NTN Report 2019
For the fiscal year ended March 31, 2019

About Us

EuropeCompany name

32

31
29 28
30

35

Paid-in capital

Holdings as percentage (%)

28 NTN Wälzlager (Europa) G.m.b.H.

EUR 14,500,000

29 NTN Kugellagerfabrik (Deutschland) G.m.b.H.

EUR 18,500,000

100

30 NTN Mettmann (Deutschland) G.m.b.H.

EUR 25,000100

31 NTN Antriebstechnik G.m.b.H.

EUR 50,000100

32 NTN BEARINGS (UK) LTD.

GBP 2,600,000

100

33 NTN-SNR ROULEMENTS

EUR 123,599,542

100

34 NTN Transmissions Europe

EUR 82,843,207

100

35 NTN TRANSMISSIONS EUROPE CREZANCY

EUR 11,500,000

100

100

(100)

(0.04)(100)

G NTN-SNR R&D Center

34

Six consolidated subsidiaries in addition to the Group companies above

Bearing technology is used to smoothen
the rotating parts of all types of machines.
With more precise bearing technology,
shafts can rotate smoother, minimizing energy loss.
Bearings are thus a technology for saving energy.
The technology developed with bearings
will smoothly change the future of electric vehicles,
robots and even society based on natural energy.

33

G

NTN’s ESG Strategies

Asia and Others
Company name46
51 50 H
43

49
48 52

38
42

100

37 NTN BEARING-MALAYSIA SDN. BHD.

MYR 10,000,000

100

(100)

45
57 47

38 NTN BEARING-THAILAND CO., LTD.

THB 780,000,000

100(99.999)

THB 1,311,000,000

100(99.999)

53 54

40 NTPT CO., LTD.

THB 700,000,00075(10.73)41 PT. NTN BEARING INDONESIA

USD 7,300,000

100

(100)

42 NTN Bearing India Private Ltd.

INR 300,000,000

100

(0.1)

43 NTN NEI Manufacturing India Private Ltd.

INR 4,808,000,000

97.4(24.96)44 NTN KOREA CO., LTD.

KRW 500,000,000100

45 NTN (CHINA) Investment Corporation

USD 256,545,000100

46 NANJING NTN CORP.

USD 180,000,000

100(86.67)47 SHANGHAI NTN CORP.

USD 166,500,000

95(15.72)48 Guangzhou NTN-Yulon Drivetrain Co., Ltd.

USD 12,500,000

60

(12)

49 Xiangyang NTN-Yulon Drivetrain Co., Ltd.

USD 34,000,000

60

(60)

50 NTN-RAB (CHANGZHOU) CORP.

USD 28,440,000

100

51 NTN-LYC (LUOYANG) BEARING CORP.

USD 73,800,00050

52 NTN CHINA LTD.

HKD 2,500,000

100

44 56

39
40

36

41 58

39 NTN Manufacturing (Thailand) CO., LTD.

53 TUNG PEI INDUSTRIAL CO., LTD.
54 TAIWAY LTD.
55 BEIJING NTN-SEOHAN DRIVESHAFT CO., LTD.

Production and sales

R&D base

OthersTWD 1,257,232,620

27.35

TWD 160,000,000

36.25(0.97)(50)

USD 6,000,000

40

KRW 75,780,330,000

49

57 NTN-DONGPAI (Shanghai) Bearing Sales Co, Ltd.

USD 1,460,000

25

(25)

58 PT. TPI MANUFACTURING INDONESIA

USD 55,415,050

28.8(0.002)56 Seohan-NTN Bearing CO., Ltd.

Production

Holdings as percentage (%)

SGD 36,000,000

37

Sales

Paid-in capital

36 NTN BEARING-SINGAPORE (PTE) LTD.

55

(6.67)H NTN China Technical Center

One consolidated subsidiary in addition to the Group companies above

3. Figures in curved brackets under “Holding as percentage” indicate the percentage of indirectly owned holdings, and are included in the total holding.
4. None of the companies has submitted a securities registration statement or securities report.
5. Of the above subsidiaries, NTN BEARING CORP. OF AMERICA and NTN-SNR have sales (excluding internal sales between consolidated companies) accounting for more than 10% of consolidated sales.
Figures for NTN-SNR are consolidated figures encompassing eight NTN-SNR subsidiaries.
6. Of the above subsidiaries, I to VIII are NTN Corporation business units, 1 to 25 and 28 to 52 (in symbols) are consolidated subsidiaries, and 26, 27 and 53 to 58 (in symbols) are affiliates subject to theequity method.

02 114

ReportNTN NTN
Report2019 2019

Financial / Company Data

* “NAMERAKA” means “smooth” in Japanese.

01 NTN Report 2019

NTN’s Business Strategies

Make theWorld*“NAMERAKA ”

The Founders’ Spirits that NTN has embraced since its founding in 1918 are the Frontier Spirit, which encourages us to keep
challenging, and the Coexistence and Co-prosperity Spirit, which encourages us to develop together with society.
These Founders’ Spirits were incorporated into the corporate philosophy as NTN’s DNA, and have been passed down to the employees
for over 100 years.
In order to put the corporate philosophy into practice, NTN Group employees use the NTN SPIRIT, the mindset and actions they are toaim for, as a cornerstone of their own work.
By putting our corporate philosophy into practice, we aim to help solve global social issues through our technical expertise andservices, and achieve a sustainable smooth society.

CONTENTS

Corporate Philosophy
We shall contribute to international society
through creatingnew technologies and developing new products.

About Us

05
07
09

A Century in Business
Revenue Structure, Main Products
Financial/Non-Financial Highlights

NTN’s
Business
Strategies

11
13
15
17
19
25
27
29
31
33
35

Value Creation Process
Value Creation Risks and Opportunities
Value Creation in the Value Chain
Medium-term Management Plan “DRIVE NTN100”
Management Commitment
Special Feature 1
Special Feature 2
Research & Development
Business Overview: Aftermarket
Business Overview: Industrial machinery market
Business Overview: Automotive market

NTN’s
ESG Strategies

37
41
45
49
51
52
53
55
59
62
63
65
67
69

Outside Director Dialog
Officer Profiles
Corporate Governance
Information Disclosure
Internal Control/Internal Audit
Risk Management
Compliance
CSR Management
Human Resources
Safety and Health
Procurement
Monozukuri
Contribution to Local Communities
Environment

Financial /Company Data

77
79
81
83
84
108
109
111
112
113

A Message from CFO
Consolidated Financial Indicators (Past 11 Years)
Management Performance/Financial Analysis
Risk Factors
Consolidated Financial Statements

For New Technology Network
1 Creation of original technologies.
2 Offering the technologies for additional values and service that are suitable for each customer and end user.
3 Improvement of employees’ standard of living, distribution of fair returns to stockholders, and contribution tosociety based on the steady growth of our business.
4 Promotion of globalization, and formation of management systems/corporate organization which are essential for
NTN, as an international leading company.

NTN SPIRIT
CredosGuidelines

Buds appear when
we challengewith frontier spirit

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

Collaboration

Leaves grow throughthe spirit of collaboration
with coexistence andco-prosperity

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

Commitment

Flowers bloom andfruits grow throughfulfilling our commitments

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

Challenge

Independent Auditor's Report
Non-Financial Data (ESG Factors)
Third-Party Opinion
Investor Information
Global Network

Achieving a Smooth Society*About product photos: some photos are cross-sectional models of products

Editorial Policy
NTN believes that the active disclosure ofmanagement plans and business results, aswell as its basic policy for corporate social
responsibility (CSR), CSR activities, andenvironmental preservation initiatives, among
other information, will help garner theunderstanding and support of all stakeholders.
This “NTN Report,” which has been issued
since the fiscal year ended March 31, 2010
after combining the “Annual Report” with the“CSR Report,” is part of this active approach to
information disclosure.

03 NTN Report 2019

Organization Covered andReporting Period
Reporting period:
Fiscal year ended March 31, 2019
(April 1, 2018 to March 31, 2019)
Includes some activities for the fiscal year
ending March 31, 2020.
The earing forecast of fiscal year ending
March 31, 2020 reflects the content
revised in July 2019.
Organization covered:
NTN Group
Includes some reports for NTN only.

Reference Guidelines
International Integrated Reporting Council (IIRC)
International <IR> Framework

Types of Information Provided by NTN
MoregeneralNTN Report

Ministry of Economy, Trade and Industry
Guidance for Integrated Corporate Disclosure and Company-Investor
Dialogues for Collaborative Value Creation

Disclaimer
This report contains future results and forecasts regarding NTN’s
future plans, strategies, and business results. Please understand that
actual business results may vary from the forecasts made herein by theCompany.

Moredetailed

Securities reports

Financial Information

Business reports(to shareholders)

Reports on
corporate governance

Financial report

CSR activities information(on website)

This report presents both financial and non-financial
information, focusing on especially important topics.
More detailed financial information is available in the
securities reports and in Financial Reports. Detailed
information on the Company’s CSR activities is alsoavailable on our website.

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

Non-financial Information
NTN Report 201904

About Us

of Japan’s first aerospace
bearing plant1986 Constructionof bearings to the Hayabusa 2
asteroid probe2014 Provision

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

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

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

Jet engine main shaft bearings

Jet engine cross-sectionof ball bearing research andmanufacturing at Nishizono Ironworks
1918 Startof driveshaft
manufacturing
1963 Start

Young engineer Jiro Nishizono started the Nishizono Ironworks in
Kuwana, Mie Prefecture in 1918 at the age of 21. Noboru Niwa
(later the Company’s first president) was running a machinery andtool shop called Tomoe Trading Co. that he had started in Osaka at
the age of 22.
In 1922, when Japan was tackling the challenge of domestic
production of bearings, Tomoe Trading Co. successfully bid foran entire cargo of bearings that had been aboard a Swedish
vessel that sank in Japan. Niwa had had business with Nishizono
Ironworks before, and asked them to refurbish the bearings. Niwa
sold the bearings and bought grinders with the proceeds of thesale. Bearing manufacturing got fully underway. The Company’s
products have carried the NTN logo, which stands for Niwa, Tomoe
Trading and Nishizono, since the start of the production.

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

About Us

A Century in Business

NTN’s Business Strategies

Spherical plain
bearing adopted
for Hayabusa 2

NTN’s ESG Strategies

First driveshaft
model produced©JAXA

100th anniversary
2018 Company’s

Noboru Niwachanges to
NTN Corporation
1989 Name

Jiro Nishizono

The Company was renamed “NTN
Corporation,” representing “For New
Technology Network,” which was adopted
as a new direction the Company should
moving forward to.

of NTN Mfg. Co., Ltd.
with capital of 50,000 yen
1927 Establishment

Financial / Company Data

The bearing at thetime of the start ofthe business

NTN celebrated its 100th anniversary on March 1, 2018, and took theopportunity to launch a communication keyword: “Make the WorldNAMERAKA, NTN.”*We are putting out products including bearings on the market thatmove machines smoothly. We will continue our efforts to achieve asmooth society by smoothing the lives of people and society aroundus. In order for sustainable growth over the next 100 years, we alsoestablished our long-term vision, and to realize it, created a Mediumterm Management Plan “DRIVE NTN100.”*“NAMERAKA” means “smooth” in Japanese.

1964

2008

NTN supplies journalbearings for the first
0 Series Shinkansen trains

The Company has helped enable faster and lighter rolling stocks bydeveloping technology tailored to the evolution of high-speed railand providing high-quality, high-reliability products.
NTN’s products have been adopted for the first 0 Series
Shinkansen as well as the latest model Shinkansen. Our journalbearings for 0 Series Shinkansen trains were recognized as
Tribology Heritage* by the Japanese Society of Tribologists.

1937*Tribology Heritage: Tribology related technology and things recognized by theJapanese Society of Tribologists as having a particularly important contribution to
the development of science and technology

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

1960~1970s

becomes the first Japanese machinery
manufacturer to win the Deming Prize*
1954 NTN
The Deming Prize is one of the world’s most prestigious awards for
TQM (total quality management). NTN is not only the first bearing
manufacturer, but also the first Japanese machinery manufacturer
to win the award. The Company was one of the first machinery
manufacturers to adopt statistical quality control, and the quality
control was applied throughout the Company. This effort wasrecognized by this honor.

The latter*Deming Prize: A prize created by theJapanese Union of Scientists andEngineers to honor the achievementsof W. Edwards Deming, a US engineer,statistician, professor, author, lecturer,
and management consultant who
popularized statistical quality control inpostwar Japan and built the foundationneeded to raise the quality of Japanese
products to world standards.

05 NTN Report 2019

Seeking to expand business in theEuropean market, the Company invested
in French bearing manufacturer SNR
ROULEMENTS in 2007, making it aconsolidated subsidiary the following year.
The addition of SNR ROULEMENTS
to the NTN Group has boosted Europeansales, making our business development
more geographically balanced, with sales
from Japan, the Americas, Europe, andAsia and other regions each accounting
for approximately 25% of the total.

Current head office building

NTN-SNR ROULEMENTS(Current head office building)About Bearings

Overseas sales and production expansion/augmentationof hub bearings
1970 Evolution

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

SNR ROULEMENTS
acquisition

Outer ring

Inner ring
GEN1
Rolling element(ball/roller)
Retainer

GEN2

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

GEN3

NTN Report 201906

About Us

Net Sales

About Us

Revenue Structure, Main Products

Fiscal year ended March 31, 2019
Automotive
applications

Aftermarket
applications

Automotive
applications

Aftermarket
applications

Asia and Others

491.3 billion yen(67%)

118.8 billion yen(16%)

8.7 billion yen(32%)

15.2 billion yen(56%)

157.0 billion yen 207.2 billion yen
(28%)
(21%)

Construction
machinery

Gearboxes

Industrial machinery
applications

123.4 billion yen(17%)

3.1 billion yen(12%)

Net sales byregionEuropeAmericas167.8 billion yen(23%)

201.5 billion yen(28%)

Aftermarket applications
Mining machinery

P.31-32

Metal industry
equipment

Paper-making
machinery

Food processing
machinery

Aerospace

Used for worldwide jetengine applications

Cement equipment

Helping ensurehigh robot
productivity

Machine tools

Helping ensurehigh machining
precision

Rolling stock

Helping
ensure safetyof worldwide
high-speed
railways

Helping ensurestable foodsupplies

Meeting growing
renewable energy
demandOfficeequipment

Electronic devices

Helping ensuresmooth copier/multifunctional
printer
operation

Used for hard drive
and thin fan motor
applications

Automotive applications
Split needle roller bearings(for camshafts)[Engines]

Medicalequipment

Financial / Company Data

Industrial machinery
applications

Wind turbines

NTN’s ESG Strategies

Operatingincome bybusiness sector

Agricultural
machineryJapan

Applications
for resource
mining and civilengineering

Net sales bybusiness sector

P.33-34
NTN’s Business Strategies

733.6 billion yen Operating Income 26.9 billion yen

Industrial machinery applications

CT scanner andartificial heart
applications

P.35-36
High-density, high-strength sintered
gears for starter motors

Auto tensioner with thevariable damper
mechanism for
ISG-equipped engine

Pulley bearings forhigh-speed rotation

Mechanical clutch units fornext-generation steeringsystems[Accessories][Steering components]
Spherical roller
bearings withreinforced
retainers

Sealed fourrow tapered
roller bearings

ULTAGE
spherical roller
bearings
Type EA,
Type EM

Auto parts
Part kits with combinations ofseveral bearings

PolyLube sealed
bearings forfood processing
machinery

PlummerblocksNeedle roller bearings forrocker arms

[Seats]Clutches forseat lifters

Long-life series
TAB bearings

Technical training / maintenance tools
Induction heater[Axle/Drivetrain][Automatic /manual transmissions]Self-centering hydraulicpuller with arms

[Brakes]
Ball screw drive
modules for electric
hydraulic brakes

Technical service units

Hub bearings

Driveshafts[Transmissions] CVTs
ULTAGE tapered roller
bearings for automotive
applications

07 NTN Report 2019

BEAREE
seal rings

Thrust needle roller
bearings

Needle roller and cageassembly bearings forplanetary gear

NTN Report 201908

About Us

About Us

Financial / Non-Financial Highlights
Financial Capital

Non-financial Capital

Net Sales

Operating Income/Operating Margin

733.6

26.9

billion yen(Billions of yen)

800.0

billion yen

701.9 717.0 683.3

80.0
690.0

600.0

3.7 %

Operating income(Billions of yen)744.4 733.6

Operating Margin

6.2% 6.7%

Operating margin

47.8

40.0

35.6

(Billions of yen)

30.0

15.0

39.6

2015 2016 2017 2018 2019 2020

(Fiscal years
ended/ending

0(Forecast) March 31)

Net Income (Loss)/
Average Shareholders’ Equity (ROE)(Fiscal years
ended/ending

Equity to Capital Ratio

(%)

(yen)

15

40

18

10

30

8.4

28.6 29.2 28.7

30.2

6.3
5
1.3

0

years
2015 2016 2017 2018 2019 2020 (Fiscal
ended/ending(Forecast) March 31)

0

years
2015 2016 2017 2018 2019 2020 (Fiscal
ended/ending(Forecast) March 31)

Inventories /Inventory Turnover Ratio

Capital Expenditures /Depreciation and Amortization

Inventories

Capital Expenditures

194.5

Inventory Turnover Ratio

billion yen(Billions of yen)

3.8

Inventory turnover ratio

Inventories

300.0
240.0
180.0

45.2

(Billions of yen)

Depreciation and Amortization

billion yen

38.9

billion yen

Capital expenditures

Depreciation and amortization

60.0
3.8

4.0

184.1 178.2

4.0

4.1

171.5 179.7

4.0

3.8

10

6

194.5

173.0

40.0

120.0

0

2015 2016 2017 2018

Net D/E Ratio

1.16

45.2
31.3

36.3

38.3

35.4 36.6

37.6 37.5

38.9

40.5

1.16 1.22
0.93

09 NTN Report 20190

Either ‘Excellent’ or ‘Good’95 %‘Needs much improvement’

5%

40

40

20

20

(Fiscal years
ended/ending(Forecast) March 31)50

241,000

metric
tons

50

61.7

20

Overseas Scope 1

57,000metrictons

Domestic Scope 1
Overseas Scope 1

64.0

61.9

60.6

metric
tons

51

51

28.5

29.4

327,000

metrictons

Domestic Scope 2
Overseas Scope 2

30.1

66.3

32.7

49

Japan

3

(10,000 m3)

Japan

Overseas400

134 128 133

132

347 343

4.8

5.4

5.7

5.8

23.0

22.4

22.8

23.6

24.1

23.8

100

134

(10,000
metric tons)

132

15
10

196 196 195 194

213

211

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

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

2015 2016 2017 2018 2019 2020

0

5.4
2015

5.1
2016

4.9
2017

4.9
2018

4.8
2019

4.7
2020

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

0

Recycling rate

2015 2016 2017 2018 2019 2020

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

097.4 %

Generated waste(Japan)Recycling rate

Generated waste(Overseas)

98.2% 98.2% 97.7% 97.8% 97.4% 98.6%
15.4 16.0

17.1 17.7 17.7 18.0

8.9

9.4 10.8

6.5

6.6

5

10
2015 2016 2017 2018 2019 2020

*Number of respondents: 104

Waste Quantities and Recycling Rates(Japan/Overseas)

20

200

4.6

74%

177,000 metric tons

3

330 324 328 326

4.9

21%

Generated waste

Overseas2.13 million m 1.34 million m

32.0‘Excellent’‘Good’(Fiscal years
ended/ending(Forecast) March 31)

2015 2016 2017 2018 2019 2020

300
28.4

49

Water Consumption (Japan/Overseas)

Overseas Scope 2

67.3

50

0

2015 2016 2017 2018 2019 2020

Domestic Scope 2

Fiscal year ended March 31, 2019

0%

60

30
0.5

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

88(Forecast)*Organization covered: NTN only

60

40

10.0
2015 2016 2017 2018 2019 202088

87

2015 2016 2017 2018 2019 2020 (April hires)‘Needs some
improvement’

60

16

Customer Satisfaction Survey
Responses

100

93

90

0

80

48,000

1.05

14

80

(10,000 metric tons)

1.11 1.11(Forecast) March 31)

(%)

87

(Fiscal years
ended/ending

2015 2016 2017 2018 2019 2020

49 %Domestic Scope 1

1.5

0

(%)

70

20

19

5

90 %

*Figures for domestic production and non-production bases have undergone
third-party verification.

times

21

15

Ratio of Overseas Production

CO2 Emissions [Scopes 1 and 2]

20.0

60.0

25

66

65

20

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

2015 2016 2017 2018 2019 2020

0

50.0
40.4

67

66

10

years
2019 2020 (Fiscal
ended/ending(Forecast) March 31)

2.0

50.0

30.0

0

10

15

10
–2.9

66

20

100
15

32

30
66

Ratio of Local Procurement

yen

12

6

35

40

0

(Fiscal years
ended/ending

20
1.2

–5

-7.0
2015 2016 2017 2018 2019 202015
27.4 26.9(%)

Financial / Company Data

15

(%)

100

60

10.0

(Forecast) March 31)

(%)

10.5

3.0

Cash Dividends

27.4 %−2.9 %

–100

16 %

20.0

5.0

(Forecast) March 31)

65 %
80

21.0 21.70

15.0Percentage of Hired Female Graduates*

15.0
2.8

2015 2016 2017 2018 2019 2020

2.8% 2.8% 3.0% 2.9%

Percentage of Employees Overseas

NTN’s ESG Strategies

0

Ratio of R&D expenditures to sales

19.2
18.1 18.5

20.0

10.0

20.0

3.0 %

R&D expenditures

2.6% 2.6%

25.0

20.4

26.9
200.0

billion yen

30.0

20.0

2.2%

Ratio of R&D expenditures to sales

21.7

billion yen

23.4

3.7%
43.9

R&D expenditures(Billions of yen)

5.2% 5.3%

60.0

400.0

−7.0

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

NTN’s Business Strategies

Operating income

Net Income (Loss) Attributable to
Shareholders (parent company)

6.3

10.8 10.9
10.9

11.1

6.8

6.9

6.8

2015 2016 2017 2018 2019 2020

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

NTN Report 201910

NTN’s Business Strategies

About Us

Value Creation Process
Based on our corporate philosophy, we create products such as bearings and driveshafts by applying the resources we haveIntellectual
CapitalProviding Solutions toSocial Issues

Environmental
Pollution
Technological Innovation
and Changes inIndustrial Structure

P.65

Original
Technologies

P.13

Safety and Comfort

Human Capital

Corporate
Philosophy

P.59

Services

Sales

Human
Resources

We shall contribute to internationalsociety through creating
new technologies and developing
new products.

Social and
Relationship Capital

NTN SPIRIT

Industrial
MachineryBusiness(Challenge/Collaboration/
Commitment)

Achieving a
Smooth Society
Automotive
Business

Procurement/
Local Communities
P.63,67

Trade Issues

Value Creation
Risks and Opportunities

Sustainable Society Using
Natural Energy

Monozukuri

Financial / Company Data

Changes in
Demographics

Reducing Energy Loss

Aftermarket
Business

Procurement

Rising Human
Rights Awareness

R&D

Uniqueness to NTN(Competitive Advantages)

Climate Change
Growth ofEmerging Countries

Values Offered
to Society(Outcome)

P.31

15

Value Chain P.

P.29

Social Issues
Anticipated in Future

Business Activities
to Create Values

NTN’s ESG Strategies

NTN’s
Business ModelManagement
Capital (Input)

R&D

Manufacturing
Capital

NTN’s Business Strategies

accumulated over our 100-year history since our foundation to a value chain consisting of “R&D”, “Procurement”, “Monozukuri” and“Sales” processes.
Our business activities help bring solutions to social issues while providing value to all our stakeholders. These activities are also
designed to further improve our corporate value through reinvestment of applied resources.
NTN will continue working to achieve a smooth society by making proposals for ensuring sustainable society.

Increased Corporate
Value (Output)

Globalization

Numerical targets for the final fiscal year
(fiscal year ending March 31, 2021)of the Medium-term Management Plan “DRIVE NTN100”

Natural Capital

New Businesses
Green Energy
Products Business

Environment

800.0 billion yen
Operating Income
57.0 billion yen
Operating Margin
7.1 %Net Income Attributable
to Shareholders
30.0 billion yen(parent company)
Net Sales

M o n o zu k u ri

P.69

Fostering the
Next Generation
Environmental
Conservation
Contributions to
Local Communities

Financial Capital

Finance

SocialContributions(Foreign exchange rates:
1 USD = 110 JPY, 1 EUR = 115 JPY)

P.77

Growth Strategies
Medium-term Management Plan “DRIVE NTN100”

11 NTN Report 2019

P.17

Foundation for Business Activities
Corporate Governance

P.45

Expansion ofBusiness Activities

NTN Report 201912

NTN’s Business Strategies

About Us

Value Creation Risks and Opportunities
The NTN Group is aware of social issues anticipated in the future, such as the climate change, growth of emerging countries, rising
human rights awareness, changes in demographics, environmental pollution, technological innovation and changes in industrial
structure, and trade issues as well as Sustainable Development Goals (SDGs), and is therefore working to strengthen its businessactivities and foundation that supports them to respond to the risks and opportunities surrounding its businesses. These measures not
only enable sustained growth of the Group's businesses, but also help bring solutions to social issues.

NTN’s Business Strategies

NTN’s Efforts

Risks and Opportunities Associated with NTN’s Management

Strengthen the Businesses

Strengthen the Foundation

Relationship to SDGs

Response to Paradigm Shifts• Spread of electric vehicles(EVs)• Electrification of industrial
machinery• Advances in medical
technologies• Soaring material costs• Cyber threats• Infringement of intellectual
property• Acquire the latest technologies using NTN Next
Generation Research Alliance Laboratory, conduct
R&D in anticipation of customer needs, and shorten
development time by utilizing CAE• Provide new added value such as sensing technology, in
addition to further development of products for EVs andimprovement of performance of core products• Propose products for advanced medical treatment suchas microscopic coating applicators• Changes in end-user needs• Improve IT governance and strengthen information
security by introducing a new core IT system• Strictly manage intellectual property

NTN’s ESG Strategies• Expansion of the sharing
economy• Spread of AI/IoT• Reduce cost through variable cost reformation andreduce materials by advanced Monozukuri

Response to Environmental Issues• Reduction in CO2 emissions• Reduction in environmental
impact• The rise of the renewableenergy industry• Water shortage• Further improve performance of the products• Laws and regulations
associated with the climatechange• Provide CMS technologies to prevent opportunity loss forapplication in renewable energy such as wind turbines• Provide natural energy products such as “N3 N-CUBE”

Financial / Company Data

• Demands for energysaving products for various
machinery types• Reduce water consumption by analyzing water risks andresponding to them, and advanced Monozukuri• Strictly prohibit the use of regulated substances• Further promote energy saving activities in businesses• Response to natural
disasters

Changes in Demographics Issues• Medium- to long-term labor shortage• Growth of emerging countries (improvement of QOL)

• Achieve high productivity even with a decrease in humanresources by utilizing CAE technologies and RPA• Issue of business succession

Globalization of the Business• The rise of low-cost
products from emerging
countries• Global governance• Foreign exchange
fluctuations

13 NTN Report 2019• Provide products that meet the growing demand formachinery to support infrastructure and for robots
associated with labor savings in manufacturing processes• Violation of competitionlaws• Sustainable procurement• Quality assurance systems
that conform to the same
standards worldwide• Trade frictions and tariffs• BCP/BCM• Expansion of internet sales• Response to child labor andconflict minerals• Focus on high value-added products, such as byoutsourcing standard products• Develop a system that enables timely delivery as
required by customers, such as by securing products for
immediate delivery• Reduce foreign exchange sensitivity by expansion of local
production and local procurement, and pass expenses
incurred on to customers• Support business continuity through dialog with
suppliers, and find new business partners• Develop a quality assurance system with “Made by NTN”
• Globalize internal control and compliance, offer
various seminars in accordance with local laws andcircumstances, prepare BCP, and conduct training• Promote CSR (Corporate Social Responsibility)
procurement, which prioritizes procurement frombusiness partners that proactively take CSR initiatives,promote green procurement, and find new suppliers

NTN Report 201914

NTN’s Business Strategies

About Us

Value Creation in the Value Chain

R&D P.29-30
Japan

Europe490 %Americas

Regions
WorldwideChina

CSR questionnaires to suppliers
R&D Centers

Technical Centers

5

4

Sales P.31-36
Representatives from our sales divisions regularly visit customer development
sites and perform consultative sales activities by precisely coordinating amongcustomers and related-divisions within the Company. They propose products andprovide consultations to solve issues to meet the needs for the new products thatthe customers are developing, and respond to any problems with existing models
that are being mass produced.
Representatives from sales engineering divisions provide technical services
required to solve issues by rapidly identifying technical needs of the customers.
As for the products of which we have started mass-production and delivery,
we are working to maintain optimal stock levels for customer productionplans and extensive lineups. We also make efforts to further improve customer
satisfaction by providing after-sales technical services including on-site visits
to hold seminars that explain topics such as bearing handling methods for thecustomers who will actually use our products.
Customer needs and requirements are constantly evolving: products’ weight
reduction, quietness, lower torque for energy saving and longer operating life.
We respond promptly to those needs, and deliver our high quality products tocustomers at appropriate prices, in an effort to improve trust and satisfactionin NTN brand. We conduct regular surveys with our Customers. Those areopportunities to evaluate their satisfaction and to receive requests or otherfeedbacks from them.

15 NTN Report 2019

Ratio of local procurement

Implemented at489

We work on sustainable procurement by promoting CSR activities throughout
the entire supply chain.

Number of visits made withtechnical service units

Ratio of overseas
production

584

49 %

We visit customers with technical service units
and provide them with technical services.

Ratio of ‘Excellent’ and ‘Good’in the customer satisfaction
survey responses

95 %We have achieved great customer satisfaction.

business partners

Quality management system
certifications at consolidated
subsidiaries

100 %All mass-production plants from our consolidated
subsidiaries have received the proper Quality System
Management Certification.

We implement procurement activities
based on the “Basic Procurement Policy”
that was established from perspectives of“globalization,” “fairness/impartiality,” and“environmental preservation.” We engage
in “Green Procurement,” giving priority tosuppliers with outstanding environmental
preservation work or environmental quality. We
also work to promote procurement in local andthe optimal regions. Guided by the “NTN CSR
Procurement Guidelines” we have created, we
actively encourage suppliers to take part in CSR
activities to promote CSR throughout the entire
supply chain. We are working to establish andstrengthen partnerships with suppliers throughimproving our communication with them.

Financial / Company Data

that combine mechatronics and control
technologies. In October 2018, we established
CAE R&D Center to aim for higher efficiency
and higher precision of our R&D activities.

Procurement P.63-64

R&D

NTN’s ESG Strategies

The Company’s R&D focuses on tribology
technology and is divided among four regions
throughout the world. Each region sharesinformation with each other on areas suchas design, prototyping, testing, production
technology and customer projects, rapidly
responds to customer needs they identified, andcreates value-added products. We are moving
into new business areas by refining our productstructure; from individual bearings to “module
products” that incorporate sensors and otherperipheral technologies, and “system products”

NTN’s Business Strategies

The Company’s corporate philosophy is “We shall contribute to international society through creating new technologies anddeveloping new products.” Based on this philosophy, we are investing the capital acquired over our 100 year history since ourfoundation in the value chain and working on R&D, procurement, Monozukuri and sales activities to contribute to internationalsociety.
The interactions among each business process enable sustainable growth by keeping the cycle of value chain
processes flowing.

Monozukuri P.65-66
With customer satisfaction as our top priority, we aim to further improve
our QCD (Q: Quality / C: Cost / D: Delivery). As a production reformation
activities, we will create a structure for total optimization and promote
production streamlining, which will lead to improving profitability of NTN
as a whole. We will bring Monozukuri sites and customers closer to eachother and deliver high value to customers through advanced and efficient
production utilizing robots and AI/IoT, and through SCM (Supply Chain
Management) collaboration. With our overseas production facilities, we
are working on strictly reapplying rules for model transfers and processchanges. We are also strengthening risk analysis and data managementfrom the first steps of product developments. Our target is to ensurestable quality from the very start of production, using NTN global quality
assurance system and standards. We are providing support from MotherPlants and Quality Control Division to perform on-site audit, to investigate
past problems, to implement process improvements and to ensure
quality guidance for local employees. Developing and producing ourmanufacturing equipment in-house lets us expand on NTN’s proprietary
expertise, while our proactive approach to human resources training
ensures that this expertise passes to the next generation of employees.

NTN Report 201916

NTN’s Business Strategies

We started the Medium-term Management Plan “DRIVE NTN100” in April 2018.
By integrating latest technologies (Digitalization) into the management resources that NTN has cultivated (Resources), we aim
to develop innovative technologies, products, and services (Innovation), accelerate global procurement and centralized purchasing(Variable cost reformation), and achieve the world’s highest productivity and quality and improved efficiency in asset management(Efficiency improvement). With acceleration of these elements, NTN will realize “Our Vision” and achieve our target in 10 years.

~ DRIVE NTN Transformation for New 100 ~Aftermarket
Business

Management bases that
support our businesses

Utilize core competence
and cooperation withexternal organizations

Corporate Philosophy

Changes in external
environment

Numerical targets

Automotive industry
A change that occurs only
once a century (CASE)

Net sales

Industrywide
IoT, robotization, and AI
Social Issues
Population increase, climatechange, resource depletion,
poverty, starvation, etc.
(SDGs)

17 NTN Report 2019

Operatingmargin1 trillion yen or
more
10% or more

Total asset
turnover1.0 or more

Exchangeratesensitivity

To be halved fromthe current leveltechnologies and products to transform our business structure.
Our automotive and industrial machinery business isworking on strengthening core business areas and responding
to new customer needs. Our aftermarket business is expanding
our technical services to shift the business focus from products
to services.
We will also work on growing our natural energy productsegment and other new business areas that provide solutions tosocial issues.

(Billions of yen)

800

600

Industrial
machinery
Aftermarket

400

Automotive

Transform ourbusiness structure toachieve the10-year goals
Respond to newmarket needs createdby changes in external
environment
Strengthen coretechnologies andproducts

1 trillion yen

New businesses(natural energy, etc.)

Industrial
machinery

Robotization and IoT
needs
Expand core businesses

Aftermarket

Automotive

200

0

2018

2028

(Fiscal years ended/ending March 31)

Expand the scope ofservices

Respond to vehicle
electrification
Expand core businesses• Enhance brand power throughthe expansion of MRO* sales• Expand aftermarket part lineup
to not miss sales opportunities

Actions • Continue to improve technical services

including maintenance• Establish a production system independentof OEM business, and maintain sufficientquantities of aftermarket parts in stock

Industrial
Machinery Business
P.33-34

Strengthen core businesses and products

Develop businesses in new areas• Further development of core technologies;
development of high-performance products• Robot-related business (robotics)• Service, solutions business

TargetAutomotive
Business
P.35-36

NTN will become a company that customers in the industrial machinery market rely on most for
its exceptional technological competence

Financial / Company Data

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

TargetAs an indispensable presence for the automotive market, NTN will become a company that offers
products and services for vehicles all over the world

Strengthen core businesses and products

Develop businesses in new areas• Become the world’s top maker of drive-trainsystems (including EVs)

• Respond to electrification and EVs

Strengthen management bases that support our businesses
Focus for the next three years on strengthening management bases that support our businesses
Changes in external environment

Strengthen management bases that support our businesses

Transform from a “Manufacturing Company” into a “Company
that Delivers Value to Customers through Products and Services”

Transform our business from products to services, or from selling bearings to providing services*MRO: Maintenance, Repair and Overhaul

10 year targets
Before creating our three-year Medium-term Management
Plan which we started in April 2018, we set targets to beachieved in the following 10 years after the plan. These 10 year
numerical targets were set with the aim of transforming froma “Manufacturing Company” into a “Company that Delivers
Value to Customers through Products and Services.”
In order to achieve these targets, we will approach changes
in the external environment as growth opportunities andrespond to new market needs while strengthening our core

30.0billion yen

NTN’s ESG Strategies

2

Develop businesses
in new areas

Tasks

P.31-32

Challenges in new areas

1 A company where its corporate philosophy is understood by all employees around theworld and where all employees think and act for themselves
2 A company with original new products and services, appreciated for its high quality andfunctions, and has a global presence
3 A company where everyone involved with NTN will be able to be proud of the “NTN”
brand

Net Income Attributable to
Shareholders (parent company)

Utilize bearing sensing technology for industrial machinery business• ESG• Profit creation• Pursue high productivity and quality• Improve efficiency in asset management

Our Vision

57.0billion yen

New market needs

New competitive environment

CASE, robotization, IoT, AI

Develop businesses in new areas

Declining population in Japan

Robust• Variable Cost Reformation• Enhance Supply Chain
management • Structural Reform of Man-Hours Managementfoundation• Concentrated Investment
and Resources

Improve profitability
Business expansion without the need for
additional workforce
Improve efficiency in asset management

Build a procurement network that supports the
expansion of global production capacity and theutilization of external production capacity
Reduce external procurement cost

Goals for effects of variable cost reformation

Variable Cost
Reformation

Structural Reformof Man-Hours andResources

Use IoT, AI, and robots to take care of part ofoperations in the manufacturing divisions
Introduce RPA to improve the quality of operations inback office divisions

3-year goals for reductions in personnel expense

Enhance Supply
Chain Management

Utilize the new IT core system
Efficient inventory holdings and reducing lead time

Concentrated
Investment

Intensively investing management resources in processes in which our technical strengths can be demonstrated
Proactively utilizing outsourcing

3rd year:

3.0

billion yen
on top of conventional
cost reductions

10th year:

30.0

billion yen
on top of conventional
cost reductions

Manufacturing divisions: Technical and administrative divisions:

1.0

billion yen

0.5

billion yen

NTN Report 2019

NTN’s Business Strategies

Pursue competitive
advantages

SustainablegrowthOperating
Income

7.1%

Operating Margin(Foreign exchange rates: 1 USD = 110 JPY, 1 EUR = 115 JPY)

TargetStrengthen core technologies and products

1

800.0billion yen

Business targets and policies
Sustainable growth by developing businesses in new areas and strengthening core technologies and products

Our vision toward a
new 100 years

Strengthen coretechnologies andproducts

Net Sales

April 2018 to March 2021

Initiatives realizing “Our Vision”
To enable sustainable growth over the next 100 years, we havecreated a long-term vision.
In order to realize “Our Vision,” we will pursue competitive
advantages by strengthening our core technologies andproducts, while developing businesses in new areas byharnessing our core technologies and R&D achievements.
We are also stepping up our development speed byproactively collaborating with outside partnerships, while
enabling sustainable growth by creating a more robust businessbases to support these new business areas.

Numerical targetstargets

Drive forward the transformation of businessstructure for the next 100 years

About Us

Medium-term Management Plan “DRIVE NTN100”

18

NTN’s Business Strategies

About UsManagement Commitment

NTN’s Business Strategies

The First Step toward a New 100 Years
A Sign for Achieving a Smooth Society
The fiscal year ended March 31, 2019 was a difficult year where we saw a net loss for the first time in five years.
The main factor was the impairment of domestic fixed assets reflecting the worsened business environment.
We intend to steadily improve our business structure to make a leap forward through continuingchallenge to “transform” while implementing structural reforms in manufacturing divisions in Japan.

NTN’s ESG Strategies

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

A tough start in“DRIVE NTN100”
As the first year of the Medium-term Management Plan “DRIVE
NTN100,” net sales for the fiscal year ended March 31, 2019was 733.6 billion yen, down 1.5%, or 10.8 billion yen, fromthe previous fiscal year.
By business sector, sales for the industrial machinery
applications and aftermarket applications were strong whilesales for the automotive applications declined, primarily in
China and Europe. In the wake of U.S.-China trade frictions,demand from China has sharply decreased since the second
half of 2018. In Europe, demand has declined due toautomakers’ delayed response to the new standard of fuelefficiency measurement for finished vehicles as well as U.S.
sanctions against Iran.
Operating income was 26.9 billion yen, down 32.0%, or
12.7 billion yen, from the previous fiscal year. This was becauseof a decline in the amount of sales, a price hike of steel andsupplementary materials, and increased expenses as a resultof the additional tariffs imposed by the U.S. In addition, werecorded extraordinary losses of 19.3 billion yen including
an impairment loss of 17.0 billion yen, resulting in a net loss

19 NTN Report 2019attributable to shareholders (parent company) of 7.0 billion yen
and turning to red for the first time in five years.
The impairment mentioned above was for fixed assets
such as equipment in manufacturing divisions in Japan. Behind
this impairment, there are structural issues in our domestic
production.
(1) Declining return on investment in domestic production
Currently, our products are produced in our domestic
manufacturing bases as well as by manufacturing subsidiaries
in Japan. In the past 10 years or so, the market in Japan has
matured. Additionally, diversified manufacturing and otherfactors such as increased personnel expenses in manufacturingsubsidiaries have negatively affected the situation, making it
harder for us to manufacture efficiently. This is not the situation
we initially expected.
(2) Increased expenses in the head office in Japan
Amid the sluggish growth in the domestic market, NTN has
focused on expanding businesses in overseas markets, which
has been strongly led by a solid support by the head office,including R&D, production engineering, and quality control.
Expenses that can be reasonably calculated are allocated tooverseas subsidiaries, yet the cost burden on the head office
is still increasing. Under these circumstances, we have madea profit by cutting costs, but rapidly increased costs, primarily
a steep rise in prices of steel and supplementary materials,
have made it harder for us to turn a profit. From here on, we

will accelerate structural reforms in manufacturing divisions
in Japan and immediately carry on to improve our businessstructure to generate profit.
Although we had to face severe results in the fiscal year
ended March 31, 2019, operating income and ordinary
income resulted in profits. Based on our stable dividend policy
for medium-term distribution, we paid interim and year-end
dividends of 7.5 yen per share each, for a total of 15 yen per
share in annual dividends. We expect the turnaround of net
income attributable to shareholders (parent company) in thefiscal year ending March 31, 2020 by expanding sales in theaftermarket applications and reducing external procurement
costs. Accordingly, we plan to maintain the same annual dividend
payout as the previous year at 15 yen per share.

Main initiatives for the second year
Under “DRIVE NTN100,” we are working to bring sustainablegrowth of our business ahead and strengthen management
bases that support the growth. We will work on variable costreformation, structural reforms of man-hours and resources,enhanced supply chain management, and concentrated
investment.
In addition, during the second year of the Medium-termManagement Plan, we will focus on the following three reforms:

Financial / Company Data

Overview of the fiscal year ended March 31, 2019(1) Break away from self-sufficiency
So far, we have adopted integrated production, conducting
everything from pre-manufacturing process, such as forging
and turning, to assembly. From now on, we will expand
outsourcing of pre-manufacturing processes. Also, for finishedproducts, we will accelerate outsourcing for general-purpose
products to OEM supplies.
(2) Variable cost reformation
We will promote significant cost reduction by strengthening
cooperation with major suppliers and focusing on fewer
suppliers. In addition, we will expand procurement from themost appropriate regions based primarily on local procurement
to reduce risk involved in exchange-rates and tariffs.
(3) Restructure of business
In Japan, we will restructure the production of radial bearings,
primarily based in the new Wakayama Works, in order to focus
on high-performance products and high value-added products.
In countries outside Japan, we will focus on investment inregions where we can expect significant growth in the futuresuch as ASEAN countries and India. We will also expand OEM
supplies by utilizing alliances.
We will soon build a solid business foundation that sustains
global businesses by implementing these structural reforms.

NTN Report 201920

NTN’s Business Strategies

Practicing “transformation”

A sign of “transformation”

Strengthening profitability
We are also working on measures to strengthen profitability
over the medium to long term.
Our core IT system has not made a major upgrade for
decades. We intend to introduce the latest system, which will
help centralize information on demand and production, achieve
efficient inventory holdings, and reduce lead time and manhours.

Enhancing supply chain management throughcore IT system renewal

Reducedman-hours

Sales expansion

Core IT system
renewalReducedinventory

Standardization
Cost reduction

Dialog with employees

21 NTN Report 2019

Financial / Company Data

During the "Outside Director Dialog" mentioned earlier, aproblem was pointed out that our head office lacked themindset that our business is developed “globally.” NTN has
expanded its business operations worldwide with overseas
sales accounting for 70% of consolidated sales. As indicatedby our Outside Directors, I am aware of our task to instill self-

NTN’s ESG Strategies

Changing our mindset to think globally

awareness that each division in the head office should takeresponsibilities globally.
Yet, we do have seen signs of gradual changes. For
example, we have seen changes in the past few years thatour procurement divisions began obtaining quotations fromoverseas suppliers as well. In addition to conventional waysof procurement by region, we are working to centralize thepurchase globally, thereby expanding the benefit of scale. In
order to further accelerate this move, in January this year, wehave appointed Herve Brelaud from NTN-SNR ROULEMENTS, a
subsidiary in Europe, as the head of procurement divisions at
the head office.
(See page 64 for more details)

NTN’s Business Strategies“DRIVE NTN100” manifests our determination of accelerating“transformation,” which was introduced in the previous
Medium-term Management Plan “NTN 100.” A transformation
never ends even after its completion, as the next transformation
is waiting to begin. In this regard, you may think why we would
use the word “transformation,” but I believe that businesses
should always undergo creative transformations and continue
to change.
The last year’s NTN Report presented frank opinions
expressed in the "Outside Director Dialog." Some comments
were quite tough and we anticipated that disclosing suchcontents would elicit various responses, but we also believedthat presenting the dialog openly would contribute totransparency of our business. We received positive recognitions
from inside and outside the company, especially from investors.
I have repeatedly expressed the necessity of transformationin the company. As I wanted to set up a meeting where our
employees would express their frank opinions about their actual
perspectives, I created an opportunity to have a dialog with our
employees for the first time. (See pages 25–26 for more details)

About UsManagement Commitment

The new Wakayama Works promote a smart factorythrough the effective use of IoT, AI, and robots. The automatedmanufacturing process will contribute to labor saving as well as
reduction of lead time and manufacturing costs.
In anticipation of shrinking working-age population in
Japan, RPA (Robotic Process Automation) has been adopted inindirect divisions to automate and replace humans for sometasks. In technical divisions, RPA has produced positive results as
the time required for drawing, for example, has been reduced
from 30 minutes to 7 minutes per project. We are going to
replace humans with RPA for all routine operations and take on
new businesses without adding staff.

Establishing the CAE R&D Center

For providing new values

With the rapid development of information andcommunications technology and intensifying global
competition, industrial R&D is required faster speed than ever.
Under such circumstances, NTN is enhancing industry-academia
collaborations and conducting R&D with the latest technology.
In October 2018, the CAE R&D Center was newly
established to further accelerate our R&D activities. CAE(Computer Aided Engineering) is a technology using computer
software to help analyze design and structure of products
as well as simulating the various types of experiments. This
technology allows us to obtain necessary results in a shortperiod of time, leading to more efficient R&D and accelerating
the development speed. The CAE R&D Center is responsible
for the field of CAE in the NTN Group, including automotive,
industrial machinery, and new areas. In the industry-academia
collaboration, we established the “NTN Next Generation
Research Alliance Laboratory” in the Graduate School ofEngineering at the National University Corporation Osaka
University. By incorporating its cutting-edge technology, we
will pursue NTN’s proprietary CAE technology. We will makehighly reliable technical proposals based on logical data ina timely manner to help our customers in accelerating theirdevelopment speed.

Developing into new areas using ourcore technologies
The automotive industry is undergoing major changes called“CASE*.” NTN’s core products, hub bearings and driveshafts,
are essential products used in vehicle axles and drivetrains.
These products are increasingly adopted by EV makers, and we
expect further sales expansion in the future.
* CASE is an acronym of Connected, Autonomous, Shared/Service, and Electric.

In addition, we are accelerating the development of new
products for electrification. We will work to meet new needs byproviding our new products, including “sHUB,” “eHUB,” and“Electric Motor and Actuator.” “sHUB” is a hub bearing withsteering assist function; “eHUB” is a hub bearing with motor
generator function; and “electric motor and actuator” works
with electric pumps and brakes.
In the industrial machinery applications, the demand
for robot-related products will increase to save labor. NTN
developed a module product for robots, “i-WRISTTM,” andhas started mass production for appearance inspection. ThisNTN Report 201922

NTN’s Business Strategies*“NAMERAKA” means “smooth ” in Japanese

We will contribute to the realization of a sustainable society
by addressing ESG issues through practicing our corporate
philosophy. In 2015, we endorsed the United Nations Global
Compact and support ten principles in four areas: humanrights, labour, the environment, and corruption prevention.
We also carry out business activities with an awareness of the
SDGs.
Our eco-products including bearings reduce energy loss invarious industries, and we are working to solve social issues bycreating energy through products that utilize natural energy.
We also hold the “NTN Rotating School” both in Japan andoverseas, a hands-on experience that allows participants
to enjoy learning about saving energy technologies andenvironmental issues to focus on education for the next
generation that will play a key role in sustainable societies.
At the end of December last year, we held the first “ESG
Meeting” to explain these activities to institutional investors. By
having dialogs, we have become aware of the ESG issues weface and will utilize their opinions to strengthen our activities
toward realization of the future.

NTN SPIRIT, the cornerstone for our
employees
Our Founder's Spirit is made up of the “Frontier Spirit” and“Coexistence and co-prosperity Spirit.” That spirit is included inour corporate philosophy: “We shall contribute to internationalsociety through creating new technologies and developing new
products” and it has been passed down through the company
for 100 years. In conducting business activities based on our
corporate philosophy, the “NTN SPIRIT” clearly states theawareness and behavior that employees should aim for.
In November 2018, we published the “NTN SPIRIT BOOK”
and distributed it to NTN Group employees in order for them torecognize the “NTN SPIRIT.” In order to deepen empathy andunderstanding of the “NTN SPIRIT,” we also hold “Corporate
Philosophy Dialogs” to share experiences and exchange opinions.
Members of overseas upper management who participated in
the dialogs gave very positive opinions such as: “We cannot
have employees apply the ‘NTN SPIRIT’ to their tasks and think
independently by simply distributing cards, posters, etc.” and“On-site seminars are must, no matter how long they take to put
together.” The “NTN PROUD AWARD,” which evaluates activities
based on our corporate philosophy, will be awarded for thesecond time this year and it encourages employees to practicethis corporate philosophy.
(See pages 57–58 for more details)

The first ESG Meeting

NTN SPIRIT BOOK

Contribution to preventing and minimizing
disasters with natural energy products
We not only help reduce an energy loss through our coretechnologies, but we are also working on developing productsthat use natural energy. We work toward the “local production
for local consumption” energy cycle where energy is generated
and consumed locally which contribute to achieving a low
carbon society.

ESG initiatives

Financial / Company Data

Container type transportable
independent power supply“N3 N-CUBE”

Toward realization of “NAMERAKA* society”

NTN’s ESG Strategies

The “NTN Micro Hydro Turbine” can generate power withhigh efficiency by just placing it in an existing water channelsuch as an agricultural water channel, and in 2018, NTN
received an Award for Excellence in the "28th Nikkei Global
Environmental Technology Awards." This innovative productcan produce significant energy from water channels that havenot been made effective use, which we are committed topromote as a part of our contribution to realize a sustainable
society.
“NTN Green Power Station (formerly known as NTN Hybrid
Street Light)” is an independent power supply that does not
require electrical installation works. The battery is charged fromthe power generated from wind and sunlight, which can beused for automatic LED lighting at night.
In the wake of frequent and large-scale natural disasters
in recent years, one of the social issues is establishing a system
to secure electricity in case of emergency. To resolve this social
issue, we have newly developed “N3 N-CUBE,” Container TypeTransportable Independent Power Supply. Equipped with power
generators and storage batteries, it generates electricity fromthree types of natural energy: wind, water, and solar power.
This power supply can be installed quickly by a small group ofpeople in the event of disaster, and no refueling is required incase of emergency.
Through natural energy products using our coretechnologies, we are also contributing to the achievement ofSDGs (Sustainable Development Goals) related to energy andenvironment.

NTN’s Business Strategies

product allows high-speed positioning with human wrist-likemovements, making the automation of work possible that has
been done by human hands.
As for wind turbines, there has been a growing needfor monitoring wind turbines to detect malfunctions as theycause a power supply disturbance when the system fails andstops generating power. Our Condition Monitoring System(CMS) for wind turbines will detect malfunctions at an earlystage through remote operation, which helps to prevent major
failures from happening and maintains stable operation. The
CMS technology is a promising area for further expansion as
it can be applied in various fields such as rolling stock andmachine tools.
In the industry-academia collaboration, we are conducting
research with the National University Corporation Osaka
University to evolve the ability to predict residual life of bearings
using AI.
We aim to achieve this as soon as possible because, if
this happens, we can monitor any kind of bearings usedin automotive parts and industrial machinery, resulting insignificant contribution to safety and security.

About UsManagement Commitment

Through these activities, we strive to become “a company
where its corporate philosophy is understood by all employees
and where all employees think and ask for themselves,” which
is one of the long-term visions of “Our Vision.”
Example of assembled products application(fully equipped with a wind turbine, hydro turbine, solar panels, and storage batteries)

Contribution to developing asustainable society
We came out with the communication phrase “Make the WorldNAMERAKA. NTN” to help welcome the company's 100th
anniversary. As society faces unprecedented environmental
changes, we intend to contribute to the development of asustainable society with our technologies and services.
We will continue to transform ourselves toward the“realization of NAMERAKA society.” We sincerely appreciate
your continued patronage and support.

NTN has made a transition from a Company with Board of Company Auditors to a Company with Nominating Committee, etc. The purpose of this transition isto establish a prompt decision-making structure and operational execution organization, strengthen the supervision of management, and improve managementtransparency and fairness. (See pages 45–46 for more details)

23 NTN Report 2019

NTN Report 201924

NTN’s Business Strategies

1

Sharing Thoughts on the Corporate Philosophy and “Transformation”

About Us

SpecialFeatureDialog between the president and employees

TOPIC 125 NTN Report 2019

TOPIC 2

We have promised our stakeholders to achieve a“smooth society.” How should we work toward this?
Y.O. For our customers, our first priority is to follow our corporate
philosophy that “We shall contribute to international society throughcreating new technologies and developing new products.” Specifically,
we must know market needs, identify potentials, and act by adding
something uniquely NTN there. However, we still have challenges in
the action part. We have guidelines for each business unit, but it isdifficult to visualize specific actions.
M.K. It is important to get closely involved in our local community
through regional development and social contribution activities.
From the standpoint of fostering the next-generation, we have held
NTN Rotating School, where children can learn about bearings,
the environment, and energy-saving technologies. I believe that a“smooth society” will be achieved by building relationships thatenable local communities and NTN to grow together.
N.T. In terms of human resource development, it is important tocreate a communicable workplace. The opposite of “smooth” is“rough.” We do not want a workplace where employees’ minds areroughed up. While benefits and vacation are essential, it is important
to maintain a workplace where employees can communicate freely
and pursue a self-actualization. I hope the company will be a place
where we can create something good even out of disagreements.
A.O. The environment, I think, is an issue we must actively get
involved in by recognizing that it is something we should takeinitiatives. For example, sales representatives who get in contact withcustomers know the best what kind of environmental information
the customers are looking for. So, our environment division andsales representatives need to work together in response. In the
midst of tightening environmental regulations, if an environmentallyhazardous substance is found in one product, customers consider

N . T. Global Human Resource Development Department [employees]
A . O. EHS (Environment, Health and Safety) Integrated Management Department [environment]
Y. K . Procurement Planning Department [business partners]
T . H . Corporate Communications Department [shareholders]that all products may be in violation of environmental regulations.
Therefore, we need to promote environmental education to increase
the understanding of laws and regulations.
Y.K. When I meet our business partners, I am often told that “there
are many sincere people at NTN.” I think this is the result of earnest
and hard work by our predecessors and factory workers. I believethat a “smooth society” can be achieved by creating our fans
and working together to provide steady supply, reduce costs, andmaintain high quality through procurement processes.
T.H. When providing information to our shareholders, analysts, andnewspaper reporters, we need to get more NTN fans. I think it is noteasy for the general public to understand what “smooth society” is.
We can think of examples such as a society where machines worksmoothly, to build a recycling-based society with natural energy
products, or to make even people’s mind smooth through ourbearings. Perhaps, specific goals may help people to understand a“smooth society.”
President Ohkubo The definition of “smooth” is more than one. It
is important that each of us think what “smooth” means. The NTN
founders’ spirit consists of “frontier spirit” and “coexistence andco-prosperity spirit.” Adopting something new leads us to “frontier
spirit.” There is no end to transformation. As soon as we see achange, the next transformation begins. There is no way to change
without adopting something new.
In addition, while NTN is a for-profit organization, our business isultimately about contributing to society. This is the “coexistence andco-prosperity spirit.” I hope not only NTN but also every company
to contribute to society. We provide opportunities to learn aboutbearings through "NTN Rotating School." I would be happy if people
develop an interest and join our company, but it is also okay if theysucceed in other companies. Through bearings, we help people todevelop an interest in environment, too. If we can open up suchopportunity, that is also a way to contribute to society.

that each employee have a sense of ownership toward the issue.
For example, I would like to properly evaluate and disclose theenvironmental friendliness of our products. Then, using this as abenchmark, each department throughout the Company can work to
improve the environmental performance of our products.
T.H. As I publish internal publications, I feel that it is important toshare the President’s message. In today’s meeting, we have learned
many ways to interpret “smooth.” Now, President Ohkubo, how do
you describe your “smooth”?
President Ohkubo I use the term in various contexts. There is no
absolute definition of “smooth.” I think each person can pursue an
ideal “smooth” that fits in his or her position. However, I would liketo cherish the term “smooth” as it sounds pleasing to the ear.
Y.K. Smooth communication is another example. There are people
we have never met among our overseas suppliers. I am realizing theimportance of communicating our procurement policies by talking tothem face to face.
N.T. Human resource development is carried out not only by thehuman resource development division at the head office, but also
at each workplace through personnel training. We intend to share
information and exchange opinions with domestic and overseas
bases more than ever, and come up with better measures for humanresource development. In addition, I think it will become more
important how managers interact with their staff. What kind of skills
do you think managers should have?
President Ohkubo Personnel training certainly varies depending on
the culture and custom of each country. However, even with different
nationalities, we can surely understand each other as the same
humankind. While we respect different aspects such as recruiting
systems and school educations, we can think globally on common
grounds. Managers do not have to think as big as educating people.
Rather, they just need to pass on their knowledge to their staff.
When a new task comes in, the first thing they have to do is to fully
understand it for themselves before passing it down to the staff. If
the staff produced a good result, then give them a good feedback. I
think positive feedbacks should be actively communicated, although
mistakes can also be reminded. I hope our Company embraces sucha culture.
Iguchi Thank you, everyone. In today’s dialog, we had a frank
conversation with President Ohkubo about “transformation” aswell as how our corporate philosophy has been adopted in theworkplace. The “adaption” does not have a specific form or answer
but rests in the mind of each of us. As President Ohkubo mentioned,“transformation” is not something to be initiated by a company. It
is important to understand that each employee who works there
must have a mindset to initiate changes. After talking directly with
the President today, I believe everyone here has developed a sense of
empathy and become motivated to put it into practice. This was thefirst dialog between the president and employees, and I feel that it
was a great opportunity for us to raise awareness. By continuously
holding such dialog, I believe we can create a virtuous circle ofawareness-raising for “transformation.” I hope we spread suchawareness throughout the NTN Group and contribute to achieving a“smooth society” that our company is aiming for.

TOPIC 3What should we do to make NTN a better company?
M.K. Until today, I thought that “transformation” was something
hard and big and the term was intimidating by itself. However,today’s conversation made me realize that we can start with a small
project, that something new is something fun, and that is where theroot of “transformation” lies. As NTN continues to globalize, raisingawareness of our corporate philosophy and founders’ spirit arebecoming more important. I feel that we need opportunities to share
the President’s message with many of the employees.
Y.O.I think that the NTN SPIRIT serves good as a guideline ordecision-making criteria for employees. I believe the capabilities of
NTN will grow greater and stronger if we can expand it globally. In
cases of other companies, where their own “way” is spread through,the management capability is strong. It is very important to make theNTN SPIRIT spread through.
A.O. The reduction of CO2 and prevention of global warming
are major challenges that everyone is facing today. It is important

NTN Report 2019

Financial / Company Data

Y.O. The image of NTN has been “hard” in a positive way. In recent
years, however, I have more comments from other employees andstakeholders that “the company has changed.” I think our TV
commercial (launched two years ago) has also been a large influence.
The sound of the phrase “NanTe Nameraka” (“How smooth” inEnglish) gives some customers an impression of NTN being soft andflexible.
M.K. I have worked here since I graduated from school, and it is
this very place at this very moment that I feel the “transformation.”
Previously, there was an atmosphere of a top-down approach,but now I feel that this meeting opportunity is the first step fortransformation.
N.T. I do not feel major changes over the past 10 years. However,since the term “transformation” was introduced in the Mediumterm Management Plan in the past few years, it appears that people
around me have developed an awareness for the “need for change.”
On the other hand, even though the concept of “transformation” isthere, our environment has not been prepared enough for accepting
it. I think we need to raise an awareness and create a culture where
employees can accept a transformation.
A.O. I was transferred to the head office last year after working as an
on-site technical support staff as well as in research and technology
development. In the workplace, even though employees are awareof the NTN SPIRIT, it has not been put into practice. In addition,
while each individual works hard, I feel they are not active in crossdivisional interactions. I currently belong to the environment division,and there are many things that cannot be accomplished by ourdivision alone. Yet, everyone has already set his or her scope of work,
making it difficult to cross boundaries.
Y.K. I belong to the procurement division. A major change for us
is that we have more interactions with overseas divisions in recent
years. However, although the head office functions as Japaneseheadquarters, it has not been functioning enough as global
headquarters. Currently, each region has an authority to conduct
its own procurement. In order to unite as a procurement division bypromoting mutual understanding and exchanging information with* The relevant stakeholders each participant closely interacts are shown in brackets.

President Ohkubo
Kouhei Iguchi Corporate Value Promotion Department Manager; Facilitator
Y. O . Osaka Sales Office [customers]
M.K. Corporate Value Promotion Department [local communities]

NTN’s ESG Strategies

We have taken on challenges for “transformation” over the past
several years. Do we feel that NTN has transformed since joining
the Company or compared to 10 years ago?

overseas subsidiaries, and become truly global headquarters, we needfurther transformation.
T.H. Compared to when I joined the Company in 2015 (when theprevious Medium-term Management Plan was established), I feel that
operations are required to be reexamined more intensely.This has
contributed to saving on man-hours. Although we have the intention
to change the Company as a whole, it appears that we have not yet
determined how to change it.
President Ohkubo I think it would be hard for a company to betransformed in just a few years after having been in business for
100 years. However, something to trigger us is necessary. Even if wemake a change on the surface, it would be meaningless unless wechange essentially. If we are the only ones who think that we madea change, that is a mere self-satisfaction. The change needs to be
noticeable to outsiders. It may not be easy to change after 100 years
of establishment, but I keep talking about this because we won’tchange unless we voice it. As it has been only three or four years
since we laid out the “transformation” plan, I did expect that manyof you have not felt its effect.

Participants

NTN’s Business Strategies

Last year, NTN Corporation celebrated its 100th anniversary. Taking this opportunity, we reviewed our corporate philosophy
system and newly established the “NTN SPIRIT.” Since the previous fiscal year’s Medium-term Management Plan “NTN100” (April
2015 to March 2018), we have established measures to restructure our business structure, centering around the key conceptof “transformation.” In the current Medium-term Management Plan “DRIVE NTN100” (April 2018 to March 2021), we have
implemented a range of measures to accelerate this effort.
It has been about two years since we started spreading awareness of our corporate philosophy. This time, we set up the firstmeeting between President Ohkubo and employees who closely interact with stakeholders. The President and these employees
openly exchanged their thoughts and opinions on how much our corporate philosophy has been adopted among employees and how“transformation” has been understood.

26

NTN’s Business Strategies

2

NTN Technologies for Realizing NAMERAKA Society

About Us

SpecialFeatureGaining competitive advantage by
providing high-precision technical dataservices using failure detection technology

NTN’s Business Strategies

In recent years, IoT built on Industry 4.0 and Society 5.0 is rapidly gaining its popularity. Collecting data from various devices andanalyzing it as big data are not only helping to improve the productivity in manufacturing businesses and prevent loss of opportunities
through appropriate maintenance but also increasingly being utilized in various fields including the improvement of quality of life. NTN
has been developing condition monitoring systems (CMS) based on the diagnostic technology for bearings we have accumulated over
the years. Here, we introduce our technologies, which are expected to grow as the adoption of IoT accelerates in the future.

Failure detection technology for rolling bearings
We developed the Integrated Rotation Senor Bearing and the
Bearing with High-Resolution Rotary Sensor. In addition, we havebeen developing products with a sensor built into bearings or its
housing in order to detect vibrations, rotational speed, temperature,etc. of rotating shafts. These products make a preventive safetyfunction possible which alerts an early sign of failure by identifying
the source of vibrations from the detected rotational speed andvibration frequency, and detecting signs of a vibration increase.

Side panel

Magnetic
bypass ring

Magnetic
encoder

Integrated Rotation Senor Bearing

Bearing with High-Resolution Rotary Sensor for automotive driving support systems

(GW)

1,000

Cumulative installed wind turbines (Actual)
Cumulative installed wind turbines (Forecast)

800
600
400
200
0

74
24 31 39 48 59

159
94 121

198

238

283 319

370

433

488

540

592

650

712

774

841

28.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

ActualThe primary purpose of the failure detection technology is not only
an early detection of damages but also a prediction of residual life ofparts. In other words, it is important to minimize the downtime due
to failures, and it is also desirable to know how long the unit can be
operational so that replacement parts can be prepared ahead of time.
However, how the actual damage occurs after the detection of signsof failure would vary greatly depending on the operating conditions
and environment. Therefore, there are still issues in realizing theresidual life prediction.
Not just limited to wind turbines, there are many otherapplications where damage to bearings can cause a societal loss. In

Forecast

Vibration acceleration

Further increase is expected in the futureTime required for detection using
conventional technology

24.0

device3) Dedicatedserver+ 4) Analysis/

diagnosis

Features of CMS (Condition Monitoring System)1) About 10 sensors are installed in the bearings for main shaft, gearbox, andgenerator
2) The data collection device measures each sensor signal every two hours3) The data is transmitted to and stored in a dedicated server via an internet
connection4) The data sets are analyzed and diagnosed normal or abnormal

addition to vibration data and other data mentioned, new analyticalmethods and precision diagnostic technologies, which use othersensing data such as sound and vision, will become increasingly
necessary in the future. We use AI technologies in our failure
detection technology to provide high-precision and useful technicalinformation services. At the same time, we will work toward further
development including the application of this technology to not
only wind turbines but also the improvement of operation rates
and reduction of maintenance burdens of rolling stock and otherindustrial machinery, etc.

STEP 1

STEP 2

STEP 3

STEP 4

From 2012

Current

Next

Future

20.0
16.0

AI

12.0
8.0
4.0

Threshold

0.0

Source: GWEC GLOBAL WIND STATISTICS 2017

Time

Business operators’ needs
1.0

Reduce downtime

0.91) Conduct scheduled maintenance mainly in the summer when the windconditions are unstable2) Give priority to generating and selling electricity during early fall throughearly spring when the wind conditions are stable3) Detect signs of failure in advance and arrange early part replacements
4) Prevent secondary damages beyond the damaged area
5) Reduce lost profits and maintenance costs

0.7

Introduction of CMS can bring great benefits by detecting
signs of failure and identifying the area of failure

0.8

Failure rate

27 NTN Report 2019

Trends in cumulative installed wind turbines
Cumulative installed wind turbines* NEDO: New Energy and Industrial Technology Development Organization+ 2) Data collection +New development of failure detection technology

CMS (Condition Monitoring System) to solve the problem of wind turbine business operators
In order to advance the failure detection technology, we have been
involved in the NEDO* project with the University of Tokyo, National
Institute of Advanced Industrial Science and Technology, etc., andworked to detect failure signs in large wind turbines.
Wind turbines have been introduced on a global scale, andthe number is expected to increase further in the future. On
the other hand, wind turbine business operators are facing an
issue in performing maintenance efficiently. In order to cut thecosts of generating electricity, it is necessary to reduce the initial
capital investment, implement a high-efficiency power generation
system, and increase the capacity factor. In other words, once theoperation begins, it is essential to maintain stable operation, andthe system downtime must be kept to the minimum. In order toreduce downtime even by a small amount, periodic inspection andpreventive maintenance of the system are important measures.
However, since wind turbines are always built in the areas of strong
wind conditions, the conventional ways of checking and emergency
response by human not only had a problem with the accessibility interms of the location, but also required significant time to determine
the cause of the problem and identify the area of failure. In addition,a delay in detecting signs of failure in bearings and gears had a riskof a partial failure spreading to the entire system. As a result, repairs
and replacements caused unexpected downtime, leading to a major
problem of lost opportunities.

1) Sensors installed withinwind turbine

Financial / Company Data

Hall sensor

Taking everything into account, NTN introduced the Condition
Monitoring System (CMS, under the brand name “Wind DoctorTM”)
for wind turbines to the market in 2012, which monitors theconditions of wind turbines applying vibration analysis and sensing
technologies. The system collects data remotely using various
measurement sensors installed, such as a vibration, displacement,
and temperature sensor. Using these data, it detects early signs offailure, which helps to reduce the maintenance burden by preventing
damage from spreading, making it possible to prepare and treat
problems properly by identifying the area of failure.
It already has a proven track record as one of the services forproviding data on the operational status using IoT. As of November
2018, the number of installations of this system in Japan has reachednearly 200 units, accounting for the largest share in the Japanesemarket.

NTN’s ESG Strategies

In the early 1990s, NTN developed a rolling bearings unit with abuilt-in rotation sensor and introduced the product to the industrial
machinery market. Rolling bearings are the parts built into a wide
range of machinery applications such as automobile, rolling stock,construction machinery, and machine tools, to support various
rotational movements. In large machinery applications where highreliability and safety are required, such as power generation facilities
and rolling stock, monitoring is necessary during operation, including
peripheral components.

System configuration of “Wind DoctorTM”

Time required for detection
using AI

0.6
0.52) Data collection
Trend management
Prediction andmaintenance

0.4
0.3
0.2
0.1

3) Advanced prediction
and maintenance (1)High precision,
early detection
4) Expansion into
other areas
Rolling stock,machine tools, etc.

5) Advanced prediction
and maintenance (2)Advanced high precisionusing AI technology, early
detection, labor saving,
unmanned operation

1) Sale of units

0.0

Time

Example of early detection of signs of failure using AI

Future plan of CMS

NTN Report 201928

NTN’s Business Strategies

R&D initiatives

About Us

Research & Development
Global R&D

EV related
business

Precisionmachinery

Machine tool

“Elemental technologies,” “Design & development,” “Production technologies,”“Assessment technologies,” “Intellectual property”
Basetechnologies

Tribology
Lubricants

Seals

Diagnosis

Evaluation

Materials

Japan

New ProductDevelopment
R&D CenterWith integrated talents and flexibility which are derived
from mutual collaborations of engineers and their
originality, the staff works on the development of new
products for automobiles, industrial machinery, andaftermarket applications. It also develops systemized
modules for existing products to create new value-added
products, and establish core technologies associatedwith it.

Production
Engineering
R&D Center

The staff conducts R&D in production systems,
production technologies, and production facilities
with unprecedented unique technologies and coretechnologies that shall be inherited within the NTNGroup. In addition, it provides solutions to the issues
related to production technology from development
to mass-production of new products as well as theguidance and assistance on production technology issues
for the entire NTN Group.

CAE
R&D Center

The staff conducts research on advanced CAE technology
with cutting-edge technology and develops proprietary
CAE programs, aiming to advance and streamline
the process of designing, developing, prototyping,and experimenting for the NTN Group’s research andtechnology divisions by utilizing CAE technology.

NTN Next
Generation
Research Alliance
Laboratory

Aiming for business expansion in the next five to 10
years, the staff conducts R&D by adopting the latest
technologies through industry-academia collaboration,
aiming to strengthen core technologies and createbusiness in new areas.

Japan

Americas

NTN
Automotive
Center(2 sites)

Industrial machinery: The staff provides technical proposals
as well as technical support based on customer requirements
such as evaluation tests and application development.
Automotive: The staff also conducts evaluation tests,
research and analysis for products after use, technicalsupport based on customer requirements, technicalproposals, and development for local procurement.

EuropeNTN-SNR R&D
Center

SNR ROULEMENTS joined the NTN Group in 2008 andbecame NTN-SNR ROULEMENTS. Utilizing the expertise
gained through its 100-year history, the staff works on thedevelopment of new products and new technologies.

China

NTN China
Technical
Center

The staff provides sales engineering which contributeto solving customer problems, various evaluation tests,
and research and analysis of products after use. It also
conducts evaluation and analysis of local materials in
China, aiming to increase the rate of local procurement.

A message from CTO (Chief Technology Officer)
Medicalequipment

Customer needs

Surface finish

Advanced
Technology
R&D Center

In order to achieve the latest (world’s best and first),
the staff works on advancing tribology, materials,
surface modification, and powder technologies toimprove bearing functions and create innovative
Monozukuri technologies that lead to global environment
conservation. It also conducts R&D including thedevelopment of components and systems, aiming for
growth markets such as in new energy resources.

AircraftEnergybusiness

Service,solutionbusiness

Automobile

Roles of R&D centers worldwide

Financial / Company Data

Robotrelated
business

Construction
machineryIn September 2017, the “NTN Next Generation Research
Alliance Laboratory” was established in the Graduate Schoolof Engineering at the National University Corporation, Osaka
University. Using artificial intelligence (AI), it is working
toward research that enables to predict the residual life ofbearings, manage trends during a bearing operation, andprevent damage in advance, aiming to achieve cutting-edge
technologies with business expansion in the next five to ten
years in sight. While promoting stronger industry-academia
collaboration, we will work to strengthen our core technologies
by adopting the latest technology and conduct R&D toward
creating new business areas.
In an effort to achieve the “Sustainable Development Goals(SDGs),” the common goals of international society, we will
promote R&D which can solve social issues while keeping ourroles in mind which we should accomplish as a company.

NTN’s ESG Strategies

Creating the technologies of the future

Rollingstock

We actively stimulate exchanges of technologies and humanresources among R&D bases in Japan, Americas, Europe, China.
We accelerate the creation of new technologies and products
on a global perspective and established an R&D system that
can accommodate the needs of global markets, by sharing
information about design, prototypes, experiments, production
technology, and customer projects via database.
In October 2018, we established the CAE R&D Center,aiming for higher efficiency and higher precision of our researchand technological development activities. CAE (Computer
Aided Engineering) technology is an engineering system that
supports the design and development of industrial products by
utilizing computer software, and that was previously conductedby the CAE Department. Establishing an independent R&D
center for CAE will improve its reliability and precision, leading
to reduce man-hours for design and experiments as well as toaccelerate development speed.

Agricultural Space rocket/
artificial
machinerysatellite

Robot/
gearboxWind
turbinedamage leading to a replacement of the spindle and improve
productivity. In addition, we started mass-production of the“i-WRIST,” a module product for the robotics applications thatcan move like a human wrist. With our proprietary mechanicallink mechanism, the “i-WRIST” performs a wide range of
motion while realizing compact design and space-saving. It can
rapidly change angles like human wrist movements, making
it possible to replace the work that has been done by humanhands, solve a labor shortage, and meet the market demand of
quality improvement.
As a business in new areas, we have developed naturalenergy products such as “NTN Green Power Station,” anindependent emergency power source for security and disasterprevention using natural energy, “Grid Connectable NTN
Micro Hydro Turbine,” which generates electricity by just being
placed in a water channel and can transmit the electricity tocommercial power lines, and “N3 N-CUBE” which has improved“mobility” by storing these natural energy products in a freightcontainer. In addition to responding to disaster prevention andmitigation, we are making proposal for locally produced andconsumed renewable energy, which contribute to realizing a
low carbon society.
We also conduct research on new technologies considering
future business model changes and business expansion. We
have already started failure detection monitoring service on
bearings for large wind turbine. Expanding its field, we advanceR&D on sensor technology to enable predicting the residual lifeof bearings, and program utilizing AI algorithms, leading to the
expansion of the service, solution business.
Furthermore, we are working on R&D in the 3D cell
layering technology with iPS-derived cells using our proprietary
microscopic coating applications, aiming for use in drug design
and regenerative medicine applications.
As initiatives to accelerate these R&D projects, we haveestablished the “Patent Management Rule” as well as the“Patent Reward Rule” to reward our employees for theirinventions. Foreign patents and know-how are also covered as
inventions to be rewarded, and there is no upper limit on the
reward payments. We continue to encourage our employees intheir creative efforts at developing new inventions.

NTN’s Business Strategies

Fully utilizing our engineering expertise such as tribology, heat
treatment, precision processing, precision measurement, andCAE to develop high-performance, energy saving, lightweightand compact products, we are committed to provide products
suitable to a low carbon society and improve customer
satisfaction, as well as contribute to not only the sustainablegrowth of our company but also a sustainable society.
The automotive industry has entered an era of once-ina-century transformation represented by CASE (Connected,
Autonomous, Shared/Service, and Electric). In anticipationof the market trends, we conduct our R&D focusing ontechnologies necessary for C (Connected), A (Autonomous),and E (Electric) of CASE.
Regarding the development of bearing, we are continually
pursuing technological innovations such as low friction, high speed
rotation, and high load capacity by strengthening core technology
and incorporating cutting-edge technology. Recently, we received
awards for excellent technology in “CHO” MONODZUKURI
Innovative Parts and Components Award with the "Low TorqueSeal Ring" in 2016, the "ULTAGE Tapered Roller Bearing for
Automotive Application" in 2017, and the "Ultra-low Friction
Sealed Ball Bearing" in 2018 sponsored by MONODZUKURI.
Nippon. Conference and Nikkan Kogyo Shimbun, Ltd.
We are also developing and proposing module productswith sensors and control systems (Electric Motor and Actuator)and system products (In-wheel Motor Systems) by utilizing
technology collaboration with other companies. In addition,
we have developed module products related to hub bearing
which is one of our core product. One is "eHUB," hub bearing
with motor generator function and the other is "sHUB," hubbearing with steering assist function. We have already started
to propose the products globally to automotive manufacturers
and conduct test-driving.
In the industrial machinery applications, R&D related to IoT,
sensing, and robotics technologies has proceeded. The“Sensor
Integrated Bearing Unit” for Machine Tool Spindles which
perform the sensing around bearing raceway surface has
enabled the advanced condition monitoring and the preventionof seizure of machine tool spindles. Since this product cansend an alarm before the spindle is seized up, it prevents

Analysis

Monozukuri
Forging
Injection molding

Turning

Grinding

Powder compression molding

Joining
Surface improvement

In recent years, we are further required to improve our work efficiency as initiated by the work stylereforms, making it difficult for us to conduct R&D using as many man-hours as before. In addition,
due to the effect of the declining birthrate and aging population in Japan, we expect that the staff
involved in R&D will decline in the future. Under these circumstances, we established the CAE R&D
Center in October 2018 to conduct R&D activities producing high-added value with fewer staff as wellas increased efficiency and precision.
In this R&D Center, we conduct R&D for the advancement of CAE (Computer Aided Engineering)
Representative Executive
Officer, Senior Managing
technology, an engineering system to help design and develop industrial products by utilizing
Executive Officer
computer software. The CAE technology simulates the various experiments and tests that are
CTO (Chief Technology Officer)
necessary during R&D activities, and the results can be confirmed in a short time. This can reduce
Yoshinori Terasaka
R&D man-hours required conventionally and allow researchers to focus on higher value-added R&D
activities. In addition, the technology can reduce the time required for development, resulting in a shorter R&D cycle for new
products as well as an early injection of competitive products to the market.
With further advanced CAE technology, we will achieve reduction of man-hours required for design and experiments toaccelerate development and promote the creation of competitive technology.

Outside technology and expertise

29 NTN Report 2019

NTN Report 201930

NTN’s Business Strategies
Trend in business performance
Sales (left axis)

Operating income (right axis)

17.1%

Aftermarket

12.1%

116.7

118.8

116.0

billion
yen

19.2

17.7

104.5

14.0

15.0

15.2

14.0

Eiichi Ukai

2016

2017

2018

2019

2020
(Forecast)• Presence of competitors in theoverseas aftermarket• Expansion of needs for service,solution business and increaseof role that customers expectfrom suppliers• Intensifying competition due
to the commoditization of
bearings, primarily of generalpurpose products, and theinflux of low-priced products• Proliferation of counterfeit
bearings• Networks of major domestic
and overseas distributors, andstrong partnership with major
distributors• Broad product lineups• Experience and know-how insupplying products for MRO in
the global market*MRO: Maintenance, Repair and Overhaul

Strengthen
product appeal

Strengthen
services

Increase thevalue of the
NTN brand

Results for the fiscal year ended March 31, 2019

Forecast for the fiscal year ending March 31, 2020

Demand in the industrial aftermarket increased in all regions.
Demand in the automotive aftermarket increased in theAmericas and other regions, but remained unchanged globally.
Amid a tightened supply-demand situation, we increased our
production to the best of our capacity, but we could not restock
inventory for immediate delivery in time, leading to some lossof sales opportunity due to supply shortage. However, sales
were 118.8 billion yen, up 1.8% from the previous year, due
to positive sales activities and reinforcing technical services. We
were affected by rising raw material prices and manufacturingcosts, but due to efforts to increase selling prices, operating
income was 15.2 billion yen, up 1.2% from the previous year.

In order to ensure a stable supply of products to theaftermarket, we are expanding the use of products
manufactured in Italy, Germany, Canada, Taiwan, and othercountries. At the same time, we are promoting the inventory
improvement of top-selling products. On the other hand,
we expect demand to decline in some regions and in someindustries. We expect to result in sales of 116.0 billion yen,down -2.4% from previous year. We also expect to resultin operating income of 14.0 billion yen, down -7.9% fromprevious year, due to the impact of the decline in volume,
despite ongoing efforts to raise prices, expand its productlineup, strengthen services and its organizational structure.

Financial / Company Data

NTN’s strengths(Fiscal years
ended/ending
March 31)

NTN’s ESG Strategies

Changes in market environment

15.0

0

2015

are promoting strategies to secure advantages, such as
identifying the needs of each market and using different brands
appropriately.

(Billions of yen)

30.0

0

DRIVE NTN100 strategies and progress

Strengthen sales and technical service network
AchieveOUR VISION

Strengthen
supply capacity

Transform from a "Manufacturing Company" into a "Company that Delivers Value to Customers
through Products and Services."

31 NTN Report 2019

112.4

50.0

OUR VISION

The business environment such as the rapid development ofAI, IoT, and other digital technologies, environmental issues,and demographic shifts has been changing continually andcompanies are required to be flexible in accommodating newmarket needs to ensure sustained growth. In the aftermarket
business, suppliers are faced with new expectations in addition
to usual requirements, including high-quality products, broad
product lineups and prompt delivery. The role of suppliers,
particularly those in the equipment aftermarket such as steel
and paper industries, is gradually changing from a bearing
supplier into a provider of comprehensive maintenance services

12.8%

45.0
113.6

100.0

Managing Executive Officer

Strengthen systems/
organization

12.9%

150.0

%

Business environment
One of the issues in our aftermarket business is that the level ofthe brand recognition in some overseas regions is not as highas it is in Japan. In addition, we have actually not been able tosecure an advantage over our competitors, who penetrate theaftermarket with a full suite of products and services including
not only bearings but also peripheral components and aftersales services.
The challenge for us is to gain larger purchase share of
our products from overseas distributors, which carry multiple
brands, while on the other hand, Japanese distributors carryour products exclusively. To that end, we need not only
to strengthen our services and improve the quality of our
products, but also recognize that we need to strive to improve
the overall quality and increase the value of the NTN brand,
through efforts such as improving the quality of packaging
boxes and reinforcing measures against counterfeit bearings. In
order to increase the market share of our products carried byoverseas distributors, it is also an important factor to develop
an immediate delivery system mainly for top-selling products. In
the fiscal year ended March 31, 2019, amid a tightened supplydemand situation, we could not increase our production tocatch up with the demand, leading to loss of sales opportunity.
We are also working to strengthen our supply system byminimizing the gap between demand forecasts and production
arrangements and increasing the production for aftermarket.
In addition, increasing influx of low-priced products
produced in emerging countries is one of the threats. We

13.4%(Billions of yen)

NTN’s Business Strategies

16
118.8

NTN provides various products for industrial machinery and automotive maintenance needs. For theindustrial aftermarket, we provide bearings for general machinery and equipment used in industries
such as mining, paper, and steel. For the automotive aftermarket, we satisfy customer needs with aproduct lineup of repair parts (auto parts) composed of bearings and peripheral components. We also
provide after-sales services, such as holding engineering seminars with technical service units, to help
our customers improve their production efficiency and ensure their stable operation.

15.6%

Operating margin

About Us

Percentage of total sales

for equipment and peripheral components. We have also
started whatever possible to enhance our service business,such as conducting needs surveys at distributors and end users
and making proposals of repair services for bearings for papermaking machinery. In addition to these continual efforts, throughproposing a new business model, which provides not only
bearings but also services, including the monitoring of bearing
operations and services based on prediction of the bearing life byutilizing our expertise in sensing and digital technologies such as
AI and IoT, we aim to further enhance our brand value and win
the best customer satisfaction in the aftermarket.

In Japan, in April 2018, in an effort to reinforce the sales and technical service network for the aftermarket business, we
integrated the domestic branch of Aftermarket Business Headquarters with the operations of NTN Bearing Service Co.,
Ltd., a consolidated subsidiary, and changed the name from NTN Bearing Service Co., Ltd. to NTN Sales Japan Corporation.
We have consolidated our sales channels into one, aiming to establish a system that enables us to gather information andidentify customer needs more quickly and accurately. While paying more visits to our customers and offering appropriatetechnologies and services, we are committed to further strengthening relationships with our customers and improving
customer satisfaction. Our initiatives also include achieving even higher customer satisfaction by leveraging the strength of thesales division of NTN Corporation with established brand recognition and exceptional development activities, and NTN Bearing
Service Co., Ltd. offering its speedy yet detail-oriented services.
On the supply side, we will aim to strengthen our supply capacity by promoting utilization of products manufactured
overseas and efficiently utilizing global stock, and expand the inventory lineups of top-selling products for the aftermarket, inan effort to establish a supply structure that is unaffected by trends in OEM demand.
In addition, with the aim of expanding the aftermarket business centered on MRO on a global basis, we are working tostrengthen technical services for customers and distributors. We are
striving to expand sales by enhancing technical service unit activities
Net Sales and Operating Margin (actual and planned figures)
and NTN Aftermarket Academy, which are intended for teaching
16.0%
basic techniques and maintenance techniques for bearings, and
12.8%(Billions of yen)providing a wide range of services including trainings by specialists
150.0
125.0
118.8
well versed in skills such as mounting/removing bearings and
100.0
prompt sharing of technical information. We are also working
50.0
to improve packages and renew designs of individual boxes, and(Fiscal years
0
introduce technologies for measures against counterfeit bearings,
ended/ending
2028 March 31)
2019
2021
in an effort to further strengthen our brand image.

NTN Report 201932

NTN’s Business Strategies

Trend in business performance
Sales (left axis)

5.7%

5.4%
1.6%

(Billions of yen)

%

109.0

billion
yen

100.0
6.3

50.0

Industrial machinery market Kazuki Kawashima

119.1
104.1

For core sectors
Ability to develop high-speed,
high-rigidity and high-precision
products

Strong relationships with
manufacturers with the top sharesin the industries

10.0

5.6
2.8

5.0

3.1

2016

2017

2018

2019

2020

0

(Fiscal years
ended/ending
March 31)

Results for the fiscal year ended March 31, 2019

Forecast for the fiscal year ending March 31, 2020

Sales were 123.4 billion yen, up 3.6% from the previous year,
supported by strong demand for construction machinery inJapan and Asia, wind turbines in the Americas, machine toolsin Europe, and aircraft driven by the start of new jet engine.
Operating income was 3.1 billion yen, up 11.1% from theprevious year due to the effect of the increase in sales volume
despite increased costs such as rising prices of steel andsupplementary materials.

Net sales is forecast to be 112.5 billion yen, down -8.8% fromthe previous fiscal year, due to a decline in demand for products
for construction machinery and machine tools in various regions,despite increased demand for products for rolling stock in Japan,
Europe and China, demand for aircraft in Europe, and demand
for wind turbines in China. Operating income expects to resultin 0.5 billion yen, down -83.9% from the previous fiscal year,
due to the impact of a decline in volume, despite efforts tostrengthen production capacity in response to fluctuations incustomer demand, improve internal and external productivity,
including those of suppliers, and promote the acquisition of new
projects with reasonable profits by focusing on industries that are
expected to grow over the medium to long term.

Agricultural
machinery

DRIVE NTN100 strategies and progress
Machine tool

Strengthen core technologies and products

For growth sectors
Ability to develop products tailoredto customer needs

Gearbox
Rolling stock

Competition in development ofhigh value-added products

Experience in doing business withworld’s major customers

Intensified competition due to the
influx of low-priced products

Ability to produce products of thesizes that other companies cannot
produce

Aerospace

Impact of policies, trade issues,and global economy on demand

112.5

Financial / Company Data

Construction
machinery

15.0

98.6

(Forecast)

NTN’s strengths(Billions of yen)

NTN’s ESG Strategies

Rising needs for autonomousmachinery operations andsensing technologies

123.4

0.4%

0.5
2015

Business environment

Changes in market environment

2.5%

0

Managing Executive Officer

Ability to respond to new needs infields and parts which are yet to betapped into

2.4%

150.0

1.6

We provide products to customers in various sectorsof industrial machinery, incorporating a wide range oftechnologies and production methods. We believe that thebusiness environment differs between the core sectors leading
the market and the sectors with strong growth prospects. On
the other hand, energy saving, long-term stable operations,and reduction in lifetime costs are common tasks appointed byeach industry. In order to meet these needs, we believe that itis necessary to use advanced IoT and sensing technologies toprovide services such as condition monitoring services designed
for predictive maintenance. In addition, it is necessary toestablish a production system that can respond promptly tofluctuations in demand, which is affected by national policies
and global economy, and to strengthen our productivity
including that of suppliers.

Operating margin

NTN’s Business Strategies

17
123.4

We produce NTN ULTAGE Series, the world’s highest class new generation bearings, which meet the market
needs for higher precision and speed of industrial machinery. Our company is also contributing to reduce
environmental impact in various fields in industrial machinery by making our bearings lower torque, smaller
and lighter. We will contribute to industrial development and creation of sustainable society, through further
evolving elemental technologies of bearings that we have cultivated over many years, and promoting
development of high value-added products by unitizing or systemizing peripheral components.

Operating income (right axis)

About Us

Percentage of total sales

Wind turbine

In the industrial machinery market, in 2018, we developed the industry’s first “Sensor Integrated Bearing Unit” with a builtin heat flow sensor for machine tools applications. This product makes it possible to prevent bearing seizure, which would
cause a main spindle failure, with advanced condition monitoring. Furthermore, with our proprietary air-cooling technology,
we have developed “Machine Tool Spindle Bearing with Air Cooling Spacer for Grease Lubrication” for machine tool spindles,
featuring both high-speed rotational performance and high-rigidity, and Angular Contact Ball Bearing for High-Speed andHeavy-Cutting Machine Tools, which is an advanced combination of high-speed rotational performance and load resistance.By
actively proposing these new products in addition to existing products, we will contribute to further improving the productivityof our customers. In addition, in 2018, we started production of ultra-precision bearings at NTN Mettmann (Deutschland)
G.m.b.H. in Germany for the first time overseas. We will expand our business by acquiring new customers through increasing
supply capacity and shortening lead times for bearings for machine tools applications on a global basis.

Develop businesses in new areas
OUR VISIONNTN will become a company that customers in the industrial machinery market rely on most for its
exceptional technological competence
In the industrial machinery market, NTN widely covers various
segments and machines of customers, and supplies bearings
from miniature sizes used in electronic devices to extra-large
sizes used in wind turbines and large mining machines.Our
customers request high reliability on the products used inaircraft and high-speed trains, which are directly linked tohuman life. NTN has always met various market needs, withaccumulated technologies on products and productions.

33 NTN Report 2019

Recently, the external environment is rapidly changing, withincreasing awareness of global environmental issues anddemographic shifts. The industrial structure itself is alsochanging as a result of the fast evolution of information
technology, such as IoT and AI. By utilizing digital technologies
along with the flexible intelligence and creativeness of
mankind, we remain to be an indispensable company in theindustry, and support the development of the industrial world.

We are accelerating the development and provision of innovative technologies, products and services in response to the newneeds, such as the spread of IoT and the utilization of AI in the industrial machinery market. In the robot related business, wehave accelerated the development of our unique wrist joint module “i-WRISTTM” and began its mass production. “i-WRISTTM”
moves in the same way as human wrist does even in a small space. Taking advantage of this feature, we are proposing the
introduction of an automation system for appearance inspection and grease applicators. Going forward, we will reinforce thecoordination with SIers (system integrators) and provide technical services such as reducing the customers’ man-hours when
designing equipment. In the service/solutions business, we areaccelerating introduction of Condition Monitoring Systems (CMS)Net Sales and Operating Margin (actual and planned figures)
5.6%
for wind turbines. We have also utilized the bearing diagnosis and2.5%
vibration analysis technologies that we have cultivated for many
(Billions of yen)
New business
150.0
125.0
years to develop “Portable Vibroscope” that is easy to operate and
123.4
areas
can detect failures in bearings. We will strengthen tools for diagnosis
100.0Core businessand analysis of bearings and diagnostic technology services, and
areas
50.0
expand the service/solutions business to offer technologies for(Fiscal years
0
ended/ending
extending the total life cycle of equipment, reducing downtime and
2019
2021
2028 March 31)
improving production efficiency.
NTN Report 201934

NTN’s Business Strategies

Trend in business performance
Sales (left axis)

67
491.3

3.8%

4.9%

4.2%

Operating margin

4.3%
1.8%

(Billions of yen)

600.0

%

480.5

billion
yen

499.3

480.2

508.6

491.3

0.1%

(Billions of yen)

60.0

461.5

40.0

400.0

200.0

18.4

24.4

20.0

21.8

NTN’s Business Strategies

Our work in the automotive segment includes developing more advanced bearings, hub bearingsand driveshafts to create higher added value. We are also combining these core products withcore technologies to develop module products. To prepare for the coming era of electrification andautonomous driving, we have released “Electric Motor and Actuators” composed of ball screws, motors
and controllers. We are working on expanding their range of applications and proposing them tocustomers. Marketing these products globally will allow us to meet demands for better fuel efficiency
and ride comfort in conventional vehicles, while also meeting rapidly growing needs for electrification.

Operating income (right axis)

About Us

Percentage of total sales

20.0
8.7

Automotive market

2015

Hideaki Miyazawa

2018

2019

2020

Changes in market environment

NTN’s strengths
Quality and reliability supported by large market
share for hub bearings and driveshafts used foraxles/drivetrains

Reduction in the total number of bearings used per vehicle due to theelectrification and EV-shift, in addition to reduction in the total number ofvehicles due to the shift from ownership to use of vehicles

Development of high value-added
products through modularization andsystematization

Demand for new driveshafts for increasing FF vehicles in emerging countries

Global production system supporting optimal supply in the customer regions*1 An acronym for ‘Connected’, ‘Autonomous,’ 'Shared/Service' and ‘Electric’—four words representing developments that are currently on the verge of creating major changes in the automotive industry.
*2 A new concept of “Mobility,” which offers cloud-based transportation services by utilizing information communication technology and seamlessly connects all modes of transportation other than private vehicles as a single service

OUR VISIONAs an indispensable presence for the automotive market, NTN will become a company that offers
products and services for vehicles all over the world
absolute reliability from the drivetrains responsible for vehicle
driving, turning and stopping performance. Carmakers are
shifting the focus and resource of their development work fromthe tangible (vehicle performance) to the intangible (services),
creating an expanding range of areas in which NTN cancontribute to vehicle safety, reliability and comfort.
We view these dynamic changes in the market environment
as opportunities. We will work to provide values that exceed
customer expectations through product development andadvanced technical services that incorporate future market
needs. We aim to become a leading manufacturer in theautomotive market’s crucial drivetrain component segment.

0(Fiscal years
ended/ending
March 31)

Results for the fiscal year ended March 31, 2019

Forecast for the fiscal year ending March 31, 2020

Sales were 491.3 billion yen, down 3.4% from the previous
year, reflecting the decline in demand due to the Worldwide
harmonized Light duty driving Test Procedure (WLTP), newstandard for measuring CO2 emissions in Europe, U.S.A.’ssanctions against Iraq, slow responses of vehicle manufacturers
to the demand shift from diesel engines to gasoline engines,
etc. as well as the sharp economic downturn in China in thesecond half of the fiscal year caused by the trade friction.
Operating income was 8.7 billion yen, down 60.3% from theprevious year, reflecting the impact of the reduction in sales
volume in Europe and China as well as the increase in costs
including rising prices of steel and secondary materials, andadditional tariffs in the U.S.A.

In Europe, the impact of negative factors seen in the previous
year remains, and demand is weak due to uncertainty about
the U.K. departure from the EU. In addition, China also expects
vehicle sales to be sluggish due to the prolongation of trade
friction with the U.S. and the introduction of new exhaustgas regulations (country 6). In other, we expect relatively firm
demand and a net increase in new projects. However, we
expect result in sales of 461.5 billion yen, down -6.1% fromprevious year. Operating income expects 0.5 billion yen, down
-94,3% from previous year, despite mitigating the impact ofadditional tariffs on U.S.A. by promoting the switch to local
procurement and manufacturing, and passing on rising pricesof steel, secondary materials, and transportation.

Financial / Company Data

On the other hand, we expect that needs specific to EVs
will increase, such as those for quietness, low vibration andhigh-speed rotation, and that the market related to sensing
technologies and failure detection functions including CMS thatare essential for autonomous driving vehicles will expand. In
addition, carsharing is expected to increase utilization rate ofeach vehicle, leading to increased needs for parts durability andincreased demand for service parts.
We recognize that the ever-changing automotive industry
is now offering suppliers a business environment that presents
chances for advancement as well as risks for survival.

35 NTN Report 20192017

NTN’s ESG Strategies

The automotive industry has entered a period of major changes,
such as CASE*1 and MaaS*2 that incorporates it. We believe thatsuccess of a company depends on how it transforms the risks
associated with changes into growth opportunities.
With the EV-shift, there is a risk that demand of bearings
may decline as a transmission that uses a lot of bearings is
replaced with a gearbox that has a simple structure. In addition,
the shift from ownership to sharing may reduce the number ofvehicles in the market and further commoditize them as tools,
intensifying price competition.

The rise of electrified vehicles throughout the world’s
automotive markets calls for functional automotive components
with different characteristics or more rigorous performancerequirements than are required for conventional internal
combustion engine vehicles. We will accommodate these needs
by offering different technical expertise and lineups of advanced
products providing features such as size/weight reduction, higher
speed rotation, lower torques and less noise/vibrations in order tosecure a competitive advantage over the competitors.
Ride-sharing and autonomous driving are two othermajor trends that are expected to change the landscape of
the automotive market. Providing these functions will require

2016(Forecast)Business environment

Increased needs for longer operating life and increased reliability offunctional parts, in addition to increased aftermarket opportunities due tofurther penetration of carsharing

0.5

0Representative Executive Officer
Senior Managing Executive Officer

DRIVE NTN100 strategies and progress

Strengthen core technologies and products
We work to differentiate our core products such as hub bearings and driveshafts with the No.1 and No.2 market share in theworld respectively by product development and technical services that meet the universal needs such as low friction and lightweight and the requirements specific to CASE. The fixed constant velocity joint “CFJ-W” we developed in 2018 achieved
the world’s highest maximum operating angle of 55° and an approximately 50% reduction in torque loss. In May 2019, welaunched “Low Friction Hub Bearing III”, which has reduced rotational friction by 62% compared to conventional products
and improved vehicle fuel efficiency. In addition, development projects and mass production adoption by emerging EV
manufacturers are increasing, and our customer base is also being diversified. At the same time, we will make steady efforts
to improve our Monozukuri efficiency and reinforce our global procurement function, maximize the scale benefits of our coreproducts that have high market shares, and secure earnings to reinvest in new areas.

Develop businesses in new areas
We are accelerating development of innovative technologies, products and services that make use of the core technologies wehave cultivated in our core businesses, and are working to respond to new needs such as electrification and autonomous driving.
In 2018, we developed “sHUB,” a hub bearing with steering assist function, and started to make proposals to customers. It
is expected not only to improve steering stability and fuel efficiency of the vehicles, but also to be applied for risk avoidance
operation of autonomous driving vehicles. In addition, “eHUB,”
which combines a hub bearing and a motor, has functions of bothNet Sales and Operating Margin (actual and planned figures)
drive assistance and electric power regeneration when decelerating,
5.5%
and contributes to improved fuel efficiency in combination with
1.8%
(Billions of yen)
New business550.0
the 48V Mild HV. Furthermore, “Electric Motors and Actuators,”
600.0
491.3
areas
which combine bearings and ball screws technology with motor
400.0Core businessdesign technology and electrical control technology, can be used for
areas
200.0
electrification of accessories such as pumps and brakes. We will work
(Fiscal years0
on mass production and commercialization of these new products
ended/ending
2028 March 31)
2019
2021
with a sense of urgency, to expand new business areas.

NTN Report 201936

NTN’s ESG Strategies

Akira Wada
June 2005: Managing Director at
Hitachi Zosen Corporation
June 2006: Standing Corporate Auditor
at NICHIZO TECH INC.
June 2011: Outside Director at NTN(current position)

Noboru Tsuda
June 2005:

Executive Officer at Mitsubishi
Chemical Industries Limited(currently Mitsubishi Chemical
Corporation)

April 2014:

Member of the Board (Representative
Director), Vice President Executive
Officer at Mitsubishi Chemical
Holdings Corporation

June 2016:

Outside Director at NTN (current
position)

TOPIC 1

Issues in the globalization of the head office
Regarding issues in the globalization of the head office (e.g.
delayed integration of domestic and overseas organizations,clarification of responsible areas, etc.) which were pointed
out last year, how were those issues discussed at the Board of
Directors and how was the situation changed over the past year?

Shift from individual optimization tototal optimization
Tsuda: Though it is difficult to make a drastic change in a year,
but I feel that the points of our remarks as Outside Directors lastyear are consciously discussed at the Board of Directors. We canmention the reform of global procurement as one of them. The
variable cost reformation has improved greatly over the past year.
Since it is just in the beginning stage, the key point will be how
it will function going forward. Another is the Supply & Demand* Supply & Demand Center: Newly established in October 2018 to improve inventory turnover ratio, operational
efficiency, and on-time delivery rate through integrated and centralized management while rebuilding the core
IT system.

37 NTN Report 2019

Center*. Regarding those two, I think that at least we came tothe starting line over the past year.
Wada: As Mr. Tsuda said, it is hard to make a drastic change
in a year, but I feel that the Board of Directors has graduallychanged according to our remarks during these 8 years of ourservices as Outside Directors. The appointment of Mr. Herve
Brelaud* as the Operating Officer in charge of Procurement
Headquarters this year is also a significant change. The talent
within NTN had been conventionally appointed to such
position. So, we would say that the appointment of the talentfrom SNR, a French subsidiary acquired by NTN, is a meaningfulchange. Following this appointment of European talent as thehead of global procurement at the head office, I expect twochanges. Firstly, this appointment should enable us to learn
the way of thinking and approach from their point of view.
Secondly, perhaps there may have been certain hesitations
particularly as an acquired subsidiary, however, now that suchtalent is a part of the head office, I expect improvements in thecommunication. Joining forces of human resources from boththe NTN head office and overseas would lead to vitalization of
our business in Europe.
*Mr. Herve Brelaud is served as Deputy General Manager, Europe & Africa Region, and Vice President, NTN-SNR
ROULEMENTS. He was appointed as the Operating Officer in charge of Procurement Headquarters in 2019.

Financial / Company Data

In the Outside Director Dialog which was held for the first time last year, a frank and outspoken talk was held on the issue ofgovernance for NTN and its approach to value creation.
It’s been a year since then. This time, those two Outside Directors are back to have a heated talk about the new issues for NTN again.

NTN’s ESG Strategies

Outside Director

is very difficult.
Tsuda: The weak financial performance for recent years is also
the issue to be solved. Of course, there is an influence of someexternal factors, but the entire officers and employees musthave a sense of crisis. That’s how serious it is. We have to thinkof the future on the assumption of current situation. We haveto think in a shorter time span and manage our business withmore sense of crisis.
Wada: We are facing the situation where we can increase
sales by manufacturing all products as usual, but not profits.
We need to pursue issues, such as decision making between
in-house production or outsourced, more strictly by profitfirst thinking. Moreover, we need to judge to what extent weshould meet customers’ needs. From customers’ point of view,of course they prefer our products to be produced in-house.
However, in consideration of sales, sometimes we have to
make other proposals convincing enough for them. Things
are not what they used to be, shifting from small variety inmass production to more variety in small production. In suchsituation where sales increase but profit decrease, efficiency
at manufacturing site is essential or otherwise we become
exhausted. How to break through this difficult situation will be
the key issue.
Tsuda: As you said, the question is whether the management
has the fortitude to lose orders with low profitability or not.
Just because the sales decline as a result of placing priority
on the total optimization, the evaluation of manufacturing
divisions or manufacturing subsidiaries in charge of it should
not be lowered. Even if sales should decline in the annual plan,
we need to find the appropriate way of evaluation, such ascomparing the results within the annual plan instead of year on
year.

NTN’s Business Strategies

Outside Director

Tsuda: We have had many discussions through TV conferences.
But, there are some things that can be discovered only bymeeting each other face-to-face. Another issue which I needto carefully observe as the Outside Director is whether we
can globally develop the appropriate system of supply anddemand or not. In October 2018, the Supply & Demand
Center was established, including the rebuilding of the core IT
system. Through this, if the comparison of costs in Japan andoverseas can be confirmed within a single division, we canmake our decisions globally including procurement. However,the problem is that, while procurement itself can operatesmoothly once the framework is established, the supply anddemand is a different matter. We need to coordinate between
business divisions as well as between manufacturing andsales divisions. It is not like we can sit back and relax once theframework is established. Needs are different in each businesssite including subsidiaries in Japan and overseas. It is importantto aim for total optimization, but this is the management issue
which can’t be judged overnight, if we consider net sales andperformance evaluation. Firstly, we need to get the Supply& Demand Center off the ground in Japan. Then, it may be
another 2 or 3 years until we can extend it globally. The Supply& Demand Center is currently served as a “mediator” between
business divisions, so there is a certain situation where acertain department is forced to be patient as a result of power
relationship between business divisions. The capability of the
Supply & Demand Center will be the key issue going forward.
Wada: That’s right. The most challenging task at the Supply &Demand Center is to coordinate different business approaches
required by each business division. Regarding the automotive
business, we can grasp the customers’ needs yearly. So, themass production according to the plan is possible. Meanwhile,the industrial machinery business rather tends to meetcustomers’ specific needs by tailor-made services, comparedwith the automotive business, therefore a close communication
with the manufacturing site is necessary. From the perspectiveof manufacturing site, the mass production such as automotive
business is easy to proceed and easy to secure profits. So, suchbusiness tends to be prioritized. It is difficult to coordinate
because slowing down this mass production system leads to
low profitability. Also, though the aftermarket business showshigh profitability, this is a result of the mass production effectcoming from OEM of automotive business. What aftermarket
business needs is diversified products in small production. But
if we are to meet such needs as they are at the manufacturingsite, then we can’t ensure profitability. To what extent weshould meet such needs of aftermarket business; it is difficult
to find the right balance. And this is where the judgment of
the management is really put to the test. It is important tochange our corporate culture which aims for mass productionof high-quality products, the Supply & Demand Center plays
one of the key roles for this change. The supply and demand
were conventionally determined by each business division forthe most parts, which is to say individual optimization. If wetry to do this at the initiative of the Supply & Demand Center,some divisions can enjoy its merit, but it can be at the cost ofsome other divisions or manufacturing sites. This coordination

About Us

Outside Director Dialog

TOPIC 2Marketing issues
Last year, regarding marketing issues, you pointed out thedifference in marketing methods for products closer to B-to-C
rather than conventional B-to-B, and the delay in response tosuch marketing. How has the situation changed?

Importance of alliance
Wada: Newly emerging nations will eventually take the placeof main manufacturers for simple bearings. Also for B-to-B
market, high value-added special bearings, such as unitizedbearings, will be in demand. Meanwhile, regarding new
businesses, we have some promising products which may
possibly have a potential for gaining a nationwide market
share. Needs for products closed to end users, such as disaster
response products in natural energy business, will see further
growth. Though the scale of sales of green energy products
business is not so big yet, it is important to increase thesales steadily. Also, it is important to find what customers
want, which are seeds for survival in the next generation,by sharing customers’ opinions and information the sales

NTN Report 201938

NTN’s ESG Strategies

Changes in the Board of Directors over the past year

Wada: It is a fact that we are going in a right direction,although you may not actually feel it in the midst of the
management.
Tsuda: We can exchange frank and honest opinions in the
Board of Directors, but on the other hand, I often feel that wetake much time unnecessarily to discuss topics which we don’t
have to. I have been thinking that we should remove such
unnecessary topics. This being part of the reasons, we decided
to make a transition in our organizational design from a
Company with Board of Company Auditors to a Company with
Nominating Committee, etc. this year.
Wada: This is a significant change. This shows the commitment
to advance while valuing our roles as Outside Directors. I’mlooking forward to what this change will bring. As Mr. Tsuda
said, discussion at the Board of Directors so far in fact included
many minor topics which should have been originally decided
by execution divisions. It is important to separate functions ofexecution and supervision, and encourage execution divisions
to responsibly make decisions on their own. Conventionally,
our company has had the corporate culture where importantmatters were decided by the Board of Directors. However, we
shifted from the attitude of waiting for top-down decisions
to the organizational structure where execution divisions shallproperly fulfill their responsibilities in execution. I expect that
this change enables us to develop the environment where
speedy corporate decision making allows employees to work
proactively and raise their motivation.
Tsuda: That’s right. In the Board of Directors in the past, I felt
the fact that decisions were made by everyone was one of
the reasons why who bears the responsibility became unclear.
Minor topics, such as whether each capital investment isreasonable or not, were included in the agenda of the Boardof Directors, and we couldn’t spend enough time on reallynecessary discussions, such as what field we should focus more

TOPIC 4

A message after looking back on the past year
What is the message from Outside Directors after looking backon the past year?

“Danshari” by the management: judging
what is truly necessary for our company
Wada: “People, products, and money” are often mentioned
as major management resources, but after all, humanresources are the most important factor. We live in the world
where the speed is increasingly becoming the top priority,and the most important factor is human resources. Personnel
Department should grasp the performance of all employees,
but furthermore, personnel decisions for ones who take theleadership in future is extremely important. The responsibility of
the Manager of Personnel Department is tremendous. In orderto make appropriate decisions, I want Personnel Department tohave a great manpower. It is essential to ensure better humanresources for survival of NTN in future, and 1 or 2 years are notenough to see results. We hope that we will be able to hearcomments such as “human resources in NTN have changed” 5
or 10 years later.
Tsuda: We need to think about how we make use of external
resources. In the same way as new businesses, we also needto consider different alternatives for human resources, not

NTN Report 2019

Financial / Company Data

39 NTN Report 2019

Raising speed and motivation by
separation of execution and supervision

only developing within our company but also externally
recruiting human resources who are capable of management.
This approach is especially important in overseas subsidiaries.
A company of our scale cannot be managed only by internal
human resources. Also, such company tends to fall into avicious practice of “following precedent,” due to the lackof external point of view. In business, I always think that weshould never just follow precedent, but it is external humanresources who let us know whether our action is just following
precedent or not. Therefore, it is important to interact withvarious companies and people outside. We should not fall intoa vicious practice of “following precedent,” and sometimes“swings and roundabouts” is necessary.
Wada: The reform of marketing is also required. Since theeconomy in Osaka is declining, the organization which puts out
our antenna to grasp customers’ needs becomes important.
For example, the development divisions and Automotive
Business Headquarters have moved to Tokyo where we cangrasp customers’ needs more easily. That’s a great decision.
Although our company tends to prefer proceeding all processes
by ourselves, we need to consider outsourcing as necessary,otherwise the increase is only in the number of employees
while profitability decreases.
Tsuda: Under the circumstances where the work style reform is
promoted to reduce overtime work, only requesting employees
to reduce overtime work just results in making them feel morestressful. The work style reform is a kind of “Danshari”, thecorporate judgment of what is truly necessary for our company.
It requires extremely important managerial judgment of what tochoose and what to abandon. This is the current major issue forour company.
Wada/Tsuda: The number of Board of Directors decreases
as a result of the transition to a Company with Nominating
Committee, etc., and its function will change drastically, suchas a decrease of number of proposals to be resolved by the
Board of Directors. Previously, directors acted on behalf of
responsible managers of execution divisions in all matters at theBoard of Directors. However, we expect more opportunities forcandidates for directors and executives in the next generation
to report directly, as we proactively invite responsible managers
of execution divisions and staff in charge. Through suchdiscussions, we also would like to make the Board of Directors
as a useful place to find great talents.

NTN’s ESG Strategies

divisions have gotten in the course of promotion of bearings
with the development divisions and technology divisions moreproactively and globally.
Tsuda: I feel that it is quite difficult to cover the marketingfor new businesses only by our human resources. At thesame time, it is not realistic to hire many employees ahead ofdevelopment of new businesses, so the partnership will become
really important. We need to shift from doing all by ourselvesto cooperating with partners. As I said last year, when we form
partnership, we need a product attractive and superior enoughto collaborate, and must choose partners who actually have it.
Wada: I also recognize the importance of partnership. Wrist
Joint Module (i-WRIST) is a great example. The collaboration
with the partner which has a brilliant visual technology enabled
us to produce a competitive device which is useful for a productacceptance judgment at the final inspection of production
site. This product also meets needs for manpower reduction in
future. I think there are many other companies who think they
can produce better products by combining our technologicalcapability through partnerships.
Tsuda: Of course, new businesses are important, but thefact remains that we also need to prioritize the drastic
improvement of profit from existing businesses. We need toanalyze fundamental causes of decline of profit, and change
existing businesses as well. Under the current circumstanceswhere the amount of investment has ballooned due to thesystem investment, and personnel expenses have increased
globally, if we carry on existing businesses in the same method
and same manpower as before, our business will recede as amatter of course. We need to thoroughly analyze and discuss
how manpower reduction has been carried out, and what
our weaknesses are when compared to competitors, be it the
procurement or the presence of situation where we have tochoose unprofitable products in our product mix, etc. Though
we did have a sufficient discussion at the time of formulationof our Medium-term Management Plan, the current status insome areas are out of its course, so we need to place the firstpriority on analyzing the current financial performance andtaking measures for improvement. The situation where weare busy but profitability does not improve, and consequently
the salary doesn’t increase and motivations of employees go
down. I think that the Board of Directors needs to deliver a
very powerful message regarding this. Capital investment
for decrepit factories; for manpower reduction; and that

We held our first ESG briefing session for institutional investors
at the end of the last year, and created the first opportunity
for a dialog between the president and employees in February
2019. As all these show the positive moves in the management
to adopt opinions of investors and employees, did you feel any
changes in the Board of Directors over the past year?

NTN’s Business Strategies

TOPIC 3preferentially to improve profitability, and in what scale of invest
framework. As I pointed out earlier, the Supply & Demand
Center is served as a “mediator” between business divisions. I
believe discussion on such issue at the Board of Directors will
enable us to make a decision for the total optimization which
can’t be judged by execution divisions. It will be important
to concentrate on the intrinsic matters to be discussed at theBoard of Directors, such as checking the progress of plans
which were formulated in the past, or decision of our major
policy, in addition to deciding on the criteria for evaluation,
human resources, and compensation. However, creating theorganizational structure alone will be meaningless. Only after
putting our hearts into it, the new structure can carry its true
meaning.
Wada: Previously, there were only 2 Outside Directors, but
the Outside Audit & Supervisory Board Members will join our
discussion as Outside Directors from now on. Since the Audit& Supervisory Board had its good function, we hope thatparticipation of the Audit & Supervisory Board Members in the
Board of Directors as Outside Directors will bring such good
aspects into the Board of Directors and make it work.
Tsuda: Going forward, I believe the Board of Directors will
become to function in such way as hearing opinions ofexecution divisions at the early stage before determining abudget before discussions. Also, as the number of Outside
Officers increased to 5, I expect the Board of Directors to be
proposal-based where discussions and requests of Outside
Officers are presented to execution divisions and the Board of
Directors.

About Usrequires configuration of core system such as the Supply &Demand Center; there are many capital investments we needto accomplish. Meanwhile, as external circumstances areworsening, it is really important to prioritize what we should
invest under the estimated cash flow, whether we should
place priority on investment even if the financial performanceis severe, or we should refrain from investing in such case. So,
these prioritizations are very important and I must say thatsteering our company has grown quite difficult.

40

NTN’s ESG Strategies

About Us

Officers(as of June 25, 2019)

NTN’s Business Strategies
NTN’s ESG Strategies
Financial / Company Data

Director

Director

Director

Director

Toshinori Shiratori

Hideaki Miyazawa

Hiroshi Ohkubo

Managing Executive Officer

Representative Executive Officer,
Senior Managing Executive Officer

Representative Executive Officer,
President, Executive Officer(Back row from left to right)

Director

Director

Yoshinori Terasaka

Eiichi Ukai

Hironori Inoue

Representative Executive Officer,
Senior Managing Executive Officer

Managing Executive Officer

Outside Director

Outside Director

Outside Director

Outside Director

Outside Director

Ryo Kawakami

Noboru Tsuda

Kouji Kawahara

Akira Wada

Tadao Kagono

41 NTN Report 2019

NTN Report 201942

NTN’s ESG Strategies

Directors
Name

Title

DirectorAge

66 years old(born on May 14, 1953)

Hironori Inoue

Director

67 years old(born on July 29, 1951)

Hideaki Miyazawa

Eiichi Ukai(born on August 30, 1959)

Director(born on October 18, 1960)

Director

Director

Noboru Tsuda

Outside Director

Ryo Kawakami

62 years old(born on February 1, 1957)

Outside Director

Tadao Kagono

60 years old(born on July 13, 1958)

Akira Wada

Kouji Kawahara

58 years old

74 years old(born on January 17, 1945)

69 years old(born on November 25, 1949)

Outside Director

58 years old(born on February 3, 1961)

Outside Director

71 years old(born on November 12, 1947)

Outside Director

51 years old(born on October 1, 1967)

Years ofService as
Director

Number of Board of
Directors Attended

Number of Company’s
Shares Held

(Fiscal year ended March 31, 2019)(As of March 31, 2019)7 years
9 years

100% 19 out of 19 times
100% 19 out of 19 times

94,900 shares

Reason for Selection

Mr. Hiroshi Ohkubo possesses operational experience in areas such as the Finance Division
and Overseas Division, and broad knowledge of company management for promoting
business globally based on these achievements, and has served as President andRepresentative Director of the Company since June 2014. The Company selects him with an
aim to continuously improve corporate value, utilizing his experience and knowledge, etc.

6 years

100% 19 out of 19 times

73,200 shares

89.4% 17 out of 19 times

Representative
Executive Officer,
President, Executive
Officer

CEO (Chief Executive Officer)

Keiji Ohashi

Representative
Executive Officer,
Senior Managing
Executive Officer

CFO (Chief Financial Officer)
General Affairs Department
EHS (Environment, Health and Safety)
Integrated Management Department

Yoshinori Terasaka*

Representative
Executive Officer,
Senior Managing
Executive Officer

CTO (Chief Technology Officer)
New Product and Business Strategic Planning
Headquarters
Americas Region

Hideaki Miyazawa*

Representative
Executive Officer,
Senior Managing
Executive Officer

Corporate General Manager, Automotive
Business Headquarters
Europe & Africa Region

Itsuji Goto

Senior Managing
Executive Officer

CSR Headquarters
Cost Planning Department
China Region

Eiichi Ukai*

Managing Executive
Officer

Aftermarket Business Headquarters
Quality Assurance HeadquartersNTN Korea Co., Ltd.
ASEAN, Oceania & West Asia Regions
India Region

Executive
Takehiko Umemoto Managing
Officer

General Manager, EV Module Division

Managing Executive
Officer

Corporate General Manager, Industrial
Business Headquarters
Green Energy Products Division

Executive
Toshinori Shiratori* Managing
Officer

Corporate General Manager, Corporate
Strategy Headquarters
Human Resources

The Company selects him with an aim to continuously improve corporate value, utilizing his

Division, Engineering Division and Business Division for the automotive market, andbroad knowledge based on these achievements. The Company selects him with an aim to

Mr. Hideaki Miyazawa possesses operational experience in areas such as Business Divisions

60,500 sharesfor the automotive market and Overseas divisions, and broad knowledge based on theseachievements. The Company selects him with an aim to continuously improve corporate value,

Responsible

Hiroshi Ohkubo*

Mr. Yoshinori Terasaka possesses operational experience in areas such as the Research

50,400 shares

Title

and the Human Resources Division and broad knowledge based on these achievements.

continuously improve corporate value, utilizing his experience and knowledge, etc.

5 yearsName

Mr. Hironori Inoue possesses operational experience in areas such as the Production Divisionexperience and knowledge, etc.

utilizing his experience and knowledge, etc.

4 years

100% 19 out of 19 times

Mr. Toshinori Shiratori possesses operational experience in areas such as the Human

33,600 shares

Resources Division and the Corporate Strategy Division, and broad knowledge based on theseachievements. The Company selects him with an aim to continuously improve corporate value,utilizing his experience and knowledge, etc.

2 years

100% 19 out of 19 times

Mr. Eiichi Ukai possesses operational experience in areas such as Quality Assurance Division

48,500 sharesand Overseas Division, and broad knowledge based on these achievements. The Company
selects him with an aim to continuously improve corporate value, utilizing his experience andknowledge, etc.

8 years
3 years
4 years*
15 years*
4 years*

100% 19 out of 19 times
100% 19 out of 19 times
100% 19 out of 19 times
100% 19 out of 19 times
84.2% 16 out of 19 times*Including years of service as Audit & Supervisory Board Member.

43 NTN Report 2019

Executive Officers

Chairman of each committee

45,200 shares

Mr. Akira Wada possesses broad knowledge based on extensive experience in the
management of other companies. The Company selects him with an aim to secure
validity and legality of management and continuously improve corporate value throughhis appropriate advice and suggestions from an independent standpoint, utilizing his
experience and knowledge, etc.

17,300 shares

Mr. Noboru Tsuda possesses broad knowledge based on extensive experience in the
management of other companies. The Company selects him with an aim to secure
validity and legality of management and continuously improve corporate value throughhis appropriate advice and suggestions from an independent standpoint, utilizing his
experience and knowledge, etc.

23,100 shares

Mr. Kouji Kawahara possesses extensive experience in banking over many years and broad
knowledge including finance, and since June 2015, he has been performing his duties as astanding Audit & Supervisory Board Member of the Company. The Company selects him withan aim to secure validity and legality of management and continuously improve corporate
value through his appropriate advice and suggestions from an independent standpoint,
utilizing his experience and knowledge, etc.

34,500 shares- shares

Financial / Company Data

Toshinori Shiratori

59 years old

Members of Compensation Committee

NTN’s ESG Strategies

Yoshinori Terasaka

Director

Members of Audit Committee

NTN’s Business Strategies

Hiroshi Ohkubo

Members of Nominating Committee

About Us

Officers (as of June 25, 2019)

Mr. Tadao Kagono possesses broad knowledge based on extensive experience as an academic
specializing in management, and since June 2004, he has been performing his duties as an
Outside Audit & Supervisory Board Member of the Company. The Company selects him with an
aim to secure validity and legality of management and continuously improve corporate value
through his appropriate advice and suggestions from an independent standpoint, utilizing his
experience and knowledge, etc.
Mr. Ryo Kawakami possesses broad knowledge based on extensive experience as a lawyer
familiar with corporate legal affairs, and since June 2015, he has been performing his duties
as an Outside Audit & Supervisory Board Member of the Company. The Company selects
him with an aim to secure validity and legality of management and continuously improve
corporate value through his appropriate advice and suggestions from an independent
standpoint, utilizing his experience and knowledge, etc.

Kazuki Kawashima

Hidefumi Tsuji

Managing Executive
Officer

Procurement Headquarters
Supply & Demand Center
Composite Material Product Division

Masaki Egami

Executive Officer

Research Division

Isao Ozako

Executive Officer

Corporate General Manager, Production
Headquarters
Production Engineering R&D Center

Koji Kametaka

Executive Officer

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

Tetsuya Sogo

Executive Officer

Corporate General Manager, Finance
Headquarters

Masaaki Yamamoto

Executive Officer

Deputy Corporate General Manager, Corporate
Strategy Headquarters*Executive Officers concurrently serving as Directors

NTN Report 201944

NTN’s ESG Strategies

1

Members composing Nominating Committee, Audit Committee, and Compensation Committee
Directors

Nominating Committee

Shareholders held on June 25, 2019 (for the fiscal year ended
March 31, 2019). The purpose of this transition is to establish
a prompt decision-making structure and operational execution
organization, strengthen the supervision of management, andimprove management transparency and fairness. Under thisstructure, we will work on further improvement of corporate
value over the medium- and long-term.

Strengthening and enhancing our corporate governance is
one of our top management priorities. We take steps to makemanagement more efficient and robust while working toincrease management transparency by disclosing information ina prompt and accurate manner to shareholders and investors.
We made a transition from a Company with Board ofCompany Auditors to a Company with Nominating Committee,
etc. upon the approval of the 120th General Meeting of

Yoshinori Terasaka
Hideaki Miyazawa
Toshinori Shiratori
Eiichi Ukai
Akira Wada

(Non-standing)Noboru Tsuda(Non-standing)Kouji Kawahara
Tadao Kagono(Non-standing)

Ryo Kawakami(Non-standing)Inside Director

are Chairmen of committees,

Outside Director

Chairman
2

Management Meeting

The Management Meeting discusses importantmatters relating to operational execution, asa supporting body for decision-making of
President, Executive Officer. The meeting iscomposed of President, Executive Officer, andExecutive Officers who are designated by him,
and held twice a month in principle.

General Meeting

Appointment/removalof Directors[Execution Organization]

Advise5 Management
Meeting

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

ReportExecutive
Officers

Appointment/removal ofmembers of committees

ReportReport2 Nominating Committee
ReportDirect(audit firm)

4 Compensation Committee(Sharing information)

Organizational design

Company with Nominating
Committee, etc.

Directors

11

Of those, independent
Outside Directors

5

Term of office of Directors

1 yearExecutive Officers

15

Of those, Executive Officers
who have the authority ofrepresentation

4

Executive Officers concurrently
serving as Directors

5Structure to support duties of
Audit Committee

Available (Audit Preparationand Support Office)Accounting auditor

Ernst & Young ShinNihon LLC

Risk Management
Committee
Compliance Committee

3 Audit Committee

Audit

Fair Trade Monitoring
Committee
Audit
DirectInternal Audit Divisions
ReportCooperate

Audit Preparation
andSupport Office

Accounting auditor

6 Executive Officers
Meeting

CSR Committee

Basic Information

3

Financial / Company Data

Representative
Executive Officer,
President,
Executive Officer

1 Board of Directors
Appointment / removal

Executive Officers
Executive Officers are elected by the resolutionof the Board of Directors, and are in chargeof executional decision making and executionof operations delegated by the Board of
Directors. Its term of office is specified asa year by the Articles of Incorporation. The
number of Executive Officers is 15 as of June25, 2019.

Report/propose

Appointment/removalof Executive 0fficers

Nominating Committee

The Nominating Committee decides on thecontent of a proposal regarding appointment/
removal of Directors, which is submitted to
the General Meeting of Shareholders. As
prescribed by laws, a half or more of themembers of the committee are Outside
Directors. Three out of the five members of
the committee are Outside Directors, and thecommittee is chaired by an Outside Director.

[Supervision Organization]

Executive Officers Meeting

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

of Shareholders

NTN’s ESG Strategies

Corporate governance structure (as of June 25, 2019)6

Compensation Committee

Hironori Inoue*Please note that persons withare Outside Directors, persons withand persons with are members of committees.

5

Audit Committee

Hiroshi Ohkubo

NTN’s Business Strategies

The Board of Directors decides the basic
management policies, and supervises theexecution of duties of Directors and Executive
Officers. The Board of Directors considerably
delegates its authority regarding operational
execution to Executive Officers, except matters
stipulated by laws and regulations or the Articles
of Incorporation to be resolved at the Boardof Directors with the aim to strengthen the
supervision of management, and make decisionmaking more prompt.
The Board of Directors is held once a monthin principle, but it is also held as needed withflexibility.
The Articles of Incorporation specify thatthe term of office of Directors shall be one year,
and the number of Directors shall be within 15.
The number of Directors is 11 as of June 25,
2019, and five of them are Outside Directors.
The Board of Directors is chaired by Director,
President, Executive Officer.

Fiscal year ending March 31, 2020 (As of June 25, 2019)

Basic Approach

Board of Directors

About Us

Corporate Governance

Audit Committee

The Audit Committee audits the execution ofduties of Directors and Executive Officers, anddecides on the content of a proposal regarding
appointment/removal of the accounting
auditor, which is submitted to the General
Meeting of Shareholders. As prescribed bylaws, a half or more of the members of thecommittee are Outside Directors. Three outof the four members of the committee are
Outside Directors, and the committee ischaired by an Outside Director.
Also, the Audit Preparation and Support
Office is established as an organization
dedicated to support the duties of the Audit
Committee, including Secretariat of Audit
Committee. Regarding matters relating toappointment, personnel relocation, disciplinary
punishment, evaluation, etc. of staff of the
Audit Preparation and Support Office, theapproval from the Audit Committee shall be
required for decision.

4

Compensation Committee

The Compensation Committee decides on
the details of the policy for determining
compensation for Directors and Executive
Officers, and details of compensation for
individual persons. As prescribed by laws, ahalf or more of the members of the committee
are Outside Directors. Three out of the fivemembers of the committee are Outside
Directors, and the committee is chaired by an
Outside Director.

DirectReportAudit

45 NTN Report 2019

NTN Report 201946

NTN’s ESG Strategies

Governance-strengthening transition

Subsidiary management structure• Start of Operating Officer System• The Board of Managing Directors is reviewed andrenamed as the Business Strategy Committee

2015• Compliance Committee is established• The effectiveness of the Board of Directors is
assessed

2006• CSR Committee is established2016• Compensation Advisory Committee is established2008• Risk Management Committee is established• An Outside Director is appointed for the first time

2018

• New corporate philosophy system is established2011• The number of Outside Directors is increased from
1 to 22019

2012• Fair Trade Monitoring Committee is established• Transition to a Company with Nominating
Committee, etc.
• The number of Outside Directors is increased from
2 to 5

Financial institution (1 person)

Roles required of Outside Directors• Taking part in the important decision-making and supervising
the processes done by the Board of Directors• Drawing on a broad range of knowledge gained throughextensive personal experience to provide appropriate advice andsuggestions on agenda/report items to be resolved at the Boardof Directors.
• Supervising management from an independent standpoint toimprove the common interests of the shareholders
Conditions for disposition
Within the Group, which conducts business on a global
scale, Outside Directors must not only strengthen corporate
governance, but also have required dispositions to aim for global
business expansion, namely, achievements as a management,
lawyer, certified public accountant, or academic, etc., and possessa wealth of experience and specialized knowledge.

An Outside Director must not be and must not have been a
Director involved in operational execution, an Executive Officer,
an accounting advisor, or employee of the Group at the time ofassuming office and for 10 years prior to that.
At the time of assuming office and for three years prior tothat, none of the following shall apply: a major shareholder, amain lender, a lead underwriting firm, a main business partner of
the Group; an officer of either of those organizations; a person
affiliated with the Group’s accounting auditor; or a person who
received significant amount of monetary compensation from theGroup for consulting, accounting, or legal services.

For details of “standards for independent outside directors,”
please refer to the securities report. (Japanese version only)
https://www.ntnglobal.com/en/csr/governance/structure.html

Lawyer (1 person)

Assessment of effectiveness of the Board of Directors

47 NTN Report 2019

1st

1. Performance of BIP Trust for compensation for Officers
2. Stock compensation plan in the Medium-term Management Plan for following term
3. The next meeting (the monthly compensation for Directors, the bonus for Directors and Operating Officers)

2nd

1. The amount of bonus for Directors 2. The amount of summer bonus for Operating Officers
3. The amount of monthly compensation for Directors
4. Appointment of members of Compensation Advisory Committee
5. Revision of rules of Compensation Advisory Committee

3rd

1. Revision of internal rules of stock compensation plan4th

1. The amount of winter bonus for Operating Officers

5th

1. The amount of monthly compensation for Operating Officers

6th

1. Discussion on the amount of compensation for Officers

7th

1. The amount of monthly compensation for Operating Officers

For details of officers’ compensation,please refer to the securities report. (Japanese version only)
https://www.ntnglobal.com/en/csr/governance/structure.html

Compensation Committee
Conditions for independence

Person of experience or academic
standing (1 person)

We made a self-assessment of the Board of Directors bysending out questionnaires to Directors and Audit & Supervisory
Board Members in the fiscal year ended March 31, 2019, to
improve effectiveness of the Board of Directors. The result was

To increase the transparency and objectivity ofrespective compensation particulars of Directors
and Operating Officers, we have established theCompensation Advisory Committee whose majority
members are Outside Officers as the advisory bodyof the Board of Directors.
The compensation of Directors and Audit& Supervisory Board Members is paid on thebasis of the “Policy to Determine the Amountof Compensation or its Calculation Method,”which was resolved at the Board of Directors.
We held seven meetings of the Compensation
Advisory Committee in the fiscal year ended
March 31, 2019, and held discussions on thecompensation system, compensation standards,
assessments and amounts of compensation for
Directors and Operating Officers.
This committee was changed to theCompensation Committee in June 2019.

Financial / Company Data

45%

Management (2 persons)• Report the status of execution of duties by subsidiaries’
directors• Application from subsidiaries for the headquarters’ approval for
certain issues, on the basis of authorization rules• Development of internal control system• Development system for promotion of CSR activities• Compliance of basic policy of risk management• Development system for promotion of compliance activities• Development system for security trade control• Instruction and audit of compliance of laws on competition

NTN’s ESG Strategies

OutsideDirectors

Clarification of control structure by concluding a letter ofconfirmation concerning management control

Compensation Advisory Committee

Outside Directors

Background

Under the provisions of the Management Rules for Subsidiaries,
we maintain a system for subsidiaries management byconcluding a letter of confirmation concerning management
control with subsidiaries. Under the system, subsidiaries willreport the execution status of duties of their directors, andrequest the Company’s approval for certain matters. In addition,
based on the letter of confirmation, we develop systems forinternal control, promotion of CSR activities, risk management,
promotion of compliance activities, security trade control, andcompliance of laws on competition. We also widely notify andoperate a helpline (whistle-blower system) to subsidiaries as acontact point for various concerns.

NTN’s Business Strategies

2004

We made a transition from a Company with Board of Company
Auditors to a Company with Nominating Committee, etc. at theGeneral Meeting of Shareholders for the fiscal year ended March
31, 2019. As a result, the total number of members of the Boardof Directors is 11 (six Inside Directors, five Outside Directors),
and the ratio of Outside Directors is 45%. The purpose of thistransition is to strengthen the supervision of management andimprove management transparency and fairness. In addition,in order to ensure appropriate corporate governance, we haveestablished our own standard for independence of Outside
Directors, stipulating qualification and independence standards
for them. This standard is used for appointing Outside Directors.
Also, all the Outside Directors are designated as independent
Officers as defined by the rules of Tokyo Stock Exchange, Inc.
(TSE), and are reported to TSE as such.
We send materials related to matters to be discussed at theBoard of Directors to the Outside Directors in advance, and holda briefing on the agenda items beforehand, to enable lively
discussion at the Board of Directors. Moreover, we continuously
provide information necessary to effectively fulfill the roles andresponsibilities of an Outside Director by creating opportunities
to deepen the understanding of our business through on-site
inspection of business sites and other means.

About Us

Corporate Governancegenerally positive, but some opinions were voiced that theeffectiveness should have been further improved about thecriteria and the number of matters to be discussed at the Boardof Directors. Thus, we will continue to make improvements.

We made a transition from a Company with Board of Company Auditors to a Company with Nominating Committee, etc., andestablished the Compensation Committee. The Compensation Committee, the majority consists of Outside Officers, aims to improve
fairness, transparency, and objectivity of procedures regarding the decision making of compensation for Directors and Executive
Officers and enhance corporate governance. Also, the committee is charged with role of resolving the respective compensation
particulars of Directors and Executive Officers.
1) The policy and amount of compensation shall be discussed
and decided at the Compensation Committee.
2) Compensation system• D irectors (excluding those who are concurrently serving as
Executive Officers) shall receive only basic compensation,
since they are in the position of supervising management(however, compensation for the chairman of the Board of
Directors, the chairman of each committee, and membersof each committee shall be paid separately).
•T he compensation of Executive Officers shall be composedof basic compensation, annual incentive (bonus), andmedium- and long-term incentive (stock compensation).
(The compensation for the authority of representation shallbe paid separately).
3) The appropriate level of basic compensation and theperformance-linked ratio, etc. shall be set by job position by
utilizing objective external research data on a regular basis.

4) The payment amount of the annual incentive (bonus) shall bedecided in consideration of the status of progress of measures
for achieving key targets for each Executive Officer, on thebasis of the performance level in the applicable fiscal year.
5) Regarding the medium- and long-term incentive (stockcompensation), the Company’s shares shall be issued based on
the achievement level of major target figures in the Mediumterm Management Plan (money equivalent to the converted
amount of shares shall be paid for a certain portion) as
incentives to motivate them for achieving the targets in theMedium-term Management Plan and raising shareholder value,
and in order to promote the holding of the Company’s shares.
6) The compensation level and composition shall be discussed
at the Compensation Committee in a timely and appropriatemanner.

NTN Report 201948

NTN’s ESG Strategies

Securing responsiveness to Corporate Governance Code

Accessible General Meeting of Shareholders

Governance Code. We will continue to work on strengthening
our corporate governance while adapting to changes in ourbusiness environment.
The “Corporate Governance Report” can be viewed on our website.
(Japanese version only)
https://www.ntnglobal.com/en/csr/governance/structure.html

Cross-held shares
Number of stocks and amount for balance sheet
Number ofstocksRecordedamount(million yen)

Shares other than unlisted shares

50

33,951

Unlisted shares

26

290

Deemed shareholding

8—

Selection of date of the general meeting ofshareholders

Three weeks’ advance notice of the general meeting is provided(seven days earlier than the legally mandated deadline of two
weeks before the meeting date).

To maximize shareholder attendance, traditionally busy dates
are avoided, and account closing/auditing schedules are
considered when setting the meeting date.

Website posting of general meeting notice

Online voting

Our early disclosure efforts include providing notice of theGeneral Meeting of Shareholders on our website one month
before the meeting date. We also work to improve foreign
shareholder convenience by providing an English translation(summarized) of the notice.

Advance voting is made possible both by post and online. For
the convenience of institutional investors, NTN is also on theElectronic Voting Platform run by Investor Communications
Japan (ICJ).

Other
Provision of detailed information in the general
meeting notice
To assist shareholders’ understanding, the officer appointmentrelated agenda items are accompanied by a list of candidates’
names, photos of candidates, the attendance rate at the Boardof Directors, years of service, and similar information.

ESG meeting
On December 25, 2018, we held an ESG meeting at ourTokyo office for the first time. We explained about NTN’s ESG
initiatives to the 15 institutional investor participants. In themeeting, in order for the investors to better understand our
ESG initiatives, we used our integrated report “NTN Report
2018,” which was issued last year, for the explanation, and also
had a dialog about our tasks and requests from investors.

Information disclosure policy
We shall work to develop the Company and increase shareholder
return, while at the same time communicating broadly withsociety, and advocating active information disclosure as one of its
management policies. Moreover, we disclose information basedon our Information Disclosure Policy and in compliance withvarious laws and regulations such as the Financial Instruments
and Exchange Act and the “Rules on Timely Disclosure of
Corporate Information by Issuers of Listed Securities” stipulatedby the Tokyo Stock Exchange. We also respect the “Corporate
Governance Code” and disclose information in a fair manneraccording to the “Fair Disclosure Rules.”We strive to disclose, as actively and fairly as possible,
information that we deem useful for investors even if that
information does not apply to laws, regulations and other rules.

The Chairman’s explanation at the General Meeting of
Shareholders is supplemented by summaries of business reports
and financial results presented on a screen with visual aids suchas graphs and photos.

Financial / Company Data

The details of shares we hold can be viewed on our Securities
Report (Japanese version only)
https://www.ntnglobal.com/en/csr/governance/structure.html

Earlier advance notice of the general meeting ofshareholders

NTN’s ESG Strategies

From the perspective of improving our corporate value overthe medium- and long-term, we hold shares of other listedcompanies to maintain and strengthen stable and long-termbusiness relationship. Regarding cross-held shares, we regularly
verify whether or not a shareholding meets the holding
purpose, in consideration of returns and risks including the
trading status, dividends, and share price fluctuations. Holdingsof stocks judged as not meeting the holding purpose will be
reduced in number. We have verified the appropriateness ofthe holding of each stock held as of March 31, 2019, andconfirmed that the holdings were appropriate for all stocks.
In principle, we exercise all voting rights of the cross-heldshares. Regarding the voting for or against proposals, we makesuch judgments by paying due respect to the management
policy of the company concerned, instead of simply applying
fixed standards. We exercise voting rights by comprehensively
taking into account “whether or not the holding will contributeto improvement of our corporate value in the medium- andlong-term” and “whether or not the holding will damage
shareholder value.”

We try to make it as easy as possible for shareholders to attend the General Meeting of Shareholders, and take various other measures
to ensure that shareholder voting is a smooth process.
NTN’s Business Strategies

We take active measures to strengthen our corporate
governance while securing responsiveness to the purport of
the Corporate Governance Code, including the transition to a
Company with Nominating Committee, etc. in June 2019. We
have implemented all of the general principles of the Corporate

About Us

Information Disclosure

The first “ESG meeting”

Management of material information
We appropriately manage information subject to insider trading
regulations as well as conclusive financial information prior todisclosure, as material information. We also promptly disclose
relevant material information if it is found that the Company’s
executive or other employee has conveyed material undisclosed
information to a business contact determined in the Fair
Disclosure Rule. However, when a certain piece of information
is determined to be material but deemed inappropriate fordisclosure, then we will not disclose the information, placing theconcerned business contact under confidentiality obligation andobligation to not purchase/sell the Company’s shares until suchmaterial information can be disclosed.

Status of inclusion in ESG indexes
We have been assessed as an active practitioner of ESG (Environment, Social and Governance) in the stock market, and our shares
have been selected for inclusion in four ESG indexes for stock trading in consideration of environment, social, and governancefactors, which Government Pension Investment Fund (GPIF) announced in July 2017 and September 2018. Our shares have also been
selected for inclusion in multiple SRI (Socially Responsible Investing) funds and SRI indexes. We will continue to carry out proactive ESG
initiatives and information disclosure.
ESG indexes that GPIF adopted
FTSE Blossom Japan Index

SRI funds and SRI indexes

MSCI Japan ESG
Select Leaders Index*

SNAM Sustainability Index

MSCI Japan
Empowering Women Index (WIN)*

S&P/JPX Carbon Efficient Index

FTSE4Good

Information Disclosure Policy can be viewed on our website.
https://www.ntnglobal.com/en/investors/disclosure.html*1 Inclusion status as of the end of July 2019.
*2 The inclusion of NTN Corporation in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names
herein, do not constitute a sponsorship, endorsement, or promotion of NTN Corporation by MSCI or any of its affiliates.
The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks orservice marks of MSCI or its affiliates.

49 NTN Report 2019

The details of each index can be viewed on our website.
https://www.ntnglobal.com/en/csr/sc/investor.html

NTN Report 201950

NTN’s ESG Strategies

Risk Management

Basic approach to internal control

Basic approach to risk management
To guide our work on managing risks, we have developed the
Risk Management Policy that outlines our basic approach toprevention and handling of risks that may hamper the executionof the Group’s business, and the Risk Management Regulations
that set forth risk management organizations and roles.
We convene the Risk Management Committee as anadvisory body for risk management twice a year, to regularly

Structure chart

Global compliance structure

Risk Management Committee

Japan
Subsidiaries

Audit Committee

DivisionsBoard of Directors

North America

Office of General Manager,
Europe & Africa Region

Office of General Manager,
Americas Region

Internal Control Section

Internal Control Section

Subsidiaries

Subsidiaries

Information Exchange
Human Resources
Interaction
India

China

Office of General Manager,
India Region

Office of General Manager,
China Region

Internal Control Section

Internal Control Section

Subsidiaries

Subsidiaries

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

Promotion of global risk management

Promotion of BCP/BCM

Monitoring of management status of critical risks(nine global risks) per business site

Completion of formulation of BCP for early recovery
at all domestic production sites

To enable comprehensive worldwide risk management for theentire NTN Group, we selected nine risks as Global Risks thatare common to both domestic and overseas subsidiaries andexpected to cause major impacts on management if they occur.
The management status of nine risks of domestic andoverseas subsidiaries is regularly monitored via our database,and we assess the status according to the common global
standards we have developed. Based on the assessment
results, we identify the groupwide status of management, andpush ahead with necessary measures including support fordevelopment of the Company’s internal rules.
The Risk Management Committee makes periodic revisions
and checks for global risk selections in response to changes inthe environment.

We have been developing the BCP/BCM structure designed tohandle a major earthquake in Japan.
In the fiscal year ended March 31, 2019, we have completed
the formulation of BCP to enable early disaster recovery at all
domestic production sites which produce products for customers.
Moreover, we have started providing BCP training to assess theeffectiveness of the formulated action plans at business sites where
BCP formulation has been completed. At the same time, we arepromoting the development of BCM (the training was performed
in five business sites in the fiscal year ended March 31, 2019).
In the fiscal year ending March 31, 2020, while continuingwith BCP training, we will also put our efforts into formulating
BCP as a part of supply chain management, for businesssites that produce products shipped to the Group (in-houseprocessed products) and each logistics unit.

Financial / Company Data

Europe/South America

Subsidiaries· Situation of risk surrounding our group
Main matters to · Policy to handle critical risk
· Management status of “global risks” per business site
be discussed· Policy to handle BCP/BCM

CSR
Headquarters

Internal Audit
Department

Chairman: Exective Officer in charge of Risk Management
Secretariat: Global Risk Management Department
Members: Departments in charge of promotion of risk management,
responsible departments in subsidiaries

NTN’s ESG Strategies

Composition

Cooperate

check the situation of risk surrounding the Group’s business,
including changes in domestic and overseas circumstances.
We also formulate the groupwide risk management
plan and discuss matters such as the promotion of BCP(Business Continuity Planning) and BCM (Business Continuity
Management). The result of discussion at the Risk Management
Committee are reported to the Board of Directors.

NTN’s Business Strategies

internal control set forth in the Business Accounting Council’sStandards and Practice Standards for Management Assessment
and Audit concerning Internal Control Over Financial Reporting(Council Opinions). We will continuously develop the internal
control and make an operational evaluation appropriately, in
accordance with relevant standards, in response to changes inthe business environment.

We recognize risk management and compliance as one of ourmost important managerial issues, and stipulate the Internal
Control Policy.
In addition, regarding the internal control under the
Financial Instruments and Exchange Act, respective 49 domestic
and overseas subsidiaries and the Internal Audit Department
made an evaluation of internal control for the fiscal year ended
March 31, 2019, in compliance with the basic framework for

About Us

Internal Control/Internal Audit

Internal audit activities
In our company, the Internal Audit Department is in chargeof the internal audit operation and the overall management
operation of the internal control system. The Internal Audit
Department conducts an internal audit of the status ofoperational execution in each division of our group, from theviewpoint of compliance with applicable laws and regulations
and the Company’s internal rules, its appropriateness as wellas effectiveness and efficiency of business activities, as anindependent audit organization. Then, the Internal Audit
Department gives advice and proposals for improvementon the basis of the result of the internal audit, confirms theimplementation status of improvement measures, and conducts

51 NTN Report 2019a follow-up audit. It also reports on results of internal audit to
President, and the Audit Committee as necessary.
Outside Japan, an Office of the General Manager has been
established in each region to oversee and monitor operations,each having an Internal Control Section within it. The Internal
Control Section works with the Internal Audit Department andCSR Headquarters to implement policies specific to the local region
or country in accordance with local needs and characteristics.
The Internal Audit Department, Audit Committee, andAccounting Auditor work to improve efficiency and effectivenessof audit by regularly holding meetings and exchanging informationand opinions about the policy, plans, and results of audit.

Global risks
1. Leakage of confidential information
2. Computer virus/cyberterrorism
3. Violation of antimonopoly laws
4. Natural disaster5. Fire disaster/explosion

6. Issue of human rights
7. Industrial accident
8. Complaint about productquality
9. Violation of bribery-related
laws
BCP training

NTN Report 201952

NTN’s ESG Strategies

Basic approach to compliance

Survey of "Compliance awareness"
observe to conduct business activities in accordance with laws
and regulations and generally accepted standards and practices
in each country, and our internal rules. We also develop andoperate the compliance promotion structure including rules
relating to compliance, a whistle-blower system, the Compliance
Committee, and the Fair Trade Monitoring Committee.

Compliance promotion structure
Major actions to enhance compliance
Category

Developmentof Structures/
Policies/Rules

Audit/
Monitoring
activities

Commencement(YYYY/MM)

Rules for management of compliance promotion
activities are established2015/04

Compliance Committee is held (four times a year)

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

2016/04

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

2016/07

Topic-specific training for important departments which
especially need to be familiar with compliance by Legal
Dept, Fair Trade Promoting Dept and Etc. (as needed)

2012/01

Compliance training for Operating Officers is implemented(as needed)

2012/08

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

2015/04

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

2015/04

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

2015/04

NTN’s Compliance, which is a database for sharing
compliance related information, such as compliancerelated incidents and introduction of compliancepromotion structure is operated

2016/08

E-learning program about corruption prevention andantimonopoly laws is implemented (once a year)

2017/04

Audits on antimonopoly compliance are implemented

2012/11

Audits on rules for corruption prevention are
implemented

2018/05

Chairperson: Executive Officer in charge
Secretariat: Legal Department

Board ofDirectors

Domestic subsidiaries
Officers
Employees

Chairperson: President, Executive Officer
Secretariat: Fair Trade Promoting Department

Internal Control Section,
Office ofGeneral Manager
in five overseas regions

Overseas subsidiaries

E

B

60
40

Communication with
President

20
0President’s decision-making
style

Chief Management Officer
Executive officer in chargeof Legal Department

Chief Management Officer
Executive officer in chargeof Legal Department

Chief Management Officer
President, Executive Officer

Compliance Committee

Helpline
Management Department:
Legal Department

Fair Trade
Monitoring Committee

President’s response at thetime of occurrence of incident

C
Corporate culture which may leadto potential scandals

Corruption prevention initiatives

Each business unitof NTN

ReportFair Trade
Monitoring Committee

53 NTN Report 2019

Compliance promotion
activities supervisor of
NTN business units /Domestic subsidiaries

FY 2018
FY 2017100
80

DStructure

Compliance Committee

A President’s usual attitude
on compliance

Financial / Company Data

Education/
Awarenessraising activities

Actions

The whistle-blower system called Helpline is established indomestic business units with both in-house and outside contact
points. Employees can use the system to voice various concerns
related to infractions of laws, Business Code of Conduct, or
in-house regulations. Issues raised through contact points will
be investigated in accordance with Helpline Management
Rules. Through the introduction in various types of compliancetraining, the Business Code of Conduct guidebook, andintranet, we have developed a structure where all employees
can openly utilize the Helpline not only as a means of reportingof misconduct, but also as a means of raising questions,
opinions, and complaints about the observance of the Business
Code of Conduct, and maintaining satisfactory relationshipbetween the Company, officers, employees, and business
partners. Whistle-blower systems are being progressively
created and operated also in overseas regions, where they are
tailored to local needs and circumstances.

NTN’s ESG Strategies

We have in place the Compliance Committee and the Fair Trade
Monitoring Committee.
The Compliance Committee handles the global compliancerisks excluding those relating to Antimonopoly Act andSubcontracting Act. The committee members propose andimplement policies for risk mitigation, in collaboration withcompliance promotion activities supervisor who is appointed ateach domestic business unit, and the Internal Control Section
which is established at each Office of the General Manager infive overseas regions. The details of these activities are reported
to the Board of Directors.
The Fair Trade Monitoring Committee, chaired by President,
Executive Officer, discusses implementation plans and reportsof antimonopoly and Subcontracting Act compliance activities.
Additionally, we established the Fair Trade Promoting Department
in CSR Headquarters as an overall management department
for the antimonopoly compliance. Under the direction of the
Fair Trade Monitoring Committee, the Fair Trade Promoting
Department conducts education, instruction, audit and otheractivities for relevant divisions. Additionally, overseas subsidiaries
are monitored for the implementation status of antimonopoly
compliance in cooperation with the Internal Control Section,
within Office of the General Manager in each region.
Also, the Legal Department works to enhance the promotion
activities in each business unit by holding the mass training meetingfor compliance promotion activities supervisors once a year, andsharing information and exchanging opinions on important issues.
Furthermore, we hold the CSR Global Meeting in which persons incharge of compliance in domestic relevant divisions, mainly within
the CSR Headquarters, and persons in charge of compliance inoverseas regions participate. In the meeting, participants exchange
information about compliance promotion activities to define newissues and mutually confirm the policy of activities.

From the fiscal year ended March 31, 2018, as a part of activities
to prevent misconduct, we started a compliance awarenesssurvey for employees of subsidiaries to evaluate the stance of thepresident of each subsidiary on compliance.
In the fiscal year ended March 31, 2019, we conducted
the survey for 2,100 employees in 48 domestic and overseas
subsidiaries (an increase of 600 employees and two subsidiaries
from the previous year). Also, we performed the compliancesurvey for 1,300 employees in the manufacturing divisionsof NTN Corporation, regarding the stance of each generalmanager of works and divisions.
Presidents and general managers who are subject to thesurvey are informed of the survey results so that they becomeaware of the fact that they are always monitored in thecompany, leading to create a corporate culture that does nottolerate any act of misconduct.
We also utilize these survey results of internal audit, andwill continuously conduct these survey of prevent misconduct.

Helpline (whistle-blower system) andeducational activities

NTN’s Business Strategies

We position the enforcement of compliance as one of our mostimportant managerial issues because we believe that earning thetrust of society is essential for us to contribute to the realizationof sustainable society and continue to be a company neededby society. We formulated the Business Code of Conduct tospecify the policy of actions which officers and employees should

About Us

Compliance

We enforce in-house regulations created to reflect domestic andoverseas anti-corruption laws and generally accepted standards
and practices. In our in-house rules and regulations, they not only
prohibit bribery from/to domestic and overseas public officials
and business partners, but also specify the rules and procedures
regarding provision of property or profit by our officers or
employees, and the rules and procedures to prevent bribery via ourbusiness partners. In various countries, regulations against bribery
have been increasingly tightened and some countries even impose
restraints on the transfer of property or profit between privatecompanies. Under these circumstances, in order to thoroughly
ensure fair trade and prevent officers and employees from giving
rise to conflict of interest situations, we have established the rules
and procedures regarding receipt of property or profit, and makeit a policy to decline the provision of entertainment and gifts
from our business partners that exceed the bounds of common
sense. We develop a structure to prevent bribery by implementing
awareness-raising activities, including internal training ande-learning program as well as conducting self-audit regarding rules
for prevention of bribery once a year. Our domestic subsidiaries
also develop and operate their own regulations while maintaining
consistency with our company policies.
Our overseas subsidiaries have developed in-house rules
and regulations localized to reflect overseas relevant laws andregulations and generally accepted standards and practices
in each country, and started to enforce such rules andregulations in stages. On top of that, we have worked to audit
the operational status of rules and regulations and internal
procedures in each region.

Internal Helpline

External Helpline

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

Antimonopoly compliance initiatives
We regard any antimonopoly violations represent a potential
risk for the whole NTN Group. In order to ensure thoroughantimonopoly compliance, the Fair Trade Promoting Department
and the Internal Control Section in each region regularly conduct
trainings on antimonopoly compliance, which are tailored to local
laws and environment.
In the fiscal year ended March 31, 2019, our main awarenessraising activities included the training for managers at mainly sales
department (378 participants), the rank-based training for new
managers and new employees (197 participants), and the new
training for operating officers mainly concerning the preventionof cartel formations, where we invited an external lawyer as alecturer.
We work to put fair and free competition into practice bycontinuing to upgrade our training activities and raising theawareness of officers and employees.

NTN Report 201954

NTN’s ESG Strategies

Basic approach to CSR

About Us

CSR Management
UN Global Compact
strengthen our groupwide CSR activities. Also, in May 2018,
CSR Headquarters was re-organized and comprises four
departments: Global Risk Management Department (handlingrisk management), Legal Department (handling compliance),
Fair Trade Promoting Department (handling Antimonopoly Act),and Corporate Value Promotion Department (handling activities
designed to help improve corporate value). Managers andstaff in charge of CSR are appointed at domestic and overseas
subsidiaries to plan and perform activities tailored to local needs
and characteristics.

We endorsed the United Nations Global Compact (aninternational initiative for developing a global framework forsustainable worldwide growth) in 2015. Under the UN Global
Compact, we support ten principles in the four areas of humanrights, labour, environment, and anti-corruption. We also
proactively participate in the Kansai subcommittee, which isestablished by the UN Global Compact, as a facilitator to realize
sustainable society through business activities.

NTN’s Business Strategies

We have established the CSR policy in the spirit of ourcorporate philosophy. We define CSR as:• Engaging in corporate activities that incorporate concern for
the environment and initiatives to ensure social fairness andcontribution to the community• Fulfilling the duty of accountability to stakeholders• Working to improve corporate activities not only in theeconomic aspect, but also in the environmental and social
aspect.
In 2014, we established the CSR Headquarters to

TOPIC 1

Experts

CSR management

Katsuhiko Kokubu

Professor, Graduate School of Business
Administration Kobe University

Hideki Matsuoka

Special Project Manager,
Asia-Pacific Human Rights Information Center(HURIGHTS OSAKA)

Masaru Kaizaki

General Manager of Planning Department,
Sustainability Office
OMRON Corporation

Eriko Nashioka (Facilitator)

Representative Director of Institute forEnvironmental Management Accounting, CPA

NTN
Senior Managing Executive Officer in charge of CSR Headquarters…………

Itsuji Goto

Adviser…………………………………………………………… Hiroshi Nakano
Manager of EHS (Environment, Health and Safety)
Integrated Management Department…………………………………… Kenji Nono
Deputy Manager of EHS (Environment, Health and Safety)
Integrated Management Department……………………… Masayuki Yamazaki

Manager of Personnel Department………………………… Toshiyuki Kawaguchi
Manager of Corporate Value Promotion Department…………………… Kouhei Iguchi

55 NTN Report 2019

The essence of “responsibility” (“R” in CSR) is to be acompany needed by society. In this sense, it is vital for acompany to present its contribution to society in an easyto-understand way to stakeholders. NTN Report 2018
describes this in the Value Creation Process section, which
can be highly evaluated. In the next step, it is important
to show in more detail how the company generates social
value (“smooth society”) as well as economic value. For thispurpose, we must perceive activities in each business areacross-sectionally as a process to create value.
At OMRON, TOGA (The OMRON Global Award) wasstarted in 2012 as an initiative to further put its corporate
philosophy into practice. The number of participants hasgrown over the years, and more than 60,000 employees
joined the event in 2018. The source of this continuous
development is the corporate culture where themanagement encourages employees to take on challenges,
which leads to the gradual increase of participants who
agree to the purpose of the event, which results in many
employees realizing the significance of solving social
challenges. This year, NTN PROUD AWARD will be held forthe second time. Based on the example of OMRON whichshows that continuation leads to transformation, we hopethat the significance of this initiative will take a firm hold in
NTN to enable the event to continue.

It is great that NTN is energetically working on
initiatives to raise awareness of the corporate philosophy,
such as Corporate Philosophy Dialog, distribution of NTN
SPIRIT BOOK, and NTN PROUD AWARD. However, it isnecessary to systematically incorporate respective measures
into the annual plan for the purpose of promotion ofraising awareness of the corporate philosophy.

TOPIC 2

Environment
A company that proactively works on environmental
management shows its long-term vision with target figures(e.g. zero CO2 emissions by 2050), specifies the target bybackcasting, and analyzes the concrete measures to realize
the target. Through such approach, the whole group canwork on the reduction of CO2 on the basis of the common
standard over the medium- and long-term. NTN therefore
should also consider the adoption of such approach whensetting the environmental targets.
It is good that NTN discloses how much its
environmentally friendly products contribute to theenvironment. However, expressing the reduction ofemission as “contribution” can be misleading since there
still is some level of emission when seen globally as a total
volume. So, regarding the method of disclosure, it might
be better to mention that NTN products are helpful as ameans of reducing the total volume of emission.

alone, makes it easier to share the policy globally among
the whole group. It is important for NTN to clarify
its positioning and connection among the corporate
philosophy, NTN SPIRIT, and the basic policy, in formulating
the basic policy on human rights.
TOPIC 4

Financial / Company Data

To incorporate stakeholders’ input into our sustainable corporate activities, we have annually held our Stakeholder
Dialog since 2015 with academics and experts representing a number of CSR-related fields. The 5th dialog was heldin June 2019, and provided some valuable input.
In the 5th Stakeholder Dialog, we mainly discussed about four topics (CSR management, environment, humanrights, and governance).
Currently, initiatives to realize sustainable society (e.g. SDGs, ESG) have been widely promoted in the world. We
learned from the experts’ dialog that it is important for NTN to tackle new businesses from a creative and strategic
viewpoint with awareness of social challenges, and aim to connect existing businesses with solutions for social
challenges, in order to further realize smooth society through our business activities.

NTN’s ESG Strategies

5th Stakeholder Dialog

TOPICS

GovernanceWe can see from the Outside Director Dialog, which iscontained in NTN Report 2018, that Outside Directors’
opinions are actively voiced in NTN. The recent transition
to a Company with Nominating Committee, etc., which issaid to have the strongest management oversight function,means that Outside Directors have a stronger voice andtheir opinions are more widely reflected, resulting inenhanced corporate governance.

TOPIC 3

Human rights
Following the global focus on ESG investment, many
companies have rapidly started initiatives on “businessand human rights” in the recent two or three years.
Development of basic policy on human rights on thebasis of corporate philosophy, rather than human rights

Useful exchange of opinions with experts

NTN Report 201956

NTN’s ESG Strategies

About UsTOPICS

Enhancement of corporate value
NTN SPIRIT as a behavioral guideline for all employees of the Group

Corporate Philosophy

Corporate Philosophy System

Recognition

Employees

Issuance of NTN SPIRIT BOOK

Customers

Contributing to Environment"NAMERAKA*
Society"* "NAMERAKA" means"Smooth" in Japanese

Local
Communities
Shareholders

NTN SPIRITThe NTN SPIRIT BOOK was issued to raise all NTN
Group employees’ awareness of the framework of ourcorporate philosophy and the corporate philosophy
code of conduct, NTN SPIRIT. This book encourages
each employee to practice our corporate philosophy
with his/her dream and goals to realize a smoothsociety. Also, we issued posters to promote awarenessraising activities in each business unit.

Empathy & Understanding
Corporate Philosophy Dialog
Since 2017, we have held the Corporate Philosophy
Dialog so that each employee will deepen their empathy
and understanding for the corporate philosophy
framework and the NTN SPIRIT, adopt them into each
employee’s operation, and disseminate the idea in each
office. Since the establishment of the NTN SPIRIT, we
held the dialog for officers (in August 2018) and overseas
executives (in October 2018). Also, the dialog washeld for general managers of domestic divisions (fromNovember 2018 to March 2019) at each business site.

The NTN PROUD AWARD has been
held to encourage all NTN Group
employees to “take on challenges
for transformation.” Four categories
corresponding to basic values of corporate
philosophy (the Field of Creation, Field ofService Solution, Field of Contribution to theSociety, and Field of Globalization) are set and employees
are encouraged to set topics and targets which link the
corporate philosophy to their daily operations and towork to achieve them. The process and results of those
activities are assessed in accordance with three credosof NTN SPIRIT, namely, Challenge, Collaboration, andCommitment. In 2018, 1,711 employees (164 teams)
from domestic and overseas business sites participated inthis event, and worked to put the corporate philosophy
into practice through activities to achieve the targets. In
2019, NTN PROUD AWARD 2 is held as “an opportunity
to practice our corporate philosophy,” and each team isworking to achieve its goals.

Financial / Company Data

Business
Partners

NTN PROUD AWARD

NTN’s ESG Strategies

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

NTN’s Business Strategies

Practice

In April 2018, we established the corporate philosophy code of conduct, NTN SPIRIT, with the aim of raising awareness of thecorporate philosophy. The NTN SPIRIT stipulates the mindset and actions which each NTN Group employee should aim for.
The NTN SPIRIT is not just a motto to be read out, but our common language for all NTN Group employees to practice. We
promote measures for practice by taking three steps of Recognition, Empathy & Understanding, and Practice.

NTN SPIRIT
Corporate
Philosophy

NTN SPIRIT BOOKVALUES

The illustration of the NTN SPIRIT BOOK was drawn by Ms.
Masumi Yamauchi, who drew the illustration of the bookcalled “If the World Were a Village of 100 People.”
The picture book depicts how people live in a smoothworld. We hope that this book will contribute to thecultivation of employees’ awareness and pride as a memberof NTN as well as cultivation of empathy, through our
initiatives and the image of happy lives.

MISSION
Founder’s Spirits

DNA

Three Steps for Practice

Recognition

Empathy &Understanding

Opening of NTN PROUD AWARD

Practice

Our three steps are Recognition, Empathy & Understanding,and Practice. Based on the Recognition, we continuously
repeat steps of Empathy & Understanding and Practice.

57 NTN Report 2019

Corporate Philosophy Dialog for officers

The picture book explains about the NTN SPIRIT in an easy-tounderstand way.

Corporate Philosophy Dialog for general managers of divisions

Employees who participated in the NTN PROUD AWARDNTN Report 201958

NTN’s ESG Strategies
Relationship to SDGs

Development and effective use of human resources

About Us

Human Resources
Diversity

Encouraging women in the workplace

We believe that each employee’s growth is namely the growthof the Company, and the NTN corporate philosophy can’t beachieved without each employee’s growth. Based on this idea,
we are working on human resources development.
Our ideal human resources are those who are creative,
self-supporting, and global. We aim for sustainable growth byencouraging each employee to become a person who think
and act for themselves.
In addition, to make an innovational shift from a“Manufacturing Company” with a history of 100 years
to “a Company that Delivers Value to Customers throughProducts and Services,” while encouraging each employee toacquire more specialized skills, we are also working to expand
specialized areas to take on challenges for new areas byconstructing necessary information from several fields to solve
various social challenges.
Human resources are the basis of corporate development.
We aim for early development of innovative human resources
who can continuously produce excellent results, and we
especially work on improvement of skills to “spontaneously set
ambitious targets, and achieve it by clarification of issues tobe solved,” “exert his/her originality and ingenuity for targets,with belief in achievement of targets,” and “make people
around him/her to be eager to cooperate,” for the purposeof meeting customers’ needs and contributing to sustainable
society by creating original and unique technology.

To improve employees’ quality awareness, we provided a
specialized quality education program to 127 employees during the
fiscal year ended March 31, 2019, including topics such as “QC
Basic Course” and “QC Advanced Course.” In our training, we
provide quality education programs which renew the employees’
awareness of the importance of quality by using educational
materials showing past quality defects and cases of complaints.
In addition, a quality education program aiming for design
development that prevents malfunctioning is provided fordesign and technology divisions.

The economic condition and social structure surrounding us
have drastically and rapidly changed, including the shrinkage oflabor force and the development of globalization.
We are working on transformation for sustainable growth,and one of the important strategies toward this transformation
is promotion of diversity.
Fusion of various values and generation of flexible
ideas, regardless of sex, nationality, culture, age, presenceof a disability, lead to transformation. We will acceleratetransformation by working to develop a workplace environment
where each employee can take pride in the Company, find his/her work rewarding, and fully demonstrate his/her ability.
We will realize our corporate philosophy, “We shallcontribute to international society through creating newtechnologies and developing new products” by promoting
various diversity-related measures.

We hold various training programs
for women to encourage themto take a further active role. The
Women Encouragement Seminaris held to help and encourage
women to consider their career
enhancement, especially for
women who work in a workplace Women Encouragement Seminarwith few women.
In addition to that, we promote information exchange with
universities and organizations which support women’s career
enhancement to develop female researchers and engineers. We
have also participated in the collaborative meeting for genderequality promotion at Osaka which is held by the National
University Corporation Osaka University. We have supported
Science Girls Festival!! held by Osaka University to increase anddevelop future female researchers and engineers, and introduced
our corporate initiatives to support women’s career enhancement
to female junior high and high school students and their parents.
Though the number of female managers has remained
almost flat, the number of female supervisors who are
candidates for the next managers has gradually increased, so
we expect that more women will take a further active role.

Global QC Circle Convention and NTN Technical Skills
Competition: Enhancement of skills and capability at
global business sites
The Global QC Circle Convention and NTN Technical Skills
Competition are annually held at Mie Prefecture where theCompany was established.
The Global QC Circle Convention is designed to help
improve worldwide safety, quality, and productivity as wellas provide an opportunity for international interaction where
information regarding various activities can be exchanged.
In the NTN Technical Skills Competition, employees
compete with each other in demonstrating their skills
developed in daily training, while using this opportunity tohand their proprietary technology down to the next generation
by interacting with superior young technicians.

Rank-based human resources development
We develop human resources development program for
employees of all ranks to encourage them to become
persons who think and act for themselves for the purpose of
improvement of operational execution capability and acquisitionof knowledge, methods, way of thinking which are necessary
to respond to skills requirement in accordance with employees’ranks which are classified by age and qualification, etc.
The development of human resources who can play anactive role not only domestically but also globally is essential
to expand businesses for the next 100 years. To develop
such human resources, we have enhanced the overseas
experience program especially for the young employees.
As human resources development programs for those whowill take overseas assignment in the future, we have theInternational Trainee System, which is a one-year program
aimed at improving language skills and operational skills
by OJT at overseas business sites, and the International
Challenge Training, in which newly graduated employees
are dispatched to overseas business sites for three months
for early development of language skills and skills to play anactive role in a different culture. We also utilize the Overseas
Study/Scholarship System to stimulate employees’ passion forlearning, and develop excellent, global human resources.

Human resources development by specialty
focusing on technical skills and technology
We promote development of human resources who can hand
our proprietary technologies and technical skills down from ourmother plant to worldwide manufacturing bases.

59 NTN Report 2019

Global QC Circle Convention

Expansion of employment of elderly employees
Under the circumstances of decreasing birthrate and aging
population in Japan, we are working to encourage experienced
employees to take an active role as important workers. We
develop an environment where experienced employees cancontinue to work after the retirement age of 60 by making
use of their career experience, to hand their knowledge,
technology, and technical skills down to the next generation.
In comprehensive consideration of their career experience,skills, workplaces, etc. to date, they can continue to work at
any of domestic subsidiaries. Such structure resulted in 90%
rehiring rate for those who reached the retirement age in thefiscal year ended March 31, 2019.

Balancing work and childcare

NTN Technical Skills
Competition

NTN production engineer training course: Strengthen
mother functions
We had established NTN School to provide training for productionengineer specialists who can take an active role globally, but wechanged its name to NTN production engineer training course in
the fiscal year ended March 31, 2018 to renew it to a more highly
specialized course. This course provides new employees aiming
to become production engineers with a three-year education
program covering from basic manufacturing to specialized
production engineering education, for the purpose of early
development and turningout of production engineers
who can take an active role as
leaders to strengthen domestic
mother functions.
An employee taking an active role inan overseas manufacturing site

We developed a handbook about childcare leave and relevant
systems for those who take childcare leave, and their bossto support the balancing of work and childcare. The creationof a handbook for both those who take childcare leave andtheir boss will result in an environment where employees
who are planning to take childcare leave get more support
from the workplace. In addition, in order to ensure smoothreinstatement, those who take childcare leave can contact
the workplace and get various application forms at theirown timing by utilizing communication tools. Also, we
encourage male employees to take childcare leave. We workon awareness-raising activities by posting in the office postersof “IkuMEN Project (a project to encourage male employees
to take childcare leave)” which is promoted by Ministryof Health, Labour and Welfare. Moreover, we post on theintranet interviews with male employees who took childcare
leave, thereby encouraging other male employees to takechildcare leave.

Financial / Company Data

Approach to diversity

NTN’s ESG Strategies

Human resources development for specialized in quality

NTN’s Business Strategies

Basic approach to human resources development

Trend of female managers and supervisors at NTN (employees on NTN enrolled)(persons)

Number of female managers (including those who take childcare leave)

140
120
100
80
60
40
20
0

45

56

69

75

81

62

53

55

94

Female supervisors

114

106

123

64

75

82

92

35
10

45

46

49

11

16

20

22

26

30

31

32

31

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019 (April)

Promotion of employment of persons
with disabilities
Regarding the employment of persons with disabilities, we haveestablished three “Dream Workshops” at Kuwana, Iwata andOkayama Works. This initiative, implemented in cooperation withspecial needs schools, provides a work environment in which
persons with intellectual disabilities can fill an important role.
Also, we have worked on developing a workplace environment
where employees in wheelchairs can work comfortably bypromoting barrier-free environment in the workplace.
We aim to create a workplace where various types of
employees can display their unique ability in a range of work sites(e.g. manufacturing site, management department, etc.). Many
employees are also taking an active role in specialized operations.

Employees with intellectual disabilities working at the Dream Workshop

NTN Report 201960

NTN’s ESG Strategies
Relationship to SDGs

Safety and HealthWork style reform

Basic approach to occupational safety and health

Promotion of work style reform

Our initiative to promote the taking of annual paid leave has
started in the 1980s. Under the original keywords of “comfort andprosperity,” we have worked on the realization of work-life balance.
We have maintained a high average utilization rate of annual paid
leave, exceeding over 80% for over 25 years. Now we are aiming at
a higher level, working to develop multi-skilled employees, conductproactive job rotation, and cultivate a workplace atmosphere which
encourages employees to take annual paid leave.
Trend of annual paid leave utilization rate(%)

Realize diverse work styles

NTN Job Return Scheme
A rehiring system for employees who left their jobs due to life
events. The conventional Mom-back System was only for those
who left their jobs due to marriage, childbirth, or childcare,
but we renewed the system to NTN Job Return Scheme in April
2018, enabling those who left their jobs due to long-term care
to use this system. Furthermore, those who left their jobs due
to studying abroad, job change, spouse’s job relocation, also
became applicable to the system. Through this approach, we
promote work-life balance as well as the development of anenvironment where former employees can make the most of
their experience, knowledge, and expertise acquired in thecompany or other companies after leaving our company.

Enhanced lineup of employee leave programs
We provide maternity, childcare, and long-term care leave
programs which are well developed beyond the legally
mandated standards. Such approach leads to the system
which allows many employees to continue their careers
without suspension.
For example, the system of shortened working hours
for childcare expands its scope to those who raise children
who are in the third grade of elementary school or younger,
and introduces staggered working hours due to childcare inTokyo and Osaka. Such initiatives are far beyond the legally
mandated standards.
We are not only working to develop such system, but also
putting our heart into making the system become vitalized andconvenient for employees. We are also trying to create an officeculture where employees can make full use of the system.

92

Development of framework supporting safety89

93

Establishment of EHS (Environment, Health and
Safety) Integrated Management Department

50*HHT-K stands for Hiyari HaTto Kigakari, meaning close-call incidents and concerns

0
2015

2016

2017

2018

2019 (Fiscal years ended
March 31)

Introduction of RPA
We are working on productivity enhancement of indirect divisions
through work style reform. Recently, the decreasing birthrate
and aging population in Japan, and the consequent shrinkage ofworking-age population have been considered as issues. Under
such circumstances, it is essential to develop a corporate structure
which enables us to expand our business without increasing
employees, in order to grow sustainably going forward. We,
therefore, have promoted automation and improvement ofefficiency by utilizing RPA (Robotic Process Automation) for routine
and repeated operations in indirect divisions (e.g. head office, sales,
technology, research, etc.). We aim to shorten the development
period of new products by using RPA for routine operations, andallocating more human resources to high-value-added operations.
In the case of product design operations where RPA
has been already introduced and utilized, the process from
calculation of design to drawing up has been automated. As aresult, the monthly operating hours for some cases decreased
by approximately 73% to 20 hours. We intend to increase thenumber of applicable divisions in the future, and work to further
improve the awareness and corporate culture to encourage each
employee to spontaneously think and promote the automationand improvement of efficiency of his/her operation.

Selected as “Best Practice Company” by Osaka
Labour Bureau, Ministry of Health, Labourand Welfare
We were selected as “Best Practice Company,” which works
on proactive initiatives for work style reform, by Osaka Labour
Bureau, Ministry of Health, Labour and Welfare. We were highly
evaluated for exceeding 80% of annual paid leave utilization
rate for over 25 years, andinitiatives for productivity
enhancement and reductionof long working hours
by utilizing RPA. We willcontinuously work on
the work style reform to
respond to diversified values
Exchange of views on work style reform withand lifestyles proactively.
Director of Osaka Labour Bureau

We established the EHS (Environment, Health and Safety)
Integrated Management Department on October 1, 2018.
We will further strengthen management of environmentand occupational safety and health, and improve effectivenessof the NTN Group, by promoting integrated management of
the environment, health and safety that have attracted growing
global interest.

Safety management structure that meets global standards
We work on initiatives for the workplace with no occupational
accidents at all global production bases.
We promote development of the workplace with nooccupational accidents, under the global safety management
structure where the President serves as chief director, the officer incharge as manager of corporate safety and health, and corporate
general manager of each headquarter in Japan and generalmanager of each overseas region as management managers.
In case of an occupational accident, information will beshared via the system developed in our group within 24 hours
regarding domestic occupational accident, and 48 hours
regarding overseas occupational accident, in principle. In thecase of a critical accident or other occupational accidents
judged by the EHS Integrated Management Department torequire the convening of a global safety and health meetingwith each region, we discuss and standardize countermeasuresin the meeting.

Personnel training to improve safety
In our training, we promote education not only to instructemployees to conduct appropriate operations according todirection, but also to encourage them to be able to think andact for themselves. Specifically, we utilize actual machines andvirtual hazard simulators and provide safety education to mainly
young employees and less-experienced employees.
We are active in providing hazard prediction training forour employees to be more sensitive to danger. Additionally,
we have introduced the program to assess each employee’s
danger sensitivity and degree of daring to risk taking (surveyof behavioral characteristic of safety issues), and utilized it as acommunication tool between employees and their bosses.

Acquisition of Certification of Occupational
Safety and Health Management System(ISO45001 / JIS Q 45100*)
To realize safety and health of all employees working at theCompany, we have proceeded with a shift of certification fromthe conventional Occupational Safety and Health Management
System (OSHMS) to JIS Q 45100.
At the Kuwana Works, we have acquired the first JIS Q
45100 certification in this industry, and completed acquisitionof certification for major domestic business units by June 2019.
We continuously promote improvement of safety and healthstandards by observance of laws and regulations and further
risk mitigation by P (Plan), D (Do), C (Check), and A (Action).

Financial / Company Data

Since we believe it is important to offer more work style
options by making working hours and locations more flexible
for various employees to take an active role in the workplace,
we implemented the telecommuting system on a trial basis
in stages from the fiscal year ended March 31, 2017. After
identifying issues and taking improvement measures, westarted the system in April 2019. We aim to further utilize thetelecommuting system in the future, because the system willlead to heightened focus on performance, a work style with
better quality, and enable the balancing of work and childcare/long-term care.

89

Regarding dangerous places discovered by safety patrol,
HHT-K*, and safety model men activities, we conduct risk
assessment and take safety measures.
In the risk assessment, we estimate risk in each item of “adegree of injury,” “possibility of occurrence,” and “frequency
of approach to risk,” and set priority for risk mitigation
measures. Regarding risk mitigation measures, we discuss
fundamental measures (abolition or change of dangerous
operations, etc.), engineering measures (installation of covers
or interlock, etc.), administrative measures (preparation ofprocedure manuals, etc.), and use of protection tools, in thisorder. Also, we clearly stipulate residual risk on sticky labels on
facilities, and thoroughly manage them.

NTN’s ESG Strategies

Start of telecommuting system

100

88

Based on the humanistic spirit of the “safety first” approach,
we ensure safety and health in the workplace, and promote
the development of the workplace environment where
employees can work comfortably while keeping their health forthe purpose of promotion of safer and better production. To
that end, the Company and employees have been deepening
mutual understanding and trust, applying our wisdom andpassion, cooperating with each other, and making unremitting
efforts to realize these goals.

Development of machines in pursuit offundamental safety

NTN’s Business Strategies

We have promoted a work style reform which enables all
employees to find their work rewarding, fulfill operational
responsibilities, and comfortably lead their lives in society withharmony and peace of mind. We thoroughly manage working
hours and introduce no overtime day, flextime, and interval
system to enable each employee to work efficiently. In addition,
we have also worked on the reform of personnel systems, suchas introducing systems responding to various types of career
paths and life events (e.g. childcare, long-term care), to provide
opportunities for many employees to take an active role.

High rate of taking annual paid leave

About Us

Human Resources

JIS Q 45100*:
JIS Q 45100 is a standard that includes, as requirements, Japanese safety and health activities which are daily
implemented in the workplace such as 4S activities (seiri (sorting), seiton (set in order), seiso (shining), andseiketsu (standardizing) and risk prediction activities, and initiatives to ensure employees’ health, which haverecently attracted growing interest, in addition to ISO 45001, the international standard for occupational safety
and health management.

Approach to health management*
In view of the fact that proactive efforts to maintainand promote the health of employees are an importantmanagement factor that may affect the sustainable growthof the Company, we promote various measures to realize theworkplace environment where each employee can display his/her ability to the utmost and work comfortably, in cooperation
with the health insurance association.
Enhancement of atmosphere workplace• Promotion of work-life balance, and prevention of long working hours• Further vitalization of communication in the workplace• Initiatives to promote balancing work and treatment of disease
Enhancement of mental health• Improvement of workforce environment based on the results of stress check• Prevention of mental illness by self-care and employee care overseen by
the line manager• Enhancement of mental health consultation system
Enhancement of physical health• Appropriate health guidance and improvement of lifestyle based on the
results of medical checkup• Steady implementation of data health plan in cooperation with healthinsurance association• Improvement of the participation rate of medical checkup for employee’s
spouse* Health management is a registered trademark of the NPO Health Management Research Association.

61 NTN Report 2019

NTN Report 201962

NTN’s ESG Strategies
Relationship to SDGs

About Us

Procurement
We conducts procurement activities under the Basic Procurement
Policy which clarifies our direction with the concept of:
Globalization, Fairness/Impartiality and Environmental
Preservation. These principles are intended to build up
relationships of trust with business partners and procurement
divisions of headquarters, as well as its related departments.
We work to conserve the environment through ouractivities as defined in the NTN Group Green Procurement
Standards, giving priority to our business partners withoutstanding performance for environmental conservation andenvironmental quality. We also encourage our partners totake proactive CSR actions positively and proclaim that in the
NTN CSR Procurement Guidelines. Our domestic and overseas
production bases work to ensure that supplies are procured
locally or from the optimal locations.

To raise recognition for the NTN CSR Procurement Guidelines
and check compliance with them, we annually conduct a survey
for our business partners.
For the fiscal year ended March 31, 2019, we widened thescope of survey and implemented at 489 business partners, up
196 from the previous survey.
We found that about 80% of our business partners areadequately managing compliance, human rights and labor,
quality and safety and information security. However, we foundthat about half of our business partners were in the process ofworking on the environment, business continuity plans, social
contributions and CSR procurement, or would need some time
before taking on such tasks.
To have our business partners understand the importanceof CSR procurement throughout the entire supply chain, we
will continue our awareness-raising activities.

Revision of Green Procurement Standards

For the latest version of the Green Procurement Standards, please
visit our website.
https://www.ntnglobal.com/en/csr/sc/client.html

NTN CSR Procurement Guidelines
In April 2016, we established the NTN CSR Procurement
Guidelines for the purpose of promoting activities throughout
the entire supply chain for social issues such as human rights,
labor practices, the environment, elimination of anti-social
forces and anti-corruption. These guidelines establish 28 topics
related to compliance, anti-corruption, human rights andlabor, the environment, quality and safety, information security,business continuity management and social contributions,and we request our suppliers to further promote their CSR
procurement activities.

We conduct self-audits for our subcontracting in order tomaintain the appropriateness of our subcontracting activities.
To have our domestic business sites autonomously self-audit
their compliance with the Subcontracting Act, we implementa certification system for “subcontracting self-auditor.” In
September 2018, we held a subcontracting self-auditor
training course and newly certified 40 self-auditors for a totalof 82 certified self-auditors. Domestic business sites (22 sites)
conducted self-audits led by the self-auditors.

Conflict minerals survey
We conduct a survey periodically, to ensure that certain
materials and our finished products do not contain particularmaterials that could be a source of funds for armed groups in
conflict zones, or misused for immoral issues such as humanrights violations, illegal mining or smuggling. We respond to
customer’s inquiries concerning conflict materials based on the
results of this survey.
In the fiscal year ended March 31, 2019, we traced backthrough the supply chain to identify material refiners througha survey, requested to 304 business partners. More than 88%
of partners responded with answers indicating that they do not
use any conflict minerals. We will continue to conduct a survey
periodically and monitor the inclusion of conflict minerals fromconflict zones or high-risk zones.
Business partner response rate

12%

No response:

Response:88%

NTN global procurement organization, transform to renew
NTN Group procurement way
Ever more international markets, current uncertain business climate, innovation,
digitalization, electrification, sustainability, … are the challenges we aim to overcome.
NTN Group objectives can only be achieved through strategies that are focused on
performance and profit. Establishing a World-Class Procurement Organization andcreating our own NTN Procurement Way, focused on overall cost performance, willcontribute to increase NTN Corporate Value.

Operating Officer,
Procurement Headquarters

Herve Brelaud
The Medium-term Management Plan “DRIVE NTN 100”
has initiated deep structural reforms. The combined
goals of concentrate NTN manufacturing sector onhigh added-value products and growing areas has led
to drive the reformation variable cost structure andestablish Procurement Headquarters in April 2018.
A real Transformation of our Global Procurement
organization has been engaged to reach our QCD(quality, cost and delivery) target in an efficient andsustainable way, in order to take the full benefits of thecompany globalization and scale.

Vision and objectives

System to clarify roles andauthority of each division

Organization

Global procurement system

Process

Use of digitaltechnologies

Human resource

Data andsystemUse of digitaltechnologies

Establish and share bestpractices of procurement activities
Foster teams equipped withhigh procurement skills

Financial / Company Data

The NTN Group established the Green Procurement Standards
and has been striving to conserve the environment and improve
environmental performance of our products together withbusiness partners who provide us with raw materials, parts andother materials.
In the fiscal year ended March 31, 2019, we revised theGreen Procurement Standards, and promoted the compliancewith environmental laws and regulations and improvement ofenvironmental performance throughout the entire supply chain.
As to the compliance with laws and regulations, we added
phthalate esters, which will be subject to regulations under therevised EU RoHS2, to the list of prohibited substances in parts andmaterials purchased by us, and clarified compliance obligations
such as the submission of the non-inclusion certification of NTNprohibited substances. For the improvement of environmental
performance of our business partners, we added more
requirements to our suppliers such as providing a report on theamount of their CO2 emissions when requested by NTN, andpromoting water risk management demanded by climate changes
which is becoming increasingly serious globally.
We briefed our business partners on the revisions at the
supplier meeting, and asked for their understanding of our green
procurement policy and submission of necessary documents suchas the non-inclusion certification of NTN-prohibited substances.

Subcontracting Act compliance work

TOPICS

NTN’s ESG Strategies

CSR questionnaire for suppliers

NTN’s Business Strategies

Basic approach to procurement activities

Utilize expenditure control system

Vision and objectives

Process

We aim to establish a World-Class Procurement
Organization to achieve the high level of overall cost
performance for the purchased goods and services,in close cooperation with our key suppliers. Creating
our own NTN Procurement Way, recognized byour customers and suppliers, internal and external
stakeholders, will be our contribution to increase the
Corporate Value.

In the spirit “One Company, One Way”, we aim to unify
NTN best practices worldwide, promoting the wideutilization of digital tools. Global category management
as well a global sourcing will lead us to offer to our
supplier base larger business opportunities and allow
optimized overall cost performance.

Human resource
Organization
Taking the benefit of NTN global presence, we will
establish NTN Global Procurement Network in Japan,
Europe, China, America, India and Asia, with the aim ofpromoting local procurement and global suppliers.

The right person in the right place! Following Hitozukuri
principle we intend to train intensively our procurement
teams and actively promote global mobility.

Data and system
At the heart of our global procurement organization,
we will set up a lean and robust information system,taking advantage of the latest digital solution, to allow a
consistent spend control as well as bringing NTN teams
and our suppliers closer together.

For the NTN CSR Procurement Guidelines, please visit our website.
https://www.ntnglobal.com/en/csr/sc/client.html

63 NTN Report 2019

NTN Report 201964

NTN’s ESG Strategies
Relationship to SDGs

Streamlined production

With customer satisfaction as our top priority, we aim to further
improve our QCD (quality, cost and delivery). We will improve
field capabilities of our manufacturing team through "KANZENSEISAN*" activity, and build global production systems basedon at-local-site, with-local-material procurements. And wecontinue to meet our customers’ needs under the production
system optimized throughout overall SCM (supply chain
management) which streamlines the logistics from supplier tocustomer.

As a part of the production reform promotion activities, weare taking initiatives to create factories where people, goods
and information flow "NAMERAKA*." In particular, we aim to
streamline our entire SCM through shortened lead time fromorder to shipment by synchronizing things including suppliers andshortening/connecting production processes, as well as througheffective inventory management. We aim to reduce “inventories(material inventory, in-process inventory, and finished goodinventory) = invested capital” by creating the framework foroverall optimization and promoting streamlined production. By
improving return on invested capital (ROIC), we will strengthen
the profitability and management performance of the entire NTN.

*"KANZEN SEISAN" means "perfect production" in Japanese.

Basic approach to quality and implementation
system
NTN’s Basic Quality Policy specifies all the basic principles thatshape our manufacturing approach. We use it to work on
maintaining and improving product quality throughout the world,working toward high quality that satisfies all our customers.
Our products are used in many applications around us,
providing daily support. They are also found in equipment where
life is at stake, such as aircraft, railway, automobile and medical
equipment, and therefore, require extreme precision and durability.
Every single employee understands the importance of Quality andworks earnestly toward Quality to improve NTN brand globally.

*"NAMERAKA" means "smooth" in Japanese.

NTN is transforming from a “Manufacturing Company” into a“Company that Delivers Value to Customers through Products
and Services.” In the production reform, which is a base of ourtransformation, we promote streamlined productions, bringMonozukuri sites and customers closer to each other throughadvanced and efficient productions utilizing robots and AI/
IoT as well as through SCM collaboration, and thereby deliver
higher value to customers.

Prediction factory: Intelligent factory (utilization of AI)

Predict disorders and changes

4

Connecting factory: SCM (supply chain management)
collaboration

Shorten lead time through overall optimization

6

Traceable factory: Utilize RFID/IPS (manage goods)

Strengthen traceability and visualize progresses

Traceable
factory
Highresponse
factory

Streamlined
factory

NAMERAKA
factory

Connecting
factory

Autonomic
factory

Prediction
factory

Wakayama Works
Wakayama Works is currently under construction in Wakayama
Prefecture as a new base designed to produce radial bearings,
the core product of the Company. Due to a rapid developmentof electrification in the automotive industry in recent years, themarket needs are rapidly expanding for radial bearings used
for motors and drive systems with high value-added features
such as low friction, low vibration and long operating life.
Wakayama Works will concentrate on such high value-added
products while actively outsourcing standard type products,
by which we will reorganize our radial bearing production
centering around the new production base.
Wakayama Works will reduce the delivery time of prototypesby half and the production lead time by one third, through smart
factory efforts and an introduction of IoT and AI system-based
new production machines, and speedily supply high quality
products worldwide. We will strengthen the entire NTN Group’sbusiness by developing similar initiatives in Japan and overseas.

65 NTN Report 2019

Construction of Wakayama Works in progress (photo taken in July 2019)D: Management of production capacity,
cost and deliveryonHigh-response factorycti

5

Speedy quotation and prototyping
Management decision-making prior to acceptance of
new project orders

GREEN ENERGY PRODUCTS DIVISION

U.S.A

NTK PRECISION AXLE CORP.

IATF 16949 (37 production sites certified)
U.S.A

Financial / Company Data3v e Mo no z u k u r i QC

Automated situational judgement (labor-saving)Japan

NTN DRIVESHAFT ANDERSON, INC.

* Applies to domestic and overseas consolidated manufacturing subsidiaries (excluding bases that have notstarted mass production)pro: Visualizing factory operations / Analysis

ISO 9001 (33 production sites certified)Im

Autonomic factory

Major certification achievements (Fiscal year ended March 31, 2019)I2

u st o m er s atisfa

Reduced inventories and small-lot productionve c: Streamlining

Monozukuri that NTN aims to shapemproStreamlined factory• Applicable quality
Our quality should immediately respond to the change of our customer’s requirements.
• Competitive quality
We have to win quality competition.
• Quality for economy
Quality should benefit our company.

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

Six concepts
1

Basic Quality Policy
Pursuing right quality to meet functions and specifications
requested by our customers.

We are proactively acquiring ISO 9001 certification(international standard for quality management systems) atdomestic and overseas production sites, as well as IATF 16949
certification (additional standard for the automobile industry).
In the fiscal year ended March 31, 2019, three new sites
have been certified. This means that, if we do not consider
production sites which are still in development, all our domestic
and overseas consolidated subsidiaries have now received theproper certification for their Quality Management System.
In addition, JIS Q9100 and Nadcap which are standards forthe aerospace industry, and certification for the railway industry
standards IRIS (Europe) and CRCC (China) are also obtained byrelevant sites.

NTN’s ESG Strategies

Monozukuri that NTN aims to shape

Quality management system

NTN’s Business Strategies

Basic approach to manufacturing (Monozukuri)

About Us

Monozukuri

TOPICS

Quality generates brand power

We define NTN’s brand power as the ability to be chosen by customers. We are receiving highacclaims as we have been continuously delivering high-quality products to our customers for
100 years since the founding of the Company. However, as commoditization is progressing
for many of NTN products such as bearings, it is not easy to differentiate ourselves fromcompetitors. In this environment, by continuing to provide products and services that win our
Operating Officer,
customers’ satisfaction at appropriate prices, we will build up better relationships of trust andQuality Assurance Headquarters
improve our brand power.
Corporate General Manager
We guarantee the quality of all products we sell to our customers from “the moment weTakashi Fujii
receive inquiry until the appropriate operating life of product ends.” Sales divisions accurately
identify operation environments and required specifications informed by customers, and share the information withtechnical and manufacturing departments. And the technical and manufacturing divisions complete productions
complying with customer requirements, internal development steps and manufacturing rules to perfection. We havea system to follow up continually after sales in case any defect of a product is detected in the market, thereby making
the guarantee possible from the moment we receive inquiry until the appropriate operating life of product ends.
As a recent trend, among major quality defects which largely affect the market, many of their initial causes lie
hidden in the pre-mass production stage. Since the establishment of the Quality Assurance Headquarters in 2018,
we also have been focusing on measures against quality defects arising from the working stage of engineering. We
continue our Monozukuri openly and squarely by identifying quality risks and improving them, such as rules difficult tocomply with from the perspective of actual manufacturing.
We promote local productions according to demands of global market, which we divide into four regions
throughout the world. While localizing steel materials procurement and special processes, we strengthen rules toachieve globally standardized quality and build a global system to centrally manage quality information. To be chosen
by customers with trust, the entire NTN Group will work as one to further strengthen its quality assurance system.

NTN Report 201966

NTN’s ESG Strategies
Relationship to SDGs

Basic approach to contributions to local communities

TOPICS

Activities worldwide

achieving the UN’s Sustainable Development Goals (SDGs)
through various activities tied closely to local communities
around the world.

Spreading the circle of “NTN Rotating School”

Mino

4

Kyoto

Minamishinshu

5

In August, NTN BEARING CORP. OF CANADA LTD. sends
volunteers for bed making at the facility for homeless people
operated by Good Shepherd*-Toronto. The volunteers arenormally students, but during the summer holiday season
for schools, NBCC employees take turns in the volunteering
work every day. In addition, NBCC gives donations together
with collaborators who endorse this activity, such as ourbusiness partners.

Tokyo* Good Shepherd: Non-profit organization sponsored by Christian associations. It establishes and operates
facilities for homeless people through charities such as donations in an effort to rescue socially vulnerable
people in the spirit of Christianity.

8

7 Izu

2
1 Sakai
TOJ stages held from May 19 to 26, 2019Children looking for waterside creatures

Bed making

EuropeAsia

NTN Kugellagerfabrik (Deutschland) GmbH, NTN Waelzlager(Europa) GmbH and SNR Waelzlager GmbH joined the village
festival of Peacevillage International. Peacevillage International
provides medical treatments in Germany for children injured in
war and conflict worldwide, and returns them to their homecountries. At the village festival, NTN staff set up a corporate
booth to interact with children protected in the facility usingbuilding blocks and other toys.

Staff of NTN MANUFACTURING (THAILAND) CO., LTD. visited a
support center for people with disabilities in Chonburi Province
on Children’s Day for the purpose of supporting autistic
children. In addition to the donation of sweets, stationeries andplay tools, a musical chairs game was held for recreation. NTN
staff members and the children had sweets together, enjoyedtheir conversation, and deepened engagement.

Village festival filled with many children and volunteers

Employees interacting with children

Financial / Company Data

Parents and children learning about energy saving in a Nameraka
Eco-Friendly class

Employees participated in the activity

Enjoying making songs together with musical instruments that used bearings

Dialog with university and high school students

Hand spinner contest in great excitement

67 NTN Report 2019

To preserve biodiversity and contribute to the local community,
Kuwana Works cooperated in Waterside Nature Observation
Walk sponsored by Kuwana City. In addition to preparatory
work to ensure the event to run safely, NTN staff researchedwaterside creatures on the river of Tadocho, Kuwana City
together with specialists, and explained about them to children
on the event day. At the end of the event, children gave reports
on creatures they captured, and shared their thoughts about
the event. They looked much interested in waterside creatures
they rarely came in contact with in their daily lives.

6
Fujisan

3 InabeAmericas

NTN’s ESG Strategies

To promote harmonious coexistence with local
communities, the Company organized NTN Rotating
School in 2017 as a way to facilitate community
interactions for our employees and education for the
next-generation. This is a mobile school based on theconcept of having children of the next generation
learn about the environment and energy saving withfun. In addition to the title sponsorship of “Tour ofJapan (TOJ),” Japan’s largest bicycle road race, we
participate in various events held by public offices, andalso hold events at business sites of the NTN Group.
In NTN’s third year of sponsorship of TOJ in 2019,
NTN Rotating School in 2019 implemented a program
incorporating music. Participants created their own
songs with musical instruments that used bearings,
or performed one-minute pieces all together withmusical instruments making various sounds underthemes they decided. All children and adults enjoyed
the program, and the venue was always surrounded
by a “smooth” atmosphere. In the classroom-style
Nameraka Eco-Friendly class, we had participants thinkenergy saving as their own issues. The mobile school’svarious thinking-based programs attracted about
2,600 guests in the eight-day event. NTN Rotating
School, in which employees acted as teachers, helps
to aid their motivations by letting them deepen
engagement between business sites and see smiles ofguests.
In January 2019, NTN Rotating School was held
overseas for the first time by NTN BEARING-THAILAND
CO., LTD. in the Children Day, a science event heldby the National Science and Technology Development
Agency . A hand spinner contest as well as bearing
assembling and friction experiences conveyed a funof science while having them learn about the rolesof NTN products and friction. The two-day event
was attended by about 1,600 guests and ended in agreat success. We will continue to develop the mobile
school activities not only in Japan but also worldwide
so that NTN Rotating School can entertain children allover the world.

Japan

NTN’s Business Strategies

One of the credos of NTN SPIRIT “Collaboration” states that
“we take care of the natural environment and maintaincoexistence with local community.” In addition to contributing
to society through our business activities, we also work on

About Us

Contribution to Local Communities

As part of our CSR activities, we actively interact with students,
who will shape the next generation. In October 2018, we
invited eight students from Senri Senior High School in Osaka
Prefecture to have dialog on our initiatives for diversity.
We received feedback from the participants, such as, “themotivation to work overseas became even stronger after

learning about NTN’s activities.” In January 2019, NTN staff
visited Doshisha University to give a lecture and have a group
discussion under the theme of “Corporate CSR Activities”
on the importance of solving social issues through businessactivities and the need to permeate corporate philosophy
through CSR activities.

NTN Report 201968

NTN’s ESG Strategies

Relationship to SDGs

Basic approach

Company-wide environmental performance for the fiscal year ended March 31, 2019NTN Environment Policy has been created by the Group to contribute to the sustainable development of society. We have built anenvironmental management system that promotes environmental protection as well as energy and resource saving.

Coexistence with the global environment is a toppriority for the NTN Group. Our business activities
are designed to prevent environmental pollution andpreserve natural capital, while our technologies reflect
our unwavering efforts to help ensure the sustainable
development of society.

Developing and releasing new technologies and products that help save and create energy

CFJ-W development
sHUB development

Compliance

Ongoing rigorous management of hazardous materials

Rigorous inventory management andmonthly self-auditing
Japan

296,000 metric tons/year max.*

289,000 metric tons/year

Overseas370,000 metric tons/year max.

384,000 metric tons/yearJapan

26.4% reduction compared to fiscal
year ended March 31, 1998*

25.1% reduction compared to fiscal
year ended March 31, 1998

Overseas10.9% reduction compared to fiscal
year ended March 31, 2007

4.8% reduction compared to fiscal
year ended March 31, 2007Japan

24.1% reduction compared to fiscal
year ended March 31, 201116.8% reduction compared to fiscal
year ended March 31, 2011

Overseas13.9% reduction compared to fiscal
year ended March 31, 2015

15.6% reduction compared to fiscal
year ended March 31, 2015Japan

99.8% min.

98.6%

Overseas

97% min.

96.7%

Reducing waste intensityJapan

3.8% reduction compared to fiscal
year ended March 31, 2011

5.9% reduction compared to fiscal
year ended March 31, 2011

Reducing paper purchase intensityJapan

5.4% increase compared to fiscal year
ended March 31, 2011

5.7% increase compared to fiscal year
ended March 31, 2011

Reducing Styrofoam

Japan

Maintaining 99% reduction compared tofiscal year ended March 31, 2000

99% reduction compared to fiscal year
ended March 31, 2000

Japan

1% reduction compared to fiscal year
ended March 31, 2018

4.6% reduction compared to fiscal
year ended March 31, 2018Japan

20 or more participating business sites

17 participating business sites

Overseas

12 or more participating business sites

Reducing CO2 emissions
Reducing environmental impact
from business activities

Reducing CO2 emissions
Reducing CO2 emissions intensity

Reducing water consumption

Sustainable resource use

Reducing waste, maintaining highrecycling rates

Reducing water consumption
intensity

Raising recycling rates

Reducing paper and Styrofoam

Rigorously management ofManaging and reducing PRTR substanceenvironmentally hazardous substances

Continually improving
environmental management system“Kigyo no Mori” and other biodiversity protection activities

11 participating business sites
Certification renewal completed in
May 2019

Acquiring revised ISO 14001 (ISO 14001:2015) certification

Business sites subject to company-wide environmental
performance can be viewed on our website.
https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html*Calculated using a fixed CO2 emissions factor of 0.381 for electricity.

Environmental education
The NTN Group conducts rank-based and function-based
environmental education of various kinds. For example, ourrank-based education programs include basic education at
new employee induction training; practical education after
workplace assignment; and education for newly appointed
managers upon promotion in order to work on environmental
issues at each workplace from the perspective of risk-benefit
management. Our function-based education programs
include education for sales divisions and distributors serving
as a contact point for customers on the survey regarding
environmentally hazardous substances that may be containedin our products. This program allows participants to learn about
how to respond to customers as well as about relevant laws
and regulations. Another such program is a training session todevelop internal auditors for the environmental management
system. Moreover, during the Environment Month every
year in June, we rigorously train all employees on importantenvironmental measures of the year, and provide education for
raising their environmental awareness.
In the fiscal year ended March 31, 2019, we held a training
session to develop internal auditors twice, inviting a chief
lecturer from L. Marvin Johnson & Associates, Inc. Japan,
a training institution for ISO auditors. We also organizedenvironmental education for distributors at West Japan Sales
Office and East Japan Sales Office (Tokyo Branch and Tohoku
Branch) of NTN Sales Japan Corporation, and provided
contamination prevention training for phthalate esters as partof the Environment Month activities.

Selfevaluation

Results

Technologies to help prevent
global warming

Protecting biodiversity

A list of our ISO 14001 certified business sites and theirenvironmental performances can be viewed on our website.
https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html

Environmental Targets

Financial / Company Data

69 NTN Report 2019

The NTN Group has acquired third-party certification globallyfor ISO 14001, an environmental management system.
Our environmental management organization is structured
to promote the compliance with environmental laws
and regulations of each country and continually improve
environmental performance.
For business sites in Japan, multi-site certification is
acquired, and all business sites work together to achieveenvironmental targets under the top management led bydirectors in charge. We also organize sectional subgroups
to address individual environmental issues. For example, theEnergy-saving/Resource-saving Sectional Meeting studies andpromotes energy-saving measures reducing CO2 emissions aswell as measures to introduce renewable energy. In the fiscal
year ended March 31, 2019, the Company-wide Environmental
Management Committee met four times and the Energysaving/Resource-saving Sectional Meeting met once.
To maintain or improve the management system, a “on-site
audit (annual)” by on-site auditors and a mutual “cross audit(every three years)” by business units are conducted.

NTN Environment Policy

Not achieved

NTN’s ESG Strategies

1. Technologies to help prevent global warming	The NTN Group will help prevent global warming by
developing and releasing new technologies and productsthat help save and create energy worldwide.
2. Compliance	The NTN Group will comply with all applicable
environmental laws and regulations, while proactively
addressing concerns expressed by customers, local
communities and other stakeholders.
3. Reducing environmental impact from business activities
	The NTN Group will minimize environmental impacts suchas emissions of CO2 and regulated substances from all
NTN Group business operations, while working to identify
and reduce environmental impact from both upstream
and downstream supply chain processes (from suppliers
to customers).
4. Sustainable resource use
	The NTN Group will adhere closely to the three Rs
approach (Reduce, Reuse, Recycle) as we work on
reducing waste and resource inputs such as water andraw materials and other resources.
5. Rigorously managing environmentally hazardous
substances	The NTN Group will practice green procurement,
rigorously manage environmentally hazardous substancesused in products and manufacturing processes, and work
actively to replace highly hazardous substances withalternatives.
6. Protecting biodiversity
	The NTN Group will work on protecting biodiversity,
playing an active role in forest preservation and otherenvironmental protection projects in partnership withlocal communities.
7. Communication
	The NTN Group will inform all NTN Group employees
about the NTN Environment Policy to raise environmental
awareness. We will disseminate information on
environmental initiatives widely to the general public topromote active communication with the general public.
8. Continually improving environmental management system	The NTN Group will improve our environmental
performance by implementing and continually improving
our environmental management system.

Environmental management structure basedon the environmental management system

Achieved

NTN’s Business Strategies

NTN Environment Policy

About Us

Environment

Company-wide environmental targets for the fiscal year ending March 31, 2020
NTN Environmental Policy

Environmental Targets

Technologies to help prevent global
warming

Developing and releasing new technologies and products that help save and create energy

otectinOngoing rigorous management of hazardous materials
Reducing CO2 emissions

Reducing environmental impact frombusiness activities

Reducing CO2 emissions
Reducing CO2 emissions intensity

Reducing water consumption

Sustainable resource use

Reducing waste, maintaining high recycling rates

Reducing paper and Styrofoam

Reducing water consumption intensity

Raising recycling rates

285,000 metric tons/year max.*

Overseas378,000 metric tons/year max.

Japan

25.8% decrease for fiscal year ended March 31, 1998*

Overseas5.5% decrease for fiscal year ended March 31, 2007Japan

17.3% decrease for fiscal year ended March 31, 2011

Overseas16.7% decrease for fiscal year ended March 31, 2015

Japan

98.1% min.

Overseas

97% min.

Reducing waste intensityJapan

3.8% decrease compared to fiscal year ended March 31, 2011

Reducing paper purchase intensityJapan

4.9% increase compared to fiscal year ended March 31, 2011

Reducing Styrofoam

Japan

Maintaining 99% reduction compared to fiscal year ended March 31, 2000

PRTR substance intensities

Japan

1% decrease compared to fiscal year ended March 31, 2019

Rigorously management ofenvironmentally hazardous substances

Managing and reducing PRTR substanceProtecting biodiversity“Kigyo no Mori” and other biodiversity protection activities*Calculated using a fixed CO2 emissions factor of 0.381 for electricity.

Japan

Increase in number of participating business sites

Business sites subject to company-wide environmental
performance can be viewed on our website.
https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html
NTN Report 201970

NTN’s ESG Strategies

Business activities and environmental impact

Resource protection

Material flow chart (The NTN Group in Japan)

INPUT

OUTPUT

Water Consumption and Water Consumption Intensity (Japan/Overseas)
Japan

389

Non-steel materials
Oils, other

Scrap metal

ktons

City gas
Coal, coke

Heavy oil A

Kerosene

DieselGasoline

tons

Tap waterIndustrial water

Generated
waste*4 quantity

Recycling quantity

Waste oilHeat
treatment

4,537tons

67,884

66,933951

Final disposal quantity

tons

tons

tons

kL

kL

Grinding/
PolishingkL

Use ofrecycled water

4,000 mtons

Assembly

PRTR substance release/transfer quantity

26.2

3

m3

Logistics

tons

132

133

196

100

196

195

213

194

2017

2018

211

2019

Sewers1,800,000
50,000

2020

15

2

10

1

5

(Target)(Fiscal years
ended/ending
March 31)Reducing PRTR chemical substance
We are working to reduce PRTR chemical substances(substances regulated under Japan’s Pollutant Release andTransfer Register Act) during the production processes by
the group companies in Japan and shifting to less hazardous
alternatives. PRTR chemical substances handled in large
quantities by the Company are the six substances shown in thechart below. They are used mainly in production processes andaccount for about 90% of the total of such substances. We will
reduce these substances by shifting to alternative substances.

1,2,4-trimethylbenzene

Toluene

PRTR chemical
substance
handling quantity

Water-soluble zinc compound

92.3 tons/yearm3

10.1 %
9.1 %

m3

27.5 %
Xylene22.7 %
Methylnaphthalene

Molybdenum and its compounds

9.1 %

m3

10.6 %

110
100

98.6

96.4

99.7

99.5
93.7

92.3

2018

years
2019 (Fiscal
ended/ending90

Our environmental accounting data can be viewed on our website.
https://www.ntnglobal.com/en/csr/environment/operation.html

97.4%

98.6%

17.1

17.7

17.7

18.0

9.4

10.8

10.9

10.9

11.1

8.9

6.5

6.6

6.3

6.8

6.8

6.9

0
2015

2016

2017

2018

2019

2020

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

Business sites subject to water consumption/consumption intensity,
waste quantities and recycling rates can be viewed on our website.
https://www.ntnglobal.com/en/csr/environment/sitereport/total.html

As part of efforts to reduce impacts on the global environment, the NTN Group practices green procurement while working tomanage and reduce environmentally hazardous substances. In addition, the NTN Group identifies regulatory developments in Japanand overseas and complies with international environmental laws and regulations.

(tons)*1 PRTR substances: Substances regulated under Japan’s PRTR (Pollutant Release and Transfer Register) Act.
*2 Material recycling: Recycling into raw materials.
*3 Thermal recycling: Recycling into fuel.
*4 Industrial waste.

97.8%

16.0

15.4

Recycling rate

97.7%

Managing and reducing environmentally hazardous substances

10.9 %

m3

98.2%

20

3

0
2016

(10,000 metric tons) 98.2%

343
132

134

Other

1,850,000
Rivers

m3

347

326

200

Wastewater quantity

m3

1,100,000
880,000
140,000

128

2015

Thermalrecycling*3

kL

4

0

Forging/
Turningm3

2,130,000

Ground water

134

GWh

tons

328

324

Generated waste (Overseas)

Generated waste (Japan)

Intensity (m³/million yen)
4.12

The results of the water stress analysis via Aqueduct and water
consumption by region can be viewed on our website.
https://www.ntnglobal.com/en/csr/environment/v3.html

PRTR substances*1

Water

3.95

400

ktons

Development/
Design

631
7,904
8,719
0
771
550
184
79
92.3

NOx

4.17

300

23.1 tons
62.5 tons

SOx

Manufacturing processes

4.28

Financial / Company Data

LPG

289

CO2 emissions

Consumption intensity (right axis)

4.31

330

tons

ktons

EnergyElectricity

15,792

4.31

Waste Quantities and Recycling Rates (Japan/Overseas)

80
2011

2015

2016

2017

Rigorously manage the inventories of products
containing phthalate esters
The EU RoHS directive was revised and phthalate esters (DEHP,
BBP, DBP and DIBP) were added to the list of prohibited
substances effective as of July 22, 2019. To respond to this,the NTN Group amended the NTN Group Green Procurement
Standards in April 2018, in which we designated phthalate
esters as prohibited substances and prohibited productions
and sales of products containing phthalate esters. In addition,
we took following measures to prevent products that were
manufactured before April 2018 and contain phthalate esters
from being accidentally distributed in the market.
• Disposal of products containing phthalate esters (certain
exceptions apply by customers’ requests)• Rigorous managementof inventories of
products containing
phthalate esters (orderand shipping system
requiring mandatory
signature of approval
by customers)• Strengthening of ourinspection system(installed an analyzer at
Analyzer for phthalate esters
major business sites)

March 31)71 NTN Report 2019

NTN Report 2019

NTN’s ESG Strategies

379
10

Steel materials

Atmospheric emissions

Material recycling*2

ktons

Overseas(10,000 m3)

NTN’s Business Strategies

To protect the water resource, the NTN Group is globally working on reducing water consumption and improve water consumption
intensity. We conduct water stress analysis by using Aqueduct (a tool released by the World Resources Institute (WRI) that provides freemaps and information showing global water risks). We are also promoting mineral resource protection such as by reducing waste andmaintaining/improving recycling rates.

Enviromental impact from production activities in Japan(Fiscal year ended March 31, 2019)

Raw
materials

About Us

Environment72

NTN’s ESG Strategies

Protecting biodiversity

Preventing global warming

CO2 Emissions/Emissions Intensities (Japan)

CO2 Emissions/Emissions Intensities (Overseas)

Scope 2: Indirect emissions*1

Emission intensity (right axis)(10,000 metric tons per year)

Intensity (metric tons of CO2 per million yen)

Scope 1 (Americas)

Scope 2 (Americas)

Scope 1 (Asia)

Scope 2 (Asia)

30

0.70

0.69

0.69

28.4

27.5

27.7

0.65

28.9

28.5

50

0.6

40

22.8

24.1

23.6

0.2
5.1

5.4

0.6

4.9

4.8

4.9

1998*2

2015(Benchmarks)

2016

2017

2019

2018

2020

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

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

33.1

0.92
35.5

34.2

0.99

0.96

1.0

38.4

37.8

0.8
0.6

27.1

26.3

28.4

28.5

29.4

32.7

30.1

0.4

32.0

0

0.2
4.9

0.8

2007*

(Benchmarks)

2015

4.6

2016

4.8

2017

5.7

5.4

2018

2019

5.8

Scope 1

2020

(Target)0(Fiscal years
ended/ending
March 31)

* The first year of production is used as the benchmark for business sites established after the fiscal year ended
March 31, 2007.

Business sites subject to CO2 emissions/emissions intensities can beviewed on our website.
https://www.ntnglobal.com/en/csr/environment/sitereport/iso14001.html

NTN Fukuroi Corporation
Converting coolant pumps into inverter models

SHANGHAI NTN Corporation
Renewal of compressor

The NTN Group optimizes emissions by converting motors forpumps and compressor into inverter models. As coolant pumps
at NTN Fukuroi Corporation were operated at a fixed rotation
speed, coolant emissions were kept at a constant level andthe excess coolants were fed back to tanks through bypass
valves. We reduced electricity by 6,600 kWh/year by optimizing
the emissions by converting pumps into inverter models
and adopting PID control by emission pressure. NTN Fukuroi
Corporation gave a presentation on this activity at the energysaving seminar sponsored by CHUBU Electric Power Co., Inc.

To reduce the power consumption of compressors, SHANGHAINTN Corporation (China) replaced aged compressors at theirdriveshaft parts plant (75 kW, 9 units) with high-efficiency
compressors (160 kW, 4 units). The hub bearing plant also
replaced 4 units of 160 kW compressors with a higher
efficiency type (110 kW, 4 units). In both instances, thecooling system was changed from air-cooled to water-cooled
to accommodate the high temperature in summer. To secure
optimal supply pressure and volume to machines, a pressure
sensor was installed on piping systems. Electric energy was
saved by 1,163,645 kWh/year by the optimized emissions fromcompressors at the target value measured by the pressure
sensor, using inverters and unit count control.

Motor

Open

Inverter
Close

Vertical pump

Coolant

Open
Close

Division received Nikkei Global Environmental
Technology AwardNTN has developed the world’s first water flow-through hydropower generator and released it in the market as NTN Micro
Hydro Turbine for electricity sales. On October 30, 2018, NTN
received the Nikkei Global Environmental Technology Award by
Nikkei Inc. Its unique mechanism which is a recent innovation
by NTN, future potentials of the electricity grid connection
system and the level of practical use, are recognized. Thisaward is given to commend technological developments,
etc. that helps to establish a sustainable global environment
by comprehensively evaluating their originality and future
potentials, such as prevention of global warming andpreservation of the natural environment and ecosystem. NTN
Micro Hydro Turbine won the award as it was highly acclaimed
for its ability to generate power simply by being placed in anexisting water channel without a need for developing the waterlevel difference, its low installation cost, and the fact that it isalready in practical use. NTN Micro Hydro Turbines are in use atvarious sites as it is recognized as a significant product for thesustainability of society, which contributes to the reduction of
CO2 emissions and can help to ensure the preservation of thenatural environment and ecosystem.

Vertical pump

Converting
coolant pumps
into inverter models

NTN Micro Hydro Turbine

Converting coolant pumps into
inverter models

Nikkei Global Environmental Technology Award
Presentation at the energy-saving seminar sponsored by
CHUBU Electric Power Inc.

73 NTN Report 2019

High-efficiency compressor

NTN Shika Corporation
Recognized by Ishikawa prefecture for participatingin Ishikawa “Wagamachi” Adopt program activities.
The original Adopt program began in 1985 in the Stateof Texas, U.S.A. in which public spaces on roadside, etc.
are adopted as “children” by residents and civil groups as“parents” who take a responsibility for cleaning and greening
activities. NTN Shika Corporation signed an agreement with the
Ishikawa Prefectural Government in March 2013 to participate
in their activities. NTN Shika Corporation works to maintain thelocal scenery through activities such as planting Noto Kirishima
Azalea, the local flower of Noto, along the highway facing theentrance of the company, as well as planting and maintaining
cherry blossom trees on its
premises along the roads.
In October 2014, NTN Shika
Corporation was honoredwith the President Award by
Japan Greenery Research andDevelopment Center, andalso in October 2018 received
a certificate of appreciationfrom the Governor of
Ishikawa Prefecture for the 5
years of continuing activities. Certificate of appreciation presentation ceremony

Financial / Company Data

The Verification Statement by SGS Japan can be viewed
on our website.
https://www.ntnglobal.com/en/csr/environment/co2.html

33.3

0.98

10

4.7

0

0.94

Scope 2

20

23.8

20.0

0.95

NTA PRECISION AXLE CORP. has been leasing an auxiliarycompressor to cover the deteriorating performance of existing
compressors due to aging. However, its maintenance cost andpower consumption were increasing year by year.
As a solution, they leased a high-efficiency compressor witha power consumption 20% lower than the existing on allinclusive contract including maintenance, by which the power
consumption was reduced by 3,238,200 kWh per year.

The NTN Group works on protecting biodiversity throughnatural environment protection activities in the local areas ofeach business site in collaboration with community residents
and NPOs.

NTN’s ESG Strategies

22.4

30

Scope 2 (Europe)

Emissions intensity (right axis)
Intensity (metric tons of CO2 per million yen)

1.02

0.8

0.4
23.0

0

0.65

20.6

20
10

0.66
28.5

Scope 1 (Europe)(10,000 metric tons per year)

0.87

40

NTK PRECISION AXLE CORP.
Installation of high-efficiency compressors

NTN’s Business Strategies

The NTN Group works on reducing CO2 emissions and emissions intensity throughout all business activities. To guarantee the datareliability, our emissions data is subjected to third-party verification by inspection and certification authority SGS Japan. We plan toincrease the scope of the reduction and work to reduce CO2 emissions throughout the entire supply chain including our business
partners.

Scope 1: Direct emissions

About Us

Environment

Kuwana Works
Environment education activities for local residents
in collaboration with municipalities
Since 2010, Kuwana Works has been engaging in forest
maintenance activities of Mt. Tado, the local mountain, in thecooperation with certified NPO “Mori no Kaze.” The forest
maintained by Kuwana Works was named as “NTN Komorebino Mori,” where NTN employees and their family members workon improving the local natural environment while learning about
forest maintenance such as planting, pruning and thinning.
As part of this, since 2017 they have been conducting forest
education activities for local residents in collaboration with
the Kuwana City Government. In the fiscal year ended March
31, 2019, 23 residents in 8 groups participated in the forest
walk at Komorebi no Mori, experiencing forest maintenanceactivities such as measuring tree trunks using a special
instrument, pruning using ladders, cutting logs and making
a bird call tool using thinned woods. Also, as a new initiative,
they began an activity to observe rare aquatic creatures in local
rivers with external guest lecturers. Kuwana Works will extend
environmental education opportunities from inside to outside of
the company, helping to raise environmental awareness.
NTN Report 201974

NTN’s ESG Strategies

Technologies for measures against climate change(2) Contribution to CO2 reduction from driveshafts and hub bearings
NTN calculates the amount of CO2 emissions that can be reduced by the contribution of S to C-eco products throughout the assumed
life period of Finished Products in comparison to the amount of CO2 emissions in case D-eco products are continued to be used in
Finished Products instead. Such amount is defined as “Contribution to CO2 reduction” of the year the product was sold.
The contribution to CO2 reduction from driveshafts and hub bearings for the fiscal year ended March 31, 2019 was approximately
1,400,000 tons (equivalent to approximately 600,000 liters of gasoline). Approximately 1,500,000 tons are forecasted for the fiscal
year ending March 31, 2020.
Contribution to CO2 reduction(10,000 tons)

180
152.5

140.8
123.8

120

Definition of environment-contributing product

NTN’s Business Strategies

include products which are already commonly used in society
because of the achievement of predecessors, as well as thosewith environmental contributions further enhanced by NTN’s
engineering and development capabilities.
NTN continues unwavering efforts to realize its corporate
philosophy by developing and providing higher-grade productsthat contribute to the environment while classifying the
products according to environmental contribution levels basedon our standards.

NTN develops business activities based on our corporate
philosophy “We shall contribute to international society
through creating new technologies and developing new
products,” and the paragraph 1 of the NTN Environment Policy“Technologies to help prevent global warming.”
As bearings and driveshafts, which are main products ofNTN, contribute to the reduction of energy loss in finishedproducts of our customers equipped with them (hereinafterreferred as “Finished Products”), all of these products canbe considered as environmentally friendly products. They

About UsTOPICS

101.3

105.3

2016

2017

NTN’s ESG Strategies

60(1) Classification and grades of NTN products and their definition
Classification

Grade

0

Definitions

S-eco (Super eco)

2019

2018

2020

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

[Calculation standard] JAPIA LCI Calculation Guidelines by Japan Auto Parts Industries Association (Consumer Use-Phase LCI calculation tool)A-eco (Advanced eco)
Environmentcontributing
products

0
1998

Classified according to environmental factor standards specified for different products in line with world’s
technology standards

B-eco (Brilliant eco)

Main environment-contributing products

C-eco (Creative eco)
Products that help to reduce energy loss of Finished Products at the same performance level of around 1997

S-eco

Contribution to CO2 reduction: 100 kg/unit

S-eco

Financial / Company Data

D-eco (Diffused eco)Contribution to CO2 reduction: 74 kg/unit(2)Calculation methods for environmental factors and eco-efficiency
To quantify products’ environmental friendliness, NTN adopted environmental factors and eco-efficiency that are defined in theformula 1 and 2 as follows.
Eco-efficiency of developed products

Environmental
factors

Product value*2

1

Eco-efficiency of benchmark products*1

Eco-efficiency

Low friction grease
Tire side2

Environmental impact*3[Outer seal]* 1. D-eco product* 2. Values are quantified by using the QFD method (including CO2 reduction contribution as Finished Products)* 3. From the perspective of evaluating contribution toward measures against climate change, environmental impact are calculated as CO2 emissions generated throughout the process of raw materials mining to production (used the LCI
calculation tool by the Japan Auto Parts Industries Association)

Trend in achievements and forecasts

Low Friction
Hub Bearing III(released in 2019)All businesses

Automotive business

Driveshafts and hub bearings

S-eco

A-eco

800
600
400

100%

20%

19%

21%

15%

16%

15%

42%

43%

42%

B-eco

C-eco

0.1%

0.6%

24%
17%
38%

79%

D-eco
27%

1998

75 NTN Report 2019

2016

2017

2018

2019

2020

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

1998

Assist lip

Slinger

23%

22%

22%

21%

2016

2017

2018

2019

CFJ

PTJ

B-eco

A-eco

Contribution to CO2 reduction: 51 kg/unitt

Contribution to CO2 reduction:27 kg/unit[Outer seal]
Lip surface
treatment
Grease forseal

Tire side

Engine side

[Inner seal]
Lip surface
treatment

Super Low Friction Hub Bearing(released in 2013)

Grease forseal

A hub bearing which can reduce frictions and suppress fretting at low-temperature as
various low-friction items are used for grease and seals.
It can reduce rotational friction by 33% in comparison to D-eco grade products.

EBJ (low-friction grease)

EDJ

A product equipped with world’s top standard light-weight compact-size driveshafts EBJ(tire side) and EDJ (engine side).
It can reduce the mass by 10% and improve transmission efficiency (torque loss ratio)
by 27% by applying low-friction grease to EBJ in comparison to D-eco grade products.

20%

Future development (expansion of product categories)
35%

200
0

Assist lip

A world’s top standard low friction hub bearing.
It can reduce rotational friction by 62% in comparison to D-eco grade products.

Driveshafts and hub bearings, accounting for about 60% of our net sales, are all environment-contributing products. Among them,the sales ratio of S to C-eco grade products, which show the achievement of NTN’s development efforts in recent years, continues torise year by year, reaching 79% in the fiscal year ended March 31, 2019. In the fiscal year ending March 31, 2020, it is expected to go
up to 83%.

Net sales (billions of yen)Labyrinth

Low friction
greaseTrend in composition of environment-contributing products by grade(driveshafts and hub bearings)[Inner seal]

A product equipped with world’s top standard high-efficiency low-vibration driveshafts
CFJ (tire side) and PTJ (engine side).
It can reduce the mass by 10% and improve transmission efficiency (torque loss
ratio) by 50% in comparison to D-eco grade products.

(1) Sales ratio of environment-contributing products among driveshafts and hub bearings

Trend in net sales

Engine side

17%
2020

(Fiscal years
ended/ending

Going forward, we will expand product categories subject to the calculation to include not only driveshafts and hub
bearings but also other product and categories such as bearings. We will also seek the way to aggregate contributions
from natural energy businesses such as NTN Micro Hydro Turbine.

(Forecast) March 31)

NTN Report 201976

Financial / Company Data

A Message from CFO

Achievements for the fiscal year ended
March 31, 2019

Forecast for the fiscal year ending
March 31, 2020

Net Sales

733.6 billion yen

690.0 billion yen

800.0 billion yen

Operating Income

26.9 billion yen

15.0 billion yen

57.0 billion yen

Operating Margin

3.7%

2.2%

7.1%

Net Income Attributable to Shareholders(parent company)-7.0 billion yen

3.0 billion yen

30.0 billion yen

Capital Expenditures

45.2 billion yen

50.0 billion yen

150.0 billion yen (3 years) (including 20.0
billion yen of intangible capital expenditures)Free Cash Flow

-22.4 billion yen

0.0 billion yen

45.0 billion yen (3 years)

3.8 times

4.0 times

4.5 times

1.2

1.2

1.0 or less

Equity to Capital Ratio

27.4%

26.9%

30% or more

ROE

-2.9%

1.3%

10.0% or more

Inventory Turnover Ratio
Net D/E Ratio
Representative Executive Officer, Senior Managing Executive Officer
CFO (Chief Financial Officer)

Plan for the fiscal year ending
March 31, 2021

NTN-ROI*1

2.1%

7.5% or more

15.0 yen

15.0 yen or more

Foreign Exchange
Rate

USD

JPY 110.9

JPY 107.0*2

JPY 110.0

EUR

JPY 128.4

JPY 120.0*2

JPY 115.0

NTN’s ESG Strategies

4.0%
15.0 yen

Dividend Payout Ratio/Dividends

NTN’s Business Strategies

We Focus on Improving Profit andGenerating Free Cash Flow

About Us

DRIVE NTN100*1 NTN-ROI: Net operating income after tax ÷ (tangible fixed assets + inventories)*2 Assumed exchange rate after the second quarter of the fiscal year ending March 31, 2020

As the first year of the new Medium-term Management Plan
“DRIVE NTN100,” the result was severe in the fiscal year ended
March 31, 2019, recording a net loss for the first time in five
years. Although it was profitable on the operating income andordinary income levels, we recorded extraordinary losses of 19.3
billion yen in total, including impairment loss of 17.0 billion
yen and loss related to Antimonopoly Act of 2.1 billion yen.
As no tax effect could be applied for the impairment loss, tax
expenses of 9.1 billion yen were incurred, resulting in a net loss
attributable to shareholders (parent company) of 7.0 billion yen.
The impairment loss was resulted from advanced
depreciation of fixed assets in manufacturing bases andmanufacturing subsidiaries in Japan, which was conductedin light of the deteriorating market environment and the low
growth potential in Japan, in order to transform ourselves into
a profit-generating organization going forward.
One of the structural backgrounds is the declining
investment efficiency in domestic productions. While many
manufacturing bases and manufacturing subsidiaries exist
in Japan, the production efficiency became more difficult toachieve structurally due to the diversification of production andincrease in personnel expenses, which was not expected at
the time of the establishment of these manufacturing sites. In
addition to this situation, the head office expenses in Japan isincreasing. Amid the sluggish growth in the domestic market,
NTN has focused on expanding businesses in overseas markets,
which has been strongly led by solid support by the head office,including R&D, production engineering, and quality control.
The expenses that could be reasonably calculated had been
allocated to overseas subsidiaries, yet the cost burden on thehead office continued to increase to the point where it became
difficult to cover such expenses by the scale effects gained fromthe matured market of Japan.
Against these structural backgrounds, we recently
experienced a sharp increase of costs resulting from inefficient

77 NTN Report 2019

production caused by rapidly increased demands in theindustrial machinery market and external environments affectedby a sharp price rise of steel materials and supplementarymaterials.
In addition to these costs, we made investments aiming
for future business growth and higher asset efficiency, such as
new Wakayama Works and the core IT system renewal. These
investments will bring positive effects through higher efficiency
in the future, but at current stage, it weighed on profit due tothe burden of partial amortization as well as increased advance
expenses.
To date, even under difficult external environments, ourdomestic businesses were able to earn certain profits throughcost reductions. However, as the domestic market became
matured, coinciding with the increase in cost burden mentioned
above, it became structurally difficult to generate profits andthis resulted in the recording of the impairment loss this time.

Aiming for medium- to long-term profit
improvement
As seen in the background of the impairment loss, operating
margin for the latest period declined, affected by inefficient
production caused by the rapidly increased demand, a sharp
price rise for steel materials and supplementary materials,
and increased costs caused by investments for the future.
Operating margin for the fiscal year ending March 31, 2020
is forecasted to decline again, and it is affected by increases
in the amortization burden and expenses related to the core
IT system, in addition to the increase in accounting expenses
related to personnel expenses. As to expenses other than these,
we continue to work on reductions. Following the impairment
loss recorded, we must improve profits for domestic businesses
in preparation for the domestic market maturing further. Whilea time to be patient will continue in the medium term, I believe
necessary investments for a growth in the next 100 years
should be made.

Toward achieving "DRIVE NTN100"
numerical targets

Evaluating business performance based on
EVA and ROIC

Having completed the first year of the Medium-termManagement Plan, we are reminding ourselves once againthat the results deviated from our numerical targets. At thesame time, we keenly realize the necessity of continuing andaccelerating the measures to strengthen our management
base, which supports our medium to long-term growth. The
main initiatives for the second year comprise, as stated in the“Management Commitment,” three measures for the structuralreform of manufacturing divisions in Japan: i) break away fromself-sufficiency, ii) variable cost reformation, and iii) restructureof business.
Moreover, we focus on improving profit and creating free
cash flow for the fiscal year ending March 31, 2020. In thefiscal year ended March 31, 2019, inventories did not decrease
as much as expected, affected by inefficient production and a
sharp decrease of demands. For the fiscal year ending March
31, 2020, however, while securing necessary inventories
for aftermarket applications, we will ensure the reductionof inventories from OEM business for the automotive andindustrial machinery markets. Also, in the fiscal year ended
March 31, 2019, increases in inventories and loans resulted in
the deterioration of D/E ratio. Therefore, as a near-term basic
policy for capital expenditures in the second year, investments
in property, plant and equipment will be made within theamount of depreciation expenses. In the three years of theMedium-term Management Plan, we will generate free
cash flow as our priority by reducing the capital expenditurefrom initially-expected 150.0 billion yen to 130.0 billion yen.
Break away from self-sufficiency, one of the measures for the
structural reform of our domestic manufacturing divisions,is also aimed to generate cash flow. We will again rigorously
remind ourselves of the approach to pursue profit on bothselling price and production fronts, as we execute eachmeasure.

Starting from the fiscal year ended March 31, 2019, we began
to further develop our business performance evaluation system.
In addition to existing profit management such as on net
sales and operating margin, we incorporated EVA and ROIC
as well into business performance indicators for the purposeof accelerating our business operation to maximize corporate
value from a perspective of creating value for shareholders. In
light of unsatisfactory results in the first year of the Mediumterm Management Plan, we take countermeasures in thesecond year by incorporating the concept of capital cost moreclearly and continuing to develop the performance evaluation
system, by which we aim to achieve our targets.

Financial / Company Data

Overview of fiscal year ended March 31, 2019

What CFO should do toward targets in thenext 10 years
NTN seeks to transform from a “Manufacturing Company”
into a “Company that Delivers Value to Customers
through Products and Services.” As CFO, I will establish the
management foundation that supports this transformation. As
our business further expands into the more global arena, I willcomprehensively manage the entire NTN Group, and make our
global cash management evolve into a system that can entirely
optimize cash efficiency and financial risks. I will support thesustainable growth of NTN Group companies by identifying
their situations more than ever, optimally allocating capital
globally, and at the same time rigorously enforcing financial
discipline.

NTN Report 201978

Financial / Company Data

About Us

Consolidated Financial Indicators (Past 11 Years)

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

Fiscal years ended March 31

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2019

For THE YEAR DATA
527,100

452,746

530,056

543,468

539,595

638,971

701,900

716,997

683,329744,373733,569

6,630,533

Operating Income(Millions of yen)

9,479

1,399

24,56020,724

7,278

33,00443,85147,77035,62339,60926,946

243,558

Operating Margin

(%)

1.8

0.3

4.6

3.8

1.3

5.2

6.2

6.7

5.2

5.3

3.7

3.7

Income (loss) before Income Taxes(Millions of yen)

(10,104)(1,838)22,855

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

26,943

14,89026,906

2,939

26,565Net Income (Loss) Attributable to Shareholders (parent company)(Millions of yen)

(8,985)(2,015)

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

23,353

15,037

2,831

20,374(6,958)(62,891)

Capital Expenditures(Millions of yen)

49,59421,50429,70054,44048,97933,162

31,26636,30035,39837,58945,172408,298

Depreciation and Amortization(Millions of yen)

45,75940,70235,93634,17534,841

39,31540,392

38,27836,62937,50638,926

351,842

R&D expenditures(Millions of yen)

17,402

14,687

15,697

17,157

16,174

17,821

18,08818,481

19,19621,007

21,661

195,788

Total Assets*2(Millions of yen)

627,613618,802632,001

693,258

768,462

848,037

856,277

794,651

798,891

839,427

840,751

7,599,322

Net Assets(Millions of yen)

192,223

214,551

210,353

212,126

211,743

213,369

262,559

248,505

245,050

269,760

246,405

2,227,189

Inventories(Millions of yen)

140,466

126,663

136,985

155,107163,287

166,484

184,128

178,220

171,482

179,738

194,505

1,758,078

Interest-bearing Debt

(Millions of yen)

275,996

231,638

223,284

271,978

360,802381,767

359,105

325,174

320,170

320,832

350,345

3,166,674

20,67917,95919,172

20,78921,39822,15623,36024,10924,66525,49324,98824,988

NTN’s ESG Strategies(Millions of yen)

NTN’s Business Strategies

Net Sales

YEAR-END DATA

Financial / Company Data

Number of Employees

PER-SHARE DATANet Assets(Yen)

376.77374.19376.05370.19375.84374.68461.21436.97431.66477.17433.32

3.92

Net Income (Loss)(Yen)(19.14)(4.00)

27.08

11.27

(26.69)(27.54)

43.91

28.28

5.33

38.36

(13.10)(0.12)Cash Dividends

(Yen)

13.00

8.00

10.00

10.00

0

2.00

6.00

10.00

10.00

15.00

15.00

0.14

Inventory Turnover Ratio(Times)

3.8

3.6

3.9

3.5

3.3

3.8

3.8

4.0

4.0

4.1

3.8

Net D/E Ratio(Times)

1.38

1.00

0.92

1.11

1.37

1.27

1.11

1.11

1.05

0.93

1.16

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

(%)

(1.3)

(0.3)

2.3

0.9

(1.9)

(1.8)

2.7

1.8

0.4

2.5

(0.8)

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

(%)

(4.3)

(1.1)

7.2

3.0

(7.2)

(7.3)

10.5

6.3

1.2

8.4

(2.9)

NTN-ROI*3

(%)

1.5

0.2

4.2

3.4

1.1

4.6

6.3

6.5

5.1

5.7

4.0

Equity to Capital Ratio

(%)

28.2

32.2

31.6

28.4

26.0

23.5

28.6

29.2

28.7

30.2

27.4

OTHER INFORMATION*1: The translation of yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan and has been made at ¥110.635 = U.S. $1.00, the exchange rate prevailing on March 31, 2019.
This translation should not be construed as a representation that yen can be converted into U.S. dollars at the above or any other rate.
*2: The figures for the fiscal year ended March 31, 2018 have been retroactively revised by"Partial Revision of the Accounting Standard for Tax Effect Accounting." Prior to the fiscal year ended March 31, 2018, no retroactive application was made.
*3: NTN-ROI =Net operating income after tax/(tangible fixed assets + inventories)

79 NTN Report 2019

NTN Report 201980

Financial / Company Data

Net sales and incomes
Sales performance

81 NTN Report 2019

IncomeRegarding profit for the fiscal year under review, factors
contributing to increased earnings included the effects ofscale. Meanwhile, factors contributing to decreased earnings
included increased personnel expenses and increased variable
cost as well as other expenses incurred. As a result, theoperating income for the term was 26,946 million yen, down
12,663 million yen (down 32.0%) from the previous fiscal year.
Operating margin was 3.7%, down 1.6 percentage points fromthe previous fiscal year.
Other expenses amounted to a net expense of 4,714
million yen. The major contributing factors were income of
5,689 million yen, including dividend income of 1,173 million
yen, interest income of 791 million yen and equity in earningsof unconsolidated subsidiaries of 73 million yen, and expensesof 10,404 million yen, including interest expenses of 3,883
million yen and foreign exchange losses of 3,032 million yen.
As a result, ordinary income for the term was 22,231 million
yen, down 9,019 million yen (down 28.9%) from the previous
fiscal year. Ordinary profit margin was 3.0%, down 1.2
percentage points from the previous fiscal year.
In addition, we recorded impairment loss of 16,963 million
yen, loss related to Antimonopoly Act of 2,108 million yen,and loss on sales of shares of subsidiaries and associates of 221
million yen recorded as an extraordinary loss. As a result, net
loss attributable to shareholder (parent company) was 6,958
million yen, down 27,332 million yen from the previous fiscal
year. Net loss per share was 13.10 yen.
Regarding annual dividends for the fiscal year under review,
we plan to pay a year-end dividend of 7.5 yen per share, which,when added to our interim dividend of 7.5 yen per share, totals
15 yen per share for the full year.

R&D and capital expenditures
R&D expenditures
Groupwide R&D expenditures for the year were 21,661
million yen (up 654 million yen from the previous fiscal year),accounting for 3.0% of sales.
The new Medium-term Management Plan “DRIVE
NTN100” was started in April 2018 under the NTN Group’s
corporate philosophy “We shall contribute to internationalsociety through creating new technologies and developing new

Capital expenditures
For NTN Corporation and its consolidated subsidiaries, the main
focus of capital expenditures was on increasing production
capacity, labor savings, and rationalization, maintaining andupgrading existing facilities, improving safety, and conducting
R&D for new products.
In Japan, capital expenditures totaled 18,261 million
yen for capital projects that included expansion of buildings
and equipment at Kuwana Works due to heat treatment
restructuring as well as additions to bearing production
equipment at Okayama Works.
In the Americas, capital expenditures totaled 13,358 million
yen on projects that included the expansion of CVJ production
equipment at NTK PRECISION AXLE CORP. and the expansion of
production equipment for CVJ parts at NTN BOWER CORP.
In Europe, capital expenditures were 9,260 million yen, withprojects including the expansion of CVJ production equipment
at NTN-SNR ROULEMENTS and NTN TRANSMISSIONS EUROPE.
In Asia and other areas, capital expenditures amounted to
4,844 million yen on projects that included expansion of CVJ
production equipment at NTN MANUFACTURING (THAILAND)
CO.,LTD.
After adjusting for -552 million yen in equipment transfers
between segments, total capital expenditures for the fiscal year
were 45,172 million yen.
All expenditures were funded from internal funds andshort-term loans. Depreciation and amortization for the fiscal
year under review amounted to 38,926 million yen (up 1,420
million yen from the previous fiscal year).

Financial position and cash flows
Interest-bearing debt increased by 29,511 million yen comparedwith the end of the preceding fiscal year. Free cash flow cameto -22,390 million yen.
Total current assets at March 31, 2019 amounted to 455,280
million yen, a year-on-year increase of 3,555 million yen (or up
0.8%). Major factors included 6,209 million yen increase infinished goods & purchased goods, 5,940 million yen increase
in work in process, 3,760 million yen increase in electronicallyrecorded monetary claims, 2,618 million yen increase in raw
materials and supplies, and 14,886 million yen decrease in notes
and accounts receivable-trade. Total fixed assets at March 31,
2019 amounted to 385,471 million yen, a year-on-year decreaseof 2,231 million yen (or down 0.6%). Major factors included
8,196 million yen decrease in property, plant and equipment, and6,296 million yen increase in intangible fixed assets. As a result,

NTN Report 2019

Financial / Company Data

Net sales by region
In terms of sales in Japan, looking at aftermarket applications,
there was an increase in industrial machinery aftermarket
applications. As for sales of industrial machinery applications,construction machinery and machine tools, other applications
increased. In automotive applications, sales grew thanks toexpanded customers' demands. As a whole, net sales were
207,249 million yen (up 1.4% from the previous fiscal year).
In terms of sales in the Americas, looking at aftermarket
applications, there was an increase in both industrial machinery
aftermarket applications and automotive aftermarket
applications. In industrial machinery applications, sales
increased in wind turbine applications and others. Sales ofautomotive applications decreased due to the decreased
customer demands and other factors. As a whole, net sales
were 201,464 million yen (down 0.1% from the previous fiscal
year).
In terms of sales in Europe, looking at aftermarket
applications, there was a decrease in automotive aftermarket
applications. In industrial machinery applications, sales
increased in aircraft applications. Sales in automotive
applications decreased due to decreased customers demand in
response to the new gas emission standard and other factors.
As a whole, net sales were 167,826 million yen (down 4.4%
from the previous fiscal year).
In terms of sales in Asia and others, looking at aftermarket
applications, there was an increase in both industrial machinery
aftermarket applications and automotive aftermarket
applications. In industrial machinery applications, sales

The cost of sales was 603,082 million yen, up 1.1 percentage
points and representing 82.2% of consolidated net sales.
Selling, general and administrative expenses were 103,541
million yen, representing 14.1% of consolidated net sales, or
up 0.5 percentage points compared to the previous fiscal year.

total assets amounted to 840,751 million yen, a year-on-yearincrease of 1,323 million yen (or up 0.2%).
Current liabilities were 289,698 million yen, a year-on-year
decrease of 26,728 million yen (or down 8.4%). This was due
mainly to 22,501 million yen decrease in short-term loans. Total
long-term liabilities amounted to 304,648 million yen, a yearon-year increase of 51,407 million yen (or up 20.3%). This was
mainly due to 52,012 million yen increase in long-term loans.
As a result, total liabilities amounted to 594,346 million yen, a
year-on-year increase of 24,679 million yen (or up 4.3%).
Total net assets were 246,405 million yen, a year-on-year
decrease of 23,355 million yen (or down 8.7%). This was
mainly due to 15,109 million yen decrease in retained earnings
and 4,360 million yen decrease in net unrealized holding gainon other securities.
The equity to capital ratio was 27.4%, down 2.8
percentage points. Total net assets per share, based on thenumber of shares outstanding over the end of the previous
fiscal year, were 433.32 yen per share (a decrease of 43.85 yen
per share over the previous fiscal year). Interest-bearing debt
amounted to 350,345 million yen, a year-on-year increase of
29,513 million yen (up 9.2%). Factoring in the 25 million yen
decrease from effects of exchange-rates, the actual increase
was 29,536 million yen. The ratio of interest-bearing debt tototal assets was 41.7% (up 3.5 percentage points compared tothe end of the previous fiscal year).
Net working capital was 165,582 million yen, an increase of
30,282 million yen from the end of the previous fiscal year. The
current ratio was 157.2% (up 14.4 percentage points over theend of the previous fiscal year).
The inventory turnover ratio was 3.77 times (down 0.37
times compared with the end of the previous fiscal year), andthe turnover ratio of total assets was 0.87 times (down 0.02
times).
Starting from the beginning of the fiscal year under review,
we began to apply Partial Amendments to Accounting Standard
for Tax Effect Accounting (ASBJ Statement No. 28, February 16,2018). Comparisons about financial positions were made using
previous fiscal year-end values adjusted retroactively.
Net cash from operating activities was 43,224 million yen (ayear-on-year decrease of 18,575 million yen, or down 30.1%).
This was mainly due to proceeds of 38,926 million yen fromdepreciation and amortization.
Net cash from investing activities was 65,614 million yen (ayear-on-year increase of 17,255 million yen, or up 35.7%). Thiswas mainly due to expenditures of 42,381 million yen for thepurchase of property, plant and equipment, and 10,846 million
yen for the purchase of intangible fixed assets.
Net cash from financing activities was 20,746 million(expenditures of 7,521 million yen for the previous fiscal year).
This was mainly due to proceeds of 74,297 million yen fromlong-term loans, proceeds of 13,643 million yen from increaseof short-term loans, net and expenditures of 58,360 million
yen for repayment of long-term loans and 7,974 million yen in
dividend payment.
After including a decrease of 970 million yen in translation
adjustments, cash and cash equivalents as of the end of
the fiscal year under review totaled 83,474 million yen,representing a decrease of 2,614 million yen (down 3.0%).
Free cash flow, the difference between net cash provided
by operating activities and net cash used in investing activities,
amounted to -22,390 million yen. The proportion of net cash
provided by operating activities to net sales was 5.9%.

NTN’s ESG Strategies

Net sales and incomes by business sector
In aftermarket applications, sales were 118,849 million yen (up1.8% from the previous fiscal year) due to an increase in sales
from industrial machinery aftermarket. Operating income was
15,184 million yen (up 1.2% from the previous fiscal year) due
to the effect of increased sales and other factors.
In industrial machinery applications, net sales were
123,398 million yen (up 3.6% from the previous fiscal year)
due to the increased customer demand for wind turbine andaircraft applications. Operating income was 3,106 million yen(up 11.1% from the previous fiscal year) due to the effect ofincreased sales and other factors.
In automotive applications, net sales were 491,322 million
yen (down 3.4% from the previous fiscal year) due to thedecreased customer demand and other factors. Operating
income was 8,656 million yen (down 60.3% from the previous
fiscal year) due to the rise of steel materials prices and U.S.A.
customs duty rates and an increase in fixed cost.

Cost of sales and selling, general andadministrative expenses

products.” In this plan, as an initiative toward the next 100
years, we promote R&D activities through the reinforcement of
two areas: core technologies and core products that support
our product development, and the development of businesses
in new areas.
By developing high-performance and high-precision
products fully utilizing our engineering strengths such as
tribology, heat treatment, precision processing, precision
measurement and CAE, we aim to offer products suitable forthe low carbon society, through which we continue to improvecustomer satisfaction and achieve the sustainable growth of theCompany.

NTN’s Business Strategies

Consolidated net sales for the fiscal year ended March 31,
2019, were 733,569 million yen, a decrease of 10,804 million
yen (down 1.5%) from the previous fiscal year. Due to theeffects of exchange-rates, a decrease of 4,044 million yen
represented a decrease of 6,759 million yen. Overseas sales
were 526,320 million yen, a decrease of 13,728 million yen(down 2.5%) from the previous fiscal year. Overseas sales
accounted for 71.8% of net sales overall (Americas 27.5%,
Europe 22.9%, Asia and others 21.4%), a decrease of 0.9
percentage points from the previous fiscal year.

increased in construction machinery, wind turbines and otherapplications. Sales of automotive applications decreased due tothe decreased customer demands caused by the slowdown ofChinese market and other factors. As a whole, net sales were157,030 million yen (down 3.5% from the previous fiscal year).

About UsManagement Performance/Financial Analysis

82

Financial / Company Data

Risk Factors

Thousands of
U.S. dollars(Note 1)Millions of yen
2019

2019

2018

2019

2019

2018

Liabilities and net assets

AssetsCurrent liabilities:

Current assets:
Cash and cash equivalents(Note 15)

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

Short-term investments(Note 15)83,474¥86,088$754,499

6,770

2,595

61,192

11,356

13,308102,644

Trade receivables (Note 15):

Short-term bank loans(Notes 10 and 15)¥

Current portion of
long-term debt and leaseobligations (Notes 10 and 15)

71,102¥

25,530$58,080NTN’s Business Strategies

642,672

230,759

61,125Trade payables (Note 15):

Notes

117,450130,384

1,061,599

Electronically recordedmonetary claims

9,505

5,745

85,913

Allowance for doubtful
accounts(1,126)(1,008)(10,178)

137,185

148,429

1,239,978

Inventories (Note 7)

194,505

179,738

1,758,078

Other current assets(Note 15)

33,34634,875

301,406

455,280

451,725

4,115,153

Accounts

Total current assets

Notes

1,601

1,368

14,471

Accounts

58,37068,348527,591

Electronically recorded
obligations

73,18864,112

661,526

133,159

133,828

1,203,588

2,504

3,888

22,633

Accrued income taxes(Notes 15 and 20)

57,40359,505

518,850

289,698

316,426

2,618,502

Long-term debt and leaseobligations (Notes 10 and 15)

255,925

204,029

2,313,237

Liability for retirement
benefits (Note 11)41,89040,393

378,632

Provision for product defectcompensation

1,108

1,492

10,015

Other current liabilities
Total current liabilities (Note 22)

NTN’s ESG Strategies

Long-term liabilities:

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

32,39932,656

292,846

Buildings and structures(Note 2(g))

207,862

205,405

1,878,809

Machinery, equipment andvehicles (Note 2(g))

793,455

795,942

7,171,826

Construction in progress

30,422

21,580274,976

1,064,138

1,055,583

9,618,457(784,275)(767,524)(7,088,851)

279,863

288,059

2,529,606

Less accumulated
depreciation
Property, plant and equipment, net(Note 22)

Investments and other assets:
Investment securities(Notes 9 and 15)

34,24240,499309,504

Investments inunconsolidated subsidiaries
and affiliates (Note 15)

24,94918,735225,507

Deferred income taxes(Note 20)

10,241

11,882

92,566

Other assets

36,17628,527

326,986

105,608

99,643

954,563

Total investments and other assets

Deferred income taxes (Note 20)
Other long-term liabilities
Total long-term liabilities (Note 22)

840,751¥

839,427$7,599,322

1,528
50,219304,648

253,241

2,753,631

54,34754,347491,228

Net assets:
Shareholders’ equity (Note 12):
Common stock:
Authorized – 1,800,000,000
sharesIssued – 532,463,527 sharesin 2019 and 2018
Capital surplus

67,97067,970614,363

Retained earnings

112,778

127,887

1,019,370

(789)

(816)

(7,132)

234,306

249,388

2,117,829

Net unrealized holding gain on
securities (Note 9)

12,02016,380108,646

Translation adjustments(7,271)(4,681)(65,721)Retirement benefit liability
adjustments (Note 11)(8,900)(7,683)(80,445)

Total accumulated othercomprehensive (loss) income, net(4,151)

4,016(37,520)

Treasury stock, at cost:
1,320,628 shares in 2019
and 1,405,959 shares in 2018
(Note 6)
Total shareholders’ equity
Accumulated othercomprehensive income (loss):

Non-controlling interests

¥

208
7,119

Contingent liabilities (Note 13)

Total net assets
Total assets (Note 22)

169
5,556

Financial / Company Data

83 NTN Report 2019leading to a serious accident, claim for damages, or product recall
could entail huge product warranty costs and potentially affectbusiness performance and the financial position of the NTN Group.
Although the NTN Group has taken out global product liability
insurance, complete coverage for loss is not possible.
Intellectual Property
The NTN Group generates a wealth of innovative technologies andknow-how in the process of new product development, representing
valuable intellectual property for which the NTN Group files patentapplications to protect its rights. However, business performanceand the financial position of the NTN Group may be affected if alegal challenge is initiated against its intellectual property or if its
intellectual property is infringed by a third party.
Global Operations
The NTN Group develops its business operations worldwide withoverseas sales exceeding 50% of consolidated sales. Overseas
business development is associated with the following risks:a. Risks from unforeseen change in tax systems of or between
individual countries
b. Risks from unforeseen change in laws of individual countries
c. Difficulty in hiring and retaining appropriate staff
d. Evolving technology levels and unstable labor relations in emerging
economiese. Political instability in emerging economies
Statutory Regulations
The NTN Group is subject to the various laws and regulations (taxlaws, environmental laws, occupational safety and health laws,
economic statutes such as Antimonopoly laws and anti-dumping
laws, trade and exchange laws, and securities trading regulations) of
the countries and regions in which it does business.
The NTN Group strives to abide by these laws and regulations andconduct fair business activities. However, if the NTN Group is everbe subject to litigation or involved in legal proceedings because of aviolation of a law or regulation, and if the decision of such litigationor legal proceedings goes against the Group, this may have an effecton the business performance or the financial state of the Group. As
well, if these laws or regulations change, or if new unforeseen laws
or regulations are enacted, these also may have an effect on thebusiness performance or the financial state of the Group.
Some of NTN Group companies are subject to the following
actions.
[1] There are ongoing investigations by the competition authorities
into our consolidated subsidiaries in Brazil and elsewhere in
relation to overseas sale of bearings, etc.
[2] The Company and its consolidated subsidiaries in the U.S. andCanada, etc. are defendants in a number of class action suits for
suspected price-fixing of bearing sales with other businesses.
[3] A lawsuit has been filed against the Company and its two
consolidated subsidiaries in Europe before the France Tribunal
de Commerce de Lyon by Renault S.A. and its group companies,
which are 15 in total (hereafter, “Renault”), seeking compensationof 66.7 million euros (provisional amount) for damages. In
addition, a lawsuit has been filed against the Company andits two consolidated subsidiaries in Europe before the United
Kingdom Commercial Court by Fiat Chrysler Automobiles N.V. andits group companies, which are seven in total (hereafter, “FCA”),
seeking compensation for damages.
 These lawsuits were filed by Renault and FCA alleging thatthey suffered damages in connection with the infringement of
the European competition laws, which was subject of the decision
adopted by the European Commission dated March 19, 2014.
[4] The NTN Group may be subject to claims for compensation fordamages in connection with the violation of competition laws andcontinue to address these claims. However, it is currently difficult
to make reasonable estimates of the future possible effects on the
results of operations and financial position of the NTN Group.

About Us

Business results and the financial position of the NTN Group are
subject to the following risks.
EconomyThe NTN Group operates global production and sales networks, andsupplies customers in various industrial sectors. Business results andthe financial position of the NTN Group operations may be affectedby the economic conditions in specific countries and businessconditions in industries to which our customers belong.
Foreign Exchange Fluctuations
Overseas sales of the NTN Group account for over 50% ofconsolidated sales. This percentage is expected to increase further
due to continued acceleration in the global business development of
the NTN Group.
Overseas subsidiaries’ foreign currency-denominated businessresults and financial positions are converted to yen for the
preparation of consolidated financial statements. Moreover, many
export transactions with overseas customers of the Company are
conducted in foreign currencies. Although the NTN Group hedges
risks through forward foreign exchange contracts and expansion of
local procurement, effects of exchange rate fluctuations on businessresults and financial positions cannot be fully eliminated.
Declines in Market Prices
The competitive environment surrounding production and sales
activities of the NTN Group is becoming harsher worldwide. As
products from China and other emerging countries are gaining
ground, bearings have been partially affected by falling market prices.
At the same time, against a backdrop of global price competition,
calls for price reductions are mounting in the automotive industry,
which accounts for over half of the NTN Group sales. Although the
NTN Group works continuously to reduce costs while developing new
products of high quality and high added value, business results andthe NTN Group’s financial position may be affected by downward
pressure on market prices.
Rise in Raw Materials Prices
The NTN Group procures a wide range of raw materials from outside
sources. To deal with cost increases, especially of steel materials,
which pose a high weighting in materials costs, measures have beentaken such as mark-ups on selling prices to reflect higher materials
cost. In addition, the Group is targeting cost reductions throughenhanced production yields and VA/VE methods. Nevertheless,business results and the NTN Group’s financial position may beaffected by stronger than expected increases in raw materials costs.
Disasters and Accidents
Production plants and facilities of the NTN Group and its transaction
counterparts are exposed to the risk of damage from natural disasters
such as earthquakes, floods, and fires. Although the NTN Grouphas put into place crisis management systems and stands ready toengage in measures to contain damage as much as possible, risks
cannot be completely eliminated. Business performance and thefinancial status of the NTN Group may be affected by a natural
disaster or by accidents.
Dependence on Specific Industries
The NTN Group’s Bearings Division derives approximately half of its
sales revenues from the automotive industry, which also accounts
for more than half of sales of components that the Constant-velocity
Joints Division produces for automotive power transmission to thedrive axle. Dependence on the automotive industry is therefore high.
Although the NTN Group works to increase sales of bearings andprecision equipment products to the industrial machinery sector andimplements policies to achieve a balanced sales structure, a rapid
shift in demand in the automotive industry could potentially affect
the NTN Group’s business results and financial position.
Product Defects
To ensure product quality, the NTN Group works to satisfy customers’
requirements concerning product functions and specifications, andstrives to provide appropriate quality and product safety by enforcing
quality assurance globally. However, a substantial product defectConsolidated Balance Sheet (March 31, 2019)

Total liabilities and net assets¥

16,25016,356

146,880

246,405

269,760

2,227,189

839,427$7,599,322

840,751¥

See accompanying notes to the consolidated financial statements.

NTN Report 201984

Financial / Company Data

Consolidated Statement of Changes in Net Assets (Year ended March 31, 2019)
Thousands of
U.S. dollars(Note 1)Millions of yen
2019
Net sales (Note 22)¥ 733,569¥

Millions of yen

744,373$

6,630,533

603,082

603,613

5,451,096

Gross profit

130,487

140,760

1,179,437

Selling, general and administrative expenses (Note 17)
Operating income (Note 22)103,541

101,151

935,879

26,946

39,609243,558

Other income (expenses):
1,965

1,698

17,761

Interest expense(3,883)(3,884)(35,097)

Equity in earnings of affiliates

73

456

660

Foreign exchange loss, net(3,032)(1,642)(27,405)

Loss on surcharge payments under the Anti-Monopoly Act (Note 18)(2,108)(3,710)(19,054)

Loss on impairment of fixed assets (Notes 8 and 22)(16,963)(635)(153,324)

Loss on sales of investments in affiliated company

(221)

–

(1,998)162(4,986)

1,464(24,007)(12,703)(216,993)

2,939

26,906

26,565

Other, net

Profit before income taxes

Retainedearnings

532,463,527¥54,347¥66,943¥114,158¥(807)¥13,507¥(10,006)¥(8,899)¥15,807¥245,050

Cash dividends paid

–

–

–

(6,645)

–

–

–

–

–

(6,645)

Profit attributable to ownersof parent–––

20,374

–

–

–

–

–

20,374Purchases of treasury stock

–

–

–

–

(9)

–

–

–

–

(9)

Sales of treasury stock

–

–

–

–

0

–

–

–

–

0

Change in equity resulting
from transactions with noncontrolling interests

–

–

1,027

–

–

–

–

–

–

1,027

Other changes

–

–

–

–

–

2,873

5,325

1,216

549

9,963

532,463,527

54,347

67,970127,887(816)

16,380(4,681)(7,683)

16,356

269,760

–

–

–

(177)

–

–

–

–

–

(177)

532,463,527

54,347

67,970127,710(816)

16,380(4,681)(7,683)

16,356

269,583

Cash dividends paid

–

–

–

(7,974)

–

–

–

–

–

(7,974)

Loss attributable to ownersof parent–––(6,958)

–

–

–

–

–

(6,958)

Income taxes (Note 20):

Purchases of treasury stock

–

–

–

–

(1)

–

–

–

–

(1)

Sales of treasury stock

–

–

–

–

28

–

–

–

–

28

–

–

–

–

–

(4,360)(2,590)(1,217)(106)(8,273)

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

Balance at April 1, 2017

Balance at April 1, 2018
Cumulative effect of changein accounting principle(Note 3)
Restated balance at April
1, 2018

Current

5,750

8,056

51,973

Deferred

3,355(3,439)30,325

Other changes

9,105

4,617

82,298

Balance at March 31, 2019

(6,166)22,289(55,733)(792)(1,915)(Loss) profit(Loss) profit attributable to:Non-controlling interests
Owners of parent¥(6,958)¥20,374(7,158)$(62,891)
Thousands of U.S. dollars (Note 1)

See accompanying notes to the consolidated financial statements.

Consolidated Statement of Comprehensive Income (Year ended March 31, 2019)
2019
¥

2019

2018
(6,166)¥22,289$(55,733)

Other comprehensive income (loss) (Note 19):
Net unrealized holding (loss) gain on securities (Note 9)(4,360)2,873(39,409)

Translation adjustments(1,841)

5,269(16,640)Retirement benefit liability adjustments(1,265)

1,238(11,434)

(999)

546

(9,030)(8,465)

9,926(76,513)

Share of other comprehensive (loss) income of affiliates accounted for by theequity method
Other comprehensive (loss) income, net
Comprehensive (loss) income¥(14,631)¥

32,215$

Treasury stock,at costNet unrealized
holding gain
on securities

Translation
adjustments

Retirement
benefit liability
adjustments

Noncontrollinginterests$1,155,936$(7,376)$148,055$(42,311)$(69,445)$147,837$2,438,287–(1,600)

–

–

–

–

–

(1,600)491,228

614,363

1,154,336(7,376)

148,055(42,311)(69,445)

147,837

2,436,687

Cash dividends paid––

(72,075)

–

–

–

–

–

(72,075)

Loss attributable to ownersof parent––(62,891)

–

–

–

–

–

(62,891)

Purchases of treasury stock

–

–

–

(9)

–

–

–

–

(9)

Sales of treasury stock

–

–

–

253

–

–

–

–

253

Other changes

–

–

–

–

(39,409)(23,410)(11,000)(957)(74,776)$491,228$614,363$1,019,370$(7,132)$108,646$(65,721)$(80,445)$146,880$2,227,189

Commonstock

CapitalsurplusRetainedearnings$491,228$614,363

Cumulative effect of changein accounting principle(Note 3)–

Restated balance at April 1,
2018

Balance at April 1, 2018

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

Financial / Company Data

Capital surplus

NTN’s ESG Strategies

Interest and dividend income

Total
net assets

Commonstock

NTN’s Business Strategies

Cost of sales (Note 17)

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

Number ofshares in issue

2019

2018

About Us

Consolidated Statement of Operations (Year ended March 31, 2019)(132,246)

Balance at March 31, 2019Total
net assets

See accompanying notes to the consolidated financial statements.
Total comprehensive (loss) income attributable to:
Owners of parent¥(15,124)¥

29,787$(136,702)

Non-controlling interests

¥

493

¥

2,428

$

4,456

See accompanying notes to the consolidated financial statements.

85 NTN Report 2019

NTN Report 201986

Financial / Company Data

Notes to Consolidated Financial Statements (March 31, 2019)
Thousands of
U.S. dollars(Note 1)Millions of yen
2019

1.Basis of Preparation

2019

2018

Cash flows from operating activities:¥

Profit before income taxes

2,939

¥

$

26,906

26,565(d)Allowance for doubtful accounts
The allowance for doubtful accounts is computed based on the actual

The accompanying consolidated financial statements of NTN Corporation

historical percentage of bad debts and an estimate of uncollectible(the “Company”) and consolidated subsidiaries are prepared on the basis

amounts determined after an analysis of specific individual receivables.

of accounting principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure requirements of(e)Short-term investments and investment securities

International Financial Reporting Standards, and are compiled from the

The accounting standard for financial instruments requires that securities

Depreciation and amortization

38,92637,506

351,842

consolidated financial statements prepared by the Company as required

be classified into three categories: trading, held-to-maturity or other

Loss on impairment of fixed assets

16,963635

153,324by the Financial Instruments and Exchange Act of Japan.

securities. Trading securities are carried at fair value and held-to-maturity

Loss on surcharge payments under the Anti-Monopoly Act

2,108

3,710

19,054

In preparing the accompanying consolidated financial statements,

221

–

1,998

certain reclassifications have been made to the consolidated financialclassified as other securities are carried at fair value with any changes–(2,154)–statements issued domestically in order to present them in a format

in unrealized holding gain or loss, net of the applicable income taxes,

1,419

which is more familiar to readers outside Japan. In addition, certain

included directly in net assets. Cost of securities sold is determined bynotes included herein are not required under accounting principles

the moving average method. Non-marketable securities classified as

generally accepted in Japan but are presented as additional information.

other securities are carried at cost based on the moving average method.

Loss on sales of investments in affiliated company
Decrease in provision for loss on support to a related company

157

Increase in allowance for doubtful accounts

64debt securities are carried at amortized cost. Marketable securities

(15)

26

(136)

(Decrease) increase in provision for product defect compensation

(401)

1,109

(3,625)Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation. Such(f)Inventories

reclassification had no effect on consolidated profit or net assets.

Inventories are principally stated at lower of cost, determined by the600(1,045)5,423Interest and dividend income(1,965)(1,698)(17,761)Interest expense

3,883

3,884

35,097

The translation of yen amounts into U.S. dollar amounts is included

Translation adjustments and foreign exchange loss, net

1,363

28

12,320solely for the convenience of readers outside Japan and has been madeat ¥110.635 = U.S. $1.00, the exchange rate prevailing on March 31,(g)Property, plant and equipment (other than leased assets)

2019. This translation should not be construed as a representation that

Property, plant and equipment are stated at cost. The Company and its

yen can be converted into U.S. dollars at the above or any other rate.

domestic consolidated subsidiaries calculate depreciation by the straight-

(456)

(660)

10,534(4,459)95,214

Increase in inventories(16,184)(5,791)(146,283)

Increase in trade payables

198

14,840

1,790

Other

466

5,616

4,212

Subtotal

59,72078,721

539,793

Interest and dividend income received

2,471

2,079

22,335Equity in earnings of affiliates

average method, or net selling value.

line method over the estimated useful lives of the respective assets. The

2.Summary of Significant Accounting Policies(a)Principles of consolidation

foreign consolidated subsidiaries principally calculated depreciation by
the straight-line method over the estimated useful lives of the respective
assets.

The accompanying consolidated financial statements include theInterest paid

(3,893)(3,969)(35,188)accounts of the Company and the significant companies which it

Surcharge payments under the Anti-Monopoly Act(6,399)(10,237)(57,839)

controls directly or indirectly. Companies over which the Company

Buildings and structures

10 to 50 years

Income taxes paid

(8,675)(4,795)(78,411)

exercises significant influence in terms of their operating and financial

Machinery, equipment and vehicles

5 to 12 years

390,690

policies have been included in the accompanying consolidated financial

Net cash provided by operating activities¥

43,224¥

61,799$statements on an equity basis.
The financial statements of certain consolidated subsidiaries whose

Cash flows from investing activities:¥

Increase in short-term investments, net(4,265)¥(42,381)

Purchases of property, plant and equipment

stipulated in the Corporation Tax Law of Japan. The property, plant and(383,070)

on the basis of a full fiscal year closing on March 31 for consolidationequipment accounts on the consolidated balance sheet at March 31,(9,645)(98,034)

purposes.

2019 and 2018 were reduced by the following amounts:(36,458)(10,846)

Purchase of investments in affiliated company(9,180)–(82,976)

Proceeds from sales of investments in affiliated company

1,145

–

10,349

(87)

(382)

(786)

Net cash used in investing activities¥(65,614)¥(48,359)$(593,067)

Cash flows from financing activities:
Increase (decrease) in short-term bank loans, net(b)Foreign currency translation

13,643¥(10,030)$

123,315translated into yen at the rates of exchange in effect at the balance
sheet date. Revenues and expenses are translated at the rates ofLand

exchange prevailing when the transactions were made.

Buildings and structurestranslated into yen at the exchange rates in effect at the respective

Thousands of
U.S. dollars

Millions of yen

Monetary assets and liabilities denominated in foreign currencies are

Assets and liabilities of overseas consolidated subsidiaries are¥Contributions granted by national and municipal governments are
deducted directly from the acquisition costs of the related fixed assets as

fiscal year end is December 31 have been included in consolidation

Purchases of other assets

Other

The principal estimated useful lives are as follows:(38,550)$(1,874)

2019

2018

¥

¥

799
410

¥

1,301

$

799

7,222
3,706

372

92

Machinery, equipment and vehicles

2019

831

119
¥

1,290

$

11,759Proceeds from long-term debt

74,297

68,998

671,551

balance sheet dates, except for the components of net assets excluding

Repayment of long-term debt, including current portion(58,360)(68,858)(527,500)

non-controlling interests which are translated at the respective historical–

10,000–rates. Revenue and expenses are translated at the average rates of(h)Liability for retirement benefits(7,974)(6,645)(72,075)

exchange for the respective years. Differences arising from translation

Liability for retirement benefits has been provided principally at an

Repayment of lease obligations

(287)

(348)

(2,594)are reflected in “Translation adjustments” and “Non-controlling

amount calculated based on the retirement benefit obligation after

Other

(573)

(638)

(5,179)interests” in the accompanying consolidated balance sheet andthe fair value of the pension plan assets are deducted. The estimatedstatement of changes in net assets.

benefit is attributed to each period by the benefit formula method over

Proceeds from issuance of corporate bonds
Cash dividends paid

Net cash provided by (used in) financing activities¥

20,746¥(7,521)$

187,518

Financial / Company Data(73)

Decrease (increase) in trade receivables

NTN’s ESG Strategies(Decrease) increase in provision for directors’ and audit & supervisory board members’
bonuses

Increase (decrease) in liability for retirement benefits

NTN’s Business Strategies

Adjustments for:

About Us

Consolidated Statement of Cash Flows (Year ended March 31, 2019)

the estimated years of service of the eligible employees.
(970)

Effect of exchange rate changes on cash and cash equivalents(8,768)885

Net (decrease) increase in cash and cash equivalents(2,614)

6,804(23,627)

Cash and cash equivalents at beginning of the year

86,08879,284

778,126

Cash and cash equivalents at end of the year
See accompanying notes to the consolidated financial statements.

¥

83,474¥86,088$754,499(c)Cash and cash equivalents

Past service cost is amortized as incurred primarily by the straight-

Cash and cash equivalents consist of cash on hand, deposits with banks

line method over a period of principally 15 years, which is within thewithdrawable on demand, and short-term investments which are readily

estimated average remaining years of service of the eligible employees.

convertible to cash subject to an insignificant risk of any change in their

Net unrecognized actuarial gain or loss is amortized commencing

value and which were purchased with an original maturity of three

in the year following the year in which the gain or loss was recognizedmonths or less.

primarily by the straight-line method over a period of principally 15
years, which is within the estimated average remaining years of serviceof the eligible employees.

87 NTN Report 2019

NTN Report 201988

Financial / Company Data

from April 1, 2018. The cumulative effect of applying IFRS 15 was

in investments and other assets and ¥86 million of deferred tax liabilities(i)Overview of transactions

Provision for product defect compensation is provided at an estimatedrecognized by adjusting the beginning balance of retained earnings thein long-term liabilities, respectively.

The Scheme adopts a mechanism known as an officer remuneration BIP

amount in order to cover the anticipated compensation.

fiscal year ended March 31, 2019, in accordance with the transitionalAlso, Note 20 “Income Taxes” in the Notes to the consolidated(Board Incentive Plan) trust (hereinafter referred to as the “BIP Trust”).

treatment provided in this standard. In addition, the effects of applying

financial statements has been expanded in accordance with Note 8 and

The BIP Trust is an incentive plan for officers based on the performance

IFRS 15 on the consolidated financial statements were immaterial.

Note 9 and Interpretive Note to Accounting for Tax Effect Accounting.

share scheme and the restricted stock scheme in the U.S., and has a

For lease transactions involving the transfer of ownership, the leased

However, comparative information for the year ended March 31, 2018

system in which the Company’s shares acquired by the BIP Trust andassets are depreciated by the same methods used for owned fixed

has not been disclosed in Note 20 in accordance with the transitional

funds equivalent to the proceeds received when converting into cash

provisions set forth in Article 7 of the Partial Amendments.

or disposing of such shares are distributed and paid according to the(j)Leases

assets.
assets are depreciated over the lease period using the straight-line

Accounting Standard and Implementation Guidance for Revenue
Recognition

method with a nil residual value.

officers’ positions and the degree of achievement of performance targets
disclosed in the mid-term management plan, and other factors.

6.Additional Information
Performance-linked stock compensation scheme(ii)The Company’s shares remaining in the trust

On March 30, 2018, the Accounting Standards Board of Japan (here

The Company introduced a performance-linked stock compensation

The Company’s shares remaining in the trust are recorded as treasury

Research and development costs are charged to income as incurred.

in after referred to as the “ASBJ”) issued “Accounting Standard for

scheme (hereinafter referred to as the “Scheme”) for its directors

stock in the net asset section, based on their book value (excluding

Revenue Recognition” (ASBJ Statement No.29) and “Implementation(excluding directors who do not reside in Japan and outside directors;

the amount of incidental expenses) recorded in the accounts of theuse are charged to income when incurred, except if the software is

Guidance on Accounting Standard for Revenue Recognition” (ASBJ

the same applies hereinafter), which serves as an officer remuneration

trust. The book value and number of shares of such treasury stock at

expected to contribute to the generation of income or to future cost

Guidance No.30). The International Accounting Standards Board

system that is closely linked to corporate performance targets in the mid-

March 31, 2019 totaled ¥152 million ($1,374 thousand) and 479,761

savings. Such expenditures are capitalized as assets and are amortized(hereinafter referred to as the “IASB”) and the Financial Accounting

term management plan and which is highly transparent and objective inshares, and at March 31, 2018 totaled ¥180 million and 566,826 shares,by the straight-line method over their respective estimated useful lives,

Standards Board (hereinafter referred to as the “FASB”) in the United

nature.

respectively.

generally a 5-year period.

States co-developed comprehensive accounting standards for revenue

NTN’s ESG Strategies(i)Overview(k)Research and development costs and computer software
Expenditures relating to computer software developed for internal

NTN’s Business Strategies

For lease transactions not involving the transfer of ownership, leased

4.Standards Issued but Not Yet Effective

About Us(i)Provision for product defect compensation

recognition and issued “Revenue from Contracts with Customers”(l)Deferred income taxes(issued as IFRS 15 by the IASB and Topic 606 by the FASB) in May 2014.

7.Inventories

Deferred income taxes are provided for temporary differences between

The ASBJ developed comprehensive accounting standards on revenue

the balances of assets and liabilities reported for financial reporting

recognition and issued them in conjunction with the implementation

Inventories at March 31, 2019 and 2018 consisted of the following:

purposes and the corresponding balances for tax reporting purposes.

guidance based on the fact that IFRS 15 was applied from fiscal years

Thousands of
U.S. dollars

Millions of yen

started on or after January 1, 2018 and Topic 606 was applied from(m)Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes in fair value

As the basic policy in developing accounting standards for revenue
recognition, the ASBJ defined the accounting standard starting with

derivatives which meet the criteria for deferral hedge accounting underincorporating the basic principle of IFRS 15 from a standpoint of

which unrealized gain or loss, net of the applicable income taxes, iscomparability between financial statements, which is one benefit

deferred as a component of net assets. Receivables and payablesof ensuring consistency with IFRS 15. Furthermore, the ASBJ added

hedged by forward foreign exchange contracts which meet certain

alternative accounting treatment without impairing comparability whenconditions are translated at the corresponding foreign exchange contract

there are matters to be considered related to accounting practices, etc.

rates. Interest-rate swaps which meet certain conditions are accounted

common in Japan.

for as if the interest rates applied to the interest-rate swaps had
Interest-rate and cross currency swaps which meet certain conditions(ii)Scheduled date of adoption
The Company expects to adopt the accounting standard andare accounted for as if the interest rates and currencies applied to theimplementation guidance from the beginning of the fiscal year ending

interest-rate and cross currency swaps had originally applied to the

March 31, 2022.

underlying debt.
(iii)Impact of the adoption of accounting standard and implementation(n)Distribution of retained earnings

guidance

Under the Corporation Law of Japan and the Company’s Articles of

The Company is currently evaluating the effect of the adoption ofIncorporation, the distribution of retained earnings with respect to a

the accounting standard and the implementation guidance on its

given financial period is made by resolution of the shareholders at aconsolidated financial statements.

¥

Finished goods

5.Change in Presentation

the period do not reflect such distributions.

Partial Amendment to Accounting Standard for Tax EffectAccounting(o)Consolidated taxation system

The Company and its consolidated subsidiaries have adopted “Partial

The Company and certain domestic consolidated subsidiaries adopted

Amendments to Accounting Standard for Tax Effect Accounting”

the consolidated taxation system, which allows companies to file tax(ASBJ Statement No. 28, February 16, 2018) (hereinafter, the “Partial

returns based on the combined profits or losses of the parent company

Amendments”) from the beginning of the fiscal year ended Marchand its wholly owned domestic subsidiaries.

$

96,468928,070

55,41949,479500,917

Raw materials and supplies

36,40933,791

329,091

194,505¥ 179,738¥$

1,758,078

8.Impairment of Fixed Assets
The Company and its consolidated subsidiaries group fixed assets used for manufacturing by management segment into minimum units which generate
identifiable cash flows (e.g., a factory). They also group fixed assets used at the head office or used for sales activities as shared assets, and group fixed
assets on an individual basis when they do not expect any future use.
The Company and its consolidated subsidiaries wrote down the following assets to their respective net recoverable values because the Company andits consolidated subsidiaries do not expect them to be recoverable. Consequently, the Company and its consolidated subsidiaries recorded related losses
on impairment of fixed assets of ¥16,963 million ($153,324 thousand) and ¥635 million in the accompanying consolidated statement of operations forthe years ended March 31, 2019 and 2018, respectively:
Thousands of
U.S. dollars

Millions of yen
Location

Usage

2019

Classification
Buildings and structures

period is made by resolution of the Board of Directors. The accounts for¥Work in process

general meeting held subsequent to the close of the financial period.
The distribution of retained earnings with respect to the interim financial

2019

2018

102,677

Financial / Company Data

included in profit for the period in which they arise, except fororiginally applied to the underlying debt.

2019

fiscal years started after December 15, 2017.

¥

Machinery and equipment
Production equipment and otherJapan

Welfare facilities

2019

2018

3,114

¥

–

$

28,147

12,851

15

116,157

Land

489

448

4,420

Construction in progress

167

65

1,509

Other

342

–

3,091

–

107

–

Buildings and structures
Machinery and equipment¥

31, 2019. As such, deferred tax assets and deferred tax liabilities are–

0

16,963¥ 635–$

153,324included within investments and other assets and long-term liabilities,

3.Accounting Changes

respectively, and related income tax disclosures have been expanded.

The recoverable value of the fixed assets presented in the above table has been measured primarily at net realizable value or value in use. If a fixed asset

As a result, ¥8,377 million of deferred tax assets in current assets

is unlikely to be sold or diverted to other usage, such asset is valued at nil. Value in use is measured as the sum of anticipated future cash flows by eachApplication of IFRS 15

and ¥86 million of deferred tax liabilities in current liabilities previously

A number of the Company’s overseas consolidated subsidiaries havepresented in consolidated balance sheet as of March 31, 2018 haveapplied IFRS 15, “Revenue from Contracts with Customers,” effective

been reclassified and included with ¥8,377 million of deferred tax assets

89 NTN Report 2019business units discounted at rate of 6% for the year ended March 31, 2019.

NTN Report 201990

Financial / Company Data

9.Securities(a)Information regarding marketable securities classified as other securities at March 31, 2019 and 2018 is summarized as follows:Year ending March 31,

Millions of yen

2020

2019
Carrying
value

Acquisition
costs

2018
Unrealized gain
(loss)

Carrying
value

Acquisition
costs

Unrealized gain
(loss)¥

29,866¥

11,798¥18,068¥36,636¥

13,038¥23,598¥¥33,954

4,999¥

16,797(911)¥

17,157

3,574
¥

3,759

40,210¥230,759

40,257363,8712022

49,874450,798

2023

48,735440,5032024

36,614

330,9442025 and thereafter

80,445727,121¥ 281,455
4,088

Equity securities

$

2021

Securities whose carrying value does notexceed their acquisition costs:

Total

25,530Thousands of
U.S. dollars$

NTN’s Business Strategies

Securities whose carrying value exceeds
their acquisition costs:
Equity securities

Millions of yen

About Us

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2019 are summarized as follows:

2,543,996(185)

16,797¥

23,413

11.Retirement Benefits
Thousands of U.S. dollars

1.Outline of retirement benefits for employees
The Company and certain domestic consolidated subsidiaries have defined benefit pension plans (i.e., corporate pension fund plans and lump-sum

2019
Acquisition
costs

payment plans), covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts of which are determined by

Unrealized gain
(loss)

reference to their basic rates of pay, length of service, and the conditions under which termination occurs. They also have defined contribution pension
plans and advance payment plans. Certain overseas consolidated subsidiaries have defined benefit pension plans and/or defined contribution pension

Securities whose carrying value exceeds
their acquisition costs:
Equity securities

plans. The Company has also established an employees’ retirement benefit trust.
$

269,951$

106,639$

163,312

2.Defined benefit pension plans

Securities whose carrying value does notexceed their acquisition costs:(1)The changes in the retirement benefit obligation for the years ended March 31, 2019 and 2018 are as follows:

Equity securities
Total

$

36,95045,185306,901$ 151,824(8,235)$155,077

Thousands of
U.S. dollars

Millions of yen

There were no sales of investment securities for the years ended March 31, 2019 and 2018.

¥

2019

2018

102,839¥ 103,637

Service cost

3,380

3,439

Retirement benefit obligation at the beginning of the year$

929,534
30,551

Interest cost

1,799

1,838

16,261

10.Short-Term Bank Loans, Long-Term Debt and Lease Obligations

Actuarial gain

(407)

(538)

(3,679)

Short-term bank loans principally represent short-term notes with average annual interest rates of 1.54% and 1.12% at March 31, 2019 and 2018,

Benefits paid

(5,131)(5,809)(46,378)

respectively.

Other

(39)

272

(352)

¥ 102,441¥ 102,839

Long-term debt and lease obligations at March 31, 2019 and 2018 consisted of the following:

Retirement benefit obligation at the end of the year
Thousands of
U.S. dollars

Millions of yen
2019
Loans from banks and other financial institutions, due through 2026, at an average annual interest rate of 1.54%¥

249,243

232,753$

2,252,841

0.405% unsecured bonds due 2025

10,00010,00090,3870.490% unsecured bonds due 2027

10,00010,00090,3870.430% unsecured bonds due 2028

10,00010,00090,387

Lease obligations due through 2046

Less current portion
¥

2,212

2,401

19,994281,455

265,1542,543,996(25,530)(61,125)

255,925¥ 204,029$

102,839*Certain domestic consolidated subsidiaries calculate the liability for retirement benefits based on the simplified method.

2019

2018
¥

Financial / Company Data

2019(b)Sales and aggregate gain on investment securities are summarized as follows:(230,759)$

2,313,237(2)The changes in plan assets for the years ended March 31, 2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen
2019Plan assets at fair value at the beginning of the year¥

62,446

2019

2018
¥

61,488$564,433

Expected return on plan assets

1,463

1,676

13,224

Actuarial gain or loss

(2,575)

1,122(23,275)

Contributions by the employers

3,716

2,687

33,588Benefits paid

(4,310)(3,775)(38,957)

(189)

(752)

(1,708)

Other
Plan assets at fair value at the end of the year

91 NTN Report 2019

NTN’s ESG Strategies

Carrying
value¥

60,551¥62,446$547,305

NTN Report 201992

Financial / Company Data

(7)The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2019 and 2018 are as follows:

About Us

(3)The balance of retirement benefit obligation and plan assets at fair value, liabilities and assets recognized in consolidated balance sheets as of March
31, 2019 and 2018 are as follows:

2019
Millions of yen
2019
Funded retirement benefit obligation

Equities

38.4%

45.2%

2019

Bonds

33.9

29.2

2018

General accounts at life insurance companies

16.1

15.2

(62,446)(547,305)

Other

11.6

10.4

35,64031,469322,140

Total

100.0%

100.0%

96,191¥

93,915$

Unfunded retirement benefit obligation

6,250

8,924

56,492

Net amount of liabilities and assets recognized in the consolidated balance sheet

41,89040,393

378,632in the future, and long-term expected rate of return from multiple plan assets.

Liability for retirement benefits

41,89040,393

378,632(8)The assumptions used in accounting for the defined benefit plans are as follows:

40,393$ 378,632

Net amount of liabilities and assets recognized in the consolidated balance sheet¥

41,890¥(4)The components of retirement benefit expenses for the years ended March 31, 2019 and 2018 are as follows:

¥

¥

3,439

$

1,838

16,261

Expected return on plan assets(1,463)(1,676)(13,224)

Actuarial loss

352

1,710

3,182

Past service cost

35

8

316

Amortization:

4,103

¥

Principally 1.2%

Principally 1.2%

Principally 1.5%

Principally 2.5%

5,319

$

37,086

Thousands of
U.S. dollars

Millions of yen

Contributions to defined contribution pension plans

2019

2018

2019

¥

¥

$

1,670

1,622

15,095

Financial / Company Data

1,799

¥

Discount rate
Expected long-term rate of return on plan assets

30,551

Interest cost

Retirement benefit expenses

2018

3.Defined contribution pension plans

2019

2018

3,380

2019

NTN’s ESG Strategies

Service cost

The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present and anticipatedThousands of
U.S. dollars

Millions of yen
2019

NTN’s Business Strategies

869,445(60,551)¥

Plan assets at fair value

2018

Thousands of
U.S. dollars

12.Shareholders’ Equity(a)The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus(other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve,(5)The components of retirement benefit liability adjustments included in other comprehensive income (before tax effect) for the years ended March 31,

respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any
time by resolution of the shareholders or by the Board of Directors if certain conditions are met.

2019 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen
2019
Actuarial gain or loss¥

(1,817)

Total

¥

3,370

24

Past service cost
¥

2019

2018

(1,793)$3,393(b)Movements in shares issued and treasury stock during the years ended March 31, 2019 and 2018 are summarized as follows:(16,423)
Number of shares

217

23
¥

Retained earnings include the legal reserve provided in accordance with the provisions of the Law. The legal reserve of the Company included inretained earnings amounted to ¥8,639 million ($78,086 thousand) at March 31, 2019 and 2018.

$

2019

(16,206)
April 1, 2018(6)The components of retirement benefit liability adjustments included in accumulated other comprehensive income (before tax effect) as of March 31,
2019 and 2018 are as follows:

Unrecognized actuarial loss
Unrecognized past service cost
Total

¥

(9,934)¥(233)¥ (10,167)(8,117)

$

(257)
¥

(8,374)$

March 31, 2019532,463,527––

532,463,527

Treasury stock:Common stock

1,405,959

1,829

87,1601,320,628

2018

2019

2018

Decrease

Shares issued:Common stockThousands of
U.S. dollars

Millions of yen
2019

Increase

April 1, 2018

Increase

Decrease

March 31, 2019(89,791)

Shares issued:Common stock

532,463,527––

532,463,527(2,106)

Treasury stock:Common stock

1,388,394

18,7671,202

1,405,959(91,897)

The increase in treasury stock of 1,829 shares was due to purchases of shares of less than one voting unit and the decrease in treasury stock of 87,160
shares was mainly due to disposal of shares by the “Officer Remuneration BIP Trust” for the year ended March 31, 2019 (Please refer to Note 6).
Additionally, the Company included 479,761 shares held by the “Officer Remuneration BIP Trust” in the number of treasury stock at March 31, 2019.
The increase in treasury stock of 18,767 shares was due to purchases of shares of less than one voting unit and the decrease in treasury stock of
1,202 shares was mainly due to disposal of shares by the “Officer Remuneration BIP Trust” for the year ended March 31, 2018 (Please refer to Note 6).
Additionally, the Company included 566,826 shares held by the “Officer Remuneration BIP Trust” in the number of treasury stock at March 31, 2018.

93 NTN Report 2019

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Financial / Company Data

Lawsuits, etc.

damages incurred in connection with the alleged violation of the(1)There are ongoing investigations by the authorities into consolidated
subsidiaries in Brazil and elsewhere on suspicion of violatingcompetition laws of each country in connection with overseas sales ofbearings.
(2)In the U.S. and Canada, a number of class action suits was filed
price-fixing of bearing sales with business competitors.
(3)In Europe, a lawsuit has been filed against the Company and its two

European Competition Law, which is the subject of a decision madeby the European Commission on March 19, 2014.

15.Financial Instruments(c)Risk management for financial instruments

Overview(i)Monitoring of credit risk (the risk that customers or counterparties may(a)Policy for financial instruments
The Company and its subsidiaries (collectively, the “Group”) raise(4)The Company and its related companies may be subject to claims
for compensation for damages in connection with the past violationof the Anti-Monopoly Act of Japan or the European Competition
Law, etc. and continue to address these claims. Depending on the
results of the claims, the results of operations of the Company and its
consolidated subsidiaries could be affected. However, it is currently
difficult to make reasonable estimates of the future possible effects on
the results of operations and financial position of the Company andnecessary funds in accordance with management plans mainly by bankborrowings and issuance of corporate bonds in support of operations
related to the manufacture and sales of bearings, constant-velocity joints(CVJs) and precision equipments. The Group utilizes bank borrowings
for short-term operating funds, and bank borrowings and issuanceof corporate bonds for long-term capital investments and finances.
Temporary surplus funds are managed by low-risk financial assets. The
Group utilizes derivatives to avoid or mitigate risks as described in thedefault)
In accordance with internal rules and manual, the credit management
section periodically monitors financial conditions of major customers,
manages collection due dates and balances of each customer and tries
to identify credit risk of customers with worsening financial conditions
at the early stage and mitigate the risk. Credit risk of securities is quite
low because the Group utilizes certificate of deposits with high credit
ratings, up to a limited amount, which is approved by the Company.
The Group believes credit risk of derivative transactions is almost
nil because counterparties are financial institutions with high credit

later part of this note and does not hold them for speculative purposes.

ratings.

amount) to Renault S.A. and its total 15 group companies (hereinafter(b)Types of financial instruments and related risks(ii)Monitoring of market risks (the risks arising from fluctuations inreferred to as “Renault”). In addition, another lawsuit has been

Trade receivables, notes, accounts receivable and electronically recorded

filed against the Company and its two consolidated subsidiaries inmonetary claims, are exposed to credit risk of customers. In addition, as

Europe in the United Kingdom Commercial Court by Fiat Chrysler

a result of the business of the Group, which operates globally, foreign

Automobiles N.V. and its total 7 group companies (hereinafter referredcurrency trade receivables are exposed to currency rate fluctuation

to as “FCA”).

risk, which is mitigated by utilizing forward foreign currency exchange

consolidated subsidiaries in the France Tribunal de Commerce de Lyon.
The suit seeks the payment of damages of €66.7 million (provisionalits consolidated subsidiaries.

with which the Group has business relationships and they are exposed to

14.Operating Leases

fluctuation risk of market prices.
Trade payables, notes, accounts payable and electronically recorded

Future minimum lease payments subsequent to March 31, 2019 for non-cancelable operating leases were as follows:
Years ending March 31
2020

Thousands of
U.S. dollars

from the import of raw materials are denominated in foreign currencies.

¥$

13,305risk is mitigated because the trade payables, notes and accounts payable

4,334

39,174

denominated in foreign currencies are within persistently the range of

5,806$ 252,479

¥

1,472

These are exposed to fluctuation risk of foreign currencies. However, theaccounts receivable denominated in the same currencies.
Loans are mainly utilized for business operations of the Group.
Short-term loans are mainly utilized for financing of operating activities.
Long-term loans are mainly utilized for capital investments andfinancing. These have maturity dates of 10 years or less, at the longest,
subsequent to March 31, 2019. Certain loans are exposed to fluctuation
risk of interest rates and fluctuation risk of exchange rates and this risk ishedged by derivative transactions of interest rate swap agreements andinterest-rate and cross currency swap agreements.
The Group has a policy to utilize derivative transactions involving
forward foreign currency exchange contracts, currency option
agreements, currency swap agreements, interest rate option agreements
and interest rate swap agreements for the purpose of avoiding futurefluctuation risk of foreign currencies trade receivables and payables
and mitigating future fluctuation risk of interest rate of loans andcorporate bonds. The Group utilized forward foreign currency exchange
contracts, interest rate swap agreements and interest-rate and crosscurrency swap agreements for the year ended March 31, 2019. Refer to“(m) Derivative financial instruments and hedging activities” in Note 2“Summary of Significant Accounting Policies.”

for hedging of fluctuation risk which is identified by each currency.
Depending on the market conditions of foreign currencies, the Grouputilizes forward foreign currency exchange contracts for forecasted
export transactions with a maximum period of 6 months.
The Group utilizes interest rate swap agreements and interestrate and cross currency swap agreements to mitigate fluctuation riskof interest rates and fluctuation risk of loan principal due to floatingexchange rates.
The Group continuously reviews securities holdings by monitoring
periodically the market value and financial condition of securities’issuers (companies with business relationships with the Group) and by
evaluating those relationships.

Financial / Company Data

Millions of yen

2021 and thereafter
Total

obligations, are due within one year. Certain trade payables resulting

foreign currency exchange rates, interest rates and others)
The Group mainly utilizes forward foreign currency exchange contracts

NTN’s ESG Strategies

contracts. Securities are mainly composed of stocks of the companies

NTN’s Business Strategies

against the Company and its consolidated subsidiaries for suspected

These suits have been filed because Renault and FCA claimed

About Us

13.Contingent Liabilities

The Group has established policies which include maximum
upper limits and reporting obligations for derivative transactions
and complies fully with these guidelines. Derivative transactions
are entered into by the Company’s Accounting Department
and certain consolidated subsidiaries. The Company carries out
mutual supervision and monitoring of the derivative transactionsin accordance with management policies and its consolidated
subsidiaries apply the same approach. Each derivative transaction of
the Company is reported to the responsible director when enteredinto. The consolidated subsidiaries are required to report the status of
their derivatives transactions to the Company on a monthly basis andare also required to consult with the Company when they enter into
derivative transactions other than forward foreign currency exchange
contracts.
(iii)Monitoring of liquidity risk (the risk that the Group may not be able
to meet its obligations on scheduled due dates)
The Group manages liquidity risk with the responsible section
preparing and updating cash flow plans and keeping necessary funds
based on reports of each section.
(d)Supplementary explanation of the fair value of financial
instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no quoted market price available, fairvalue is reasonably estimated. Since various assumptions and factors arereflected in estimating the fair value, different assumptions and factors
could result in different fair value. In addition, the notional amounts ofderivatives in Note 16 “Derivative Financial Instruments and Hedging
Activities’’ are not necessarily indicative of the actual market risk involvedin the derivative transactions.

95 NTN Report 2019

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Financial / Company Data

(7) Short-term bank loans, (9) Notes and accounts-trade payables (10) Electronically recorded obligations and (11) Accrued income taxes

The carrying value of financial instruments on the consolidated balance sheets, fair value and the difference as of March 31, 2019 and 2018, are shown

Since these items are settled in a short time period, their carrying value approximates fair value.

About Us

Fair Value of Financial Instrumentsin the following table. The table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note

(8) Current portion of long-term debt and (12) Long-term debt

2 below).

Long-term debt is composed of corporate bonds and long-term loans. The fair market value of corporate bonds is based on quoted market prices.
Millions of yen

The fair value of long-term loans is based on the present value of the total of principal and interest discounted by the interest rate to be applied

2019
Carrying value

Fair value

83,474¥

Difference

83,474¥

Carrying value–¥

86,088Fair value¥

Difference

86,088

¥

–

6,770

6,770

–

2,595

2,595

–

(3)Notes and accounts – trade receivables

128,806

128,806–

143,692

143,692–(4)Electronically recorded monetary claims

9,505

9,505

–

5,745

5,745

–

(5)Investment securities

33,95433,958

4

40,21040,213

3

71

71

–

77

77

–

(2)Short-term investments(6)Short-term loans receivable included inother current assets¥ 262,580

Total assets¥

262,584¥4¥

278,407¥278,410¥

71,102–

58,08058,080–(8)Current portion of long-term debt

25,33025,330–60,85360,853–(9)Notes and accounts – trade payables

59,971

59,971–

69,71669,716–(10)Electronically recorded obligations

73,18873,188–64,11264,112–(11)Accrued income taxes

2,504

2,504

–

3,888

3,888

–

(12)Long-term debt

253,912

Total liabilities¥ 486,007¥

488,402

¥

2,395

¥

458,549¥

458,729

¥

180

¥

¥

896

¥

–

¥

636

¥

636

¥

–

Derivative transactions (*)

896

201,900

202,080

applied assuming new loans under similar conditions are made.
Derivative Transactions
Please refer to Note 16 “Derivative Financial Instruments and Hedging Activities” section of these Notes to Consolidated Financial Statements.
Note 2:Financial instruments for which it is extremely difficult to determine the fair value are as follows:

180

2019
Unlisted stocks
Stocks of subsidiaries and affiliates(2)Short-term investments

754,499
61,192

61,192$

1,164,243–

85,913–(5)Investment securities

306,901

306,937

36

642

–

2,373,426$

36(7)Short-term bank loans

642,672

642,672–(8)Current portion of long-term debt

228,951

228,951–(9)Notes and accounts – trade payables

542,062542,062–(10)Electronically recorded obligations

661,526

661,526–(11)Accrued income taxes

22,633

22,633–

2,295,042

2,316,690

21,648(12)Long-term debt
Total liabilities
Derivative transactions (*)$ 4,392,886$

4,414,534$

21,648

$

$

8,099

$

–

8,099

228,110

2,603

2019
Within one year
Cash and cash equivalents¥

Short-term investments
Trade receivables
Electronically recorded monetary claims

$

$

289

preceding table.

–

85,913$ 2,373,390

19,024

225,507

Millions of yen

1,164,243

Total assets¥$

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in the–(3)Notes and accounts – trade receivables

642

25,237

18,735288

Difference

754,499(4)Electronically recorded monetary claims(6)Short-term loans receivable included inother current assets¥¥

follows:

Fair value$

24,949Financial / Company Data

$

¥

Other
Total

2019
Carrying value

2019

2018

Note 3:Redemption schedules for cash and cash equivalents, receivables and marketable securities with maturities at March 31, 2019 and 2018 are as

Thousands of U.S. dollars(1)Cash and cash equivalents

Thousands of
U.S. dollars

Millions of yen

NTN’s ESG Strategies

71,102

2,395

present value of the total of the principal, interest payments and net cash flows of the swap agreements discounted by the interest rates to be3(7)Short-term bank loans

256,307

Certain long-term loans with floating interest rates have been hedged by interest rate swap agreements and interest-rate and cross currency

swap agreements. These have been accounted for as loans with fixed interest rates. The fair value of those long-term loans is based on the

NTN’s Business Strategies¥(1)Cash and cash equivalents

assuming new loans under the similar conditions to existing loans are made.

2018*Assets and liabilities arising from derivative transactions are shown at net value with the amount in parentheses representing net liability position.

Short-term loans receivable included in other current assets
Total(1) Cash and cash equivalents, (2) Short-term investments, (3) Notes and accounts-trade receivables, (4) Electronically recorded monetary claims¥

More than five
years and within
ten years–¥–

More than ten
years
¥

–

6,770

–

–

–

128,806

–

–

–

9,505

–

–

–

71

–

–

–

¥ 228,626

¥

–

¥

–

¥

–

Millions of yen
2018
Within one year
Cash and cash equivalents
Short-term investments
Trade receivables
Electronically recorded monetary claims

Note 1:Methods to determine the fair value of financial instruments and other matters related to securities and derivative transactions

83,474More than one
year and within
five years

Short-term loans receivable included in other current assets
Total

¥

86,088More than one
year and within
five years¥–

More than five
years and within
ten years¥–

More than ten
years
¥

–

2,595

–

–

–

143,692

–

–

–

5,745

–

–

–

77

–

–

–

¥ 238,197

¥

–

¥

–

¥

–

and (6) Short-term loans receivable included in other current assets
Since these items are settled in a short time period, their carrying value approximates fair value.
(5) Investment securities
The fair value of equity securities is based on quoted market prices.

97 NTN Report 2019

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Financial / Company Data

2019

2019
Within one year$

Cash and cash equivalents

More than one
year and within
five years

754,499

Short-term investments

Electronically recorded monetary claims–$

Classification

More than ten
years

–

$

Notional
amountTransactionMore than
one year

Valuation
gain (loss)

Fair value

Forward foreign currency exchange contracts–

Selling:

61,192

–

–

–

Euro

1,164,243–––

U.S. dollars

135,030–(1,166)(1,166)85,913

–

–

–

Other

24,947

–

(216)

(216)

642

–

–

–

5,170

–

54

54

139,178

115,072

8,279

8,279

Short-term loans receivable included in other current assets$ 2,066,489

Total

More than five
years and within
ten years

$

–

$

–

$

–

Over-the-countertransactions$

58,020

$

–

$

271

$

271

NTN’s Business Strategies

Trade receivables$

About Us

Thousands of U.S. dollars

Thousands of U.S. dollars

Buying:
Other

Note 4:The redemption schedule for long-term debt is disclosed in Note 10 “Short-Term Bank Loans, Long-Term Debt and Lease Obligations” section ofthese Notes to Consolidated Financial Statements.

Interest-rate and cross currency swaps
Receive/fixed yen and pay/fixed Euro39,119Other

16.Derivative Financial Instruments and Hedging Activities

$

Total

–

401,464$877

115,072

$

8,099

877
$

8,099

NTN’s ESG Strategies(a)Derivative transactions to which hedge accounting is not applied
The fair value of forward foreign currency exchange contracts is computed using prices provided by counterparty financial institutions.

The estimated fair value of the derivatives positions outstanding which do not qualify for deferral hedge accounting at March 31, 2019 and 2018 issummarized as follows:(b)Derivative transactions to which hedge accounting is applied

Currency-related transactions

The estimated fair value of the derivatives positions outstanding which qualify for deferral hedge accounting at March 31, 2019 and 2018 is summarized
as follows.

Millions of yen
2019Classification

Transaction

Notional
amountMore than
one year

Millions of yen
Valuation
gain (loss)

Fair value

2019

Swap rates applied to underlying long-term debt

Selling:¥Euro

Over-the-countertransactions

6,419

¥

–

¥

30

¥

14,939

–

(129)

(129)

Other

2,760

–

(24)

(24)

572

–

6

6

Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable

¥

6,000

¥

6,000

(*1)

¥

130

¥

–

(*3)

Forward foreign currency exchange contract
Selling:
U.S. dollars

Buying:Millions of yen

Other

2018
Method of hedge accounting

Interest-rate and cross currency swaps

Swap rates applied to underlying long-term debt

Receive/fixed yen and pay/fixed Euro
Other
¥

Total

15,39812,731

916

916

4,328

–

97

97

44,416¥

12,731

¥

896

¥

896

Notional
amountMore than
one year

Notional
amountMore than
one year¥

14,000¥¥¥Interest-rate and cross currency swaps

Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable

Forward foreign currency exchange contract

Receive / floating U.S. dollars and pay / fixed yen

6,000

(*1)

1,500

–

(*2)

86

–

(*3)

Selling:
U.S. dollars

Valuation
gain (loss)

Fair value

Thousands of U.S. dollars
2019

Forward foreign currency exchange contracts
Method of hedge accounting

Selling:
Euro

¥

6,343

¥

–

¥

131

¥

131

U.S. dollars

13,135

–

272

272

Other

2,277

–

10

10

Over-the-countertransactions

Swap rates applied to underlying long-term debt

TransactionMore than
one year

Fair value

Interest rate swaps
Receive / floating and pay / fixed

Forward foreign currency exchange contracts
applied to underlying accounts-trade receivable

Notional
amount$54,232$

54,232

(*1)

$

1,175

$

–

(*3)

Forward foreign currency exchange contract
Selling:

Buying:U.S. dollars

Other

1,774

–

64

64

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

99 NTN Report 2019

Fair value

Interest rate swaps
Receive / floating and pay / fixed

2018
Transaction

Transaction

Swap rates and currency applied to underlying
long-term debt

Millions of yen

Classification

Fair value

Interest rate swaps
Receive / floating and pay / fixed

30

U.S. dollars

TransactionMore than
one year

Financial / Company Data

Method of hedge accounting

Forward foreign currency exchange contracts

Notional
amount14,067¥37,596

14,067¥

14,067

159
¥

636

159
¥

*1 Because interest rate swap agreements are accounted for applying swap rates to underlying long-term debt, their fair value is included in that of long-term debt disclosed in
Note 15 “Financial Instruments.”*2 Because interest-rate and cross currency swaps agreements are accounted for applying swap rates to underlying long-term debt, their fair value is included in that of long-term
debt disclosed in Note 15 “Financial Instruments.”*3 Because forward foreign currency exchange contracts are accounted for applying forward foreign exchange rate to underlying accounts-trade receivable, for the years ended
March 31, 2019 and 2018, respectively, their fair value is included in that of accounts-trade receivable.

636

NTN Report 2019100

Financial / Company Data

20.Income Taxes

Research and development costs included in cost of sales and selling, general and administrative expenses totaled ¥21,661 million ($195,788 thousand)Income taxes applicable to the Company and its domestic subsidiaries comprise corporate taxes, inhabitants’ taxes and enterprise taxes which, in theand ¥21,007 million for the years ended March 31, 2019 and 2018, respectively

aggregate, resulted in statutory tax rates of 30.0% and 30.2% for the years ended March 31, 2019 and 2018, respectively. Overseas subsidiaries are

About Us

17.Research and Development Costs

subject to the income taxes of the respective countries in which they operate.
The effective tax rates for the years ended March 31, 2019 and 2018 differ from the Company’s statutory tax rate for the following reasons:

18.Loss on Surcharge Payments under the Anti-Monopoly Act

2019

The Company has negotiated the compensation of damages with a part of customers in association with investigations by the authorities about thecompetition laws. Nevertheless, in overall consideration of the effects to operations of the Company and its consolidated subsidiaries due to extended
would accord with the overall benefits for both parties.
As a result, the Company and its consolidated subsidiaries recorded loss on surcharge payments under the Anti-Monopoly Act in the amount of¥2,108 million ($19,054 thousand) and ¥3,710 million for the years ended March 31, 2019 and 2018, respectively.

19.Other Comprehensive Income (Loss)
The following table presents the analysis of other comprehensive income (loss) for the years ended March 31, 2019 and 2018.

2019

2019

2018

Net unrealized holding (loss) gain on securities:
Amount arising during the year

30.0%

30.2%

Permanent non-deductible expenses

4.9

1.5

Permanent non-taxable income(68.0)(6.5)

Elimination of dividend income

96.7

8.0

Equity in earnings of affiliates

(1.0)

(0.5)

Difference in overseas consolidated subsidiaries’ applicable tax rates(53.1)(7.7)

Increase in valuation allowance

267.2

5.3

Decrease in deferred tax assets due to change in statutory tax rates

(1.7)

(2.5)

Tax credit for research and development expenses

(1.6)

(2.1)

Unrealized inter-company profit

29.5

(3.5)

Other

6.9

(5.0)

309.8%

17.2%

Effective tax rates¥(6,254)

¥

4,104

$

(56,528)––(6,254)

4,104(56,528)

Tax effect

1,894(1,231)

17,119Total(4,360)2,873(39,409)(1,939)5,269(17,526)

98

–

886

(1,841)

5,269(16,640)

Tax effect

–

–

–

Total

(1,841)

5,269(16,640)(2,114)

1,069(19,108)

457

1,911

4,131

(1,657)2,980(14,977)

Tax effect392(1,742)

3,543

Total

(1,265)

1,238(11,434)

The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2019 and 2018 arepresented below:

Translation adjustments:

2019

Amount arising during the year
Reclassification adjustments for gains included in profit
Before tax effect

Retirement benefit liability adjustments:
Amount arising during the year
Reclassification adjustments for gains included in profit
Before tax effect

Share of other comprehensive (loss) income of affiliates accounted for by the equity
method:(936)

553(8,460)Reclassification adjustments for gains included in profit

(63)

(7)

(570)

(999)

Total
Other comprehensive (loss) income, net¥(8,465)(9,030)

546
¥

9,926

$

(76,513)

2019

2018

Deferred tax assets:
Tax loss carryforwards¥

16,616¥

15,503Liability for retirement benefits

7,965
15,090$150,188
140,127

Impairment loss

5,882

1,026

53,166

Accrued expenses

4,115

4,403

37,194Inventories

990

2,147

8,948

Valuation loss on investment securities

895

898

8,090

4,101

4,103

37,068

48,102

35,632434,781

Valuation allowance for tax loss carryforwards(11,118)–(100,493)

Valuation allowance for taxable temporary differences(10,605)–(95,855)(21,723)(5,842)(196,348)

26,37929,790238,433(8,895)(8,886)(80,400)

Other
Gross deferred tax assets

Less: valuation allowance

Amount arising during the year

Thousands of
U.S. dollars

Millions of yen

Financial / Company Data–

Before tax effect

Reclassification adjustments for gains included in profit

NTN’s ESG Strategies

Thousands of
U.S. dollars

Millions of yen

Statutory tax rates

NTN’s Business Strategies

negotiations, the Company reached the conclusion to pay the settlement amount because the Company considered that an amicable and early resolution

2018

Total deferred tax assets

Deferred tax liabilities:
Depreciation and amortization
Unrealized holding gain on securities(5,126)(7,020)(46,333)

Reserve for deferred gain on property included in retained earnings(1,167)(1,192)(10,548)

Other
Total deferred tax liabilities
Net deferred tax assets¥(1,119)(1,018)(10,114)(16,307)(18,116)(147,395)

11,67491,038

10,072¥

Note 1:Valuation allowance increased by ¥15,880 million ($143,535 thousand) in the year ended March 31, 2019. The reason for this increase is that theCompany and its consolidated subsidiaries recorded a valuation allowance along with the recording of tax loss carryforwards and impairment loss.
Note 2:Tax loss carryforwards and related deferred tax assets as of March 31, 2019 will expire as follows:

101 NTN Report 2019

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Financial / Company Data

1.Outline of reporting segments

2019Year ending March 31,

Tax losscarryforwards (*1)

Valuation allowance fortax losscarryforwards

Deferred tax assets
or tax loss
carryforwards

¥

¥

¥

2020

444

(266)

178

The Group’s reporting segments are divisions of the Group for which separate financial information is available, and whose operating results are reviewed
regularly by the highest management decision-making body (the Board of Directors meeting of the Company) in order to allocate management resources
and assess performance of operations.
The Group’s main business lines consist of the manufacture and sales of bearings, CVJs and precision equipments for the aftermarket, general

890

(612)

278

industrial machinery market, and automotive market. Business activities in Japan are controlled by the Company (the Head Office), and overseas business

2022

698

(379)

319

activities are controlled by the General Manager responsible in each region. Business entities in each region prepare their own plans and strategies to

2023

546

(184)

362

2024

528

(55)

473

13,510¥(9,622)

16,616¥(11,118)3,888(*2) ¥

NTN’s Business Strategies

2021

2025 and thereafter

About Us

22.Segment Information

Millions of yen

conduct business activities while analyzing profitability and the investment efficiency of operations.
Accordingly, the Group has four reporting segments based on geographic business segmentation controlled by the Head Office or the General
Managers: Japan, the Americas, Europe, and Asia and other areas. Each reporting segment engages in the manufacture and sale of bearings, CVJs, andprecision equipments and other products.

5,498

2.Calculation methods used for net sales, profit or loss, assets, liabilities and other items on each reporting segment
The accounting policies of the segments are substantially the same as those described in Note 2 “Summary of Significant Accounting Policies.” Inter-

Thousands of U.S. dollars

segment sales and transfers are recorded at the same prices used in transactions with third parties.

2019
Year ending March 31,

In addition, the Company and its consolidated subsidiaries have been applied “Partial Revision of Accounting Standard for Tax Effect Accounting”
Deferred tax assets
or tax loss
carryforwards

$

$

$

2020

4,013

(2,404)

1,609(ASBJ Guidance No. 28 issued on February 16, 2018) from the beginning of the current consolidated fiscal year. The segment assets and segment
liabilities in the previous consolidated fiscal year are the amounts after retrospective application of the accounting standard.
(Application of IFRS 15)

2021

8,045

(5,532)

2,513

2022

6,309

(3,426)

2,883

Customers” from the beginning of the current consolidated fiscal year. The cumulative effect of applying IFRS 15 was recognized by adjusting retained

2023

4,935

(1,663)

3,272

earnings at the beginning of the fiscal year ended March 31, 2019, in accordance with the transitional treatment provided in its standard. Therefore, the

2024

4,773

(498)

4,275

amounts in previous consolidated fiscal year are not revised. In addition, the effects of applying IFRS 15 on segment information are immaterial.

122,113(86,970)2025 and thereafter$

150,188$ (100,493)

35,143(*2) $

49,695The consolidated subsidiaries in overseas excluding a part of consolidated subsidiaries have been applied IFRS 15, “Revenue from Contracts with

3.Information as to net sales, profit or loss, assets, liabilities, and other items for each reporting segment for the years ended March 31,
2019 and 2018

Financial / Company Data(*1) The tax loss carryforwards in the above table are measured using the statutory tax rates.
(*2) The balance of deferred tax assets of ¥5,498 million ($49,695 thousand) arising from tax loss carryforwards of ¥16,616 million ($150,188 thousand) calculated after
multiplying the loss amount with the statutory tax rates as of March 31, 2019. A certain portion of tax loss carryforwards was considered to be recoverable in future income
taxes because it is probable that future taxable profit would be available.

NTN’s ESG Strategies

Tax losscarryforwards (*1)

Valuation allowance fortax losscarryforwards

Reportable segment information for the years ended March 31, 2019 and 2018 is summarized as follows:
Millions of yen
2019
Reporting segments

21.Amounts per Share
Amounts per share at March 31, 2019 and 2018 and for the years then ended were as follows:

2019¥

Americas216,268¥

EuropeAsia andother areas

Total

Adjustments

Consolidated

733,569¥¥

Sales, profit and assets or liabilities by reporting segments:
Yen

Net assets

Japan

U.S. dollars

433.32¥

Net sales:

2019

2018
477.17$

Sales to third parties
3.92(Loss) profit attributable to owners of parent:
Basic(13.10)38.36(0.12)Cash dividends

15.00

15.00

0.14

Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end.

¥

194,668¥

179,827¥

142,806¥–

733,569

Inter-segment sales and transfers

136,804

3,635

4,177

12,771

157,387(157,387)

–

Total

353,072

198,303

184,004

155,577

890,956(157,387)

733,569

Segment profit

¥

682

¥

4,345

Segment assets¥

609,258¥

176,903

Segment liabilities¥

417,716¥

107,032¥

955¥

17,218¥¥143,805¥

173,683¥

110,503¥45,417

23,200¥3,746¥ 1,103,649¥(262,898)¥

840,751¥¥(86,322)¥594,346

680,668¥

26,946

Basic profit or loss attributable to owners of parent per share is computed based on the profit or attributable to owners of parent of common stockand the weighted-average number of shares of common stock outstanding during the year. Diluted profit attributable to owners of parent per share has
not been presented because there were no potentially dilutive shares of common stock and the Company and consolidated subsidiaries recorded loss
attributable to owners of parent for the year ended March 31, 2019. Diluted profit attributable to owners of parent per share has not been presented
because there were no potentially dilutive shares of common stock for the year ended March 31, 2018.

Other items:
Depreciation and amortization¥

15,285

¥

9,687

¥

7,117

¥

6,837

¥

38,926¥–¥38,926

Capital expenditures¥

27,253¥

13,600

¥

9,366

¥

5,146

¥

55,365

¥

(553)

¥

54,812The Company recorded shares held by the “Officer Remuneration BIP Trust” (Please refer to Note 6) as treasury stock in the consolidated financial
statements as of March 31, 2019 and 2018. Accordingly, to compute “net assets per share,” the Company’s shares held by the trust (479,761 sharesand 566,826 shares at March 31, 2019 and 2018, respectively) are included in treasury stock that is excluded from the number of shares outstanding
as of March 31, 2019 and 2018. In addition, to compute “(Loss) profit attributable to owners of parent per share,” the Company’s shares held by thetrust (516,314 and 567,097 average number of shares for the years ended March 31, 2019 and 2018, respectively) are included in treasury stock that is
excluded from the computation of the average number of shares for the years ended March 31, 2019 and 2018.
Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective years together with theinterim cash dividends paid.

103 NTN Report 2019

NTN Report 2019104

Financial / Company Data

About Us

4.Related information

Millions of yen(1)Sales by products and service

2018

Sales by products and service classified by the similarity of the market for the years ended March 31, 2019 and 2018 are summarized as follows:

Reporting segments
Japan

Americas

Asia andother areas

Europe

Total

Adjustments

Millions of yen

Consolidated

2019

Sales, profit and assets or liabilities
by reporting segments:

Aftermarket¥

Sales to third parties¥

213,977¥

194,277¥

188,225¥

147,894¥

744,373

¥

–

¥

¥

123,398¥

Total

491,322¥733,569

744,373

Inter-segment sales and transfers

133,346

4,269

4,292

14,058

155,965(155,965)

–

Total

347,323

198,546

192,517

161,952

900,338(155,965)

744,373

Segment profit

¥

8,015

¥

7,092

¥

2,800

¥

19,601¥37,508

¥

2,101

¥

39,609Segment assets¥

600,896¥

162,740¥

153,105¥

172,888¥ 1,089,629¥(250,202)¥

839,427

Segment liabilities¥

390,465¥

104,599¥

112,591¥

52,238¥¥(90,226)¥

569,667

659,893

118,849

Automotive

NTN’s Business Strategies

Net sales:
Sales to third parties

Industrial
machinery

Millions of yen
2018
Industrial
machinery

Aftermarket
Sales to third parties¥

116,695¥

Automotive

119,085¥

Total

508,593¥744,373

Thousands of U.S. dollars
Other items:

2019¥

13,482

¥

9,854

¥

7,236

¥

6,934

¥

37,506¥–¥37,506

Capital expenditures¥

26,409¥10,287

¥

7,710

¥

4,267

¥

48,673

¥

(201)

¥

48,472

Industrial
machinery

Aftermarket$ 1,074,244

Sales to third parties$ 1,115,361

Automotive

NTN’s ESG Strategies

Depreciation and amortization

Total$ 4,440,928$ 6,630,533

Thousands of U.S. dollars
2019(2)Regional information

Reporting segments
Japan

Americas

Europe(a)SalesAsia andother areas

Total

Adjustments

Consolidated

Sales categorized by country and region based on locations of customers within the Group for the years ended March 31, 2019 and 2018 are

Millions of yen

Net sales:
Sales to third parties

Financial / Company Datasummarized as follows:

Sales, profit and assets or liabilities by reporting segments:$ 1,954,788$ 1,759,552$ 1,625,408$ 1,290,785$ 6,630,533

1,236,535

32,85537,755

115,434

1,422,579

Inter-segment sales and transfers

3,191,323

Total

6,164

1,792,407$

39,274

1,663,163
8,632

155,629

209,699(1,422,579)–(1,422,579)$

33,8596,630,533$$ 5,506,919$ 1,598,978$ 1,299,815$ 1,569,874$ 9,975,586$ (2,376,264)$ 7,599,322

Segment liabilities$ 3,775,623

$

$

$

$ 6,152,375$$ 5,372,133

410,512$$ 6,630,533

Segment profit

998,807$

8,053,112–

Segment assets

967,433$

1,406,219$(780,242)

$

2019

¥

Japan

Americas207,249¥

201,464Europe¥167,826

Asia and other areas¥

157,030

Total¥

733,569

243,558
Millions of yen
2018¥

Other items:
Depreciation and amortization$

138,157$

87,558$64,329$61,798$351,842$–$

351,842

Capital expenditures$

246,332$

122,927$

84,657$46,513$

500,429$(4,998)$495,431

Japan

Americas204,325¥

201,677

Europe¥175,599

Asia and other areas¥

162,772

Total¥

744,373

Thousands of U.S. dollars
2019

The total amount of segment profit is adjusted to operating income of the consolidated statement of operations.
Other than those corresponding to segment assets, adjustments relate to the elimination of inter-segment transactions, etc. The adjustments forsegment assets consist of inter-segment elimination, etc. of ¥297,147 million ($2,685,832 thousand) and ¥290,727 million and the corporate assetsof the Group of ¥34,249 million ($309,567 thousand) and ¥40,525 million for the years ended March 31, 2019 and 2018, respectively. The corporate
assets are mainly long-term investment funds (investment securities) for the years ended March 31, 2019 and 2018.

Japan

Americas

EuropeAsia and other areas

Total$ 1,873,268$ 1,820,979$ 1,516,934$ 1,419,352$ 6,630,533“Americas” includes the U.S.A., Canada and Central and South America. “Europe” includes Germany, France, the U.K. and others. “Asia and otherareas” include China, Thailand, India and others. The sales of the “Americas” segment above include the sales to customers in the U.S.A. of ¥171,062
million ($1,546,183 thousand) and ¥172,454 million for the years ended March 31, 2019 and 2018, respectively. The sales of the “Asia and other areas”
segment above include the sales to customers in China of ¥79,886 million ($722,068 thousand) and ¥86,709 million for the years ended March 31, 2019and 2018, respectively.

105 NTN Report 2019

NTN Report 2019106

Financial / Company Data

Property, plant and equipment categorized by country and region within the Group at March 31, 2019 and 2018 are summarized as follows:

About Us

Independent Auditor's Report(b)Property, plant and equipment

Millions of yen
2019

¥

Japan

Americas

Europe104,182¥¥

79,046

Asia and other areas

48,400¥

Total

48,235¥279,863

NTN’s Business Strategies

Millions of yen
2018

¥

Japan

Americas

Europe113,587¥¥

72,952

Asia and other areas

49,544¥

Total

51,976¥

288,059

Thousands of U.S. dollars
2019
Americas

EuropeAsia and other areas

Total$ 714,475$ 437,475$ 435,983$ 2,529,606

NTN’s ESG StrategiesJapan$ 941,673

1.Property, plant and equipment in “Americas” in the amount of ¥70,062 million ($633,272 thousand) and ¥64,293 million is located in the U.S.A. at
March 31, 2019 and 2018, respectively.
2.Property, plant and equipment in “Europe” in the amount of ¥31,930 million ($288,607 thousand) and ¥34,724 million is located in France at March
31, 2019 and 2018, respectively.
3.Property, plant and equipment in “Asia and other areas” in the amount of ¥35,843 million ($323,975 thousand) and ¥38,839 million is located in
China at March 31, 2019 and 2018, respectively.

Financial / Company Data

5.Loss on impairment of fixed assets
Loss on impairment of fixed assets by reporting segment for the years ended March 31, 2019 and 2018 is summarized as follows:

Millions of yen
2019
Japan
¥

16,963

Americas¥

Europe–¥Asia and other areas–¥–

Adjustments
¥

Total

–

¥

16,963

Millions of yen
2018
Japan
¥

Americas635¥Europe–¥Asia and other areas–¥

Adjustments

–

¥

Total

–

¥

635

Thousands of U.S. dollars
2019
Japan

Americas$ 153,324$

Europe–$Asia and other areas–$–

Adjustments
$

Total

–

$ 153,324

23.Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated financial statements asof March 31, 2019 and for the year then ended, was approved at the annual general meeting of the shareholders held on June 25, 2019:Year-end cash dividends (¥7.5 (U.S. $0.07) per share)

107 NTN Report 2019

Millions of yen

Thousands of
U.S. dollars

¥

$

3,987

36,037NTN Report 2019108

Financial / Company Data

Non-Financial Data (ESG Factors)
NTN only

Item

Domestic subsidiaries

Applicable ScopeSocial (S) Factors

Overseas subsidiaries

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Achievements

Achievements

NTN only

See
page:

Item

14

14

P.41

R&D expenditures

Male

14

14

P.41

Ratio of R&D expenditures to sales

Female00

P.41

Number of directors not serving as Operating Officers

14

14

-

Number of Outside Directors

2

2

P.47

Percentage of Outside Directors

14%

14%

P.47

Number of Outside Audit & Supervisory Board Members

3

3

-

Board of Directors Number of meetings per year

18

19

P.43

Director (outside) attendance rate

100%

100%

P.43

Director (inside) attendance rate

99%

99%

Audit & Supervisory Board Members (outside) attendance rate

100%

Audit & Supervisory Board Members (inside) attendance rate

Applicable Scope

Overseas subsidiaries

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Achievements

Achievements

21.0 billion yen

21.7 billion yen

P.29

2.8%

3.0%

P.29

See
page:

4

P.29

129

138

P.29

Ratio of local procurement (Total)

88%

90%

P.63

(Americas)

84%

89%

P.63

(Europe)

94%

95%

P.63

(Asia and Others)

84%

89%

P.63

Subcontracting self-auditing rate

95%

100%

P.63

P.43

Conflict minerals survey response rate from business partners

92%

88%

P.63

95%

P.43

Overseas Production Rate (Total)

52%

49%

P.65

100%

100%

P.43

(Americas)

19%

20%

P.65

15

15

-

(Europe)

17%

16%

P.65

Audit & Supervisory Board Members (outside) attendance rate

100%

98%

-

(Asia and Others)

16%

14%

P.65

Audit & Supervisory Board Members (inside) attendance rate

100%

100%

-

112

127

P.66

100%

100%

P.66

120

64

P.66

Audit & Supervisory Board Number of meetings per year

Number of outside awards received for product development

Number of participants in specialized quality education courses
Quality management system certification rate*1

5

7

P.48

Director (outside) attendance rate

100%

100%

-

Number of Sales TQM (Total Quality Management) activities

Director (inside) attendance rate

100%

100%

-

Number of customer visits by Technical Service Units

Audit & Supervisory Board Members (outside) attendance rate

100%

100%

-

Number of employees

Number of sites subject to internal control assessments

51

49

P.51

Number of SRI indexes included in

6*

6*

P.50

Compensation Advisory Committee Number of meetings per year

727

584

-

25,49324,988-Percentage of female employees

11%

11%

-

Percentage of employees overseas

67%

65%

P.10

122

-

Average age Total

41

41

-

82.6%

82.9%

-

Male

41

41

-

Total annual cash dividends per share

15 yen15 yenP.79

Female39

39-

Number of Stakeholder Dialog held with CSR experts

1

1

P.55

Average years of continuous employment Total

19

19

-

Number of CSR Committee held per year

2

0

-

Male

19

19

-

Number of Risk Management Committee held per year

3

2

P.52

Female17

18-

Number of Compliance Committee held per year

4

4

P.53

Percentage of hired female graduates

14%

16%

P.10

2.06%

2.13%

P.60

32

31

P.60
P.60

2

2

P.53

Employment rate of persons with disabilities

Response rate of survey of "Compliance awareness"

76%

79%

P.54

Number of women in management positions (NTN only)*2

Helpline Recognition level

81%

79%

P.54

Percentage of women in management positions (NTN + domestic subsidiaries)*2

17

6

P.54

100%

100%

P.54

Number of Fair Trade Monitoring Committee held per year

Number of reports from whistle-blower
Report response rate
* As of July 31

Environment (E) Factors

NTN onlyItem
CO2 emissions

Total

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Achievements

Achievements

641,000 metric tons

674,000 metric tons

P.73

See
page:

P.60

Post-retirement rehiring rate (NTN only)

62%

90%

P.60

Number of employees taking leave for partner’s childbirth

178

204

P.60

Number of employees taking childcare leave Total

44

47

P.61

Male

3

2

P.61

Female

41

45

P.61

Number of employees returning after childcare leave Total

18

19

P.61

Male

3

1

P.61

Female

15

18

P.61

100%

95%

P.61

31

35

P.61

Percentage of employees returning after childcare leave
Number of employees on shortened working hours for childcare Total

49,000 metric tons

48,000 metric tons

P.73

Male

0

1

P.61

Scope 2

237,000 metric tons

242,000 metric tons

P.73

Female

31

34

P.61

Scope 154,000 metric tons

57,000 metric tons

P.73

Number of employees taking long-term care leave

1

1

P.61

Scope 2301,000 metric tons

327,000 metric tons

P.73

Number of employees using NTN Job Return scheme

2

0

P.61

Total

3.22 million m3

3.47 million m3

P.72

Number of employees using intra-company child daycare center (Bear Kids Land)

34

32

P.61

Domestic

1.94 million m3

2.13 million m3

P.72

Number of employees using the facility supporting persons with intellectual disabilities (Dream Workshop)

15

12

P.60

Overseas1.28 million m3

1.34 million mm3

P.72

Number of employees taking mental health leave

26

27

P.62

176,000 metric tons

177,000 metric tons

P.72

Percentage of returning employees taking mental health leave

50%

50%

P.62

Domestic

68,000 metric tons

68,000 metric tons

P.72

Number of counseling service consultations per month

69

56

P.62

Overseas

Generated waste Total

Recycling rates

Applicable Scope

Overseas subsidiaries

3.5%
14.5%

Domestic Scope 1
Overseas
Water usage

Domestic subsidiaries

3.6%
12.2%

(NTN Group)*2

108,000 metric tons

109,000 metric tons

P.72

Percentage of high-stress employees*3

8%

8%

P.62

Total

97.9%

97.4%

P.72

Rate of workplace incidents causing lost work time

0.08*40.64*5

P.62

Domestic

99.9%

98.5%

P.72

Number of workplace incidents causing lost work time

1*4

8*5

P.62

Overseas

96.7%

96.7%

P.72

Number of law-related training sessions held by safety and health consultants

8

7

P.62

100%

100%

P.62

0

6

P.62

Percentage of designated health checks provided
Number of ISO 45001-certified sites
Number of OSHMS-certified sites

9

3

P.62

Number of hazard simulation classes provided

95

73

P.62

Financial / Company Data

213

Percentage of votes cast

Number of shareholders at the General Meeting of Shareholders

NTN’s ESG Strategies

3

Number of patents reward being paid

NTN’s Business Strategies

Number of directors Total

Domestic subsidiaries

About Us

Governance (G) Factors

Other non-financial data can be viewed on our website.
https://www.ntnglobal.com/en/csr/nonfinance.html*1: ISO 9001, IATF 16949
Applies to domestic and overseas consolidated manufacturing subsidiaries (excluding bases that have not started mass production).
*2: Includes three consolidated subsidiaries merged in October 2018: NTN KONGO CORP., NTN MIKUMO COMPANY LTD. and NTN ENGINEERING PLASTICS CORP.
*3: As determined by NTN stress check program.
*4: December 16, 2016 to December 15, 2017
*5: December 16, 2017 to December 15, 2018

109 NTN Report 2019

NTN Report 2019110

Financial / Company Data

Investor Information

NTN Report 2019 third-party opinion

Head Office
NTN Corporation
3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan

Transfer Agent for Common Stock
Mitsubishi UFJ Trust and Banking Corporation
4-5, 1-chome, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

General Meeting of Shareholders
The General Meeting of Shareholders washeld on June 25, 2019; Osaka

Common Stock
Authorized:
1,800,000,000
Issued and Outstanding: 532,463,527

Stock Exchange Listings
First Section of Tokyo Stock Exchange (#6472)

Stock Price Range in the Fiscal Year
ended March 31, 2019
High: 536 yen
Low: 296 yen

Number of Shareholders
45,296

Independent Audit Firm
Ernst & Young ShinNihon LLC

Professor, Faculty of Economics, Takasaki City University of Economics

Takeshi Mizuguchi

Breakdown of Shareholders

Breakdown of Number of Shares Held

Financial instruments firms

Between 5,000 and 9,999

4.42%

Between 1,000 to 4,999

3.14%

5.87%

Between 10,000
and 49,999

Foreign owners

Financial institutions

11.82%

46.22%

532,463,000

Other corporations

14.20%

Less than 1,000

6.66%

0.97%

Between 50,000
and 99,999

532,463,000

2.09%

sharesshares

Between 100,000
and 499,999

1,000,000 or more

6.84%

Individuals

23.34%

70.19%

Between 500,000
and 999,999

4.24%
RecentStock Price Range
Stock price (yen)Nikkei Stock Average (yen)Stock price (yen)Nikkei Stock Average (yen)25,000
25000

1,000

1,000
800

25,00020,000800
600

20,00015,000600
400

15,00010,000400
200

10,000
5,000

200
0

5,000
0

0

Financial / Company Datathe report lists environmental issues, especially climate change,
as one of the important factors. In response to these issues, youoffer various products such as a condition monitoring system
for wind turbines, “NTN Micro Hydro Turbines,” and “N3
N-CUBE.” I highly value the fact that you define environmentcontributing products based on your own standards and ismaking efforts to increase the percentage of higher-grade
products.
On the other hand, in October 2018, the IPCC
(Intergovernmental Panel on Climate Change) published the“Special Report on Global Warming of 1.5°C” and issued
the following serious message: “The global mean surface
temperature has already increased by 1°C relative to thepre-industrial period, and is likely to reach 1.5°C sometime
before 2050 if it continues to increase at the current rate. The
world with global warming of 1.5°C, although not as muchas that of 2°C, will have heavy rains and flood damages more
frequently than we do now. In order to limit the mean surface
temperature increase to 1.5°C, it is necessary to reduce CO2
emissions to net zero at around 2050.” I believe that with thisreport the world’s leading companies have set their targets
even higher than before.
Reflecting on your initiatives in that context, the base year
for the definition of environment-contributing products could beraised even higher to accelerate your environmental initiatives.
In addition, I believe that some of your customers have madecommitments such as expressing support for RE100, SBT,and TCFD. I suggest you, too, make such commitments while
contributing through your products. That will lead to state thatyou are part of a community that shares the same goals.

NTN’s ESG Strategies

NTN has transitioned to a Company with Nominating
Committee, etc. this year. I believe this was an importantreform in the corporate governance. In order not to let thislose its substance, it is important how responsibly the Board of
Directors, led by the Outside Directors, can fulfill its monitoringrole. In this regard, I believe it was a good idea to devote four
pages in this report to the Outside Director Dialog, for theattitudes and insights of Outside Directors and their thoughtson their work can be conveyed to outside stakeholders. I hope
to see this feature in the report every year.
I am also impressed by the fact that you are focusing ontechnology transfer among employees and development of
human resources. In particular, it is effective to provide not only
training systems, but also other opportunities such as Global
QC Circle Convention and NTN Technical Skills Competition.
Furthermore, “NTN PROUD AWARD,” in which employees
compete in activities that link the corporate philosophy totheir daily work, was attended by more than 1,700 employees
worldwide. No matter how impressive the management
philosophy might be, it will not be actualized after all unless the
behavior of each employee at workplace changes. So, I believe
this initiative is very important.
From that point of view, I believe that the dialog between
the president and employees, which was featured for the firsttime this year, was also a good effort. If it was the preparationof this report which led to an opportunity for such dialog, you
can say that it was an effective use of the report. I suggest a
dialog with overseas employees will be also a good initiative
next time.
“Value Creation Risks and Opportunities” on page 13 of(as March 31, 2019)

NTN’s Business Strategies

ProfileAfter working at a trading company and auditing firm, Mizuguchi became a lecturer in the Faculty of Economics at Takasaki City University of
Economics in 1997. He assumed his present role in 2008.
Mizuguchi specializes in responsible investment and non-financial information disclosure.
He has served as Chair of the Green Bonds Working Group (Ministry of the Environment), a member of the ESG Working Group (Ministry of theEnvironment) and Director of the Society for Environmental Economics and Policy Studies.
His major publications include Responsible Investment—Changing the Future through the Flow of Capital (Iwanami Shoten, Publishers; winner of
the SEEPS Commentary Award), ESG Investment—Form of the New Capitalism (Nikkei Publishing) and An Era of Sustainable Finance—ESG/SDGs
and the Bond Market (Written and Edited by KINZAI).

About Us

Third-Party Opinion

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3Monthly Volume Traded

Response to the third-party opinion

Millions of shares

I would like to express my heartfelt thanks to Professor Mizuguchi for his valuable opinion.
In June 2019, we became a Company with Nominating Committee, etc., and now has
a governance system that is designed to improve corporate value over the medium- to longterm. Responding to climate change is an urgent issue as shown in the IPCC Special Reportthat Professor Mizuguchi has mentioned. We recognize that it is crucial for us to contribute tosaving energy and creating a society independent from fossil fuels through the technologies wehave cultivated.
Contribution to society through our technologies is incorporated in our corporate
philosophy. Through our efforts such as continuing “NTN PROUD AWARD,” which Professor
Mizuguchi has spoken highly of, we will work to spread this philosophy among our employees
worldwide to become a company that can think and act on its own.
The valuable opinion Professor Mizuguchi has provided us will be carefully considered as
we work on finding solutions to issues of public concern through our business activities andfulfil our mission to develop a “smooth society.”

111 NTN Report 2019200

Millions of shares

200
150

Inquiries
Corporate Communications Department
T E L : +81-6-6449-3528
F A X : +81-6-6443-3226
E-mail: irmanager@ntn.co.jp
NTN on the Internet

150
100
100
50
Senior Managing Executive Officer
In charge of CSR Headquarters

50

Itsuji Goto

00

NTN’s website offers a variety of corporate and productinformation, including the latest NTN Report and financial results.

https://www.ntnglobal.com/en/index.html
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NTN Report 2019112

Financial / Company DataJapan

About Us

Make theWorld*“NAMERAKA ”

Global Network(as of March 31, 2019)

Company namePaid-in capital

EuropeCompany name

Holdings as percentage (%)

28 NTN Wälzlager (Europa) G.m.b.H.

EUR 14,500,000

II

Industrial Business Headquarters, Kuwana Works

29 NTN Kugellagerfabrik (Deutschland) G.m.b.H.

EUR 18,500,000

100

III

Industrial Business Headquarters, Nagano Works

30 NTN Mettmann (Deutschland) G.m.b.H.

EUR 25,000

100

IV

Industrial Business Headquarters, Kongo Works

31 NTN Antriebstechnik G.m.b.H.

EUR 50,000100

32 NTN BEARINGS (UK) LTD.

GBP 2,600,000

100

33 NTN-SNR ROULEMENTS

EUR 123,599,542

100

34 NTN Transmissions Europe

EUR 82,843,207

100

35 NTN TRANSMISSIONS EUROPE CREZANCY

EUR 11,500,000

100

Automotive Business Headquarters, Iwata Works

Automotive Business Headquarters, Okayama WorksVII

Automotive Business Headquarters Mikumo Works

32

31
29 28

1

NTN SALES JAPAN CORP.

23

JPY 480,000,000

100

NTN MIE CORP.

JPY 3,000,000,000

100

NTN HOUDATSU SHIMIZU CORP.

JPY 1,250,000,000

100

(100)

Six consolidated subsidiaries in addition to the Group companies above

33

G

NTN’s ESG Strategies

E(0.04)G NTN-SNR R&D Center

34

3

6 VI

(100)

(100)

Financial / Company Data

4 NTNtechnology
NOTO CORP.
1,000,000,000 100
Bearing
is used toJPYsmoothen
5
NTN
FUKUROI
CORP.
JPY
1,500,000,000 100
11
1
the rotatingparts of all types ofJPY machines.
III
6 NTN AKAIWA CORP.
1,250,000,000 100
8
12 VIII
With7 more
precisebearing technology,
NTN OMAEZAKICORP.
JPY 266,000,000
97.4
57
IV VII
8 NTN Advanced Materials Corp.
JPY 400,000,000
99.34
10shafts can rotate smoother, minimizing energy loss.
V A B
C
9 NTN CASTING CORP.
JPY 450,000,000 100
Bearings are thus
technology
for savingenergy.
10 NTNaKINAN
CORP.
JPY 450,000,000
100
II 2 13 D
11 NTN KAMIINA CORP.
JPY 725,000,000
80
The technology developed with bearings
12 NTN TECHNICAL SERVICE CORP.
JPY 200,000,000 100
will smoothly change
theCO.,futureof electricJPYvehicles,
13 NTN LOGISTICS
LTD.
10,000,000 100
A New Product Development R&D Centerrobots and evensociety based on natural energy.

30

35

100

NTN’s Business Strategies

II

VI

4

I

Holdings as percentage (%)

NTN Corporation (parent company)

VIII Composite Material Product Division, Engineering Plastics Works

9

Paid-in capitalI

B Production Engineering R&D Center* Center“NAMERAKA” means “smooth” in Japanese.
C CAE R&D
D Advanced Technology R&D Center

AmericasE

Company name

2214
F
19 15 18
21 20 16
17 26
27

24

Paid-in capital

Holdings as percentage (%)

14 NTN USA CORP.

USD 200,620,000

100

15 NTN BEARING CORP. OF AMERICA

USD 24,700,000

100

(100)

16 NTN DRIVESHAFT, INC.

USD 54,580,000

100

(100)

17 NTN DRIVESHAFT ANDERSON, INC.

USD 19,500,000

100

(100)

18 AMERICAN NTN BEARING MFG. CORP.

USD 24,330,000

100

(100)

19 NTN-BOWER CORP.

USD 117,000,000

100

(100)

20 NTK PRECISION AXLE CORP.

USD 15,000,000

60

(60)

21 NTA PRECISION AXLE CORP.

USD 20,000,000

62.5(62.5)

22 NTN BEARING CORP. OF CANADA LTD.

CAD 20,100,000

100

USD 700,000

100

24 NTN MANUFACTURING DE MEXICO, S.A.DE C.V.

MXN 532,705,718

100

(5)

25 NTN DO BRASIL PRODUÇÃO DE SEMI-EIXOS LTDA.

BRL 390,739,432

100(2.72)

26 ASAHI FORGE OF AMERICA CORP.

USD 10,100,000

19.8(19.8)

27 Seohan-NTN Driveshaft USA Corp.

USD 6,000,000

49

23 NTN-SUDAMERICANA, S.A.

23

Asia and Others

NTN Next Generation Research Alliance Laboratory

F

Company name46
51 50 H
43

49
48 52

38
42

100

37 NTN BEARING-MALAYSIA SDN. BHD.

MYR 10,000,000

100

(100)

45
57 47

38 NTN BEARING-THAILAND CO., LTD.

THB 780,000,000

100(99.999)

THB 1,311,000,000

100(99.999)

53 54

40 NTPT CO., LTD.

THB 700,000,00075(10.73)41 PT. NTN BEARING INDONESIA

USD 7,300,000

100

(100)

42 NTN Bearing India Private Ltd.

INR 300,000,000

100

(0.1)

43 NTN NEI Manufacturing India Private Ltd.

INR 4,808,000,000

97.4(24.96)44 NTN KOREA CO., LTD.

KRW 500,000,000100

45 NTN (CHINA) Investment Corporation

USD 256,545,000100

46 NANJING NTN CORP.

USD 180,000,000

100(86.67)47 SHANGHAI NTN CORP.

USD 166,500,000

95(15.72)48 Guangzhou NTN-Yulon Drivetrain Co., Ltd.

USD 12,500,000

60

(12)

49 Xiangyang NTN-Yulon Drivetrain Co., Ltd.

USD 34,000,000

60

(60)

50 NTN-RAB (CHANGZHOU) CORP.

USD 28,440,000

100

51 NTN-LYC (LUOYANG) BEARING CORP.

USD 73,800,00050

52 NTN CHINA LTD.

HKD 2,500,000

100

44 56

39
40

36

41 58

NTN Automotive Center

One consolidated subsidiary in addition to the Group companies above

39 NTN Manufacturing (Thailand) CO., LTD.

53 TUNG PEI INDUSTRIAL CO., LTD.
54 TAIWAY LTD.

25

R&D base

Others

(50)

27.35
36.25

USD 6,000,000

40

KRW 75,780,330,000

49

57 NTN-DONGPAI (Shanghai) Bearing Sales Co, Ltd.

USD 1,460,000

25

(25)

58 PT. TPI MANUFACTURING INDONESIA

USD 55,415,050

28.8(0.002)56 Seohan-NTN Bearing CO., Ltd.

Production and sales

TWD 1,257,232,620(0.97)TWD 160,000,000

55 BEIJING NTN-SEOHAN DRIVESHAFT CO., LTD.

Production

Holdings as percentage (%)

SGD 36,000,000

37

Sales

Paid-in capital

36 NTN BEARING-SINGAPORE (PTE) LTD.

55

(6.67)H NTN China Technical Center

NOTES 1. The scope of consolidation as of March 31, 2019 consisted of NTN Corporation and 58 consolidated subsidiaries (13 domestic and 45 overseas subsidiaries). A total of 8 affiliates (all overseas affiliates) were
accounted for by the equity method.
The following changes to the scope of consolidation and application of the equity method were made during the fiscal year under review.
Consolidated subsidiaries: No additions/4 removals
Affiliates: No additions/1 removal
2. Of the above subsidiaries, the following companies are specified subsidiaries: NTN USA CORP., NTN DRIVESHAFT, INC., NTN-BOWER CORP., NTN DO BRASIL PRODUÇÃO DE SEMI-EIXOS LTDA., NTN Wälzlager(Europa) G.m.b.H., NTN-SNR ROULEMENTS (‘NTN-SNR’), NTN Transmissions Europe, NTN NEI Manufacturing India Private LTD., NTN (CHINA) Investment Corporation, NANJING NTN CORP., SHANGHAI NTN CORP.,
and NTN-LYC (LUOYANG) BEARING Corporation
NTN NTN
ReportReport2019 201901 113One consolidated subsidiary in addition to the Group companies above

3. Figures in curved brackets under “Holding as percentage” indicate the percentage of indirectly owned holdings, and are included in the total holding.
4. None of the companies has submitted a securities registration statement or securities report.
5. Of the above subsidiaries, NTN BEARING CORP. OF AMERICA and NTN-SNR have sales (excluding internal sales between consolidated companies) accounting for more than 10% of consolidated sales.
Figures for NTN-SNR are consolidated figures encompassing eight NTN-SNR subsidiaries.
6. Of the above subsidiaries, I to VIII are NTN Corporation business units, 1 to 25 and 28 to 52 (in symbols) are consolidated subsidiaries, and 26, 27 and 53 to 58 (in symbols) are affiliates subject to theequity method.
NTN Report 2019114

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