forward exchange contracts to hedge foreign exchange rate volatility

The Company and its domestic consolidated subsidiaries havepayment plans. In addition, for the Employees’ Pension Fund,risk and interest rate swap transaction to hedge interest rate volatility risk related to loans.

three types of defined benefits plans: Employees’ Pension

a company belonged to a comprehensive employees’ pension

Fund, defined benefit corporate pension plan, and lump-sum

fund and, for the defined benefit corporate pension plan, sixhedge accounting has been applied:

payment plan. In addition, additional retirement payments

companies outsourced asset management to a life insurance

Interest rate related derivatives

are made in some cases when employees retire or resign.

company, etc.

The following tables summarize the fair value information as of March 31, 2014 and 2013 of derivative transactions for which

The Company has established a retirement benefit payment

Millions of yen

trust.

2014

Hedge accounting method

Type of derivatives

Specified treatment for interest
rate swaps

Interest rate swaps
Receive floating rate

At the year ended March 31, 2014, for the Company and its

Major hedged items

Contract
amountContract
amount due
over one year

Fair value

Long-term debt

¥1,040¥  800(Note)

Long-term debt

2,627

2,074

(Note)

Some domestic consolidated subsidiaries and other countries
have established a defined contribution pension system in
addition to a defined benefit pension system.

consolidated companies in Japan, six companies had lump-sum
Retirement benefit obligation and pension plan assets as of March 31, 2014 and 2013 consisted of the following:

Pay fixed rate
Specified treatment for interest
rate and currency swaps

Defined benefit plans

Interest rate and currency swaps
Receive floating rate and U.S. dollar
Pay fixed rate and Thai Baht

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥34,592$335,845

1,873

18,184

Movement in retirement benefit obligations:
Millions of yen

Balance at April 1, 2013

2013

Hedge accounting method

Type of derivatives

Specified treatment for interest
rate swaps

Interest rate swaps
Receive floating rate

Major hedged items

Contract
amountContract
amount due
over one year

Long-term debt

¥6,610¥2,740Service cost
Interest cost
Fair value(Note)

Retirement benefit paid
Other
Balance at March 31, 2014
Balance at April 1, 2013
Expected return on plan assets

Thousands of U.S. dollars

Actuarial gain

2014

Type of derivatives

Specified treatment for interest
rate swaps

Interest rate swaps
Receive floating rate

Major hedged items

Long-term debt

Contract
amount$10,097

Contract
amount due
over one year

12,067$350,019¥22,331$216,806$ 7,767

Fair value(Note)

384

3,728

3,158

30,660997

9,680

Benefit expenses(672)(6,524)¥26,198$254,350

Balance at March 31, 2014
Note: The amounts in this table include figures for pension plans that use simplified methods.

Millions of yen

Interest rate and currency swaps
Receive floating rate and U.S. dollar

1,243¥36,052

Contributions paid by the employer

Pay fixed rate
Specified treatment for interest
rate and currency swaps

5,078(21,155)

Movement in plan assets:

Pay fixed rate

Hedge accounting method523(2,179)Long-term debt

25,505

20,136(Note)

Pay fixed rate and Thai Baht
Note: The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not stated at fair value, but the amount paid or
received under the swap agreements is recognized and included in interest expenses of the long-term loans payable as hedged items. Accordingly,
the fair value of the interest rate swaps is considered to be included in the fair value of the long-term loans payable.

2013

Projected benefit obligation¥(34,592)

Plan assets at fair value

22,331

Projected benefit obligations in excess of plan assets(12,261)

Unrecognized actuarial difference
Prepaid pension expenses
Employees’ severance and retirement benefits

1,885
28
¥(10,404)

Notes: 1. C ertain consolidated subsidiaries’ retirement benefit obligations were estimated using a simplified method. In addition, pension plan assets at consolidated subsidiaries that use a comprehensive employees’ pension fund, which were ¥3,100 million at the year ended March 31, 2013, are not includedin the above plan assets.
2. In the year ended March 31, 2013, prepaid pension expenses were recorded.

46

47

KYB Corporation

Annual Report 2014

Financial Statements

Reconciliation from retirement benefit obligations and plan assets to liability for retirement benefits

Long-term expected rate of return

Millions of yen

Thousands of
U.S. dollars

2014

2014

Funded retirement benefit obligations¥32,101$311,660

Plan assets(26,197)(254,340)

5,904

57,3203,950

38,350Total Net liability for retirement benefits at March 31, 2014

¥ 9,854$ 95,670

Liability for retirement benefits¥ 9,949$ 96,592

Unfunded retirement benefit obligations

Asset for retirement benefits
Total Net liability for retirement benefits at March 31, 2014

(95)

(922)

¥ 9,854$ 95,670

Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered indetermining the long-term expected rate of return.
Actuarial assumptions
The principal actuarial assumptions at March 31, 2014 (expressed as weighted averages) are as follow:
2014

Discount rate

1.5–4.2%

Long-term expected rate of return

1.5–2.0%

The discount rates used by the Company and certain consolidated subsidiaries were 2.0% for the year ended March 31, 2013.
The rates of expected return on plan assets used by the Company and certain consolidated subsidiaries were 1.5% to 4.0% for theNote: The amounts in this table include figures for pension plans that use simplified methods.

year ended March 31, 2013.
Retirement benefit costs included in the consolidated statements of income for the years ended March 31, 2014 and 2013 wereas follows:
Millions of yen

Service cost

The required contribution of certain consolidated subsidiaries to defined-contribution pension plans for the year ended March 31,
2014 is ¥421 million (US$4,087 thousand).

Thousands of
U.S. dollars

2014

2014

¥1,872$18,175

17

Income Taxes

Interest cost

523

5,078

The Companies are subject to a number of taxes based on income. The aggregate statutory tax rate in Japan was approximately

Expected return on plan assets(384)(3,728)37.2% for the year ended March 31, 2014.

Net actuarial loss amortization

280

2,718

Other
Total retirement benefit costs for the year ended March 31, 2014

90

874

¥2,381$23,117

The following table summarizes the significant differences between the statutory tax rate and the Companies’ effective tax rate
for financial statement purposes for the years ended March 31, 2014 and 2013.

Millions of yen

Service costs—benefits earned during the year

2014

2013

2014

¥ 7,220¥     —

$ 70,097

—

7,483

—

1,857

2,026

18,029Deferred tax assets:

2013

Liability for retirement benefits¥2,177

Employees’ severance and retirement benefits

Interest cost on projected benefit obligation

635

Tax loss carried forward

Expected return on plan assets(229)

Accrued bonuses

1,596

1,599

15,495

Amortization of actuarial differences

422

Software

1,292

1,292

12,544Other

17

Tax effect of unrealized gains on inventories

1,041

1,065

10,107

Provision for product warranties

905

735

8,786

Tax effect of unrealized gains on fixed assets

519

413

5,039

Accrued enterprise tax

329

81

3,194

Valuation loss on inventories

326

328

3,165

Accrued expenses (social security payments for bonuses)

234

227

2,272

Retirement benefits for directors and corporate auditors

201

210

1,951

Deductible expenses for assets used in research and development

249

162

2,417

Impairment loss on fixed assets

178

131

1,728

Other

1,135

1,072

11,021   Subtotal

17,082

16,824

165,845

Less: Valuation allowance(2,577)(2,638)(25,020)   Total deferred tax assets

14,505

14,186140,825

Severance and retirement benefit expenses¥3,022

Note: The amounts of retirement benefit costs calculated based on simplified methods are included in service costs benefits earned during the year.

Item included in cumulative adjustment for retirement benefits (before tax effect deduction) as of March 31 is as follows:

Unrecognized actuarial difference

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥(770)$(7,476)

Plan assets as of March 31, 2014 are comprised as follows:
2014

Bonds

18%

Equity securities

69

Cash and cash equivalents

7

Other
Total
Note: The amounts in this table include figures for pension plans that use simplified methods

6
100%

Deferred tax liabilities:
Securities contributed to employees’ retirement benefit trust(2,904)(2,993)(28,194)

Undistributed earnings of consolidated overseas subsidiaries(3,085)(2,598)(29,951)

Unrealized holding gains on securities(2,273)(1,644)(22,068)

Tax allowable reserves for deduction of fixed assets

(158)

(188)

(1,534)

Other

(267)

(390)

(2,593)(8,687)(7,813)(84,340)¥ 5,818¥ 6,373$ 56,485   Total deferred tax liabilities   Net deferred tax assets

48

Thousands of
U.S. dollars

Millions of yen

Note: The amounts of retirement benefit costs calculated based on simplified methods are included in service cost.

49

KYB Corporation

Annual Report 2014

Financial Statements

Following the promulgation on March 31, 2014 of the “Act­commencing from April 1, 2014 will change from 37.2% tofor Partial Revision of the Income Tax Act” (Act No. 10 of

34.8%. If the Company takes the above change into consider-2014), the special corporate tax for reconstruction from theation and uses it as a basis for recalculating the temporary

Great East Japan Earthquake will no longer be imposed fromdifferences at the end of the current consolidated fiscal year,

the fiscal year beginning on or after April 1, 2014. In line withthis change in the tax rate resulted in a ¥279 million (US$2,709

this revision, the Company’s statutory tax rate used to calculate

thousand) decrease in deferred tax assets (net of deferred tax

deferred tax assets and liabilities for temporary differences

liabilities) and an increase of the same amount in deferred

expected to be eliminated in the consolidated fiscal year

income taxes.

19

Asset Retirement Obligations

1. Asset Retirement Obligations Recognized in the Consolidated Balance Sheet
The Company and its certain consolidated subsidiaries have posted asset retirement obligations based on a reasonable estimate of
the cost of removing equipment that used chrome plating, asbestos and certain other materials. These estimates are based on the
Waste Management and Public Cleaning Act, Ordinance on Prevention of Health Impairment due to Asbestos and other laws andregulations.
Asset retirement obligations calculated by using the estimated useful period since acquisition of the equipment, 4 to 31 years,
and a discount rate of 2.0% for the years ended March 31, 2014 and 2013.
The asset retirement obligations as of March 31, 2014 and 2013 were as follows:18

Business Combinations

Transactions under Common Control
1. Summary of Transaction(1) Business activities of the related company
Type of business	Operations involving shock absorbers and other devices

Thousands of
U.S. dollars

Millions of yen

2014

2013

2014

¥391

¥364

$3,796

New obligations by acquisition of fixed assets

0

31

0

Changes in estimated obligations and accretion

5

5

49

(4) Name of the new company
	KYB Motorcycle Suspension Co., Ltd.
(Consolidated Subsidiary of the Company)(5) Other information concerning summary of transaction
	The new company will utilize the resources and knowledge

Beginning of the year

Settlement payment
End of the year

(10)

(9)

(97)

¥386

¥391

$3,748for motorcycles (including ATVs, snowmobiles and similarof the Company, which has specialized in the manufacture

motor vehicles) as well as associated equipment, partsof shock absorbers, and Yamaha Motor Co., Ltd., which isand accessories (except sales and procurement)a manufacturer of motorcycles. The goal is to establish a

2. Asset Retirement Obligations Other Than Those Recognized in the Consolidated Balance Sheeta. Development, manufacture and sale of shock absorbers

global infrastructure for the supply of motorcycle shock

The Company and its certain consolidated subsidiaries have obligation for future restoration mainly relating to the offices, pursuant

and other devices for motorcycles (including ATVs,

absorbers and other components as well as to supply atto the office rental agreements. However, these obligations were not recognized in the consolidated balance sheet because theysnowmobiles and similar motor vehicles) as well ascompetitive cost products that are among the best in the

could not specify the timing of its pursuance and estimate reasonably the amounts of these obligations for estimated period of use

world in terms of performance and quality.

of the relevant tangible fixed assets was uncertain and no plan or expectation of relocation.

associated equipment, parts and accessoriesb. Support to other companies involving the development
and sale of shock absorbers and other devices for motor-	  On the divestiture date, the Company sold 33.4% of thestock of KYB Motorcycle Suspension to Yamaha Motor.

20

cycles (including ATVs, snowmobiles and similar motor
vehicles) as well as associated equipment, parts and2. Summary of Accounting Treatment

accessories

The Company accounted for this business combination asc. All activities associated with the above business activities(2) Date of business combination
October 1, 2013transactions under common control in accordance with­“Accounting Standard for Business Combinations (ASBJ Statement No. 21, announced December 26, 2008) and “Guidance(3) Legal method of business combinationon Accounting Standard for Business Combinations and	A new company was established through a divestiture with

­Accounting Standard for Divestitures” (ASBJ Guidance No. 10,

the Company the divesting company and KYB Motorcycle
Suspension Co., Ltd. the company newly established by
the divestiture.

announced December 26, 2008).

Segment Information

1. Segment Information(a) General information about reportable Segments
Each reportable segment of the Companies is the business unit
in the Companies, for which segment financial information isavailable. Reportable segments are reviewed periodically at theBoard of Directors Meeting in order to determine allocation of

In consideration of the volume standard and other items
concerning reportable segments, “Special-purpose Vehicles”
and “System Products and Electronic Equipment” are combined into “Other” for disclosure purposes. Consequently,
the Company has two reportable segments: “Automotive
Components” and “Hydraulic Components.”

management resources and evaluate business result on eachreportable segment.
The Company has a business headquarters or department for(b) B asis of measurement on reported segment net sales,
profit or loss, segment assets and other material items

individual products and services. Each headquarters or depart-

The accounting methods for each reportable segment arement determines comprehensive strategies in Japan andalmost the same as those set forth in the “Summary of Signifi-

overseas for its products and services and conducts businesscant Accounting Policies”. The amount of segment profit

operations. As a result, the Company has four business catego-corresponds to that of operating income. Intersegment sales

ries: ”Automotive Components,” “Hydraulic Components,”

and transfers are based on the market prices.

“Special-purpose Vehicles” and “System Products and Electronic Equipment,” which consists of activities that do notbelong to the other three segments.

50

51

Annual Report 2014

KYB Corporation
Financial Statements(c) Information about reported segment net sales, profit or loss, segment assets and other material items

Thousands of U.S. dollars

Segment information as of and for the years ended March 31, 2014 and 2013 was as follows:

2014
Reportable segment

Millions of yen

2014
Reportable segment
Automotive
Components

HydraulicComponents

Intersegment

Subtotal

Other

Total

Adjustment

Consolidated

Outside customers

Consolidated$3,424,379$3,246,932$177,447$3,424,379$     —

27,02051,301

24,57275,873(75,873)—

2,149,990

1,148,243

3,298,233

202,0193,500,252(75,873)

3,424,379¥218,948¥115,486¥334,434¥18,277¥352,711¥    —¥352,711   Total sales

2,501

2,783

5,284

2,530

7,814

(7,814)—

Segment profits

88,864

77,612

166,476

10,903

177,379(971)

176,408

1,912,398

1,347,165

3,259,563

322,845

3,582,408(76,748)

3,505,660

84,34072,145

156,485

11,418167,903—167,903

107

3,349

3,456

—

3,456

—

3,456

178,553

92,165

270,718

20,030290,748(379)

290,369

0

—

0

1,505

1,505

—

1,505

118,269

339,718

20,807

360,525(7,814)

352,711

9,153

7,994

17,147

1,123

18,270(100)

18,170

Other items

Segment assets

196,977

138,758

335,735

33,253368,988(7,905)361,083

Depreciation
Impairment loss on fixed assets

Other items
8,687

7,431

16,118

1,176

17,294—

17,294

11

345

356

—

356

—

356

18,391

9,493

27,884

2,063

29,947(39)

29,908

0

—

0

155

155

—

155

Millions of yen

2013 Increase in property, plant and equipment and intangible assets Amortization of goodwill andnegative goodwill

Notes: 1. “Other” includes “special-purpose vehicles” and “System Products and Electronic Equipment” that are not included in the two reportable segments.
2. All amounts of adjustment of segment profits are the elimination of intersegment transactions.
3. All amounts of adjustment of segment assets are the elimination of intersegment transactions.
4. Segment profits have been reconciled with operating income in the consolidated statement of income.
5. The increase in property, plant and equipment and intangible assets includes long-term prepaid expenses.

3. Related Information

Reportable segment(a) Information about products and services

Automotive
Components

HydraulicComponents

Subtotal

Other

Total

Adjustment

Consolidated¥184,802¥105,068¥289,870¥15,882¥305,752¥    —¥305,752

Intersegment

2,424

2,402

4,826

1,137

5,963

(5,963)—   Total sales

187,226

107,470

294,696

17,019311,715(5,963)

305,752

Segment profits

5,106

4,255

9,361

871

10,232242

10,474

Segment assets

177,682

131,610309,292

22,128331,420(3,508)327,912The information about products and services for the years ended March 31, 2014 and 2013 was omitted since same information isdisclose in “1. Segment information”.

Segment sales:
Outside customers

Adjustment$1,121,223

221,449 Amortization of goodwill andnegative goodwill

Total

24,281   Total sales Increase in property, plant and equipment and intangible assets

Other$2,125,709

Segment profits

Depreciation

SubtotalIntersegment

Segment assets

Impairment loss on fixed assets

HydraulicComponents

Segment sales:

Segment sales:
Outside customers

Automotive
Components(b) Information about geographic region
The information about geographic region as of and for the years ended March 31, 2014 and 2013 was as follows:
Millions of yen

2014
Japan

EuropeU.S.A.

China

South East
Asia

Other areas

Total¥169,249¥60,711¥37,802¥25,676¥24,966¥34,307¥352,711

90,527

12,0496,222

19,292

14,291

5,256

147,637

Other items
Depreciation
Impairment loss on fixed assets Increase in property, plant and equipment and intangible assets Amortization of goodwill andnegative goodwill

7,394

6,643

14,037517

14,554—

14,554

47

9

56

—

56

—

56

18,087

17,65935,746

3,469

39,215—

39,215

(1)

—

(1)

—

(1)

—

(1)

Net sales
Property, plant and equipment

Millions of yen

2013

Net sales

Japan

EuropeU.S.A.

China

South East
Asia

Other areas

Total¥162,262¥43,646¥30,598¥17,872¥25,590¥25,784¥305,752

86,945

9,261

4,848

18,494

11,429493

131,470

Property, plant and equipment

Thousands of U.S. dollars

2014

Net sales

Japan

EuropeU.S.A.

China

South East
Asia

Other areas

Total$1,643,194$589,427$367,010$249,282$242,388$333,078$3,424,379

878,903

116,981

60,408187,301

138,748

51,0281,433,369

Property, plant and equipment

Notes: 1. Net sales are based on the locations of customers and categorized by countries and areas.
2. Property, plant and equipment are based on the locations and categorized by countries and areas.
3. Regions are based on geographic proximity.

(c) Information about major customers
The information about major customers for the years ended March 31, 2014 and 2013 was not disclosed since net sale to any
customer was less than 10% of the amount of net sales in consolidated statement of income.

52

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KYB Corporation

Annual Report 2014

Financial Statements(d) Information about impairment loss on fixed Assets by reportable segments
The information about impairment loss on fixed assets by reportable segment for the years ended March 31, 2014 and 2013 wasomitted since same information is disclosed in the reportable segments.
3. Amortization of Goodwill and Unamortized Balance of Goodwill by Reportable Segments
Amortization of goodwill and unamortized balance of goodwill by reportable segments for the years ended March 31, 2014 and2013 were as follows:
Millions of yen

2014
Reportable segment
Automotive
Components

HydraulicComponents

Subtotal

Other

Total

Amortization

¥1

¥—

¥1

¥155

¥156

Unamortized balance

3

—

3

620

623

Amortization

¥1

¥—

¥1

¥  —

¥   1

Unamortized balance

—

—

—

—

—

Goodwill

Negative goodwill

Millions of yen

2013
Reportable segment
Automotive
Components

HydraulicComponents

Subtotal

Other

Total

Amortization

¥1

¥—

¥1

¥—

¥1

Unamortized balance

4

—

4

—

4

Amortization

¥2

¥—

¥2

¥—

¥2

Unamortized balance

1

—

1

—

1

Goodwill

Negative goodwill

Thousands of U.S. dollars

2014
Reportable segment
Automotive
Components

HydraulicComponents

Subtotal

Other

Total

Amortization

$10

$—

$10

$1,505$1,515

Unamortized balance

29

—

29

6,020

6,049

Amortization

$10

$—

$10

$    —$    10

Unamortized balance

—

—

—

—

—

Goodwill

Negative goodwill

21

Subsequent Event

On June 25, 2014, the shareholders of the Company authorized the following appropriation of retained earnings as of March 31,
2014:Millions of yen

Cash dividends, ¥5.0 (US$0.05) per share

54

Thousands of
U.S. dollars

2014

2014

¥1,278$12,40855