NTN Report2017
for the year ended March 31, 2017

Building a“Smooth Society”
for theNext 100 Years

NTN’s Value Creation Process
NTN is a precision equipment manufacturer that does business around the world inbearings and other eco-products that reduce energy consumption by reducing friction.
NTN’s products are the choice of some of the most widely recognized companies thatmake automobiles, rolling stock, construction machinery, aircraft, medical equipment
and numerous other machines that are integral parts of lives everywhere.

Stakeholders
of NTN
NTN’s
Risk Management
P. 43

ResolvingSocial Issues

Providing
Value
ReducedProviding safety andProposal of sustainableenergy loss

comfortsociety using natural energy

Communicating with
Stakeholders P. 35

Corporate Philosophy“We shall contribute to international societyResethrough creating new technologies andDevdeveloping new products.”
er-ser vices

Growth of
emerging
nations

Globalwarming

1. Creation of original technologies.
2. Offering the technologies for additional values and service that are suitablefor each customer and end user.

Employment
problemAgingsociety

Prevention ofenvironmental
pollution

Noise
reduction

Business Activities
Creating Value for Society

Research &Development

We carry out R&D worldwide based on a global four-region R&D systemthat focuses on protection of the global environment and contributing
to new energy.

Production

In order to meet the needs of our customers, our company is arranging
global production systems and is endeavoring to produce in places
around the world where there is demand.

Sales

We aim to be a dependable partner for all of our customers, lending
close support to solve customers’ problems.

After-services

We extend support to customers through technical services provided
after product purchase and equipment installation and through ourglobal supply system.

Returning Value

CapitalInvestment

Intellectual
CapitalManufacturing
CapitalHuman
CapitalSocial and
Relationship Capital

NaturalCapitalFinancial
Capital

P. 51

P. 53

P. 55

P. 59

P. 63

P. 73

Corporate Governance P. 37

NTN Report 2017eotiv smot
Au icationlApp

Expanding the
Corporate Scale

NTN’s Value Chain

The Source ofValue Creation1

rket
rma ons
e
t
f
i
A
licat
App

Sales

3. Improvement of employees’ standard of living, distribution of fair returns to stockholders, and contribution to society 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.

e l op m e n t

Af t

Networking The World With New Technology

arch &

Produc tion

For New Technology Network

Social Issues

ery
chin
a
M
l
stria tions
Indu pplicaAContents 1
5
About the Company

NTN’s Value Creation Process

1

NTN at a Glance
A Chronology of NTN
Financial/Non-financial Highlights

57
9

To Our Stakeholders
The View of Top Management on the Progress of “NTN 100”

11
13

New Businesses and Social Contribution
Activities Supporting Future Growth23

Aftermarket Applications
Industrial Machinery Applications
Automotive Applications

27
29
31

Stakeholder Dialog
Corporate GovernanceCorporate Governance Structure
CSR Management
Internal Control
Message from Outside Directors— Toward Sustainable Improvement of Corporate Value —Risk Management
Compliance
Officers
Business Operations Utilizing Our Six Capital Assets
Intellectual Capital
Manufacturing Capital
Human CapitalSocial and Relationship Capital
Natural Capital
Financial Capital

35
37
37
39
41
42

Risk Factors
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Main Financial Indexes: 11-Year Summary
Non-financial Capital Data

77
79
81
81
82
83
84
104
105
107
109
110
111

11
NTN’s Vision andStrategy

23
Feature27
Review ofOperations

33
The Source ofValue Creation

77
Corporate
Information

Editorial Policy

Third-Party Opinion
Investor Information
Global Network

43
45
47
50
51
53
55
59
63
73

NTN believes the active disclosure of management plans and business results, as well as its basic policy for corporate social responsibility (CSR),
CSR activities, and environmental preservation initiatives, among other information, will help garner the understanding and support of all stakeholders.
This “NTN Report” which since the fiscal year ended March 31, 2010 has combined the “Annual Report” and the “CSR Report,” is part of this active
approach to information disclosure.
This report has been edited with reference to the International Integrated Reporting Framework of the International Integrated Reporting Council.

Reporting period
The scope of this report is the fiscal year ended March 2017 (April 1, 2016 to March 31, 2017).
However, some report contents include activities for the fiscal year ending March 2018.

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

NTN Report 2017

2

NTN at a Glance
NTN expands business globally in bearings, driveshafts, and precision machinery, and has
been growing steadily since its founding in 1918.
We are employing the technologies and expertise we have developed for expanding
into four new areas of business with the aim of achieving sustainable growth.

Outline (as of March 31, 2017)
Number of employees:

Corporate name: NTN Corporation
Trademark:Consolidated: 24,665 Non-consolidated: 5,301

Date founded: March 1918

Fiscal term: MarchHead office: 3-17, 1-chome, Kyomachibori, Nishi-ku, Osaka-shi,

Capital: 54.3 billion yen
Net sales: Consolidated: 683.3 billion yen

Osaka 550-0003, Japan

Non-consolidated: 318.6 billion yen (Fiscal year ended March 31, 2017)

Representative: Hiroshi Ohkubo, President

Changes in Consolidated Financial Results
Net Sales [Left axis]

Operating Income [Right axis]

Net Income (Loss)*

Operating Margin(Billions of yen)(Billions of yen)

1,000

6.2%

5.2%

800
1.3%

600

100

6.7%
5.2%
717.0

701.9

80

700.0

683.3

639.0

60

539.6
47.8

43.9

400

5.1%

36.0

35.6

33.0

40

23.4

200

15.0

20

10.0

7.3

2.8

0

0
–14.2
2013
(Years ended/ending March 31)

–14.6
2014

2015

2017

2016

2018
(Forecast)

Net Sales by Region
Japan

Americas

EuropeAsia and Others

28% 191.5 billion yen

28% 194.8 billion yen

23% 155.0 billion yen

21% 142.1 billion yen(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)

250

250

250

250

200

177.5 179.1

191.5 189.6 191.5 193.0

150

202.6

200
150

212.6
194.8

202.5

174.6
141.6

200
150

166.3 171.2 169.0

200
155.0 156.5

124.8

150

100

100

100

100

50

50

50

50

0

0

0

0

2013 2014 2015 2016 2017 2018(Years ended/ending March 31) (Forecast)2013 2014 2015 2016 2017 2018(Years ended/ending March 31) (Forecast)2013 2014 2015 2016 2017 2018(Years ended/ending March 31) (Forecast)

136.7

145.9 142.1 148.0

119.0
95.8

2013 2014 2015 2016 2017 2018(Years ended/ending March 31) (Forecast)* Net income for the year ended March 2016 and later shows the “Net income attributable to shareholder (parent company).”

5

NTN Report 2017

Net sales
in the fiscal year
ended March 2017

Operating incomein the fiscal year
ended March 2017

billion yen

billion yen

683.3

35.6

Lines of Business Supporting Industry
and People’s Lives Worldwide

P. 27

Aftermarket Applications
NTN provides products that suit the maintenance needs ofall kinds of industrial machinery and automobiles.

15%
104.5

39%
15%
98.6

Maintenance tools/
Technical training

About the Company

billion yen

Auto parts

14.0

billion yen

Industrial
machinery aftermarket

P. 29

Industrial Machinery Applications

5%

NTN’s Vision and Strategy

billion yen

NTN contributes to people’s lives by supporting the rotating parts ofa wide range of industrial machinery.

1.6

Featurebillion yen

Construction
machinery bearings

Gearboxbearings

Agricultural
machinery bearings

Wind turbine
bearings

70%
480.2

billion yen

20.0

Rolling stock
bearings

P. 31

Automotive Applications

The Source of Value Creation

56%

Aerospacebearings*

Review of Operations*

NTN contributes to safety and relief of vehicles through the supply of
bearings and driveshafts used in vehicles in many forms.

billion yen

Hub bearing*
EngineCorporate Information

Transmission

Wheel
applications

Driveshaft** Photos are cross-sectional models of products.

NTN Report 2017

6

A Chronology of NTN

50 Years of Manufacturing Driveshafts
Almost 100 Years of Manufacturing Bearings
Founding–1960’s

1970’s–1980’s

1918

1938

1971

Began researching and manufacturing of ballbearings at Nishizono Ironworks. (Uchibori,Kuwana-cho, Kuwana-gun, Mie Pref.)Japan’s first bearing manufacturing company to
set up in China—Manshu Bearings Mfg. Corp.

Established American NTN Bearing Mfg. Corp.
in the USA for manufacture of bearings

1939
Constructed Kuwana Plant(the present Kuwana Works)

1954
Awarded the Deming Prize for statistical quality
control for the first time in the Japanesemachinery industry
First president: Noboru Niwa

Established Toyo Bearing Okayama Co., Ltd.
(the present Okayama Works)

Founder: Jiro Nishizono

Established NTN Kugellagerfabrik (Deutschland)
G.m.b.H. in Germany for the manufacture of bearings

1923
Nishizono Ironworks and Tomoe Trading Co.
(Nishi-ku, Osaka) began joint manufacturing andthe sale of bearings

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

1937
Company named the Toyo Bearing Mfg. Co., Ltd.
Company stock traded publicly

First factory outside of Japan (Schiller Park Plant, IL, USA)1972
Renamed company to NTN Toyo Bearing Co., Ltd.
The only Japanese bearings manufacturer to be awarded
the Deming Prize

1960
Established Toyo Bearing Iwata Co., Ltd.
(the present Iwata Works)

1963
Entered into a technical tie-up with Hardy Spicer
Co., Ltd. in the U.K. and began driveshaft production

1973
Established NTN Bearing-CAE (Canada) Ltd. in
Canada for the manufacture of bearings(the present NTN Bearing Corp. of Canada Ltd.)

1984
Established Toyo Bearing Nagano Co., Ltd.
(the present Nagano Works)

1986
Constructed Japan’s first plant dedicated toaerospace bearings in Kuwana Works

1989
Changed company name to NTN Corporation

Driveshaft
Former head office building

Current head office building

About the NTN Name
The name NTN was created as a trademark by combining the ‘N’ from Noboru NIWA,
a man who raised capital for the business and became the company’s first president,
Jiro NISHIZONO, the firm’s top engineer, and ‘T’ from the Tomoe Trading Co., which soldthe company’s products, all of which carried the NTN mark.
The company’s name was changed to NTN Mfg. Co., Ltd. and later to Toyo Bearing
Mfg. Co., Ltd. (Toyo means “the Orient,” a broader area than Japan.) Today, we are, ofcourse, NTN Corporation.
Upon the last name change in 1989 we applied a new meaning to NTN—
“For New Technology Network” (Networking The World With New Technology)—to indicate
a shift in focus from the historical meaning to a forward-looking vision.

7

NTN Report 2017

2010’s

And to Our 100th Anniversary

1998

2010

2013

Established NTN Manufacturing (Thailand) Co., Ltd.
in Thailand for the manufacture and sales ofbearings and driveshafts

Established Seohan-NTN Bearing Co., Ltd. in Korea
as a joint venture for the manufacture and sales ofbearings for wind turbines

Established the designated logistics company NTN
Logistics Co., Ltd. in Kuwana

1999

Established NTN do Brasil Produção de Semi-Eixos
Ltda. in Brazil for the manufacture and sales ofdriveshafts in Brazil

2002
Established Shanghai NTN Corporation in China asa joint venture for the manufacture and sales ofdriveshafts and bearings

Established NTA Precision Axle Corporation in the
USA for the manufacture and sales company forthe forging, turning and heat treatment of parts

NTN’s Vision and Strategy

All plants and R&D Centers in Japan obtained
ISO 14001 certification by a multi-site qualification
procedure

Established NTN Manufacturing De Mexico, S.A.DE
C.V. in Mexico for the manufacture and sales of
hub bearings and driveshafts

About the Company

1990’s–2000’s

Established NTN Noto Corporation in Japan for the
manufacture and sales company of bearings forindustrial machinery
NTN Manufacturing de Mexico, S.A.DE C.V.

2014
Established Xiangyang NTN-Yulon Drivetrain Co., Ltd.
in Chia for the manufacture and sales of driveshafts

2015

2003

2011
Established NTN-LYC (Luoyang) Bearing
Corporation in China as a joint venture for the
manufacture and sales of hub bearings andneedle bearings

2004

Established Nanjing NTN Corporation in China forthe manufacture and sales of bearings

NTN Mie Corporation established as a model
factory for domestic bearing production

Review of Operations

Established Beijing NTN-Seohan Driveshaft Co.,
Ltd. in China as a joint venture for the manufactureand sales of driveshafts

Established NTN Driveshaft Anderson, Inc. in the
USA for the manufacture of driveshafts

FeatureShanghai NTN Corporation

NTN Noto CorporationNTN Driveshaft Anderson, Inc.

2016
Established “Green Power Park” at the Advanced
Technology R&D Center

Nanjing NTN Corporation

2012

The Iwata Works, Kuwana Works, Okayama Worksand Nagano Works acquired ISO9001 and ISO/TS16949 certification

Established NTPT Co., Ltd. in Thailand as a joint
venture for the manufacture and sell forging andturning parts

The Source of Value Creation

NTN Mie Corporation

2005
Established NTN NEI Manufacturing India Pvt. Ltd.
in India as a joint venture for the manufacture andsales of driveshafts

2006
Corporate Information

Invested in SNR ROULEMENTS in France, asubsidiary to Renault

NTN-SNR Roulements

2008
Established NTN Houdatsu Shimizu Corporation forthe manufacture and sales company of super-large
bearings and other products“Green Power Park,” a modelfor natural energy circulation(Mie Prefecture)

NTN Report 20178

Financial/Non-financial Highlights
Financial Capital

Net Sales

Operating Income/Operating Margin
Operating Income（億円）(Billions of yen)（億円）
(Billions of yen)

800

80

639.0
600

701.9 717.0 683.3 700.0

Operating Margin（億円）(Billions of yen)

5.2%

6.2% 6.7%

30

1.3%

400

40

200

20
43.9

47.8

–10

2013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)

2.8
0

7.3
2013 2014 2015 2016 2017 2018 （3 月期）

10.0

35.6 36.0

33.0

0

15.0

10

20

0

23.4

5.2% 5.1%

60

539.6

Net Income (loss) Attributable to
Shareholder (parent company)

–20

（見通し）
(Forecast)(Years ended/ending March 31)–14.2 –14.6
2013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)(Years ended/ending March 31)

Net Income/Average Shareholders’ Equity (ROE)

Equity to Capital Ratio

Cash Dividends

（(%)
%）

（
%）
(%)

（円）
(Yen)

15

40

10.5

10

30

6.3
4.3

5

1.2

26.0

28.6 29.2 28.7 29.1

20

6

10
–7.2 –7.3
2013 2014 2015 2016 2017 2018 （3 月期）

0

（見通し）
(Forecast)2
2013 2014 2015 2016 2017 2018 （3 月期）

Capital Expenditures/
Depreciation
Capital Expenditures

Depreciation（億円）(Billions of yen)

50

300

34.8
33.2

39.3 40.4 38.3
36.3 35.4 36.6 37.4
31.3

2013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)

Net D/E Ratio

Inventories (Left Axis)
Turnover Ratio (Right Axis)（億円）(Billions of yen)

44.0

0

(Years ended/ending March 31)

Inventories/
Inventory Turnover Ratio

49.0

0

（見通し）
(Forecast)(Years ended/ending March 31)

30

10

5

–5

40

10

10

23.5

0

–10

15

15

240

（倍）
(Times)

3.8

3.3

times

times

180

163.3 166.5

3.8

times

4.0

times

184.1 178.2

4.0

times

4.1

2.0

times

1.5

1.37

1.27
1.11 1.11 1.05 1.06

171.5 170.0
1.0

20

120

10

60

0

2013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)

9

NTN Report 2017

00.5

2013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)02013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)

Non-financial Capital
Manufacturing Capital

Ratio of R&D Expenditures to Net Sales

Ratio of Overseas Production

Ratio of Local Procurement

(%)
（
%）

(%)
（
%）

About the Company

Intellectual Capital

R&D Expenditures
Ratio of R&D Expenditures(Billions of yen)

（億円）

25

3.0%

2.8%

2.6% 2.6%

2.8% 2.8%

19.2 19.5
17.8 18.1 18.5

20
16.2

100

100

80

80

60

15

49

49

50

51

52

40

40

5

20

20

0

2013 2014 2015 2016 2017 2018 （3 月期）

2013 2014 2015 2016 2017 2018 （3 月期）(Years ended/ending March 31)

Percentage of Hired Female Graduates
[NTN]

（見通し）
(Forecast)(Years ended/ending March 31)

35

Needs much improvement
0%

32

30

80
66

66

25

66

21

15

15

17

19

19

Excellent30%

Needs some
improvement
5%

Review of Operations

20

40

Customer Satisfaction Surveys(As of year ended March 31, 2017)

（(%)
%）

100

60

88

10
20
0

5
2013 2014 2015 2016 2017 2018 （3 月期）

Good

0

2013 2014 2015 2016 2017 2018（4 月入社）

（見通し）
(Forecast)(Years ended/ending March 31)（見通し）(Forecast)(Joined in April)

65%

The Source of Value Creation

Natural Capital
CO2 Emissions[Scopes 1 and 2]
Domestic Scope 1
Overseas Scope 1

Water Usage[Japan/Overseas]
Domestic Scope 2
Overseas Scope 2（万トン）(10,000 tons)

Japan

Overseas（万(10,000m3）m3)

70

Feature

（
%）
(%)

66

88

Social and Relationship Capital

Percentage of Employees Overseas

64872013 2014 2015 2016 2017 2018 （3 月期）(Years ended/ending March 31)

Human Capital

62

0

（見通し）
(Forecast)（見通し）(Forecast)

86

60

10

0

83

NTN’s Vision and Strategy

47

79

400

60
26.7

28.5

29.4

4.8

4.5

4.8

23.0

22.4

22.8

40
30
20

300

101

Corporate Information50

110 131 124 128 136

200

100

234

202 196 196 195 198

10
0

5.4
2015

4.9

5.1
2016

2017 （3 月期）(Forecast)(Years ended/ending March 31)02013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)

For detailed data on non-financial capital,
please see “Non-financial Capital Data”
on PP. 107–108.

* Third parties verified domestically, including
non-production bases

NTN Report 201710

To Our Stakeholders

About the Company
NTN’s Vision and Strategy
FeatureThe Source of Value Creation
Corporate Information

My name is Hiroshi Ohkubo, President of NTN Corporation.
The year ended March 31, 2017 was the second year of our Medium-termManagement Plan “NTN 100.” Regarding our performance, there was a decrease in sales
and income due to effects of the strong yen and other factors, but we expanded our
global market share in the aftermarket applications and sales in automotive applications
by acquired new projects.
The year ending March 31, 2018 will be the final year of “NTN 100” and also our100th anniversary. We steadily execute the major themes of “NTN 100” to launch
us forward into the next 100 years of business.

Hiroshi Ohkubo
President
NTN Report 2017

Review of Operations

Looking forward to the next 100 years, we areaiming for the development of a “smooth society,”and transforming into a company contributing toa broad range of stakeholders.

12The View of Top Management on the Progress of “NTN 100”Overview of Medium-term Management Plan“NTN 100”
Long-term Vision: “Our Vision”
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 be able to be proud of the “NTN” brandLong-term Objectives
Net Sales (Left Axis)

Operating Income (Right Axis)

Operating Margin

Operating margin

to 10–15%(Billions of yen)

1,400
8.5% 8.7%

4.6%

1.8%

1,000

5.2%

3.8%

200

Net sales

800
639.0

600
434.8

483.8

33.2 37.6

200

534.0 527.1

452.7

0

to double

701.9

24.6 20.7
1.4

160

current figure

530.1 543.5 539.6

46.8 49.6
9.5

240

6.2%

1.3%

0.3%

388.3

280

9.7% 9.3%

1,200

400

(Billions of yen)

120

March 2018

33.0

company’s

80

anniversary

40

100th

43 9
43.9

7.3

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Medium-termManagement
Plan

Rapid Advance

GCA

21

21

For the Next Global Advance

2010

2013

0

(FY)

RevivalNTN 100

2014“NTN 100”: Results to Date and Outlook for the Final Fiscal YearNet Sales (Left Axis)

Operating Income (Right Axis)

Net Income (Loss)*

Operating MarginFirst year
(Billions of yen)

6.2%

1,000

400

717.0

701.9

639.0

–200

5.2%

5.1%

33.0

80

700.0

683.3

60
36.0

35.6
23.4

15.0

40
10.0

2.8

–14.6

2016
Results
120.2

2017
Results
108.4

2018(Forecast)

US$

2015
Results
109.8

€

134.2

138.7

132.6

118.8

115

NTN Report 2017

20
0

2014
Results
100.2* Net income for the year ended March 2016 and later shows the “Net income attributable to shareholder (parent company).”

13

100

47.8

43.9

200
0

Final year

5.2%

800
600

Second year

6.7%

110

–20
(Years ended/ending March 31)

Basic Policies of “NTN 100”
(April 2015 – March 2018)

Implement main policies based on three Basic Policies to become a co-creative partner company for customers
About the Company

l

na

io
eg

R

wth

cts

na

Busin
Strat ess
egy
Busin

Philosophy, p

Ma

age
Man

ess b

olicy, b

asicusinesroge G

s proce

ss...

y
bilit
a
t
fi
Pro

ion
dat
n
u
Fo
age
n
a
M

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

Strategy by
Business

Reform business structure from “volume” to“value” to generate profit

Strategy by
BusinessStrengthen management andfinancial foundations

Strategy by
Function

NTN’s Vision and Strategy

Produ

FeatureMajor Themes and Progress

Manage Growth1

Develop Businesses in New Areas

Review of Operations

Concentrate resources(personnel, materials andcash) on strategic areas

For details, see P. 16• Sales begin for NTN Hybrid Street Lights and NTN Micro Hydro
Turbines

2

Expand Aftermarket Business• Enhance NTN brand and expand global market share

Reform business structurefrom “volume” to “value”
to generate profit

Manage Foundation

For details, see P. 18

3Structural Reform of the Driveshaft Business

The Source of Value Creation

Manage Profitability• Development of module products

4“Monozukuri” with Next-generation Technology• Promoting a quality assurance system by globally consistent
standard quality assurance with “Made by NTN”
For details, see P. 19

Establish Management Foundation
as a Truly Global Company

Corporate Information

5

Strengthen management
and financial foundations• Promoting supply chain CSR• Thorough compliance with laws and regulations• Strengthening our risk management system

6

Strengthening Profit Control and
Improving Asset Efficiency• Introducing new core system applied advanced IT

NTN Report 201714

We are implementing transformation andbuilding the foundation aimed at realizing“Our Vision”—sustainable growth for the
next 100 years.

Our Current Condition andManagement Issues
In the fiscal year ended March 31, 2017, the Japanese
economy saw a continued moderate recovery reflecting
improvement of employment and income environment,
coupled with effects of various government policies.
Looking at overseas economy, the U.S. economy
continued strong. The European economy also saw
a moderate recovery although the effect of theUnited Kingdom leaving the EU was concerned.
The economic conditions in China and otheremerging countries show signs of recovery.
In this environment, the NTN Group is tackling thethree-year Medium-term Management Plan “NTN 100”that started in April 2015 and continues until March 2018
when NTN marks the Company’s 100th anniversary. The
term “NTN 100” is initials of “NTN Transformation for Next 100.”
We deem the three years as the period for implementing

Net Sales

Overview of Results for the Year Ended
March 31, 2017
In this second year of “NTN 100,” net sales during the
fiscal year decreased 4.7% from the previous fiscal year
to 683.3 billion yen, and operating income decreased

Operating Income/Operating Margin
Operating Income    （億円）(Billions of yen)（億円）
(Billions of yen)

800

80

639.0
600

transformation and building the foundation aimed atrealizing “Our Vision” to mark the 100th anniversary inMarch 2018 and achieve sustainable growth for the next
100 years. In this period, we will work in accordance withthe three basic policies: “Manage Growth” to concentrate
resources (personal, materials and cash) on strategicareas, “Manage Profitability” to reform business structurefrom “volume” to “value” to generate profit, and “Manage
Foundation” that will strengthen management andfinancial foundations. Acting on these three policies, wewill forge ahead with the major themes.

701.9 717.0 683.3 700.0

Operating Margin（億円）(Billions of yen)

5.2%

6.2% 6.7%

30
5.2% 5.1%

60

539.6

1.3%
40

400

43.9
33.0

47.8

2013 2014 2015 2016 20172018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)

15

NTN Report 2017

0

15.0
10.0

35.6 36.0

2.8
0
–10

7.3
0

23.4
20
10

20

200

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

2013 2014 2015 2016 20172018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)–20–14.2 –14.6
2013 2014 2015 2016 2017 2018 （3 月期）（見通し）(Forecast)(Years ended/ending March 31)

Four New Business Areas
Develop businesses in new areas fusing
NTN’s technology and knowhow“Using Natural Energy”“Working and Livingwith People”“Electrifying Automobiles,
Revolutionizing Safety”

Research
institutions

Government
agencies

NTN’s Vision and Strategy

Service, Solution
Business“Utilizing Big Data”

Government-industry-academia collaboration
Tier 1 supplier collaboration

Develop Businesses in New Areas
In addition to bearings and driveshafts, we are developing
businesses in new areas—energy, electric vehicles (EV),the robot-related business, and services and solutions.
In energy business, we began selling “NTN Hybrid
Street Lights” in July 2016. The lights use power
1

Corporate Information

Manage Growth

The Source of Value Creation

Progress of Medium-term Management
Plan “NTN 100”

Review of Operations

generated from two sources of natural energy, windand solar, that power the LED lights which turn on atnight. In June 2017 we also began selling the “NTN
Micro Hydro Turbine,” a compact hydroelectric generator
that can be easily installed in an irrigation channel tosupply electricity stably and with high efficiency.
We will promote the turbines for generating andsupplying power to areas with irrigation channels but
no power lines. Additionally, in March 2017 demonstration
tests began in Iwata City, Shizuoka Prefecture, on the“NTN Vertical Axis Wind Turbine” that runs silently andis highly efficient at generating power, with a capacityof 10 kW. We plan to obtain ClassNK certification andcommercialize the wind turbine for sale in December.

FeatureFor the fiscal year ending March 2018, the final fiscal
year of “NTN 100,” we anticipate net sales of 700.0
billion yen and operating income of 36.0 billion yen.
In addition to steady sales growth for automotive
applications, we anticipate higher sales and income
from the previous fiscal year thanks to a recovery indemand in industrial machinery applications. Whether
or not there will be any influence due to pending
litigation is difficult to predict at the present time,
but we have included an estimated 10.0 billion yen as
extraordinary loss. As a result, net income attributable
to shareholders (parent company) is expected to be
10.0 billion yen.
Regarding distribution of dividends, in celebrationof our 100th anniversary in March 2018, and in order toexpress our appreciation to our shareholders, we will
add a commemorative dividend of 5 yen to the regulardividend of 10 yen for both interim and year-end
dividends, totaling 15 yen per year.

Universities

Other
companies

Robot-related Business

Outlook for the Year Ending March 31, 2018—the Final Fiscal Year of “NTN 100”

EV Business

Energy Business

About the Company

25.4% to 35.6 billion yen. Net income attributable toshareholders (parent company) decreased by 81.2%
from the previous fiscal year to 2.8 billion yen due tothe posting of extraordinary losses related to theAnti-monopoly Act. However, excluding the effects of
exchange-rates, net sales increased by 3.6% from theprevious fiscal year and operating income increasedby 1.9% from the previous fiscal year, resulting in higher
sales and income.
Regarding dividends, we paid out an annual
dividend of 10 yen as planned at the beginning of
the fiscal year.

NTN Micro Hydro Turbine

NTN Vertical Axis Wind Turbine (10 kW)

NTN Report 201716

Condition Monitoring System (CMS)for Wind Turbines, Wind DoctorTM
Start of demonstration tests in Iwata City, Shizuoka Prefecture

In EV business, we developed a “New In-wheel
Motor System” that we are also promoting globally inresponse to the increased awareness of environment.
In May 2016 we added an “Electric Motor and Actuator”
series to our product lineup, which we are promoting
to assist in the electrification of automobiles and to
improve fuel efficiency.
In robot-related business, under the theme of“working and living with people,” we are developing
applications and accelerating our market expansion
with products such as our “Parallel Link High Speed
Angle Control Equipment,” which helps to increase
productivity at automated production facilities.

Parallel Link High Speed Angle Control Equipment

For more details on our business development
in new areas, see the “Feature” section on P. 23.

2 Expand Aftermarket BusinessIn terms of expand of the aftermarket business,
we aim “World’s No.1 customer satisfaction level withproduct line up and engineering services.”
In Japan we aim to strengthen our engineering
services through our technical workshop. Outside
Japan, we are strengthening our mobile activities inwhich our engineers travel by Technical Service Units
to distributors and customers, building relationshipsof trust and helping to expand sales. We are also
extending our automotive aftermarket business in
Europe, China and other locations and continuously
working on the sales expansion.
In production, we completed construction ofa new heat treatment plant at NTN Noto Corporationin Shika-machi, Ishikawa Prefecture, in July 2017.
The establishment of an integrated production
system for bearings will shorten the production leadtime and provide a more stable supply system for
the Noto region.

In Service, Solution Business, we sale a “Condition
Monitoring System (CMS) for Wind Turbines, Wind
DoctorTM.” The system monitors the operating conditionof large wind power generator components, such as
bearings and gears by utilizing bearing diagnostic andsensing technologies accumulated through many yearsof our experience. With bearing condition monitoring,
diagnostic, and sensing technologies—we plan toactively apply to other fields, such as rail transport.
Exterior of heat treatment plant at NTN Noto Corporation

17

NTN Report 2017

About the Company

We will strengthen customer service with these
activities and improve the NTN brand. Additionally,
we will expand the aftermarket business and improve
the global share by expanding sales in maintenance,
repair and overhaul (MRO).

Manage Profitability
New plant at NTN Driveshaft Anderson, Inc. in the U.S. (Production started in
April 2017)

looking to improve earnings by taking such measures
as reducing variable costs.
“Monozukuri” with Next-generation Technology
Following the theme of “innovation with Monozukuri
methods for the next 100 years,” we plan to introduce
innovative manufacturing technologies such as“Electron Beam Welding,” increase our cost-competitive
capabilities, shorten lead times, and adopt energyefficient processes. Additionally, efforts led by our
Quality Assurance Headquarters will focus on
strengthening our global quality assurance system toensure globally consistent quality worthy of the label“Made by NTN.”

NTN’s Vision and Strategy

4

FeatureReview of Operations

Structural Reform of the Driveshaft BusinessWe have identified expanded profits as the mostimportant item on an agenda that includes quality,
cost, delivery date, and technical support. We are aiming
to achieve the world’s No.1customer satisfaction level.
In sales and engineering, we have employeda new concept and advanced production technologies
to develop products that offer customers highadded value, including a modularized “Advanced
Drive-Shaft Module” that utilizes NTN’s hub bearings,
which holds the top share globally, and the world’s
lightest “Lightweight Driveshaft for FR Vehicles.”On the production side, we are establishing newplants in China and the United States, and otherlocations as the automotive production rises andautomakers build new production bases. We are also
working to increase localized production rates and
3

The Source of Value Creation
Corporate Information

NTN Report 201718

Manage Foundation
5 Strengthen the Management Foundation
We are steadily working on supply chain CSR, thoroughcompliance with laws and regulations, and strengthening
our risk management structure in order to enhance our
global control and risk management.
By implementing various initiatives throughout the
supply chain CSR, the NTN Group is addressing social
issues such as “Human Rights,” “Labour,” “Environment,”
and “Anti-corruption,” endorsing 10 Principles of the UN
Global Compact. For our suppliers we hold briefing
sessions to seek their cooperation with CSR Procurement
Guidelines and NTN’s Green Procurement Standards.
We also investigate the use of conflict minerals and workon avoiding the use.

To strengthen our risk management system,
we have built a database for global risk management
and we are grasping the current situation of NTN Groupto promote the prevention of risk occurrence and themitigation. We are also working on Business Continuity
Plans (BCP) and Business Continuity Management (BCM)
to prepare for emergencies.
See P. 43

See P. 59

With regard to compliance, our efforts are directedby a Compliance Committee, while a Fair Trade
Monitoring Committee guides our full compliancewith Antimonopoly Act. As companies worldwide
establish anti-corruption and bribery prevention
measures, we have also set up the bribery prevention
regulations, thereby strengthening our compliance.
We are also promoting education and awareness-raising
activities such as e-learning, plus compliance training
and management training for employees going overseas
or top management at subsidiaries. Holding “CSR Global
Meeting” with the Overseas District Internal Control
Section, we are strengthening our global internal
control system.
See P. 40

CSR Global Meeting

19

NTN Report 2017

BCP design at major business sites

In addition, we are working on reforming our coresystem. Introducing new core system appliedadvanced IT, we are improving work efficiency andpromoting standardization. We also expand thesales and improve the profitability by realizing thequick information sharing about procurement,
production and sales activity.
6 Strengthen the Financial Foundation
We are putting in place measures to strengthen profit
control and improve asset efficiency. While carryingout efforts such as improving profits and decreasing
inventory assets, there was extraordinary losses due toissues related to litigation and the Antimonopoly Act,leading to a decrease in current net income and adrop in associated indicators. Heading into the final
fiscal year of the Medium-term Management Plan“NTN 100”, we aim to achieve a better financial position
by reducing interest-bearing debt, increasing inventory
turnover ratio, reducing retirement benefit obligations,and improving the profit margin of sales to ensure astable long-term return of profits to our shareholders.

About the Company
NTN’s Vision and Strategy

Strengthening of the Financial Foundation: Results and Forecast“NTN 100” 3-Year Plan
Target of our“NTN 100”

Fiscal Year Ending
March 31, 2018
Forecast

Total (Costs)
Average (Ratio)

Reduction of interest-bearing
debt (excluding foreignexchange impact)

26.2 billion yen
reduction

1.8 billion yen
reduction

2.2 billion yen
increase

25.7 billion yen
reduction

60.0 billion yen
reduction/3 years

Inventory reduction(inventory turnover)

4.0 times/year

4.0 times/year

4.1 times/year

4.1 times/year

4.5 times/year

Capital expenditures

36.3 billion yen/year

35.4 billion yen/year

44.0 billion yen/year

115.7 billion yen/
3 years

135.0 billion yen/
3 years

12.5 billion yen/year

21.2 billion yen/year

0 yen

33.7 billion yen

67.0 billion yen/
3 years

Equity to capital ratio

29.2%

28.7%

29.1%

29.1%

30.0% or more

Net D/E ratio

1.1

1.1

1.1

1.1

1.0 or less

ROE

6.3%

1.2%

4.3%

3.9%

Over 14%The Source of Value Creation

Fiscal Year Ended
March 31, 2017
Results

Review of Operations

Fiscal Year Ended
March 31, 2016
Results

FCF

Feature1. ‌Strengthen
Asset Efficiency“NTN 100” 3-Year Plan
2. Improvement‌
of theProfit Margin on Sales

Operating margin

Fiscal Year Ended
March 31, 2016
Results

Fiscal Year Ended
March 31, 2017
Results

Fiscal Year Ending
March 31, 2018
Forecast

Average

6.7%

5.2%

5.1%

5.7%

Target of our“NTN 100”

8.8%

3. ‌Shareholder Return

Dividends

Fiscal Year Ended
March 31, 2016
Results

Fiscal Year Ending
March 31, 2017
Results

Fiscal Year Ending
March 31, 2018
Forecast

AverageAnnual 10 yen
Dividend payout ratioof 35%

Annual 10 yen
Dividend payout ratioof 188%Annual 15 yen
Dividend payout ratioof 80%—
Dividend payout ratioof 67%

Target of our“NTN 100”—
Dividend payout ratioof 30% is basic idea.

NTN Report 201720

Corporate Information“NTN 100” 3-Year PlanSociety that NTN is aiming for:Development of a “smooth society”
NTN was founded in 1918, getting started in businessrolling stocks, airplanes, wind turbines, and machineryby researching and manufacturing ball bearings, aof all kinds, helping to save energy and ensure safety

technology that was key to the development ofin people’s lives.

Japanese industry in that era. On March 1, 2018 we

Our core technology is tribology technology, ancelebrate the company’s 100th anniversary. My deepest

area that NTN will continue to develop and improve.

gratitude goes out to all those who have supported us

In the automotive applications, NTN is the top
manufacturer in the world of hub bearings, whichand patronized our business through the years.
With a view toward the next 100 years, we aresupport the rotation of tires. We are also number two

looking to transform into a corporation that canin the world in driveshafts, which transmit the power

make many further contributions to society. We cameof a vehicle’s engine to its wheels. We aim to continue

up with the anniversary business concept “What NTN

creating new technologies and products for thecan do for society for the next 100 years” based on

world’s automakers and vehicle-related manufacturers.

the types of business we have carried out in the first

In the industrial machinery applications, we

100 years. We are thus engaging in a range ofprovide highly reliable products and solutions for aendeavors with this concept for next 100 years andwide range of fields, including bearings for aviationachieve a “smooth society.”

and aerospace, rolling stock, medical devices,
industrial robots and construction machinery.
Additionally, in the wind power generation

What NTN continues: Pursue tribology*
technology to make things “smooth”

which holds a large share in renewable field andexpanding globally, NTN supplies bearings for windturbines and will continue enabling the advancement

NTN has developed and used its bearings technology
to make rotating parts move smoothly in automobiles,of this genuine renewable energy source.
In the aftermarket applications, to incorporate* “Tribology” refers to the “science and technology of two interacting surfaces in relative motion, covering all phenomena that occurs between them” as an engineering field that
deals with lubrication, friction, wear, seizing and bearing design. The science and technology of tribology is applied to achieve low-wear, low-friction machines and parts, and to
reduce surface damage as a way of saving energy and resource efficient throughout our society (excerpt from the Japanese Society of Tribologists homepage).

NTN will contribute to the “development of a smooth society”
by utilizing technology that makes things “Nameraka.*”
Our technology developed in bearings will smoothly bring about change in the
future through electric vehicles, robots and even a society based on natural energy.
* “Nameraka” means “smooth” in Japanese.

The 100th anniversary logo represents
tribology image of rotations combinedsmoothly and precisely, persistence of
keeping smooth rotating for next timeand growth for the future.

21

NTN Report 2017

Taken from the capital letters of NTN.
“NanTe Nameraka” means “How smooth!”in Japanesea global trusted company by doing the businesseverywhere such as bearings for steel and paper mills

activity considering the 17 Sustainable Development

and mining, we will improve the technical service

Goals. NTN will provide new value to our various

globally and plan to achieve the highest level ofstakeholders such as customers, suppliers,

customer satisfaction in the world.

shareholders, employees and local communities.

About the Company

the demand for the aftermarket of bearings used

We will also realize the sustainable growth andimprove the corporate value in the mid-to-longterm by expanding the businesses, including thedevelopment in new areas, considering the global
social issue.

We will expand the fields to which we can contribute

NTN’s Vision and Strategy

What NTN starts: Contribute to
the development of a “recycling-basedsociety that keeps circulating smoothly”

by utilizing our core tribology technology developedin bearings toward achieving a sustainable society.
In the Medium-term Management Plan “NTN
Feature100,” four new business areas, “Natural Energy,” “EV,”“Robot-related,” and “Service, Solution” are in planning.
In 2015, NTN endorsed the United Nations Global
Compact and is supporting 10 principles in the fourareas of, “Human Rights,” “Labour,” “Environment,” andReview of Operations“Anti-corruption.” Additionally, we are aiming to beusing technology that makes things “smooth,” based on our key phrase,“Make the World Nameraka.” This is what NTN can do for society for the next 100 years.
To all of our stakeholders—we appreciate your continued support and

The Source of Value Creation

NTN will help develop a “smooth society,” “smooth world” and “smooth lifestyles”

encouragement going forward.
Corporate Information

NTN Report 201722

Feature

New
Business

New Businesses andSocial Contribution
Activities Supporting
Future Growth“Developing Business in New Areas”
is a major themes under “Manage
Growth,” one of the three basic
policies in the Medium-termManagement Plan “NTN 100.”
Here, we feature four areas of new
business development—Energy,
EV, Robot-related, and Services,
Solutions. We also introduce social
contribution activities that we areundertaking as part of our 100th
anniversary activities.

In July 2016 we began selling “NTN Hybrid Street Lights,” which
use the power generated from two forms of natural energy,
wind and solar to charge batteries and power LED lights thatturn on automatically at night.
Generators with higher power
generation capacity using wind andsolar light are in demand in themarket, but the noise generated by
the blades as they turn and cut
through the air is problematic. Quiet
operation is required in residential
areas and at public facilities.
Using vertical axis wind turbines with a proprietary blade that
does not generate any wind noise,“NTN Hybrid Street Lights” realizes
extreme quietness. They are in
use at many areas of local

NTN Hybrid
Street Light

New
Business

Automotive
Engineering
Exposition
2017

Introducing an extensive lineup of “Electric Motors and Actuators”

23

NTN Report 2017

Energy Business

EV Business

NTN is expanding the scope of our core products—hub
bearings, driveshafts, and bearings of all types—whilefurther extending its automotive-related businessthrough the development of the EV Business as
a new business.
In the automotive industry a shift from hydraulics
to electrification is taking place for many kinds of control
systems, including next-generation vehicles. In May
2016 NTN began developing the “Electric Motor andActuator” Series as products essential for the new
by-wire* control systems.
NTN exhibited a wide lineup of products in thisseries at the “2017 Automotive Engineering Expositions
in Yokohama and Nagoya” to promote their use.

About the Company

NTN
Vertical Axis
Wind Turbine(10 kW)

NTN’s Vision and Strategy

Demonstration testing begun at“Iwata Eco-Park” in Iwata City,
Shizuoka Prefecture

ing on wind speed, optimization of brake control conditions, andthe durability of structural components during continuous
operation over a long period of time. Such data will be used to
improve the reliability of the wind turbines.
In these ways we are actively working to commercialize
new types of products and develop business in the area of
natural energy.

Featurecommunities including public facilities such as parks, schools,
as well as bus stops, parking lots, commercial facilities,
emergency evacuation centers. The lights were also set up
at the Mie Prefectural Sun Arena where was used as a media
center during the Ise-Shima Summit held in May 2016 tolight up the local community.
In July 2017 we began selling the “NTN Micro Hydro
Turbine,” an independent power type compact hydroelectric
generator that can be easily installed in an existing irrigation
channel to generate power, thus significantly reducing
construction costs. Moreover,the proprietary shape of theblades such as the winglets on
the turbine blades offer highefficiency power generation.
The generated power is stored
NTN
in a battery and used by street
Micro Hydro
Turbinelights or nearby equipment,
providing community-based
power generation.
We also developed the“NTN Vertical Axis Wind Turbine(10 kW)” with high-efficiency
blade technology, and begandemonstration tests at “Iwata Eco-Park” in Iwata City, Shizuoka
Prefecture. The turbine uses proprietary vertical axis blades thatrun quietly and generate power with high efficiency. The
demonstration tests are providing data on operation control,
such as control conditions on the number of rotations depend-

Review of Operations
The Source of Value Creation

We exhibited a wide lineup of “Electric Motor andActuators” under the theme “New Technology Transforms
the Next—Make the World Nameraka.” The booth had
dynamic models of an engine, brake, and oil pump,creating an appeal for our products and their wide range
of applications.
The future is sure to be filled with next-generation
vehicles including EVs and fuel cell cars, and we foresee
NTN’s core products—hub bearings and driveshafts—
continuing to be utilized in these next-generation
vehicles. We are planning not only to expand these coreproducts, but also to develop new business in the areaof EV-related Business. By so doing, we plan to expand
our automotive-related businesses overall.

Corporate Information* By-wire: a system such as brake-by-wire and shift-by-wire, where driver operations areconverted from mechanical systems to electrical signals to drive actuators.

“Electric Motors and Actuators” Series

NTN Report 2017

24

New
Business

Robot-related BusinessIn the Robot-related Business, we are developing applications
for our “Parallel Link High Speed Angle Control Equipment.”
This compact device has a wide range of moving angles,
making it possible to position the unit with high speed andprecision. With these features, it can be used at automatedproduction facilities or with visual inspection equipment that
require a broad range of moving in a small space. It is also
being proposed as a replacement for skilled technical work
such as welding processes.
In March 2017, we developed a new product thatcombines a Dry Ice Snow Precision Cleaning System(QuickSnow®) from Air Water Inc. that uses liquid carbon
dioxide in combination with our Parallel Link High Speed Angle
Control Equipment. By incorporating our equipment into Air
Water’s QuickSnow® system, the nozzle turning becoming
quick and smooth, enabling cleaning with high efficiency
without damaging objects, even if they are complex in shape.
We plan to continue engaging in such collaborations
with customers and other firms to expand our reach in the
Robot-related Business.

Continuing to expand
the Robot-related Businessthrough collaborations
with customers
and other firms

High Speed Angle Control Equipment that utilizes
driveshaft technology

New
Business

Condition Monitoring System for Wind Turbines
Wind DoctorTM

Monitoring service

25

NTN Report 2017

Jointly developed with the customer

Service,
Solution Business

In Service, Solution Business, we are working to enhance
the performance of the “Condition Monitoring System(CMS) for Wind Turbines” and develop it for other fields.
We are developing and manufacturing the system,“Wind DoctorTM,” based on years of experience with bearing
diagnostics and sensing technologies. The system monitors
the operating condition of the bearings, gears, and othercomponents of a large wind turbines. It is used formonitoring large wind turbines in Japan and supplying
diagnostic data.
We aim to further improve the operational analysis
technology for early failure detection function so that thetechnology can be applied to other fields such as rollingstock, where a top priority is placed on safe operation.

Social Contribution Activities

Sponsoring the “Tour of Japan”

NTN’s Vision and Strategy

learn about bearings
through workshops andhands-on experience.
Besides the classroom-style workshops on
bearings, children andadults could play witha “Rotating Hurricane
Spinner” that consists of
two steel balls attached
together, make a wind turbine using paper cups, or assemble
a deep groove ball bearing. Through such activities, bothchildren and adults could learn about ecology, saving energy
and tribology technology as part of the concept of a “SmoothSociety” for the
next generation.

About the Company

As part of our 100th anniversary activities, NTN became thetitle sponsor of the cycle road race “NTN presents the 20th
Tour of Japan” which held races in the eight stages in Japanin May 2017.
The Tour of Japan is the largest international cycle
road race held in Japan. NTN sponsored this race as thebicycle is a symbol of ecology and in common with theconcept of global environmental conservation behind
NTN’s tribology technology. The cycle road race pursues thesmoothest run in much the same way as NTN aims forsmooth rotation with its bearing technology.
“NTN Rotating Workshops” were held at the race
locations, giving over 2,000 visitors the opportunities to

FeaturePHOTO: TOJ2017

Commendation ceremony

Children at the “NTN Rotating Workshop”
Review of Operations

NTN Donates “NTN Hybrid Street Lights”

Regions scheduled
to be donated withNTN Hybrid Street Lights

3 units
Ishikawa Prefecture

3 units
Fukushima Prefecture

2 units
Iwata City,
Shizuoka Prefecture

5 units
Donation ceremony at the Kuwana City Hall
President Ohkubo (left) and Mr. Ito, Mayor of Kuwana (right)

Kuwana City,
Mie Prefecture

NTN Report 201726

Corporate Information

4 units
Kumamoto Prefecture

The Source of Value Creation

NTN donates 17 units of “NTN Hybrid Street Lights” to fivelocations within Japan to promote the locally produced
and consumed renewable energy. This donation is as oneof the measures towards coexisting with local communities
for the company’s 100th anniversary activities. The products
will be used for regional disaster and crime prevention.
NTN will continue promoting the local productionof energy for local consumption in communities
through our natural energy products to help achievea low carbon society.

Review of Operations

Aftermarket Applications
NTN provides products that suit the maintenance needs of all kinds ofindustrial machinery and automobiles.

Results in the Fiscal Year Ended March 31, 2017
Net sales

104.5

billion yen

Down 8.0%
from theprevious fiscal
year

Operating income

14.0

billion yen

Down 8.0%
from theprevious fiscal
year

Net sales in aftermarket applications were 104.5 billion yen, a decrease of 9.1
billion yen (8.0%) from the previous fiscal year, due to a decrease in industrial
machinery aftermarket and the effects of exchange-rates and other factors.
Operating income was 14.0 billion yen, a decrease of 3.7 billion yen (20.9%), due
to the effects of exchange-rates and other factors. While automotive aftermarket

Eiichi Ukai, Director

remained strong, the primary reasons for these declines were that industrial
machinery aftermarket, which accounts for the majority of sales, decreased
due to the sluggish economic environment mainly in emerging countries.

Current Business Conditions and Our Major Initiatives

Percentage of
total sales

There are signs of recovery in demand for bearings for industrial machinery, and15%

we expect a recovery in demand for industrial machinery aftermarket. In
addition, we are focusing on enhancing the NTN brand and expanding sales by

104.5 billion yen

strengthening system for sales of MRO projects. In automotive aftermarket, there
has been high growth in sales due to an expansion of product line up in theAmericas and Europe, and we will continue to work to expand our market share.

Operating Income/Operating Margin
Net Sales (Left Axis)

Operating Income (Right Axis)

Operating Margin(Billions of yen)(Billions of yen)

17.1% 17.1%

150

112.4 113.6
103.8
100

45

15.6%

16.5%

13.4%

Net sales

105.5

Net salesbillion yen

Up 1.0% fromthe previous
fiscal year

15.0

billion yen

Up 7.1% fromthe previous
fiscal year

We expect the market shrinking in Japan, but we will expand our market shareand work to develop more MRO projects. In the Americas and Europe, we will

14.2%

also promote expanding sales of MRO projects for industrial machinery after-

104.5 105.5
30

89.2

Forecast for the Fiscal Year Ending March 31, 2018

market. And we will strengthen our sales networks and promote sales forautomotive aftermarket. We anticipate an increase in sales in the Asia region
due to recovery demand for aftermarket.

17.7

19.2

Under these business conditions, we expect to see net sales of 105.5

17.7

14.7

50

14.0

15.0

15

billion yen (up 1.0% from the previous fiscal year), and operating income of
15.0 billion yen (up 7.1% from the previous fiscal year).
* MRO: Maintenance, Repair and Overhaul

0

2013

27

2014

2015

2016

2018
(Forecast)(Years ended/ending March 31)

NTN Report 2017

2017

0

NTN helps to improve the productivity of customers’ equipment and maintain consistent
operations through the stable supply of products and a quick delivery system by our global

PRODUCTS

supply chain. For the maintenance needs of automobiles, we offer a wide range of autoparts that combine bearings and peripheral components. We also visit a large number ofcustomers with Technical Service Units, hold technical workshops, and provide detailed* ‌Photos are cross-sectional models of products.

support to help solve customers’ problems.
About the Company*

Spherical roller
bearing withcompact seal

Super large-sized
split spherical roller
bearing

Bearing unit

MiningSteel

NTN’s Vision and Strategy*
Sealed four row
tapered roller bearing

Constant velocity
joint for industrial
machineryULTAGE Spherical roller bearings[Type EA, Type EM]

FeatureThe rust guard series
spherical roller
bearings*

Oil and Gas

Review of Operations

Paper-making“PolyLube”
bearings for foodmachinery

The Source of Value Creation

Parts kit for trucks
Plastic sliding screws

Food

Auto Parts

Arm shaped self-centering
hydraulic puller

Corporate Information

Induction heating device

Technical
Service Unit

Maintenance Tools / Technical training

NTN Report 201728

Review of Operations

Industrial Machinery Applications
NTN contributes to people’s lives by supporting the rotating parts ofa wide range of industrial machinery.

Results in the Fiscal Year Ended March 31, 2017
Net sales

98.6

billion yen

Down 5.3%
from theprevious fiscal
year

Operating income

1.6

billion yen

Down 71.4%
from theprevious fiscal
year

In the industrial machinery applications, demand for construction machinery
began to recover from the second half of the year ended March 2017, anddemand for gearbox for robots was also strong. Net sales were 98.6 billion yen,a decrease of 5.5 billion yen (5.3%) from the previous fiscal year due to theeffects of exchange-rates and other factors. Operating income were 1.6 billion

Kazuki Kawashima, Director

yen decrease of 4.0 billion yen (71.4%) from the previous fiscal year. However,excluding the effects of exchange-rates, there was an increase in both net sales
and income.

Current Business Conditions and Our Major Initiatives

Percentage of
total sales

Industrial machinery market recovery remained stagnant, but it started moving

15%

in a positive direction from the second half of the year ended March 2017.
This was mainly due to the recovery of sales in construction machinery,

98.6 billion yen

which account for a large portion of the industry sector, and we expect thisstrong demand to continue in the fiscal year ending March 2018. In addition,
sales for wind turbines and gearbox for robots, as well as products for aircraft
and rolling stock have also increased, and positive results from restructuring the

Operating Income/Operating Margin
Net Sales (Left Axis)

Operating Income (Right Axis)

Operating Margin(Billions of yen)

5.7%

150

(Billions of yen)

5.4%

the marketplace, and expanding production capacity.

Forecast for the Fiscal Year Ending March 31, 2018
Net sales

1.6%

1.6%
109.0

93.7

generate profits by developing high-value-added products, introducing them to

15

102.0

3.2%

100

engineering division are appearing. We will work to further expand sales and

101.2

104.1

98.6

2.1%

102.0

10

Operating income
billion yen

Up 3.4% fromthe previous
fiscal year

2.1

billion yen

Up 31.3% fromthe previous
fiscal year

In Japan, we expect an increase in demand for construction machinery toexport to emerging countries, and demand for gearbox for robots, while in

6.3

Europe and China we see increasing demand for wind turbines. In the

5.6

50

5

Americas, the production of construction machinery is on a slight recovery
curve. And in Europe, we expect an increase in sales due to the demand for

3.3
1.6

1.5

2.1

new aircraft. We also expect demand for construction machines and machine
tools to increase in Asia and China.

0

2013

29

2014

2015

2016

2018
(Forecast)(Years ended/ending March 31)

NTN Report 2017

2017

0

Under these business conditions, we expect to see net sales of 102.0
billion yen (up 3.4% from the previous fiscal year) and operating income of
2.1 billion yen (up 31.3% from the previous fiscal year).

We are expanding commercialization of our ULTAGE series of bearings, NTN’s new
generation of bearings with the world’s highest standard, to meet market needs forhigher rotational speed and precision. The bearings allow industrial machinery to be

PRODUCTS

made smaller and lighter, and operate at lower rotational torque, which reduces theenvironmental impact. We will continue to develop the elemental technologies ofbearings and work to develop high value-added products through the unitization and* ‌Photos are cross-sectional models of products.

systemization of bearing-related components.
Underlying support
for high productivity inrobotic applications

NTN’s Vision and Strategy

Construction machinery bearings

Gearbox bearings

Helping to ensurestable food supplies

Meets growing demand in
renewable energy

FeatureAgricultural machinery bearings

Wind turbine bearings

Applications for jet engines
around the world

Supports safety of the world’s
high-speed railways*

Fundamental components
for ensuring high-precision
processing

Supports smooth operationof copiers andmultifunctional printers

Machine tool bearings

The Source of Value Creation

Rolling stock bearings

Review of Operations*

Aerospace bearings

Office equipment bearings
Used for CT scanners andartificial hearts

Corporate Information

Used also for HDDs andthin fan motors

Hydrodynamic bearings

About the Company

Applications for resource
mining and civil engineering

Medical equipment bearings

NTN Report 201730

Review of Operations

Automotive Applications
NTN contributes to safety and relief of vehicles through the supply of
bearings and driveshafts used in vehicles in many forms.

Results in the Fiscal Year Ended March 31, 2017
Net sales

480.2

billion yen

Down 3.8%
from theprevious fiscal
year

Operating income

20.0

billion yen

Down 18.2%
from theprevious fiscal
year

Sales in automotive applications increased due to steady growth in demand for
motorcycles in the ASEAN region. In China region, there was higher automobile
production volume, and the start of mass production at our new plant. However,
due to the effects of exchange-rates and other factors, sales were 480.2 billion

Hideaki Miyazawa, Managing Directoryen (down 3.8% from the previous fiscal year). Although there were favorable
effects from scale merits and the reduction of variable costs, operating income
was 20.0 billion yen (down 18.2% from the previous fiscal year) also due to theeffects of exchange-rates and other factors. Excluding the effects of
exchange-rates, there was an increase in both income and profits.

Percentage of
total sales

Current Business Conditions and Our Major Initiatives

70%

In the global automotive market, North American automobile production islooking weak, and there is uncertainty about the future of the economy in

480.2 billion yen

China. Meanwhile, the market structure and consumer needs are becoming
increasingly diverse; this includes increasing production of EVs, electrification,and self-driving vehicles. We are seeing greater movement in qualitativechanges than in quantitative expansion. Under such business conditions, weOperating Income/Operating Margin
Net Sales (Left Axis)

Operating Income (Right Axis)(Billions of yen)

-2.5% 433.9
400

4.9%

3.8%

2.8%

480.5

499.3

4.2%

(Billions of yen)

3.8%

60

480.2 492.5

24.4
20.0

18.4

18.9

20

12.0

Forecast for the Fiscal Year Ending March 31, 2018

492.5

Operating income
billion yen

Up 2.6% fromthe previous
fiscal year

18.9

0

We expect positive effects from the launch of new models in Japan andstrong customer demand in Europe. We also expect increasing automobile
demand in ASEAN. Meanwhile, in the Americas, although we see positiveeffects from the start of mass production on new orders at the new plant in
Mexico, there is concern over a possible downward deviation from the

-9.0
2014

2015

2016

2017

2018
(Forecast)(Years ended/ending March 31)

expected number of new cars.
Under these business conditions, we anticipate net sales to be 492.5
billion yen (up 2.6% from the previous year) and operating income of 18.9
billion yen (down 5.5% from the previous year).

31

billion yen

Down 5.5%
from theprevious fiscal
year

productions at Japanese manufacturers in China and increases due to steady

0

2013

develop new technologies and introduce more new products, starting with

Net sales
40

356.6

200

and hub bearings, and increasing production capacity. We are also working toelectric motors and actuators, to achieve sustainable business expansion.

Operating Margin600

are working to strengthen profits by business structural reform of the driveshafts

NTN Report 2017

We have developed low-torque hub bearings, driveshafts, and bearings, while making
these products smaller and lighter, and we are also developing modular products.
With the electrification of automobiles and in anticipation of self-driving, we have

PRODUCTS

developed an Electric Motor and Actuator series composed of ball screw, motor, andcontroller, which we are promoting to customers for a wider range of applications.
By selling these products globally, we are helping to improve vehicle fuel efficiency
and riding comfort.

* ‌Photos are cross-sectional models of products.

About the Company

Pulley bearings forhigh-speed rotation[Accessories]
Needle roller bearings
for rocker arm*

Mechanical clutch unit for
next-generation steering system

High-density,
high-strength sintered gears for starter motors
Split type needle
roller bearings(for camshaft)

NTN’s Vision and Strategy

Auto tensioner with thevariable damper mechanism for
ISG-equipped engine*[Steering]

Clutch forseat lifter[Engine][Seat]
FeatureReview of Operations

World’s

No. 1
share

[Wheel applications]

Ball screw drive module forelectric hydraulic brake

World’sNo. 2[Brake]share

The Source of Value Creation[Transmission]

*
*

AT/MT
Driveshafts

Hub bearings

CVT

BEAREE
seal ring

Corporate Information

Thrust needle
roller bearings[Electric Motor and Actuator]
In recent years, automobiles have been evolving from
Needle roller and cageassembly bearings forplanetary gear

mechanical control using conventional hydraulic and pneumatic
systems to electric control via electrical systems. At the sametime, there is a movement toward low fuel consumption and thedevelopment of self-driving vehicles. We are producing

ULTAGE Tapered
roller bearings forautomobiles

extensive series of electric motors and actuators that will fit rightLong-Life series
TAB bearingsin with the accelerating electrification of vehicles.

NTN Report 201732

The Source of Value Creation
At NTN, we operate our business in the belief that “corporate governance and six capital
assets” are indispensable as the “source of value creation.”
By developing businesses that recognize social issues, we enhance the value
we offer to our various stakeholders — that include our customers, business partners,
shareholders, investors, employees and local communities. We seek to maintain sustainablegrowth as we increase our corporate value over the medium and long terms.

Responding to Social Issues
In 2015, we endorsed the United Nations Global Compact, an international initiativefor developing a global framework for sustainable worldwide growth. Our aim is tobecome a truly global company trusted on the world stage as we support ten principles
in the areas of human rights, labour, the environment, and corruption prevention.
In the future, we will promote business initiatives while also remaining aware of
the 17 objectives and 169 targets of the “UN’s Sustainable Development Goals (SDGs)”,
which came into effect in January 2016.

33

NTN Report 2017

About the Company

Corporate GovernanceOne of our top management priorities is to strengthen and enhance our corporate
governance. We take steps to make our management more efficient and robust
while ensuring it remains compatible with the corporate governance code.

NTN’s Vision and Strategy

Six Capital Assets

We are aggressively strengthening
our core businesses as we continue
to develop new ones. Using ourintellectual capital to our advantage,
we recognize business development
as an essential aspect of ouroperations.

We focus on maintaining andimproving product quality while
promoting measures to create a safe
and comfortable workplaceenvironment.

We consider our human resources tobe the most important asset driving
our future growth. Toward that end,
we are focusing on initiatives tocreate a workplace environment inwhich a diverse range of individuals
can play active roles and to cultivate
global human resources.

Social and
Relationship Capital

Natural Capital

Financial CapitalIn our business operations, we focus
on achieving long-term value
creation in order to further
strengthen the relationship oftrust we are building with ourvarious stakeholders.

We aim to reduce the environmental
impacts of all our business operations
under our corporate philosophy of“We shall contribute to internationalsociety through creating new technologies and developing new products.”

In the interest of improving ourfinancial foundation, we are
implementing various measures tostrengthen profit control andimprove our asset efficiency.

NTN Report 2017

Corporate Information

Human Capital

The Source of Value Creation

Manufacturing Capital

Review of Operations

Intellectual Capital

FeatureWe offer products and services through an approach to business developmentthat makes full use of what we call our “six capital assets”: Intellectual Capital,
Manufacturing Capital, Human Capital, Social and Relationship Capital, Natural
Capital, and Financial Capital. With these assets, we are striving to devise
solutions to social issues for the sustainable society.

34

Stakeholder Dialog
We are making opportunities to dialog with our various stakeholders forsustainable improvement of corporate value.

Third stakeholder dialog with experts in various aspects of CSR:
Continuing an initiative introduced in 2015
Experts

1. On the Centenary of the Company’s Founding
Stakeholder I feel that it is wonderful how you have sincerely responded to
the results of the dialog during the past two years through evaluation andexecution. Also, in the lead-up to commemorating your centennial in 2018,
you are instilling your corporate philosophy. To achieve this, it is necessary to
be linked to specific actions and to clarify what links the corporate philosophy
to the concrete actions of employees. Doing this will enable each and every
employee to contribute to society through his or her actions.

Katsuhiko Kokubu
Professor, Graduate School of Business Administration,
Kobe University

2. The Need for CSR in the Midst of Global Expansion
Stakeholder In order to promote CSR on a global basis, it is important tocooperate with local companies and with society. Toward that end, it is also
useful to “identify materiality (issue of particular importance among wide
range of CSR initiatives)” in addition to instilling the corporate philosophy,
so please consider that aspect. From a management perspective, “promoting
diversity” is also an important factor. For the global expansion, promoting
diversity is required with the understanding of executive officers.

Yoko Hiyama
Lawyer admitted in Japan and New York,
Ethos Law Office, Ethos LPC

Kazuhiko Shiratori

3. Environmental Initiatives
Stakeholder I believe that you have positioned itself at a fairly high level interms of reducing the environmental impact of its business operations. In the
future, I would expect to see initiatives involving different aspects than in thepast through the establishment of an environmental strategy with a long-term
perspective. This could involve reducing the environmental impacts and other
innovations in the scope of supply chain.
In such a case, it would be necessary to develop indicators, such as theenvironmental contribution, that could be understood by a third-party, what itmeans the objectivity of data. I believe that products that contribute to society— not only from your own company but also developed in collaboration withother companies — will be essential for the sustainable society.

Executive Researcher, The Japan Association for
Chemical Innovation; Former Senior Manager,
Sekisui Integrated Research Inc.

(The above is the summary of the experts’ comments.)

Dialogs with Other Stakeholders

Customers

Eriko Nashioka (Facilitator)
Certified Public Accountants / Representative Director,
Institute for Environmental Management Accounting

35

NTN Report 2017

We hold sessions where customers canspeak directly with our engineers about theirrequirements whenever it needs andexhibitions where they can become morefamiliar with our products and technologies.

Business partners
We conduct surveys on CSR and plantcommemorative cherry trees.

Please visit the website for details.
1st: http://www.ntnglobal.com/en/ecology/dialog01.html
2nd: http://www.ntnglobal.com/en/ecology/dialog02.html
3rd: http://www.ntnglobal.com/en/ecology/dialog03.html

Director and Corporate General Manager,
CSR Headquarters

Kohei Iguchi
Project Leader, 100th Anniversary
Planning & Promotion ProjectFeatureNTN We have been considering the materiality of our group by placing our
focus on the Sustainable Development Goals (SDGs) adopted by the United
Nations. This will enable each base outside Japan to be rooted in its own region
through its business operations. Regarding diversity, we have been implementing
a variety of measures, including training of executive officers, and we will takesteps to create an environment of mutual respect with each of our bases
outside Japan and with our respective cultures.

Hiroshi Nakano

Review of Operations

Yasuyuki Kuroda
General Manager, CSR Department,
CSR Headquarters

Toshiyuki Matsutani
General Manager, General Affairs &Environmental Management Department

We hold periodic general shareholders’meetings, briefing sessions on financial
results, individual interviews and so on.

Corporate Information

Shareholders and Investors

The Source of Value Creation

NTN From now on, we would like to concentrate not only on environmental
efforts at our factories but also on creating environmental value. We recognizethat the objectivity of data is also important, and we are promoting visualizationof environment-related figures as non-financial indicators, such as third-party
evaluations of CO2 data. Regarding products that contribute to the environment,
we are beginning to formulate such criteria, and we intend to develop productsthat would be effective over the medium and long terms.

NTN’s Vision and Strategy

NTN Our corporate philosophy reflects the “frontier spirit” and “co existence
and co-prosperity spirit” that permeated our company when it was established,
as expressed in the phrase, “creation of original technologies” and “contributing tosociety.” In order to ensure this corporate philosophy permeates the company forthe next 100 years, it is necessary to explain it in a manner that enables employees
to understand the link between their day-to-day work and our corporate philosophy.
Ultimately, it would be ideal if our corporate philosophy were to guide our
employees in their decision-making. We will work to ensure that each and every
employee can contribute to society while meeting the needs of our customers.

About the Company

NTN

Employees

Local communities

We offer tours factory for employees’ families at
each workplace while also offering opportunities
for dialog with the management team.

We exchange opinions with students atspecial meetings and offer factory tours for
local residents.

NTN Report 201736

Corporate GovernanceCorporate Governance Structure
Philosophy and Implementation System

One of our top management priorities is to strengthen and enhance our corporate governance. We take steps to makeour management more efficient and robust while ensuring it remains compatible with the corporate governance code.
We also strive to communicate with shareholders, investors, and other stakeholders by providing information
in a prompt and accurate manner. This ensures more transparent management.
Board of Directors (Convened 17 times*)

Committees

The role of the Board of Directors is to make decisions relating
to fundamental business policies, statutory matters, importantmanagement issues, and to supervise the performance of
duties by its members. The board holds regular meetings at
least once per month, with extraordinary meetings also
convened at any time when necessary. Moreover, with thegoal of improving the function of the Board of Directors,
we are analyzing and evaluating their effectiveness.

Compensation Advisory Committee (Convened 3 times*)
In consultation with the Board of Directors, the Compensation Advisory Committee deliberates, advises, and makes
recommendations to the Board of Directors on issues such ascompensation of individual directors and executive officers.
A majority of the committee members are outside officers.

Audit & Supervisory Board (Convened 14 times*)
We have four Audit & Supervisory Board Members, two ofwhom are standing Audit & Supervisory Board Members(with three of the four being outside Audit & Supervisory
Board Members). The Audit & Supervisory Board Members
are responsible for auditing the performance of duties bymembers of the board. Audit & Supervisory Board Members
attend board meetings and other important meetings andexpress their opinions as part of their efforts to maintain andimprove the transparency and fairness of the Company’s
management supervision system.
Business Strategy Committee (Convened 29 times*)
Discusses fundamental business policies and importantmanagement strategies, with meetings held twice per month.
Executive Committee (Convened 12 times*)
We have introduced the Executive Officer System to enableswift decision-making and business execution. Reviews ofmonthly performance are conducted by the Executive
Committee, comprising Directors, Audit & Supervisory Board
Members and Executive Officers.
* In the fiscal period under review

CSR Committee (Convened 2 times*)
Composed of heads of relevant departments, this committee
deliberates and implements various measures intended toeffectively promote CSR activities.
Risk Management Committee (Convened 2 times*)
Identifies and analyzes the various risks that the NTN Groupfaces, and develops measures for preventing and managing
those risks. In addition, it is advancing Business Continuity
Planning (BCP) and Business Continuity Management (BCM).
Compliance Committee (Convened 4 times*)
Oversees and provides advice for taking a preventative
approach to developing internal rules, organizing training
and educational activities, and monitoring activities for global
compliance risks other than those related to the Japan
Antimonopoly Act (Antimonopoly Act) and the Act against Delayin Payment of Subcontract Proceeds, Etc., to Subcontractors(Subcontracting Act).
Fair Trade Monitoring Committee (Convened 2 times*)
Chaired by the NTN President, the committee is focused oncomprehensive compliance with the Antimonopoly Act andSubcontracting Act and exerts practical control to ensurefair-trading by providing advice regarding training andeducational activities.

Corporate Governance Structure
Shareholders’ Meeting
Assigns/Removes

Accounting Auditors(Audit firm)

Cooperates

Assigns/Removes

Audit &
Supervisory Board

AuditsAssigns/Removes

Board of Directors

Committees
Compensation Advisory Committee

Business Strategy Committee

CSR Committee

Executive Committee

Risk Management Committee

Divisions, Subsidiaries

Compliance Committee
Fair Trade Monitoring Committee

37

NTN Report 2017

Innovations Adopted to Strengthen Corporate
Governance2006 CSR Committee is established.
2008 Risk Management Committee is established.
One outside director is appointed.
2011 Number of outside directors is increased from 1 person to 2 persons.
2012 Fair Trade Monitoring Committee is established.

Open Shareholders’ Meeting
We have taken the following steps, such as facilitating participationin the Shareholders’ Meeting, to streamline procedures forshareholders to exercise their voting rights.

Feature2015 Compliance Committee is established.
Board of Directors undergoes effectiveness evaluation.

NTN’s Vision and Strategy

2004 Executive Officer System is introduced.
Board of Managing Directors reviewed and renamed theBusiness Strategy Committee.

After director candidates are decided on at the Board of
Directors, they are nominated and voted in at the Shareholders’Meeting. This ensures transparency and fairness. The Board of
Directors, based on set regulations, makes decisions on theselection and dismissal of representative directors and directors with special titles, as well as the designation and cancellation of duties delegated to directors.
Regarding subsidiaries, they must report to headquarters
on the fulfillment of their duties and must submit certain
matters for headquarter’s approval according to the terms ofManagement Rules for Subsidiaries. In this way the Board isstrengthening the management control system.

About the Company

Main Initiatives

2016 Compensation Advisory Committee is established.

This committee was convened to deliberate issues of compensation(monthly compensation, bonuses, Etc.) for directors and executive
officers and to submit a report to the Board of Directors. This
committee will continue discussions on executive compensation
while also considering the opinions of outside officers.

Strengthening Management Auditing Functions

3. Scheduling the Shareholders’ Meeting outside of common
dates that other companies use
To ensure that as many shareholders as possible can attend theShareholders’ Meeting, we schedule it outside of common dates
that most companies hold their meetings, and we take into accountfactors such as settlement and audit schedules.
4. Shareholders’ Meeting and other notices listed on the website
We endeavored to provide information of listed notices of the
Shareholders’ Meeting on the web earlier before mailing. At thesame time, we include an abridged English-language translationof the notice. We are also taking steps to make the process moreconvenient for foreign shareholders.

6. Other efforts
At the Shareholders’ Meeting, certain sections of business reports
and settlement data are shown on monitors using graphs, photos
and other visible data to complement the meeting chairperson’s
explanations.

NTN Report 201738

Corporate Information

5. Exercising voting rights
In addition to the exercise of voting rights via the mailing, we accept
those via the web in advance. We also participate in the Electronic
Voting Platform, which is managed by Investor Communications
Japan (ICJ) for institutional investors.

The Source of Value Creation

We employ a corporate auditor-based governance system inwhich three of the four Audit & Supervisory Board Members
are from outside the company. Outside Audit & Supervisory
Board Members bring specialized knowledge in areas such as
finance, management and law, and they conduct audits incollaboration with the in-house standing Audit & Supervisory
Board Member and the Internal Audit Department.
The Board of Directors, which includes two outside
directors, makes decisions on important matters and oversees
business execution, and the Audit & Supervisory Board Members sit on the Board of Directors and other important meetings to offer their opinions. In this way, we strive to maintainand improve transparency and fairness of the Company’s
management supervision system.
All outside directors and outside Audit & Supervisory Board
Members (5) are designated and registered as Independent
Directors/Audit & Supervisory Board Members in accordancewith the regulations set in place by Tokyo Stock Exchange, Inc.

2. Measures to publicize the Shareholders’ Meeting notice
Beginning this fiscal year, we are providing photographs ofcandidates for officer positions and a list of candidates in the
proposal for election of officers as a means of notifying shareholders.

Review of Operations

Compensation Advisory Committee Convened

1. Issuing our Shareholders’ Meeting notice at an earlier date
We send notices regarding the Shareholders’ Meeting to shareholders
three weeks before it is held, which is seven days earlier than thetwo weeks notification required by law.

Corporate Governance

CSR Management
Philosophy and Implementation System

CSR is the initialism for “Corporate Social Responsibility.”
Our definition of CSR is “to aim for fulfilling our
accountability to our stakeholders and improving ourcorporate value not only economically but also in theenvironmental and social realms while including CSR
in our corporate commitments to environmental
preservation, social fairness and contributions.”
In order to advance the following CSR initiatives ingeneral, we periodically convene our CSR Committees
in the relevant divisions under the guidance of the CSR
Department. Moreover, CSR managers and other staff
in charge of CSR are appointed at domestic andoverseas subsidiaries.
1. Corporate Governance: Corporate governance; internal controls
2. Compliance: Complying with laws and regulations; internal rules
and social norms
3. Environmental Management: Preservation of the naturalenvironment and ecosystems; greening activity
4. Contribution to Society: Volunteer initiatives; support for culture
and the arts; support for disaster recovery
5. Customers: Enhancing customer satisfaction
6. Business Partners: Building partnerships (establishing coexistence
and co-prosperity relationships)
7. Employees: Human resource development; improvement of theworking environment

In addition, in accordance with our “CSR Policy,”
we develop our “Employee Code of Conduct” as the guideline that all employees are required to follow to implement
CSR initiatives in their day-to-day activities and “Business
Code of Conduct,” as the guideline to comply with.

Main Initiatives

CSR Committee

Annual number of meetings

2

Our CSR Committee, chaired by the General Manager of the
CSR Department, comprises the heads of relevant divisions.
The committee convenes twice a year and deliberates on
issues and policies in order to ensure the effective implementation of CSR initiatives.
In the fiscal year under review, we deliberated on social
issues according to the 10 principles of the UN Global Compact
such as human rights, CSR supply chain, and revisions to the
ISO 14001 standards for environmental management systems.
Moreover, we remain actively focused on information disclosurein order to meet our commitment to corporate accountability.
Each department sets Key Performance Indicators (KPI) in
order to allow for visualization of non-financial information, which
is an invisible asset. By regularly reporting on and discussing KPI at
the CSR committee, we are raising awareness of the importance of
non-financial information and increasing our corporate value.
Consequently, NTN has been evaluated as a company actively
engaged in the areas of environmental preservation and social
contribution in the stock market; as a result, it has been incorporated
into multiple SRI (socially responsible investment) funds as well as in
the SRI index.

Corporate Planning
Department

Legal Department

General Affairs
Department

Personnel Department

CSR Department
Environmental
Management Department

CSR Committee

Quality Management
Department

Management Department/
CSR Committee Secretariat

Intellectual Property
Management Department

Chief Management
Officer

Procurement Department

Sales Management
Department

Managing Departments
CSR Committee Members

CSR Committee and CSR Management System

Implementing Departments

CSR Managers(Plants, Engineering Departments, Research &Development, Sales, Head Office, Subsidiaries)

Persons incharge of CSR

Subcommittee for designated topics(as required)
Please visit the website for details.
http://www.ntnglobal.com/en/ecology/management.html

39

NTN Report 2017

*1. Inclusion status as of the end of June 2017
*2. The incorporation of NTN Corporation into the MSCI index and the use of the MSCI
logo, trademark, service mark or index name are not indications of sponsorship,
recommendation or promotion of NTN Corporation by MSCI or its affiliates. The MSCI
Index is the exclusive property of MSCI. The names and logos of MSCI and the MSCI
Index are trademarks or service marks of MSCI or its affiliates.

Going forward, we will continue to reflect the opinions ofexternal stakeholders in Stakeholder Dialog and the likeregarding materiality, which also corresponds to the Sustainable
Development Goals.

For Stakeholder Dialog, please see PP. 35–36.
For the Non-financial Information, please see PP. 107–108.

Promoting CSR initiatives across the entire NTN GroupFeatureWe convene our CSR Global Meeting with the goal of promoting
CSR initiatives across the entire Group through personnel interaction
and the global exchange of information.
At the first meeting, we built the foundation on which we arepromoting CSR initiatives globally; at the second meeting, we further
strengthened our horizontal links across national borders.
This, our third meeting, brought together the Five
Overseas Offices of the General Manager Internal Control
Section (details on p. 41), outside director, corporate auditors,
CSR Headquarters, and the Internal Audit Department toparticipate in discussion of issues under the slogan, “StepTogether for Transformation.” While considering the actual

CSR Global Meeting

89%

Awareness rate ofCorporate Philosophy
among employees

87%

NTN Report 201740

Corporate Information

Activity to widely spreading the corporate philosophy

The Source of Value Creation

Under “Our Vision” — the company’s long-term vision — our goal
is to establish “a company where its corporate philosophy isunderstood by all employees around the world and where all
employees think and act for themselves.” We intend to forge ahead
with initiatives to raise awareness of our corporate philosophy.
Widely spreading the corporate philosophy can beconsidered to follow the three steps outlined below, which weare implementing through appropriate measures.
Step 1: Make employees aware of the existence of thecorporate philosophy and its expressions.
Step 2: Obtain employees’ sympathy and understanding forthe contents of the corporate philosophy.
Step 3: Ensure each employee practices the tenets of thecorporate philosophy through his or her own workand establishes a system to ensure continued
implementation.
In the preceding term, we created posters and pocket
cards displaying our corporate philosophy in 13 languages.
These were distributed to domestic and overseas subsidiaries inan effort to raise awareness. In this term, we conducted thesurvey questionnaire on penetration of corporate philosophy inorder to identify the state of recognition and understanding of
our corporate philosophy. The results revealed an employee
level of awareness of 87%. Therefore, we focused on Step 2
during the year; specifically, in addition to promoting further
interpretation of the current corporate philosophy and formulating our corporate philosophy action policy, we implemented
various measures that included a review of the framework of
our corporate philosophy.
As we continue with measures to obtain employees’
sympathy andunderstanding, we areconsidering introducing
a corporate award for
employee initiatives
linked to our corporate
philosophy with thegoal of achieving“Our Vision.”

Review of Operations

For Widely Spreading the Corporate Philosophy
Response rate tosurvey questionnaire
on penetrations ofCorporate Philosophy

NTN’s Vision and Strategy

Convening ofAnnual CSR Global Meetingcircumstances and characteristics of each region, participants
were able to promote global CSR initiatives by engaging inongoing discussions while reviewing policies on risk management,compliance promotion, internal controls, and other issues byregion and by country.
We intend to strengthen the management foundation
by reflecting the contents of discussions and reinforcing
our global structure such as the establishment of rules as wellas in-house education and awareness-raising.

About the Company

Strengthen the Management Foundation

Corporate GovernanceInternal Control
Philosophy and Implementation System

In line with the basic framework for internal control as
outlined in “Standards and Practice Standards forManagement Assessments and Audits Concerning
Internal Control Over Financial Reporting (Council
Opinions),” published by the Business Accounting
Council, we have established the “Internal Control
Policy.” Based on this policy, we have made designingand implementing an internal control system one of thepriorities of our risk management and compliance.
The Internal Audit Department takes the lead oninternal audits and has been established as anindependent auditing organization to audit businessexecution throughout the NTN Group.
In April 2014, we established our CSR Headquarters, which comprises the CSR Department, Legal
Department and Fair Trade Department in an effort tostrengthen our Group-wide system to promote compliance and social responsibility. The CSR Department
handles mainly risk management, while the Legal
Department oversees compliance and the Fair Trade
Department ensures compliance with the Antimonopoly
Act. All three departments work closely to implement
various policies. Meanwhile, we established the “Officeof the General Manager” at each of our various regions
outside Japan to monitor operations. We thenestablished the “Internal Control Section” in each ofthese offices that collaborates with the Internal Audit
Department and CSR Headquarters, implementing
policies to suit the particular circumstances andcharacteristics of each region and country.

Collaborating System with Internal Control Sections

Internal Control Section,
Office of General Manager,
Europe & Africa Region

Internal Audit
Department

Divisions

CSR
Headquarters

Subsidiaries

Subsidiaries

India
Internal Control Section,
Office of General Manager,
India & West Asia Region
Subsidiaries

ASEAN
Internal Control Section,
Office of General Manager,
ASEAN & Oceania Region

Internal Control Section,
Office of General Manager,
Americas Regionofcompanies%

Since the end of the preceding fiscal year, we have included
one additional subsidiary in the assessment for internal
controls, thus expanding coverage for Company-level internal
controls to 49 companies inside and outside Japan, including
our head office. The sales of these 49 companies account for
97.7% of the total sales of NTN and its subsidiaries before
elimination for financial consolidation. This accords with
Internal Control Guidelines stipulating “a coverage ratio of the
top 95% of sales before elimination of consolidation” and evenexceeds the ratio. Moreover, we implemented assessments of
the internal controls of the business processes of 10 of the 49
companies that represent significant business units.
In addition, the Internal Audit Department conducted
audits of the operations of subsidiaries in the ASEAN region
and in South Korea in order to eliminate local risks of fraud andviolations of laws and regulations. As a more wide-ranging
initiative encompassing not only our subsidiaries in ASEAN andSouth Korea but also more than 1,500 employees at 46 othercompanies inside and outside Japan, we conducted a survey ofthe stance of each company’s president regarding compliance.
In so doing, we have quantified the culture and environmentthat can contribute to fraud or other violations at a company.

Moreover, the 3rd CSR Global Meeting was held with theInternal Audit Department, the CSR Headquarters, and the Five
International Offices of the General Manager Internal Control
Section. We exchanged information on audits outside Japanto strengthen the internal controls of the entire Group.

Internal Control Section,
Office of General Manager,
China Region
Subsidiaries

Please visit the website for details.
http://www.ntnglobal.com/en/ecology/internalcontrol.html

NTN Report 2017

Sales base rate
before eliminationof consolidation

49 63
97.7

and on various CSR initiatives, discussed issues, and took steps
China

Subsidiaries

41

Internal control
assessment bases

the Internal Audit Department.
North America

Subsidiaries

Information Exchange
Human Resources
Interaction

Strengthening Internal Controls Inside and Outside Japan

This information is also used for internal audits conducted by

Japan
Europe/South America

Main Initiatives

For details of the CSR Global Meeting, please see P. 40.

Message from Outside Directors — Toward Sustainable Improvement of Corporate Value —We interviewed our outside directors for opinions on the current state of corporate
governance and future issues.

Akira Wada
Outside Director

June 2005: Managing Director of Hitachi Zosen Corporation
June 2006: Standing Corporate Auditor of NICHIZO TECH INC.
June 2011: Outside Director of NTN (Current post)

ompared with the situation when I was first appointed

inspired to work with them. In addition to reviewing measures thatas an outside director, the discussions of the Board ofwill enable NTN to do so, the company must develop and extend

Directors are clearly becoming more vigorous. NTN received a

the NTN brand with a global perspective. When I attend meetingscease and desist order and surcharge payment order in 2013of the Board of Directors, I am always aware of whether theon suspicion of having violated the Antimonopoly Act, but I

discussion is progressing beyond a limited in-house perspective.

feel that all company employees are working hard and in goodI also express opinions on matters recognized as issues that willfaith to build a corporate governance system that ensures such

improve brand value.
Furthermore, NTN should pursue not only its own interests

incidents are never repeated.

but also aim to become a company that seeks greater sustainableachieve further growth in anticipation of the next 100 years, it isvalue for all stakeholders. In order to form such a corporate image,essential that NTN pursues global development with greater

I will continue to submit various proposals in the interests ofcommitment than ever before. To that end, the company’s greatest

ensuring that management’s judgment contributes to transparency

challenge is to hire global human resources so that people are

and impartiality.

Review of Operations

Establishing a management system for a global company
can thrive in the international society
Outside Director

June 2005: Executive Officer of Mitsubishi Chemical Corporation
April 2014: Deputy CEO and Executive Officer of Mitsubishi
Chemical Holdings Corporation
June 2016: Outside Director of NTN (Current post)

The Source of Value CreationO

governance will continue to evolve. I have been engaged inoutside director. Outside directors can speak positivelytransforming its corporate mindset and corporate culture

while also fostering active discussion in the Board of Directors.

while contributing to the emergence of a company that is

In addition to attending the Audit & Supervisory Board, I visit

useful to society.

the various workplaces where NTN’s employees are engaged,

I hope, therefore, to take full advantage of my experience andwhich offers me many opportunities to obtain information andfully express my opinion so that NTN’s management system formake recommendations. Consequently, I have never felt thata global company can thrive in the international society.
NTN is currently working on various initiatives targeting

NTN established its Compensation Advisory Committee in“NTN 100;” moreover, developing business in new segments

June 2016, which demonstrates NTN’s attitude that it must remain

remains an important strategy. Creating a new business is“accountable” and maintain adequate “management transparency”

never easy, but I trust that the stated management targets

in the best interests of its shareholders and investors.

will be achieved by instituting a management system suitable

At the same time, I believe that, in order to continue
further growth and become a truly global company, corporate

for such a global enterprise and by sharing values of NTN
employees globally.

NTN Report 201742

Corporate Information

ne year has passed since I was first appointed as an

I have lacked information.

FeatureNTN celebrates its centennial in March 2018, but in order toNoboru Tsuda

NTN’s Vision and Strategy

C

About the Company

The need to develop and extend
the NTN brand with a global perspective

Corporate GovernanceRisk Management
Philosophy and Implementation System

Main Initiatives

We have developed the “Risk Management Policy” andestablished “Risk Management Rules” that set forth
the structure and standards to follow in the event ofan emergency. We promote risk management in orderto reduce undesirable outcomes occurring in thecompany by identifying risks or to prevent them fromoccurring. We established the Risk Management
Committee as an advisory body for managing risks.
This committee convenes twice a year. Beginning withthe current fiscal year under review, we are establishing“NTN Group Global Risk (Global Risks)” and promoting
Global Risk Management under a new structure.
Moreover, we are advancing Business Continuity
Planning (BCP) and Business Continuity Management(BCM) by continuously striving to increase ourabilities to respond to risks and recover from them sothat, even if disasters and other events that could
disrupt business continuity should occur, we canensure safety and prevent the interruption of crucial
work or resume such work as soon as possible.

Strengthening and Restructuring the Global Risk
Management Structure

Global Risk Management Structure

Priority management risks were set by the Risk Management Committee based on the opinions of officers and division
heads, but comprehensive management of the Global Risk
facing the entire Group is considered necessary. We haveidentified nine risks with regional commonality under theheading of “Global Risks” (diagram at left).
By structuring our Global Risk Management Database forthe purpose of managing global risks and obtaining risk
management reports not only from business sites and affiliatedcompanies in Japan but also from subsidiary companies
outside Japan, we can grasp the situation our entire Groupfaces as we proceed.
From the viewpoint of overall regional control, on theother hand, it is also necessary to clarify the roles of each
district and each business headquarters (departments incharge) as well as the head office (promoting divisions) and to
manage risks unique to specific areas. In addressing thesechallenges, we will promote the following initiatives in thenext fiscal year.

Board of Directors

Risk Management Secretariat

Business Strategy Committee
Risk Management Committee
Promoting
Divisions

Departmentsin charge

Promoting Divisions
Departments in charge

Subsidiaries

1: Leakage of confidential information
2: Computer viruses and cyber terrorism
Global Risks

3: Violation of Antimonopoly Act
4: Natural disasters
5: Fires and explosions
6: Human rights issues
7: Industrial accidents
8: Product quality complaint
9: Violation of bribery-related laws
1: Vague management policies
Individual Risks

2: Failure of new businesses and capital investments
3: Failure of corporate mergers and acquisitions
4: Insider trading
5: Accidents occurring during maintenance andrelocation of capital investments
128: Inadequate response to customers

Please visit the website for details.
http://www.ntnglobal.com/en/ecology/riskmanagement.html

43

NTN Report 2017

SloganRisk Management is our Mission
With the Risk Management Committee, we have changed theManagement Risk we had identified as our conventional
priority, replacing it with “Global Risks” as the priority risk that
our entire Group must contend with. To implement thischange, we set forth our new Management Policy and adopted
a new slogan.
Global Risk Management Policy
The NTN Group will proactively implement prevention,
crisis-response, and recovery measures and will strengthen
its foundation for the next 100 years.

SloganRisk Management is our Mission

1. Fully implementing the Global Risk Management System
2. Strengthening governance related to risk management
3. Improving the functions of the Global Risk Management
Database and establishing a mechanism for effective utilization

About the Company

Continuous promotion of BCP/BCM
Strengthening the internal promotion system

Establishment and Convening of the
BCP/BCM Subcommittee

FeatureIn order to strengthen the internal structure to promote BCP/BCM,
we established the BCP/BCM Subcommittee comprising the head
office Promotion Departments under the Risk Management
Committee. This Subcommittee convenes periodic meetings andshares information on its progress. In order to establish the BCM
system, we began restructuring our BCP in our major business sites
in Japan in December 2016. Regarding BCP guidelines anddocuments that have already been formulated, we are making
revisions to the content to ensure conformity with the status quo.

NTN’s Vision and Strategy

We are also implementing measures to correspond to therisk characteristics of each region so as to eliminate the risks
or prepare for their occurrence. For example, in Japan we
conducted an earthquake drill and a drill for emergency releaseof a poisonous substance; outside Japan, we conducted a
tornado evacuation drill.

Review of Operations

Tornado evacuation drill (NTN-BOWER CORP.)

Business Continuity Planning at a major business site
The Source of Value Creation

Promoting Risk Management throughout Our Group
Voice

We

Corporate Information

are working to strengthen our risk management system as we build the foundation for our next
100 years. Among our priorities is the urgent need to implement management of Global Risks.
We are focused on identifying the risks faced by our Group on a global scale and are working closely withsubsidiary companies both inside and outside Japan to ensure prompt countermeasures, all the whileworking closely as the harmonious group.
As one initiative related to BCP/BCM, we established the new “BCP/BCM Subcommittee” tostrengthen our internal implementation system. As we expand BCP into the future, we will gradually
expand the number of business sites subject to implementation and strive to ensure supply stability forour customers through early recovery following a disaster.

Keiji Ohashi
Managing Director
Chief Management Officer in charge of Risk Management

NTN Report 201744

Corporate GovernanceCompliance
Philosophy and Implementation System

Main Initiatives

At NTN, we consider the need to maintain stringent
compliance as one of the most important issues ourcompany is facing. Not merely content with observing
the various laws and regulations and internal rules,
we also define compliance as adhering to widely heldsocial norms; we are therefore instituting a system to
implement global compliance.
In addition to having established rules applicable
to compliance promotion activities in April 2015,
we established the Compliance Committee and haveheld it periodically. Among the various importantmanagement risks investigated and identified by the
Risk Management Committee, this committee handles
compliance risks linked to potential infringement oflaws and regulations. The members of the committee
coordinate with domestic subsidiary compliancesupervisors and, internationally, with the respective
Internal Control Sections at each of the Five Overseas
Offices of the General Manager. After relevant prioritization, they design and implement policies for risk
reduction and report the details of their activities andthe status of implementation to the Board of Directors.
Similarly, we are striving to minimize compliancerisks by instituting Helpline, a whistle-blowing system.

Compliance Committee

Compliance Promotion Activity Structure

Since 2016

Board of Directors

Compliance Committee

Compliance promotion
activities supervisorsof NTN and domestic
subsidiaries

Internal Control Section
at each of the Five
Overseas Offices of theGeneral Manager

Compliance divisions at
our overseas subsidiaries

Executives and employees
at NTN and domestic
subsidiaries

Executives and employees
at our overseas
subsidiaries

Annual number of meetings

4

The Compliance Committee convenes four times a year withthe attendance of the Director in charge of the Legal Department and the corporate auditors. The Committee is focused on
enforcing and strengthening compliance.
Regarding bribery prevention, we enforced the China
Regional version and the Japan version of the Anti-Bribery
Rules, and at the same time we are also working on promoting
audit activities based on these rules. Outside the China Region
and Japan, we are also promoting the establishment and introduction of Corruption Prevention Regulations in accordance with thestipulations of each country’s regulations.
In relation to the prevention of fraudulent accounting,
we have formulated and implemented a variety of audit
activities. As for prevention of labor law violations, we haveenacted new rules for time management and introduced
appropriate systems.

Compliance Training & Awareness-raising Activity“Compliance Day” Established
In 2016, we adopted July 26 as “Compliance Day” in order tocreate an opportunity for all to consider anew the importanceof compliance. Every year on that day, the president sends a
message to all employees to remind them that the NTN Groupis committed to ensuring the issue of compliance remains at
the forefront.
In relation to training activities, we conducted 48 types oftraining in the current term such as rank-based training, trainingby business area, and training on specific themes as well as grouptraining for supervisors of compliance promotion activities.
Furthermore, in order toshare information
related to compliancewithin our corporategroup, we began tocompile and roll out“NTN’s Compliance,” ourWorkshop for supervisors of compliancepromotion activities

45

NTN Report 2017

Domestic and International Initiatives

Operation of the Helpline andAwareness-raising Activities

Chief Management
Officer

Chief Management
Officer

Director in charge ofLegal Department

Director in charge ofLegal Department

Compliance
Committee

Helpline
Management
Department
Legal Department

Internal Helpline

Chief Management
OfficerPresident

Fair Trade
Monitoring
Committee

FeatureExternal Helpline

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

Please visit the website for details.
http://www.ntnglobal.com/en/ecology/compliance.html“Compliance Day” (July 26), we distributed to employees inJapan the “Antimonopoly Compliance Booklet” and strengthened
awareness of compliance with the Antimonopoly Act. This alsopresented an opportunity to reconfirm the importance ofcompliance through the president’s message.
Outside Japan, we cooperate with the Internal Control Section in each region to develop systems for training
and advanced applications, as well as self-audits organizedby each region, and we are redesigning the system toensure compliance with the relevant competition laws ineach region.
The NTN Group will use these various systems to
conduct continuous education and awareness-raising activities
that strengthen overall control over our compliance.

NTN Report 2017

46

Corporate Information

To ensure compliance with the Antimonopoly Act and the
Subcontracting Act, the “Fair Trade Promoting Department”
undertakes most activities under the supervision of the “Fair
Trade Monitoring Committee” with the president as chairman
under the control of the Board of Directors.
The Fair Trade Promoting Department conducts internal
training, e-learning, and self-audits related to compliancewith the Antimonopoly Act and mandatory applications
submitted in advance to prevent and monitor contact withcompetitor companies. This system allows the overall stateof contact with competitor companies to be monitored.
Through regular audits by the Internal Audit Department,
we confirm the effectiveness of initiatives targeting compliance with the Antimonopoly Act. Prior to enactment of

The Source of Value Creation

Strengthening of systems to ensure compliancewith the Antimonopoly Act

Review of Operations

In Japan, we introduced an internal Helpline as well as anexternal Helpline related to compliance and we have been
operating them. To complement these Helplines, we haveprovided a Helpdesk linked directly to the Fair Trade Promoting
Department that is intended to address competition laws
(the Antimonopoly Act and Subcontract Act). Regarding the
Helplines and the Helpdesk, we are publicizing them andraising awareness through the introduction of various typesof compliance training and by listing information in CSR
guidebooks and on the intranet in order to encourage theemployees to make use of them when needed.

Outside Japan, we are seeking to accommodate theneeds and circumstances of each region by establishing aseries of whistle-blowing systems.

NTN’s Vision and Strategy

Helpline (Whistle-blowing system)

About the Company

compliance database. Also, we conduct an annual complianceawareness survey and are using it to identify themes to beaddressed as we expand our compliance promotion activities
for the next term.

Officers (As of June 23, 2017)

1

2

4

5

6

7

8

9

11

12

Directors

3

10

13

Outside Directors

47

NTN Report 201714

1

Hiroshi Ohkubo

Directors

Managing Director
Research, Engineering
Quality Assuarance Headquarters
Americas Region
He has operational experience in areas such as
the Research Division, Engineering Division andBusiness Division for the automotive market
and broad knowledge based on theseachievements.

4

Keiji Ohashi

He has operational experience in areas such as
the Finance Division and the General Affairs
Division and broad knowledge based on theseachievements.

He has operational experience in areas such as
Divisions for the automotive market andOverseas Divisions and broad knowledge
based on these achievements.

11

Director
Corporate General Manager,
Industrial Business Headquarters
Composite Material Product Division8

Hidefumi Tsuji

9

Takehiko Umemoto

Director
Production
Procurement, Logistics Department

Director
Quality Assuarance Headquarters
General Manager, EV Module Division

He has operational experience in areas such as
the Production Division and Overseas Divisions
and broad knowledge based on theseachievements.

He has operational experience in areas suchas Business Divisions for the industrial
machinery market and technical divisions
and broad knowledge based on theseachievements.

Eiichi Ukai

12

Director
Aftermarket Business HeadquartersNTN KOREA CO., LTD.
ASEAN & Oceania,
India & West Asia Region
He has operational experience in areas such as
Quality Assurance Division and Overseas
Divisions and broad knowledge based on theseachievements.

Akira Wada

13

Noboru Tsuda

14

Outside Director

Outside Director

He has broad knowledge based on extensive
experience in the management of othercompanies. In the future, by securing validity
and legality of management throughsupervision of management of the Company
from an independent standpoint andreceiving appropriate advice and suggestions
utilizing this experience and knowledge,
etc., the Company aims to strengthen
management decision-making functions in
the Board of Directors.

He has broad knowledge based on extensive
experience in the management of othercompanies. In the future, by securing validity
and legality of management throughsupervision of management of the Company
from an independent standpoint andreceiving appropriate advice andsuggestions utilizing this experience andknowledge, etc., the Company aims tostrengthen management decision-making
functions in the Board of Directors.

NTN Report 2017

Corporate Information

Outside Directors

He has operational experience in areas suchas the Cost Planning Division and Overseas
Divisions and broad knowledge based onthese achievements.

The Source of Value Creation

He has operational experience in areas such as
Business Divisions for the automotive market
and Business Divisions for the industrial
machinery market and broad knowledge
based on these achievements.

Managing Director
Human Resources
Cost Planning Department
China Region

Review of Operations

He has operational experience in areas such as
the Human Resources Division and the
Corporate Strategy Division and broad
knowledge based on these achievements.

Kazuki Kawashima

6

Itsuji Goto

Feature7

He has operational experience in areas such as
the Legal Division and broad knowledge basedon these achievements.

Director
Corporate General Manager,
Corporate Strategy Headquarters

5

Hideaki Miyazawa
Managing Director
Corporate General Manager,
Automotive Business Headquarters
Europe & Africa Region
Electric Module Products Division
EV Module Division

Director
Corporate General Manager,
CSR Headquarters
Internal Audit Department

10

He has operational experience in areas such as
the Production Division and the Human
Resources Division and broad knowledge basedon these achievements.

Managing Director
Corporate General Manager,
Finance Headquarters
General Affairs, Environmental
Management Department
CSR Headquarters

Hiroshi Nakano

Toshinori Shiratori

Executive Vice President
Representative Director
Green Energy Products Division
Human Resources
Project Director, Driveshaft Business
Strengthening Project

NTN’s Vision and Strategy

3

Yoshinori Terasaka

About the Company

President Representative Director
With operational experience in areas such as
the Finance Division and Overseas Divisions andbroad knowledge based onthese achievements, he was selected to aim forthe achievement of the Mediumterm
Management Plan NTN 100 and the sustainablegrowth of corporate value.

2

Hironori Inoue

48

Audit & Supervisory
Executive Officers
Board Members

Kouji Kawahara
Standing Audit & Supervisory
Board Member(Outside)

Yusuke Iyama

Tadao Kagono

Ryo KawakamiStanding Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member(Outside)(Outside)

Natsuhiko Mori

Tetsuya Sogo

Isao Ozako

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Isao Koiwai

Koji Kametaka

Masaki Egami

Takayuki Matsuo

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Executive Officer

Etsu Harima

Pete Eich

Makoto Okasaka

Alain Chauvin

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Eiichi Nakamizo

Kazuki Hagihara

Katsuaki Miyake

Koji Ishikawa

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Kenji Nono

Satoshi Ueda

Masaaki Yamamoto

Herve Brelaud

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Ikuo Watanabe

Masayuki Nishiguchi

Masayuki Kaimi

Shigefumi Komori

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Takashi Fujii

Nobuyoshi Ozawa

Executive Officer

Executive Officer

Executive Officers

Production Strategy Department
Deputy Project Director and Project
Leader, Driveshaft Business
Strengthening Project

Deputy Corporate General Manager,
Industrial Business Headquarters

Corporate General Manager,
Aftermarket Business Headquarters

General Manager,
Human Resources Department
General Affairs, Environmental
Management Department
Global Human Resources Development
Department

Deputy Corporate General Manager,
Automotive Business Headquarters
General Manager,
Business Planning Department

Corporate General Manager,
Quality Assurance Headquarters

49

NTN Report 2017

Corporate General Manager,
New Product and Business Strategic
Planning Headquarters
General Manager, Composite Material
Product Division
Green Energy Products Division

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

Director and President,
NTN Bearing Corp. of America

Deputy General Manager,
Americas Region
Director and Vice Chairman,
NTN Bearing Corp. of America

Deputy Corporate General Manager,
Industrial Business Headquarters
General Manager, Kuwana Works

Deputy Corporate General Manager,
Aftermarket Business Headquarters

General Manager,
ASEAN & Oceania Region
General Manager, India & West Asia Region

General Manager, Americas Region
President, NTN USA Corp.
Director and Chairman,
NTN Bearing Corp. of America

Research
General Manager, New ProductDevelopment R&D Center

Deputy Corporate General Manager,
Automotive Business Headquarters

Deputy Corporate General Manager,
Automotive Business Headquarters
General Manager, Iwata Works

Deputy General Manager, China Region
Director, NTN (China) Investment Corp.

General Manager,
Production Strategy Department

General Manager, China Region
President, NTN (China) Investment Corp.
President, Guangzhou NTN-Yulon
Drivetrain Co., Ltd.

Deputy Corporate General Manager,
Corporate Strategy Headquarters

General Manager, Europe & Africa Region
President, NTN-SNR ROULEMENTS

General Manager,
Green Energy Products Division

Deputy General Manager,
Europe & Africa Region
Vice President, NTN-SNR ROULEMENTS

Deputy Corporate General Manager,
Industrial Business Headquarters
General Manager,
Business Planning Department

About the Company
NTN’s Vision and Strategy

Business Operations Utilizing
Our Six Capital Assets

P. 51

Manufacturing
CapitalP. 53

Human Capital

P. 55

Social and
Relationship Capital

P. 59

Natural Capital

P. 63

Financial Capital

P. 73

FeatureIntellectual Capital

Review of Operations
The Source of Value Creation
Corporate Information

NTN Report 201750

Intellectual CapitalAt the NTN Group, we are aggressively strengthening our core businesses as we continue
to develop new ones. Using our intellectual capital to our advantage, we recognize businessdevelopment as an essential aspect of our operations.
Philosophy and Implementation System

Utilizing core technologies that include tribology,
material/heat treatment, precision processing,
precision measurement, rotation control, precision
positioning technology and analysis, we are developing
technologies that meet market needs for long service
life, low weight, compact design and low friction. We arealso commercializing products in new areas.
In order to support these business operations andrespond to the growth of global sales, we continue tocreate a globalized R&D system. In addition, we areconducting advanced technological research in Japan
with the collaboration of industry, academia andgovernment. Moreover, in Japan, Europe, the Americas,
China and other regions, we share databases containing data on design, testing and trial production as well
as data on production technology and customer
projects in order to shorten our lead time for customers.
We have the Patent Management Rule as well as the
Patent Reward Rule in place to reward our employees fortheir inventions. 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 toencourage our employees in their creative efforts at
developing new inventions.

Main Initiatives

The NTN Group’s Competitive Advantage:
Technical Capabilities to Develop Future Technologies“CHO” MONODZUKURI Innovative Parts and Components Award

Recipient of the Environmental
Components Award
By promoting the development of a series of electronic module
products, we are contributing to increased automotive fueleconomy and greater ride comfort as well as accelerated developmentof next-generation vehicles. In addition, our Low-Torque Seal Ringfor automobile transmissions was awarded the Environmental
Components Award of the CHO MONODZUKURI Innovative
Parts and Components Awards from Nikkan Kogyo Shimbun,
Ltd. in recognition of this component’s leading contribution toincreased fuel economy. We are also promoting the developmentof products that employ renewable energy as well as thecommercialization of the robotics field and service solutions.
Through these efforts, we are using ourtechnological expertise to develop futuretechnologies and nurture the growth of ourbusiness in the direction of environmental
preservation and renewable energy as we
contribute to the strengthening of NTN’scompetitive advantage.

Global Four-region R&D system
Wind
turbinesJapan
New ProductDevelopment
R&D Center

Advanced
Technology
R&D Center
Production Engineering
R&D Center

EuropeRolling
stock

Design data
Testing data/Trial production data
Production technology data
Customer information
Etc.

Construction
machinery

Industrial TechnicalCenterElectric
vehiclesCreating theTechnologies of the FutureSpacerockets,
artificial
satellites
AircraftPreservation of the global environment,
new energy
Longer working life
(high reliability)

Ultra-high speed &specialenvironments

More lightweight &more compact

Lower friction(lower torque)

Medicalequipment

Precisionequipment

Customer needs

Americas

Machinetools

Automobiles

Share database information“Elemental technologies,” “Design and development,”“Production technologies,” “Assessment technologies,”“Intellectual property”

NTN Automotive
CenterNTN-SNR R&D
CenterBase technology

China

Tribology
NTN China
Technical Center

Surface finish
Seals

Analysis
Evaluation

51

NTN Report 2017

Monozukuri

LubricantDiagnosis
Materials

Forging
Grinding

Turning
Joining

Powder compression
molding

Injection molding
Surface improving

Commercializing products in a range of new business segments

Number of
Patents Rewarded

191

Compared with thepreceding fiscal year
41% increase

We promoted an intellectual property strategy in line with ourbusiness and R&D strategy to strengthen our competitivenessespecially in key product areas. As a result, 443 employees(cumulative) have been rewarded for compared for 191 patents,
an increase of 41% to the preceding fiscal year. We will continue
to encourage our employees to create inventions to increase thecompetitiveness of our business.

http://www.ntnglobal.com/en/ecology/ic.html

We will use our core technologies to our advantage in order to achieve the technologicaldevelopment that will support us for our next 100 years.

In

Corporate Information

March 2018, NTN commemorates its centennial. Bearings, our main product line, have contributed
significantly to the development of industry by minimizing the energy loss from rotational motion.
We are now pursuing four new business segments under the management priority of “Manage
Growth” as part of our “NTN 100” Medium-term Management Plan. In the energy business and electricvehicle business, we established respective divisions in April 2016 and have successfully commercialized
products that we have developed. In our Robot-related Business and Service, Solution Business, we aredeveloping products that meet market needs and are working toward commercialization.
We will continue to promote R&D through manufacturing technologies and our base technologyof tribology while working to develop and grow new businesses. Our intention is to promote technologicaldevelopment that will support us over the coming 100 years.

The Source of Value Creation

Please visit the website for details.

Review of Operations

Voice

Developing Inventions that Contribute to
Our CompetitivenessFeatureDuring the fiscal year under review, we introduced onto theglobal market two new products from our core businesssegment: Tapered Roller Bearings with an early failure detection function and Ultage Series Small-Size High-Speed Angular
Contact Ball Bearings for Machine Tool Spindles.
In order to further advance commercialization of products
in new business areas as stipulated in the priority policies of
our Medium-term Management Plan “NTN 100,” we establishedthe Green Energy Products Division in our Natural Energy
Business and began selling Hybrid Streetlights offering quiet
operation while allowing highly efficient power generation
utilizing two renewable energy sources, wind and photovoltaic
power. Moreover, at Asaka canal in Fukushima Prefecture in
Japan, we completed
the demonstration
test of “NTN Micro
Hydro Turbines,”
small-scale independent hydropower
generators capableof producing power
NTN Micro Hydro Turbine,a small hydroelectric power plant
when located in

NTN’s Vision and Strategy

Green Energy Products Division andElectric Module Products Division
Establishedexisting in waterways. We continue to advance the earlycommercialization of renewable energy products, including thelaunch of the demonstration test of the small hydro turbine (10kW) at Iwata Eco Park in Iwata, Shizuoka Prefecture in Japan.
Looking to our EV segment, in order to contribute to the early
emergence of next-generation vehicles, we established the“Electric Module Products Division” for development of the Electric
Motor and Actuator Series in addition to the EV Module Division.
In our robotics segment, we are currently developing acompact robot capable of high-precision assembly of ultra-small
parts. This robot uses an angle control device incorporating our
proprietary parallel link mechanism as the core component.

About the Company

Using Our Competitive Advantage to Develop New Products

Natsuhiko Mori
Senior Executive Officer
Corporate General Manager, New Product and Business Strategic Planning Headquarters

NTN Report 201752

Manufacturing Capital
We focus on maintaining and improving product quality while promoting measures tocreate a safe and comfortable workplace environment.

Philosophy and Implementation System

Main Initiatives

Under our “Basic Quality Policy,” which underpins all
our manufacturing, we formulate “Quality Management
Policy” every year and work to improve the quality ofour products. During the fiscal year under review, we
promoted pre-production preparation, acquired quality
information from production bases outside Japan on atimely basis, and accelerated our response times.
We are also strengthening our response to any criticalclaim that might arise anywhere around the globe.

Ensuring Global Quality

Basic Quality Policy
Pursuing right quality to meet functions and specifications
requested by our customers.
Applicable quality
Our quality should immediately respond to the change ofour 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.

Strengthening our quality assurance functions

Quality Assurance Headquarters
EstablishedWe established the Quality Assurance Headquarters in order tominimize the impact on customers from any quality problems
that might arise in the market or around the world. Utilizing
the G-QUICK system, we can direct a prompt response to thedepartments involved regarding any quality issues that mightarise. At the same time, we are implementing a system that canquickly resolve problems by dispatching support staff from the
Quality Assurance Headquarters to the site in question.
We are also seeking to acquire certification of registration
with ISO 9001, the international standard for quality management
systems, and are actively acquiring the ISO/TS 16949 certification
required by auto manufacturers for our production bases insideand outside Japan. The major certifications acquired in the fiscal
year under review are outlined below.
Major Certifications Acquired in Fiscal Year Ended March 31, 2017
ISO 9001 certification acquired at 38 bases
RegionIn order to meet the needs of our customers, weare arranging global production systems and are
endeavoring to provide manufacturing facilities inlocations around the world where demand exists. In
order to ensure stable quality from the very first productoff the line and establish quality assurance systems withunified global standards at our production bases
outside Japan, we dispatch support staff to locations
from mother plants and the Quality Management
Department. They audit the workplaces in question,
investigate past quality problems, and improve
production lines. Moreover, with the goal of rapidly
obtaining quality information from production bases
outside Japan, we have adopted the G-QUICK system tocentrally manage global quality information. In
addition to actively taking steps to acquire quality
management certifications relevant to the items we
produce, we are providing varied training to raise
employee awareness and increase their knowledge
regarding quality.
We are also promoting occupational health andsafety based on the “safety first” approach, as we
recognize this as an indispensable aspect of awelcoming work environment and improved quality.

Japan

Base
ELECTRIC MODULE PRODUCTS DIVISION

ISO/TS 16949 certification acquired at 31 bases
Region

Base

China

Xiangyang NTN-Yulon Drivetrain Co., Ltd.

JapanNTN ENGINEERING PLASTICS CORP.

Japan

NTN ADVANCED MATERIALS CORP. Kanie Plant

Japan

NTN ADVANCED MATERIALS CORP. Kameyama Plant

MexicoNTN MANUFACTURING DE MEXICO, S.A. DE C.V.

53

NTN Report 2017

Date of Certification
Fiscal year ended
March 31, 2017
Fiscal year ending
March 31, 2018 (planned)
Fiscal year ending
March 31, 2018 (planned)
Fiscal year ending
March 31, 2018 (planned)
Fiscal year ending
March 31, 2018 (planned)

In 2016, ISO/TS16949, the international standard for the auto
industry, was revised and renamed “IATF 16949.” For the next fiscal
year, we are preparing to acquire certification with IATF 16949.

Please visit the website for details.
http://www.ntnglobal.com/en/ecology/mc.html

Date of Certification
Fiscal year ending
March 31, 2018 (planned)

IATF standards workshop presented by anoutside lecturer

Quality improvement initiatives

Number ofworkplace
accidents Reduced by

Quality Training and
Quality Month Activity

accidents

Safety inspection in lift operation

Review of Operations

Four manufacturing bases and five subsidiaries that acquired
certification for the Occupational Safety and Health Management System (OSHMS) conducted ongoing activities toward
their goal of zero workplace accidents. Unfortunately, 20
workplace accidents occurred, but this represented a decreaseof six compared with the preceding fiscal year, no doubt as aresult of these safety initiatives.
Although the OSHMS has brought our occupational healthand safety management up to a nominal standard, we believe that itis still insufficient in terms of predicting and responding to hazards
that arise in unexpected circumstances. For this reason, we intend tostrengthen our risk
management efforts
in the future byimplementing risk
prediction activities
for non-routine
operations that arise
suddenly.

FeatureIn addition to the QC Basic Course, QC Management Course
and QC Advanced Course that form our quality training
program, we provide training intended to increase employee
awareness and knowledge of quality issues. In the fiscal year
under review, we also implemented quality education for
managers, who include department heads and presidents ofsubsidiaries. For the coming fiscal year, we intend to enrich thetraining materials we use andfocus on additional quality
training initiatives.
In November each year, wemark “Quality Month” with activities
that are intended to improve
quality throughout our group.
We are raising employee awarenessof the importance of quality
through measures that include ourQuality Action Declaration and thepresentation of quality lectures forall employees.
Poster for our Quality Month in6

Compared with thepreceding fiscal year
21% decrease

NTN’s Vision and Strategy

Our Approach to Occupational Safety and Health

About the Company

Cultivating Strong Quality-minded Personnel

fiscal 2016
Please visit the website for details.
http://www.ntnglobal.com/en/ecology/mc.html
The Source of Value Creation

Improving the NTN Brand with the Goal of Delivering Quality that Satisfies Our Customers
Voice

In

Corporate Information

terms of quality assurance, our mission is to implement the policies of our Medium-term Management
Plan “NTN 100,” which envisions “a company with a global presence that is appreciated for its highquality.” In other words, customers around the world recognize our company’s quality and capabilities, andthis increases market appreciation of the NTN brand.
In order to meet the demands of the global marketplace, we have established a global production
system and have sought to manufacture our products in locations around the world where demand forthem exists. When launching new production plants or transferring production, it is essential that we
ensure a smooth and seamless transfer of the production system of our mother plants. For that reason,
we are strengthening our pre-production arrangements and are accelerating the acquisition of global
quality information. Through this effort, we are unifying our global quality assurance system.
We will enhance the profile of the globally unique NTN brand as we strive to deliver a level ofquality that truly satisfies our customers.

Takashi Fujii

Executive Officer
Corporate General Manager, Quality Assurance Headquarters

NTN Report 201754

Human Capital
We consider our human resources to be the most important asset driving our future growth.
Toward that end, we are focusing on initiatives to create a workplace environment in which adiverse range of individuals can play active roles and to cultivate global human resources.
Philosophy and Implementation System

Main Initiatives

Diversity

Cultivating Global Human Resources

As a company that has developed its businessaround the globe, we have hired a diverse range of
employees who differ by gender, age, career choice
and work style. We therefore believe it is necessary
to foster a workplace environment characterized byunderstanding and mutual recognition of eachother’s differences so that all our employees candemonstrate their abilities to the full. At the sametime, we work to ensure that all employees cangrow and develop a sense of fulfillment from theirwork, which eventually contributes to the further
development of our company. In order to put these
ideals into effect throughout our Group, the “Diversity
Group” was established in the Global Human Resource
Development Department in March 2015 and is
promoting various initiatives related to diversity.
Moreover, in order to promote greater work-lifebalance, we have built on our Child Care Leave
System by implementing the “Mom-back System,”
which re-employs those who have left the company
for reasons of childbirth and child care. We are alsoplanning to enhance our systems that support ahealthy balance between work and childcare.
We are supporters of four areas in the 10 principles of the United Nations Global Compact, namely,
human rights, labour, the environment, and corruption
prevention. Among these, we position human rights asa priority of our business operations. In addition,
we are working to increase awareness among the NTNGroup regarding two of the associated initiatives,
specifically that “Principle 1: Businesses should
support and respect the protection of internationallyproclaimed human rights;” and “Principle
2: make sure that they are not complicity in humanrights abuses.” Furthermore, as guided by our Human
Resources Department, we are working to introduce asystem that can detect human rights violations and are
improving our monitoring and response throughsystems that include our “Helpline.”
Through these initiatives, we remain focused on
creating a workplace environment in which ourdiverse employees can find success.

Ratio of females
in management
position

NTN
ダイバーシティハンドブック

Dream Workshop, a facility supporting persons
with intellectual disabilities

社 外 秘
NTN INTERNAL USE ONLY

“Diversity Handbook”

55

NTN Report 2017%

Our Group focuses on creating workplace environments thatmakes it easier for our diverse employees to work comfortably.
As part of our initiative to promote capable female employees,
we continued to offer seminars for woman and managementthat we first introduced during the preceding year. As a result,
we have succeeded in increasing the female management
promotion rate by 10% for the fiscal year, compared with 8.5%
in the preceding term.
Regarding the employment of persons with disabilities,
we have established three “Dream Workshops” at Kuwana, Iwata
and Okayama Works. This initiative, implemented in cooperation
with special needs schools, contributes to a work environment inwhich people with intellectual disabilities can fill an importantrole. We have achieved a rate of employment of persons withdisabilities of 2.08% for the current term, with the numericalvalue exceeding the statutory employment rate. We remaincommitted to an ongoing and active recruitment effort.
Moreover, in order to further raise awareness related todiversity, we have introduced “unconscious bias training” fordivision heads in our head office. The objective of this training
is to instill the appropriate level of judgment as well as response
skills for various circumstances by enabling the participants torecognize and control any preconceptions, prejudices, or otherbiases that we tend to acquire unconsciously. This initiative
offered an opportunity for the participants to consider diversity
in their immediate surroundings and confront their own biases
through group discussion of a mock scene in which an incident
involving prejudice caused a workplace disruption. In addition,in an effort to raise awareness of diversity, we distributed our“Diversity Handbook” to all employees.

NTN ダイバーシティハンドブック
発行日 2017 年 3 月 31 日
発行者 NTN 株式会社 グローバル人材育成部
このハンドブックに関する著作権は、すべて発行者であるNTN株式会社に帰属します。
したがって、許可なくその部分または一部を複製・転載し、または改変する等、NTN株式会社の著作権を侵害する行為は、これを禁じます。

10.9

Number of
employees who
took childcare
leave

For employees in Japan

40

Rate of paid
leave utilization(regular
employees)

92%

Introducing Training to Minimize
Employee Harassment

Sign for Iwata Works’ Bear Kids Land

Training seminar on preventing abuses of authority

Review of Operations

In an effort to prevent sexual harassment and other abuses ofauthority, we introduced training on these forms of harassment
for employees who have been promoted to management
positions, those who have recently entered the company, andheads of management departments of subsidiaries in Japan. In
addition, we are promoting initiatives to instill and improveawareness of human rights, including improvements to monitoringfor human rights violations.
Our policy is to continue developing a variety of measuresrelated to human rights in order to share them with our
subsidiaries outside Japan.

FeatureWe prepared for the introduction of a telecommuting system as ameans of enhancing both our child care and nursing care support
systems. First, we introduced telecommuting for employees inmanagement positions in the Osaka and Tokyo regions as well as
employees involved in general office work who are engaged inchild care and nursing care. We intend to identify any issues thatarise and will focus on extending this system with the goal ofachieving full-fledged introduction by April 2018.
We remain dedicated to creating an easy and welcoming
workplace by further enhancing Bear Kids Land, the in-company
daycare center, and clarifying operational issues regarding our
Mom-back System while incorporating system revisions.

NTN’s Vision and Strategy

Instilling and Strengthening Respect for Human Rights

About the Company

Enhancing Work-life Balance

Please visit the website for details.

The NTN GROUP actively promotes “DIVERSITY” —NTN-SNR ROULEMENTS’ efforts—
Voice

We,

Corporate Information

NTN-SNR ROULEMENTS, are committed to create a working environment free from discrimination in which all human rights are respected. We have reaffirmed our commitment tomaintain intergenerational bonds by signing the Generation Contract in December 2016.
Focusing on gender equality, we promote it in all areas of working life (hiring, training, wages, etc.).
Women represent a significant percentage of our employees in all categories as follows: women employees
from 26.8 % (2014) to 27.4% (2016) and women managers 18.5% (2016). In addition, we endeavor to improve
working conditions for older employees by facilitating part-time work through ergonomic measures.
We will continuously put further efforts to hire the people with disabilities and to guarantee equal job,training and career development opportunities for everyone.

The Source of Value Creation

http://www.ntnglobal.com/en/ecology/hc.html

Isabelle PICHARD
Human Resource Relations Department Manager
NTN-SNR ROULEMENTS

NTN Report 201756

Human Capital

Philosophy and Implementation System

Main Initiatives

Improving Business Competitiveness with
Exceptional Human Resources

Global Human Resources Development

International sales account for 72% of total Group sales,
while 66% of our employees are located outside Japan.
In order to achieve further growth going forward,
we are committed to training what we call “globally
focused personnel” who can succeed in markets
beyond their national or regional boundaries. To meetthis indispensable requirement, we have convened our
NTN Technical Skills Competition, which brings together
young and intermediate-level technicians from various
regions, and our Global QC Circle Convention, which isintended to improve safety, quality, and productivity. In
addition, we are promoting a variety of measures suchas introducing the International Challenge Training, theinternational trainee system, and the globalizationinternship system. These initiatives also contribute to
the creation of a mechanism that ensures transmissionof our original technologies and skills from motherplants to our production bases around the world. At thesame time, we are improving our ability to pass on theskills and expertise we have acquired.

Improving our original skills and preserving our
proprietary technologies

Employment and Conditions
We at NTN support the 10 principles related to labour
as set out in the UN Global Compact; moreover, we areworking to uphold the “elimination of all forms of forced
and compulsory labour” while working to ensure the“effective abolition of child labour” with application to all
our subsidiaries in Japan and around the world.
In Japan, in addition to providing training for “theelimination of discrimination in respect of employment
and occupation” and ensuring that “Business should
uphold the freedom of association and the effective
recognition of the right to collective bargaining” throughthe solicitation of regular employees by labour unions,
we are devising initiatives such as labour-management
consultations through talks with employees and aremaintaining good labour relations.
Regarding our human resources system, we areadvancing the implementation of systems to accommodate recent changes in the employment situation, suchas devising ways of working and increasing the diversityof our personnel. We are also developing a system thatmakes it possible to train employees with the capability
to lead our business in the global marketplace.

57

NTN Report 2017

NTN Technical Skills Competition
At the NTN Technical Skills Competition, young and intermediatelevel technicians around the world — the coming generations
who will be responsible for our company’s future — compete to
demonstrate the superiority of their skills while continuallyplanning to upgrade their expertise and preserve the company’s
proprietary expertise for future generations.
At the competition, we held six events that included
heat treatment skills and machine maintenance. Following
the overall evaluation, we awarded Gold, Silver and Bronze
prizes as well as a Spirit Award. This competition has been
held annually since 2014, and a review of the events in thiscompetition revealed an increase in participation, including
more females; moreover, compared with last year’s competition,
the participants have more than doubled in number. The
competition is clearly fulfilling its role as a venue for international exchange.

Competition under way at the NTN Technical Skills Competition (top)Group photo of participantsAbout the Company

Global QC Circle Convention

International Trainee Systems

Held annually since 2011, the Global QC Circle Convention

In addition to making it possible for employees to plan theirenables QC Circles — representing various areas of the world

future careers with a broader perspective, we have the internationalthat are actively involved in quality improvement — to introduce

trainee system and the globalization internship system with theand share the results of their quality improvement challenges how

goal of training personnel who can succeed globally. During theeffectively improved. Through this effort, we are devising ways tofiscal year under review, we actively promoted various initiatives

improve safety, quality and productivity around the world.

through this system.

Presentation under way at the Global QC Circle Convention

Gathering as part of the International Trainee System

FeatureDesigning careers with a broader perspective

NTN’s Vision and Strategy

Improving safety, quality and productivity

The goal of International Challenge Training is to provide earlytraining for Japanese personnel to enable them to be active inbusiness globally. First introduced in 2015, this initiative
supports the deployment of new graduate employees inlocations outside Japan. After completing training, participants
are involved in a systematic job rotation scheme throughwhich they are transferred to locations outside Japan after
initiative trains effective personnel and enables them to makeuse of their international training experience.

2

As one means of addressing labour issues, the presidents of our
subsidiaries in Japan are brought together at a meeting where
the participants conduct a survey to uncover any instances offorced labour or child labour while monitoring the status of
dialogues with employees. Moreover, focusing on subsidiaries
in Japan, we monitor labour conditions and the status of thehuman resources systems twice a year. By identifying the statusquo, we are able to take steps to address any emerging problems
or issues while providing guidance.
In the future, we plan to extend this initiative toencompass our subsidiaries outside Japan. In our role as theglobal company, we will identify local working conditions andhuman resources systems in order to construct appropriate
systems and mechanisms.
Please visit the website for details.
http://www.ntnglobal.com/en/ecology/hc.html

NTN Report 2017

58

Corporate Informationachieving a track record of five years working in Japan. This

Annual Number of Monitoring of Working Conditions
and the Human Resources System conducted

The Source of Value Creation

International Challenge Training

Review of Operations

Timely training of globally focused personnel

Social and Relationship CapitalIn our business operations, we focus on achieving long-term value creation in order tofurther strengthen the relationship of trust we are building with our various stakeholders.

Philosophy and Implementation System

In order to enhance customer satisfaction at NTN
Group sales bases around the world, we appoint asales person and an engineer to be in charge ofeach of our customers and sales agents. This allows
us to quickly and accurately determine the needs
and problems of each customer and thus offer thebest responses and solutions. At the same time, we
work continually to improve the skills of these sales
people and engineers. In Japan, we implement TQM(Total Quality Management), which reviews weekly
activities through meetings and training events.
TQM develops the skills of sales representatives andencourages them to adopt the perspective of thecustomer before they take action.
With regard to our suppliers, the Procurement
Department at our head office is the main point ofcontact working with production sites according to
our Procurement Guidelines, which have beenformulated with a focus on a global perspective,
fairness and impartiality, and preservation of the
global environment. We carefully select our suppliers
and work to establish relationships of trust withthem. We also formulated the “NTN CSR Procurement
Guidelines” and placed priority on CSR Procurement
and Green Procurement by engaging business
partners who were capable of actively implementing
these CSR initiatives.

Contents of NTN CSR Procurement Guidelines
1

Compliance2

Human rights and labor

3

Environment

4

Quality and safety

5

Information security

6

Business Continuity Management (BCM)

7

Social Contributions

Main Initiatives

Enhancing Customer Satisfaction
Overall Assessment of
Customer Satisfaction Surveys
Excellent30
5

Needs some
improvement%%

http://www.ntnglobal.com/en/ecology/sc.html

59

NTN Report 2017

65
0

Needs much
improvement%%* (As of the year ended March 31, 2017)
We received responses from 97 companies in Japan and abroad.

The NTN Group conducts various types of training at its sales basesin Japan as part of the effort to enhance customer satisfaction.
During the fiscal year under review, we were able to clarify
our strategies and tactics through cross SWOT analysis* and byproviding Customer Strategy Training to verify whether we aretaking a strategic approach from the customer’s perspective.
We are also implementing Change Leadership Training forsales representatives and sales managers in order to develop
personnel who can lead salespeople to improve their bargaining
skills while also taking the lead in reforming awareness andaction. Furthermore, we offer Sales Manager Training aimed at
upgrading the skills of sales managers so that they can comprehensively implement process management. We are also training
sales managers with subordinates so they can train personnel
capable of thinking and acting independently. Both types oftraining have been productive and have achieved positive results.
Going forward, we will focus on developing training methods
that respond to changing customer needs.
* SWOT analysis: The classification of elements of business operations into the four
categories of Strengths, Weaknesses, Opportunities, and Threats. Each category isevaluated and analyzed. Furthermore, strategies and tactics are developed through amethod of combining these elements.

Change Leadership Training
Please visit the website for details.

GoodSupplier Meetings

2/

Number ofcompanies participated57

Responsible Mineral Procurement
Survey response
rate of conflictminerals

100%

Please visit the website for details.
Supplier Meeting

Review of Operations

We confirm that the materials and mineral resources included in
the components used for our products are not associated with“conflict minerals” and there are no adverse effects on society
such as being a fund for armed groups in conflict areas. If adverse
effects are assumed or confirmed, we seek out manufacturingmethods that avoid the purchase of such conflict minerals. During
the next fiscal year, we plan to conduct periodic surveys of our
suppliers regarding conflict minerals.

FeatureWe hold periodic Supplier Meetings for our business partners inorder to clarify changes in our Procurement Policy and provide
notice of anticipated production volumes at our production
bases. We held these meetings twice in the fiscal year underreview. At these events, we sought the cooperation of the 57
participating companies.
At these meetings and on our website, we also request that
our suppliers follow the NTN CSR Procurement Guidelines andGreen Procurement Standards we formulated in April 2016.
Further, in February 2017, we requested that our 293 suppliers
complete a questionnaire on their CSR matters and we requested
in writing that they implement our CSR procurement initiatives.

NTN’s Vision and Strategy

Number ofannual meetings

We also implemented a self-audit for subcontractors for our
22 bases in Japan (21 production bases and 1 research center). In
addition, more severe audits were conducted under the supervisionof our Procurement Department. In the next fiscal year, we will
establish a certification system for the auditors undertaking
self-audits for subcontractors in order to promote the training ofexperts and the establishment of a system through which eachbase will conduct audits on an independent basis.

About the Company

Activating Supply Chain Management

http://www.ntnglobal.com/en/ecology/sc.html

The Source of Value Creation

Strengthening Supply Chain Management According to Our CSR Procurement Guidelines
Voice

We

Corporate Information

continue to maintain our business operations under Procurement Guidelines formulated fromthe viewpoint of a global perspective, fairness and impartiality and preservation of the global
environment. We established the NTN CSR Procurement Guidelines in April 2016 to promote appropriate
activities throughout the supply chain, addressing social issues such as human rights, labor practices,
the environment, prevention of corruption, and the eradication of anti-social forces.
We recognize that it is important to strongly promote Supply Chain Management not only in Japanbut also internationally, as we have a business that operates globally.
Recently, Business Continuity Management has been attracting attention as an important issue.
In response, we have formulated Business Continuity Planning for each manufacturing base. For the next
step, we will focus on deploying this initiative to each of our suppliers.
Through these activities, we are taking steps to raise the satisfaction level of our customers
and stakeholders.

Kunio Kamo

General Manager
Procurement & Logistics Department

NTN Report 201760

Social and Relationship Capital
Our Group’s CSR policy states that, in addition to developing a variety of initiatives
around the world, “We shall make every effort to interact meaningfully with society on
a local level and to engage in activities that contribute to society.”
Environmental preservation

Number of social
contribution activities

556 685

Compared withthe preceding
fiscal year
Increase by 129

6.5%

Social welfare /Health & medicine / Sports

42.6%

Assistance for disaster-stricken areas /Community disaster-prevention andcrime prevention / Others

Expenditure rateby field
Local community activities,
Preservation of historicalsites and traditional culture/ Culture, Art &International exchange

7.8%

Academic & research / Social education

33.0%

10.1%

Participation in the “Table for Two Program”© TABLE FOR TWO

Enjoying a nutritious lunch

Eleven of our business sites are participants in the “Table for
Two Program” operated by TABLE FOR TWO International, anon-profitable organization. A portion of the sales proceedsfrom every purchased “healthy menu” meal targeted for
donations is donated to recipients in the developing world,
where it is used to fund children’s lunches and the like. In
short, this social contribution initiative supports the health ofpeople in developed countries while also contributing food aid
to children in developing countries.

Supporting the renovation of
restrooms and other facilities
NTN Bearing India Private Ltd. has assisted in the renovation of
restrooms and other facilities in a government run school in a village
outside of Chennai, India. After massive flooding in December
2015 damaged the same, we collaborated with a local non-profitableorganization and successfully completed the restoration.

BeforeAfter

Refurbished restrooms

Sponsorship of 24-hour charity marathon

Participants in 24-hour charity marathon

61

NTN Report 2017

Since 2014, NTN Sudamericana, S.A. (located in Panama) has
participated as an official sponsor of a charity marathon
dedicated to raising awareness and support for children
suffering from incurable diseases.

Desk calendars donated insupport of the visually impaired

Donated desk calendars

NTN’s Vision and Strategy

NTN commemorates 30 years of providing
assistance to SOS Children’s Village.

Letter of gratitude for our
30 years of support

FeatureNTN Kugellagerfabrik (Deutschland) G.m.b.H. is proud to havebeen supporting SOS Children’s Village since October 1986.
This is an independent international non-governmental
development organization that focuses on protecting thehuman rights of children. They are committed to motivating
children who are unable to live with their families, helping
them work toward a positive future and develop along with
their communities.

About the Company

NTN Bearing - Thailand Co., Ltd. donated more than 100 deskcalendars provided by employees. These calendars are repurposed
as Braille educational materials for the visually impaired.

Drawings, photos and letters ofappreciation from children

Review of Operations

Contributing to Born Learning Trails

The Source of Value Creation

American NTN Bearing Mfg. Corp. makes regular charitable
donations to a non-profitable organization. The company’s
employees also volunteer to construct “Born Learning Trails”
that are sponsored by this organization. The company also
encourages participations in initiatives that are closely tied tothe public places, such as schools and playgrounds, where thetrail signage (information display) is drawn.
Creating a colorful sign on a Born Learning Trail

Annual Summer Party

Corporate Information

NTN (China) Investment Corp. and Shanghai NTN Corp. collaborate
in holding an annual Summer Party. During 2017, which marks
the tenth year of this event, the companies hosted not only
employees and their families but also staff from facilities forthe persons with disabilities and residents from neighboringareas. More than 3,000 people participated in this event, which
turned into an occasion for all the people to expand their
network of friends and recognize their daily advantages.

Creating a sign board for Summer Party

Please visit the website for details.
http://www.ntnglobal.com/en/ecology/sc.html

NTN Report 201762

Natural Capital
For the NTN Group to ensure continuous and sustainable growth, it is indispensable that we
not only generate profit but also adopt eco initiatives to address global environmental issues.
Toward this end, we aim to reduce the environmental impacts of all our business operations
under our corporate philosophy of “We shall contribute to international society throughcreating new technologies and developing new products.”
In addition to reducing CO2 emissions during our production
operations, the NTN Group is contributing to reduced CO2
emissions during the product usage phase by providing ourcustomers with a variety of efficient bearing products. Moreover, we are contributing to the emergence of a sustainable
society by directly addressing the issue of CO2 emissions
reduction. We are doing so by developing our green energy
business and by making an effort to meet our long-termtargets for CO2 emissions, whose deadline year is fiscal 2025.

Contributing to the emergenceof a sustainable society

NTN is helping to create a“smooth society.”

CO2 reduction initiatives
1. Reductions within
the NTN Group

Long-term target (fiscal 2025)
CO2 emissions
relative to1997 Reduce by

3. Direct reduction through development of green energy business*2

2. Reductions by customers
Customers in automotive
applications. Customers inindustrial machinery applications.
Customers in aftermarket
applications.

28.7%

Upgrading of heat treatment devices,compressors, and other equipment

Various bearing products
and driveshafts

Fuel conversion, LED lighting,heat shielding

NTN Hybrid Street Light
NTN Micro Hydro Turbine
NTN Vertical Axis
Wind Turbine*1More lightweight and morecompact, long-life, high-reliability,
and super-high-speed products

Generation ofrenewable energy
LED lighting*1. Cutaway image reveals inner structure of product.

Voice*2. Please refer to website for details:
http://www.ntnglobal.com/en/products/natural_energy/index.html

Contributing to the emergence of a sustainable society with
reduced CO2 emissions by developing green energy products

H

aving taken advantage of the bearing technology that the company has cultivated over many years, our Green
Energy Products Division has developed and commercialized the NTN Hybrid Street Light, which features an
independent power supply that combines a wind turbine and a photovoltaic panel, as well as the NTN Micro Hydro
Turbine, a small hydroelectric power generator that can function as an independent power supply, generating powersimply by being placed in a flowing waterway. It generates power using wind, water, and sunlight as energy sources
and can be used as a power supply for street lamps or electric fences. Moreover, because it produces almost no noise
when generating power, it can be used in urban or residential areas. What’s more, because it does not need to beconnected to the power grid, it can be used in the event of a blackout caused by a disaster such as an earthquake.
These outstanding products emit absolutely no CO2 and thus directly contribute to the emergence of a sustainable
society through emissions reduction.

Koji Ishikawa
Executive Officer
General Manager, Green Energy Products Division

63

NTN Report 2017

Environmental Policy

Environmental Management System

We have established energy-efficiency and resource-conserving
committees and committees on office environmental measuresin the manufacturing, head office, and sales divisions and arestrengthening our environmental management system at
each workplace.
In the next fiscal year, in accordance with the transition to
the 2015 edition of the ISO 14001 standard, we will revise ourenvironmental policy along with our environmental management system.

Plan of Our Environmental Management System

Maintaining harmony with the global environment is our mostimportant challenge. The NTN Group has identified pollution control
and preservation of our natural capital as priorities of our business
operations. Furthermore, we remain committed to developing
technologies that contribute to the emergence of a sustainable
society in harmony with nature.

Chief Management Officer of Enterprise-wide
Environmental Management[Director in charge of Environmental
Management Department]
Company-wide Environmental Management Committee
Management Manager of Corporate
Environmental Management(General Manager of Environmental
Management Department at Head Office)

Cross Audit Team
Business sites (including Head Office)Chief Management Officer of Environmental
Management of Business Sites(Head of business sites)

Business Site Environmental Management Committee
Chief of Secretariat: Head of Management Department,
General Manager of General Affairs Department in thecase of the Head Office

5. Stringently controlling environmentally harmful substances
The NTN Group will practice green procurement and conduct
stringent management of any environmentally harmful substancesused in our products and processes. We remain focused on adopting
benign substitutes for any highly harmful chemical substances we
use in our operations.

8. Continuously improving our Environmental Management System
The NTN Group will implement and continuously improve ourEnvironmental Management System in order to enhance our environmental performance.

Management Manager of Environment
Management of Business Sites
General Manager ofManagement Department
General Manager of General Affairs
Department at Head Office*
Divisions(Plants, offices, departments, centers, etc.)
Division Heads
Environmental Staff

Energy-efficiency andResource-conservation Committee
Environmentally Hazardous
Substances Management Committee
Pollution Control Staff Committee
Environmental Staff Meeting
Logistics Environmental Committee
Office Environmental Committee

Manufacturing
Business Sites

Head Office,Sales Department(Secretariat)
Environmental Management Section(General Affairs Department in the case of the Head Office)* Frames depicted with dotted lines differ fromthe solid-line frames indicating employees incharge and hands-on employees.

Please refer to the Environmental Data for a list of business sitesthat have acquired ISO 14001 certification.
http://www.ntnglobal.com/en/ecology/sitereport/iso14001.html

NTN Report 2017

64

Corporate Information

7. Maintaining open communication
In implementing this Environmental Policy, the NTN Group will seek toimprove the environmental awareness of all our employees. In addition,
we will widely disseminate information on our environmental initiatives
and actively promote open communication with the general public.

(Officers in charge of General Affairs Department in the caseof the Head Office)On-site Audit Team

4. Utilizing resources sustainably
The NTN Group will strive to reduce waste as well as our inputs ofwater, raw materials, and other resources by remaining focused on
reducing, reusing, and recycling.

6. Conserving biodiversity
In cooperation with local communities, the NTN Group will proactivity
implement forest preservation, biodiversity conservation, and otherenvironmental protection initiatives.

Energy-saving/resource-saving sectional meeting
Environmentally Hazardous Substances Management
Sectional Meeting
Pollution Control Sectional Meeting
Logistics Environment Sectional Meeting

The Source of Value Creation

3. Reducing the environmental impacts of our business operations
The NTN Group remains dedicated to minimizing the environmental
impacts of our emissions of CO2 and restricted substances across all
our business operations. We will endeavor to identify and reduce ourenvironmental impacts in both the upstream and downstream (fromsupplier to customer) branches of our supply chain.

Chief of Secretariat: General Manager of Environmental
Management Department at Head Office

Review of Operations

1. Developing technology that contributes to prevention of
global warming
By developing technologies and innovative products that contribute toenergy efficiency and alternative energy generation worldwide, theNTN Group will contribute to the prevention of global warming.
2. Observance of laws and regulations
The NTN Group will observe all relevant environmental laws, regulations, and ordinances. Moreover, we will proactively take steps tocomply with requests from our customers, local communities, andother stakeholders.

FeatureNTN Environment Policy

NTN’s Vision and Strategy

Our Group formulated the NTN Environmental Policy so that
we can reduce our environmental impact and contribute to
the sustainable development of society.
To implement this policy, we established an enterprisewide Environmental Management Committee that includes
all our companies as well as our subsidiaries in Japan andhave identified corporate environmental targets regarding
CO 2 emissions and waste reduction for all our companies andbusiness sites.

About the Company

In an effort to reduce our environmental impact, our Group has established an Environmental
Management System encompassing the entire Group.

Natural CapitalCompany-wide Environmental Performancefor the Fiscal Year Ended March 31, 201715 of 23 Targets Achieved
For the fiscal year under review, we promoted initiatives andset our targets in accordance with the four policies of the NTN
Environmental Policy. As a result, we succeeded in achieving
our targets for 15 of 23 items.

Our targets for the next fiscal year are CO2 emissions of
654,000 tons/year (282,000 tons/year in Japan; 372,000 tons/year
outside Japan). In addition, we intend to set company-wide
environmental targets according to our revamped NTN
Environmental Policy and Environmental Action Policy.
We will also devise measures to achieve these targets.

Company-wide Environmental Results for the Fiscal Year Ended March 31, 2017
NTN Environmental
PolicyDevelopment andsales of environmentallyfriendly products

Environmental
PurposeDevelopment ofenergy-efficient
products

Prevention of
global warming

Environmental Targets

Reduction of
CO2 emissions

Reduction inenvironmental impact

Raise therecycling rate

Preserve resources

Management andreduction ofenvironmentallyhazardous substances

Compliance withenvironmental laws

Activities to contributeto society and protect
the natural environment

Expansion andimprovement ofenvironmental
management
systems

Protecting biodiversity

Overseas346,000 tons/year or less*

342,000 tons/year

Overseas
Japan
Overseas

Japan
Overseas

Reduction in paper
purchased intensity

Japan

Reduction in useof Styrofoam

Japan

Improvement over the fiscal year
–20.3%
ended March 31, 1998, –21.1%
Improvement over the fiscal year
–10.8%
ended March 31, 2007, –14.0%
99.8% or more

99.9%

98% or more

96.9%

Reduction over the fiscal year
ended March 31, 2011, –0.1%
Reduction over the fiscal year
ended March 31, 2011, –16.0%
Reduction over the fiscal year
ended March 31, 2015, –6.4%
Increase paper consumption by+15.1% over the fiscal year
ended March 31, 2011
In comparison with the fiscal
year ended March 31, 2000,–99% maintained

Manage and reduce PRTR-designated substances
Introduce management that reflects the Act on Rational Use andProper Management of Fluorocarbons
Continue to create measures to prevent leak accidents and carryout improved and full-scale emergency drills(Prevention of water pollution)

NTN Report 2017

–3.1%
–15.3%–5.2%+14.7%–99.7%

Being implemented in eachbusiness site
Being managed in eachbusiness site
Completed at all business sites
Strict management continuing

ISO 14001
certificate

Prepare the AMC Kameyama Plant
for inclusion in the multi-site
ISO 14001 certification.

Audit scheduled for
September 2017

Accommodate
revisions to
ISO 14001

Begin operating the ISO 14001:2015 of theManagement System

Now collecting information atseminars and preparing torevise the management manual

Promote green
procurement

Ensuring the understanding of the revisionof the Green Procurement Standards andthe guidelines for activities to preserve
biodiversity
Clarification of responsibilities for green
procurement in each division
Zero complaints of environmentallyhazardous substances

NTN Kigyo no Mori and other protecting biodiversity activities*1. The CO2 emissions factor of power suppliers is calculated with a fixed coefficient of 0.381.
*2. AMC KAMEYAMA Plant has been included.
*3. NTN-LYC (Luoyang) Bearing Corp. has been included.

65

Being implemented in eachbusiness site
277,000 tons/year3

Continue strict management of poisonous materials
Observance of laws andregulations andimplementation ofthorough environmental
management systems

Preparing to implement

273,000 tons/year or less*1 *2

Reduction in wasteJapangeneration intensity
Reduction inwater consumption
intensity

R&D in progress in engineeringand research divisions

Japan

Japan

Not achieved

Results

Develop environmentally contributing products to meet needsof expanding new energy and greater number of electric cars
Begin assessment of environmental efficiency in new productdevelopment
Promote energy efficiency by using the new energy-efficientbudget framework

Reduction in CO2emissions intensity

Reduce, reuse,
and recycle

Achieved

Revision of Green
Procurement Standard

No complaints from customers
Being implemented invarious regions

Selfevaluation

Company-wide Environmental Targets
for the Fiscal Year Ending March 31, 2018
About the Company

NTN Environmental Policy and Environmental Action Policy
for the Fiscal Year Ending March 31, 2018
NTN Environment Policy

Environmental Action Policy

1. Developing technology that contributes toprevention of global warming

Develop technologies and products that contribute to energy efficiency and energy
generation.

Continue strict management of poisonous materials.

2. Observance of laws and regulations

Increase number of personnel who have acquired pollution control supervisor qualification.
Stringently identify equipment containing PCBs and undertake planned processing reliably.
Reduce CO2 emissions using a supplemental budget.

3. Reducing the environmental impacts of ourbusiness operations

Identify Scope 3 impacts and other environmental impacts in the supply chain.
Promote green procurement.

NTN’s Vision and Strategy

Introduce management that reflects the Act on Rational Use and Proper Management of
Fluorocarbons.

Reduce water usage.
Reduce waste generation and maintain a high recycling rate.

4. Utilizing resources sustainably

Reduce use of paper and Styrofoam.
Manage and reduce the handling volume of substances that are subject to the PRTR law.

6. Conserving biodiversity

Promote biodiversity conservation initiatives such as the Kigyo no Mori forest.

7. Maintaining open communication

Plan measures that contribute to an improved evaluation of our environmental rating aswell as vigorous information disclosure.

8. Continuously improving our Environmental
Management System

Feature5. Stringently controlling environmentally harmful
substances

Include the AMC Kameyama Plant in the multi-site ISO 14001 certification.
Accommodate revisions to the ISO 14001 standard (transition to the 2015 edition).

Review of Operations

Company-wide Environmental Targets for the Fiscal Year Ending March 31, 2018
NTN Environmental Policy

Environmental Targets

Using proprietary technology tohelp minimize global warming

Develop technologies and products that contribute to energy efficiency and energy generation.

Ensuring compliance with laws and regulations

Continue strict management of poisonous materials
Reduce CO2 emissions.
Reduce CO2 emissions.

Reduce water usage.

Committing to the use ofsustainable resources

Reduce waste generation andmaintain a high recycling rate.

Reduce water
consumption intensity.

Raise the recycling rate.

372,000 tons/year or less*1

Japan

Improvement over the fiscal year ended
March 31, 1998, –21.2%

Overseas

Improvement over the fiscal year ended
March 31, 2007, –5.0%*1

Japan

Reduction over the fiscal year ended
March 31, 2011, –16.8%

Overseas

Reduction over the fiscal year ended
March 31, 2015, –1.2%* 2Japan

99.8% or more

Overseas

97% or more

Reduce waste generation
intensity.

Reduction over the fiscal year ended March 31,
2011, –1.6%

Reduce paper purchased
intensity.

Increase paper consumption by +14.0% over the
fiscal year ended March 31, 2011

Reduce use of Styrofoam.

In comparison with the fiscal year ended March 31,
2000, –99% maintained

Ensuring thorough management ofenvironmentally hazardous substances

Manage and reduce the handling volume of substances that are subject to the PRTR law.

Implementing biodiversity
conservation initiatives

NTN Kigyo no Mori and other biodiversity-protection activities

Continually improving ourEnvironmental Management System

Accommodate revisions to the ISO 14001 standard (transition to the 2015 edition).

*1. 5 business sites added: NTN-AT, NDB, NTPT, NNMI Chennai, and Nanjing NTN.
*2. 4 business sites added: NDB, NTPT, NNMI Chennai, and Nanjing NTN

NTN Report 2017

66

Corporate Information

Reduce use of paper
and Styrofoam.

Reduce CO2 emissions
intensity.

282,000 tons/year or lessOverseas

The Source of Value Creation

Reducing the environmental impact ofour business operationsJapan

Natural Capital

Environmental Impact of Business Activities
Reducing Environmental Impact in All Business Activities
The NTN Group strives to reduce its environmental impacts
across all processes from development and design to logistics.
Toward that end, we are taking steps to identify the overall

scope of all inputs into the manufacturing process (rawmaterials, energy, chemical substances [PRTR] and water) andall outputs from the manufacturing process (air, solid waste,chemical substances [PRTR] and wastewater) in an effort tominimize them.

Environmental impact from production activities in Japan (Fiscal Year ended March 31, 2017)
Target: the NTN Group in Japan

INPUT
Raw
material

OUTPUT

385,000 tons

Atmospheric exhaust

Material recycling*2

Scrap metalSteelmaterial

375,000 tons
Non-ferrous metal/
oils and fats, etc. 10,000 tons

14,570 tons

CO2 emissions

Production process

SOx
NOx

Development/
DesignEnergy598 GWhLPG
8,826 tons
City gas
6,471 mCoal coke
0 tonsHeavy oil A 1,650,000 L
Kerosene
940,000 L
Diesel fuel184,000 L
Gasoline
78,000 L

277,000 tons
30.6 tons
99.8 tons

Electricity

Generatedamount ofwaste

Forging/
Turning

3

Thermalrecycling*3

Recycled
amountWaste oil

4,120 tons

Grinding/
Polishing

Substances Subject to PRTR*1

99.5 tons

62,980 tons

Total landfilledamountHeat Treatment

59.2 tons

20,000 m

3

1,050,000 m
Tap water
760,000 m
GroundwaterIndustrial
water

140,000 m

Assembly

Drainage

3Rivers3

Sewage3*1. An Act intended to improve management andmonitoring of environmental emissions ofspecific chemical substances

60 tons

Amount of substances subject to
PRTR released and transferred

Use ofcirculating
water

Water 1,950,000 m3

63,040 tons

1,740,000

1,690,000 m
50,000 m

m3

3

3

Logistics*2. Material recycling: To recycle for use as a raw material*3. Thermal recycling: To recycle for use as fuelPlease refer to the website for environmental
accounting data.
http://www.ntnglobal.com/en/operation.html

67

NTN Report 2017• For data specific to particular business sites, please refer to theEnvironmental Data.
http://www.ntnglobal.com/en/ecology/sitereport/index.html• Please refer to the website for the third-party verification opinion fromSGS Japan as well as information on efforts to prevent global warming
attributable to logistics.

Prevention of Global Warming

http://www.ntnglobal.com/en/ecology/co2.html

Reduction of CO2 Emissions

CO2 Emissions and CO2 Emissions Intensity (Overseas)

Scope 1: Direct Release
Scope 2: Indirect Release*1
2018 Targets
Emissions Intensity (Right Axis)（万トン／年）(10,000 tons/year)

30

Scope 1: Direct Release
Scope 2: Indirect Release2018 Targets
Emissions Intensity (Right Axis)*2

原単位（トン-CO22/million／百万円）
Emissionsrate(ton-CO
yen)

26.9

27.2

28.4

27.5

27.7

28.2

1.2

20.6
0.87

0.70
21.6

0.73
21.7

0.70
23.0

0.69
22.4

0.69

0.69

0.4
20.0

5.3

5.5

5.4

5.1

0.6
1998
2013
(Reference year)

2014

2015

2016

2017

2018 (Years ended/(Target) ending March 31)

10

Dual-pane windows installed in the head office building

20.6

30.0

30.8

31.5

0.98

0.97

0.93

0.92

24.6

25.7

5.4

5.1

26.7

34.2

37.2

1.2
0.98

0.98

2007
2013
(Reference year)

0.8

29.4

28.5

0.4

20.0
0.6

1.6

2014

4.8
2015

4.8

4.5
2016

2017

0
2018 (Years ended/(Target) ending March 31)*2. Emissions Intensity outside Japan was modified with the addition of five business sites.

air conditioning equipment with the latest models and introduced various types of LED lighting in order to achieve ourplanned reduction of CO2 emissions.

Corporate Information

The NTN Group is also taking steps to reduce CO2 emissions at
our offices.
During installation of seismic upgrades to our head officebuilding following the Great Hanshin-Awaji Earthquake ofJanuary 1995, we upgraded the structure along with windows
equipped with energy-efficient glass panes. In the summer of
2016, the building was retrofitted with site-fabricated low-E
Insulated Glazing Unit (IGU) glass* windows in order to achievea further CO2 emissions reduction. In addition, we upgraded the

0

1.04

33.0

The Source of Value Creation*1. Domestic Power Drain Coefficient, calculated with a fixed coefficient of 0.381
CO2 Emissions and CO2 Emissions Intensity (outside Japan)* Site-fabricated low-E IGU glass retrofit
https://www.asahiglassplaza.net/products/attoch/(Japanese Website Only)

30

4.9

0

2 ／百万円）原単位（トン-CO2/million
Emissionsrate(ton-CO
yen)

40

20

22.8

10

0

0.8

（万トン／年）(10,000 tons/year)

Review of Operations

20* Five business sites outside Japan: NTN-AT, NDB, NTPT, NNMI Chennai, Nanjing NTN

FeatureCO2 Emissions and CO2 Emissions Intensity (Japan)

The CO2 emissions intensity target was not achieved byeither the domestic Group or overseas Group. The principal
contributing factor was reduced production in the domestic
Group and in the North American offices of the overseas Group.
Regarding the CO2 emissions reduction target for thedomestic Group for the next fiscal year, we adopted a target of
282,000 tons/year (representing a 1.8% increase year-on-year).
We also noted that increased production scale was a contributor
to increased CO2 emissions, but by promoting various energyefficiency initiatives, we are working towards achieving thetarget. In addition, because the overseas Group is promoting
local production and has added five business sites*, we haveadopted a CO2 emissions target of 372,000 tons/year.

NTN’s Vision and Strategy

Regarding our CO2 emissions reduction target for the fiscal
year under review, our Group companies in Japan did notmeet the target (3,000 tons above the target and a 0.6%
increase year-on-year). For Scope 1 emissions, upgrading the
cupola furnace at NTN Casting Corporation to an electric
furnace in January 2016 resulted in a reduction of 5.2% compared to the preceding fiscal year. Scope 2 emissions, however,rebounded 1.9% in reaction. On the other hand, Group companies outside Japan did meet the target (4,000 tons below thetarget and a 3.5% increase year-on-year). Shanghai NTN
Corporation contributed to this by introducing photovoltaic
generation equipment, accruing a benefit from in-house
power generation(a 5.8% decrease year-on-year).

About the Company

In an effort to reduce our environmental impact, our Group has established an Environmental
Management System encompassing the entire Group.

Energy-efficient dual-pane windows installed in the head office
At left: with dual panes installed At right: Before dual-pane installation
with low-E coating

NTN Report 201768

Natural CapitalProtecting Biodiversity
The NTN Group, working in collaboration with local residents and NGOs, engages in nature
conservation and strives to preserve biodiversity around its business sites.

Nagano Works Is Recognized with Governor’s Award,
the “Nagano Hometown Forest Creation Award.”
In January 2017, the Nagano Works was formally recognized for
its initiatives with the awarding of the Governor’s Award, the“Nagano Hometown Forest Creation Awards.” This honor is
bestowed on an individual or organization that has made asignificant contribution to forest conservation and forestry
development. The Nagano Works earned high praise forengaging in forest improvement in the City of Komagane for morethan a decade since concluding a forest maintenance agreementwith the city. The initiative that
led to this award was based on
the “Forest Adoption” Project inNagano Prefecture in March
2006. We intend to continue
promoting our Forest Adoption projects and will address
future community contribution Presentation by Eri Nakajima,
initiatives.
Deputy Governor of Nagano“Nagomi no Mori” Initiative Launched in Second Location
In January 2017, NTN Kinan Corporation entered into a second
environmental conservation and forest agreement withKamitonda-cho, Nishimuro-gun, Wakayama prefecture.
The first “NTN Kinan Muro Nagomi no Mori” project got
under way in 2007 and resulted in the planting of about 2,000
oak, sawtooth oak, white oak, and other species of hardwood
trees. After a decade of growth, these trees have reachedabout five meters in height.
During this time, the company gained access to an
additional 0.45 hectares of mountain forest at the same location
and will be planting trees and cutting undergrowth. Under
the guidance of the local Nishimuro Forestry Cooperative,
the company will spend about a decade planting ubamegashi(quercus philyraeoides), bayberry, wild cherry trees, andShibaguri chestnut. NTN Kinan will continue to engage inforest conservation activities while working to protect thesurrounding areas and the natural environment.

Greening Initiative at NTN-LYC (Luoyang) Bearing Corp.
NTN-LYC (Luoyang) Bearing Corp. is located in the city of
Luoyang, Henan province, China, and has been in production
since 2012. Known locally as “Peony City,” it is the site of the
Luoyang Peony Festival held every year in April.
In February 2017, as part of the factory’s greening initiative,
employees planted six pine trees as well as more than 100
peonies in a vacant lot in front of the administration building
and on the southern side of thefactory, creating a facility worthyof its location in the “Peony City.”
Going forward, the company
will continue to implement
environmental conservation
initiatives through ongoingpruning of trees as well as
weeding and mowing of thepeony gardens. All are invited tovisit Luoyang in April when thepeonies are in full bloom.
Planted peonies in bloom“Kigyo no Mori” Initiative Now a Part of the Region
Since 2002, Iwata Works has been engaged in five spring-toautumn greening initiatives at Nature Fureai Park in the cityof Iwata.
This initiative involves various tasks such as pruning of
azaleas, maintenance of weeding and walking paths, repair ofmonuments and benches using thinned timber, and, for the
fiscal year under review, a total of 270 employees and theirfamily members participated. The company is committed tocontinued engagement in environmental preservation andcommunity activities in the future.

Participating in activities at Nature Fureai Park

Commemorative photo taken at signing ceremony. From left: Yoshinobu
Nisaka, Governor of Wakayama Prefecture, Seiji Uemoto, President of
NTN Kinan Corporation, Takamichi Koide, Mayor of Kamitonda-cho

69

NTN Report 2017

Protection of Resources
About the Company

In addition to conventional initiatives such as reducing water consumption and improving thewater consumption intensity, the NTN Group has been promoting the AQUEDUCT* initiative.
This effort focuses on the risks to fresh water (current status and future projections of water
quantity and quality) for each business site and provides an evaluation. In the future, we willaddress the water risks and production volumes at each of our business sites in order toreduce water consumption and promote water recycling.

Water Stress (forecast for 2030) and Current Water Usage
NTN’s Vision and Strategy

Water consumption in fiscal
year ended in March 31, 2017

Europe190,000 m

The size of the droplet graphic
indicates the water
consumption.

China

3

370,000 m

3

Japan

Predicted changes in water
stress (estimate for 2030)

1,950,000 m

Low (10% or less)

Asia

Low to medium (10–20%)

150,000 m

Medium to high (20–40%)

3

Americas3570,000 m

3

FeatureHigh (40–80%)
Highest (more than 80%)
Water shortage* A tool that provides free world maps and information showing the risk to water around the world as indicated by the World Resources Institute (WRI)

Promoting Reduced Water Consumption
Water Usage (Overseas)

Groundwater
Tap WaterIndustrial Water
Reduction in Consumption Intensity

Americas
EuropeAsia
China
Reduction in Consumption Intensity*
3
（万m
／年）
(10,000
m3/year)(10,000 m3/year)

250

202
100

150

200

234

200
(Reference)

196

196

195

198

-17.6%-14.6%-15.3%-16.8%

-7.5%

100

2014

2015

2016

2017

2018

(Years ended/(Target) ending March 31)

Generated Amount of Waste and Recycled Amount(Japan)Total Landfilled Amount
Reduction Rate in Waste Generation Intensity（千トン／年）(1,000 tons/year)

70

59.8
59.6

62.3
62.1

64.8

65.8

64.7

65.7

63.0
63.0

65.9

Generatedamount65.8

Recycled
amount

10
0

0

124

128

99.7%
100

(Reference)

2011

99.8%
1.6%

2014

99.9%

99.9%

-1.9%

1.0%

2015

2016

99.9%

99.8% or more

-3.1%

-1.6%

2017

2018

(Years ended/(Target) ending March 31)

2013

2014

2015

2016

2017

* Adjusted with the inclusion of 4 business sites

1362018 (Years ended/(Target) ending March 31)

Generated Amount of Waste and Recycled Amount(Overseas)
Recycled Amount
Recycling Rate

Total landfilled Amount
Reduction Rate in Waste Generation Intensity（千トン／年）(1,000 tons/year)

120

80

40
20

131
110

-6.2%

110.0
93.0

100.4

106.7

GeneratedamountRecycled
amount

87.6

88.2

84.7

85.6

94.6%

96.5%

96.8%

97.1%

96.9%

97.0% or more

100

-2.6%

-9.0%

-3.9%

2.7%

6.0%

2011

2014

2015

2016

2017

77.5

90.4

97.3

73.4

40

0

(Reference)

2018 (Years ended/(Target) ending March 31)

NTN Report 2017

70

Corporate Information

Recycled Amount
Recycling Rate

30

-4.9%

The Source of Value Creation

2011

Raising the Recycling Rate

50

101

-6.5%

50

50

60

100 (Reference)

150

100

0

Review of Operations

Water Usage (Japan)Natural CapitalManagement and Reduction of Environmentally Hazardous Substances
The NTN Group is managing and reducing environmentally hazardous substances while
complying with worldwide laws and regulations.

Response to Environmental Regulations
The NTN Group complies with chemical substance restrictions
around the world by keeping a close watch on changing
restrictions and constantly testing for what substances are

Reducing the Use of Chemical Substances Subject to
the PRTR
We are committed to reducing the amount of hazardous
chemical substances used in our Group’s production processes
in Japan and are seeking less harmful substitutes for thehazardous chemicals that we continue to use. The target
chemical substances are used in our production processes;
several of the six substances indicated in the illustration atright account for about 90% of the total, and in order to reduce
the amounts of the substances used, we will introduce substitutes for the target substances we use in small quantities.
Moreover, in order to reduce the total volume handled, we arepromoting changes to both our work processes and thesubstances used.

contained in the raw materials, parts, and materials it procures.
We strive to manage and reduce the amount of environmentally hazardous and harmful substances we use.

Chemical Substances Subject to PRTR: Amounts Handled
Other

9.3%
TolueneChemical Substances
Subject to PRTR:
Amounts Handled

7.8%

1,2,4trimethylbenzene

27.8%

99.5 tons/year

Water-solublecompounds
8.0%
of zinc

Xylene22.0%
Methylnaphthalene

Molybdenum and its
compounds 8.7%

16.5%

（トン）
(Tons)

110
100
Reduction

98.6

99.7

99.5

2016

2017

96.4
90.7

90
80
2011

Substitution

2014

2015

Propermanagement(Years ended/ending March 31)

Emergency-Response Drills Conducted
Disposal of PCB-Contaminated Equipment
The Law Concerning Special Measures Against PCB Waste wasamended in May 2016 to accelerate the processing of PCB
waste in Japan; the law took effect on August 1 that same year.
This strengthened the authority of prefectural and city governments and the like to request notifications and conduct on-site
inspections of business operators regarding high-concentration
PCB wastes that have not been reported on.
In our Group companies in Japan, four transformer units
containing low concentrations of PCBs were discarded at the
Kuwana Works during the fiscal year under review. Moreover,the Iwata Works discarded 46 capacitors containing highconcentrations of PCBs, 32 transformers containing low concentrations of PCBs, and two capacitors, among other items.
We will continue the disposal process for equipment
containing low-concentration PCBs during the coming fiscal year.

71

NTN Report 2017

NTN Mikumo Corp. carries out emergency-response drills every
June during Environment Month. During the fiscal year underreview, training was provided to new employees assigned from the
Mono-Zukuri (Manufacturing) Center, Manufacturing Department,
and Quality Assurance Department as well as 33 employees who
had not undergone training prior to June 30, 2016.
Specifically, certain points were confirmed on-site, including
the emergency stop procedure required in the event ofa leakage of coolant; confirmation of the drainage route inside
the factory for rainwater and the like; and proper use ofabsorption matsstockpiled in thewarehouse on siteand elsewhere.

Emergency drill in front of wastewater treatment facility

Environmental Management

Accommodating Revisions to the ISO 14001 Standard

locations across Japan. The chief lecturer was assigned from L.
Marvin Johnson & Associates, Inc. Japan, a training institute for
ISO auditors. We plan to increase the number of internal
auditors to around 230 as part of our main review leading up
to our introduction of the 2015 version of the ISO 14001
standard, which is scheduled for September 2017.

The AMC Kameyama Plant prepares for certification of registration with the 2015 version of the ISO 14001 standard.
the standards as all our companies gear up for the review
scheduled for September 2017.

Participation in Shimane Exchange Meeting 2016

Improving Environmental Awareness

NTN Casting Corporation participated in the Shimane Exchange
Meeting 2016 held in the city of Matsue, Shimane Prefecture,in December 2016. This event highlights the activities of thevarious companies in the area as well as local governments andorganizations and the like for the benefit of students with thegoal of promoting exchanges among companies. About 230
booths staffed by private enterprises, governments, NPOs, anduniversity laboratories participated in this exchange fair, which
attracted more than 1,600 visitors, of which 700 were students.
This event was a good opportunity for local residents to learn
about the business operations and corporate philosophy of
NTN Casting Corporation. Many visitors to our booth offered
their comments and asked questions.

In order to raise environmental awareness, our Group companies in Japan have updated and distributed an “Environmental
Policy Card” for all employees (including those stationed atbusiness sites such as temporary staff, subcontractors, andpermanently assigned contractors). Moreover, every year inJune, Environment Month, we identify priority initiatives foreach business site. For example, through our Environmental
News publication, we are particularly thorough about making
all concerned well aware of procedures such as the emergency
response required during an oil or chemical leak.

FeatureThe Kameyama Plant of NTN Advanced Materials Co., Ltd.
(AMC Kameyama Plant) had acquired certification of ISO 14001
registration independently around the time it was part of theformer Nippon Kagaku Yakin Co., Ltd. However, the examination
the company will undergo under the multi-site system as amember of NTN will be its first.
Therefore, in order to implement the environmental
management system required to be in place for the 2015
version of the ISO 14001 standard, a study group comprising key
members of the AMC Kameyama Plant will focus on the issues
addressed in the revision and increase their understanding of

NTN’s Vision and Strategy

In response to the revision of the 2004 version of the ISO 14001
standard to the 2015 version in September 2015, members of
the NTN Group in Japan held a workshop for internal environmental auditors. In addition, from November 2016 to January
2017, a total of 99 staff attended training courses at four

About the Company

The NTN Group has established and implemented an Environmental Management System(EMS) that meets the ISO 14001 international standard as part of its effort to enhance its
environmental initiatives. In the fiscal year under review, no serious legal violations occurred,
as no violations of emissions standards and no pollution accidents were noted.

Review of Operations

Study session at AMC Kameyama Plant

The Source of Value Creation
Corporate Information

Attendees at Shimane Exchange Meeting 2016

Environmental Policy Card
(Items 4 and above appear onback of card.)

Issue of Environmental NewsNTN Report 201772

Financial CapitalIn the interest of improving our financial foundation, we are implementing various
measures to strengthen profit control and improve asset efficiency.

Improving Our Financial Foundation with a Steady Approach

Voice

Our

net sales and operating income decreased from the previous fiscal year mainly due to theeffects of exchange-rates. Free cash flow improved due to inventory reduction and othermeasures intended to reduce working capital. On the other hand, net income attributable to shareholders(parent company) decreased relative to the preceding fiscal year due to extraordinary losses and effects of
exchange-rates, while related indicators such as Return On Equity (ROE) declined. We will continue to focus on
operating margin and ROE and will devise measures to improve our financial foundation by strengthening our
profit control and improving asset efficiency.

Keiji Ohashi
Managing Director,
Corporate General Manager, Finance Headquarters

Summary for the fiscal year ended March 31, 2017
Net sales:

683.3 billion yen,a decrease of 33.7 billion yen (4.7%)
year-on-year

R&D costs:

19.2 billion yen,
an increase of 0.7 billion yen (3.9%)
year-on-year

Operating income:35.6 billion yen (Operating margin 5.2%),
a decrease of 12.1 billion yen (25.4%)
year-on-year

Interest-bearing debt: 320.2 billion yen,a decrease of 5.0 billion yen (1.5%)
year-on-year

Capital expenditures: 35.4 billion yen,a decrease of 0.9 billion yen (2.5%)
year-on-year

Inventories:

171.5 billion yen,a decrease of 6.7 billion yen (3.8%)
year-on-year

36.6 billion yen,a decrease of 1.6 billion yen (4.3%)
year-on-year

Dividends:

10 yen (5 yen at 2nd quarter end, 5 yen
at fiscal year end)
Dividend payout ratio of 187.6%

Depreciation:

Net Sales

Operating Income / Operating Margin
Operating Income (Left Axis)
Operating Margin (Right Axis)

Net Income (Loss) Attributable to
Shareholder (Parent Company) /Ratio of Net Income (Loss) to Sales
Net Income (Loss) Attributable to Shareholder(Parent Company) (Left Axis)
R atio of Net Income (Loss) to Sales (Right Axis)(Billions of Yen)

(Billions of Yen)

(%)(Billions of Yen)

(%)

800

50

10

30

6

40

8

20

4

30

6

10

2

20

4

0

0

10

2

–10

–2

0

–20

600

400

200

0

73

0

–4

2012 2013 2014 2015 2016 20172012 2013 2014 2015 2016 20172012 2013 2014 2015 2016 2017

(Years ended March 31)(Years ended March 31)(Years ended March 31)

NTN Report 2017

Net Sales and IncomesSales Performance
Consolidated net sales for the fiscal year ended March 31, 2017,
were 683,329 million yen, a decrease of 33,668 million yen (4.7%)
from the previous fiscal year. Due to the effects of exchangerates, a decrease of 59,246 million yen represented an increase of
25,578 million yen. Overseas sales were 491,863 million yen, adecrease of 35,577 million yen (6.7%) from the previous fiscal
year. Overseas sales accounted for 72.0% of net sales overall(Americas 28.5%, Europe 22.7%, Asia and others 20.8%), a
decrease of 1.6 percentage points from the previous fiscal year.

Cost of Sales and Selling, General and
Administrative Expenses

In terms of sales in Japan, looking at aftermarket applications,
there was a decrease in industrial machinery aftermarket
applications. As for sales of industrial machinery applications,construction machinery and other applications increased. In
automotive applications grew thanks to expanded customers’

Net Sales by Region

Industrial Machinery
Net Sales [Left Axis]
Industrial MachineryOperating Income [Right Axis]

Japan
Europe(Billions of Yen)

80

600

60

400

40

200

20

Cash Dividends

Americas
Asia and Others(Billions of Yen)

(Yen)

800

12
10

600
Corporate
Corporate Information
Information

800

The
TheSource
Source ofof Value
Value Creation
Creation

Aftermarket
Automotive
Aftermarket
Automotive

8
400

6
4

0

0

–200

–20

Review of Operations

The cost of sales was 555,722 million yen, up 0.9 percentage
points and representing 81.3% of consolidated net sales. Thiswas mainly effects of exchange-rates.
Selling, general and administrative expenses were 91,984
million yen, representing 13.5% of consolidated net sales, or up
0.6 percentage points compared to the previous fiscal year.

Net Sales and Incomes by Region

Net Sales / Operating Income by
Business Sector

FeatureIn aftermarket applications, sales were 104,501 million yen due
to the effects of exchange-rates and a decrease in demand forindustrial machinery aftermarket. Operating income was
13,995 million yen due to the effects of exchange-rates andother factors.
In industrial machinery applications, net sales were 98,611
million yen due to the effect of exchange-rates and otherfactors, though customer demand increased for construction
machinery and other applications. Operating income were1,622 million yen.
In automotive applications, net sales were 480,217 million
yen due to the effect of exchange-rates, though customer
demand increased in overseas. Operating income was 20,006
million yen after accounting for effects of exchange-rates andother factors, although the increased sales had the effect of
reducing proportional costs.

NTN’s Vision and Strategy

Net Sales and Incomes by Business Sector

About the Company

demands. As a whole, net sales were 191,466 million yen(up 1.0% from the previous fiscal year).
In terms of sales in Americas, looking at aftermarket
applications, there was an increase in automotive aftermarket
applications. In industrial machinery aftermarket applications,sales increased in construction machinery applications andothers. Sales of automotive applications also increased backed
by increased customer demands and other factors. As a whole,
net sales were 194,765 million yen (down 8.4% from theprevious fiscal year), due to effects of exchange-rates.
In terms of sales in Europe, automotive aftermarket
applications increased. For industrial machinery applications,lower customer demand for wind turbines and other products,
and increased demand for in aircraft and other applications,
resulted in relatively unchanged performance from theprevious fiscal year. As a whole, net sales were 154,990 million
yen (down 8.3% from the previous fiscal year), due to effects
of exchange-rates.
In terms of sales in Asia and other areas, automotive
aftermarket applications were increased. For industrial
machinery applications, sales increased in construction
machinery and other applications; similarly, sales increased in
automotive applications thanks to expanded customer
demands. As a whole, net sales were to 142,108 million yen(down 2.6% from the previous fiscal year), due to effects of
exchange-rates.

200
2
0

0

2012 2013 2014 2015 2016 20172012 2013 2014 2015 2016 20172012 2013 2014 2015 2016 2017

(Years ended March 31)(Years ended March 31)(Years ended March 31)

NTN Report 201774

Financial CapitalIncomeRegarding profit for the fiscal year under review, factors contributing
to increased earnings included the effects of scale and a decreasein variable costs. Meanwhile, factors contributing to decreased
earnings included unfavorable effects of exchange-rates, lower
sales price level, and increased personal expenses. As a result,the operating income for the term was 35,623 million yen,down 12,147 million yen from the previous fiscal year.
Other expenses amounted to a net expense of 20,733
million yen. The major contributing factors were income of
5,475 million yen, including a loss reversal associated withthe arbitration award of 2,147 million yen, and expenses of
26,208 million yen, including an loss releated to Antimonopoly
Act of 12,129 million yen, impairment losses of 4,562 million
yen, and a loss on sale of fixed assets of 171 million yen.
As a result, net income before income taxes and equity
in earnings was 14,890 million yen for the fiscal year underreview, a decrease of 12,053 million yen compared with thepreceding fiscal year. Net income per share was 5.33 yen forthe year under review.
Regarding annual dividends for the fiscal year underreview, we plan to pay a year-end dividend of 5 yen per share,
which, when added to our interim dividend of 5 yen per share,
totals 10 yen per share for the full year.

R&D and Capital Expenditures
R&D Expenditures
R&D expenditures of the entire group for the fiscal year underreview were 19,196 million yen (up 715 million yen over theprevious fiscal year), representing 2.8% of consolidated net sales.
Under the ongoing “NTN 100,” our 3-year Medium-termManagement Plan from April 2015 to March 2018, we arevigorously creating new businesses to “Manage Growth.”
In April 2016, we established our Electric Module Products
Division and Green Energy Products Division, which are

Capital Expenditures and Depreciation

intended to promote product commercialization.
In order to accommodate increased sales outside Japan,
we continue to globalize our research and development
system. We are supporting state-of-the-art technologicalresearch in Japan by seeking collaboration among industry,
academia, and government and are building a global networkwith R&D bases outside Japan for new products andtechnologies. Additionally, we are accelerating efforts toaccommodate our customers with technical services,
certification evaluations, inspections, and analysis and thelike so that we can quickly respond to sales growth in theAmericas, Europe, Asia, and elsewhere.

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 12,198 million yen
for capital projects that included the expansion of bearing
production equipment and expansion of buildings at NTN
Noto Corporation. as well as additions to bearing production
equipment at NTN Akaiwa Corporation.
In the Americas, capital expenditures totaled 11,350
million yen on projects that included the construction of a newplant and installation of CVJ production equipment at NTN
Driveshaft Anderson, Inc. and the addition of production
equipment for CVJ parts at NTN-Bower Corporation.
In Europe, capital expenditures were 8,250 million yen,with projects including the expansion of bearing production
equipment at NTN-SNR ROULEMENTS and NTN Mettmann(Deutschland) G.m.b.H.
In Asia and other areas, capital expenditures amounted to
3,663 million yen on projects that included expansion of CVJ

Inventories / Inventory Turnover Ratio

Capital Expenditures
Depreciation

Interest-bearing Debt

Inventories (Left Axis)
Inventory Turnover Ratio (Right Axis)(Billions of Yen)

(Billions of Yen)

60

200

(Times)8(Billions of Yen)

400

100

6

300

100

4

200

50

2

100

0

0

50
40
30
20
10
0

0

75

2012 2013 2014 2015 2016 20172012 2013 2014 2015 2016 20172012 2013 2014 2015 2016 2017

(Years ended March 31)(Years ended March 31)(Years ended March 31)

NTN Report 2017

Investment Cash Flow

(Billions of Yen)

75

50

0

–25

–50
2015

2016

2017

(Years ended March 31)

NTN Report 201776

Corporate
Corporate Information
Information

25

The
TheSource
Source ofof Value
Value Creation
Creation

Operating Cash Flow
Free Cash Flow

Review of Operations

Cash Flows

FeatureTotal current assets at March 31, 2017 amounted to 434,929
million yen, a year-on year increase of 12,636 million yen(or 3.0%). Major factors included an 11,973 million yen
increase in cash and cash equivalents; 3,210 million yen
increase in electronically recorded monetary claims; a 3,054
million yen increase in accounts receivable-trade; 6,738 million
yen decrease in inventories.
Total fixed assets at the fiscal year-end amounted to284,612 million yen, a decrease of 11,789 million yen (or 4.0%)
against the end of the previous fiscal year. Investments andother assets increased by 3,393 million yen (4.5%), to 79,350
million yen, against the result for the previous fiscal year. As a result,
total assets amounted to 798,891 million yen, a year-on-yearincrease of 4,240 million yen (or 0.5%).
Current liabilities were 315,028 million yen, a year-on-yearincrease of 26,257 million yen (or 9.1%). This was due mainly toa 12,642 million yen increase in short-term bank loans anda 5,757 million yen increase in trade payables. Total long-term
liabilities amounted to 238,813 million yen, a year-on-year
decrease of 18,562 million yen (or 7.2%). This is mainly due toa 14,578 million yen decrease in long-term debt and lease

NTN’s Vision and Strategy

Financial Position and Cash Flows
Interest-bearing debt decreased by 5.0 billion yen
compared with the preceding fiscal year. Free cash
flow came to 21.2 billion yen.

obligations, and a 4,988 million yen decrease in liabilities for
retirement benefits.
Total net assets were 245,050 million yen, a year-on-year
decrease of 3,455 million yen (or 1.4%). This was due mainly toan 8,469 million yen decrease in translation adjustments; a 2,486
million yen decrease in retained earnings; a 4,953 million yen
increase in net unrealized holding gain on securities; and a 3,522
million yen increase in retirement benefit liability adjustments.
The equity to capital ratio was 28.7%, down 0.5 percentage
points. Total net assets per share, based on the number of shares
outstanding over the end of the previous fiscal year, were 431.66
yen per share (a decrease of 5.31 yen per share over the previous
fiscal year). Interest-bearing debt amounted to 320,170 million
yen, a decrease of 5,004 million yen (1.5%) from the end of theprevious fiscal year. Factoring in the 3,241 million yen decrease
from effects of exchange-rates, the actual decrease was 1,763
million yen. The ratio of interest-bearing debt to total assets was
40.1% (down 0.8 percentage points compared to the end of theprevious fiscal year).
Net working capital was 119,901 million yen, a decreaseof 13,621 million yen from the end of the previous fiscal year.
The current ratio was 138.1% (down 8.1 percentage points overthe end of the previous fiscal year).
The inventory turnover ratio was 3.98 times (down 0.04
times compared with the end of the previous fiscal year),while the turnover ratio of total assets was 0.86 times (down
0.04 times).
Net cash from operating activities was 62,388 million
yen (a year-on-year increase of 16,141 million yen, or 34.9%).
Major items included proceeds of 36,629 million yen fromdepreciation and amortization, 14,890 million yen fromincome before income taxes, and an increase of 7,243 million
yen in trade payables.
Net cash from investing activities was 41,219 million yen(a year-on-year increase of 7,448 million yen, or 22.1%).
This was due mainly to expenditures of 35,273 million yen forthe purchase of property, plant, and equipment and 6,627
million yen for the purchase of other assets.
Net cash from financing activities was 8,218 million yen(a year-on-year decrease of 19,740 million yen, or 70.6%).
Major factors included expenditures of 75,060 million yen for
repayment of long-term loans and 39,481 million yen inproceeds from long-term loans. Proceeds from issuance ofcorporate bonds totaled 20,000 million yen.
After including a decrease of 978 million yen in translation
adjustments, cash and cash equivalents as of the end of the
fiscal year under review totaled 79,284 million yen, representing
an increase of 11,973 million yen (17.8%) compared with theprevious consolidated fiscal year end.
Free cash flow, the difference between net cash provided
by operating activities and net cash used in investing activities,
amounted to 21,169 million yen. The proportion of net cash
provided by operating activities to net sales was 9.1%.

About the Company

production equipment at NTPT Co., Ltd. and Xiangyang
NTN-Yulon Drivetrain Co., Ltd.
After adjusting for -64 million yen in equipment transfers
between segments, total capital expenditures for the fiscal year
were 35,398 million yen.
All expenditures were funded from internal funds andshort-term loans. Depreciation and amortization for the fiscal
year under review amounted to 36,629 million yen (down1,649 million yen from the previous fiscal year).

Risk Factors

Business results and the financial position of the NTN Groupare subject to the following risks. It should be noted that theforward-looking statements contained in the following reflect
judgments of the NTN Group as of the submission date of our
securities report (June 26, 2017).

1) Economy
The NTN Group operates global production and sales
networks, and supplies customers in various industrial
sectors. Business results and the financial position of the
NTN Group operations may be affected by the economic
conditions in specific countries and business conditions inindustries to which our customers belong.

2) 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 businessdevelopment of the NTN Group. Overseas subsidiaries’ foreign
currency-denominated business results and financial positions
are converted to yen for the preparation of consolidated
financial statements. Moreover, many export transactions withoverseas customers of the Company are conducted in foreign
currencies. Although the NTN Group hedges risks throughforward foreign exchange contracts and expansion of local
procurement, effects of exchange rate fluctuations on businessresults and financial positions cannot be fully eliminated.

3) Declines in Market Prices
The competitive environment surrounding production andsales activities of the NTN Group is becoming harsher
worldwide. As products from China and other emerging
countries are gaining ground, bearings have been partiallyaffected by falling market prices. At the same time, against
a backdrop of global price competition, calls for pricereductions 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 andhigh added value, business results and the NTN Group’s
financial position may be affected by downward pressure
on market prices.

4) Rise in Raw Materials Prices
The NTN Group procures a wide range of raw materials fromoutside sources. To deal with cost increases, especially of steel
materials, which pose a high weighting in materials costs,
measures have been taken such as mark-ups on selling prices
to reflect higher materials cost. In addition, the Group istargeting cost reductions through enhanced production yields
and VA/VE methods. Nevertheless, business results and the
NTN Group’s financial position may be affected by stronger
than expected increases in raw materials costs.

77

NTN Report 20175) 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 Group has put into place crisis management
systems and stands ready to engage in measures to containdamage as much as possible, risks cannot be completely
eliminated. Business performance and the financial status of
the NTN Group may be affected by a natural disaster or by
accidents.

6) 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 theConstant-velocity Joints Division produces for automotive powertransmission to the drive axle. Dependence on the automotive
industry is therefore high. Although the NTN Group works toincrease sales of bearings and precision equipment products tothe industrial machinery sector and implements policies toachieve a balanced sales structure, a rapid shift in demand in theautomotive industry could potentially affect the NTN Group’sbusiness results and financial position.

7) Product Defects
To ensure product quality, the NTN Group works to satisfy
customers’ requirements concerning product functions andspecifications, and strives to provide appropriate quality andproduct safety by enforcing quality assurance globally. However,a substantial product defect leading to a serious accident, claim
for damages, or product recall could entail huge productwarranty costs and potentially affect business performance andthe financial position of the NTN Group. Although the NTNGroup has taken out global product liability insurance, complete
coverage for loss is not possible.

8) Intellectual Property
The NTN Group generates a wealth of innovative technologies
and know-how in the process of new product development,
representing valuable intellectual property for which the NTNGroup files patent applications to protect its rights. However,business performance and the financial position of the NTNGroup may be affected if a legal challenge is initiated against
its intellectual property or if its intellectual property is infringed
by a third party.

9) Global Operations

FeatureReview of Operations
The Source of Value Creation
Corporate Information

The NTN Group is subject to the various laws and regulations(tax laws, environmental laws, occupational safety and healthlaws, economic statutes such as antimonopoly laws andanti-dumping laws, trade and exchange laws, and securities
trading regulations) of the countries and regions in which itdoes business. The NTN Group strives to abide by these laws
and regulations and conduct fair business activities. However,if the NTN Group is ever be subject to litigation or involved inlegal proceedings because of a violation of a law or regulation,and if the decision of such litigation or legal proceedings goesagainst the Group, this may have an effect on the businessperformance 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
the business performance or the financial state of the Group.
Some of NTN Group companies are defendants are subject tothe following actions and others.
[1] In June 2012, the Company and its former executives
received an indictment filed by the Tokyo District Prosecutors Office (“TDPO”) on suspicion of having violated theJapan Antimonopoly Act in relation to domestic sale ofbearings. In March 2013, the Company received a ceaseand desist order and surcharge payment order (for 7,231
million yen) from the Japan Fair Trade Commission(“JFTC”). Because the assertions by the JFTC and the TDPO
are greatly different from the Company’s view of the facts,
in April 2013, the Company requested the JFTC to initiate
a hearing. As a result, hearing proceedings for the JFTC
orders were commenced in September 2013. In addition,
in respect of a criminal trial we had been appealing
against the conviction declared in February 2015 by the
Tokyo District Court, but the Tokyo High Court renderedjudgment of the rejection of the appeal in March 2016.
The Company and its former executives have appealed to
the Supreme Court.
		 Overseas, there are ongoing investigations by theauthorities into our consolidated subsidiaries in Brazil
and elsewhere.

NTN’s Vision and Strategy

10) Statutory Regulations[2] The Company and its consolidated subsidiaries in the U.S.,
Canada, etc. are defendants in a number of class action
suits for suspected price-fixing of bearing sales with otherbusinesses. The Company and its subsidiaries in the U.S.
received a letter from the U.S. Department of Justice (“DOJ”)
in March 2015 that they were no longer subject of its
investigation which lasted since November 2011.
Additionally, the Company and its subsidiaries havenever been subject of investigation by the competition
authority of Canada. However, last year in November,
we considered quick settlement of the suits to be thebest option, taking account of an increase in expenses
due to prolonged suits and their impact on business
operations, and therefore entered into a settlementagreement with indirect purchasers who comprised apart of plaintiffs in the U.S.
[3] In February 2016, a lawsuit was filed against eight bearing
manufacturers, including the Company, in The United
Kingdom Competition Appeal Tribunal. It sought the joint
payment of damages of 507.8 million euros (provisionalamount) to Peugeot S.A. and its total 19 group companies(hereinafter referred to as the “PSA group”). The claim wasrevised and now PSA group seeks the joint payment ofdamages of 437.7 million euros (provisional amount) against
four bearing manufactures, including the Company. The suithas been filed allegedly because the PSA group incurred
damages in connection with the violation of the European
Competition Law, which is subject of the decision made by
the European Commission on March 19, 2014. We will insist
on the legitimacy of the Company’s argument.
[4] The Company or its affiliated companies may be filed thelawsuit similar to the abovementioned lawsuit etc. 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 Company and its consolidated subsidiaries.

About the Company

The NTN Group develops its business operations worldwide
with overseas sales exceeding 50% of consolidated sales.
Overseas business development is associated with thefollowing 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 inemerging economies
e. Political instability in emerging economies

NTN Report 201778

Consolidated Balance Sheet
March 31, 2017

Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2016

2017

¥   79,284718¥   67,311
924$   708,874
6,420

11,850124,998
5,495
(877)

12,252
121,944
2,285
(899)

105,950
1,117,600
49,130(7,841)

141,466
171,482
8,405
33,574

135,582
178,220
8,928
31,3281,264,839
1,533,211
75,149300,184434,929422,2933,888,677

33,142
199,673782,738
16,72033,488
197,815
777,730
15,705296,321
1,785,265
6,998,417
149,493

1,032,273(747,661)

1,024,738(728,337)

9,229,496(6,684,796)

284,612296,401

2,544,700

36,395
17,992—
5,150
19,81330,21319,089139
12,44914,067

325,406
160,865—
46,046
177,147

79,35075,957

709,464¥  798,891¥  794,651$ 7,142,841

AssetsCurrent assets:
Cash and cash equivalents (Note 12)
Short-term investments (Note 12)
Trade receivables (Note 12):
Notes
Accounts
Electronically recorded monetary claims
Allowance for doubtful accounts
Inventories (Note 4)
Deferred income taxes (Note 21)
Other current assets (Note 12)
Total current assets

Property, plant and equipment, at cost (Note 5):
Land (Note 2(g))
Buildings and structures (Note 2(g))
Machinery, equipment and vehicles (Note 2(g))
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net (Note 23)

Investments and other assets:
Investment securities (Notes 6 and 12)
Investments in unconsolidated subsidiaries and affiliates (Note 12)
Goodwill
Deferred income taxes (Note 21)
Other assets
Total investments and other assets

Total assets (Note 23)
See accompanying notes to the consolidated financial statements.

79

NTN Report 2017

Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2016

2017

Liabilities and net assets
Current liabilities:$  596,656
598,569

1,433
57,82958,132

1,349
53,89856,39012,812517,046
519,755

Other current liabilities

117,394
3,057
1
2,173
58,723

111,637
4,236
17
1,496
48,294

1,049,613
27,332
919,429525,040

Total current liabilities (Note 23)

315,028

288,771

2,816,648

Other long-term liabilities

189,110
42,149
401
2,272
4,881

203,688
47,137
308
1,073
5,169

1,690,822
376,852
3,585
20,314
43,641

Total long-term liabilities (Note 23)

238,813257,375

2,135,214

54,347
66,943
114,158

54,34767,351
116,644

485,914598,534
1,020,679

Trade payables (Note 12):
Notes
Accounts
Electronically recorded obligations
Accrued income taxes (Notes 12 and 21)
Deferred income taxes (Note 21)
Provision for loss on support to a related company

NTN’s Vision and Strategy¥ 54,091
69,000Current portion of long-term debt and lease obligations (Notes 7 and 12)

About the Company¥ 66,733
66,947

Short-term bank loans (Notes 7 and 12)Long-term liabilities:
Long-term debt and lease obligations (Notes 7 and 12)
Liability for retirement benefits (Note 8)
Deferred income taxes (Note 21)

FeatureProvision for product defect compensation

Contingent liabilities (Note 10)
Review of Operations

Net assets:
Shareholders’ equity (Note 9):
Common stock:
Authorized – 1,800,000,000 shares
Issued – 532,463,527 shares in 2017 and 2016
Capital surplus
Treasury stock, at cost:
1,388,394 shares in 2017 and 795,969 shares in 2016
Total shareholders’ equity(616)(7,215)

237,726

2,097,912

13,507(10,006)(8,899)8,554(1,537)(12,421)

120,765(89,463)(79,565)(5,398)15,807(5,404)
16,183(48,263)
141,330

245,050¥798,891

248,505¥794,651

2,190,979$7,142,841

Accumulated other comprehensive income (loss):
Net unrealized holding gain on securities (Note 6)
Translation adjustments
Retirement benefit liability adjustments
Total accumulated other comprehensive loss, net
Non-controlling interests
Total net assets
Total liabilities and net assets
See accompanying notes to the consolidated financial statements.

NTN Report 2017

80

Corporate Information(807)
234,641

The Source of Value Creation

Retained earnings

Consolidated Statement of Income
Year ended March 31, 2017

Thousands of
U.S. dollars (Note 1)

Millions of yen

2017
Net sales (Note 23)
Cost of sales (Note 14)
Gross profit
Selling, general and administrative expenses (Note 14)
Operating income (Note 23)
Other income (expenses):
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Gain on reversal of prior year customs duties
Gain on valuation of derivatives, net
Gain on reversal of reorganization expenses
Gain on reversal of provision for product defect compensation
Litigation expenses
Foreign exchange loss, net
Product compensation expense
Provision for loss on support to a related company
Gain on reversal of loss on arbitration ruling (Note 15)
Gain on sales of property, plant and equipment (Note 16)
Gain on change in equity (Note 17)
Loss on surcharge payments under the Anti-Monopoly Act (Note 18)
Loss on impairment of fixed assets (Notes 5 and 23)
Loss on sales of property, plant and equipment
Loss on arbitration ruling (Note 19)
Other, net
Profit before income taxes
Income taxes (Note 21):
Current
DeferredProfitProfit attributable to:Non-controlling interests
Owners of parent

2016

2017

¥683,329
555,722
127,607¥716,997
576,651
140,346$6,109.607
4,968,680
1,140,927

91,98435,62392,576
47,770822,424
318,503

1,420(4,192)
213
695
590
—
—
(1,956)(1,341)(1,190)
(667)
2,147
—
—
(12,129)(4,562)(171)—
410(20,733)
14,8901,429(4,730)
801
—
—
760
656
(1,219)(6,824)
(208)
(33)
—
2,880
1,552
—
(2,688)—(13,013)(190)(20,827)
26,943

12,696(37,480)
1,904
6,214
5,275
—
—
(17,488)(11,990)(10,640)(5,964)19,196——(108,445)(40,789)(1,529)—3,668(185,372)
133,131

5,590
4,835
10,425
4,465

10,490405
10,895
16,04849,98043,23093,21039,921(1,634)¥  2,831(1,011)¥ 15,037(14,609)$   25,312

See accompanying notes to the consolidated financial statements.

Consolidated Statement of Comprehensive Income
Year ended March 31, 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

ProfitOther comprehensive income (loss) (Note 20):
Net unrealized holding gain (loss) on securities (Note 6)
Translation adjustments
Retirement benefit liability adjustments
Share of other comprehensive loss of affiliates accounted for by the equity method
Other comprehensive loss, net
Comprehensive income (loss)
Total comprehensive income (loss) attributable to:
Owners of parent
Non-controlling interests
See accompanying notes to the consolidated financial statements.

81

NTN Report 2017

2017

2016

2017

¥4,465¥ 16,048$ 39,921

4,953(8,682)
3,624
(768)
(873)
¥3,592(6,008)(17,345)
(934)
(726)
(25,013)¥ (8,965)

44,285(77,625)
32,402(6,867)(7,805)$ 32,116¥2,836¥  756¥ (8,352)¥   (613)$ 25,357$ 6,759

Consolidated Statement of Changes in Net Assets
Year ended March 31, 2017

Millions of yen
Number ofshares in issue

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at cost532,463,527—¥54,347—¥67,370—¥106,128(4,521)¥(559)—¥14,562—¥ 14,901
—

—

—

—

15,037

—

—

—

—

—

15,037

—
—

—
—

—
—

—
—

(58)
1

—
—

—
—

—
—

—
—

(58)
1

—
—

—
—

(19)
—

—
—

—
—

—
(6,008)—(16,438)

—
(943)

—
(1,105)(19)(24,494)

532,463,527—

54,347—67,351—

116,644(5,317)

(616)
—

8,554
—

(1,537)—(12,421)—

16,183—

248,505(5,317)

Profit attributable to ownersof parent

—

—

—

2,831

—

—

—

—

—

2,831

Purchases of treasury stock

—

—

—

—

(191)

—

—

—

—

(191)

—
—

—
—

(408)
—

—
—

—
—

—
4,953

—
(8,469)

—
3,522

—
(376)

(408)
(370)

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

Balance at April 1, 2015
Cash dividends paid

Purchases of treasury stock
Sales of treasury stock
Change in equity resulting
from transactions with
non-controlling interests
Balance at April 1, 2016
Cash dividends paid

Change in equity resulting
from transactions with
non-controlling interests
Other changes

Noncontrollinginterests

Total net
assets¥(11,478) ¥17,288——¥262,559(4,521)FeatureBalance at March 31, 2017Retirement
benefit liability
adjustments

NTN’s Vision and Strategy

Other changes

Translation
adjustments

About the Company

Profit attributable to ownersof parent

Net unrealized
holding gain on
securities

Thousands of U.S. dollars (Note 1)

Balance at April 1, 2016
Profit attributable to ownersof parent
Purchases of treasury stock
Change in equity resulting fromtransactions with non-controllinginterests
Other changes

Retirement
benefit liability
adjustments

Noncontrollinginterests

CapitalsurplusRetainedearnings$485,914—$602,182—$1,042,907 $(5,508)(47,540)
—

—
—

—
—

25,312——(1,707)

—
—

—
—

—
—

—
—

25,312(1,707)——(3,648)
—

—
—

—
—

—
44,285—(75,721)—31,490—(3,361)(3,648)(3,307)$485,914$598,534$1,020,679 $(7,215)$120,765$(89,463) $ (79,565) $141,330$2,190,979$ 76,480—

Translation
adjustments$(13,742) $(111,055) $144,691———

Total net
assets$2,221,869(47,540)

See accompanying notes to the consolidated financial statements.

The Source of Value Creation

Balance at March 31, 2017

Net unrealized
holding gain on
securities

Commonstock

Review of Operations

Cash dividends paid

Treasurystock,
at costCorporate Information

NTN Report 201782

Consolidated Statement of Cash Flows
Year ended March 31, 2017

Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2016

¥ 14,890¥ 26,943$ 133,131

36,6294,562
47
667
12,12989

38,278
2,688
53
33
—
(6)

327,498
40,789420
5,964
108,445
796

(4)
93
(655)
—
1,114
(1,420)
—
4,192
834
(590)
(213)
171
—
(9,282)
2,468
7,243
1,989
74,953
1,988(4,314)(1,114)(1,112)—(8,013)¥ 62,388

31
(632)
1,529
(2,412)
11,651(1,429)(2,146)
4,730
1,433
—
(801)
(2,880)(1,552)4,599(2,148)(5,408)32
72,586
2,396(4,789)(11,651)—
2,146(14,441)¥ 46,247(36)
832(5,856)—
9,960(12,696)—
37,4807,457(5,275)(1,904)
1,529—(82,990)
22,06664,75917,781
670,150
17,775(38,571)(9,960)(9,942)—(71,644)$ 557,808

Cash flows from investing activities:
Decrease in short-term investments, net
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of other assets
Proceeds from redemption of investment securities
Other
Net cash used in investing activities

200(35,273)472(6,627)—
9(41,219)336(34,441)
3,121(3,179)1,000(608)(33,771)

1,788(315,374)
4,220(59,252)—
81(368,537)

Cash flows from financing activities:
Increase (decrease) in short-term bank loans, net
Proceeds from long-term debt
Repayment of long-term debt, including current portion
Proceeds from issuance of corporate bonds
Proceeds from issuance of common stock assigned to non-controlling interests
Cash dividends paid
Repayment of lease obligations
Other
Net cash used in financing activities

13,67939,481(75,060)
20,000—(5,317)(325)(676)(8,218)(19,529)
37,297(45,039)—
4,652(4,521)(249)(569)(27,958)

122,303352,997(671,107)
178,819—(47,540)(2,906)(6,043)(73,477)(978)11,97367,311(172)(15,654)
87,778(8,744)
107,050
601,824—¥ 79,284(4,813)¥ 67,311—$ 708,874

Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase in provision for loss on support to a related company
Loss on surcharge payments under the Anti-Monopoly Act
Increase (decrease) in allowance for doubtful accounts(Decrease) increase in provision for directors’ and audit &supervisory board members’ bonuses
Increase (decrease) in provision for product defect compensation(Decrease) increase in liability for retirement benefits
Decrease in account payable for reorganization expenses
Payments for loss on arbitration rulingInterest and dividend income
Proceeds from insurance income
Interest expense
Translation adjustments and foreign exchange loss, net
Gain on valuation of derivatives, net
Equity in earnings of affiliates
Loss (gain) on sales of property, plant and equipment, net
Gain on change in equity(Increase) decrease in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Other
SubtotalInterest and dividend income received
Interest paid
Payment for loss on arbitration ruling
Surcharge payments under the Anti-Monopoly Act
Proceeds from insurance income
Income taxes paid
Net cash provided by operating activities

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Decrease in cash and cash equivalents resulting from exclusion of subsidiaries
from consolidation
Cash and cash equivalents at end of the year
See accompanying notes to the consolidated financial statements.

83

NTN Report 20172017

Notes to Consolidated Financial Statements
March 31, 2017

1. Basis of Preparation

Contributions granted by national and municipal governments are
deducted directly from the acquisition costs of the related fixed assets as
stipulated in the Corporation Tax Law of Japan. The property, plant andequipment accounts on the consolidated balance sheets at March 31,2017 and 2016 were reduced by the following amounts:
Millions of yen
2016
2017

Land
Buildings and structures
Machinery, equipment andvehiclesThousands of
U.S. dollars
2017¥  799¥  799$ 7,144

402

434

3,594

155

195

1,386

¥1,356¥1,428$12,124(i) Liability for retirement benefits
Liability for retirement benefits has been provided principally at an
amount calculated based on the retirement benefit obligation after thefair value of the pension plan assets are deducted. The estimated benefit
is attributed to each period by the benefit formula method over theestimated years of service of the eligible employees.

NTN Report 201784

Corporate Information(h) Provision for loss on support to a related company
Provision for loss on support to a related company is provided for the
possible loss on support provided to a related company considering thesubsidiary’s financial condition and other factors.

The Source of Value Creation(c) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks
withdrawable on demand, and short-term investments which are readily
convertible to cash subject to an insignificant risk of any change in theirvalue and which were purchased with an original maturity of threemonths or less.

The principal estimated useful lives are as follows:
Buildings and structures
10 to 50 years
Machinery, equipment and vehicles	  5 to 12 years
Review of Operations(b) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the rates of exchange in effect at the balance sheet
date. Revenues and expenses are translated at the rates of exchange
prevailing when the transactions were made.
Assets and liabilities of overseas consolidated subsidiaries aretranslated into yen at the exchange rates in effect at the respectivebalance sheet dates, except for the components of net assets excluding
non-controlling interests which are translated at the respective historicalrates. Revenue and expenses are translated at the average rates of
exchange for the respective years. Differences arising from translation arereflected in “Translation adjustments” and “Non-controlling interests” inthe accompanying consolidated balance sheets and statements ofchanges in net assets.

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

Feature(a) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and the significant companies which it
controls directly or indirectly. Companies over which the Company
exercises significant influence in terms of their operating and financial
policies have been included in the accompanying consolidated financial
statements on an equity basis.
The financial statements of certain consolidated subsidiaries whose
fiscal year end is December 31 have been included in consolidation on
the basis of a full fiscal year closing on March 31 for consolidation
purposes.

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

NTN’s Vision and Strategy

2. Summary of Significant Accounting Policies(e) Short-term investments and investment securities
The accounting standard for financial instruments requires that securities
be classified into three categories: trading, held-to-maturity or othersecurities. Trading securities are carried at fair value and held-to-maturity
debt securities are carried at amortized cost. Marketable securities
classified as other securities are carried at fair value with any changes in
unrealized holding gain or loss, net of the applicable income taxes,
included directly in net assets. Cost of securities sold is determined by
the moving average method. Non-marketable securities classified asother securities are carried at cost based on the moving average method.

About the Company

The accompanying consolidated financial statements of NTN Corporation(the “Company”) and consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as requiredby the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated financial
statements issued domestically in order to present them in a format
which is more familiar to readers outside Japan. In addition, certain notes
included herein are not required under accounting principles generally
accepted in Japan but are presented as additional information.
Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation. Such
reclassification had no effect on consolidated profit or net assets.
The translation of yen amounts into U.S. dollar amounts is included
solely for the convenience of readers outside Japan and has been madeat ¥111.845 = U.S.$1.00, the exchange rate prevailing on March 31, 2017.
This translation should not be construed as a representation that yen canbe converted into U.S. dollars at the above or any other rate.

(d) Allowance for doubtful accounts
The allowance for doubtful accounts is computed based on the actual
historical percentage of bad debts and an estimate of uncollectible
amounts determined after an analysis of specific individual receivables.

Past service cost is amortized as incurred primarily by the straight-line
method over a period of principally 15 years, which is within theestimated average remaining years of service of the eligible employees.
Net unrecognized actuarial gain or loss is amortized commencing in
the year following the year in which the gain or loss was recognizedprimarily by the straight-line method over a period of principally 15 years,
which is within the estimated average remaining years of service of theeligible employees.

(p) Distribution of retained earnings
Under the Corporation Law of Japan and the Company’s Articles ofIncorporation, the distribution of retained earnings with respect to agiven financial period is made by resolution of the shareholders at a
general meeting held subsequent to the close of the financial period.
The distribution of retained earnings with respect to the interim financial
period is made by resolution of the Board of Directors. The accounts forthe period do not reflect such distributions.

(j) Provision for product defect compensation
Provision for product defect compensation is provided at an estimatedamount in order to cover the anticipated compensation.

(q) Consolidated taxation system
The Company and certain domestic consolidated subsidiaries adopted
the consolidated taxation system, which allows companies to file tax
returns based on the combined profits or losses of the parent company
and its wholly owned domestic subsidiaries.

(k) Leases
For lease transactions involving the transfer of ownership, the leased
assets are depreciated by the same methods used for owned fixed assets.
For lease transactions not involving the transfer of ownership, leased
assets are depreciated over the lease period using the straight-line
method with a nil residual value.
(l) Goodwill
Goodwill is being amortized by the straight-line method over theestimated period of the economic benefits.
(m) Research and development costs and computer software
Research and development costs are charged to income as incurred.
Expenditures relating to computer software developed for internal
use are charged to income when incurred, except if the software is
expected to contribute to the generation of income or to future costsavings. Such expenditures are capitalized as assets and are amortized by
the straight-line method over their respective estimated useful lives,
generally a 5-year period.
(n) Deferred income taxes
Deferred income taxes are provided for temporary differences between
the balances of assets and liabilities reported for financial reporting
purposes and the corresponding balances for tax reporting purposes.
(o) Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes in fair value
included in profit for the period in which they arise, except for derivatives
which meet the criteria for deferral hedge accounting under which
realized gain or loss, net of the applicable income taxes, is deferred as acomponent of net assets. Receivables and payables hedged by forward
foreign exchange contracts which meet certain conditions are translated
at the corresponding foreign exchange contract rates. Interest-rate
swaps which meet certain conditions are accounted for as if the interest
rates applied to the interest-rate swaps had originally applied to theunderlying debt.
Interest-rate and cross currency swaps which meet certain conditions
are accounted for as if the interest rates and currencies applied to theinterest-rate and cross currency swaps had originally applied to theunderlying debt.

85

NTN Report 2017

3. Additional Information(a) Implementation Guidance on Recoverability of Deferred Tax
Assets
Effective April 1, 2016, the Company and its domestic consolidated
subsidiaries adopted “Revised Implementation Guidance on
Recoverability of Deferred Tax Assets” (Accounting Standards Board ofJapan Guidance No. 26 of March 28, 2016).
(b) Performance-linked stock compensation scheme
Effective from the fiscal year ended March 31, 2017, the Company
has introduced a performance-linked stock compensation scheme(hereinafter referred to as the “Scheme”) for its directors (excluding
directors who do not reside in Japan and outside directors; the same
applies hereinafter), which serves as an officer remuneration system thatis closely linked to corporate performance targets in the mid-term
management plan and which is highly transparent and objective innature.
(i) Overview of transactions
The Scheme adopts a mechanism known as an officer remuneration
BIP (Board Incentive Plan) trust (hereinafter referred to as the “BIP
Trust”). The BIP Trust is an incentive plan for officers based on theperformance share scheme and the restricted stock scheme in the
U.S., and has a system in which the Company’s shares acquired by the
BIP Trust and funds equivalent to the proceeds received whenconverting into cash or disposing of such shares are distributed andpaid according to the officers’ positions and the degree ofachievement of performance targets disclosed in the mid-term
management plan, and other factors.
(ii) The Company’s shares remaining in the trust
The Company’s shares remaining in the trust are recorded as treasury
stock in the net asset section, based on their book value (excluding
the amount of incidental expenses) recorded in the accounts of thetrust. The book value and number of shares of such treasury stock at
March 31, 2017 totaled ¥180 million ($1,609 thousand) and 568,000
shares, respectively.

4. Inventories
Inventories at March 31, 2017 and 2016 consisted of the following:

2016

Finished goods¥ 97,406¥103,195$  870,902

Work in process

43,62945,808390,084

Raw materials and supplies

30,447

29,217272,225¥171,482¥178,220$1,533,211

About the Company

2017

Thousands of
U.S. dollars
2017

Millions of yen

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, andgroup fixed assets on an individual basis when they do not expect any future use.
The Company and its consolidated subsidiaries wrote down the following assets to their respective net recoverable values because the Company
and its consolidated subsidiaries do not expect them to be recoverable. Consequently, the Company and its consolidated subsidiaries recorded related
losses on impairment of fixed assets of ¥4,562 million ($40,789 thousand) and ¥2,688 million in the accompanying consolidated statement of income
for the years ended March 31, 2017 and 2016, respectively:

Usage

Classification

2017

2016

Japan

Production equipment and otherMachinery and equipment¥   24¥$   215

Construction in progress

100

226

894

Other

432

—

3,862

Machinery and equipment

85

—

760

Other

79

—

707

EuropeAsia and other areas

Production equipment and other—

Buildings and structures

1,319

—

11,793

Machinery and equipment

2,441

—

21,825Construction in progress

—

2,462

—

Goodwill

82

—

733

¥4,562¥2,688$40,789

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
is unlikely to be sold or diverted to other usage, such asset is valued at nil.

The Source of Value Creation

6. Securities(a) Information regarding marketable securities classified as other securities at March 31, 2017 and 2016 is summarized as follows:
Millions of yen
Unrealized
gain (loss)

Carrying
value¥31,758¥12,025¥19,733¥25,002¥11,717¥13,285

4,347

4,772

(425)

3,825

5,080

(1,255)

—

—

—

2,000

2,000

—

4,347

4,772

(425)

5,825

7,080

(1,255)¥36,105¥16,797¥19,308¥30,827¥18,797¥12,030

Unrealized
gain (loss)

Securities whose carrying value
exceeds their acquisition costs:
Equity securities
Securities whose carrying value does
not exceed their acquisition costs:
Equity securities
Other
Subtotal
Total

NTN Report 201786

Corporate Information

Carrying
value

2017
Acquisition
costs

2016
Acquisition
costs

Review of Operations—

Production equipment and other—

FeatureLocation

Thousands of
U.S. dollars
2017

Millions of yen

NTN’s Vision and Strategy

5. Impairment of Fixed Assets

Thousands of U.S. dollars
Carrying
value

2017
Acquisition
costs

Unrealized
gain (loss)$283,947$107,515$176,432

38,866

42,666(3,800)———38,866

42,666(3,800)$322,813$150,181$172,632

Securities whose carrying value
exceeds their acquisition costs:
Equity securities
Securities whose carrying value does
not exceed their acquisition costs:
Equity securities
Other
Subtotal
Total(b) Sales and aggregate gain on investment securities are summarized as follows:
There were no sales of investment securities for the years ended March 31, 2017 and 2016.

7. Short-Term Bank Loans, Long-Term Debt and Lease Obligations
Short-term bank loans principally represent short-term notes with average annual interest rates of 0.84% and 1.05% at March 31, 2017 and 2016,
respectively.
Long-term debt and lease obligations at March 31, 2017 and 2016 consisted of the following:Thousands of
U.S. dollars
2017

Millions of yen

Loans from banks and other financial institutions, due through 2025, at an average annualinterest rate of 1.37%

2017

2016

¥233,437¥271,083$2,087,148

0.405% unsecured bonds due 2025

10,000—89,4090.490% unsecured bonds due 2027

10,000—89,409Lease obligations due through 2046

2,620

1,605

23,425

256,057

272,6882,289,391

Less current portion(66,947)(69,000)(598,569)¥189,110¥203,688$1,690,822

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2017 are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2018¥ 66,947$  598,569

2019

60,666542,4112020

21,449191,7742021

32,187287,7822022

29,066259,8782023 and thereafter

45,742408,977¥256,057$2,289,391

8. Retirement Benefits
1. Outline of retirement benefits for employees
The Company and certain domestic consolidated subsidiaries have defined benefit pension plans (i.e., corporate pension fund plans and lump-sum
payment plans), covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts of which are determined byreference 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
plans. The Company has also established an employees’ retirement benefit trust.

87

NTN Report 2017

2. Defined benefit pension plans(1) The changes in the retirement benefit obligation for the years ended March 31, 2017 and 2016 are as follows:

2016¥104,978¥109,664$938,603

Service cost

3,432

3,340

30,685Interest cost

1,870

1,994

16,720

Actuarial gain(612)

(2,821)(5,472)

Benefits paid

(5,859)(6,281)(52,385)

Retirement benefit obligation at the beginning of the year

Other
Retirement benefit obligation at the end of the year

(172)

(918)

(1,538)¥103,637¥104,978$926,613
NTN’s Vision and Strategy*Certain domestic consolidated subsidiaries calculate the liability for retirement benefits based on the simplified method.

(2) The changes in plan assets for the years ended March 31, 2017 and 2016 are as follows:

2017

2016

Thousands of
U.S. dollars
2017¥57,841¥64,587$517,153

Expected return on plan assets

1,834

2,122

16,398Actuarial gain and loss

3,240

(6,128)28,969Contributions by the employers

2,586

2,172

23,121

Benefits paid

(3,710)(3,639)(33,171)

Millions of yen

Plan assets at fair value at the beginning of the year

Plan assets at fair value at the end of the year

(303)

(1,273)(2,709)¥61,488¥57,841$549,761

FeatureOther

About the Company

2017

Thousands of
U.S. dollars
2017

Millions of yen(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, 2017 and 2016 are as follows:

2016

Funded retirement benefit obligation¥ 95,273¥ 96,786$ 851,831

Plan assets at fair value(61,488)(57,841)(549,761)

33,78538,945302,070

Unfunded retirement benefit obligation

8,364

8,192

74,782

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

42,14947,137

376,852

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

42,14947,137

376,852¥ 42,149¥ 47,137$ 376,852

Thousands of
U.S. dollars
2017

The Source of Value Creation

Liability for retirement benefits(4) The components of retirement benefit expenses for the years ended March 31, 2017 and 2016 are as follows:
Millions of yen
2016¥ 3,432¥ 3,340

Interest cost

1,870

1,994

16,720

Expected return on plan assets(1,834)(2,122)(16,398)

2,254

2,500

20,153

(9)

(162)

(80)

¥ 5,713¥ 5,550$ 51,080$ 30,685

Amortization:
Past service cost
Retirement benefit expenses

NTN Report 201788

Corporate Information

2017

Service cost

Actuarial loss

Review of Operations

2017

Thousands of
U.S. dollars
2017

Millions of yen

(5) The components of retirement benefit liability adjustments included in other comprehensive income (before tax effect) for the years ended March
31, 2017 and 2016 are as follows:
Thousands of
U.S. dollars
2017

Millions of yen

2017

Actuarial gain and loss¥(808)

17

(149)

152

¥6,123¥(957)$54,745

Past service cost
Total

2016

¥6,106$54,593(6) The components of retirement benefit liability adjustments included in accumulated other comprehensive income (before tax effect) as of March
31, 2017 and 2016 are as follows:

2016

Thousands of
U.S. dollars
2017¥(11,487)¥(17,593)$(102,705)

(280)

(297)

(2,503)¥(11,767)¥(17,890)$(105,208)

Millions of yen

2017

Unrecognized actuarial loss
Unrecognized past service cost
Total(7) The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2017 and 2016 are as follows:
2017

2016

Equities

50.5%

43.7%

Bonds

23.6

19.7

General accounts at life insurance companies

16.0

17.1

Other

9.9

19.5

Total

100.0%

100.0%The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present andanticipated in the future, and long-term expected rate of return from multiple plan assets.
(8) The assumptions used in accounting for the defined benefit plans are as follows:
2017

2016

Discount rate

Principally 1.2%

Principally 1.2%

Expected long-term rate of return on plan assets

Principally 2.5%

Principally 2.5%

3. Defined contribution pension plans
Millions of yen

Contributions to defined contribution pension plans

2017

2016

¥1,545¥1,568

Thousands of
U.S. dollars
2017$13,814

9. 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,
respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at
any time by resolution of the shareholders or by the Board of Directors if certain conditions are met.
		 Retained earnings include the legal reserve provided in accordance with the provisions of the Law. The legal reserve of the Company included
in retained earnings amounted to ¥8,639 million ($77,241 thousand) at March 31, 2017 and 2016, respectively.

89

NTN Report 2017

(b) Movements in shares issued and treasury stock during the years ended March 31, 2017 and 2016 are summarized as follows:
Number of shares

2017
April 1, 2016

Increase

March 31, 2017

532,463,527——

532,463,527

Treasury stock: Common stock

795,969

592,425—

1,388,394

2016
April 1, 2015

Increase

Decrease

March 31, 2016

Shares issued: Common stock

532,463,527——

532,463,527

Treasury stock: Common stock

670,098

127,486

1,615

795,969

Corporate Information

Future minimum lease payments subsequent to March 31, 2017 for non-cancelable operating leases were as follows:
Millions of yen

Thousands of
U.S. dollars

2018¥1,004$ 8,9772019 and thereafter

3,872

34,619¥4,876$43,596

Total

NTN Report 2017

The Source of Value Creation

11. Operating Leases

Years ending March 31,

Review of Operations

Lawsuits, etc.
(1) In June 2012, the Company and its former executives received
an indictment filed by the Tokyo District Prosecutors Office(hereinafter referred as TDPO) on suspicion of having violated theAnti-Monopoly Act of Japan in connection with the sales of bearings
in Japan. In March 2013, the Company received a cease and desist
order and surcharge payment order for ¥7,231 million ($64,652
thousand) from the Japan Fair Trade Commission (hereinafter referredas JFTC). Because the assertions by the JFTC and the TDPO are
different from the Company’s view of the facts, in April 2013, theCompany requested the JFTC to initiate a hearing. As a result, hearing
proceedings for the JFTC orders were commenced in September
2013. In addition, in respect of a criminal trial, the Company had been
appealing against the conviction declared in February 2015 by the
Tokyo District Court, but the Tokyo High Court rendered its judgment
and rejected the appeal in March 2016. The Company and its former
executives have appealed to the Supreme Court of Japan.
		 There are ongoing investigations by authorities into consolidated
subsidiaries in South Korea and elsewhere.
(2) In the U.S. and Canada, a number of class action suits was filed against
the Company and its consolidated subsidiaries for suspected pricefixing of bearing sales with business competitors. The Company andits consolidated subsidiary have reached an agreement to settlewith indirect purchasers, parts of the certain plaintiffs in the U.S. in
November 2016.
(3) In February 2016, a lawsuit was filed against eight bearing
manufacturers, including the Company, in The United Kingdom
Competition Appeal Tribunal. The suit sought the joint payment ofdamages of €507.8 million (provisional amount) to Peugeot S.A. andits total 19 group companies (hereinafter referred to as the PSA
group). The claim was revised for four bearing manufactures,
including the Company to pay €437.7 million (provisional amount)jointly. The suit was filed because the PSA group claimed damages
incurred in connection with the alleged violation of the European
Competition Law, which is the subject of a decision made by theEuropean Commission on March 19, 2014.
(4) The Company and its related companies may be subject to lawsuit
similar to the above mentioned lawsuits, etc. and continue to addressthese claims. Depending on the results of the above lawsuits, etc.,
the results of operations of the Company and its consolidated
subsidiaries could be affected. However, it is currently difficult tomake reasonable estimates of the future possible effects on the
results of operations and financial position of the Company and its
consolidated subsidiaries.

Feature10. Contingent Liabilities

NTN’s Vision and Strategy

The increase in treasury stock of 592,425 shares was due to purchases of 24,425 shares of less than one voting unit and purchases of 568,000 shares by
the “Officer Remuneration BIP Trust” as the trust asset of the new stock compensation scheme for directors for the year ended March 31, 2017 (Pleaserefer to Note 3-(b)). Additionally, the Company included 568,000 shares held by the “Officer Remuneration BIP Trust” in the number of treasury stock at
March 31, 2017.
The increase in treasury stock of 127,486 shares was due to purchases of 49,486 shares of less than one voting unit and the acquisition of 78,000
shares under provisions of Article 156 of the Law (the acquisition of treasury stock based on the resolution of the meeting of the shareholders) applied
pursuant to Article 163 of the Law (the acquisition of treasury stock based on the resolution of the Board of Directors meeting) for the year ended
March 31, 2016. The decreases in treasury stock were due to sales of shares at requests of shareholders owning less than one voting unit for the year
ended March 31, 2016.

About the Company

Decrease

Shares issued: Common stock90

12. Financial Instruments — Fair Value
Overview(a) Policy for financial instruments
The Company and its subsidiaries (collectively, the “Group”) raisenecessary 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 issuance ofcorporate 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 thelater part of this note and does not hold them for speculative purposes.
(b) Types of financial instruments and related risks
Trade receivables, notes, accounts receivable and electronically recordedmonetary claims, are exposed to credit risk of customers. In addition, as aresult of the business of the Group, which operates globally, foreign
currency trade receivables are exposed to currency rate fluctuation risk,
which is mitigated by utilizing forward foreign currency exchange
contracts. Securities are mainly composed of stocks of the companies
with which the Group has business relationships and they are exposed tofluctuation risk of market prices.
Trade payables, notes, accounts payable and electronically recorded
obligations, are due within one year. Certain trade payables resulting
from the import of raw materials are denominated in foreign currencies.
These are exposed to fluctuation risk of foreign currencies. However, therisk is mitigated because the trade payables, notes and accounts payable
denominated in foreign currencies are within persistently the range ofaccounts receivable denominated in the same currencies.
Loans are mainly utilized for business operations of the Group. Shortterm loans are mainly utilized for financing of operating activities. Longterm loans are mainly utilized for capital investments and financing.
These have maturity dates of 8 years or less, at the longest, subsequent toMarch 31, 2017. Certain loans are exposed to fluctuation risk of interest
rates and fluctuation risk of exchange rates and this risk is hedged byderivative transactions of interest rate swap agreements and crosscurrency swap agreements.
The Group has a policy to utilize derivative transactions involving
forward foreign currency exchange contracts, currency option agreements,
currency swap agreements, interest rate option agreements and interest
rate swap agreements for the purpose of avoiding future fluctuation riskof foreign currencies trade receivables and payables and mitigating
future fluctuation risk of interest rate of loans and corporate bonds. The
Group utilized forward foreign currency exchange contracts, interest rate
swap agreements and cross currency swap agreements for the year
ended March 31, 2017. Refer to “(o) Derivative financial instruments
and hedging activities” in Note 2. “Summary of Significant Accounting
Policies.”

91

NTN Report 2017(c) Risk management for financial instruments(i) Monitoring of credit risk (the risk that customers or counterparties may
default)
In accordance with internal rules and manual, the credit management
section periodically monitors financial conditions of major customers,
manages collection due dates and balances of each customer and tries
to identify credit risk of customers with worsening financial conditions at
the early stage and mitigate the risk. Credit risk of securities is quite low
because the Group utilizes certificate of deposits with high credit ratings,
up to a limited amount, which is approved by the Company. The Group
believes credit risk of derivative transactions is almost nil because
counterparties are financial institutions with high credit ratings.
(ii) Monitoring of market risks (the risks arising from fluctuations in foreign
currency exchange rates, interest rates and others)
The Group mainly utilizes forward foreign currency exchange contracts
for hedging of fluctuation risk which is identified by each currency.
Depending on the market conditions of foreign currencies, the 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 cross currency
swap agreements to mitigate fluctuation risk of interest rates andfluctuation risk of loan principal due to floating exchange rates.
The Group continuously reviews securities holdings by monitoring
periodically the market value and financial condition of securities’issuers (companies with business relationships with the Group) andby evaluating those relationships.
The Group has established policies which include maximum upper
limits and reporting obligations for derivative transactions and comply
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 monitoringof the derivative transactions in accordance with management policies
and its consolidated subsidiaries apply the same approach. Eachderivative transaction of the Company is reported to the responsible
director when entered into. The consolidated subsidiaries are required toreport the status of their derivatives transactions to the Company on amonthly basis and are 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 tomeet 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 onreports 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 13 “Derivative Financial Instruments and Hedging
Activities’’ are not necessarily indicative of the actual market risk involvedin the derivative transactions.

Fair Value of Financial Instruments
The carrying value of financial instruments on the consolidated balance sheets, fair value and the difference as of March 31, 2017 and 2016, are shownin the following table. The table does not include financial instruments for which it is extremely difficult to determine the fair value. (Please refer to Note
2 below).
About the Company

Millions of yen

2017

2016

Carrying
value

Fair value

Difference

Carrying
value

Fair value

Difference¥ 79,284¥ 79,284¥ —¥ 67,311¥ 67,311¥( 2 ) Short-term investments

718

718

—

924

924

—

(3)N
 otes and accounts —trade receivables

136,848

136,848—

134,196

134,196—( 1 ) Cash and cash equivalents

—

5,495

5,495

—

2,285

2,285

—

( 5 ) Investment securities

36,105

36,1094

28,827

28,8303( 6 ) S hort-term loans receivable included
in other current assets

94

—

2

2

—

¥258,544¥258,548¥  4¥233,545¥233,548¥    3( 7 ) Short-term bank loans

66,733

66,733—54,09154,091—( 8 ) Current portion of long-term debt

66,61566,615—68,701

68,701—( 9 ) Notes and accounts —trade payables

59,26259,262—

55,24755,247—(10) Electronically recorded obligations

58,132

58,132—56,39056,390—(11) Accrued income taxes

3,057

3,057

—

4,236

4,236

—

(12) Long-term debt

186,822

187,600

778

202,382

205,662

3,280

Total liabilities¥440,621¥441,399¥778¥441,047¥444,327¥3,280Derivative transactions (*)¥  1,070¥  1,070¥ —¥    480¥    480¥

Feature94

Total assets

NTN’s Vision and Strategy( 4 ) Electronically recorded monetaryclaims—Thousands of U.S. dollars

2017
Carrying
value

Fair value$  708,874$  708,874( 2 ) Short-term investments

6,420

6,420

—

( 3 ) Notes and accounts —trade receivables

1,223,550

1,223,550—

Difference$—( 4 ) E lectronically recorded monetaryclaims49,13049,130—( 5 ) Investment securities

322,813322,84936( 6 ) Short-term loans receivable included
in other current assets—$2,311,664$   36( 7 ) Short-term bank loans

596,656

596,656—( 8 ) Current portion of long-term debt

595,601

595,601—(9)N otes and accounts —trade payables

529,858

529,858(10) Electronically recorded obligations

519,755

519,755(11) Accrued income taxes

27,332

27,332—(12) Long-term debt

1,670,365

1,677,321

6,956

Total liabilities$3,939,567$3,946,523$6,956

Derivative transactions (*)$    9,567$    9,567

$

—
—

—

*Assets and liabilities arising from derivative transactions are shown at net value with the amount in parentheses representing net liability position.

Note 1: Methods to determine the fair value of financial instruments and other matters related to securities and derivative transactions(1) Cash and cash equivalents, (2) Short-term investments, (3) Notes and accounts-trade receivables, (4) Electronically recorded monetary claim 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.

NTN Report 201792

Corporate Information

841$2,311,628

The Source of Value Creation

841

Total assets

Review of Operations( 1 ) Cash and cash equivalents

(5) Investment securities
The fair value of equity securities is based on quoted market prices.
(7) Short-term bank loans, (9) Notes and accounts-trade payables (10) Electronically recorded obligations and (11) Accrued income taxes
Since these items are settled in a short time period, their carrying value approximates fair value.
(8) Current portion of long-term debt and (12) Long-term debt
Long-term debt is composed of corporate bonds and long-term loans. The fair market value of corporate bonds is based on quoted market
prices. The fair value of long-term loans is based on the present value of the total of principal and interest discounted by the interest rate tobe applied assuming new loans under the similar conditions to existing loans are made.
Certain long-term loans with floating interest rates have been hedged by interest rate swap agreements and interest-rate and crosscurrency swap agreements. These have been accounted for as loans with fixed interest rates. The fair value of those long-term loans is basedon the present value of the total of the principals, interest payments and net cash flows of the swap agreements discounted by the interest
rates to be applied assuming new loans under similar conditions are made.
Derivative Transactions
Please refer to Note 13 “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:

2017

2016

Thousands of
U.S. dollars
2017¥17,992¥19,089$160,865

290

288

2,593

—

1,098

—

¥18,282¥20,475$163,458

Millions of yen

Unlisted stocks
Stocks of subsidiaries and affiliates
Other
Unlisted foreign bonds
Total

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 preceding table.
Note 3:	Redemption schedules for cash and cash equivalents, receivables and marketable securities with maturities at March 31, 2017 and 2016 are
as follows:
Millions of yen

2017
More than one year
More than five years
and within five years
and within ten years

Withinone year

Cash and cash equivalents
Short-term investments
Trade receivables
Electronically recorded monetary claims¥ 79,284

¥—

¥—

¥—

718

—

—

—

136,848

—

—

—

5,495

—

—

—

94

—

—

—

¥222,439

¥—

¥—

¥—

Short-term loans receivable included in other current assets
Total

Millions of yen
2016
More than one year
More than five years
and within five years
and within ten years

Withinone year

Cash and cash equivalents
Short-term investments
Trade receivables
Electronically recorded monetary claims
Short-term loans receivable included in other current assets
Total

93

NTN Report 2017

More thanten years

More thanten years¥ 67,311

¥—

¥—

¥—

924

—

—

—

134,196

—

—

—

2,285

—

—

—

2

—

—

—

¥204,718

¥—

¥—

¥—

Withinone year

Cash and cash equivalents
Trade receivables
Electronically recorded monetary claims
Short-term loans receivable included in other current assets
Total

More thanten years$  708,874

$—

$—

$—

6,420

—

—

—

1,223,550———

49,130

—

—

—

841

—

—

—

$1,988,815

$—

$—

$—

About the Company

Short-term investments

Thousands of U.S. dollars
2017
More than one year
More than five years
and within five years
and within ten years

13. Derivative Financial Instruments and Hedging Activities(a) Derivative transactions to which hedge accounting is not applied
The estimated fair value of the derivatives positions outstanding which do not qualify for deferral hedge accounting at March 31, 2017 and 2016 issummarized as follows:

NTN’s Vision and Strategy

Note 4:	The redemption schedule for long-term debt is disclosed in Note 7 “Short-Term Bank Loans, Long-Term Debt and Lease Obligations” sectionof these Notes to Consolidated Financial Statements.

Currency-related transactions
Millions of yen
Transaction

Notional amount

2017
More than one year

Fair value

Valuation gain (loss)¥  220Forward foreign currency exchange contracts
Selling:Over-the-countertransactions

Euro¥ 6,975¥ 1,338¥  220U.S. dollars

13,781

—

(8)

(8)

Other

2,241

—

(71)

(71)

204

—

(4)

(4)

Other

Review of Operations

Buying:Interest-rate and cross currency swaps
Receive / fixed yen and pay / fixed Euro
Total

FeatureClassification

10,05810,058933

933¥33,259¥11,396¥1,070¥1,070Fair value

Valuation gain (loss)

Millions of yen
Transaction

Notional amount

2016
More than one year

Forward foreign currency exchange contracts
Selling:Euro
Over-the-countertransactions¥ 6,956¥ 1,338

¥ 19

¥ 19

U.S. dollars

4,983

480

80

80

Other

1,225

—

(6)

(6)

10,05810,058387

387¥23,222¥11,876

¥480

¥480

The Source of Value Creation

Classification

Interest-rate and cross currency swaps
Receive / fixed yen and pay / fixed EuroNTN Report 2017

Corporate Information

Total

94

Classification

Transaction

Notional amountThousands of U.S. dollars
2017
More than one year
Fair value

Valuation gain (loss)

Forward foreign currency exchange contracts
Selling:Over-the-countertransactions

Euro$ 62,363$ 11,963$1,967

U.S. dollars

123,215—(71)$1,967(71)

Other

20,037

—

(635)

(635)

1,824

—

(36)

(36)

Buying:Other
Interest-rate and cross currency swaps
Receive / fixed yen and pay / fixed Euro
Total

89,92889,928

8,342

8,342

$297,367$101,891$9,567$9,567

The fair value of forward foreign currency exchange contracts are computed using prices provided by counterparty financial institutions.
(b) Derivative transactions to which hedge accounting is applied
The estimated fair value of the derivatives positions outstanding which qualify for deferral hedge accounting at March 31, 2017 and 2016 is summarized
as follows.

Method of hedge accounting

Transaction

Swap rates applied to underlying
long-term debt

Interest rate swaps

Swap rates and currency applied tounderlying long-term debt

Interest-rate and cross currency swaps

Receive / floating and pay / fixed
Receive / floating U.S. dollars and pay / fixed yen

Forward foreign currency exchange
Forward foreign currency exchange contract
contracts applied to underlying other
Selling:
current liabilities
U.S. dollars

Notional amountMillions of yen
2017
More than one year

Fair value¥18,500¥14,000(*1)¥ 1,500¥ 1,500(*2)¥    79—(*3)¥ 3,003—(*3)

Buying:Euro

Method of hedge accounting

Transaction

Swap rates applied to underlying
long-term debt

Interest rate swaps

Swap rates and currency applied tounderlying long-term debt

Interest-rate and cross currency swaps

Receive / floating and pay / fixed
Receive / floating U.S. dollars and pay / fixed yen

Method of hedge accounting

Transaction

Swap rates applied to underlying
long-term debt

Interest rate swaps

Swap rates and currency applied tounderlying long-term debt

Interest-rate and cross currency swaps

Receive / floating and pay / fixed
Receive / floating U.S. dollars and pay / fixed yen

Forward foreign currency exchange
Forward foreign currency exchange contract
contracts applied to underlying other
Selling:
current liabilities
U.S. dollars

Notional amountMillions of yen
2016
More than one year

Fair value¥23,000¥18,500(*1)¥ 1,500¥ 1,500(*2)

Notional amountThousands of U.S. dollars
2017
More than one year

Fair value$165,407$125,173(*1)$ 13,411$ 13,411(*2)$    706—(*3)$ 26,850—(*3)

Buying:Euro*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 12 “Financial Instruments – Fair Value.”*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 oflong-term debt disclosed in Note 12 “Financial Instruments – Fair Value.”*3 Because forward foreign currency exchange contracts are accounted for applying forward foreign exchange rate to underlying accounts-trade receivable and othercurrent liabilities, their fair value is included in that of accounts-trade receivable and other current liabilities.

95

NTN Report 201714. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses totaled ¥19,196 million ($171,630 thousand)and ¥18,481 million for the years ended March 31, 2017 and 2016, respectively.

16. Gain on Sales of Property, Plant and Equipment
Gain on sales of property, plant and equipment for the year ended March 31, 2016 consisted of the following:
Millions of yen
2016

Gain on sales of land at former TAKARAZUKA Works

NTN’s Vision and Strategy

In relation to arbitration proceedings for allegedly defective products with Volvo Powertrain AB in Europe, NTN-SNR ROULEMENTS (hereinafter referred
to as NTN-SNR) received the final ruling from the Arbitration Institute of the Stockholm Chamber of Commerce (Sweden) that ordered NTN-SNR toprovide compensation for damages in November 2015. Accordingly, the Company and NTN-SNR recorded loss on arbitration ruling for the year ended
March 31, 2016. The Company and NTN-SNR thoroughly examined the ruling and decided that there was a flaw in such arbitration proceedings.
Therefore, the Company and NTN-SNR challenged the ruling in the Stockholm District Court in February 2016. In January 2017, NTN-SNR has reached
an agreement to settle with Volvo Powertrain AB. As a result, the Company and NTN-SNR recorded gain on reversal of loss on arbitration ruling in theamount of ¥2,147 million ($19,196 thousand) for the year ended March 31, 2017.

About the Company

15. Gain on Reversal of Loss on Arbitration Ruling¥2,694

Others186¥2,880Feature17. Gain on Change in Equity
In January 2016, PT. NTN MANUFACTURING INDONESIA changed from being a consolidated subsidiary to an affiliate due to the issuance of new sharesto a third party resulting in the decrease in ownership interest held by the Company and its subsidiary. As a result, the Company recorded gain onchange in equity in the amount of ¥1,552 million for the year ended March 31, 2016.

19. Loss on Arbitration Ruling

NTN Report 2017

96

Corporate Information

NTN-SNR ROULEMENTS (hereinafter referred to as NTN-SNR), a consolidated subsidiary, had been involved in arbitration proceedings with Volvo
Powertrain AB in Europe since November 2012. They submitted a claim to arbitration and requested a payment for damages due to allegedly defective
products provided by NTN-SNR. In November 2015, NTN-SNR received the final ruling from the Arbitration Institute of the Stockholm Chamber ofCommerce (Sweden) that ordered NTN-SNR to provide compensation for damages. The Company and NTN-SNR recorded loss on arbitration ruling in
the amount of ¥13,013 million, which is the final arbitration amount less the proceeds from insurance income, for the year ended March 31, 2016.

The Source of Value Creation

In relation to a number of class action suits for suspected price-fixing of bearing sales with other business competitors, the Company and its
consolidated subsidiary in the U.S. have reached an agreement to settle with indirect purchasers, parts of the certain plaintiffs in the U.S. in November
2016. In addition, the Company has negotiated the compensation of damages with a part of customers in association with investigations by theauthorities about the competition laws. Nevertheless, in overall consideration of the effects to operations of the Company and its consolidated
subsidiaries due to extended negotiations, the Company reached the conclusion to pay the settlement amount because the Company consideredthat an amicable and early resolution 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¥12,129 million ($108,445 thousand) for the year ended March 31, 2017.

Review of Operations

18. Loss on Surcharge Payments under the Anti-Monopoly Act

20. Other Comprehensive Income (Loss)
The following table presents the analysis of other comprehensive income (loss) for the years ended March 31, 2017 and 2016.
Thousands of
U.S. dollars
2017

Millions of yen

2017

2016

¥ 7,210¥ (9,038)

(134)

—

(1,197)

Before tax effect

7,076(9,038)63,267

Tax effect(2,123)

3,030(18,982)

Total

4,953

(6,008)44,285(8,768)(17,363)(78,394)

86

18

769

(8,682)(17,345)(77,625)

Net unrealized holding gain (loss) on securities:
Amount arising during the year
Reclassification adjustments for gains included in profit$ 64,464

Translation adjustments:
Amount arising during the year
Reclassification adjustments for losses included in profit
Before tax effectTax effect

—

—

—

Total

(8,682)(17,345)(77,625)

Amount arising during the year

3,451

(3,276)30,855

Reclassification adjustments for losses included in profit

2,305

2,224

20,609Before tax effect

5,756(1,052)

51,464

Tax effect(2,132)

118(19,062)

Total

3,624

(934)

32,402Retirement benefit liability adjustments:

Share of other comprehensive loss of affiliates accounted forby the equity method:Amount arising during the year
Other comprehensive loss, net

(768)

(726)

(6,867)¥  (873)¥(25,013)$ (7,805)

21. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporate taxes, inhabitants’ taxes and enterprise taxes which, in theaggregate, resulted in statutory tax rates of 30.2% and 32.4% for the years ended March 31, 2017 and 2016, respectively. Overseas subsidiaries are
subject to the income taxes of the respective countries in which they operate.
The effective tax rates for the years ended March 31, 2017 and 2016 differ from the Company’s statutory tax rates for the following reasons:Statutory tax rates

2017

2016

30.2%

32.4%

Permanent non-deductible expenses

0.8

0.9

Permanent non-taxable income

(9.3)

(5.8)

Elimination of dividend income

11.8

7.9

Equity in earnings of affiliates

(0.4)

(0.9)

Difference in overseas consolidated subsidiaries’ applicable tax rates

(2.9)

(3.2)

Increase in valuation allowance

34.7

10.6

Decrease in deferred tax assets due to change in statutory tax rates

0.1

2.5

Tax credit for research and development expenses

(0.5)

(3.1)

Gain on change in equity

—

(1.9)

Other

5.5

1.0

Effective tax rates

70.0%

40.4%

97

NTN Report 2017

The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2017 and 2016 arepresented below:

2016

Deferred tax assets:¥ 18,594$ 146,542

1,167

3,237

10,434

Tax loss carryforwards

9,443

13,26684,429Accrued expenses

5,339

3,874

47,736

Valuation loss on investment securities

898

898

8,029

Impairment loss

863

673

7,716

4,901

3,567

43,820348,706

Other

44,109(5,969)(2,426)(53,368)

Total deferred tax assets

33,032

41,683295,338

Depreciation and amortization(13,373)(14,757)(119,567)

Unrealized holding gain on securities(5,789)(3,666)(51,759)

Reserve for deferred gain on property included in retained earnings(1,233)(1,329)(11,024)

(184)

(309)

(1,645)(1,171)(1,335)(10,471)

Deferred tax liabilities:

Retained earnings of overseas consolidated subsidiaries
Other
Total deferred tax liabilities(21,750)(21,396)(194,466)

Net deferred tax assets¥ 11,282¥ 20,287$ 100,872

Amounts per share at March 31, 2017 and 2016 and for the years then ended were as follows:
Yen

2017

2016

U.S. dollars
2017¥431.66¥436.97

$3.86

Basic

5.33

28.28

0.05

Cash dividends

10.00

10.00

0.09

Net assets

The Source of Value Creation

22. Amounts per Share

Review of Operations

The “Act for Partial Revision of Regulations Including the Act for, among Other Purposes, Partial Revision of the Consumption Tax Act to Implement a
Drastic Reform of the Taxation System for Purposes Such as Securing Stable Financial Resources for Social Security” (Act No. 85, 2016) and the “Act for
Partial Revision of Regulations Including the Act for, among Other Purposes, Partial Revision of the Local Tax Act and the Local Allocation Tax Act to
Implement a Drastic Reform of the Taxation System for Purposes Such as Securing Stable Financial Resources for Social Security” (Act No. 86, 2016) wereenacted in the Japanese Diet session on November 18, 2016 and the timing of implementation for the consumption tax rate increase to 10% was
postponed from April 1, 2017 to October 1, 2019.
In line with these revisions, the timing of implementation for the abolishment of the special local corporation tax, the restoration of the enterprise
tax on corporations as a result of said abolishment, the revision of the local corporate income tax rate, and the revision of the rate of the corporation
levy that comprises a part of the corporate residential tax, which had been scheduled from fiscal years beginning on or after April 1, 2017, waspostponed to fiscal years beginning on or after October 1, 2019.
Though the domestic statutory tax rates to calculate deferred tax assets and liabilities will not change, the tax rates are reclassified between national
tax and local tax. The effect of the change on the consolidated financial statements was immaterial.

Feature39,001

Less: valuation allowance

Gross deferred tax assets

NTN’s Vision and Strategy¥ 16,390

Inventories

Liability for retirement benefits

About the Company

2017

Thousands of
U.S. dollars
2017

Millions of yen

Profit attributable to owners of parent:
Corporate Information

NTN Report 201798

Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end.
Basic profit attributable to owners of parent per share is computed based on the profit attributable to owners of parent of common stock and theweighted-average number of shares of common stock outstanding during the year. Diluted profit attributable to owners of parent per share has notbeen presented because there were no potentially dilutive shares of common stock for the years ended March 31, 2017 and 2016.
The Company recorded shares held by the “Officer Remuneration BIP Trust” (Please refer to Note 3-(b)) as treasury stock in the consolidated financial
statements as of March 31, 2017. Accordingly, to compute “net assets per share,” the Company’s shares held by the trust (568,000 shares at March 31,2017) are included in treasury stock that is excluded from the number of shares outstanding as of March 31, 2017. In addition, to compute “profit
attributable to owners of parent per share,” the Company’s shares held by the trust (349,538 average number of shares for the year ended March 31,2017) are included in treasury stock that is excluded from the computation of the average number of shares for the year ended March 31, 2017.
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.

23. Segment Information
1. Outline of reporting segments
The Group’s reporting segments are divisions of the Group for which separate financial information is available, and whose operating results arereviewed 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, generalindustrial machinery market, and automotive market. Business activities in Japan are controlled by the Company (the Head Office), and overseas
business activities are controlled by the General Manager responsible in each region. Business entities in each region prepare their own plans andstrategies to 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.
2. C
 alculation 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 the significant accounting policies in Note 2. Inter-segment
sales and transfer are recorded at the same prices used in transactions with third parties.
3. Information as to net sales, profit or loss, assets, liabilities, and other items for each reporting segment for the years ended March 31, 2017 and 2016
Reportable segment information for the years ended March 31, 2017 and 2016 is summarized as follows:
Millions of yen

2017
Reporting segments
Japan

Americas

EuropeAsia andother areas

Total

Sales to third parties¥200,956¥187,788¥165,262¥129,323¥  683,329

Inter-segment sales and transfers

119,879

3,605

3,755

12,980140,219(140,219)

—

Total

320,835

191,393

169,017

142,303

823,548(140,219)

683,329

Segment profit¥  4,462¥  8,286¥  3,310¥ 14,523¥   30,581¥   5,042¥ 35,623

Segment assets¥584,617¥169,057¥138,029¥157,234¥1,048,937¥(250,046)¥798,891

Segment liabilities¥379,093¥115,146¥ 95,336¥ 53,954¥  643,529¥ (89,688)¥553,841

Depreciation and amortization¥ 13,168¥ 10,098¥  6,390¥  6,973¥   36,629¥—¥ 36,629

Capital expenditures¥ 19,207¥ 11,699¥  8,318¥  3,749¥   42,973¥     (64)

¥ 42,909

Adjustments

Consolidated¥¥683,329

Sales, profit and assets
or liabilities
by reporting segments:
Net sales:—

Other items:

99

NTN Report 2017

Millions of yen
2016
Reporting segments
Japan

Americas

EuropeAsia andother areas

Total

Sales to third parties¥200,106¥203,881¥179,526¥133,484¥  716,997

Inter-segment sales and transfers

137,579

4,498

4,023

14,676

160,776(160,776)

—

Total

337,685

208,379

183,549

148,160

877,773(160,776)

716,997

Segment profit¥ 24,150¥  5,774¥  3,100¥ 12,619¥   45,643¥   2,127¥ 47,770

Segment assets¥552,813¥169,453¥143,964¥160,124¥1,026,354¥(231,703)¥794,651

Segment liabilities¥354,653¥121,245¥ 96,262¥ 57,006¥  629,166¥ (83,020)¥546,146

Depreciation and amortization¥ 11,836¥ 11,247¥  7,085¥  8,110¥   38,278¥—¥ 38,278

Capital expenditures¥ 16,179¥  7,453¥  8,326¥  8,022¥   39,980¥    (185)¥ 39,795

Adjustments

Consolidated

Net sales:¥—¥716,997

NTN’s Vision and Strategy

Other items:

About the Company

Sales, profit and assets
or liabilities
by reporting segments:

Thousands of U.S. dollars

2017
Reporting segments
Japan

Americas

EuropeAsia andother areas

Total

Sales to third parties$1,796,737$1,679,002$1,477,598$1,156,270$6,109,607$

Inter-segment sales and transfers

1,071,831

32,23233,574116,053

1,253,690(1,253,690)

—

Total

2,868,568

1,711,234

1,511,172

1,272,323

7,363,297(1,253,690)

6,109,607

Segment profit$   39,894$   74,085$   29,595$  129,849$  273,423$    45,080$  318,503

Segment assets$5,227,028$1,511,529$1,234,110$1,405,821$9,378,488$(2,235,647)$7,142,841

Segment liabilities$3,389,449$1,029,514$  852,394$  482,400$5,753,757$  (801,895)$4,951,862

Adjustments

Consolidated

FeatureSales, profit and assets
or liabilities
by reporting segments:
Net sales:—$6,109,607

Depreciation and amortization$  117,734$   90,286$   57,133$   62,345$  327,498$—$  327,498

Capital expenditures$  171,729$  104,600$   74,371$   33,519$  384,219$      (572)$  383,647

The Source of Value Creation

The total amount of segment profit is adjusted to operating income of the consolidated statement of income.
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 ¥286,466 million ($2,561,277 thousand) and ¥276,943 million and the corporate assets of
the Group of ¥36,420 million ($325,629 thousand) and ¥45,240 million for the years ended March 31, 2017 and 2016, respectively. The corporate assets
are mainly long-term investment funds (investment securities) for the year ended March 31, 2017.
The corporate assets are mainly operating funds of the Company (deposits and securities) and long-term investment funds (investment securities)
for the year ended March 31, 2016.

Review of Operations

Other items:

Corporate Information

NTN Report 2017100

4. Related information(1) Sales by products and service
Sales by products and service classified by the similarity of the market for the years ended March 31, 2017 and 2016 are summarized as follows:
Millions of yen

2017

Sales to third parties

Aftermarket

Industrial
machinery

Automotive

Total¥104,501¥98,611¥480,217¥683,329

Millions of yen
2016

Sales to third parties

Aftermarket

Industrial
machinery

Automotive

Total¥113,628¥104,110¥499,259¥716,997

Thousands of U.S. dollars

2017

Sales to third parties

Aftermarket

Industrial
machinery

Automotive

Total$934,338$881,675$4,293,594$6,109,607(2) Regional information(a) Sales
Sales categorized by country and region based on locations of customers within the Group for the years ended March 31, 2017 and 2016 aresummarized as follows:
Millions of yen

2017
Japan

Americas

EuropeAsia andother areas

Total¥191,466¥194,765¥154,990¥142,108¥683,329

Millions of yen
2016
Japan

Americas

EuropeAsia andother areas

Total¥189,557¥212,550¥169,039¥145,851¥716,997

Thousands of U.S. dollars

2017
Japan

Americas

EuropeAsia andother areas

Total$1,711,887$1,741,383$1,385,757$1,270,580$6,109,607“Americas” includes the U.S.A., Canada and Central and South America. “Europe” includes Germany, France, the U.K. and others. “Asia and other areas”
include China, Thailand, India and others. The sales of the “Americas” segment above include the sales to customers in the U.S.A. of ¥168,383 million($1,505,503 thousand) and ¥188,391 million for the years ended March 31, 2017 and 2016, respectively. The sales of the “Asia and other areas” segment
above include the sales to customers in China of ¥74,223 million ($663,624 thousand) and ¥77,612 million for the years ended March 31, 2017 and 2016,
respectively.

101

NTN Report 2017

(b) Property, plant and equipment
Property, plant and equipment categorized by country and region within the Group at March 31, 2017 and 2016 are summarized as follows:
Millions of yen

Americas

EuropeAsia andother areas

Total¥110,920¥76,259¥44,964¥52,469¥284,612

About the Company

2017
Japan

Millions of yen
2016
Japan

Americas

EuropeAsia andother areas

Total¥111,877¥75,580¥46,400¥62,544¥296,401

Japan

Americas

EuropeAsia andother areas

Total$991,730$681,828$402,020$469,122$2,544,700

1.	Property, plant and equipment in “Americas” in the amount of ¥67,938 million ($607,430 thousand) and ¥67,151 million is located in the U.S.A. at
March 31, 2017 and 2016, respectively.

NTN’s Vision and Strategy

Thousands of U.S. dollars
2017

2.	Property, plant and equipment in “Europe” in the amount of ¥32,545 million ($290,983 thousand) and ¥35,487 million is located in France at March
31, 2017 and 2016, respectively.
Feature3.	Property, plant and equipment in “Asia and other areas” in the amount of ¥39,440 million ($352,631 thousand) and ¥49,028 million is located in
China at March 31, 2017 and 2016, respectively.

5. Loss on impairment of fixed assets

Review of Operations

Loss on impairment of fixed assets by reporting segment for the years ended March 31, 2017 and 2016 is summarized as follows:
Millions of yen

2017
Japan

Americas

EuropeAsia andother areas

Adjustments

Total

¥556

¥—

¥164

¥3,760¥82¥4,562Millions of yen
2016
Americas

EuropeAsia andother areas

Adjustments

Total

¥226

¥—

¥—

¥2,462¥—¥2,688Japan

Americas$4,971$—Thousands of U.S. dollars
2017
Asia andEuropeother areas$1,467$33,618

Adjustments

Total

$733

$40,789

The Source of Value Creation

Japan

Corporate Information

NTN Report 2017102

24. Business Combination
Common Control Transaction, etc.
1. Overview of transaction(1) Company name and business description of combined company
Combined company: NTN Antriebstechnik G.m.b.H.
Business description: Manufacture and sales of CVJs
(2) Date of the business combination
March 31, 2017(3) Legal form of business combination
Acquisition of stock from non-controlling shareholder by theexercise of stock acquisition rights on exchangeable bonds issued
by non-controlling shareholder(4) Company name of combined company after business combination
		 There is no change.
(5) Other matters related to overview of transaction
The Company acquired additional 25% of ownership interests
through the transaction. As a result, NTN Antriebstechnik G.m.b.H.
became a wholly owned subsidiary of the Company. The Company
aims to enhance the consolidation group management and to
expand the CVJ business in Europe by the transaction.

2. Overview of accounting treatment applied
The transaction was treated as “transaction with non-controllingshareholders” which falls under the category of “common control
transactions, etc.” set forth in “Accounting Standard for Business
Combinations” and “Implementation Guidance on AccountingStandard for Business Combinations and Accounting Standard forBusiness Divestitures.”3. Matters to be disclosed when additionally acquiring shares ofsubsidiaries
Details on acquisition cost of acquired company and consideration for
acquisition by type
Consideration for the acquisition: Exercise of stock acquisition rights
on exchangeable bonds ¥1,028 million ($9,191 thousand)
4. Matters related to change in ownership interests held by the Company
due to transactions with non-controlling shareholders(1) Main reason for change in capital surplus
			 Additional acquisition of shares in a subsidiary(2) Decrease in capital surplus due to transaction with non-controllingshareholders			 ¥408 million ($3,648 thousand)25. Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated financial statements
as of March 31, 2017 and for the year then ended, was approved at the annual general meeting of the shareholders held on June 23, 2017:

Year-end cash dividends (¥5.0 (U.S.$0.04) per share)

103

NTN Report 2017

Millions of yen

Thousands of
U.S. dollars¥2,658$23,765

Independent Auditor’s Report

About the Company

NTN’s Vision and Strategy

FeatureReview of Operations

The Source of Value Creation

Corporate Information

104

NTN Report 2017

Main Financial Indexes: 11-Year SummaryYears ended March 31

2007

2008

2009

2010

Net Sales  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Millions of yen)

483,818

533,985

527,100

452,746

Operating Income . . . . . . . . . . . . . . . . . . . . . (Millions of yen)

46,79349,612

9,479

1,399

Operating Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  (%)

9.7

9.3

1.8

0.3

Income (Loss) Before Income Taxes . . . . . (Millions of yen)

45,17044,313(10,104)(1,838)Net Income (Loss) Attributable to   Shareholder (Parent Company)  . . . . . . (Millions of yen)

27,01427,431(8,985)(2,015)

Capital Expenditures  . . . . . . . . . . . . . . . . . . (Millions of yen)

59,34759,504

49,59421,504

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . (Millions of yen)

32,69339,54745,75940,702

R&D Costs  . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Millions of yen)

14,221

15,006

17,402

14,687

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (Millions of yen)

611,944629,464

627,613618,802

Net Assets/Shareholders’ Equity . . . . . . . . (Millions of yen)

215,815

216,401

192,223

214,551

Inventories  . . . . . . . . . . . . . . . . . . . . . . . . . . . (Millions of yen)

107,131

109,969

140,466

126,663Interest-bearing Debt  . . . . . . . . . . . . . . . . . (Millions of yen)

197,911

212,874

275,996

231,638

Number of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

17,306

18,96020,67917,959445.61445.98376.77374.19  - Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Yen)

58.34

58.43

(19.14)(4.00)  - Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Yen)

53.74

54.59

—

—

Cash Dividends  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Yen)

16.00

19.00

13.00

8.00

Inventory Turnover Ratio  . . . . . . . . . . . . . . . . . . . . . (Times)

4.5

4.9

3.8

3.6

Net D/E Ratio  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Times)

0.79

0.86

1.38

1.00

Net Income (Loss)/Average Total Assets (ROA)  . . . .  (%)

4.6

4.4

(1.3)

(0.3)

Net Income (Loss)/   Average Shareholders’ Equity (ROE) . . . . . . . . . . . .  (%)

13.8

13.1

(4.3)

(1.1)

NTN-ROI*2  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  (%)

8.6

8.6

1.5

0.2

Shareholders’ Equity Ratio . . . . . . . . . . . . . . . . . . . . . . .  (%)

34.2

33.3

28.2

32.2

FOR THE YEAR DATAYEAR-END DATAPER SHARE DATANet Assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Yen)Net Income (Loss)

OTHER INFORMATION*1. In Financial Section, U.S. dollar amounts have been converted from yen,for convenience only, using the approximate exchange rate on March 31, 2017, which was U.S.$1 = ¥111.845*2. NTN-ROI = Net operating income after tax / (Inventories + tangible fixed assets)

105

NTN Report 2017

Thousands of US dollars*1(except per share amounts)

2017

2017

530,056

543,468

539,595

638,971

701,900

716,997

683,329

6,109,607

24,56020,724

7,278

33,00443,85147,77035,623

318,503

4.6

3.8

1.3

5.2

6.2

6.7

5.2

5.2

22,855

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

26,943

14,890133,131

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

23,353

15,037

2,831

25,312

29,70054,44048,97933,162

31,26636,30035,398316,492

35,93634,17534,841

39,31540,392

38,27836,629327,498

15,697

17,157

16,174

17,821

18,08818,481

19,196

171,630

632,001

693,25 8

768,462

848,037

856,277

794,651

798,891

7,142,841

210,353

212,126

211,743

213,369

262,559

248,505

245,050

2,190,979

136,985

155,107163,287

166,484

184,128

178,220

171,482

1,533,211

223,284

271,978

360,802381,767

359,105

325,174

320,170

2,862,622

19,172

20,78921,39822,15623,36024,10924,665

24,665376.05370.19375.84374.68461.21436.97431.66

3.86

27.08

11.27

(26.69)(27.54)

43.91

28.28

5.33

0.05

—

—

—

—

—

—

—

—

10.00

10.00

0

2.00

6.00

10.00

10.00

0.09

3.9

3.5

3.3

3.8

3.8

4.0

4.0

0.92

1.11

1.37

1.27

1.11

1.11

1.05

2.3

0.9

(1.9)

(1.8)

2.7

1.8

0.4

7.2

3.0

(7.2)

(7.3)

10.5

6.3

1.2

4.2

3.4

1.1

4.6

6.3

6.5

5.1

31.6

28.4

26.0

23.5

28.6

29.2

28.7

NTN Report 2017

Corporate Information

2016

The Source of Value Creation

2015

Review of Operations

2014

Feature2013

NTN’s Vision and Strategy

2012

About the Company

2011

106

Non-financial Capital Data
Corporate Governance
Item

NTN

Applicable scope

Domestic subsidiaries
Overseas subsidiaries
For details, please see P. 37 and following.

Year ended Mar. 31, 2016

Year ended Mar. 31, 2017

Achievements
2
3
14
14
18
97%
100%
93%
100%
—
30%
3 brands

Achievements
2
3
14
14
17
97%
99%
96%
100%
3
31%
6 brands*

Number of outside directors
Number of outside Audit & Supervisory Board members
Number of directors who do not also serve as executive officers
Number of Audit & Supervisory Board held
Number of Board of Directors held
Attendance rate of (outside) directors at Board of Directors
Attendance rate of (inside) directors at Board of Directors
Attendance rate of (outside) auditors at Board of Directors
Attendance rate of (inside) auditors at Board of Directors
Number of Compensation Advisory Committee held
Ratio of non-Japanese top executives at overseas subsidiaries
Number of selections to SRI indexes
Number of accounting and business briefing sessions heldby top management (hosted by NTN)
Number of stakeholder dialog held with CSR experts
Number of CSR Committee held
Number of CSR Global Meetings held
Response rate to survey questionnaire on penetration of
corporate philosophy
Awareness rate of corporate philosophy among employees
Usage rate of CSR Guidebook
Rate of carrying pocket card such as Business Code of Conduct
Number of Risk Management Committee held
Percentage of companies with company-wide risk management
systemRatio of risk management follow-up at domestic subsidiaries
Ratio of risk management follow-up at overseas subsidiaries
Number of Compliance Committee held
Response rate on compliance awareness survey
Ratio of cultures that encourage freely talking about compliance
Rate of employees who feel compliance awareness at
office has improved
Recognizability of Helpline
Helpline call response rate
Number of whistle-blowing cases

6

4

1
2
1

1
2
1

—

89%

—
63%
89%
2

87%
64%
89%
2

100%

100%

100%
—
6
77%
67%

100%
97%
4
78%
68%

34%

33%

72%
100%
5

79%
100%
15

* As of June 30, 2017

Intellectual Capital
Item

For details, please see P. 51 and following.

Applicable scopeYear ended Mar. 31, 2016

Year ended Mar. 31, 2017

Achievements
18.5 billion yen
4
2.6%
135

Achievements
19.2 billion yen
3
2.8%
191

R&D expenditures
Number of outside awards received for product development
Ratio of R&D expenditures to sales
Number of patents reward was paid

Manufacturing Capital
Item

For details, please see P. 53 and following.

Applicable scopeYear ended Mar. 31, 2016

Year ended Mar. 31, 2017

Achievements
137
100%
0.37
4

Achievements
145
100%
0.28
3

Number of participants in specialized quality education courses
Quality management system certification rate*
Rate of workplace incidents (that required time off )Number of workplace incidents (that required time off )Number of training sessions related to laws held by safety andhealth consultants
Consultation rate for specific health checkups
Specific counseling guidance implementation rate
Number of sites which acquired OSHMS certification
Number of employees who took leave for mental health reasons
Number of employees who returned to work after taking leave formental health reasons
Number of counseling service consultations per month
Number of practical safety education conducted* Consolidated subsidiaries involved in manufacturing (excluding bases which have not started mass-production)

107

NTN Report 2017

9

7

84%
45%
9
23

100%
47%
9
23

80%

56%

—
—

76
60

Human Capital

NTN

Item
Number of employees

Applicable scope
Total
Male
FemaleYear ended Mar. 31, 2017

Achievements
5,154
4,661
493
66%
40
40
40
18
18
18
90%*1
2.8%
6%
1.95%
8.5%
—
75%
1,870 hours
124 hours35
1
34

Achievements
5,301
4,756
545
66%
40
41
39
17
18
16
92%*2
2.1%
4.6%
2.08%
10.0%
10.9%
63%
1,842 hours
110 hours
40
2
38
20

1
8
0
86
20
1

1
19
1
55
29
0

22

23

14

14

Feature9

NTN’s Vision and Strategy

Year ended Mar. 31, 2016

About the Company

Percentage of employees overseas
Total
Average age
Male
FemaleYears of continuous employment Total
Male
FemaleRate of paid leave utilization for regular employees
Job turnover
Job turnover in 3 years or less
Employment rate of persons with disabilities
Ratio of females promoted to management positions
Ratio of females in management positions
Ratio of post-retirement re-employment
Total number of work hours per year
Total number of overtime work hours
Number of employees who took childcare leave Total
Male
FemaleNumber of employees who returned to work
after taking childcare leave
Total
Male
FemaleNumber of employees who took nursing care leave
Number of male employees who took childbirth support leave
Number of employees who utilized shortened work hours
Number of employees of our “Mom-back” system
Number of employees of Bear Kids Land,the in-company day-care center for employees’ children
Number of individuals enrolled in Dream Workshop,
the facility supporting persons with intellectual disabilities

Domestic subsidiaries
Overseas subsidiaries
For details, please see P. 55 and following.

*1. For fiscal year ended March 31, 2016, data spans December 16, 2014 to December 15, 2015.
*2. For fiscal year ended 31, 2017, data spans December 16, 2015 to December 15, 2016.

Social and Relationship Capital
Applicable scope

Natural Capital

CO2 emissions Total
Japan
Japan
Overseas
Overseas
Water usage
Total
Japan
Overseas

Scope 1
Scope 2
Scope 1
Scope 2

95%

223
257
2
57
100%

228
272
2
57
100%

22

22

—

293

1
100%
192 million yen
1,695
556

1
100%
142 million yen
2,190
685

For details, please see P. 63 and following.

Applicable scopeYear ended Mar. 31, 2016

Year ended Mar. 31, 2017

Achievements
605,000 tons
51,000 tons
224,000 tons
45,000 tons
285,000 tons
3,200,000 m3
1,960,000 m3
1,240,000 m3

Achievements
619,000 tons
49,000 tons
228,000 tons
48,000 tons
294,000 tons
3,230,000 m3
1,950,000 m3
1,280,000 m3

Corporate Information

Item

Achievements

95%

The Source of Value Creation

Customer Satisfaction Survey results(ratio of Excellent + Good responses)
Number of TQM (Total Quality Management) activities implemented
Number of visits to customers by a Technical Service Unit car
Number of Supplier Meetings held
Number of companies participating in Supplier Meetings
Self-audit implementation rate for subcontracting transactions
Number of business bases at which Subcontract Act complianceworkshops were held
Number of business partners who met request to promote
CSR procurement
Number of Supplier Quality Improvement Challenges held
Survey response rate of conflict minerals
Expenditures for social contribution activities
Number of employees participating in blood drive
Number of social contribution activities

Year ended Mar. 31, 2017

Achievements

Review of Operations

Item

For details, please see P. 59 and following.
Year ended Mar. 31, 2016

For more details on each type of capital, please see our website.
http://www.ntnglobal.com/en/ecology/nonfinance.html

NTN Report 2017108

Third-Party Opinion

NTN Report 2017 Third-Party Opinion
Takeshi Mizuguchi
Professor, Faculty of Economics, Takasaki City University of Economics
Profile:After working at a trading company and auditing corporations, he became the lecturer in the Faculty of Economics
at Takasaki City University of Economics from 1997, and assumed his present position in 2008.
His areas of expertise cover responsible investment and disclosure of non-financial information.
He successively worked as the chairman of the green bond review committee organized by the Ministry of the Environment,a member of the ESG review committee, and the director of the Society for Environmental Economics and Policy Studies.
Major publications include “Responsible Investment” (Iwanami Shoten, winner of SEEPS Commentary Award)
and “ESG Investment—Form of the New Capitalism” (Nikkei Publishing).

I feel that the degree of perfection is getting higher year by year
as an integrated report. This year, the opening section, “NTN’s
Value Creation Process,” describes a story about how to reach yourcompany’s goal, “a smooth society,” by improving corporate values,
such as fixing social problems, in an easy-to-understand way. Your
company’s main business has been making bearings. So, I thinkthat the concept of reducing friction to aim at a safe andenergy-effective “smooth society” is compelling for your company.
In addition, I think it was also advantageous that the report
explained the progress of your Medium-term Management Plan“NTN 100,” under the title of “The President’s Business Strategy.”
I took it to mean that the entire picture can be grasped by reading
this article. Among all, I appreciate that this report mentioned thebusiness fields directly leading to fixing of social problems, such as
the energy business or EV business, in the description about“Manage Growth” regarding your new businesses, in the sense ofembodiment of integrated thinking.
In fact, your strategy has been producing concrete fruits, forexample, the NTN Micro Hydro Turbine launched in June this year
and the NTN Vertical Axis Wind Turbine whose demonstration
experiments have started. The performance of hydro turbines orwind turbines is influenced by low-friction smooth rotation, andthis is indeed the core technology of your company. In this sense,
I think that these new businesses are good trials to “visualize” yourstrength and technologies. I anticipate your company will build up
additional achievements in the future. Also in the EV business,
NTN established the Electric Module Products Division to promote
development of new products. The shift to EV might be promoted

more rapidly than expected; for example, it was reported that salesof gasoline and diesel vehicles will be prohibited by 2040 in France
and the UK. Therefore, I wish your company will further accelerate
tackling of this business.
It is also an important effort that your company evaluatedwater-relevant risks for each business site in relation to natural
capital. In some overseas regions, it is expected that people will
suffer from water-relevant stress more seriously; so, I expect yourcompany to take planned measures. With respect to humancapital, I also appreciate that your company has been continuously
opening the NTN Technical Skills Competition and Global QC Circle
Convention to get your worldwide employees involved in these
efforts. In the aspect of social and relationship capital, yourcompany has determined the NTN CSR Procurement Guidelines,
paying attention to supply chains, too. The human rights issuesof supply chains are particularly drawing increased attention
overseas. And thus, I suggest you consider identifying high-risk
regions and then conducting due diligence.
I think it was also good that the report introduced opinions ofoutside directors in relation to corporate governance. On the other
hand, in the fiscal year ended March 2017, your company posted
a loss of approximately 12.1 billion yen in relation to the Antimonopoly
Law, which exceeded one-third of the operating income. This was avery high tuition. I know that your company has strengthened its
response by forming committees to observe compliance andsupervise fair trade; so, try hard continuously so as not to get
involved in this type of dispute again.

Responding to the Third-Party Opinion
We appreciate your valuable opinions, Mr. Mizuguchi.
In the process of creating “NTN Report 2017,” the third-party opinions collected so far and expert
opinions collected by the stakeholder dialog were reflected. This report introduces, as various efforts,
the progress of the Medium-term Management Plan “NTN 100,” and NTN’s Value Creation aiming at
sustainable growth including the corporate philosophy, vision, strength, and activities of NTN which
will observe its centennial anniversary, together with linkages between the business activities and
CSR, by classifying our capital into six types.
We accept the precious opinions about, for example, due diligence regarding human rights
issues or making efforts not to violate the Antimonopoly Law, promoting our businesses
additionally, and aiming at “a smooth society” as an “‘Monozukuri’ corporation contributing to
global society even in the next hundred years” by taking these opinions as a future reminder.

109

NTN Report 2017

Hiroshi Nakano
Director and Corporate General
Manager, CSR Headquarters

Investor Information (As of March 31, 2017)
Head Office
NTN Corporation
3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan

Transfer Agent for Common Stock
Mitsubishi UFJ Trust Banking
Corporation 4-5, 1-chome,
Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan
Stock Exchange Listings
First Section of Tokyo Stock Exchange(#6472)

Number of Shareholders
25,138

Independent Auditor
Ernst & Young ShinNihon LLC

Stock Price Range in the Fiscal
Year Ended March 31, 2017
High: ¥604
Low: ¥243

Breakdown of Number of Share Held

Financial Instruments Firms

Between 5,000
and 9,999
2.23%

Other Corporations

Between 10,000
and 49,999
4.50%

3.56%

14.89%

Financial
Institutions
45.04%

Total

532,463

Individuals
16.70%

Shares in thousands

Between 1,000
and 4,999
4.46%
Less than 1,000
0.23%

Total

Between 50,000
and 99,999
1.63%

532,463

Between 100,000
and 499,999
6.73%

Shares in thousands

1,000,000 and more
75.18%

FeatureBetween 500,000
and 999,999
5.04%

Foreign Owners
19.81%

NTN’s Vision and Strategy

Breakdown of Shareholders

About the Company

Common Stock
1,800,000,000 shares
Authorized
Issued and outstanding532,463,527 shares

General Meeting of Shareholders
The General Meeting of Shareholders
was held on June 23, 2017 in Osaka

Tokyo Stock Price Range
Stock Price (Yen)

Nikkei Stock Average (Yen)

800

25,000400

15,000200

10,00005,000Opening

5

6

7

8

9 10 11 12 1

2

3

4

5

6

7

8

2016

2015

9 10 11 12 1

2

3

Closing
Nikkei stock
average

Closing

4

High

Low

Opening

The Source of Value Creation

20,000

Review of Operations

600

2017

Investor Relations

Monthly Volume Traded

Corporate Communications Dept.

(Million Shares)

Phone: +81-6-6449-3528

200

Corporate Information

Fax: +81-6-6443-3226
E-mail: irmanager@ntn.co.jp

150

NTN on the Internet
100

NTN’s Website offers a variety ofcorporate and product information,
including the latest NTN report and50

financial results.
0

http://www.ntnglobal.com/en/
4

5

2015

6

7

8

9 10 11 12 1

2

2016

3

4

5

6

7

8

9 10 11 12 1

2

3

2017

NTN Report 2017110

Global Network(As of March 31, 2017)
Company Name

Paid-in Capital

Holding as
percentage (%)

Consolidated Subsidiaries

Company Name

US. $24,330,000

100

(100)

22 NTN-BOWER CORP.

US. $117,000,000

100

(100)

23 NTK PRECISION AXLE CORP.

US. $15,000,000

60

(60)

24 NTA PRECISION AXLE CORP.

US. $20,000,000

62.5(62.5)

CAN. $20,100,000

100

26 NTN-SUDAMERICANA, S.A.

US. $700,000

100

27 NTN MANUFACTURING DE

Mex. $369,405,719

100

(5)

BRL 79,479,763

100(13.37)29 NTN Wälzlager (Europa) G.m.b.H.

€ 14,500,000

100

30 NTN Kugellagerfabrik€ 18,500,000

100€ 25,000

100

MFG. CORP.

NTN BEARING SERVICE CORPORATION¥480,000,000

100

2

NTN MIE CORP.

¥3,000,000,000

100

3

NTN KONGO CORP.

¥1,000,000,000

100

4

NTN HOUDATSU SHIMIZU CORP.

¥1,250,000,000

100

5NTN NOTO CORP.

¥1,000,000,000

100

6NTN FUKUROI CORP.

¥1,500,000,000

100

7

NTN AKAIWA CORP.

¥1,250,000,000

100

8

NTN MIKUMO COMPANY LTD.

¥450,000,000

100

9NTN OMAEZAKI CORP.

¥266,000,000

97.4

28 NTN do Brasil Producão de

10 NTN ENGINEERING PLASTICS CORP.

¥100,000,000100

11 NTN ADVANCED MATERIALS CORP.

¥400,000,000

99.34

12 NTN CASTING CORP.

¥450,000,000

100

13 NTN KINAN CORP.

¥450,000,000100

14 NTN KAMIINA CORP.

¥725,000,000

80

15 NTN Technical Service Corp.

¥200,000,000100

16 NTN LOGISTICS CO., LTD.

¥10,000,000

100

25 NTN BEARING CORP. OF

CANADA LTD.

MEXICO, S.A. DE C.V.
Semi-Eixos Ltda.

(Deutschland) G.m.b.H.

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

32 NTN Antriebstechnik G.m.b.H.

(100)

17 NTN USA CORP.

US. $197,120,000100

18 NTN BEARING CORP. OF AMERICA

US. $24,700,000

100

(100)

19 NTN DRIVESHAFT, INC.

US. $54,580,000

100

(100)

20 NTN DRIVESHAFT ANDERSON, INC.

US. $16,000,000

100

(100)

33

Production

Production and sales

R&D

Holding as
percentage (%)

21 AMERICAN NTN BEARING

1

Sales

Paid-in Capital(100)€ 50,000

100

33 NTN BEARINGS (UK) LTD.

STG. £2,600,000

100

34 NTN-SNR ROULEMENTS€ 123,599,542

100

35 NTN TRANSMISSIONS EUROPE€ 82,843,207

100

36 NTN TRANSMISSIONS EUROPE CREZANCY€ 11,500,000

100

(100)

S. $36,000,000100(0.97)

37 NTN BEARING-SINGAPORE (PTE) LTD.

(0.04)

Others30 31 32
35 36

29
34 F

59
60 45
52
50

44

49 53

43

47 51
G

46
61

48 57
56

39 40
41

38
37

42 62

58

111

NTN Report 2017

Company Name

Paid-in Capital

Holding as
percentage (%)

38 NTN BEARING-MALAYSIA SDN.BHD.

M. $10,000,000

60

(60)

39 NTN BEARING-THAILAND CO., LTD.

BAHT 780,000,000

100(99.999)

BAHT 1,311,000,000

100(99.999)

BAHT 700,000,00075(10.73)

US. $7,300,000

100

(100)

40 NTN MANUFACTURING(THAILAND) CO., LTD.

41 NTPT CO., LTD.
42 PT. NTN BEARING INDONESIA
43 NTN BEARING INDIA PRIVATE LTD.

96.54

45 NTN KOREA CO., LTD.

WON 500,000,000

100

46 NTN (CHINA) Investment Corp.

US. $256,545,000

100

47 Nanjing NTN Corp.

US. $180,000,000

100(86.67)48 Shanghai NTN Corp.

US. $166,500,000

95(15.72)49 Guangzhou NTN-Yulon Drivetrain Co., Ltd.

US. $12,500,000

60

(12)

50 Xiangyang NTN-Yulon Drivetrain Co., Ltd.

US. $34,000,000

60

(60)

51 NTN-RAB (Changzhou) Corp.

US. $28,440,000

100

52 NTN-LYC (Luoyang) Bearing Corp.

US. $73,800,000

50

53 NTN CHINA LTD.

HK. $2,500,000

100

India Private Ltd.

(0.1)
(0.001)Affiliated Companies Accounted for by the Equity Method
54 ASAHI FORGE OF AMERICA CORP.

US. $7,100,000

28.17

55 Seohan-NTN Driveshaft USA CORP.

US. $6,000,000

49

56 TUNG PEI INDUSTRIAL CO., LTD.
57 TAIWAY Industry CO., LTD.

27.35

NT. $160,000,000

36.25

58 UNIDRIVE PTY LTD.

A. $5,000,000

40

59 Beijing NTN-Seohan Driveshaft Co., Ltd.

US. $6,000,000

40

WON 75,780,330,00049

61 NTN-DONGPAI (Shanghai) Bearing

US. $1,460,000

25

(25)

62 PT. TPI MANUFACTURING INDONESIA

US. $55,415,050

28.8(0.002)60 Seohan-NTN Bearing CO., LTD.

Sales Corp.

(50)

NT. $1,257,232,620(28.17)(6.67)

R&D Bases
A NTN R&D CENTER
B PRODUCTION ENGINEERING R&D CENTER

NTN’s Vision and Strategy

100

INR 3,608,000,000

Holding as
percentage (%)

Paid-in Capital

C INDUSTRIAL TECHNICAL CENTERD ADVANCED TECHNOLOGY R&D CENTERE NTN Automotive Center

Other than above, another 10 companies

F NTN-SNR R&D Center
G NTN China Technical Center

Review of Operations

25
25
17
17
E
E
21 18
21 18
24 23 19 24 23 19
22
20 54
20 54 22

55

55

12
7

26

1

28

Corporate Information

14
14
21
2
1210
B 16 11 A B
16 11 A 10
15 C 78 6 159 C 8 6 9
3 D
3 D
13
13

27

26

5
4

The Source of Value Creation

5
4

FeatureNotes 1. The scope of consolidation as of March 31, 2017 consisted of NTN Corporation and 63 consolidated subsidiaries (16 domestic and 47 overseas subsidiaries). A total of
9 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 (unchanged year-on-year)		Affiliates (unchanged year-on-year)		
2. Of the above consolidated subsidiaries, NTN USA CORP., NTN DRIVESHAFT, INC., NTN-BOWER CORP., NTN Wälzlager (Europa) G.m.b.H., NTN-SNR ROULEMENTS, NTN
TRANSMISSIONS EUROPE, NTN NEI Manufacturing India Private Ltd., NTN (CHINA) Investment Corp., Nanjing NTN Corp., Shanghai NTN Corp. and NTN-LYC (Luoyang)
Bearing Corp. are specified subsidiaries.
3. Figures in curved brackets under “Holding as percentage” indicate the percentage of indirectly owned holdings, and are included in the total holding.

27

About the Company

INR 300,000,000

44 NTN NEI Manufacturing

Company Name

28

NTN Report 2017112

NTN Corporation
3-17, 1-chome, Kyomachibori,
Nishi-ku, Osaka 550-0003, Japan
http://www.ntnglobal.com/en/

This report was printed with anenvironment-friendly printing method
using vegetable inks. Vegetable inks
have excellent biodegradability, andprinted matter printed with vegetable
inks is easy to recycle.

2017. 11. 4000