Annual Report 2012 Year Ended March 31, 2012

Automotive Components ・ Shock Absorber (SA), HighPer formance Single C ylinder Shock Absorbers, SemiActive Air Suspensions, Adjustable Shock Absorbers, Power
Steering System, Electric Power Steering (EPS), Vane Pump
for CVT Hydraulic System, Electronic Control Unit, Power
Assisted Steering Control Unit, Solenoid, Sensors, Noise
Resistant Pressure Sensors : Motorcycle Components ・Suspension, Shock Absorbers for ATVs, Shock Absorbers for
Snowmobiles : Construction Machinery, Industrial Vehicles,
Agricultural Machinery・Hydraulic Pumps, Hydraulic Motors,
Hydraulic Cylinders, Hydraulic Valves, Integrated HST(Pump + Motor), Control Units for Forklift Trucks : Railroad
Equipment ・ Semi-active Suspension Systems for Bullet Train(Shinkansen), Caliper Brakes with Tread Cleaning Systems,
Oil Dampers for Railroad Vehicles, Inter-car Yaw Dampers,
Controllers for Semi-active Suspension Systems for Bullet
Train (Shinkansen) : Industrial Machiner y ・ HydraulicLinear Actuators, Mini-buffer, Gas Springs/Free Lock Type,
Buffers of Various Types, Multiple Electromagnetic Valves,
Proportional Electromagnetic Pressure and Flow Control
Valves, Position Control Solenoid Valves : Building, Civil
Engineering, and Stage Equipment ・ Movable Roof Open/Close Systems, Measurement and Compensation Systems for
Uneven Sinking of Structure, Stage Mechanisms, Movable
Floors Rearranging Viewers Seats, Boom Headers (Hydraulic
Tunnel Borers), Vibration Control Devices, Oil Dampers for
Earthquakes, Housing Basic Isolation Systems : Testers ・High Precision Leak Testers, Portable Fatigue Testers, Gate
Type Fatigue Testers, Torsional Fatigue Testers, Internal
Pressure Fatigue Testers, Shock Absorbers Testers, Noise
Check Systems, Road Simulators for Automobiles, Road
Simulators for Motorcycles, Simulators for Research andTraining : Aircraft Components ・ Servo Actuators, Actuators,
Light Weight Accumulators, Steering Actuators, Flight Control
Actuators, Tail Skid Actuators, Wheel Brakes, Reservoir
Modules, Reservoirs for Space Rockets : Special-Purpose
Vehicles ・ e Mixer, Concrete Mixer Trucks, Granule Carriers,
Inclined Mixers, Portable Retractable Large Audience Screen
Display, Lift Bucket for Noise Abatement Wall Inspection,
Chipping Vehicle for Pruned Branches, Vehicle for Shredding
Sensitive Documents : Marine Components ・ Cable Handling
Systems, Hejacules (Self Propelled Hydraulic Jack), Conveyers
for Laser Cutting, Hydraulic Block Lifters : Environment,
Welfare, and Disaster Prevention ・ Self-Propelled Waste
Checker Conveyers, Earthquake Simulator Trucks, Biomixers(Rotating Drum High Speed
Fermentation Equipment),
Shock Absorbers for Chair
Skis, Vehicle Kneeling Down
Systems, Solar Projectors

Our Precision, Your Advantage

The Pivotal Roles of KYB

KYB Corporation

Annual Report 2012

Automobiles and motorcycles must deliver the best
possible riding comfort and handling stability.
Shock absorbers, power steering systems,
and other KYB products incorporate
advanced technologies cultivated byrigorous testing under punishing conditions.
Their performance plays a critical role indelivering drivability that can satisfy all drivers.
KYB’s vibration control technologies help
improve comfort and safety in applications ranging
from railroad car shock absorbers to seismic
damping systems for buildings.

shock absorbers
for the utmost in comfort and handling stability

HydraulicProfileThe KYB Group, which has no affiliation with any othercorporate group, uses its core expertise in hydraulictechnology to supply a variety of products and technologies
to manufacturers of automobiles, construction machinery,aircraft, railway cars, and many other products.

1

The Pivotal Roles of KYB

KYB Corporation

Annual Report 2012

KYB’s hydraulic devices are vital to the operation of
construction machinery, agricultural machinery,industrial equipment, and even railroad cars and aircraft,which demand the highest levels of reliability.
All of our hydraulic devices proudly represent KYB’s
expertise in power control and precision processing.
By supplying these devices, KYB contributes to social
progress and an infrastructure that allows people to lead
their lives in safety and comfort.

Hydraulic devices for a broad range of requirements

Management Vision
Human Resources Development :To cultivate the talent to achieve objectives with athorough understanding of principles and strategy.
Technology and Product Development:
To provide products that are impressive, comfortable, andreliable to customers throughout the world.
Monozukuri (Manufacturing expertise):
To make our plants enjoyable, dynamic places to work, andat the same time full of discipline based on the field priority
doctrine, in order to produce products satisfactory to thecustomer.
Management :Always keep the social responsibilities of the corporation inmind and provide efficient group management.

2

3

The Pivotal Roles of KYB

KYB Corporation

Annual Report 2012

KYB is always seeking new ways to leverage its knowhow by combining its core hydraulic technology withskills in fields like electronic control, new materials, andair and water pressure to create composite systems.
One example is fully active suspension systems forautomobiles and railroad cars. Combining technologies
also makes possible products extending from theater
equipment to Paralympic chair skis and wheelchair shock
absorbers. All these products are vital to maintaining
safety and comfort. Our dedication to developing
technologies and products that improve the quality of life
will always guide the operations of KYB.

The vast

potential of technologies
originating from hydraulics

Management Principles
The KYB Group contributes to society by providing technologies
and products that make life safe and comfortable.
1. Challenge higher objectives and construct a livelier corporate
cultural climate.
2. Maintain grace and good faith, and pay attention to natureand the environment.
3. Always seek creative ideas and contribute to the progress ofcustomers, shareholders, suppliers, and society.

45The Financial Strength of the KYB GroupKYB Corporation

Major Performance Indicators in FY2011

Annual Report 2012

Ten-Year Trends in Net Sales and Net Income

Year ended March 31, 2012

387,080(Millions of yen)

46.0%

¥21,537

in FY2002

in FY2002

in FY2002

300,000

Net income

Equity ratio

ROE

250,000¥13,897

33.2%

14.8%

252,020¥8,937 million
270,32925.4%

207,642¥207,642 million

290,455

million

228,525

million

350,000

337,158¥337,158

320,082

Operating income

329,262

Ratio of overseas sales

356,083

400,000

Net sales¥2,663 million

30.6%

4.5%

in FY2002

in FY2002

in FY2002

17,014200,000

millionInterest-bearing debt

Capital expenditure

13,897150,000

Dividends

in FY2002

in FY2002

in FY2002

2009

2008

2007

2006

2005

(5,229)

5,000

6

2004

2003

(F Y )

2002

0

7

Net sales
Net income

2011

¥5

661

¥8,397 million

2,663¥51,053 million

2,917

50,0002010

million

6,959

million¥9

5,501¥27,172

6,040¥78,386

8,397

100,000

KYB Corporation

Annual Report 2012

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

Years Ended March 31,

Millions of yen
2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

Net sales¥ 337,158¥ 320,082¥ 252,020¥ 329,262¥ 387,080¥ 356,083¥ 290,455¥ 270,329¥ 228,525¥ 207,642

Cost and expenses

315,621295,931

248,124

329,213368,809341,510

283,732

260,687

217,406

198,705

Operating income

21,53724,151

3,896

49

18,271

14,573

6,723

9,642

11,119

8,937

6.4

7.5

1.5

0.0

4.7

4.1

2.3

3.6

4.9

4.3

Ordinary income (loss)

22,75523,972

5,530(1,395)

17,643

15,111

8,272

9,992

10,918

9,260

Income (loss) before income taxes and minority interests

21,75924,4391,670(4,299)15,21813,480

8,008

10,13810,856

5,465

Net income (loss)

13,897

17,014661(5,229)

8,397

6,959

2,917

5,501

6,040

2,663

Comprehensive income

14,997

14,405

—

—

—

—

—

—

—

—

Return on Equity (ROE)

14.8

21.1

0.9

—

9.9

8.7

4.0

8.0

9.6

4.5

Cash flows from operating activities

17,39935,43322,654

8,499

19,706

20,357

13,8208,999

12,57019,278Cash flows from investing activities(20,000)(7,233)(12,828)(26,505)(20,165)(18,322)(15,959)(14,778)(11,533)(10,107)

Cash flows from financing activities(3,454)(16,967)(6,646)32,1994,192(3,157)

2,965

191

(2,310)(1,260)R&D expenses

4,035

3,218

2,816

3,268

3,367

3,707

3,705

3,533

3,393

3,845

Depreciation and amortization

13,50813,42615,31816,551

14,973

12,288

10,250

9,780

8,268

8,157

Capital expenditure

27,172

8,915

10,081

24,96823,564

19,735

15,677

14,070

10,395

8,397

Working capital

42,00646,024

48,701

43,512

29,12023,75821,392

26,492

17,91724,550Total net assets

102,761

89,96478,48976,45091,73887,81676,71870,656

66,81959,520Total assets

301,348

285,134

269,361

269,655

289,738

285,146

247,966

222,224

213,845

194,454

Cash and cash equivalents at end of period

42,00948,122

37,66334,272

20,073

16,651

14,963

13,96018,901

20,252

33.2

30.6

27.3

26.6

29.8

29.1

30.9

31.8

31.2

30.6

37.72

¥ 31.33¥ 12.63¥ 24.15¥ 26.55¥ 11.47

For the year:

Operating income margin [%]At year-end:

Equity ratio [%]Yen
Per share data:
Net income (loss)¥ 62.87¥ 77.54

Net worth453.00Cash dividends applicable to the year
P/E ratio [Times]
Number of employees

8

¥

3.03

¥ (23.62)¥

395.18336.55327.97387.45372.60343.99316.64299.34266.62

9.00

8.00

2.50

3.50

7.00

7.00

6.00

6.00

6.00

5.00

8.0

8.6

113.9

—

10.2

20.8

35.2

15.2

15.0

21.6

11,975

11,44010,977

11,370

11,546

10,596

8,387

8,186

7,645

6,105

9

Message from the President

KYB aims to make lives safer andmore comfortable withtechnologies and products
backed by true manufacturing
craftsmanship.

KYB Corporation

Annual Report 2012

Our Vision for
Fiscal 2020

We want to be an organization that supplies products to all of
the world’s major manufacturers of automobiles and construction machinery.
The starting point for creating the current medium-term management plan was to envision the
KYB Group in fiscal 2020. We have clearly defined that vision and established a timeline for what
we must do to achieve it. I believe this approach will allow us to establish effective business andinvestment plans that accurately reflect changes in our operating climate.
Our vision for fiscal 2020 is to be a highly reliable organization that supplies products to all of theworld’s major automobile and construction machinery manufacturers. For the KYB Group, Japan
has become simply one base of operations in a global organization. Achieving sustained growthIn fiscal 2011, ended March 31, 2012, the KYB Groupfor the Group will require shifting the emphasis of management from the head office in Japan to ancompleted the first year of the three-year management plan

optimized worldwide emphasis. The Group must build an infrastructure that is capable of constantly

up to March 2014. We saw an increase in sales,

producing creative products and systems at R&D bases around the world.

while earnings were lower. Nevertheless, we made steadyMilestones for Achieving Our Vision

progress in building a sound foundation for global operations,Fiscal 2011 to 2013: Setting the stage for growth, putting the necessary framework in place

which is the central goal of the plan.

Fiscal 2014 to 2016: Making our global infrastructure more powerful
Fiscal 2017 to 2019: Taking the offensive and winning

The KYB Group is dedicated to remaining a source of exciting
products that can satisfy customers around the world.
To give our stakeholders a better understanding of the Group,
I would like to explain major initiatives of the medium-term
management plan in fiscal 2012. I will also cover
our strategy for achieving
medium- and long-term growth.

Fundamental Policy
for the Current
Medium-termManagement Plan

Compete on the global stage by using the power of the KYB Group.
The slogan of the current medium-term management plan is “compete on the global stage with thepower of the KYB Group.” To accomplish this, the plan has seven priority initiatives:(1) Automotive Components (AC) Operations: expand overseas operations and aftermarket sales(2) Hydraulic Components (HC) Operations: establish a global production framework

Masao Usui

(3) Strengthen electronics technologies

President and Representative Director(4) Recruit and train the human resources needed to execute our global growth strategies(5) Reinforce the domestic development framework and establish new development
		 frameworks overseas(6) Reduce inventories and boost productivity by cutting lead times in half(7) Speed up decision making by establishing regional headquarters in Europe, China,
		 and North America
We must take into consideration a number of risk factors, notably the weaker euro caused byfinancial instability in Europe and increasingly heated global competition among suppliers. However,
economic growth rates will likely remain high in emerging countries, particularly the BRICS and
ASEAN countries. To increase our share of the expanding global markets where we compete, wemust use the strengths of the entire Group to quickly leverage the monozukuri (manufacturingexpertise) that can make us a winner worldwide. We will shift manufacturing and development
activities to the best locations so as to make products where they are used. At the same time, wewill reinforce measures to create and refine core technologies in Japan. In addition, we will build
a stronger framework for our operations—one that is capable of generating consistent earnings
regardless of fluctuations in sales.
Our Goals under the Current Medium-Term Management Plan
Consolidated net sales: ¥400 billion
Consolidated operating margin: At least 8%

10

11

Message from the President

Fiscal 2011 Initiatives
and Accomplishments

KYB Corporation

Annual Report 2012

AC Operations

Progress was made in building frameworks for global production, sales,

The KYB Group has prepared a detailed road map covering the new models that overseas

and development.

automakers plan to launch. We plan to use this road map to increase sales outside Japan. In April

During fiscal 2011, KYB’s market faced events of historic magnitude: supply chain disruptions caused

2012, we established an Electronics Technology Center. The primary role of the new center is toby the Great East Japan Earthquake, the increasingly serious debt crisis in Europe, and the yen’s

strengthen electronics technologies while enabling us to manufacture automotive electrical parts

record strength. However, automakers in Japan quickly restored their supply chains and benefitedinternally. Furthermore, the Electronics Technology Center is at the forefront of our measures tofrom the resumption of eco-car subsidies, which resulted in higher automobile production than one

assemble a global development center network.

year earlier. The construction machinery industry recorded a large increase in sales over fiscal 2010.

Shock absorbers are a core product of the KYB Group. In fiscal 2011, we accounted for only 18%

The main causes for this were rapid growth in demand in China and the ASEAN region during theof the OEM supply of shock absorbers to non-Japanese companies. We aim to raise this figure to

first half of fiscal 2011 and demand associated with earthquake reconstruction activities in Japan.

34% by 2020. Another goal is to double aftermarket sales of shock absorbers. To accomplish this, we

In this environment, the KYB Group made progress as follows in building frameworks forwill add aftermarket production lines in the United States, China, and Brazil and work on raising sales

global production, sales, and development that will be needed to reach the current medium-termin the BRICS countries and mature markets.

management plan’s goals:•• In May 2011, we established a company in Brazil with Mando Corporation of Korea to increase

HC Operations

OEM sales overseas.

Over the past several years, insufficient production capacity of industrial hydraulic devices, the core•• In July 2011, we began operating the KYB Developmental Experiment Center. This facility includes

product of this business, has been a major issue for the KYB Group. We have taken the following

a test track, which enables us to strengthen our R&D infrastructure and to create new KYB

steps to address this issue.

exclusive technologies and products. We are using the track to test vehicles under actual driving

At the end of March 2012, we completed construction of a plant in Zhenjiang, China, thatconditions for assessing performance aspects such as the sensitivity of shock absorbers and ride

manufactures travel motors for mid-size hydraulic excavators (20 to 30 ton class). Production began

comfort.

in April. Initially, output will be 3,000 motors per month.

•• In October 2011, we established an Aftermarket Business Headquarters to double aftermarket

For cylinders used in mid-size hydraulic excavators, we raised monthly output to 14,000 units insales of shock absorbers by aggressively targeting new sources of demand.

China in October 2011 and started supplying these cylinders to customers in China and the ASEAN•• Also in October 2011, we established an ASEAN Purchasing Center in Thailand. This new centerregion. Furthermore, we are considering the construction of a plant in the ASEAN region to meetand our purchasing center in China allow us to purchase parts and materials worldwide, thereby

the growing local demand for these cylinders. In addition, a third building is under construction at

better enabling us to lower expenses.

Gifu East Plant to centralize the Group’s production of mid-size cylinders. We will use space at the•• We plan to add development capabilities to the KYB Group’s overseas business sites in stages.

current cylinder plant in Gifu to increase output of ultra-large cylinders (more than 190 tons) for theThis will enable us to use locally purchased parts to create new products at a development

rapidly growing mining machinery market. In addition, our wholly owned subsidiary KYB Cadac has

center in the same region. These localized activities will result in products that are competitive

started construction of a new plant in Japan to increase output of control valve castings for hydraulicin terms of price and quality.

Fiscal 2012 Priorities

excavators.
Special-Purpose Vehicles

Channel substantial group resources to building a foundation for businessThis business involves the sale of systems that incorporate our advanced technologies in hydraulics,

operations that can compete and win on a global scale.

electronic control, and many other fields. Our best-known products are concrete mixer trucks, aIn fiscal 2012, the second year of the current medium-term management plan, we will move evencategory where we rank highest in Japan. Sales of these trucks have increased rapidly since the first

faster to build a foundation for conducting business operations on a global scale. Our actions reflect

half of fiscal 2011 because demand associated with earthquake reconstruction activity has emergedmarket conditions for our major products and include a number of key initiatives.

at the same time as strong demand for replacing older trucks. We expect cement mixer truck sales
to continue to grow in the current fiscal year as well, with sales in this business sector increasing
33% to ¥3.3 billion.

Products with
Growth Potential

We are targeting opportunities and expanding our presence in growing markets tocreate new profit centers.
To establish our future profit centers, three products will be of particular importance for the KYBGroup in the coming years.
The first product is EHESS. Our engineers have developed the world’s first system that canreuse the hydraulic pressure energy that is produced as hydraulic fluids flow back following the
movement of a hydraulic excavator. Using EHESS cuts fuel consumption by about 30%. Benefits
can be obtained by simply adding an EHESS unit to an existing hydraulic excavator. I believe that this12

13

Message from the President

KYB Corporation

Annual Report 2012

We are determined to achieve more growth by retaining an intent focus on speed.

innovative system will become widely used soon after we begin mass production.
The second product is aircraft actuators. Seven KYB actuators will be used in each Boeing 787

In my role as president, I always keep the importance of speed in mind above all else. Reachingin the fleets of All Nippon Airways and Japan Airlines. Our actuators open and close wheel wells,

decisions with speed is vital to responding accurately to the rapid changes in our markets. Speed

withdraw and lock landing gear, and perform other tasks. We are currently conducting sales

is particularly critical in the aftermarket sales business, which is directly linked to end users.

activities with the aim of having other airlines select our actuators for this aircraft.

Furthermore, the KYB Group will share information globally among group companies with no time

The third product is seismic isolation and damping systems made by our wholly owned subsidiarydifferences for the purpose of thinking, acting, and evolving together.

Kayaba System Machinery. TOKYO SKYTREE, a 634-meter tall tower that began operating in May

Despite the uncertain outlook for our operating climate, the KYB Group will resolutely focus all its

2012, uses 96 of our high-speed seismic dampers in the tower and 130 high-attenuation oil dampers

energy and resources on achieving the goals of the current medium-term management plan.

for the low-rise section of the complex. Interest in seismic isolation and damping systems has beenvery strong in the wake of the Great East Japan Earthquake. KYB will retain an aggressive stancetowards sales in this product category.

Capital Expenditures
Plan

We will continue making capital expenditures for growth while carefully monitoringchanges in the operating climate.
Capital expenditures totaled ¥27.1 billion in fiscal 2011. We will continue to make substantial capital
expenditures for projects that can contribute to our growth. As we make these expenditures, wewill carefully monitor the rapid changes taking place in our markets. In fiscal 2012, we plan tomake capital expenditures of ¥36.5 billion, ¥9.4 billion more than in fiscal 2011. One major project
underway is construction of a third building at Gifu East Plant to centralize the Group’s productionof mid-size cylinders. This facility will allow us to increase output of cylinders used in ultralarge hydraulic excavators to meet the strong growth in demand for these excavators at mining

Earnings
Distributions for
Shareholders

Our goal is to maintain a DOE ratio of at least 2%.
My final subject is our basic policy for earnings distributions and our dividend plan for fiscal 2012.
Returning a suitable amount of earnings to shareholders is one of KYB’s highest priorities.
Our basic policy is to pay an annual dividend equivalent to a Dividend on Equity (DOE)*
ratio of at least 2%. For fiscal 2012, we plan to pay a dividend of ¥9, the sum of a ¥4 interim
dividend and ¥5 year-end dividend. We will also increase retained earnings, which helps fundcapital expenditures and R&D expenditures. Overall, we aim to maximize shareholder value bysustaining growth year after year.
I ask for the support and understanding of shareholders, investors, and all other stakeholders as
we take the actions required to achieve our goals.
*DOE=Dividends / (Net assets–Minority interests in consolidated subsidiaries–Revaluation and translation differences)companies. Another project will increase monthly output capacity at KYB Cadac for hydraulicexcavator control valve castings from 700 tons to 1,200 tons.
The large amount of investments in Japan may appear to be inconsistent with our goal of making
the KYB Group more global. However, investing in manufacturing activities in Japan does notcontradict our goals. For example, KYB Cadac uses the world’s most advanced casting technologies
to fabricate its control valves. Transferring this production to another country is currently
impractical. Furthermore, seismic isolation and damping equipment are functional components that
embody sophisticated technologies. Here again, making these components in Japan and exportingthem to countries prone to earthquakes is the most advantageous way to conduct this business.
The same is true of electric power steering systems, which rely on both mechanical and electronic
control expertise. Ultra-large cylinders are used in hydraulic excavators that are sold to customers
outside Japan. However, we deliver most of these cylinders to factories in Japan. Therefore, weshould increase output in Japan for a number of reasons, including consistency with our policy ofmaking products where they are used.
We are shifting the manufacture of products that are used in many applications, such as
aftermarket shock absorbers, from Japan to other countries. We will globalize our operations while
increasing output of value-added products in Japan.

The Key
Components ofGrowth at theKYB Group

We will make even greater use of our vibration and power control technologies.
We will also combine this expertise with electronic control and other advanced 		technologies to create new system products.
We supply products and systems for a wide range of applications, such as automobiles, airplanes,
railroads, ships, hydraulic excavators, special-purpose vehicles, and construction (seismic isolationand damping systems). This diversity significantly protects us from the effects of a downturn in any
particular industry.

14

15

Business Segment

KYB Corporation

Annual Report 2012

Automotive Components (AC) Operations

Hydraulic Components (HC) Operations

Major Products

Major Products

Shock absorbers

Cylinders

Suspension systems

ValvesPower steering systems

Oil dampers for railway vehicles

Vane pumps

Collision shock absorbers

Front forks

Pumps

Oil cushion units

MotorsStay dampers

Equipment for landing systems

Free locks

Flight control systems
Emergency devices for aircraft

Sales Composition

Sales Composition

55.1%

40.7 %

Photo credit by LEXUS

14,299along with higher sales in the ASEAN region, and demand associatedwith earthquake recovery activities in Japan. This growth was offset
effects of monetary tightening.

Variable Transmission (CVT) pumps were strong.

(-1,023)

Sales of hydraulic equipment for aircraft increased 18.9% to ¥6.5
billion along with growth in orders for spare parts. Sales of other17

FY 2011

downturn in orders for semi-active systems from customers in China.

FY 2010

dampers for railway cars, decreased 18.3% to ¥6.8 billion owing to a

FY 2009

FY 2011

FY 2010

FY 2009

FY 2011

FY 2010products, which consist primarily of semi-active systems and oil
FY 2009

Sales of other products, mainly automotive stay dampers and

FY 2009

power steering and lower sales in Europe. Sales of Continuously

16

were up significantly in the first half because of growth in China

somewhat by slowing sales in China in the second half due to thedemand for hydraulic pumps fell along with the shift toward electriccomponents for all-terrain vehicles, increased 11.0% to ¥7.5 billion.

FY 2011

Sales of industrial hydraulic components, which are used mainly

6,154

168,631

4,890

sales of automotive shock absorbers.
power steering products, were down 6.9% to ¥35.9 billion because

increased ¥3.5 billion to ¥14.2 billion.
in construction machinery, increased 15.6% to ¥124.1 billion. Sales

sovereign debt crisis attributed a 1.0% decrease to ¥117.9 billion in
Sales of automotive hydraulic products, which consist mostly of(¥ million)

122,809

The effects of the Great East Japan Earthquake and the floodingin Thailand were limited, but lower sales in Europe caused by the(¥ million)

73,313

186,962

were ¥6.1 billion, ¥4.0 billion less than in fiscal 2010.

Segment sales increased 13.5% to ¥139.4 billion and segment profits

Segment profits

13,941(¥ million)

Segment sales

FY 2010(¥ million)

Performance in Fiscal 2011

139,468

Segment profits

10,181

Segment sales increased 1.0% to ¥188.8 billion, yet segment profits

Segment sales
188,845

Performance in Fiscal 2011

Topics of FY2011

Business Segment

Other

Major ProductsElectro-Hydraulic Energy Saving System (EHESS)KYB Developmental ExperimentCenterConcrete mixer trucks

KYB has developed a hybrid system that can directly reuse regenerative hydraulicGranule carriers

The test track allows performing

pressure energy. The aim is to create a hybrid system incorporating simple yet

Special-function vehicles

tests over a broad range of

sophisticated hydraulics technology.

Motion simulatorsroad surfaces. This will improve

Hydraulic systems

KYB’s ability to develop suspension

Auditorium and stage control systems

components, steering components,

Naval ship equipment

electronic components, and other

Tunnel borers

products that have even higher

Environment-friendly equipment

performance and reliability.

Seismic isolation systems
Vibration control dampers
Electronic applications

Sales Composition

4.2 %Boom cylinder

Boom regeneration
valve

Rotation
regeneration
valve

Rotation motor

Control valve

Assist pump/
Regeneration
pump motor unit

Assist/Standby
regenerationvalve
Oil tank
Electronic
control unit

EngineElectric battery
Hydraulic pump

Seismic damping system for
the TOKYO SKYTREE
Segment profits(¥ million)(¥ million)

profits were ¥0.9 billion.
13,811

Sales of special-purpose vehicles, mostly concrete mixer
trucks, surged 54.5% to ¥2.4 billion and sales of other products,
mostly seismic isolation systems and vibration control dampers,

KYB’s seismic isolation anddamping systems, which are madeAircraft Actuator for Boeing 787

by our wholly owned subsidiary
989

Segment sales increased 4.2% to ¥14.3 billion and segment

Segment sales

14,395

Performance in FY2011

Kayaba System Machinery,

Seven KYB actuators will be used inare used for the TOKYO SKYTREE,

each Boeing 787 in the fleets ofa 634-meter tall tower.

All Nippon Airways and Japan Airlines.
Boeing 787

18

FY 201176
FY 2010

FY 2009

FY 2011

FY 2010

FY 200927

demand associated with earthquake recovery activities.

12,707increased 0.4% to ¥10.5 billion. The main cause for these was

Actuators for Boeing 787

19Actuator for locking gearTopics of FY2011

Corporate Governance

New Company to Oversee the Americas

Basic Policy for Corporate Governance

KYB established KYB Americas Corporation to centralize the

The KYB Group positions the upgrading of its corporate

supervision of manufacturing and sales companies in thegovernance as one of its highest priorities in order to increase

Americas. This company will strengthen operations in thecorporate value as the Group’s activities become more global.

region by increasing management efficiency and capturing

In addition, we regard making contributions to society,more synergies among the KYB Group’s business activities.

including stakeholders, as our primary mission.

This action follows the establishment of similar regional
management companies in Europe and China.
KYB Americas Corporation

Corporate Governance Systems
a | Overview of the corporate governance system
KYB uses the Board of Auditors system and has the following

New CVT Pump Plants in China and Thailand

Group Company Management Committee
This council discusses important matters concerning themanagement of business operations at group companies in Japan.
Global Strategy Committee
This committee discusses important matters concerning themanagement of group companies in other countries.
Operation Review with the President
These meetings are held at each site, with KYB’s president
reviewing problems involving the quality of products and issues
concerning management.

units for the purpose of ensuring the effectiveness of corporate

KYB Hydraulics Industry (Zhenjiang) Ltd., which is locatedgovernance. In addition, we are taking actions to strengthen thein Zhenjiang, China, has completed construction of a CVT

framework for overseeing group management activities.

hydraulic vane pump plant. The plant will soon begin full-

Board of Corporate Auditors
This board consists of four standing auditors, including two
outside auditors (one of whom is an independent auditor). KYB

Board of Directors

scale production of 50,000 units per month. In addition, an

believes that audits performed by these auditors provide for

88,000m2 site has been purchased at the Amata Nakorn

The Board of Directors has seven members and, in principle,

the effective oversight of management and create an effective

Industrial Park in Thailand for construction of a CVT hydraulicmeets once each month. Directors reach decisions about items

framework for governance. There are no personal, financial,prescribed by laws and regulations as well as policies and otherbusiness, or other relationships involving financial or otherimportant matters involving management. The directors alsointerests between KYB and the outside auditors.

vane pump plant slated for completion in February 2013.
These two projects are part of the KYB Group’s ongoing

President Usui at the opening ceremony

oversee the management of business operations.

measures to enlarge its global production framework.

Audit Department
Purchase of Land for KYB Cadac’s New Casting Plant
KYB Cadac’s new casting plant is scheduled for completionin February 2013 in Nagano Prefecture. The company plansto build the world’s most advanced mono block valve casting
plant while using an environmentally friendly design. The

Board of Managing Executive Officers/Board of

The Audit Department, which has a staff of 11 people, performs

Executive Officers

internal audits and is supervised directly by the President. ThisKYB uses the executive officer system for the purposes

department performs audits of all business sites and groupof separating the role of management supervision and thecompanies in accordance with the rules for internal audits. To

management of business operations, speeding up decision-

ensure that audits are performed efficiently, there are periodic

making, and improving the efficiency of management.

meetings with the Board of Corporate Auditors to share

Executive officers meet to hold discussions about important

plant will increase output of castings—key elements ofmatters associated with management.

hydraulic devices for construction machinery—as part ofIllustration of the new KYB Cadac plantvalve castings, which have very intricate shapes. To meet thedemands of its customers, KYB Cadac plans to more thandouble its monthly output from the current 700 tons to 1,800
tons by fiscal 2014.

20

audits, exchange opinions about internal controls, and discuss
other matters.

measures to strengthen our production framework.
Highly advanced technologies are required to fabricate

information about annual audit plans, discuss matters involving

21

Corporate Governance

KYB Corporationb |Internal controls

Management Structure and Internal Controls
Annual Shareholders’ Meeting
Elect / Dismiss

Cooperation

Elect / Dismiss

Elect / Dismiss

Board of Corporate Auditors(including two outside auditors)

Annual Report 2012

Audit

LawyerBoard of Directors

event. KYB has established rules and guidelines for risks

KYB positions internal controls as a vital base for the effective

associated with compliance, the environment and safety, naturalfunctioning of corporate governance. Internal controls contributedisasters and accidents, product quality, information security,

to heightening the transparency of business operations as wellexport controls, and other items. KYB also supervises, evaluates,

as to making these operations effective, efficient, and reliable.

and provides guidance for the implementation of these rules andEvery year, the Board of Directors approves resolutions regarding

guidelines.

the Basic Policy for Internal Controls, which covers systems for

Risks associated with the businesses and investments of thecompliance, information management, and group management.

KYB Group are managed by the Board of Directors, Board of
Executive Officers and other units. When a major problem

Representative
Director, President
Executive Officer

Cooperation
Cooperation

Quick reportoccurs, KYB establishes an Emergency Response Headquarters

Head office departments are responsible for the management of

led by the company President. This headquarters collects andrisk as well as for monitoring issues involving risk management

analyzes information about the event and oversees actions aimed

and responding as needed to a natural disaster or other suchat minimizing damage and other losses.

Executive
Officer for CSR

Audit
Department

GlobalStrategy
Committee

Group
Company
Management
Committee

Board of Managing
Executive Officers
Board of Executive
Officers

Operation
Review with
the President
Legal Affairs Dept.
(In charge ofcompliance)(whistleblowing)

Internal audit
Auditing

Opinions and complaints

Certified Public Accountant

Reportc | Risk management

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

Compensation
The following table shows compensation for directors and corporate auditors and the number of applicable individuals.
Category

Total
compensation(millions of yen)

Number ofapplicable
individuals

Compensation by category (millions of yen)
Basiccompensation

Stock options

Bonuses

Retirement
payments

Directors

365

278

—

64

22

21

Standing auditors(excludes outside
auditors)

50

34

—

12

3

3

Outside auditors

55

41

—

12

1

3

The following table shows compensation paid to the independent auditor.
Category

Management (As of June 26, 2012)
Representative Director,
ChairmanTadahiko Ozawa

Members of the Board of
Directors,
Senior Managing Executive
Officers

Akiyoshi Tanaka
Yasusuke Nakajima

Representative Director,
President Executive Officer

Hidetsune Iseki

Masao Usui

Keisuke Saito
Managing Executive Officers

Representative Director,
Executive Vice President
Executive Officer

Keiichi Handa
Takafumi Shoji
Kazuhiro Ogata

Kazuhisa Ikenoya

Morio Komiya
Masaki Nishiwaki
Eiji Hisada
Tadao Ogoshi

Compensation for audit certification(millions of yen)

KYB Corporation

65

35

Consolidated subsidiaries

8

—

73

35

Executive Officers

Standing Auditors

Total

Hitoshi Nitta

Haruki Ubukata

Note: Compensation for non-auditing services is for advisory services regarding the use of international accounting standards for other services.

Michio Yoshino

Tomoo Akai

Shigeru Ito

Michio Tani

Makoto Kimura

Osamu Kawase

Shigeo Kidokoro
Hiroaki Hirayama
Yuukou Yusa

Other Significant Compensation

belongs to the same network as the independent auditor used

Three consolidated subsidiaries, including KYB Americas

by the Company, for audit certification and other services for

Corporation, have paid ¥88 million to KPMG International, whichfiscal 2011.

Hideo Ookuma
Yasuo Ooe
Kiyokazu Nagata
Kiyoshi Kanamaru
Hitoshi Arakawa
Junichi Matsuo
Hiroshi Ogawa
Masao Ono
Hideki Nonoyama
Kenji Yamanouchi

22Compensation for non-auditing services(millions of yen)23

Environmental Activities

KYB Corporation

Environmental Policies

Annual Report 2012

Environmental management organization

In order for the KYB Group to tackle environmental preservation activities as a whole, we have developed a basic environmental policy.

Environment and Safety Committee meetings are held twice a year, and environment and safety audits are held once a year to unify
understanding of policies and activities related to the environment and the safety of each plant on a group-wide scale. Furthermore,

Companywide Environmental Slogan

we have been introducing various techniques so that employees can also save energy at home by changing the temperature setting ofProtect the Green Earth and Create Products Gentle to the Environment

air conditioners and through environmental education and implementation of environmental housekeeping books.

Environmental & Safety Medium-Term Policy

Basic Environmental Policies
The KYB Group creates products gentle to both people and theearth. As a company that provides power and comfort, we are

The KYB Group established a new medium-term management

dedicated to the promotion of environmental activities as anplan in fiscal 2011. Based on this plan, we will implement

important tool for evaluating management.

environmental and safety activities based on our basic policy

1. Strive to ensure long-term and sustainable operations 		
2. Work to promote harmony with society and contribute to theglobal community as a good corporate citizen.
3. Clarify every employee’s role so that all employees canparticipate fully.

Group-wide promotion organization

President Executive Officer

Promotion plant organization
Executive Officer for
Environment & Safety

as abstracted below:
1. Creation of energy-saving plants:

throughout the entire KYB Group.

Environmental and Safety Committee Organization(Fiscal 2011 to 2013)

Reduce CO2 basic unit by 1% each year and reduce CO2
emissions by 25% compared to 1990 by 2020
2. Creation of waste-free plants:
Reduce final disposal amount of industrial wastes by 65%
compared to fiscal 2000 by 2015

Environment and Safety Committee

Environment and Safety Auditing

Chairman: Executive Officer for
Environment & Safety
Committee members:— General Manager of Each Plant— General Manager of Related Division(Head Office)Plant General Manager

Safety Supervisory Officer

Environment Supervisory Officer
Energy-saving Plant Committee

3. Creation of accident-free plants:

Safety and Health Committee

Create a workplace that is safe, pleasant and accident-free

Environment Supervisory Committee
Subcommittees

Subcommittees

Subcommittees— Environment Preservation
Subcommittee— Safety and Health Subcommittee— Energy-saving Plant Committee— General Waste Subcommittee— Industrial Waste Subcommittee— Metal Scraps Subcommittee— Energy Saving Subcommittee— Environmental Pollutant
Subcommittee

From the Executive Officer for Environment & Safety
A Steady Push to Achieve the New Medium-Term Environmental Plan
The KYB Group already has a record of implementing a number

measures at all plants by 2013. We are reinforcing buildingsof initiatives to protect the environment, such as reducing

systematically and improving risk assessments so thatemissions of greenhouse gases and other environmentallyemployees’ families will feel comfortable sending their loved

burdensome substances and developing products that help

ones off to work.

Division

Division

Division

Division

Finally, let me thank you for your interest in this report. I

conserve energy.
In 2011, however, we were unable to achieve some of ourwelcome your input on how we can improve in the future.

quantitative environmental targets, in part because of the impact

TOPICSof the Great East Japan Earthquake on the implementation andoperation of independent power generation facilities.
In light of this, we are taking diverse strategic actions, such asAward for Strong Environmental Awareness and Initiatives

Kazuhiro Ogata

Takako Vietnam Co., Ltd. (TVC) received the 2011 “Green Company Award” from the People’sManaging Executive Officer

Committee of Binh Duong Province in 2011. The award honors companies engaged inenvironmentally friendly production activities. TVC handles the issues of waste separation andoperating some facilities at night to stay within peak power limits.
We have also established quantitative environmental targets

wastewater processing from the early stage and it continues to tackle environmental problems withfor production bases outside Japan, where we are monitoringstrong awareness. The employee cafeteria at its 1st plant has won praise from workers for offeringgreenhouse gas emissions and taking initiatives to reduce them.

The 1st plant of TVC

them a comfortable space surrounded by greenery.
TVC manufactures and assembles precision parts for hydraulic and electronic devices. Takako

In terms of safety, we aim to complete seismic durability

Industries has plants in Shiga Prefecture (Japan), Vietnam, and the U.S.A. In Vietnam, the 1st and2nd plants are in Binh Duong Province, near Ho Chi Minh City. The area is an economic hub districtof southern Vietnam with approximately 2,000 companies. The local government, which has
actively promoted area business, is working to develop a town that ensures industrial development
Canteen of the 1st Plant

24

while providing a good living environment for its citizens.

25

Financial Section

KYB Corporation

Annual Report 2012

Financial Review
Operating Income(Billions of yen)

13.8

21.5

09

-5.2

11

Capital Expenditure

23.5

3.2

07

08

09

10

11

(Billions of yen)

FY

07

08

09

10

FY

11

301.3

285.1

09

10

11

FY

07

08

09

10

33.2

(%)

21.1

30.6

29.8
26.6

27.3
14.8

07

08

09

10

102.7

89.9

78.4

76.4

9.9

FY

11

Return on Equity (ROE)*(%)(Billions of yen)

269.3

08

Equity Ratio

Total Net Assets and Total Assets

269.6

07

8.9

10.0

2.8

3.2

FY

Depreciation and Amortization(Billions of yen)
4.0

(Billions of yen)

289.7

Cash FlowsNet cash provided by operating activities decreased 50.9%
to ¥17,399 million. Major sources of cash were income
before income taxes and minority interests of ¥21,759 million and depreciation and amortization of ¥13,508 million.
However, uses of cash included ¥7,098 million in increasein notes and accounts receivable—trade and ¥8,527 million
in income taxes paid.
Net cash used in investing activities increased 176.5% to¥20,000 million. The purchase of property, plant and equipment of ¥19,200 million was the primary use of cash.
Net cash used in financing activities decreased 79.6% to¥3,454 million. The primary uses of cash were ¥21,501 million for the repayment of long-term loans payable and¥1,768 million for cash dividends paid. The major source of
cash was a net increase in short-term loans payable of¥6,476 million.
There was net cash outflow of ¥6,055 million resulting ina ¥6,113 million decrease in cash and cash equivalents,
which totaled ¥42,009 million at the end of the period.

10

13.5

08

13.4

R&D Expenses

07

15.3

FY

11

16.5

10

14.9

09

27.1

08

24.9

07

3.8

0.04

0.6

8.3

18.2

337.1

320.0

329.2

252.0

FY

3.3

Financial Condition
Current assets increased mainly because of an increase innotes and accounts receivable—trade that accompanied thegrowth in net sales. Non-current assets were higher due toan increase in property, plant and equipment resulting frommaking speedy investments in building production framework. The result was a ¥16,214 million increase in total
assets from one year earlier to ¥301,348 million.
Total liabilities increased ¥3,416 million to ¥198,586 million. There were increases in notes and accounts payable—
trade that accompanied the growth in net sales andaccounts payable—other due to capital expenditures.
Total net assets increased ¥12,797 million to ¥102,761
million due to the increase in retained earnings.
The increase in net assets raised the equity ratio by 2.6
percentage points from one year earlier to 33.2%.

0.9

FY

11

Total Net Assets

07

08

09

10

11

FY

07

08

09

10

11

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

Total Assets

26

Net Income (Loss)(Billions of yen)

24.1

(Billions of yen)

17.0

Net Sales
387.0

retirement program at a subsidiary in Europe.
After subtracting the net extraordinary loss of ¥996 million from the ordinary income of ¥22,755 million, income
before income taxes and minority interests totaled ¥21,759
million. Deductions were ¥7,317 million for income taxes
and ¥544 million for minority interests, which resulted in net
income of ¥13,897 million.

91.7

Summary
In the automotive components segment, sales decreased
0.1% to ¥186,664 million. Sales of shock absorbers for automobiles decreased. The effects of the Great East Japan
Earthquake and flooding in Thailand were limited, but sales
were lower in Europe due to the effect of the sovereign debt
crisis. Sales of shock absorbers for motorcycles increased
owing to higher sales to customers in the United States andgrowth in sales in the ASEAN region, where demand is verystrong. Sales of hydraulic equipment for automobiles, chiefly for power steering, decreased. Despite an increase insales of continuously variable transmission pumps, demandfor hydraulic pumps fell with the shift toward electric power
steering and lower sales in Europe as the primary causes.
In the hydraulic components segment, sales increased
13.4% to ¥137,522 million. There was a large increase insales of hydraulic equipment for industrial use due to strong
first half sales in China, higher sales in the ASEAN region,and demand associated with earthquake reconstruction
activities in Japan. However, sales growth slowed in thesecond half due to monetary tightening in China. Sales ofhydraulic equipment for aircraft posted a large increase
along with growth in orders for spare parts.
In the others segment, which consists of special-purpose
vehicle and other products, sales increased 7.5% to ¥12,971
million. Sales of special-purpose vehicles, primarily concrete
mixer trucks, were much higher mainly due to demandassociated with earthquake recovery activities in Japan.
There was also an increase in sales of other products, mainly seismic isolation systems.
As a result, consolidated net sales increased 5.3% to¥337,158 million.
Operating income was ¥21,537 million. While there was alarge decline in the automotive components segment, there
were increases in the hydraulic components segment and in
the other segment, mainly special-purpose vehicles.
Non-operating income and expenses, net improved to net
non-operating income of ¥1,209 million. This was attributable mainly to a ¥1,141 million decrease in foreignexchange losses and a ¥120 million decrease in interest
expenses.
Ordinary income decreased ¥1,217 million to ¥22,755
million.
There was net extraordinary loss of ¥995 million.
Extraordinary losses included an impairment loss and provision for retirement benefits in association with an early27

Financial Section

KYB Corporation

Annual Report 2012

Consolidated Balance Sheets (Unaudited)
Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
As of March 31, 2012 and 2011
Millions of yen

ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable—tradeFinished goods
Work in process
Raw materials and supplies
Deferred tax assets
Short-term loans receivable
Other
Allowance for doubtful accounts    Total current assets

Non-current assets:
Property, plant and equipment:   Buildings and structures, net   Machinery, equipment and vehicles, net   Land   Lease assets, net
Construction in progress   Other, net    Total property, plant and equipment

Intangible assets:   Goodwill   Software   Other    Total intangible assets

Investments and other assets:   Investment securities   Deferred tax assets   Other   Allowance for doubtful accounts    Total investments and other assets    Total non-current assets    Total assets

Millions of yen

2012

2011

¥ 36,460
86,582
17,121
12,229
8,581
3,996
7,042
7,885
(437)
179,462¥ 46,208
80,184
16,534
12,879
8,098
4,107
5,051
5,058
(469)
177,654

26,864
41,537
23,341
1,767
5,747
2,302
101,562

24,14435,91022,324
1,725
4,318
2,397
90,821

5
58
1,109
1,173

16
67
1,107
1,191

14,709
2,865
1,625
(49)
19,150121,886¥301,348

10,258
3,418
1,828
(38)
15,467
107,479¥285,134

LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable—trade
Short-term loans payable
Lease obligations
Accounts payable—other
Income taxes payable
Notes payable—facilities
Provision for product warranties
Provision for directors’ bonuses
Other    Total current liabilities

2012

2011

¥ 69,596
35,160341
12,006
3,313
2,721
3,339
159
10,819137,456¥ 68,340
34,802
293
7,083
4,959
756
2,949
311
12,134
131,630

Non-current liabilities:
Long-term loans payable
Lease obligations
Deferred tax liabilities for land revaluation
Provision for retirement benefits
Provision for directors’ retirement benefits
Provision for environmental measures
Asset retirement obligations
Other    Total non-current liabilities    Total liabilities

43,226
1,464
3,965
10,431
264
222
354
1,199
61,130
198,586

44,774
1,455
4,513
10,767
666
222
209
930
63,539195,169

19,11321,00961,416(544)
100,995

19,11321,00849,293(531)
88,883

2,107
5,316(8,283)(859)
2,626
102,761¥301,348

1,365
4,768
(7,652)(1,518)2,599
89,964¥285,134

Net assets:
Shareholders’ equity:   Capital stock   Capital surplus   Retained earnings   Treasury stock    Total shareholders’ equity
Accumulated other comprehensive income:   Valuation difference on available-for-sale securities   Revaluation reserve for land   Foreign currency translation adjustment    Total accumulated other comprehensive income
Minority interests    Total net assets    Total liabilities and net assets

Note: This document has been translated from the original Japanese, the Annual Securities Report.

28

29

Financial Section

KYB Corporation

Annual Report 2012

Consolidated Statements of Income (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2012 and 2011
Millions of yen

Net sales
Cost of sales    Gross profit
Selling, general and administrative expenses    Operating income
Non-operating income:Interest income
Dividends income
Technical support fee
Equity in earnings of affiliates
Government subsidies for employment adjustment
Subsidies income
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses   Ordinary income
Extraordinary income:Gain on sales of non-current assets
Gain on negative goodwill
Gain on sales of investment securities
Gain on sales of subsidiaries and affiliates’ stockReversal of allowance for doubtful accounts
Other
Total extraordinary income
Extraordinary losses:
Loss on disposal of non-current assets
Impairment loss
Loss on valuation of investment securities
Loss on valuation of investments in capital of subsidiaries and affiliates
Special retirement expenses
Business structure improvement expenses
Loss on adjustment for changes of accounting standard for asset retirement obligations
Other
Total extraordinary losses   Income before income taxes and minority interests
Income taxes—current
Refund of income taxes
Income taxes—deferred
Total income taxes
Income before minority interests
Minority interests in income (loss)   Net income

Millions of yen

2012

2011

¥337,158
273,087
64,07042,533
21,537¥320,082
257,006
63,07538,92424,151

211
401
837
870
68
279
851
3,520

197
239
762
1,192
25
156
758
3,332

1,555
351
395
2,302
22,755

1,675
1,492
343
3,511
23,972

33
—
0
26
—
—
60

55
718
5
410
50
230
1,470

309
481
3
87
166
—
—
8
1,056
21,759
6,928
—
388
7,317
14,441544¥ 13,897

351
260
0
—
213
2
165
10
1,003
24,439
5,975
(109)
987
6,854
17,584570¥ 17,014

Income before minority interests
Other comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Revaluation reserve for land
Share of other comprehensive income of associates accounted for using equity method   Total other comprehensive income (loss)
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
Note: This document has been translated from the original Japanese, the Annual Securities Report.

Yen

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

¥62.87
9.00¥77.548.00

Note: This document has been translated from the original Japanese, the Annual Securities Report.

30

31

2012

2011

¥14,441¥17,584

741
(463)
548
(270)
555
14,997(128)(2,843)—(206)(3,179)14,405

14,556440

13,915489

KYB Corporation

Financial Section

Annual Report 2012

Consolidated Statements of Changes in Net Assets (Unaudited)

Consolidated Statements of Cash Flows (Unaudited)

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2012 and 2011
Millions of yen

Millions of yen
2012

2011

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Gain on sales of non-current assets
Loss on disposal of non-current assets
Gain on sales of investment securities
Loss on valuation of investment securities
Gain on sales of stocks of subsidiaries and affiliates
Loss on valuation of investments in capital of subsidiaries and affiliates
Impairment loss
Amortization of goodwill
Amortization of negative goodwill
Gain on negative goodwill
Increase (decrease) in allowance for doubtful accounts
Decrease in provision for retirement benefits
Increase (decrease) in provision for product warranties
Decrease in provision for directors’ retirement benefits(Decrease) increase in provision for directors’ bonuses
Increase in provision for environmental measures
Decrease in provision for business structure improvement
Loss on adjustment for changes of accounting standard for asset retirement obligations
Interest and dividends income
Interest expenses
Equity in earnings of affiliates
Increase in notes and accounts receivable—trade
Increase in inventories
Increase in notes and accounts payable—trade
Increase in accounts payable—other
Other, net   Subtotal
Interest and dividends income received
Interest expenses paid
Income taxes paid
Income taxes refund    Net cash provided by operating activities¥ 21,759
13,508
(33)
309
(0)
3
(26)
87
481
17
(1)
—
8
(289)
449
(2)
(151)
—
—
—
(612)
1,555
(870)
(7,098)(1,480)1,593
957(4,321)
25,841
1,316(1,507)(8,527)276
17,399¥ 24,439
13,426
(55)
351
(5)
0
(410)
—
260
33
(37)
(718)
(26)
(234)
(956)
(17)
258
15
(119)
165
(437)
1,675
(1,192)(13,347)(4,847)
15,8391,464
2,461
37,988847(1,717)(1,916)231
35,433

Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Purchase of stocks of subsidiaries and affiliates
Proceeds from sales of stocks of subsidiaries and affiliates
Payments for investments in capital of subsidiaries and affiliates
Payments for sales of investments in subsidiaries resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Other, net    Net cash used in investing activities

(856)
2,427
(19,200)
281(2,913)
—
—
(252)
(239)
(193)
1,087
(140)
(20,000)(6,920)5,644(7,665)
566
(47)
(225)
1,349
(165)
—
(285)
692
(176)
(7,233)

Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders    Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from change of scope of consolidation
Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period

6,476
(354)
13,975(21,501)—(12)
0(1,768)(269)(3,454)(180)(6,236)
48,122123—¥ 42,009(7,756)(285)
2,106(8,986)
(10)
(477)
0
(1,416)(141)(16,967)(753)
10,47837,663—(19)¥ 48,122

Shareholders’ equity

Balance as of April 1, 2010
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Balance as of April 1, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Net changes of items other than shareholders’ equity
Balance as of March 31, 2012

Capital stock

Capital surplus

Retainedearnings

Treasury stock

Total shareholders’equity¥19,113
—
—
—
—
—
—
—
19,113——————¥19,113¥20,256
—
—
—
752
—
—
—
21,008———0——¥21,009¥33,620(1,416)
17,014——83(7)—49,293(1,768)13,897——(5)—¥61,416¥(990)
—
—
(477)
936
—
—
—
(531)
—
—
(12)
0
—
—
¥(544)¥ 71,999(1,416)
17,014
(477)
1,688
83
(7)
—
88,883(1,768)13,897(12)
0(5)—¥100,995

Millions of yen
Accumulated other comprehensive income
Valuationdifference on Deferred gains
available-for-sale or losses
Revaluation
securities
on hedges reserve for land

Balance as of April 1, 2010
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Balance as of April 1, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Net changes of items other than shareholders’ equity
Balance as of March 31, 2012

¥1,490
—
—
—
—
—
—
(125)
1,365
—
—
—
—
—
741
¥2,107

¥45
—
—
—
—
—
—
(45)
—
—
—
—
—
—
—
¥—

¥4,760
—
—
—
—
—
—
7
4,768
—
—
—
—
—
548
¥5,316

Note: This document has been translated from the original Japanese, the Annual Securities Report.

Foreigncurrencytranslation
adjustment

Total
accumulated othercomprehensive
incomeMinority
interests

Total net assets¥(4,724)
—
—
—
—
—
—
(2,928)(7,652)
—
—
—
—
—
(631)
¥(8,283)¥1,572——————(3,090)(,518)
—
—
—
—
—
658
¥ (859)¥ 4,917——————(2,318)
2,599
—
—
—
—
—
27
¥ 2,626¥ 78,489(1,416)
17,014
(477)
1,688
83
(7)
(5,408)89,964(1,768)13,897
(12)
0
(5)
685
¥102,761

Note: This document has been translated from the original Japanese, the Annual Securities Report.

32

33

Financial Section

KYB Corporation

Annual Report 2012

Notes to Consolidated Financial Statements (Unaudited)
Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

This document has been translated from the original Japanese, the Annual Securities Report.
1

Major Accounting Policies for the Preparation of the Consolidated Financial Statements
		 (Reason for exclusion from consolidation)

1. Scope of Consolidation
1) Number of Consolidated Subsidiaries: 30		The remaining seven non-consolidated subsidiaries were		 (1) Domestic subsidiaries: 8

not consolidated because their aggregate amount of total			Kayaba System Machinery Co., Ltd., KYB Engineering

assets, net sales, net income (amount corresponding toand Service Co., Ltd., KYB Kanayama Co., Ltd., KYB

ownership), and retained earnings (amount corresponding

Logistics Co., Ltd., KYB Cadac Co., Ltd., KYB-YS Co.,to ownership) were not material to the consolidated finan-Ltd., KYB Trondule Co., Ltd., Takako Industries, Inc.

cial statements.

		 (2) Overseas subsidiaries: 22			KYB Americas Corporation, KYB Steering Spain, S.A.,KYB Europe Headquarters GmbH, KYB Europe GmbH,

2. Application of Equity Method
1) Number of Equity-Method Affiliates: 5

KYB Manufacturing Taiwan Co., Ltd., KYB Steering

		 Number of Affiliated Companies: 5(Thailand) Co., Ltd., KYB (Thailand) Co., Ltd., KYB Sus-		Towa Seisakusho Co., Ltd., P.T. Kayaba Indonesia, KYB-

pensions Europe, S.A., KYB Industrial Machinery (Zhenji-

UMW Malaysia Sdn. Bhd., KYB-UMW Steering Malaysiaang) Ltd., KYB Hydraulics Industry (Zhenjiang) Ltd., KYB

Sdn. Bhd., KYB-Mando do Brasil Fabricante de Autopeças

Manufacturing Vietnam Co., Ltd., KYB Manufacturing

S.A. (formerly KYB do Brasil Fabricante de Autopeças Ltda.)

Czech s.r.o., KYB Middle East FZE, TSW Products Co.,		  KYB do Brasil Fabricante de Autopeças Ltda., which wasInc., TAKAKO Vietnam Co., Ltd., Wuxi KYB Top Absorb-

a consolidated subsidiary in previous fiscal years, waser Co., Ltd., KYB Trading (Shanghai) Co., Ltd., KYB Asia

excluded from the scope of consolidation and reclassifiedCo., Ltd., KYB Latinoamerica S.A. de C.V., KYB

to an equity-method affiliate of the Company, due to the

Advanced Manufacturing Spain, S.A., KYB (China)

sale of 50% shares the Company owned. This company

Investment Co., Ltd., KYB Panama S.A.

was renamed KYB-Mando do Brasil Fabricante de		KYB do Brasil Fabricante de Autopeças Ltda., which was aconsolidated subsidiary in previous fiscal years, was exclud-

Autopeças S.A.
2) M
 ajor Affiliates Not Accounted for by the Equity Method

ed from the scope of consolidation and reclassified to an		 (1) Non-consolidated subsidiaries

equity-method affiliate of the Company, due to the sale of			KYB International America, Inc., KYB Technical Center

50% shares the Company owned. This company was(Thailand) Co., Ltd, etc.

renamed KYB-Mando do Brasil Fabricante de Autopeças		 (2) Affiliates

S.A.

			

		  Due to the increased materiality of its business opera-

Chikuyo Seiki Kogyo K.K., etc.

		(Reason for not accounted for by the equity method)tions, KYB Europe Headquarters GmbH has been included		The equity method was not applied to these companies,

in the scope of consolidation commencing with fiscal 2011,

because their net income and retained earnings were notended March 31, 2012.

material to consolidated net income and retained earnings,

		  In fiscal 2011, consolidated subsidiaries KYB Manufacturing North America, Inc., and KYB America LLC merged withKYB Manufacturing North America, Inc., which was the surviving company, on October 1, 2011. Following the merger,
the company was renamed KYB Americas Corporation andKYB America LLC was dissolved.
2) Major Non-Consolidated Subsidiaries

and have no overall material influence on the consolidated
financial statements.
3) For equity method affiliates with a fiscal year end
other than March 31, the financial statements for the
fiscal year of each company are used.

method over five years, the estimated useful life.

March 31.
	  In prior years, for KYB Industrial Machinery (Zhenjiang) Ltd.,KYB Hydraulics Industry (Zhenjiang) Ltd., KYB Trading (Shang(China) Investment Co., Ltd., the financial statements as of thelease exempt from passage of title, where the leasenecessary for any significant transactions between the fiscal

started on or before March 31, 2008, are treated aspose of unifying fiscal year ends with the fiscal year of KYB,

		 (4) Long-term prepaid expenses

pro forma financial statements as of March 31 are used			

instead. As a result, these financial statements cover the			  For the amortization period, the same standards as forused.

4. Summary of Significant Accounting Policies

3) Accounting Basis for Allowances

1) Standards and Methods for Valuing Assets

		 (1) Allowance for doubtful accounts

		 (1) Inventories

			Concerning receivables, the allowance for doubtful			Inventories are stated at cost based on the average costaccounts is provided based on the actual loss rate. Con-

method (in which book values are reduced for invento-

cerning specific loans including doubtful accounts, eachries with declining profitability).

uncollectible debt is accounted for based on the proba-		 (2) Investment securities

bility of collection.

			Marketable other securities are stated at market value as			To provide bonuses to directors and corporate auditors,

recorded as an increase or decrease in net assets. Costs

the Company provides an allowance for that fiscal yearof their sales are determined by the moving averagemethod.

(Thailand) Co., Ltd., KK Hydraulics Sales (Shanghai) Co.,any significant transactions between this date and March 31.

Ltd.

			  Other securities that are not marketable are stated at			To prepare for the payment of retirement benefits tocost, with cost being determined by the moving average

employees, a provision for retirement benefits is record-

method.

ed that is equal to the amount of these benefits as of the		 (3) Derivatives

end of the fiscal year based on retirement benefit obliga-			Derivatives are stated at market value.
2) Method of Depreciation of Material Depreciable Assets

tions and pension plan assets.
			  Unrecognized actuarial net gains or losses are divided

		 (1) Property and equipment (Excluding Lease assets)

into proportional amounts using the straight-line method			Depreciation on property and equipment is amortizedbased over a period that does not exceed the averageremaining service years (14–15 years) for employees inusing the declining-balance method.

each fiscal year that an actuarial gain or loss occurred.

			  For the useful lives and residual values, the same standards as for the method prescribed in the Corporation

Each proportional amount is recognized as an expense

Tax Act are used.

in the following fiscal year.

			  However, for buildings (excluding building fixtures)		 (4) Provision for directors’ retirement benefits			To prepare for the payment of retirement benefits to

od is used. Consolidated subsidiaries outside Japan use

directors, some consolidated subsidiaries establish a pro-primarily the straight-line method.

vision for directors’ retirement benefits based on year-end
payments in accordance with their internal rules.
		 (5) Provision for environmental measures			line method.
			  For the useful lives, the same standards as for the
method prescribed in the Corporation Tax Law are used.
			  However, amortization of computer software for inter-	  In fiscal 2011, consolidated subsidiaries KYB (Thailand) Co.,34

portion based on the expected future payment amount.
		 (3) Provision for retirement benefits			Intangible fixed assets are amortized using the straight-

consolidated financial statements are adjusted as necessary for		 (2) Provision for directors’ bonusesof the fiscal year-end. Adjustments to market value are		 (2) Intangible fixed assets (Excluding Lease assets)

Sistemleri Sanayi ve Ticaret, A.S., KYB Technical Center

Amortized in equal installments
the method prescribed in the Corporation Tax Act are

15-month period from January 1, 2011, to March 31, 2012.

KYB Manufacturing Taiwan Co., Ltd., KYB Manufacturing VietEurope Headquarters GmbH as of December 31 are used. The

rental for accounting purposes.

year end and March 31. Starting with fiscal 2011, for the pur-statements of consolidated subsidiaries KYB Europe GmbH,nam Co., Ltd., Wuxi KYB Top Absorber Co., Ltd., and KYB			  Method in which the leasing period is the useful life
and the residual value is zero. However, for the finance			KYB Systemerit Co., Ltd., Kensiyuu Co., Ltd., KK Hydrau-

			KYB International America, Inc., KYB Suspansyiontransfer of ownershipconsolidated financial statements. Adjustments were made asTo prepare the consolidated financial statements, the financial

		 (2) Overseas subsidiaries

			Finance leases and leased assets where there is no

fiscal year-end of these companies were used to prepare the		 (1) Domestic subsidiaries
lics Ltd.

		 (3) Lease assetshai) Co., Ltd., KYB Latinoamerica S.A. de C.V., and KYB

acquired on or after April 1, 1998, the straight-line meth3. Fiscal Year-End of Consolidated Subsidiaries

nal use is principally calculated using the straight-line

Ltd., and KYB Panama S.A. changed their fiscal year ends to35

To prepare for the payment of expenses for the removal
and treatment of polychlorinated biphenyl (PCB) used inequipment and other locations, a provision has been
made that is equal to expected future payments.

KYB Corporation

Financial Section

		 (6) Provision for product warranties

		 (3) Hedging policy			To prepare for the payment of expenses for future			In accordance with internal administrative rules, therepairs, a provision is made that is based on estimatedCompany’s policy is to use derivatives within the scope

expenses for individual items and on the past level ofof actual demand for the purposes of hedging risk asso-

these expenses as a percentage of sales.

ciated with foreign exchange rate volatility for foreign4) Foreign Currency Translations (Assets and liabilities
denominated in major foreign currencies)		Foreign currency denominated receivables and payables arerates for loans payable.
		 (4) Determining hedging effectiveness

translated into Japanese yen at the spot rate prevailing on			There are no assessments of hedging effectivenessthe respective balance sheet dates. Translation differences

because significant terms are the same for hedging

are treated as gains and losses.

methods and the items hedged.

		  Assets and liabilities of overseas subsidiaries are translated into Japanese yen at the spot rate prevailing on the balance sheet date. Income and expenses are translated at the
average rate for the period. Translation differences are6) Amortization Method and Period for Goodwill and
Negative Goodwill
		Goodwill and negative goodwill are amortized in equal
installments over the estimated length of time that the ben-included in Foreign currency translation adjustments andefits are expected to be received (five years). However, neg-minority interests under the net assets section on the con-ative goodwill recognized on or after April 1, 2010 is treatedsolidated balance sheet.

as an extraordinary gain in the fiscal year in which the negative goodwill occurred.

5) Hedging7) Scope of Cash on Consolidated Statements of Cash Flows		 (1) Hedge accounting method			The Company uses the deferred method for hedge		The scope of cash (cash and cash equivalents) on the consolidated statements of cash flows is cash on hand, depos-

accounting.
			  However, the exceptional accrual method is used to

its readily convertible to cash and short-term investments

account for interest rate swap agreements that meetthat mature within three months and that carry little risk of

specified conditions.

price fluctuation.

		 (2) Hedging instruments and hedging targets
			Hedging instruments: Forward exchange contracts andinterest rate swap agreements			  Hedging targets: Foreign currency-denominated transactions and interest on loans payable2

currency-denominated transactions and variable interest8) Other Material Items in Basis of Presentation ofConsolidated Financial Statements		Accounting for consumption taxes
		Consumption taxes is accounted for using the net-of-tax
method.

Changes in Presentation

Not applicable3

Additional Information

1. Application of Accounting Standard for Accounting
Changes and Error Corrections

2. Termination of Retirement Benefit System for Directors
	In prior years, the Company had maintained a provision for	For accounting changes and corrections of prior period errors

directors’ retirement benefits that was based on the amountthat are made on or after April 1, 2011, “Accounting Standard

that must be paid according to internal rules. The Board of

for Accounting Changes and Error Corrections (ASBJ State-

Directors approved a resolution on April 22, 2011, to terminate

ment No. 24, December 4, 2009)” and “Guidance on Account-

this retirement benefit system and shareholders approved aing Standard for Accounting Changes and Error Corrections

resolution on June 24, 2011, to stop making retirement benefit(ASBJ Guidance No. 24, December 4, 2009)” have been

payments based on the length of the term of office. Retire-

applied.

ment benefits are paid when each director and corporate auditor leaves. The “other” item of non-current liabilities includes¥406 million yen for directors’ retirement benefits that are
owed for service up to the June 24, 2011.

36

4

Annual Report 2012

Notes to Consolidated Financial Statements

1. Consolidated Balance Sheets
FY2010 (Mar. 31, 2011)

FY2011 (Mar. 31, 2012)*1) Accumulated Depreciation for Property, Plant andEquipment:¥202,942 million*1) Accumulated Depreciation for Property, Plant andEquipment:¥207,426 million*2) Assets of non-consolidated subsidiaries and equitymethod affiliates are as follows:(¥ million)
		 Investment securities (stock)3,742		(investments in companies under joint control
in above amount)
1,937		Investments included in investments and otherassets (other)439*2) Assets of non-consolidated subsidiaries and equitymethod affiliates are as follows:(¥ million)
		 Investment securities (stock)4,220		(investments in companies under joint control
in above amount)
2,492		Investments included in investments and otherassets (other)305*3) Assets pledged as collateral and corresponding liabilities*3) Assets pledged as collateral and corresponding liabilities

Assets pledged(¥ million)

Corresponding liability secured(¥ million)

Property and equipment(Book values) Buildings andstructures

Land
Leased land
Other

Corresponding liability secured(¥ million)

Property and equipment(Book values)
1,514

Short-term loans
payable[207] Machinery, equipment
and automobiles

Assets pledged(¥ million)

74

1,579

 Buildings andstructures[49]
Long-term loans
payable

[74]
709
[—]
127
[—]
0
[0]
2,426
[282]

2,062

Short-term loans
payable[190] Machinery, equipment
and automobiles

[100]
Land
Leased land
Other
3,641
[149]

1,586

43
[43]
709
[—]
124
[—]
0
[0]
2,463
[234]

1,880
[149]

Long-term loans
payable

1,595
[—]

3,475
[149]

		  Figures in brackets are industrial park mortgages and thecorresponding liabilities.

		  Figures in brackets are industrial park mortgages and thecorresponding liabilities.

*4) Revaluations of Land Used for Business Operations		In accordance with the “Act on Revaluation of Land (Act No.
34, March 31, 1998),” companies are required to reevaluate
land used for business operations. An amount equivalent totaxes for the amount following the revaluation is then recognized as “Deferred tax liabilities for land revaluation” on thebalance sheet. The amount less these deferred tax liabilities isrecognized as “Revaluation reserve for land” in net assets.

*4) Revaluations of Land Used for Business Operations		In accordance with the “Act on Revaluation of Land (Act No.
34, March 31, 1998),” companies are required to reevaluate
land used for business operations. An amount equivalent totaxes for the amount following the revaluation is then recognized as “Deferred tax liabilities for land revaluation” on thebalance sheet. The amount less these deferred tax liabilities isrecognized as “Revaluation reserve for land” in net assets.

		 Revaluation method		Revaluations are calculated by using the valuation for property
tax as prescribed in Article 2-3 of the “Order for Enforcementof the Act on Revaluation of Land (Order No. 119, March 31,
1998).”
		  Revaluation date:Mar. 31, 2002		 Difference at end of fiscal year between fairvalue and post-revaluation book value of land
subject to revaluation:¥(5,886) million

		 Revaluation method		Revaluations are calculated by using the valuation for property
tax as prescribed in Article 2-3 of the “Order for Enforcementof the Act on Revaluation of Land (Order No. 119, March 31,
1998).”
		  Revaluation date:Mar. 31, 2002		 Difference at end of fiscal year between fairvalue and post-revaluation book value of land
subject to revaluation:¥(6,069) million

37

KYB Corporation

Financial Section5) Balance of Guaranteed Loans
1) Loan guarantees		(1) Guarantees of employees’ loans from financial institutions(home construction loans):¥0 million(2) Guarantees of affiliated company loans from financial
institutions
P.T. Chita Indonesia¥14 million			(RP 1,500 million)6) Notes Receivable Discount and Notes Receivable Endorsed			(¥ million)(1) Notes receivable discount4(2) Notes receivable endorsed
452

5) Balance of Guaranteed Loans
1) Loan guarantees		(1) Guarantees of employees’ loans from financial institutions(home construction loans):¥0 million(2) G uarantees of affiliated company loans from financial
institutions
		P.T. Chita Indonesia¥8 million			(RP 960 million)
		 KYB-Mando do Brasil		  Fabricante de Autopeças S.A.
¥219 million
			(EUR 2 million)6) Notes Receivable Discount and Notes Receivable Endorsed			(¥ million)(1) Notes receivable discount5(2) Notes receivable endorsed
499*7) Notes Matured at the End of the Fiscal Year		The end of the fiscal year was a holiday for financial institutions. However, notes that matured on this day were treatedas having been settled the same day. Notes that matured on
March 31, 2012, were as follows:			(¥ million)(1) Notes receivable—trade681(2) Notes payable—trade539(2) Notes payable—equipment
184

2. Consolidated Statements of Income
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)*1) Major components of selling, general and administrative
expenses are as follows:(¥ million)
Salaries and subsidies
10,157Retirement benefit expenses
499
Provision for directors’ retirement benefits
158
Packing and freight
8,771
Research and development expenses
3,218*1) Major components of selling, general and administrative
expenses are as follows:(¥ million)
Salaries and subsidies
11,781Retirement benefit expenses
616
Provision for directors’ retirement benefits
94
Packing and freight
9,430
Research and development expenses
4,035		  Major components of the above research and development
expenses are as follows:(¥ million)
Salaries and subsidies
1,437
Retirement benefit expenses
81		  Major components of the above research and development
expenses are as follows:(¥ million)
Salaries and subsidies
1,652
Retirement benefit expenses
99*2) General and administrative expenses include researchand development expenses of ¥3,218 million.

*2) General and administrative expenses include researchand development expenses of ¥4,035 million.

*3) Major components of gain on sales of non-current assets
are as follows:(¥ million)
Buildings and structures
14
Machinery, equipment and automobiles
24
Land
2
Other
13
Total
55

*3) Major components of gain on sales of non-current assets
are as follows:(¥ million)
Buildings and structures
0
Machinery, equipment and automobiles
22
Other
11
Total
33

38

Annual Report 2012*4) Major components of loss on disposal of noncurrent
assets are as follows:(¥ million)
Buildings and structures
40
Machinery, equipment and automobiles
270
Land
4
Other
37
Total
351

*4) Major components of loss on disposal of noncurrent
assets are as follows:(¥ million)
Buildings and structures
134
Machinery, equipment and automobiles
141
Other
32
Total
309

*5) Impairment Losses
		During FY2010, the following groups of assets of the KYB Group
have been charged with impairment losses.
Location (Prefectures)
Use
Category
Yamato-shi, Kanagawa
Idle assetsLand*5) Impairment Losses
		During FY2011, the following groups of assets of the KYB Group
have been charged with impairment losses.
Location (Prefectures)
Use
Category

Kani-shi, Gifu

Idle assets

Machinery andequipment

Tsu-shi, Miye
Sagamihara-shi, Kanagawa—

Idle assets
Idle assets
Other

Land
Land
Goodwill

Kani-shi, Gifu

Idle assets

Machinery andequipment

Zhenjiang, China

Business
assets

Machinery andequipment

Zhenjiang, China

Business
assetsAutomotive
equipment

Other

Goodwill—		  In principle, the KYB Group uses business sites as the standard for grouping assets used for business operations. Idle
assets are grouped individually.
		  In FY2010, for idle assets not used for business operations,the book value was written down to the amount that can berecovered for land with no expected future cash flows. As aresult, an impairment loss of ¥129 million was recorded as an
extraordinary loss.
		  The increase in ownership of Wuxi KYB Top Absorber Co.,
Ltd., resulted in the recognition of goodwill. Since there are noprospects at this time for a recovery in earnings at this company, the resulting impairment loss of ¥131 million for this goodwill was recorded as an extraordinary loss.
		  The amount that can be recovered from these assets isdetermined by using net sales proceeds based on market
prices.

		  In principle, the KYB Group uses business sites as the standard for grouping assets used for business operations. Idle
assets are grouped individually.
		  In FY2011, for idle assets not used for business operations,the book value was written down to the amount that can berecovered for land with no expected future cash flows. As aresult, an impairment loss of ¥22 million was recorded as an
extraordinary loss.
		  For assets used for business operations where there was asignificant decline in profitability, the book value was written
down to the amount that can be recovered for land with noexpected future cash flows. As a result, an impairment loss of¥355 million was recorded as an extraordinary loss.
		  The increase in ownership of Wuxi KYB Top Absorber Co.,
Ltd., resulted in the recognition of goodwill. Since there are noprospects at this time for a recovery in earnings at this company, the resulting impairment loss of ¥103 million for this goodwill was recorded as an extraordinary loss.
		  The amount that can be recovered from these assets isdetermined by using net sales proceeds based on market
prices.

*6) Special retirement payments include increased payments
in association with additional benefits offered to employees who resign at two consolidated subsidiaries in Europe.

*6) Special retirement payments include increased payments
in association with additional benefits offered to employees who resign at two consolidated subsidiaries in Europe.

*7) Business structure improvement expenses include
expenses already incurred and an allowance for estimated future expenses in association with the liquidation of
two consolidated subsidiaries in Japan.
		  Business structure improvement expenses are as follows:		 Expenses for relocation andremoval of equipment¥2 million

39

KYB Corporation

Financial Section

3. Consolidated Statements of Comprehensive Income

Annual Report 20122) Of the dividends for which the record date was in FY2009, dividends for which the effective date falls after theend of FY2010.

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Other reclassification adjustments and tax effect for comprehensive income(¥ million)
Net unrealized loss on securities:
Amount arising during the year
Reclassification adjustments   Before tax effect   Tax effect   Net unrealized loss on securities
Revaluation reserve for land:
Amount arising during the year
Reclassification adjustments    Before tax effect    Tax effect    Revaluation reserve for land
Foreign currency translation adjustments:
Amount arising during the year
Reclassification adjustments    Before tax effect    Tax effect    Foreign currency translation adjustments
Share of other comprehensive income of associates accounted for using equity method:Amount arising during the year
Total other comprehensive income

1,062
3
1,065
(324)
741
—
—
—
548
548
(384)
(81)
(465)
1
(463)
(270)
555

Resolution
Annual Shareholders’Meeting, Jun. 24, 2011

Type of shares
Common shares

Aggregate
dividend

Source of funds
for dividends

Dividend
per share

Record date

Effective date

¥884 million

Retainedearnings¥4.00

Mar. 31, 2011

Jun. 27, 2011

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
1. Number and Type of Shares Issued and Treasury Stock(Thousands of shares)
Shares issued as ofApril 1, 2011
Shares issued:
Common shares   Total
Treasury stock:
Common shares   Total

Shares issued as ofMarch 31, 2012

Increase

Decrease

222,984
222,984————

222,984
222,984

1,907
1,907

28
28

1
1

1,933
1,933

Note: T he increase of 28 thousand shares of treasury stock is due to purchases by the Company of holdings of less than one unit (tangen). The decrease of 1
thousand shares of treasury stock is due to sales by the Company of treasury stock to shareholders who wanted to increase their holdings to one unit.

2. Stock Acquisition Rights and Stock Acquisition Rights Held by the Company
Not applicable
3. Dividends
1) Dividends Paid

4. Consolidated Statements of Changes in Net Assets
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
1. Number and Type of Shares Issued and Treasury Stock(Thousands of shares)
Shares issued as ofApril 1, 2010
Shares issued:
Common shares   Total
Treasury stock:
Common shares   Total

Increase

Decrease————

222,984
222,984
4,373
4,373

1,088
1,088

Shares issued as ofMarch 31, 2011

3,554
3,554

222,984
222,984
1,907
1,907

Note: The increase of 1,088 thousand shares of treasury stock is mainly the result of a 1,000 thousand share increase due to repurchases authorized by the
Board of Directors.

  The Company purchased 88 thousand shares through purchases of holdings of less than one unit (tangen). The decrease of
3,554 thousand shares of treasury stock is mainly the result of an allocation of 3,554 thousand shares of Company stock for an
exchange of stock that made KYB-YS Co., Ltd., a wholly owned subsidiary.
2. Stock Acquisition Rights and Stock Acquisition Rights Held by the Company
Not applicable
3. Dividends
1) Dividends Paid

Resolution

Type of shares

Aggregate
dividend

Annual Shareholders’ Meeting, Jun. 25, 2010
Board of Directors Meeting, Nov. 18, 2010

Common shares
Common shares¥546 million¥870 million

40

Dividend
per share

Record date

Effective date

¥2.50
¥4.00

Mar. 31, 2010
Sept. 30, 2010

Jun. 28, 2010
Dec. 7, 2010

Resolution

Type of shares

Aggregate
dividend

Dividend
per share

Record date

Effective date

Annual Shareholders’ Meeting, Jun. 24, 2011
Board of Directors Meeting, Nov. 22, 2011

Common shares
Common shares¥884 million¥884 million

¥4.00
¥4.00

Mar. 31, 2011
Sept. 30, 2011

Jun. 27, 2011
Dec. 6, 20112) Of the dividends for which the record date was in FY2010, dividends for which the effective date falls after theend of FY2011.

Resolution
Annual Shareholders’Meeting, Jun. 26, 2012

Aggregate
dividend

Source of funds
for dividends

Dividend
per share

Record date

Effective date

¥1,105 million

Retainedearnings¥5.00

Mar. 31, 2012

Jun. 27, 2012

Type of shares
Common shares

5. Consolidated Statements of Cash FlowsFY2010 (Apr. 1, 2010 – Mar. 31, 2011)

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)

The relationship between cash and cash equivalents and theamounts in the line items of the balance sheet as of the end of
FY2010 was as follows:(¥ million)
Cash and deposits
46,208Deposits with maturities more than three months(3,084)

The relationship between cash and cash equivalents and theamounts in the line items of the balance sheet as of the end of
FY2011 was as follows:(¥ million)
Cash and deposits
36,460
Deposits with maturities more than three months(1,449)Purchases of commercial paper under
repurchase agreements(Short-term loans receivable)

4,998

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

6,998

Cash and cash equivalents

48,122

Cash and cash equivalents

42,00941

KYB Corporation

Financial Section

Annual Report 2012

7. Financial Instruments

6. Lease Transactions
1. Finance Leases (Lessee)

rules, the appropriate department of each business unit

1. Financial Instruments

Finance leases where there is no transfer of ownership

1) Policy on Financial Instruments

1) Leased Assets

periodically monitors the status of all major counterpar-

For funds needed for capital expenditures, the Groupties for trade receivables. In addition, the Company works

		 Property, plant and equipment

uses internal funds from operating cash flows and useson quickly identifying situations where a decline in a cus-

		 Mainly automobiles used in the Automotive Components and Hydraulic Components Operations

bank loans and other sources to procure funds as need-

tomer’s financial condition or other event raises concerns

ed. Funds that are temporarily unneeded are invested

about the collection of a receivable and takes actions to		 Major items for the preparation of the consolidated financial statements

mainly in short-term deposits, investment-grade repur-

reduce this risk. Consolidated subsidiaries as well use the		These items are explained in “4. Summary of Significant Accounting Policies (2) Method of Depreciation of Material Deprecia-chase agreements and similar instruments. The Group’s

same credit risk management procedures in accordance

policy uses derivative financial instruments in order towith the Company’s internal administrative rules.

2) Method for Depreciation of Leased Assets

ble Assets.”		  For finance leases where there is no transfer of ownership, leases are accounted for using the same method as for ordinary

these instruments for speculative purposes.

rental transactions for leases that started on or before March 31, 2008. These leases are as follows:		 (1) Acquisition cost, accumulated depreciation and net book value of leased assets

2) Financial Products and Their Risks(¥ million)

FY2010 (Mar. 31, 2011)
Buildings and structures
Machinery, equipment and vehicles
Other
Total

Acquisition cost

Accumulated depreciation

Net book value

52
1,430
843
2,326

48
938
700
1,688

4
491
143
638

Accumulated depreciation

4
1,089
177
1,271

Buildings and structures
Machinery, equipment and vehicles
Other
Total

Net book value

2
819
147
969

2
269
30
302

Note: The acquisition cost is calculated by including interest paid because future lease payments at the end of the fiscal year are a small percentage ofproperty, plant and equipment at the end of the fiscal year.

		 (2) Future lease payments
FY2010 (Mar. 31, 2011)
318
320
638

Due within one year
Due after one year
Total(¥ million)
FY2011 (Mar. 31, 2012)
160
141
302

Note: Future lease payments are calculated by including interest paid because future lease payments at the end of the fiscal year are a small percentage ofproperty, plant and equipment at the end of the fiscal year.

		 (3) Lease payments, reversal of impairment loss on leased assets, assumed depreciation charge and impairment loss
FY2010 (Mar. 31, 2011)
520
520

Lease payments
Assumed depreciation charge

institutions that have a high credit rating.
Market Risk Management (risk associated with chang-

the Group to credit risk associated with individual cus-

es in foreign exchange rates, interest rates, etc.)

tomers. Furthermore, the Group is vulnerable to foreign

The Company uses forward exchange contracts at times

exchange rate volatility risk because of foreign currency-

to reduce exposure to foreign exchange rate volatility

denominated receivables and payables associated withrisk. In addition, the Company uses interest rate swaps

overseas operations.

to reduce exposure to interest rate volatility risk associated with loans payable.

term holdings of stock and the stock of companies

For securities and investment securities, the Company

where the Group has a business relationship. Thesechecks the fair value, financial condition of issuers (coun-securities expose the Group to market risk.

terparty companies) and other items. This facilitates the

Almost all trade notes and accounts receivable andcontinuous reexamination of these holdings in consider-payable are due within one year. Some foreign currency-

ation of market conditions and the relationship withdenominated receivables and payables are vulnerable tothese counterparty companies.

foreign exchange rate volatility risk. However, theamount of exposure is never more than the balance ofreceivables in the same foreign currency. Loans are usedprimarily to procure funds for capital expenditures. Sincesome loans carry floating interest rates, the Group is
exposed to interest rate volatility risk. Derivatives (interest rate swaps) are used to hedge this risk.
Derivatives used by the Group are forward exchange
contracts to hedge foreign exchange rate volatility risk(¥ million)
FY2011 (Mar. 31, 2012)
296
296

Derivatives are used solely for the purpose of reducing
exposure to risk and are conducted only with financial

Trade notes and accounts receivable and payable expose

Securities and investment securities are mainly long-

FY2011 (Mar. 31, 2012)
Acquisition costhedge interest rate fluctuation risk and does not use

and interest rate swaps to hedge interest rate volatility
risk associated with loans. For information about hedg-

Derivatives are used in accordance with internal rules.
Liquidity Risk Management Concerning to Fund
Procurement (risk of being unable to make payments
on payment 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 ofliquidity and taking other actions.
(4) Supplemental Explanations of Matters Relating to

ing methods, items hedged, hedging policies and thethe Fair Value of Financial Instruments and Others

evaluation of hedging effectiveness, please see in“4.

The fair values of financial instruments include the values		 (4) Calculation method of the assumed depreciation charge

Summary of Significant Accounting Policies (5)based on market prices and those deemed as market			Straight-line method using the leasing term as the asset life with a residual value of zero.

Hedging.”

prices obtained by a reasonable estimate when the finan-			(Impairment losses)

			No impairment losses were recognized for leased assets.

(3) Risk Management for Financial Instruments
Credit Risk Management (risk of a counterparty failingto fulfill a contractual obligation)

2. Operating Leases (Lessee)

In accordance with the Company’s internal administrative

Future lease payments for operating leases that cannot be terminated(¥ million)
FY2010 (Apr. 1, 2010 – Mar. 31, 2011) FY2011 (Apr. 1, 2011 – Mar. 31, 2012)

Due within one year
Due after one year
Total

909
1,525
2,434

42

943
2,094
3,037

43

cial instruments do not have market prices. Since certain
assumptions are adopted for calculating such values,
they may differ when different assumptions are adopted.

KYB Corporation

Financial Section

2. Matters Relating to the Fair Value of Financial Instruments

2. Financial instruments whose fair values are deemed too difficult to determine

The following are the consolidated balance sheet amounts, fair values, and differences between them. Unlisted stocks and others,
the fair values of which are extremely difficult to determine, have been excluded. (see Note 2)(¥ million)
FY2010 (Mar. 31, 2011)(1) Cash and time deposits(2) Notes and accounts receivables—trade(3) Short-term loans receivable(4) Investment securities
Assets(5) Notes and accounts payables—trade(6) Short-term borrowings(7) Long-term loans payable (including current portion)
Liabilities(8) Derivative transactions:
Exempt from hedge accounting
Subject to hedge accounting

Consolidated balance
sheet amounts

Fair values

Differences

46,20880,184
5,051
6,411
137,856
68,34011,512
68,063
147,916

46,20880,184
5,051
6,411
137,856
68,34011,512
68,383
148,236

—
—
—
—
—
—
—
320
320

—
—

—
—

—
—

FY2011 (Mar. 31, 2012)(1) Cash and time deposits(2) Notes and accounts receivables—trade(3) Short-term loans receivable(4) Investment securities
Assets(5) Notes and accounts payables—trade(6) Short-term borrowings(7) Long-term loans payable (including current portion)
Liabilities(8) Derivative transactions:
Exempt from hedge accounting
Subject to hedge accounting

Consolidated balance
sheet amounts

Fair values

36,46086,582
7,042
10,384140,470
69,596
17,94860,438147,982

36,46086,582
7,042
10,384140,470
69,596
17,94860,515148,059————

Differences
—
—
—
—
—
—
—
76
76

(¥ million)
FY2010 (Apr. 1, 2010 – Mar. 31, 2011) FY2011 (Apr. 1, 2011 – Mar. 31, 2012)

Category

Unlisted stock
Affiliated company stock

104
4,220

104
3,742

	The above stocks are not included in “(4) Investment Securities” due to the extreme difficulty of determining a fair value because there are no market prices.
3. Scheduled redemption amount of financial assets and securities with maturities(¥ million)
FY2010 (Mar. 31, 2011)
Due within
one year

Cash and time deposits
Notes and accounts receivables—trade
Short-term loans receivable
Total

More than one year More than five years
and up to five years and up to ten years

46,20880,184
5,051
131,444

—
—
—
—

—
—
—
—

Due after
ten years————

FY2011 (Mar. 31, 2012)
Due within
one year

Cash and time deposits
Notes and accounts receivables—trade
Short-term loans receivable
Total

More than one year More than five years
and up to five years and up to ten years

36,46086,582
7,042
130,085

—
—
—
—

—
—
—
—

Due after
ten years————

4. Scheduled repayment of loans payable after the accounting period
Please refer to “Loans Payable, Etc.” in the consolidated supplementary information.

8. Securities
FY2010 (Mar. 31, 2011)
1. Other Securities(¥ million)——

Notes: 1. Calculation of fair values of financial instruments and information concerning securities and derivatives
Assets(1) Cash and time deposits, (2) Notes and accounts receivables—trade, and (3) Short-term loans receivable
		 Since all deposits are short term, book values are used as fair values because the two figures are virtually identical.
(4) Investment securities
		 Fair values of stocks and bonds are the prices on securities exchanges.
Liabilities(5) Notes and accounts payables—trade and (6) short-term borrowings
Since payables and borrowings are repaid within a short time, book values are used as fair values because the two figures are virtually identical.
(7) Long-term loans payable (including current portion)
		The fair value of long-term loans payable is calculated by using a discount rate that is equal to the interest rate for a new loan with the same totalinterest and principal. Long-term loans payable with floating interest rates are subject to the special accounting procedure for interest rate swaps(see (8) below). The fair value is calculated by using a reasonable estimate of the interest rate for a loan with the same total of interest and principal that was processed along with the applicable interest rate swap.
		 Long-term loans payable include the current portion to be repaid within one year.
Derivatives(8) Derivative transactions		Interest rate swaps that use the special accounting procedure 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 (7) above).

44

Annual Report 2012

Category
Securities whose book values on theaccompanying consolidated balance sheet
exceed their acquisition costs
Securities whose book values on theaccompanying consolidated balance sheet
do not exceed their acquisition costs

Consolidated balance
sheet amount(1) Equity securities(2) Bonds(3) Other
Subtotal(1) Equity securities(2) Bonds(3) Other
Subtotal

Total

Acquisition cost

5,061
—
—
5,061
1,350
—
—
1,350
6,411

2,597
—
—
2,597
1,637
—
—
1,637
4,235

Differences
2,464
—
—
2,464
(287)
—
—
(287)
2,176

Note: U nlisted equity securities (consolidated balance sheet amount of ¥104 million) are not included in the above table of “Other securities” due to theextreme difficulty of determining a fair value because there are no market prices.

2. Other Securities Sold During FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
Proceeds from sales
20

Equity securities

45

Gain on sales
5(¥ million)
Loss on sales—

KYB Corporation

Financial Section

Annual Report 2012

9. Derivative Transactions

3. Securities Subject to Asset Impairment
	In FY2010, there was an asset impairment loss of ¥0 million for equity securities included in other securities.
	  To determine asset impairment losses, securities with a fair value that was at least less than half of the acquisition cost were
written down to zero and securities with a fair value of about 30% to 50% below the acquisition cost were written down to thelevel regarded as necessary in consideration of the likelihood of recovering the investment and other factors.

FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
1. Derivative Transactions Exempt from Hedge Accounting	Not applicable
2. Derivative Transactions Subject to Hedge Accounting

FY2011 (Mar. 31, 2012)	Hedges related to interest rates

1. Other Securities(¥ million)(¥ million)
Category

Securities whose book values on theaccompanying consolidated balance sheet
exceed their acquisition costs
Securities whose book values on theaccompanying consolidated balance sheet
do not exceed their acquisition costs

Consolidated balance
sheet amount

Acquisition cost

9,385
—
—
9,385
999
—
—
999
10,384

5,978
—
—
5,978
1,163
—
—
1,163
7,142

(1) Equity securities(2) Bonds(3) Other
Subtotal(1) Equity securities(2) Bonds(3) Other
Subtotal

Total

Differences
3,406
—
—
3,406
(164)
—
—
(164)
3,242

Note: Unlisted equity securities (consolidated balance sheet amount of ¥104 million) are not included in the above table of “Other securities” due to theextreme difficulty of determining a fair value because there are no market prices.

Hedge accounting
methodType of derivativetransactions

Interest rate swap
exceptional treatment

Interest rate swap transaction
Receive floating, pay fixedHedging targets

Contractual
amount, etc.

Contractual
amount of morethan one year

Long-term debt

16,4856,485

Equity securities

Gain on sales0(¥ million)
Loss on sales—

3. Securities Subject to Asset Impairment
	In FY2011, there was an asset impairment loss of ¥3 million for equity securities included in other securities.

(Note)

Note: F or hedges where the exceptional treatment of interest rate swaps is used, fair value includes the fair values of the hedged long-term loans because theswaps and loans are treated as a single unit.

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
1. Derivative Transactions Exempt from Hedge Accounting	Not applicable
2. Derivative Transactions Subject to Hedge Accounting
	Hedges related to interest rates(¥ million)

2. Other Securities Sold During FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Proceeds from sales
0

Fair value

Hedge accounting
methodType of derivativetransactions

Interest rate swap
exceptional treatment

Interest rate swap transaction
Receive floating, pay fixedHedging targets

Contractual
amount, etc.

Contractual
amount of morethan one year

Long-term debt

7,286

3,743

Fair value(Note)

Note: F or hedges where the exceptional treatment of interest rate swaps is used, fair value includes the fair values of the hedged long-term loans because theswaps and loans are treated as a single unit.

	  To determine asset impairment losses, securities with a fair value that was at least less than half of the acquisition cost were
written down to zero and securities with a fair value of about 30% to 50% below the acquisition cost were written down to thelevel regarded as necessary in consideration of the likelihood of recovering the investment and other factors.

10. Footnotes to Retirement Benefits
1. Overview of Retirement Benefit Plans
	The Company and its domestic consolidated subsidiaries have three types of defined benefits plans: defined benefit pension
plans, tax-qualified pension plans, and lump-sum payments severance plans. In addition, additional retirement payments are
made in some cases when employees retire or resign.
	  The Company has established a retirement benefit payment trust.
	  Some consolidated subsidiaries switched from a qualified pension plan system to a defined benefit corporate pension plan on
October 1, 2011.
	  At the end of March 2012, for the Company and its consolidated companies in Japan, six companies had a lump-sum retirement payment system. In addition, for the Employees’ Pension Fund, two companies belonged to a comprehensive employees’
pension fund and, for the defined benefit corporate pension plan, five companies outsourced asset management to a life insurance company, etc.
	  Some consolidated subsidiaries in Japan and other countries have established a defined contribution pension system in addition to a defined benefit pension system.

46

47

KYB Corporation

Financial Section

2. Retirement Benefit Obligations

12. Tax Effect Accounting(¥ million)
FY2011 (Mar. 31, 2012)(33,227)
18,741(14,485)
4,054(10,431)

FY2010 (Mar. 31, 2011)(33,803)
18,258(15,545)
4,778(10,767)(1) Benefit obligation (Note)(2) Plan assets(3) Funded status (1)+(2)(4) Unrecognized net actuarial gain(5) Accrued severance indemnities for employees

Note: Certain subsidiaries’ benefit obligations were calculated using a simplified method. In addition, plan assets at consolidated subsidiaries that use acomprehensive employees’ pension fund, which were ¥2,223 million at the end of March 2011 and ¥2,321 million at the end of March 2012, are notincluded in the above plan assets.

3. Net Periodic Benefit Cost(¥ million)
FY2010 (Apr. 1, 2010 – Mar. 31, 2011) FY2011 (Apr. 1, 2011 – Mar. 31, 2012)(1) Service cost (Note)(2) Interest cost(3) Expected return on plan assets (deductible amounts)(4) Net actuarial gain(5) One-time payments of additional retirement benefits(6) Net periodic benefit cost (1)+(2)+(3)+(4)+(5)

2,148
648
(355)
438
28
2,908

1,914
648
(386)
308
12
2,497

Note: Net periodic benefit cost of consolidated subsidiaries using the simplified method are added up in (1) Service cost.

4. Assumptions in Calculating Retirement Benefit Obligations
FY2010 (Mar. 31, 2011)
Straight-line attribution
2.0%(¥ million)
FY2011 (Mar. 31, 2012)
Straight-line attribution
2.0%(3) Expected rate of return on investments

3.0%(1.30% for retirement benefit
payment trust)

3.0%(1.28% for retirement benefit
payment trust)(4) Years for amortizing net actuarial

14–15 years(Amortized using the straight-line
method over a period that does notexceed the average remaining
service period for employees whenan actuarial gain or loss occurs.
Recognized as an expense startingin the following fiscal year.)

14–15 years(Amortized using the straight-line
method over a period that does notexceed the average remaining
service period for employees whenan actuarial gain or loss occurs.
Recognized as an expense startingin the following fiscal year.)(1) Allocation of projected retirement benefit obligations(2) Discount rate

11. Stock Options
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
Not applicable

Annual Report 2012

FY2010 (Mar. 31, 2011)

FY2011 (Mar. 31, 2012)

1. Major Components of Deferred Tax Assets and Deferred
Tax Liabilities(¥ million)
Deferred tax assets:
Employees’ severance and retirement benefits
8,695
Tax loss carried forward
2,573
Accrued bonuses
1,840
Software
1,099
Allowance for product warranty expenses
805
Tax effect of unrealized gains on inventories
685
Enterprise taxes
451

1. Major Components of Deferred Tax Assets and Deferred
Tax Liabilities(¥ million)
Deferred tax assets:
Employees’ severance and retirement benefits
7,527
Tax loss carried forward
1,811
Accrued bonuses
1,463
Software
1,110
Allowance for product warranty expenses
907
Tax effect of unrealized gains on inventories
628
Impairment loss on fixed assets
317 Valuation loss on inventories
297 Retirement benefits for directors andcorporate auditors

268 Expenses payable (social security payments
for bonuses) Accrued retirement benefits for directors andcorporate auditors

237

248

Enterprise taxes
Tax effect of unrealized gains on fixed assets

210
202

Securities valuation losses
Depreciation and amortization
Valuation loss on inventories
Other
Subtotal
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:

125
121
116
753
17,784(3,756)
14,027 Securities contributed to employees’ retirement
benefit trust Tax effect for retained earnings at overseas
consolidated subsidiaries

Other
Subtotal
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:

195
1,075
15,986(2,457)
13,528(3,519) Securities contributed to employees’ retirement
benefit trust(3,040)(1,885) Tax effect for retained earnings at overseas
consolidated subsidiaries(2,173)Net unrealized loss on securities(787)
Tax allowable reserves for deduction of fixed assets
(294)
Other
(249)
Total deferred tax liabilities(6,736)
Net deferred tax assets
7,290

Net unrealized loss on securities(1,111)
Tax allowable reserves for deduction of fixed assets
(221)
Other
(347)
Total deferred tax liabilities(6,895)Net deferred tax assets
6,633

Net deferred tax assets as of March 31, 2011, are included in thefollowing balance sheet items.
(¥ million)
Current assets—Deferred tax assets
4,107
Fixed assets—Deferred tax assets
3,418
Current liabilities—Other(74)
Long-term liabilities—Other(160)

Net deferred tax assets as of March 31, 2012, are included in thefollowing balance sheet items.
(¥ million)
Current assets—Deferred tax assets
3,996
Fixed assets—Deferred tax assets
2,865
Current liabilities—Other(42)
Long-term liabilities—Other(186)

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Not applicable48 Expenses payable (social security payments
for bonuses)

49

KYB Corporation

Financial Section

2. Breakdown of the principal categories that are factors
underlying significant differentials between the burden of
the statutory tax rate and income taxes after the application of tax effect accounting.
Statutory tax rate
(Adjustment)
Tax rate differences among consolidated subsidiaries

39.8 %(3.3)%

Unrecognized tax effect for write-off of unrealized
gains(2.0)%

Equity-method investment income
Tax exemptions at overseas consolidated subsidiaries
Special deduction for R&D expenditures
Gain on sales of related company stock
Other
Effective tax rate(1.9)%(1.9)%(1.9)%
1.5 %(2.2)%
28.1 %

2. Breakdown of the principal categories that are factors
underlying significant differentials between the burden of
the statutory tax rate and income taxes after the application of tax effect accounting.
Statutory tax rate
39.8 %(Adjustment)
Tax rate differences among consolidated subsidiaries (3.4)%
Change in valuation reserves(3.3)%Tax exemptions at overseas consolidated subsidiaries (2.2)%
Equity-method investment income(1.6)%
Retained earnings at overseas consolidated
subsidiaries

1.7 %Effect of change in tax rate
Other
Effective tax rate

3.7 %(1.1)%
33.6 %

Annual Report 2012

13. Business Combinations
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
Transactions under common control
1. Summary of Transaction(1) Names and business activities of companies that were combined
Name of the company:

Yanagisawa Seiki MFG Co., Ltd.

Business activities:

Manufacturing and sales of AC and HC Operations’ products(2) Date of business combination:

Sept. 30, 2010, and Nov. 15, 2010 (dates of effectiveness)(3) Legal method of business combination:	Acquisition of stock (additional acquisition) and exchange of stock to makeYanagisawa Seiki a wholly owned subsidiary(4) Company name after business combination:	No change. Yanagisawa Seiki was renamed KYB-YS Co., Ltd., on April 1, 2011.
(5) Overview of transaction, including purpose	To further strengthen consolidated group management, the Company made Yanagisawa Seiki a wholly owned subsidiary byusing cash and deposits to purchase additional stock on September 30, 2010, and conducted an exchange of stock on
November 15, 2010.

3. Information Concerning Change in Tax Rate for Corporate
Income Tax, Etc.
Starting with fiscal years that begin on or after April 1, 2012, corporate tax rates will be lowered and special reconstruction corporate taxes will be applied following the issuance on December
2, 2011 of the “Act for Partial Revision of the Income Tax Act.,etc. for the Purpose of Creating a Taxation System Responding
to Changes in Economic and Social Structures (Act No. 114 of
2011)” and the “Act on Special Measures for Securing Financial
Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake (Act No. 117 of
2011).” As a result, the statutory corporate tax rate used to calculate deferred tax assets and deferred tax liabilities has been
lowered from the previous 39.8% to 37.2% for temporary differences expected to be covered or settled for fiscal years thatbegin between April 1, 2012, and April 1, 2014, and to 34.8% for
temporary differences expected to be covered or settled forfiscal years that begin on or after April 1, 2015.
Due to these changes, there were decreases of ¥1,279 million
in deferred tax assets, ¥674 million in deferred tax liabilities and¥548 million deferred tax liabilities for land revaluation. There
were also increases of ¥763 million in deferred income taxes,¥158 million in the valuation difference on available-for-salesecurities and ¥548 million in the revaluation reserve for land.

2. Summary of Accounting Treatment of Mergers
The Company accounted for these mergers as transactions under common control in accordance with “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21, December 26, 2008) and “Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Divestitures” (ASBJ Guidance No. 10, December 26, 2008).
3. Information Concerning Additional Acquisition of Subsidiary Stock(1) Acquisition cost and description
Payment for acquisition

Cash and deposits
Exchange of stock

Direct expenses for acquisition
Acquisition cost(¥ million)
225
1,688
0
1,914

(2) Exchange ratio for each type of stock, calculation method, number of shares submitted and the valuea) Type of stock and exchange ratio
		 Common share: 1 share of KYB to 14.85 shares of Yanagisawa Seikib) Calculation of exchange ratio		To ensure that the ratio for the exchange of stock is fair and proper, the Company and Yanagisawa Seiki selected American
Appraisal Japan Co., Ltd., as a third party to calculate an exchange ratio. The Company and Yanagisawa Seiki then held
discussions to determine the final exchange ratio while using the third-party ratio as reference.
c) Number of shares submitted and value
		 Shares submitted: 3,554,459 shares
		 Value:¥1,688 million

4. Amount of and Reason for Negative Goodwill(1) Negative goodwill: ¥718 million(2) Reason	Negative goodwill was recorded because the minority shareholders’ portion of the fair value of net assets at the time of thisbusiness combination was higher than acquisition cost.

50

51

KYB Corporation

Financial Section

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)

Annual Report 2012

2. Summary of Accounting Treatment of Mergers

Transactions under common control

The Company accounted for these mergers as transactions under common control in accordance with “Accounting Standard forMerger of KYB Manufacturing North America, Inc. (KMNA) and KYB America LLC (KAC)

Business Combinations” (ASBJ Statement No. 21, December 26, 2008) and “Guidance on Accounting Standard for Business

1. Summary of Transaction

Combinations and Accounting Standard for Divestitures” (ASBJ Guidance No. 10, December 26, 2008).

(1) Names and business activities of companies that were combined(Remaining company)

As a result of this business combination, the Company and Mando each hold half of the voting rights of KYB Mando do Brasil
Fabricante de Autopecas S.A., making this company an equity-method affiliate of the Company.

Name of the company:

KMNA

Business activities:

Manufacturing and sales of AC Operations’ products(Dissolved company)
Name of the company:

KAC

Business activities:

Sales of AC and HC Operations’ products(2) Date of business combination:

Oct. 1, 2011

(3) Legal method of business combination:	KMNA (consolidated subsidiary of KYB) and KAC (consolidated subsidiary of
KYB) merged with KMNA the remaining company and KAC was dissolved.
(4) Company name after business combination:	KYB Americas Corporation (Consolidated subsidiary of the Company)(5) Overview of transaction, including purpose
	These two companies were merged because the combination of manufacturing and sales activities is expected to improve
efficiency and produce business synergies that will strengthen business operations in the Americas. In addition, KYB plans to
use this merger to achieve more growth in the Americas by expanding operations in North and Central America, where thesetwo companies are located. Since KAC was a wholly owned subsidiary of KMNA, no shares were issued and there was noincrease in capital due to this merger and there was no merger payment.
2. Summary of Accounting Treatment of Mergers
The Company accounted for these mergers as transactions under common control in accordance with “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21, December 26, 2008) and “Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Divestitures” (ASBJ Guidance No. 10, December 26, 2008).
Formation of Company under Common Control
1. Summary of Transaction(1) Names and business activities of operations that were combined
Name of business operations:

Shock Absorber for Automobile BusinessBusiness activities:

Manufacturing and sales of shock absorber for automobiles(2) Date of business combination:

May 31, 2011

(3) Legal method of business combination:	KYB Mando do Brasil Fabricante de Autopecas Ltda., which was a wholly owned
subsidiary of KYB in Brazil, became a company under common control with 50/50

14. Asset Retirement Obligations
FY2010 (Mar. 31, 2011)
1. Asset Retirement Obligations Included in the Consolidated Balance Sheet(1) Summary of asset retirement obligations
	The Company and some consolidated subsidiaries have posted asset retirement obligations based on a reasonable estimateof the cost of removing equipment that used chrome plating, asbestos and certain other materials. These estimates are basedon the Waste Management and Public Cleaning Act, Ordinance on Prevention of Health Impairment due to Asbestos andother laws and regulations.
(2) Method for calculating amount of asset retirement obligations
	The Company and some consolidated subsidiaries calculate balance sheet asset retirement obligations by using an estimatedthe time of use of 9 to 31 years starting with the time of acquisition and a discount rate of 2.0%.
(3) Change in total asset retirement obligations during fiscal 2010
Beginning of the year (Note)
Adjustment for passage of time
Decrease due to retirement of assets
End of the year(¥ million)
217
2
(10)
209

Note: B eginning with the fiscal year ended March 31, 2012, the Company has applied Accounting Standard for Asset Retirement Obligations (ASBJ
Statement No. 18, March 31, 2008) and Guidance on Accounting Standard for Asset Retirement Obligations (ASBJ Guidance No. 21, March 31,2008). The balance at the beginning of the fiscal year uses this new accounting standard.

2. Asset Retirement Obligations Not Shown on the Consolidated Balance Sheet
Office space used by the Company and some consolidated subsidiaries have leases requiring the payment of the cost to restore
the space to its original condition when the space is vacated. A reasonable estimate of the asset retirement obligations associated with this office space is not possible because the length of time the space will be used is not known and there are currently
no plans to relocate these offices. Consequently, no asset retirement obligations are recognized for these offices.
FY2011 (Mar. 31, 2012)
1. Asset Retirement Obligations Included in the Consolidated Balance Sheetownership following the sale of half of its stock to the Korean company Mando(1) Summary of asset retirement obligations

Corporation.

	The Company and some consolidated subsidiaries have posted asset retirement obligations based on a reasonable estimate(4) Company name after business combination: KYB-Mando do Brasil Fabricante de Autopeças S.A.

of the cost of removing equipment that used chrome plating, asbestos and certain other materials. These estimates are based(5) Other information concerning summary of transaction

on the Waste Management and Public Cleaning Act, Ordinance on Prevention of Health Impairment due to Asbestos and	KYB and Mando both have global automotive shock absorber operations. In Brazil, a market with good prospects for growth,

other laws and regulations.

the companies signed a joint venture agreement that will allow capturing business synergies through the mutual utilization of(2) Method for calculating amount of asset retirement obligations

the two companies’ resources and knowledge.

	The Company and some consolidated subsidiaries calculate balance sheet asset retirement obligations by using an estimated(6) Reason for decision to form a company under common control
	To form this company under common control, KYB and Mando signed a joint venture agreement in which the two companies
will jointly control KYB Mando do Brasil Fabricante de Autopecas S.A. The payment for this business combination was entirely an interest in voting rights. There are no other items that show the control of this company. Consequently, the decision
was reached that this business combination should use the company under common control format.

52

the time of use of 5 to 31 years starting with the time of acquisition and a discount rate of 2.0%.
(3) Change in total asset retirement obligations during fiscal 2011
Beginning of the year
Increase due to purchase of property, plant and equipment
Adjustment for passage of time
Other net increase (decrease)
Decrease in assets retirement obligations
End of the year

53(¥ million)
209
141
4
8
(0)
363

KYB Corporation

Financial Section

2. Asset Retirement Obligations Not Shown on the Consolidated Balance Sheet

Annual Report 2012

3) Reportable Segment Sales, Profits, Assets, and Other Items(¥ million)

Office space used by the Company and some consolidated subsidiaries have leases requiring the payment of the cost to restore
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)

the space to its original condition when the space is vacated. A reasonable estimate of the asset retirement obligations associatAutomotive
Components

HydraulicComponents

Subtotal

Other(Note 1)

Total

Elimination ofintersegment
transactions(Notes 2 and 3)

186,795
167
186,962
10,181
148,116

121,221
1,588
122,809
13,941
123,672

308,016
1,756
309,772
24,123271,789

12,066
1,745
13,811
76
16,598320,082
3,501
323,583
24,200288,388—(3,501)(3,501)(48)(3,253)320,082—
320,082
24,151
285,134

7,713
143

5,194
8

12,908
151

518
109

13,426260——

13,426
260

3,988

4,361

8,350

565

8,915

—

8,915

Reportable segment

ed with this office space is not possible because the length of time the space will be used is not known and there are currently
no plans to relocate these offices. Consequently, no asset retirement obligations are recognized for these offices.
Segment sales
Outside customers
Intersegment   Total
Segment profits
Segment assets
Other items
Depreciation
Impairment loss

15. Real Estate Leases, etc.
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
Omitted due to the absence of significant items
FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Omitted due to the absence of significant items
16. Segment Information, etc.

Increase in tangible and intangible
noncurrent assets (Note 5)

1. Segment Information
1) Summary of Reportable Segments

The Company’s reportable segments are organizational units for which separate financial data can be obtained andwhere the Board of Directors conducts regular studies to determine the allocation of resources and evaluate
performance.
The Company has a business headquarters or department for individual products and services. Each headquarters or
department determines comprehensive strategies in Japan and overseas for its products and services and conducts
business operations. As a result, the Company has four business categories: Automotive Components, Hydraulic Components, Special-purpose Vehicles, and Other Products, which consists of activities that do not belong to the otherthree segments.
In consideration of the volume standard and other items concerning reportable segments, Special-purpose Vehicles
and Other Products are combined into the Other segment for disclosure purposes. Consequently, the Company has
two reportable segments: Automotive Components and Hydraulic Components.
Automotive Components involves the manufacture of automotive hydraulic devices and other products. Major products are shock absorbers for automobiles and motorcycles and power steering products. Hydraulic Components
involves the manufacture of primarily industrial hydraulic components used in construction machinery.
Segment
Reportablesegment

Other

Major Products

Automotive
Components

Shock absorbers, suspension system, power steering, vane pumps, front folk, oil cushion units,
stay dampers, free rock, and other automotive products

HydraulicComponents

Cylinders, valves, oil damper for railway vehicles, collision shock absorbers, pumps, motors,
equipment for landing systems, flight control systems, and emergency devices for aircraft

Other

Concrete mixer trucks, granule carriers, special-function vehicles, motion simulators, hydraulicsystems, auditorium and stage control systems, naval ships equipment, tunnel borers, environment-friendly equipment, seismic isolation systems and vibration control dampers, electronic
application

2) Method of Calculating Sales, Profits, Assets and Other Items for Each Reportable Segment

The accounting procedure for the reportable segments is based on “Basis of Presentation of Consolidated Financial
Statements.”
The income or loss for each reportable segment is based on operating income or loss.
In principle, prevailing market prices are used for transfers for intersegment transactions.

54 Amortization of and/or negative
goodwill
Gain on negative goodwill

Amount on
consolidated
statements(Note 4)

(1)

(2)

(4)

—

(4)

—

(4)

164

453

617

101

718

—

718

Notes: 1. The Other category includes special-purpose vehicles and other products that are not included in the two reportable segments.
2. The deduction of ¥48 million in segment profits is due to the elimination of intersegment transactions.
3. The deduction of ¥3,253 million in segment assets is due to the elimination of intersegment transactions.
4. Segment profits have been adjusted for consistency with operating income in the consolidated statement of income.
5. The increase in tangible and intangible noncurrent assets includes long-term prepaid expenses.

(¥ million)
FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Automotive
Components

HydraulicComponents

Subtotal

Other(Note 1)

Total

Elimination ofintersegment
transactions(Notes 2 and 3)

186,664
2,181
188,845
6,154
147,552

137,522
1,945
139,468
14,299138,807324,186
4,126
328,313
20,453286,359

12,971
1,423
14,395989
18,318337,158
5,550
342,70921,443
304,678—(5,550)(5,550)94(3,329)337,158—
337,158
21,537
301,348

7,297
466

5,786
14

13,084481

424—

13,508481——

13,508481

9,378

17,395

26,773398

27,172—

27,172

(1)

16

15

—

15

—

15

—

—

—

—

—

—

—

Reportable segment

Segment sales
Outside customers
Intersegment   Total
Segment profits
Segment assets
Other items
Depreciation
Impairment loss
Increase in tangible and intangible
noncurrent assets (Note 5) Amortization of and/or negative
goodwill
Gain on negative goodwill

Notes: 1. The Other category includes special-purpose vehicles and other products that are not included in the two reportable segments.
2. The deduction of ¥94 million in segment profits is due to the elimination of intersegment transactions.
3. The deduction of ¥3,329 million in segment assets is due to the elimination of intersegment transactions.
4. Segment profits have been adjusted for consistency with operating income in the consolidated statement of income.
5. The increase in tangible and intangible noncurrent assets includes long-term prepaid expenses.

55

Amount on
consolidated
statements(Note 4)

KYB Corporation

Financial Section

Annual Report 2012

(2) Property and equipment

2. Related Information(¥ million)

FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
1) Information for Products and Services

Omitted because categories of products and services are the same as for reportable segments.
2) Information for Geographic Regions(1) Net sales(¥ million)
Japan

EuropeNorth America

China

South East Asia

Other areas

Total

172,447

45,71332,29730,427

18,617

20,578320,082

Notes: 1. Sales are based on the locations of customers and categorized by countries or areas.
2. Regions are based on geographic proximity.
3. Major countries and areas in each region:		 (1) Japan....................... Japan		 (2) Europe..................... Germany, Great Britain, Spain, Italy, France, Czech Republic, Russia, Poland		 (3) North America......... U.S.A., Canada
		 (4) China....................... China
		 (5) South East Asia....... Indonesia, Malaysia, Thailand, Vietnam
		 (6) Other areas.............. Taiwan, Korea, United Arab Emirates, Mexico, Brazil, Panama

Japan

EuropeNorth America

China

South East Asia

68,640

8,860

3,490

14,648

5,498

Other areas

Total

423

101,562

Notes: 1. Sales are based on the locations of customers and categorized by countries or areas.
2. Regions are based on geographic proximity.
3. Major countries and areas in each region:		 (1) Japan....................... Japan		 (2) Europe..................... Germany, Great Britain, Spain, Italy, France, Czech Republic		 (3) North America......... U.S.A.
		 (4) China....................... China
		 (5) South East Asia....... Thailand, and Vietnam
		 (6) Other areas.............. Taiwan, United Arab Emirates, Mexico, Brazil, Panama3) Information for Major Customers

Since no single customer accounts for more than 10% of net sales from external customers on the consolidated statement of income, information for major customers was omitted.
3. Information for Impairment Loss of Fixed Assets by Reportable Segment
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)(2) Property and equipment(¥ million)
Japan

EuropeNorth America

China

South East Asia

Other areas

Total

65,221

9,449

3,334

5,995

5,685

1,135

90,821

Notes: 1. Sales are based on the locations of customers and categorized by countries or areas.
2. Regions are based on geographic proximity.
3. Major countries and areas in each region:		 (1) Japan....................... Japan		 (2) Europe..................... Germany, Great Britain, Spain, Italy, France, Czech Republic		 (3) North America......... U.S.A.
		 (4) China....................... China
		 (5) South East Asia....... Thailand, Vietnam
		 (6) Other areas.............. Taiwan, United Arab Emirates, Mexico, Brazil, Panama

Omitted because the same information is provided in segment information.
FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Omitted because the same information is provided in segment information.
4. Amortization of Goodwill and Unamortized Balance of Goodwill by Reportable Segments(¥ million)
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
Reportable segment

3) Information for Major Customers

Since no single customer accounts for more than 10% of net sales from external customers on the consolidated statement of income, information for major customers was omitted.
FY2011 (Apr. 1, 2011 – Mar. 31, 2012)

Goodwill
Amortization of goodwill
Balance at fiscal year end
Negative goodwill
Amortization of goodwill
Balance at fiscal year end

Automotive
Components

HydraulicComponents

Subtotal

Other (Note)

Total

—
—

33
16

33
16

—
—

33
16

1
4

35
—

37
4

—
—

37
4

Note : T his table shows amortization of goodwill and unamortized balance of goodwill for negative goodwill resulting from business combinations before
April 1, 2010.

1) Information for Products and Services

Omitted because categories of products and services are the same as for reportable segments.

(¥ million)
FY2011 (Apr. 1, 2011 – Mar. 31, 2012)

2) Information for Geographic Regions

Reportable segment(1) Net sales(¥ million)
Japan

EuropeNorth America

China

South East Asia

Other areas

Total

181,935

47,34133,31333,071

22,341

19,154

337,158

Notes: 1. Sales are based on the locations of customers and categorized by countries or areas.
2. Regions are based on geographic proximity.
3. Major countries and areas in each region:		 (1) Japan....................... Japan		 (2) Europe..................... Germany, Great Britain, Spain, Italy, France, Czech Republic, Russia, Poland		 (3) North America......... U.S.A., Canada
		 (4) China....................... China
		 (5) South East Asia....... Indonesia, Malaysia, Thailand, Vietnam
		 (6) Other areas.............. Taiwan, Korea, United Arab Emirates, Mexico, Brazil, Panama

56

Goodwill
Amortization of goodwill
Balance at fiscal year end
Negative goodwill
Amortization of goodwill
Balance at fiscal year end

Automotive
Components

HydraulicComponents

Subtotal

Other (Note)

Total

0
5

16
—

17
5

—
—

17
5

1
2

—
—

1
2

—
—

1
2

Note : T his table shows amortization of goodwill and unamortized balance of goodwill for negative goodwill resulting from business combinations before
April 1, 2011.

57

KYB Corporation

Financial Section

5. Gains on Negative Goodwill in Reportable Segments

5

FY2010 (Apr. 1, 2010 – Mar. 31, 2011)

Annual Report 2012

Consolidated Supplementary Information

1. Corporate Bonds

In the Automotive Components, Hydraulic Components and Other segments, consolidated subsidiary Yanagisawa Seiki MFG

Not applicableCo., Ltd. (now KYB-YS Co., Ltd.) became a wholly owned subsidiary of the Company following the additional acquisition of its
stock through an exchange of stock. This resulted in a gain on negative goodwill. This gain in the fiscal year ended March 31,

2. Loans Payable, etc.

2012, was ¥164 million in Automotive Components, ¥453 million in Hydraulic Components and ¥101 million in Other,

Beginning of fiscal year(¥ million)

End of fiscal year(¥ million)

Average interest rate(%)

Repayment deadline

Short-term loans payable
Current portion of long-term loans payable
Leases obligations due within one year

11,512
23,289293

17,94817,212
341

2.0
2.0
—

—
—
—

Long-term loans payable(excluding current portion)

44,774

43,2262.1

	2013.5.31 to
2025.6.30

Lease obligations(excluding current portion)

1,455

1,464

—

	2013.4.1 to2017.10.7

315

325

0.0

—

81,64180,518——respectively.

Category

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Not applicable
6. Related Parties
FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
Not applicable

Other interest-bearing debts:

FY2011 (Apr. 1, 2011 – Mar. 31, 2012) Security deposits payable(“Others” in noncurrent liabilities)

Not applicable

Total

17. Special Purpose Companies Subject to Disclosure

Notes: 1. The average interest rate is the weighted average interest rate for loans payable as of the end of the fiscal year.
2. T he average interest rate for lease obligations is not shown because lease obligations in the consolidated balance sheet are prior to the deduction of
the interest portion that is included in total lease payments.
3. T otal repayments in each of the next five fiscal years for long-term loans payable and lease obligations (excluding the current portions) and other interest-bearing debts are as follows:

FY2010 (Apr. 1, 2010 – Mar. 31, 2011)
Not applicable
FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Not applicable

Category

Long-term loans payable
Lease obligations

18. Per Share Data

Net assets per share (¥)
Net income per share (¥)

395.18
77.54

Diluted net income per share is not shown because there are nocommon stock equivalents.

453.0062.87

Net assets per share (¥)
Net income per share (¥)

Due after two years
through three years(¥ million)

Due after three years
through four years(¥ million)

Due after four years
through five years(¥ million)

21,335268

10,812
219

7,004
138

3,873
78

Note: Security deposits payable are not shown because there is no repayment deadline.

FY2011 (Apr. 1, 2011 – Mar. 31, 2012)

FY2010 (Apr. 1, 2010 – Mar. 31, 2011)

Due after one year
through two years(¥ million)

Diluted net income per share is not shown because there are nocommon stock equivalents.

Note: Base of calculations for net income per share are as follows.

3. Asset Retirement Obligations
	Asset retirement obligations as of March 31, 2012, did not exceed 1% of the sum of liabilities and net assets on this date. Consequently, a list of these obligations is not presented as provided for in Article 92-2 of the Consolidated Financial Statement
Regulations.
4. Other

FY2010(Apr. 1, 2010 – Mar. 31, 2011)

FY2011(Apr. 1, 2011 – Mar. 31, 2012)

Net income (¥ million)
Amount not attributable to common shares (¥ million)
Net income related to common shares (¥ million)

17,014—17,014

13,897—
13,897

Average number of common shares outstanding in fiscal year
(Thousands)

219,413

221,064

Quarterly information
Cumulative
first quarter

Cumulative
second quarter

Cumulative
third quarter

FY2011

Net sales (¥ million)

79,868

164,727

247,216

337,158

Income before income taxes and minority
interests (¥ million)

6,860

11,756

15,63921,759Net income (¥ million)
Net income per share (¥)

4,017
18.17

7,147
32.33

9,066
41.01

13,89762.87

First quarter

Second quarter

Third quarter

Fourth quarter

18.17

14.16

19. Subsequent Events
FY2011 (Apr. 1, 2011 – Mar. 31, 2012)
Not applicable58

Net income per share (¥)

59

8.68

21.86

Major Subsidiaries and Affiliates

KYB Corporation

Annual Report 2012

As of March 31, 2012

Consolidated Subsidiaries

Japan

North America and South America

Kayaba System Machinery Co., Ltd.

KYB Americas Corporation— Manufacturing and sales of stage equipment and seismic— Manufacturing and sales of shock absorbers for automobiles

base isolation and vibration control dampers
Sumitomo Fudosan Shiba Daimon Bldg., 5-5,
Shibadaimon 2-chome, Minato-ku, Tokyo 105-0012, Japan
Tel: 81-3-5733-9441
Fax: 81-3-5733-9504

KYB Engineering and Service Co., Ltd.
— Sales of shock absorbers and hydraulic equipment
1159 Bijogi, Toda-shi, Saitama 335-0031, Japan
Tel: 81-48-449-0852
Fax: 81-48-449-8256

KYB Trondule Co., Ltd.
— Manufacturing and sales of electronic equipment
3909 Ura, Nagaoka City, Niigata 949-5406, Japan
Tel: 81-258-92-6903
Fax: 81-258-92-6921

KYB Kanayama Co., Ltd.

2625 North Morton, Franklin, Indiana 46131, U.S.A.
Tel: 1-317-736-7774
Fax: 1-317-736-4618

TSW Products Co., Inc.
— Sales of shock absorbers and hydraulic equipment
715 Corey Road Hutchinson, Kansas 67504-1642, U.S.A.
Tel: 1-620-663-1790
Fax: 1-620-663-1797

KYB Latinoamerica, S.A. de C.V.
— Sales of shock absorbers
Av. de Las Palmas #731, Despacho 1301, Col. Lomas de 		
Chapultepec, C.P. 11000, Mexico D.F.
Tel: 52-55-5282-5770
Fax: 52-55-5282-5661

KYB Panamá, S.A.
— Sales of shock absorbers— Manufacturing of shock absorbers and hydraulic equipment
4350-130 Aza-Funeno Tobe, Kanayama-cho, Gero City,
Gifu 509-1605, Japan
Tel: 81-576-35-2201
Fax: 81-576-35-2204

KYB Cadac Co., Ltd.
— Manufacturing and sales of casting and metal mold products
1088, Tojo, Chikuhoku-mura, Higashi Chikuma-gun,
Nagano 399-7502, Japan
Tel: 81-263-66-2150
Fax: 81-263-66-2608

KYB-YS Co., Ltd.
— Manufacturing and sales of shock absorbers andhydraulic equipment
9165 Sakaki, Sakaki-machi, Hanishina-gun,
Nagano 389-0601, Japan
Tel: 81-268-82-2850
Fax: 81-268-82-2857

P.H. World Trade Center Piso 17, Oficina 1705, Marbella, 		Panamá, República de Panamá, P.O. Box 0832-0075
Tel: 507-213-8300— Manufacturing and sales of hydraulic pump components
and electronic machine parts
32-1, Housono-Nishi 1-chome, Seika-cho, Souraku-gun, 		Kyoto 619-0240, Japan
Tel: 81-774-95-3336
Fax: 81-774-95-3337

EuropeKYB Europe Headquarters GmbH— Headquarters of KYB’s European base
Kimpler Strasse 336, 47807 Krefeld, Germany
Tel: 49-2151-9314380
Fax: 49-2151-9314330

KYB Europe GmbH— Sales of shock absorbers
Kimpler Strasse 336, 47807 Krefeld, Germany
Tel: 49-2151-931430
Fax: 49-2151-9314320— Manufacturing and sales of pumps for power steering
Poligono Industrial de Ipertegui No. 2, nave 12, CP-31160, 		
Orcoyen (Navarra), Spain
Tel: 34-948-321004
Fax: 34-948-321005

KYB Suspensions Europe, S.A.
— Manufacturing and sales of shock absorbers for automobiles

KYB Logistics Co., Ltd.
— Packages and delivers of shock absorbers andhydraulic equipment
1790, Dota, Kani-shi, Gifu 509-0206, Japan
Tel: 81-57-426-6427
Fax: 81-57-426-8389

Ctra. Irurzun S/No. 31171, Ororbia (Navarra), Spain
Tel: 34-948-421700
Fax: 34-948-322165

KYB Advanced Manufacturing Spain S.A.
— Manufacturing and sales of shock absorbers for automobiles
Poligono Industrial Perguita Calle B, No. 15,
31210 Los Arcos (Navarra), Spain
Tel: 34-948-640338
Fax: 34-948-640328

KYB Manufacturing Czech s.r.o.
— Manufacturing and sales of shock absorbers for automobiles
U Panasonicu 277, Stare Civice, 530 06 Pardubice, Czech Republic
Tel: 420-466-812-232
Fax: 420-466-812-861

60

KYB Asia Co., Ltd.

— Sales of shock absorbers— Sales of shock absorbers

LOB 16-302, Jebel Ali Free Zone, P.O. Box 261819, Dubai, United
Arab Emirates
Tel: 971-4-887-2448
Fax: 971-4-887-2438

105/1-2 Moo 1, Bangna-Trad Road, K.M. 21, Srisajorakaeyai,
Bangsaothong, Samutprakarn 10540, Thailand
Tel: 66-2-769-2140
Fax: 66-2-769-2144

KYB Manufacturing Vietnam Co., Ltd.
— Manufacturing and sales of shock absorbers for motorcycles

Asia
KYB Industrial Machinery (Zhenjiang) Ltd.
— Manufacturing and sales of shock absorbers for automobiles
Wei 3 Road 38, Dingmao, Zhenjiang New Zone, Zhenjiang,
Jiangsu 212009, People’s Republic of China
Tel: 86-511-8889-1008
Fax: 86-511-8888-6848

KYB Hydraulics Industry (Zhenjiang) Ltd.
— Manufacturing and sales of hydraulic equipment for 		
industrial use
Wei 3 Road 121, Dingmao, Zhenjiang New Zone, Zhenjiang,
Jiangsu 212009, People’s Republic of China
Tel: 86-511-8889-7200
Fax: 86-511-8888-7222

Plot I 10-11-12, Thang Long Industrial Park, Dong Anh District,Hanoi, Vietnam
Tel: 84-4-881-2773
Fax: 84-4-881-2774

Takako Vietnam Co., Ltd.
— Manufacturing of internal parts for hydraulic equipment
27 Dai Lo Doc Lap, Vietnam Singapore Industrial Park, 		Thuan An District, Binh Duong, Vietnam
Tel: 84-650-378-2954
Fax: 84-650-378-2955

Equity-Method Affiliates

Wuxi KYB Top Absorber Co., Ltd.
— Manufacturing and sales of shock absorbers for motorcycles

KYB Steering Spain, S.A.

Takako Industries, Inc.

KYB Middle East FZE

No. 2 Xikun North Road, Singapore Industrial Zone,
Wuxi New District, Jiangsu 214028, People’s Republic of China
Tel: 86-510-8528-0258 Fax: 86-510-8528-0616

Towa Industry Co., Ltd.
— Manufacturing of hydraulic cylinders and jacks
5-2, Kawai-cho 4-chome, Minokamo-shi, Gifu 505-0022, Japan
Tel: 81-574-25-3828
Fax: 81-574-27-1021

KYB Trading (Shanghai) Co., Ltd.

P.T. Kayaba Indonesia— Sales of shock absorbers and supplies components— Manufacturing and sales of shock absorbers for

B1008-1009 Far East International Plaza, 317 Xianxia Road,
Shanghai 200051, People’s Republic of China
Tel: 86-21-6211-9299
Fax: 86-21-5237-9001

KYB (China) Investment Co., Ltd.
— Headquarter of KYB's China baseautomobiles and motorcycles
JL, Jawa Blok II No. 4, Kawasan MM 2100, Cikarang Barat 17520,
Indonesia
Tel: 62-21-8981456
Fax: 62-21-8980713

KYB-UMW Malaysia Sdn. Bhd. /Wei 3 Road 121, Dingmao, Zhenjiang New Zone, Zhenjiang,
Jiangsu 212009, People’s Republic of China
Tel: 86-511-8888-2057
Fax: 86-511-8888-7615

KYB Manufacturing Taiwan Co., Ltd.
— Manufacturing and sales of shock absorbers formotorcycles and automobiles
No. 493, Kuang Hsing Road, Bade City, Taoyuan Pref. 33450, Taiwan
Tel: 886-3-368-3123
Fax: 886-3-368-3369

KYB Steering (Thailand) Co., Ltd.
— Manufacturing and sales of pumps for power steering
700/460 Moo 7, Tambol Don Hua Roh, Amphur Muang, 		
Chonburi 20000, Thailand
Tel: 66-3-845-0076
Fax: 66-3-845-4313

KYB (Thailand) Co., Ltd.
— Manufacturing and sales of shock absorbers formotorcycles and automobiles
700/363 Moo 6, Amata Nakorn Industrial Park 2, Bangna-Trad Road,
K.M. 57, Tambol Don Hua Roh, Amphur Muang, Chonburi 20000,
ThailandTel: 66-3-846-9999
Fax: 66-3-845-8331

61

KYB-UMW Steering Malaysia Sdn. Bhd.
— Manufacturing and sales of shock absorbers andhydraulic equipment
Lot 8, Jalan Waja 16, Telok Panglima Garang, 42500 Kuala Langat,
Selangor Darul Ehsan, Malaysia
Tel: 60-3-3122-6222
Fax: 60-3-3122-6677

KYB-Mando do Brasil Fabricante de Autopeças, S.A.
— Manufacturing and sales of shock absorbers for automobiles
Rua Francisco Ferreira da Cruz, 3000, Fazenda Rio Grande PR,
CEP 83820-000, Brazil
Tel: 55-41-2102-8200
Fax: 55-41-2102-8210

Corporate Information

Shareholder Information

As of March 31, 2012

As of March 31, 2012

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

Minato-ku, Tokyo 105-6111, Japan		

Tel: 81-3-3435-3511

		

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

Fax: 81-3-3436-6759

Common Stock Issued:

222,984,315 shares

Number of Shareholders:

12,655

Transfer Agent and Registrar:

Mizuho Trust & Banking Co., Ltd.

		

2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8670, Japan

Major Shareholders:Name

Date of Establishment:

November 25, 1948

Fiscal Year:

April 1 to March 31

Paid-in Capital:¥19,113 million

Toyota Motor Corporation

19,654

8.81

Number of Employees:

11,975 (Consolidated basis)

Japan Trustee Services Bank, Ltd. (Trust Account)

13,493

6.05

Securities Traded:

Tokyo Stock Exchange (First Section)

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

12,999

5.83

Japan Trustee Services Bank, Ltd. (Trust Account 9)11,703

5.25

Shareholdings(Thousands)

Percent of Total
Shares Issued

Plants:Sagami, Kumagaya, Gifu North, Gifu South, Gifu East

Meiji Yasuda Life Insurance Company

10,046

4.51

R&D Centers:

Basic Technology R&D Center, Production Technology R&D Center

Hitachi Construction Machinery Co., Ltd.

8,920

4.00

Sales Branches:

Nagoya, Osaka, Fukuoka, Hamamatsu, Hiroshima

Mizuho Corporate Bank, Ltd.

7,163

3.21

Sompo Japan Insurance Inc.

6,744

3.02

Trust & Custody Services Bank, Ltd. as trustee forMizuho Bank, Ltd. Retirement Benefit Trust Accountre-entrusted by Mizuho Trust and Banking Co., Ltd.

6,115

2.74

Ogaki Kyoritsu Bank, Ltd.

5,914

2.65

102,752

46.08

Total

Composition of
Shareholders:(Thousands)

1,933 (0.9%)
15,636 (7.0%)
Financial institutions

49,787 (22.4%)

Other domestic companies

100,499 (45.2%)

Individuals and others
Foreign companies
Treasury stock

54,482 (24.5%)

Monthly Stock
Price Range:(Tokyo Stock Exchange)

Stock price (¥)
800
700
600
500
400
300
200
100
Trading volume(share)060,000,000
40,000,000
20,000,000
0FY2007

FY2008FY2009FY2010FY2011High (¥)

729

520

356

745

690

Forward-Looking Statements

This annual report contains forward-looking statements, including KYB’s plans and strategies, 				

as well as statements that report historical results. Forward-looking statements involve such 				

known and unknown risks and uncertainties as economic conditions; currency exchange rates;

Low (¥)

326

110

127

309

333

laws, regulations, and government policies; and political instability in principal markets.

At Year-End (¥)

385

125

345

669

503

		

62

63

Automotive Components ・ Shock Absorber (SA), High Performance Single Cylinder Shock Absorbers, Semi-Active Air
Suspensions, Adjustable Shock Absorbers, Power Steering System, Electric Power Steering (EPS), Vane Pump for CVT
Hydraulic System, Electronic Control Unit, Power Assisted Steering Control Unit, Solenoid, Sensors, Noise ResistantPressure Sensors : Motorcycle Components ・ Suspension, Shock Absorbers for ATVs, Shock Absorbers for Snowmobiles: Construction Machinery, Industrial Vehicles, Agricultural Machinery・Hydraulic Pumps, Hydraulic Motors, Hydraulic
Cylinders, Hydraulic Valves, Integrated HST (Pump + Motor), Control Units for Forklift Trucks : Railroad Equipment ・ Semiactive Suspension Systems for Bullet Train (Shinkansen), Caliper Brakes with Tread Cleaning Systems, Oil Dampers forRailroad Vehicles, Inter-car Yaw Dampers, Controllers for Semi-active Suspension Systems for Bullet Train (Shinkansen): Industrial Machinery ・ Hydraulic Linear Actuators, Mini-buffer, Gas Springs/Free Lock Type, Buffers of Various Types,
Multiple Electromagnetic Valves, Proportional Electromagnetic Pressure and Flow Control Valves, Position Control
Solenoid Valves : Building, Civil Engineering, and Stage Equipment ・ Movable Roof Open/Close Systems, Measurement
and Compensation Systems for Uneven Sinking of Structure, Stage Mechanisms, Movable Floors Rearranging Viewers
Seats, Boom Headers (Hydraulic Tunnel Borers), Vibration Control Devices, Oil Dampers for Earthquakes, Housing Basic
Isolation Systems : Testers ・ High Precision Leak Testers, Portable Fatigue Testers, Gate Type Fatigue Testers, Torsional
Fatigue Testers, Internal Pressure Fatigue Testers, Shock Absorbers Testers, Noise Check Systems, Road Simulators
for Automobiles, Road Simulators for Motorcycles, Simulators for Research and Training : Aircraft Components ・ Servo
Actuators, Actuators, Light Weight Accumulators, Steering Actuators, Flight Control Actuators, Tail Skid Actuators, Wheel
Brakes, Reservoir Modules, Reservoirs for Space Rockets : Special-Purpose Vehicles ・ e Mixer, Concrete Mixer Trucks,
Granule Carriers, Inclined Mixers, Portable Retractable Large Audience Screen Display, Lift Bucket for Noise Abatement
Wall Inspection, Chipping Vehicle for Pruned Branches, Vehicle for Shredding Sensitive Documents : Marine Components
・ Cable Handling Systems, Hejacules (Self Propelled Hydraulic Jack), Conveyers for
Laser Cutting, Hydraulic Block Lifters : Environment, Welfare, and Disaster Prevention
・ Self-Propelled Waste Checker Conveyers, Earthquake Simulator Trucks, Biomixers(Rotating Drum High Speed Fermentation Equipment), Shock Absorbers for Chair
Skis, Vehicle Kneeling Down Systems, Solar Projectors

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