KYB Corporation

Annual Review 2010
Year Ended March 31, 2010

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

Thousands of
U.S. dollars

Millions of yen
2010

2009

2008

2007

2006

2010

For the year:
Net sales
Costs and expenses
Net income (loss)
Capital expenditures¥252,020
248,124661
10,081¥329,262
329,212(5,229)24,968¥387,080
368,809
8,397
23,564¥356,083
341,510
6,959
19,735¥290,455
283,733
2,917
15,677$2,709,892
2,668,000
7,108
108,398

At year-end:
Working capital
Total net assets
Total assets¥ 48,700
78,489269,361¥ 43,512
76,450269,655¥ 29,120
91,739289,738¥ 23,758
87,816285,146¥ 21,392
80,681
247,966$  523,656
843,968
2,896,355

Yen

Per share:
Net income (loss)
Cash dividends applicable to the year
Net worthNumber of employees

¥

3.03
—
336.55
10,977¥ (23.62)
3.50
327.97
11,370¥ 37.72
7.00
387.45
11,546

U.S. dollars¥ 31.33
7.00
372.6010,596

$0.03
—
3.62

¥ 12.636.00
343.99
8,387

Notes: 1. U.S. dollar amounts were translated from Japanese yen, for convenience only, at ¥93=U.S.$1, the approximate exchange rate prevailing on March 31, 2010.
2. This document has been translated from the original Japanese, the Annual Securities Report. All amounts are rounded down to the nearest million yen,unless otherwise noted.

Net Sales

Net Income (Loss)(Billions of yen)

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

(%)

8.3

252.0

6.9

329.2

387.0

356.0

4.0

2.9

290.4

9.9
8.7

–5.2

0.6

0.9

06

07

08

09

10

06

07

08

09

–6.6

10

06

07

08

09

10

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

Contents
Financial Review..............................................................1
Consolidated Balance Sheets..........................................2
Consolidated Statements of Income...............................4
Consolidated Statements of Cash Flows........................5
Corporate Information / Shareholder Information............6

Financial Review
Summary

Total property, plant and equipment decreased ¥7,498 million

Consolidated net sales decreased 23.5% compared to the pre-to ¥97,000 million (US$1,043,011 thousand). The reason for thevious fiscal year, to ¥252,020 million (US$2,709,892 thousand)decrease was that an investment budget in property, plant andin the fiscal year ended March 31, 2010. A sluggish worldwide

equipment had been cut drastically to adjust production scaleeconomy effected the Group’s sales and production in theaccording to a sales drop in the first half of the fiscal year.

first half of the fiscal year, but demand started to recover inthe second half.

Total liabilities decreased ¥2,332 million to ¥190,871 million (US$2,052,376 thousand). Although there was a ¥7,636

Amidst a difficult operating environment, the KYB Groupmillion increase in notes and accounts payable—trade due toaggressively pursued such structural business reform efforts

the recovery in production at the end of the fiscal year, theas the Companywide Cost Reduction Activity, resulting in a

Company anticipated repayment of loans as the fund manage-¥3,846 million increase in operating income to ¥3,896 million

ment of the Group companies improved by reducing capital(US$41,892 thousand).

investment cost.

Non-operating income and expenses, net increased ¥3,080

Total net assets increased ¥2,038 million to ¥78,489 million

million to ¥1,634 million, compared to the previous fiscal year.

(US$843,968 thousand). There were increases in valuation

This was attributable to a ¥2,650 million increase in foreign

difference on available-for-sale securities of ¥727 million, in

exchange gain, net, and a ¥476 million increase in government

foreign currency translation adjustments of ¥586 million, andsubsidies for employment adjustment to the Company and its

in retained earnings of ¥564 million, respectively, compared todomestic subsidiaries, despite a ¥202 million increase in inter-the previous fiscal year.

est expenses.
As a result, ordinary income increased ¥6,926 million to

Cash Flows¥5,530 million (US$59,462 thousand) compared to an ordinary

Net cash provided by operating activities increased ¥14,155

loss of ¥1,395 million in the previous fiscal year.

million, or 166.5%, to ¥22,654 million (US$243,591 thou-

Extraordinary income and losses, net totaled a loss ofsand). The primary source of cash was an increase in income¥3,859 million, ¥955 million higher than in the previous fiscal

before income taxes and minority interests to ¥1,670 million

year. There were increases in extraordinary losses, including(US$17,957 thousand) due to a recovery in operating income

business structure improvement expenses of ¥567 million,

supported by the Companywide Cost Reduction Activity.

special retirement expenses of ¥528 million, a loss on prior

Net cash used in investing activities decreased ¥13,676 mil-periods adjustment of ¥366 million, retirement benefit expens-lion, or 51.6%, to ¥12,828 million (US$137,935 thousand). The

es of ¥293 million, an impairment loss of ¥204 million, and amajor use of cash was ¥12,458 million (US$133,957 thousand)loss on disposal of non-current assets of ¥102 million.

for the purchase of property, plant and equipment.

Income before income taxes and minority interests amount-

Net cash used in financing activities amounted to ¥6,646

ed to ¥1,670 million (US$17,957 thousand) compared to a loss

million (US$71,462 thousand) compared to a ¥32,199 millionof ¥4,299 million in the previous fiscal year, and total income

cash inflow in the previous fiscal year. The major use of cash

taxes were ¥1,271 million (US$13,667 thousand).

was a net decrease in short-term loans payable to ¥7,096 mil-As a result, net income increased ¥5,890 million to ¥661
million (US$7,108 thousand), compared to a net loss of ¥5,229
million in the previous fiscal year.

lion (US$76,301 thousand).
As a result, cash and cash equivalents at end of period
increased ¥3,391 million, or 9.9%, to ¥37,663 million(US$404,978 thousand). There was a ¥9,826 million cash

Financial Condition

inflow from operating and investing activities. Net increase

Total assets amounted to ¥269,361 million (US$2,896,355

in cash and cash equivalents was ¥3,340 million (US$35,914

thousand), the same level as the previous fiscal year-end.

thousand).

Total current assets increased ¥6,989 million to ¥153,864
million (US$1,654,452 thousand). This was mainly the result of
an increase in cash and deposits of ¥16,049 million becauseof a change in fund management operation. On the other
hand, there was a decrease in short-term loans receivable of¥17,002 million as a source of temporary funds. In addition,
there was an increase in notes and accounts receivable—
trade of ¥9,797 million because of the sales recovery at theend of the fiscal year.

KYB Corporation Annual Review 2010

Consolidated Balance Sheets (Unaudited)
Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
As of March 31, 2010 and 2009

Thousands of
U.S. dollars

Millions of yen

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

2010

2009

2010

¥ 34,571
69,3035,000
15,141
13,024
8,373
3,553
140
5,279
(523)
153,864¥ 18,521
59,506—
16,791
14,8207,952
3,361
17,143
9,088(311)
146,874$  371,731
745,194
53,763
162,806
140,043
90,032
38,204
1,505
56,763(5,624)
1,654,452

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

25,38342,83522,601
1,889
1,427
2,863
97,00026,50846,851
21,978
888
4,416
3,855
104,498

272,935
460,591
243,022
20,312
15,34430,785
1,043,011

Intangible assets:   Goodwill   Software   Other    Total intangible assets

50
106
874
1,031

90
112
283
486

538
1,140
9,398
11,086

11,101
4,585
2,487
(710)
17,464
115,496¥269,361

10,277
5,616
2,609
(707)
17,795
122,780¥269,655

119,366
49,301
26,742(7,634)
187,785
1,241,892$2,896,355

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

Notes: 1. U.S. dollar amounts were translated from Japanese yen, for convenience only, at ¥93=US$1, the approximate exchange rate prevailing on March 31, 2010.
2. T his document has been translated from the original Japanese, the Annual Securities Report. All amounts are rounded down to the nearest million yen,unless otherwise noted.

Millions of yen

Thousands of
U.S. dollars

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
Provision for business structure improvement
Other    Total current liabilities

2010

2009

2010

¥ 54,963
29,072
266
5,091
888
594
3,974
52
119
10,138105,163¥ 47,326
31,951
186
8,056
217
1,535
4,515
59
—
9,512
103,362$   591,000
312,6022,860
54,742
9,548
6,387
42,731559
1,280
109,0111,130,785

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
Other    Total non-current liabilities    Total liabilities

66,821
1,644
4,512
11,033684
207
803
85,708
190,871

71,769482
4,512
11,125851
207
892
89,842
193,204

718,505
17,67748,516
118,634
7,355
2,226
8,634
921,591
2,052,376

19,113
20,256
33,620(990)
71,99919,113
20,25733,055(989)
71,437

205,516
217,806
361,505(10,645)774,183

1,490
45
4,760
(4,724)
1,572
4,917
78,489¥269,361

763
48
4,760
(5,310)262
4,750
76,450¥269,655

16,022484
51,183(50,796)
16,90352,871
843,968$2,896,355

Net assets:
Shareholders’ equity   Capital stock   Capital surplus   Retained earnings   Treasury stock    Total shareholders’ equity
Valuation and translation adjustments   Valuation difference on available-for-sale securities   Deferred gains or losses on hedges   Revaluation reserve for land   Foreign currency translation adjustment    Total valuation and translation adjustments
Minority interests    Total net assets    Total liabilities and net assets



KYB Corporation Annual Review 2010

Consolidated Statements of Income (Unaudited)
Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2010 and 2009

Thousands of
U.S. dollars

Millions of yen

Net sales
Cost of sales    Gross profit
Selling, general and administrative expenses    Operating income
Non-operating income:Interest income
Dividends income
Foreign exchange gains
Technical support fee
Equity in earnings of affiliates
Government subsidies for employment adjustment
Subsidies received for construction of plants
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses   Ordinary income (loss)
Extraordinary income:Gain on sales of noncurrent assets
Reversal of allowance for doubtful accounts
Surrender value of insurance
Gain on change in equity
Refund of prior periods taxes and dues
Total extraordinary income
Extraordinary losses:
Loss on prior periods adjustment
Loss on disposal of noncurrent assets
Impairment loss
Loss on valuation of investment securities
Loss on valuation of inventories
Loss on retirement of inventories
Special retirement expenses
Retirement benefit expenses
Business structure improvement expenses
Other
Total extraordinary losses   Income (loss) before income taxes and minority interests
Income taxes—current
Refund of income taxes
Income taxes—deferred
Total income taxes
Minority interests in loss   Net income (loss)

2010

2009

2010

¥252,020
213,592
38,42734,531
3,896¥329,262
287,663
41,59941,54949$2,709,892
2,296,688
413,194371,301
41,892

172
178
104
517
977
889
565
734
4,138

250
235
—
530
581
413
—
1,150
3,161

1,849
1,914
1,118
5,559
10,505
9,559
6,075
7,892
44,495

2,058
—
445
2,503
5,530

1,856
2,546
203
4,606
(1,395)

22,129—4,785
26,914
59,462

95
23
173
164
166
624

37
116
—
—
—
154

1,022
247
1,860
1,763
1,785
6,710

366
519
1,232
288
—
—
1,045
293
567
170
4,484
1,670
1,043
(120)
348
1,271
(261)
¥    661

—
417
1,028
607
317
170
517
—
—
—
3,058
(4,299)
1,017
(47)
18
988
(58)
¥  (5,229)

3,935
5,581
13,247
3,097——
11,237
3,151
6,097
1,828
48,215
17,957
11,215(1,290)3,742
13,667(2,806)$    7,108

Yen

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

¥3.03
2.50

U.S. dollars¥(23.62)
3.50

$0.03
0.03

Notes: 1. U.S. dollar amounts were translated from Japanese yen, for convenience only, at ¥93=US$1, the approximate exchange rate prevailing on March 31, 2010.
2. T his document has been translated from the original Japanese, the Annual Securities Report. All amounts are rounded down to the nearest million yen,unless otherwise noted.

Consolidated Statements of Cash Flows (Unaudited)
Kayaba Industry Co., Ltd. and its Consolidated Subsidiaries
Years ended March 31, 2010 and 2009

Millions of yen

Thousands of
U.S. dollars

2010

2009

Cash flows from operating activities:
Income (loss) before income taxes and minority interests
Depreciation and amortization
Gain on sales of non-current assets
Loss on disposal of non-current assets
Loss on sales and valuation of investment securities
Impairment loss
Amortization of goodwill
Amortization of 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’ bonuses
Interest and dividends income
Gain on cancellation of insurance contract
Interest expenses
Equity in earnings of affiliates(Increase) decrease in notes and accounts receivable—trade
Decrease in inventories
Increase (decrease) in notes and accounts payable—trade
Increase (decrease) in accounts payable—other
Increase in provision for business structure improvement
Subsidy income
Other, net   Subtotal
Interest and dividends income received
Interest expenses paid
Income taxes paid
Income taxes refund
Proceeds from insurance income
Proceeds from subsidy    Net cash provided by operating activities¥  1,670
15,318
(95)
519
288
1,232
39
(37)
230
(108)
(511)
(6)
(350)
(173)
2,058
(977)
(9,904)
2,831
7,712
581
119
(565)
1,063
20,938740(2,118)
(473)
2,978
175
412
22,654¥ (4,299)
16,551
(37)
417
607
1,028
234
(36)
(94)
(1,096)
922
(60)
(486)
—
1,856
(581)
32,025
1,674(30,178)(3,621)——(282)
14,542949(1,812)(5,224)
44
—
—
8,499

$   17,957
164,710(1,022)
5,581
3,097
13,247
419
(398)
2,473
(1,161)(5,495)(65)(3,763)(1,860)22,129(10,505)(106,495)
30,441
82,925
6,247
1,280(6,075)
11,430225,140
7,957(22,774)(5,086)32,022
1,882
4,430
243,591

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 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(1,946)
1,273(12,458)
473
(8)
—
(329)
299
(131)
(12,828)(1,574)
1,170(24,432)395(1,125)
(473)
(403)
260
(322)
(26,505)(20,925)
13,688(133,957)
5,086
(86)
—
(3,538)3,215(1,409)(137,935)

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
Proceeds from stock issuance to minority shareholders
Cash dividends paid to minority shareholders    Net cash provided by (used in) financing activities(7,096)(227)
4,354(4,184)
(30)
(3)
0
—
664
(123)
(6,646)2,954(92)
36,475(4,550)
(55)
(812)
3
(1,558)—(164)
32,199(76,301)(2,441)
46,817(44,989)
(323)
(32)
0
—
7,140
(1,323)(71,462)160
3,340
34,27250¥ 37,663(1,234)
12,95920,073
1,239¥ 34,272

1,720
35,914
368,516538$ 404,978

Effect of exchange rate change on cash and cash equivalents
Net 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
Cash and cash equivalents at end of period

2010

Notes: 1
 . U.S. dollar amounts were translated from Japanese yen, for convenience only, at ¥93=US$1, the approximate exchange rate prevailing on March 31, 2010.
2. T his document has been translated from the original Japanese, the Annual Securities Report. All amounts are rounded down to the nearest million yen,unless otherwise noted.



KYB Corporation Annual Review 2010

Corporate Information(As of March 31, 2010)

Head Office:World Trade Center Bldg., 4-1, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo 105-6111, Japan
Tel: 81-3-3435-3511 Fax: 81-3-3436-6759
URL: http://www.kyb.co.jp

Date of Establishment:

November 25, 1948

Fiscal Year:

April 1 to March 31

Paid-in Capital:¥19,113 million

Number of Employees:

10,977 (Consolidated basis)

Securities Traded:

Tokyo Stock Exchange (First Section)

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

R&D Centers:

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

Sales Branches:

Nagoya, Osaka, Fukuoka, Hamamatsu, Hiroshima

Overseas Offices:

Europe Branch
Kimpler Str. 336, 47807 Krefeld, Germany
Tel: 49-2151-9314365 Fax: 49-2151-9314330
California Representative Office5790 Katella Ave., Cypress, CA 90630, U.S.A.
Tel: 1-562-799-3862 Fax: 1-562-799-3863

Shareholder Information(As of March 31, 2010)

Common Stock Issued:

222,984,315 shares

Number of Shareholders:

15,156

Transfer Agent and Registrar:

Mizuho Trust & Banking Co., Ltd.

		

2-1, Yaesu 1-chome, Chuo-ku, Tokyo 100-0005, Japan

Major Shareholders:		
Name
Shareholdings(Thousands)

Japan Trustee Services Bank, Ltd. (Trust Account)

29,991

13.45

Toyota Motor Corporation

19,654

8.81

Trust & Custody Services Bank, Ltd.

16,234

7.28

The Master Trust Bank of Japan, Ltd.

14,322

6.42

Meiji Yasuda Life Insurance Company

10,046

4.51

8,920

4.00

7,952

3.57

Hitachi Construction Machinery Co., Ltd.
4,373 (1.96%)

Bridgestone Corporation

Mizuho Corporate Bank, Ltd.

12,655(5.68%)

101,711(45.61%) 7,163

3.21

Sompo Japan Insurance Inc.

6,744

3.02

The Ogaki Kyoritsu Bank, Ltd.

5,914

2.65

126,941

56.93

Total

Composition of Shareholders: 4,373 (1.96%)(Thousands)

Percent of
Total Shares
Issued12,655(5.68%)

101,711(45.61%)

49,163(22.05%)55,082(24.70%)� Financial institutions
� Other domestic companies
� Individuals and others
� Foreign companies� Treasury stock

49,163(22.05%)55,082(24.70%)� Financial institutions
� Other domestic companies
� Individuals and others
� Foreign companies� Treasury stock

Printed in Japan

6