TS TECH Report 2012

TS TECH Co., Ltd.

TS TECH Report 2012

Beliefs“Due regard for human resources”

A “company welcomed with joy”

Company Principle
We will always provide comfortable,
high-quality products at a competitive pricefor customers all over the world,
pursuing our dreams
through creating products andchallenging infinite possibilities.

Management Policies● Create a bright working atmosphere, respecting harmony and communication among people.
● Work in a harmonious manner, making the most effective use of time and observing priorities.
● Challenge the creation of new value, using wisdom in an enthusiastic manner.
● Strive constantly for the realizaton of individual visions.

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2

A Message from the President

3

Chapter 1 Striving to be a “Company Welcomed with Joy”
Attractive Products
Due Regard for Human Resources
Social Responsibility and Trust

6
8
14
18

Chapter 2 Sharing Pleasure with Stakeholders
Organizational Governance
Human Rights
Labour Practices
The Environment
Fair Operating Practices
Consumer Issues
Community Involvement and Community Development

22
24
26
27
28
32
33
34

Chapter 3 System and Performance

37

Editorial Policy: Publication of TS TECH Report
The TS TECH Group has issued this new TS TECH Report by integrating the annual reports and environmental reports that itpreviously published, reorganizing them from the perspective of corporate social responsibility (CSR).
The Group is carrying out a variety of activities and initiatives in terms of the economy, the environment, and society in order
to be a “Company Welcomed with Joy.” This report is issued with the purpose of fulfilling the Group’s accountability in theseregards. It is also a part of a commitment to “Build a corporate structure with advanced CSR characteristics,” which is one of
the measures in the 11th Medium-Term Management Plan (April 2011 to March 2014).
In editing this report, reference was made to ISO 26000, the international standard for social responsibility, which was published in November 2010.
Scope of the report

Period covered by TS TECH Report

Disclaimer

TS TECH Report covers the entire TS
TECH Group that conducts business inJapan and around the world. However, thescope of the report may differ depending
on business activities and CSR initiatives.

In principle, this report covers the period
from April 1, 2011, to March 31, 2012, but
it may include coverage of activities before
or after that period.

This report contains forward-looking
statements of TS TECH Co., Ltd., pertaining to plans, forecasts, strategies, andresults. These forward-looking statements
are based on currently available information, and actual results may vary significantly from the forward-looking statements
contained in this report due to a range ofvariable factors.

Corporate Message

Conceptual Overview of TS TECH’s CSR

Customers

Stakeholders
Shareholders

Local Communities

Society
A “Company
Welcomed with Joy”
General Society

The
Environment

In the manufacture of its products, TS TECH pursues safety, environmental sustainability, and comfort. The pursuit of comfort inparticular is multifaceted and deep, and over the course of time, this pursuit is subject to an infinite process of evolution. When
we approach our tasks as individual members of the TS TECH Group, our actions are underpinned by the belief that comfort
leads to satisfaction, which in turn brings joy to the end users of our products. Under the TS Philosophy, we are not bound to
the present, but rather we create products that go beyond the present in order to bring joy to all our stakeholders.
Our will and determination to take on the challenges of a world whose future shape we cannot yet see are expressed throughthe words “Beyond Comfort.”

Employees

EconomyProviding Safe and Comfortable Products
Suppliers

Administration
TS Philosophy

TS TECH booth at the 42nd Tokyo Motor Show in 20111

— TS Philosophy —TS Philosophy / Conceptual Overview of TS TECH’s CSR
Contents / Editorial Policy / Corporate Message
Introduction—Aspiring to Excellence in CSR

TS TECH Report 2012

Contents / Editorial Policy / Corporate Message

TS TECH Co., Ltd.

Introduction

TS TECH Report 2012

A Message from the PresidentInterview
Aspiring to Excellence in CSR
TS TECH has established the “TS Philosophy,” which comprises the Company’s be-

make a social contribution and realize the happiness of the Group’s employees.
The Group’s CSR involves continuously supplying safe and comfortable products,
expanding our earnings and contribution to society while conducting business opera-

Overcoming Natural Disasters and Making Progress in Strengthening
Our Platform for Global CompetitivenessAfter overcoming such large-scale natural disasters as the Great East Japan Earthquake and floodingin Thailand, we are making steady progress on our journey to realize our goal of “Best component
competitiveness in the world” under the Group’s 2020 Vision,“Innovative Quality Company.”tions that maintain a balance between economic, social, and environmental considerations, and working to realize the TS Philosophy.
We are grateful for this opportunity to present information to readers around theworld, encompassing not only the TS Philosophy but also such key issues as corporate governance and compliance and many of the programs and measures we undertake through our own initiative. How will readers appraise our structures and efforts?
At the same time, how will employees of the Group—in Japan and globally—assess
the content of this report? By receiving accurate feedback from within and outside
the Group, we believe that a dialogue with many different stakeholders is possible.
Hence, we very much look forward to hearing your opinions and requests in relation
to this report.
While engaging in this dialogue, we will continue to aspire to excellence in CSR.

Toshio Komeji
President

TS TECH Report 2012and development, it is as an important shared philosophy through which we aim to

3

2

TS TECH Report 2012

liefs, principles, and management policies. As we strive for continued future growth

Q

Please provide an overview
of conditions in the global
automobile market andexplain your approach to
future growth.

Although developed countries are exhibiting
market maturity, we believe that the global
automobile market still has ample growthpotential, particularly driven by such emerging markets as China and India, where wesee rising demand for entry-level models.
There are market forecasts that predict
annual production volume to top 100 million
units within a few years, hence the potential
for automotive component manufacturers is
also great.
However, competition in the automotive components market is becoming evermore fierce, and it will be impossible to win
against harsh competition unless we makethe shift from a globally optimized structure
toward a regionally optimized one, including
through the development and productionof products with different specifications tomeet local needs in each market.
Meanwhile, automobile manufacturers
are aggressively pursuing research anddevelopment (R&D) programs for nextgeneration vehicles, particularly in such areas as hybrid vehicles and electric vehicles.
For example, trends may emerge in which
automobile manufacturers move away fromengine, transmission, and exhaust systemcomponents toward electrical components,
such as batteries and motors. Hence, forcomponent manufacturers, it may be seen
as a tumultuous period. Although we do notforesee a shift away from seats in the automobile market, to secure further growth it

will be necessary to focus on the development of interior products that respond to
the needs of next-generation vehicles, including through safety technologies, weight
reduction, and low cost.

Q

Please summarize theCompany’s operating performance in the fiscal year
ended March 31, 2012.

The fiscal year ended March 31, 2012, saw
our operations buffeted by adverse conditions on an unprecedented scale, including
a series of natural disasters and extremely
high appreciation of the yen. Our consolidated operating results were affected by areduction in the unit volume of orders fromour main customers owing to the aforementioned natural disasters as well as theimpact of exchange rates. As a result, on aconsolidated basis, net sales amounted to305,483 million yen, a decrease of 14.5%
compared with the previous fiscal year, andoperating income declined 53.4%, to 9,401
million yen. Ordinary income totaled 10,928
million yen, a decrease of 49.2% comparedwith the previous fiscal year. Net income
amounted to 4,713 million yen, a decreaseof 59.9% compared with the previous
fiscal year.
Although the Great East Japan
Earthquake and flooding in Thailand had aserious impact on manufacturing activities
worldwide, even in a situation of irregular
production, the fact that no quality problems occurred may be attributed to thesmooth functioning of our global management structure.

What progress have you
made in the 11th MediumTerm Management Plan?

The fiscal year ended March 31, 2012, was
the initial year of our 11th Medium-Term
Management Plan, under which we are
pursuing three key policies: (1) Strengthen
QCDDM* competitiveness; (2) Build a corporate structure with advanced CSR characteristics; and (3) Build an infrastructure of“people” who can compete globally. In thefiscal year under review, we implemented
the following specific measures in accordance with the plan.
*QCDDM: Refers to quality, cost, development,delivery, and management•Strengthening Our Foundations to
Better Compete in the Global Arena
To reinforce our regional management
control structure and ensure that it is fully
attuned to a multipolar world, we expanded
sales, development, and purchasing functions in North America, South America,
China, Asia, and Europe. We increased thenumber of staff sent from Japan to work inthese regions and focused on the following
specific measures:
Sales: Strengthening local sales capabilities
Development: Strengthening local development capabilities to meet
local and customer needs
Purchasing: Building a globally optimized
value chain•Strengthening Our Organizational
Structure to Acquire New Customers
With the aim of further strengthening sales
activities for acquiring new customers,
we upgraded the Business Development
Office, which was newly establishedin April 2011, to become the Business
Development Department from April 2012.
•Developing New Technology (NewTypes of Frames for Automobile
Seats) to Enhance Component
CompetitivenessTo enhance component competitiveness,
we commercialized new types of frames forautomobile seats that achieve lower cost
while providing better safety and lightweightcharacteristics. We plan to progressively
switch to these frames, beginning with the
Honda CIVIC and CR-V.

Net Sales(Billions of yen)

500

400

300

Q

200

100

0
2008 2009 2010 2011 2012 2013
(Forecast)Please outline your dividend

and your forecasts for
Q policy
the fiscal year ending March
31, 2013.
The TS TECH Group recognizes shareholder return as an important management
issue. For the fiscal year ended March 31,
2012, in consideration of earnings trends
and the need to retain internal reserves
sufficient to strengthen the Group’s foundations, we implemented a year-end cash

Operating Income(Billions of yen)

30

20

Evolution as a Global Company

The word “Beyond” incorporates the ideaof “going beyond the present.” Although
the Group has to date pursued automobile
seat development and manufacturingwhile focusing on safety, environmentfriendliness, and comfort, our desire to“take on challenges that are not simply an
extension of what we have always done but
rather seek to go one step ahead without
being bound to the present” is includedin the phrase “Beyond Comfort.” It also
conveys our commitment to transform theprevious “one-global-specification” methodof operations into a system that produces
products suited to the particular needsof each operating location worldwide,
while not being restricted by conventional
ideas. In the decade from 2001–2010,

Q

Build an infrastructure of“people”who can compete globally

Enhancing global production anddevelopment capabilities
Building an optimum global V/C
Outstanding technologies,
differentiation
Safety, environmental, and design technologies

As a global company, we face the world
while striving for further growth, and are
gaining a robust understanding of a diverse
range of issues. At the same time, we areconstantly making progress toward our goalof becoming a “Company Welcomed with
Joy.” I look forward to your appraisal of TS
TECH based on an understanding of theGroup’s business activities and programs,
including CSR.

Partner of Honda
for global growth

Sound balance sheet
Continued development investment, impetus

Strengthen competitiveness inall spheres of corporate
activities (QCDDM), and lay
the foundations to achieve theGroup's 2020 Vision.

In the area of CSR, makea basic social
contribution, and lay thefoundations for our own
CSR activities.

Lay the foundations as atruly global company fornurturing “Global Human
Resources” who can
succeed globally.

M&A, TC
New markets, technologies, and functions

At the 42nd Tokyo Motor Showin 2011, TS TECH exhibited its
concept of the future of sitting,titled “Touch Za (sitting) Dream.”

The publishing of this reportis likely to bring an expansion in readership. What isyour message for those whoare reading a TS TECH
report for the first time?

Targets in 11th Medium-Term Management Plan

02008 2009 2010 2011 2012 2013
(Forecast)“Global, Speed, Challenge”
Build a corporate structure withadvanced CSR characteristics

Please explain the ideas
underpinning “Beyond
Comfort”—the corporate
message you launched in2011.

we pursued our vision of a “Good Quality
Company.” While principally remaining focused on further enhancing product quality,
I believe that we made substantial progressover this 10-year period. For the decadefrom 2011–2020, we are striving toward our2020 Vision, “Innovative Quality Company,”
and I want us to generate value that goesbeyond comfort.
We are already communicating theseideas within and outside the Group. In
September 2011, we organized a forumon the theme of “sitting,” which included
a panel discussion by experts from various fields along with engineers from the
TS TECH Group. At the 42nd Tokyo Motor
Show held in December 2011, we presented the Group’s insights on the future of“sitting,” based on the concept of “Touch“Za (sitting)” Dream.” We plan to continue
regularly holding these types of programs,
and hope that as many stakeholders as
possible will gain a better understanding of
the Group’s ideas.

10

11th Medium-Term Management Plan (April 2011 to March 2014)

Strengthen QCDDM
competitivenessdividend of 12.00 yen per share. Combinedwith the interim cash dividend of 12.00 yen
per share, this resulted in total cash dividends of 24.00 yen per share applicable tothe fiscal year under review.
For the fiscal year ending March 31,
2013, we anticipate a resumption of production following recovery from the flooding in Thailand and an increase in the unit
volume of orders from main customers.
Consequently, on a consolidated basis, we
forecast net sales of 363,000 million yen (up18.8%), operating income of 21,500 million
yen (up 128.7%), ordinary income of 23,000
million yen (up 110.5%), and net income of
12,500 million yen (up 165.2%).
The cash dividend forecast for the fiscal
year ending March 31, 2013, is 28.00 yen
per share, comprising interim and yearend cash dividends of 14.00 yen per shareeach.

TS TECH Report 2012Q

TS TECH Report 2012

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TS TECH Report 2012

TS TECH Co., Ltd.

Expanding businessother than business
related to Honda

Operating profit
margin of 6%
or moreTS TECH organized a forum to
discuss the future of “sitting”
in which experts from various
fields participated in a panel
discussion.

TS TECH Co., Ltd.

TS TECH Report 2012

TS TECH Report 2012

TS TECH’s CSR involves striving to becomea “Company Welcomed with Joy” andencompasses a wide variety of policies andprograms that aim to realize this goal.

Relax Seat

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TS TECH Report 2012

Chapter 1 Striving to be a “Company Welcomed with Joy”

Intelligence SeatFirst-Class Seat for Motorcycles

TS TECH Co., Ltd.

TS TECH Report 2012

Attractive Products

Creating Attractive Products that Will Delight End Users is an Essential Partof CSR

98

By generating further original technologies focusing on the three domains of safety, environment-friendliness,and product attractiveness, we aim for product development that will put us at the forefront of global
competition.

TS TECH Report 2012

TS TECH Report 2012

Interview

Q

Creating “attractive products” through continuous
innovation in technology development
Masanari Yasuda, Director, Executive General Manager of the Development and Engineering Division
In the global automobile market characterized by diverse needs, TS TECH aims to create “attractive products.” In this chapter, in addition
to featuring an interview with the Executive General Manager of the Development and Engineering Division, who deals with leading-edge
R&D, we talk to a large-project leader (LPL) and other key members involved in the successful development of new-model seats for Honda
Motor Co., Ltd.’s new CR-V. We also introduce some of the technology used in TS TECH’s motorcycle seats.

Please provide an overview of the structure of the Development and Engineering
Division.

The Development and Engineering Division comprises eight departments. The responsibilities of each department are clearly
defined, with functions divided into “R-Development” (elemental
technology development) and “D-Development” (new model
development).
Within R-Development, centered on the New ProductDevelopment Department, we conduct research under some
30 themes, including safety, comfort, and attractiveness. Under
D-Development, led by the Model LPL Department, enhanced
verification by each department has enabled us to substantiallyreduce the number of design-change cycles for each model,
which had previously run to several hundred cycles. Hence, wehave realized a high level of efficiency in the new model development process.
At present, to reduce the number of prototype samples, weare pursuing “non-physical development” driven by computeraided engineering (CAE)-based analysis.
By adopting such systems, all parts of our operations areable to progress according to plan, and it is now possible toconduct R&D based on a long-term roadmap.

Q

Please explain about the technical domains
on which you focus to create attractive
products.

Our R&D activities are focused on the three domains of safety,
environment-friendliness, and product attractiveness.
With regard to safety, we have developed such technologies as head-on collision safety seats and an active headrest
system, which absorbs the shock from collisions. We also
meet the regulatory and assessment trends in countries worldwide at a high level.
In the area of environment-friendliness, as a means of contributing to the enhancement of automobile fuel efficiency, we
are working to make our products lighter. For example, we arechanging over to plastic seat frames and reducing the numberof components we use.
From the point of view of product attractiveness, we areengaged in various research that seeks to realize such concepts as “stress-free seats” in keeping with the Group’s corporate message of “Beyond Comfort.” Projects include research
into a system that will support a user’s body during cornering
by making the seat swell out, and collaborative research withacademic institutions on systems to prevent drivers from falling
asleep.

What is your view of CSR from the perspec-of the Development and Engineering
Q tiveDivision?

For our division, I believe that CSR means applying strenuous
efforts to creating attractive products, which will bring enjoyment to as many end users as possible.
To achieve this goal, we must respond to the needs of end
users around the world. Hence, our overseas subsidiaries conduct surveys to identify the needs of end users in each region.
Based on these efforts, we are building product and component strategies to ensure that TS TECH is globally competitive in 10 years time. In this way, creating attractive productswith features required by end users is closely related to CSR.

How are you responding to intensified global

Q competition?

We are carefully looking at how we can optimize our systems
in each region. We are also implementing a range of measures
to ensure that we survive and prosper in a very competitiveenvironment. This includes using common frames and complementary components across several models, as well as optimizing logistics between our production facilities and thoseof our customers. In the future too, we will continue striving
to generate innovative, original technologies, as we aim tocreate attractive products that go beyond the expectationsof our customers and end users worldwide.

TS TECH Co., Ltd.

TS TECH Report 2012

New CR-V
Equipped with seats developed by TS TECH

Members of the new CR-V seat development project teamThe new CR-V seats
The seats provide comfort and convenience while also including a rangeof safety features.

Development of the New CR-V Seat, which Exceeded the Expectations of
End Users
Development of the new CR-V seat was managed by a large-project leader (LPL), who coordinates andoversees project members in the various departments involved in product development and manufacturing.
This interview explains the development process, which aims to realize TS TECH’s corporate principle ofbecoming a “Company Welcomed with Joy.”

What were the goals

the new CR-V seat
Q ofdevelopment?
We aimed to create a seat that would meetthe request from Honda Motor Co., Ltd.
(hereafter “Honda”) for a “very easy-to-use
seat,” which provides even greater comfort and convenience and safety than thesecond and third generation CR-V seat arrangement. To realize this goal, we adopted
a project leader system that encompasses
all departments and functions involvedin a project—including sales, purchasing, development, quality, production, andGroup facilities worldwide—and establisheda structure that aimed for product development exceeding Honda’s expectations on
all fronts.
As a result, the project successfully
delivered two new technologies—the new
one-motion double fold-down rear seat(hereafter “new rear seat”) and active headrest mechanism-less seat (hereafter “newseat frame”).

Please explain the specialof the new
Q characteristics
rear seat.

Previously, stowing the seats required several operations. However, this new systemprovides a very easy-to-use arrangementthat only requires a single maneuver.
For this new model, even greater userconvenience was added through suchfeatures as the ability to operate the systemfrom the rear seat door, including remote
operation from the trunk.

To make the seat arrangement operation
lighter, the system uses a damper. While theprevious system required two dampers, forthe new system, by modifying the adjustment range it became possible to operate
the seat arrangerment with ease using only
one damper. The new mechanism’s spacesaving features provide an even larger luggage space.

Please explain about the

Q new seat frame.

Previously, the front seat headrest pushed
out forward during a rear-end collision to
support the user’s neck. The new system
is designed so that rather than making theheadrest move, the collision sinks the seated person’s body into the back of the seat,and their neck area is supported by being
pushed into the headrest. Thanks to thisdesign, there was no longer a need for themechanism to move the headrest, enabling
us to achieve a weight reduction of approximately 12% compared with the previous
model. I believe that we were successful
in enhancing the product’s environmental
performance through a weight reduction
while maintaining neck-shock mitigation
performance during rear-end collisions.

Q

Which aspects of the development did you particularly
struggle with?

The new rear seat uses a system whereby
the headrest is folded down by using theforce generated by flipping up the seat base

New One-Motion
Double Fold-Down
Rear Seat

By rotating the trunk lever(or pulling a strap beside theseat base) once, the entire
seat arrangement movement
is completed.

❶

❷

❸

to pull a cable, and the seat back is folded
forward by also utilizing this force. This
creates a flat space in the rear part of thevehicle interior. Although each part of thesequential mechanism is an evolution of thepreviously existing technology, since a malfunction in even one place will prevent theentire system from working, it was essential
to employ a trial-and-error approach involving many design and testing cycles.
While it is a seat with a high degree of
manufacturing difficulty, as a global model
we undertook rigorous theoretical verification in the development area and then sent
design drawings of the completed system
to our facilities worldwide. This means
the same quality and performance can beproduced at any of our manufacturing facilities. By carrying out thorough verification toachieve uniform global quality, we directly
paved the way for stable production.

Q

In January 2012, you received Honda’s “Award for
Appreciation of Excellence”
in the Development
Category.

“The achievement of both weight reduction
and safety technologies as well as low cost”
in the new seat frame, along with the newrear seat “arrangement technology that realizes one-motion double fold-down with remote lever operation from the luggage compartment” were highly appraised. This wasrecognized by our first award in two years
in the Development Category at Honda’s
2012 New Year award ceremony for suppliers. From design through to production, allrelated departments in the Group worked

together closely to create the product,
which meant we had a particularly high levelof confidence in it. We have heard that it
is winning significant praise in the market
too. However, having received recognition
through such a prestigious award from
Honda, all of us involved in the project feela renewed sense of purpose and are readyto once again take on the challenge of newmodel development.

By achieving uniform global

your level of conQ quality,
tribution to Honda and end

Active Headrest
Mechanism-less Seat

Comparison with previous model
Weight Approx. 12% decrease
Cost
Approx. 10% decreaseusers has also increased.
The project leaders and I have brought
together various functions, and I think thatthe collaborative development structure
we forged was a breakthrough. Amid theunique pressure of a global model, it wassurely thanks to this structure that we wereable to achieve successful development injust two years.
The seat we developed is currently being
produced at four TS TECH manufacturing
facilities (as of June 2012), and a formal
decision has been made whereby the seat
will eventually be manufactured at sevenlocations. There have been no reports fromend users of any malfunctions, and I believethat we have achieved uniform global quality. In addition to the award received from
Honda, we are extremely pleased that sales
in the market are progressing so well that
production is having difficulty in keeping up
with demand. We plan to continue leveraging the project leader-based development
structure, and will strive to create many
more new products.

By making it easy for the user
to sink into the seat back,posture changes are minimized.

The TS TECH Group is currently
manufacturing seats for the
new CR-V at its plants aroundthe world.

TS TECH Report 2012

Masaharu Machii, Model LPL, Model LPL Department
Development and Engineering Division

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TS TECH Report 2012

Large-Project Leader (LPL) Discusses the CR-V ProjectTS TECH Co., Ltd.

TS TECH Report 2012

Representatives from Six Departments Discuss Being at the Frontline of
the New CR-V Seat Development Project

Mass Production Using
Innovative Technology

For this project, we aimed to increase thelocal procurement ratio for raw materials.
Ultimately, for a model that includes many
new technologies, we were able to achieverobust results, including an improved
local procurement ratio (including global
procurement) even in the region that has
the Group’s lowest ratio. I think it is likely to
become a benchmark development case as
we strive to secure a stable supply of competitive components at each manufacturinglocation around the world—a critical factor
for global models.

I think the greatest achievement of this development project is in the realization of mass production of a model that includes innovative technology. For the new rear seat, when the lever isoperated once, the seat folds down frontward in
three stages. The key issue was how smooth we
could make the movement in the time-staggeredsequential operation. We achieved a high level ofsuccess in addressing this issue, hence we wereable to provide customers with comfortable,
stress-free operation. I hope that we can utilize
technologies we created during this project infuture development, and I want to constantly aim
to make seats that will bring joy to customers.

Heat-Resistant Motorcycle Seats
Making touring more comfortable

Kazuya Aoki,
Experiment and Research
Section, Development and Testing
Department, Development andEngineering Division

All motorcycle riders have had the experience of returning to a parked bike and being unable to sit on the seat because it had
been under the sun for too long and got too hot. The TS TECH Group has solved this problem by developing heat-resistantmotorcycle seats as part of its efforts to realize more comfortable and fun motorcycle touring.
The surface temperature of a conventional seat rises because the seat cannot completely reflect infrared light, whichcauses accumulation of heat in the cover material. The seats TS TECH has developed, on the other hand, allow infrared lightto pass through the cover material and diffuse within the urethane interior, thereby keeping the surface temperature down.
TS TECH exhibited these heat-resistant seats at the 42nd Tokyo Motor Show in 2011 and is now expanding efforts tointroduce them to motorcycle manufacturers with the aim of going into mass production.

Real Stitching
Creating the appearance of real stitching

Design of Advanced Mechanism
through Trial and Error Bore Fruit

Takuro Yamada,
Design Section,
Design Department,
Development andEngineering Division

We struggled with the final seat packaging
to go along with the design of the onemotion double fold-down system. We
altered the frame design and repositioned
many of the mechanisms as we aimed
for the greatest possible level of seating
comfort by searching for the best position.
Since the front seat equipment specifications vary depending on the different
needs of countries and regions, we exerted
substantial efforts to meet global model requirements, and this was reflected in suchtasks as the production of design drawings
with more than 100 specifications.

Secured Safety throughNumerous Testings

Takashi Ishizuka,
Collision Safety Section,
Development and Testing
Department,
Development andEngineering Division

In the new seat frame, the most crucial
aspect is ensuring adequate mitigation ofshock even in the unexpected event of arear-end collision. Within this, to achieve theoptimal headrest frame shape for reducing
neck shock we used a large amount of trial
and error. Although it took many iterations of
this process to reach the optimum design,
I believe that in the end we were able toproduce a seat structure that provides ample
effectiveness.

Development Under a Compressed
Time Frame through Close Liaison
Between Project Leaders
I played a coordination role in the development
project, including coordinating the opinions of
those involved in development among the project
leaders. Despite the seat containing several newtechnologies, the product boasts a very highquality finish. In particular, while operation of therear seat arrangement is very easy and involves
simple movements, the resulting product ispacked with advanced, innovative technologies.
I believe that the results generated in termsof many aspects—including comfort, convenience, and safety—underpin the high appraisal
received from Honda and in the global marketplace.

Visual beauty is an important element in ensuring that the TS TECH Group can offer an appealing product to users. The Group
conducts research into materials and processing technologies so that it can continue to improve the “finish quality,” which
requires a variety of different technologies. “Finish quality,” which entails a thorough understanding of the characteristics ofmaterials, such as cloth and leather, and the combination of expert processing technologies are used for wrinkle-processing
technologies and “real stitching.” Wrinkle-processing technology results in a beautiful gather in automobile seat leathers andthe “real stitching” that is utilized for motorcycle seats. By transferring and reproducing the appearance of stitching and patterns in the surface of a single seat cover, TS TECH is able to create realistic “stitching” that looks just like the real thing. This
improves the “finish quality” of motorcycle seats, by allowing a greater amount of design freedom, and also helps to make theseat more durable, by preventing water from penetrating into the seat interior.

Yoshiyuki Shoji,
Materials Development Section,
Development and Testing
Department, Development andEngineering Division

Realized Uniform Global Quality
Based on Early Maturation of QCD*1
at the Mother Plant
For this project, with the aim of achieving early QCD
maturation—originating from the Saitama Plant for
deployment at five manufacturing locations around theworld—we gathered managers from each overseas
plant in Japan simultaneously for the first time. We used
this opportunity to provide explanations of the equipment
and jig needed to ensure the level of quality demandedby the customer as well as guidance on ASSY*2 procedures and key points in managing the equipment. We
also conducted peer group sessions on improved tools
for difficult processes. Furthermore, we were also able toshare up-to-the-minute information, including responses
to defects encountered in Japan at initial setup confirmation events. I believe that these preparations paid off
by contributing to the smooth start-up of production lines
at each overseas plant. I think that the joint verification
meeting held on this occasion involving plants worldwide
will become a valuable success template for achieving
uniform global quality in global models.

Kenji Tanaka,
Production Engineering Section,
Production Department, Saitama
Plant, Manufacturing DivisionFirst-Class Seat for Motorcycles*1: QCD refers to “quality, cost, and delivery.”*2: ASSY is an abbreviation of Assembly, andit refers to component units.

TS TECH Report 2012

Toshio Sato,
Cost Planning Section,
Cost Planning Department,
Sales Division

Achieved an Improved Local
Procurement Ratio

TS TECH is also the largest manufacturer of motorcycle seats in Japan, supplying seats to all Japanese
motorcycle manufacturers. At present the TS TECH Group is continuing to approach R&D for motorcycle seatsfrom various angles, in order to support a comfortable driving experience. Below is an overview of some of thetechnologies the Company makes use of.

13

12

TS TECH Report 2012

For the new CR-V seat development project, representatives from six departments participated under LPL
Masaharu Machii. The six members each recall the particular struggles their respective departments faced andthe sequence of events leading to the project’s ultimate goal.

As a Top Manufacturer of Motorcycle SeatsTS TECH Co., Ltd.

TS TECH Report 2012

Due Regard for Human Resources

14

In striving for sustainable development, the TS TECH Group respects the roles and responsibilities of each ofits business units and employees while fusing global and local elements to nurture human resources capableof competing in any country.

What does “due regard for humanQ resources” mean to you?

A Management Philosophy that Prioritizes “Due Regard for
Human Resources”
Yoshitaka Nakajima, Director, Executive General Manager of the Corporate Administration Division
One of the core principles of TS TECH’s management philosophy is “due regard for human resources.” We believe that people are the decisive factor driving a company’s success, and our focus on people reflects our desire to be a long-lasting company. Amid the automobile
industry’s shift away from operating structures that are optimized on a global basis toward those optimized on a regional basis, we hear fromthe Executive General Manager of the Corporate Administration Division, who is also a director of the Company, the General Manager of the
Human Resources and Administration Department, and young TS TECH employees regarding the Group’s efforts in building an infrastructure for turning out human resources capable of competing from a “Glocal” (a fusion of “global” and “local”) perspective.

A company that does not value people will not survive forlong. In 2010, TS TECH celebrated its 50th anniversary, but toensure that we reach our 80th and 100th anniversaries, we are
pursuing management while focusing closely on “due regard
for human resources” as a core principle shared across theGroup.
Of course, to generate profits, we need to ensure that fixed
costs are maintained at an appropriate level, but I think it isimportant first to recognize the importance of employment security. Each employee has his or her own role to play, and collectively it is the employees that are the source of the Group’s
strength. Our corporate culture is based on giving mutual recognition and respect and passionately fulfilling our roles whilepursuing our dreams. We must value that culture. To do so, I
want all of our staff—not just Japanese but local staff overseas
too—to each maintain a strong sense of individual purpose.
For this reason, I believe that it is important to manage theorganization so that employees can keep a high level of motivation and work as a united team to build a bright and enjoyable future.

Q

Please explain what you mean by “dueregard for human resources” that strives
for globally sustainable development.

TS TECH commenced its overseas operations in 1977, and wehave built a structure that currently spans 12 countries and 35
subsidiaries. Up to now, Japan has had the role of the “mothership,” transferring technology and human resources to each
operating location. However, amid the automobile industry’s
shift away from operating structures that are optimized on a
global basis toward those optimized on a regional basis, it is
becoming even more crucial than ever to have a sound graspof local needs. In other words, within the process of shiftingfrom a structure based around a single global product specification to one based on vehicle models optimized for eachregion, one of the most important keys to success is how acompany invests its management resources.
At present, although we are increasing the number of staff
sent from Japan to work at overseas operations, in addition to
training and supplying globally capable staff from Japan we arealso simultaneously promoting local human resources development overseas. We believe that it is necessary to achieve agood balance between these two approaches. We are starting
off by first of all developing employees with a strong sense ofindividual purpose who are capable of competing in any country. In human resources in Japan, we often talk of people with
“T-shaped” skill sets—the vertical part of the “T” representing
specialist skills and the horizontal part representing generalist
skills. I believe that we can raise the Group’s competitivenessand develop global human resources capable of competing
anywhere in the world by nurturing a diverse array of “T-shaped”
skill combinations.

Q

How are you responding to the need for
greater diversity and internationalization?

In responding to increasing diversity, while being inclusive ofmany factors—nationality, gender, and disability, for example—
I think the way we express “TS TECH within society” is also
very important. As a specific example, in 2012 we launched inJapan the TS Women’s Committee, which has begun working
on measures to improve the working environment for womenand make it easier for women to excel. We are prepared tomodify, as need be, our personnel system and establish new
structures. Overseas, I think it will be imperative to develop
working environments that are adapted to the work values andcultures of each particular country. Under the 11th MediumTerm Management Plan, these activities aim to address such
issues on a medium- to long-term basis.
To promote internationalization as part of further global expansion, we must cultivate people so that everyone who works
in the Group can share the TS philosophy and is able to understand it as well as put it into practice. The most important thingis for all employees at various TS TECH workplaces around theworld to share the same expectations.

TS TECH Report 2012

“Due Regard for Human Resources” is Essential to Sustainable Development

15

TS TECH Report 2012

Interview

TS TECH Co., Ltd.

TS TECH Report 2012

General Manager of the Human Resources and Administration Department Discusses What is Needed to Nurture People Who Will Thrive in the Global Arena

Takashi Kojima

Takuya Fujikura

Yuki Okada

Yuya Masuda

Nurturing Global Human Resources Able to Compete on the World Stage“We are Creating Tomorrow’s TS TECH”

One of the three key corporate policies being implemented under the 11th Medium-Term Management Plan
is “Build an infrastructure of “people” who can compete globally.” Hence, as a truly global company we arefocused on nurturing global human resources able to compete on the world stage. Here, I would like to explainsome of our specific measures.

One of the TS TECH Group’s avowed goals involves the nurturing of “Global Human Resources” capable ofsucceeding globally, which is stated in its 11th Medium-Term Management Plan as “Build an infrastructure of“people” who can compete globally.” Young employees responsible for the monodzukuri of tomorrow and theGroup’s growth talk about their experiences, challenges, and personal goals at TS TECH.

Q

What do you mean by“global human resources?”

In a nutshell, this means people who can thrive
anywhere in the world. “Global” is about going toplaces where the environment is different. While weshould of course apply the TS Philosophy, this alsomeans that we need to have a sense of balancethat respects other countries’ cultures and customs,
and have the flexibility to adapt to local lifestyles.
However, as an important prerequisite we mustfirst be able to precisely manage our jobs in Japan.
The Group’s overseas subsidiaries are centered on
manufacturing, and monodzukuri (the art and scienceof manufacturing) shares common characteristics theworld over. For employees who can capably handle
monodzukuri-related jobs—in other words, they havemastered the foundations of the Group’s business—
opportunities beckon for a successful career all over
the world.

Q

Please explain what you
mean by “mastering thefoundations of the business.”

The Group encompasses a wide range of functions, and each function requires a high degree of
specialization. Acquiring such specialization requires
the mastery of the business’ foundations. For eachindividual employee to efficiently gain these specialist
skills, it is necessary to standardize jobs across theorganization so that the work is not jeopardized by
the transfer of people between positions.
Furthermore, in the Group’s global businessdevelopment, experience on the “monodzukuri front
lines” has particular significance. Rather than throughverbal communications, showing technical skills thatare learned on site is more easily understood by local
staff and enables the building of trust. For employees,
rather than memorizing technical skills as knowledge
we emphasize the importance of direct skill acquisition.

Q

Please tell us about yourmain approach to nurturing
global human resources.

Companies require both specialists and generalists. If
a person only has experience in one particular function, that person would be unsuitable to manage anoverseas subsidiary or lead a department. In addition
to specialized knowledge and experience, to nurture
people with general and specialist (“T-shaped”) skill
sets, including a broad outlook and flexible thinking, it is necessary to utilize job rotation as part of
the human resources development approach. For
this reason, we have established subcommittees foreach specialist domain, including manufacturing,product development, and management. At present,in each sphere we are discussing such questions as,“What target characteristics should the employee
have?” and “How do we establish the process thatwill enable employees to reach this goal?” Based on
this approach, we aim to revitalize our job rotation
system.
To steadily advance the Group’s global development, we believe that a common language andawareness are also essential elements. In our training programs for each employee level, we include
elements covering the Group’s thinking, from the
TS Philosophy to the TS Guidelines for Conduct, aspart of our “off-the-job training.” In the program, we
would like to offer attendees an opportunity to think
together about how they should understand and respond at each seniority level to wishes expressed in
the TS Philosophy and the TS Guidelines for Conduct.
It should not be a place for merely verbal and written
explanations. I want to make this commonplaceacross the entire Group, including at our overseas
operations.

Kosuke Monna

Breakdown of Employees
by Region(As of March 31, 2012)
Asia and Europe
2,715

Joined Nine
Years Ago
Japan
2,183

Total
14,434(Number of employees)

China
3,350

Manufacturing Section 2, Administration Department,
Hamamatsu Plant, Manufacturing Division

My job involves planning and implementing measures to improve efficiency
from analyses of production status in the door trim production process. In
monodzukuri, you cannot find defects if you are only dealing with the task
at hand. It is important to think how the work I am doing now affects theCompany as a whole. If none of the workers at a site possess this kind ofawareness, high-level targets cannot be achieved. As a group leader, I pay
particular attention to communication, so that young employees maintaina high level of awareness.

Takuya Fujikura
Joined EightYears Ago

Production Engineering Section, Production Department,
Saitama Plant, Manufacturing Division

While in the Production Section I was doing my best to focus on monodzukuri.
but since being assigned to the Production Engineering Section my viewhas broadened to such an extent that I now take into account efficiency
and profit. Previously, there was a strong awareness that we had to create
products by making them ourselves, otherwise we would not get anywhere.
As such, I would push other departments. But things have changed since
my operation began to coordinate with other departments on the launch of
new models. With a view to possibly heading overseas some day, I makethe most of listening to what people say in various other departments ofthe plant.

Americas6,186Michiko Takagi
Joined Six
Years Ago

Career Development Section, Human Resources andAdministration Department, Corporate Administration
Division

Since entering the Company, I have experienced every aspect of personnel
work one after the other, including hiring and salaries. I was put in chargeof training last year, and in this my second year I am planning new training
courses and making proposals to improve the existing training sessions.
I think that the difficult thing about training work is assessing people’s
individual needs, as these differ from employee to employee, and differences
arise between the management side and the side of those receiving thetraining. Without sticking to ready-made ideas, I want to give some thought
to what kind of training and what type of education system are needed.

Yuki Okada
Joined Six
Years Ago

Commencing with the planning of orders in the Sales Planning Section, I
have performed tasks in a wide range of fields, such as budget planning,financial analysis, and marketing. In addition to administration involving
numbers, I have experience in environmental analysis work and have gained
a comprehensive insight into companies and industry. Talks from managers
at twice-monthly training sessions have helped considerably, but as I do a lotof desk work I would like to have the opportunity to see something of the TS
TECH frontline. I am thinking that I would like to become a specialist whoseknowledge is extensive and deep, not extensive and shallow.

Takashi Kojima
Joined EightYears Ago

Engineering Section, Motorcycle Engineering
Department, Development and Engineering Division

I have been able to acquire the knowledge required to use software foranalysis and technical drawing when carrying out design work, testing,and analysis work, for the drawings used in motorcycle seat development.
Thus, little by little, I have learned about the motorcycle seat manufacturing
process. From now on I need to absorb knowledge and technique in a wide
range of fields, not just motorcycles. As I have many things to learn fromother departments, I am planning to regularly visit the automobile engineering department myself and to try and listen to their opinions.

Sales Planning Section, Business Development
Department, Sales Division

Yuya Masuda
Joined Nine
Years Ago

Manufacturing Section 1, Production Department,
Suzuka Plant, Manufacturing Division

In my first six years since joining the Company I have carefully studied the
production processes on the factory floor. Putting this experience to gooduse, for the past three years I have been supporting frontline operations byproviding feedback on the results of discussions with other departments
concerning such matters as the production methods of new models. My
work in support of overseas plants has provided me with experience I cannot
gain in Japan, such as communication with the local people there. It is also
important to keep broad lines of communication with each base, and so I
fully intend to stay in active touch with those in charge at the frontline andto broaden my network.

TS TECH Report 2012

TS TECH Report 201216

Michiko Takagi

17

Kosuke Monna

Tetsuya Harada, General Manager of the Human Resources and Administration Department

TS TECH Co., Ltd.

Social Responsibility and Trust

35 Companies in 12 Countries Worldwide

TS TECH Report 2012

General Manager of CSR Department Discusses Striving to be a “Company
Welcomed with Joy”

Interview

We Will Enhance the Group’s Social Trust by Fulfilling Our Social
Responsibilities through the Efforts of All Employees

1918

The key to consistently fulfilling our social responsibilities through the provision of safe and comfortableproducts at each of the Group’s facilities around the world is the establishment of trust based on the efforts
of all employees.

TS TECH Report 2012

TS TECH Report 2012

Hisashi Tochihara, General Manager of the Corporate Social Responsibility Department

Q

What matters are most important in thepractice of CSR at the TS TECH Group?

I think CSR at the TS TECH Group is founded on consistently
providing end users with a safe and comfortable automobile interior environment. However, during that process, if we were toneglect our compliance responsibilities and this led to employee or corporate misconduct, we could lose that trust in one
stroke. For this reason, I believe that it is extremely importantfor each individual employee to understand the seven attitudes
set forth in the TS Guidelines for Conduct, which forms thefoundation of the TS Philosophy, and put these into practicefrom their own standpoint.

Q
Aiming to be a “Company Welcomed with Joy,”All Employees Fulfilling Their Roles
Hisashi Tochihara, General Manager of the Corporate Social Responsibility Department
TS TECH’s CSR comprises the pursuit of the Company’s stated principle of being a “Company Welcomed with Joy,” and measures aimed
at realizing this goal. In addition to an interview with the General Manager of the Corporate Social Responsibility Department, in which hediscusses the importance of an approach that includes all of the Group’s employees, this chapter also features explanations of the role of the
CSR checksheet currently being implemented at each business site, and an original wheelchair development project based on a request fromthe Honda Motor Workers’ Union.

Please explain the TS TECH Group’s
approach to the three aspects of the“triple bottom line” (economic, social,and environmental performance).

While economic performance is indicated by the results ofour main business activities, rather than maximizing profit only
for the Group, we aim to achieve a good balance in what wereturn to many different stakeholders—society as a whole, end
users, corporate customers, shareholders, suppliers, and local
communities. In addition to donations and volunteer activities,
as an automotive parts manufacturer we endeavor to engage
in monodzukuri in a way that has a low impact on the environment, and make a contribution to society by applying oursignificant know-how related to sitting, which we have accumulated over the past 50 years.

Q

How are the activities of the CSR
Department structured?

The CSR Department comprises three sections—theEnvironment Section, the Legal Section, and the Public
Relations Section. The Environment Section manages environmental protection activities and promotes the social

responsibility guideline program in line with ISO 26000 (Guidanceon social responsibility). The Legal Section promotes the TS
TECH Corporate Governance System (TSCG), including compliance. The Public Relations Section is responsible for investor
relations (IR) and providing timely information disclosure within
and outside the Group.
In particular, since one of the key policies adopted underthe 11th Medium-Term Management Plan is “Build a corporate
structure with advanced CSR characteristics,” it is essential for
the TS TECH Group to advance such programs as ISO 26000
and strengthen its environmental protection measures during
the period of the current plan.

Q

Are you focusing on any particular keywords in your promotion of CSR?

CSR is not something that is practiced only by certain departments or staff, such as the CSR Department, but rather it issomething all employees practice within their own roles. For
example, people in development functions seek to make lightweight, safe, and comfortable seats; people in sales functions
work to sell a large number of units at a competitive price;
people in quality functions maintain advanced quality management; people in accounting functions work to produce accurate financial statements speedily; and people in corporate
management functions establish and manage structures to ensure that no impropriety occurs. Such examples illustrate how
CSR is about each employee properly fulfilling his or her own
role, and this contributes to the realization of being a “Company
Welcomed with Joy.”
The “R” in CSR stands for “responsibility,” but “R” can also
stand for “reliability.” I think these are two of the most important
keywords. Not only must we fulfill our responsibilities, I think in
the current era it is vital to enhance social trust, thereby contributing to a higher appraisal of the Group.

TS TECH Co., Ltd.

TS TECH Report 2012

Stakeholder Dialogue: Honda Motor Workers’ Union
Using a Checksheet to Discover CSR Issues
The TS TECH Group’s CSR Checksheet is used to identify issues in reference to the seven core subjects ofsocial responsibility in ISO 26000: organizational governance, human rights, labour practices, the environment,
fair operating practices, consumer issues, and community involvement and development. Overseas subsidiaries perform self-checks using a checksheet with questions relating to especially basic issues within thecore subjects. Issues are identified for each region based on the analytical results obtained and activities
connected to CSR measures rolled out.
We also operate the TS TECH Corporate Governance (TSCG) Self-Verification System for the early
discovery and handling of issues related to matters such as legal compliance and risk management.

Human Rights•Organizational governance to promote social responsibility•Elimination of discrimination / prevention of harassment

We establish and operate in a suitable and appropriate manner policies
and a system for expanding CSR and mechanisms such as action
guidelines and training programs.

We do not allow harassment on the grounds of race, ethnicity, countryof origin, religion, gender, or any other discriminative feature.
We do not discriminate in hiring on the grounds of race, ethnicity,
country of origin, religion, gender, or any other discriminative feature.

20

Action theme

Question

Choices

AnswerAction theme(1) Yes.

(1) Yes.

(including
general CSR
promotion)(2) We have not specifically stated therules, but they have been tacitly
agreed upon.

Have you specified adedicated department
or a person responsible2
for matters pertaining
to respect for humanrights?

(3) We make decisions each time,
as needed.

Organizational
governance(1) Yes.
Have you specified items (2) We have not specifically stated therelating to CSR in arules, but they have been tacitly
3
code of conduct (action
agreed upon.
guidelines)?
(3) We make decisions each time,
as needed.
Do you conduct
awareness-building ac4 tivities aimed to spread
understanding of CSR
among employees?

(1) Yes, routinely.
(2) Yes, at odd intervals or for some
employees.
(3) Only when needed.

Respect forhuman rights
Have you specified a(including thespecific policy or rules
elimination of 3 aimed at respect fordiscriminahuman rights?
tion and theprevention ofharassment)

Do you ascertain the(1) Yes, routinely.
status of CSR initiatives (2) Yes, at odd intervals.
5through internal investi(3) Not particularly.
gations?
6

Do you conduct awareness-building activities
4
relating to respect forhuman rights?

Example of specificinitiatives

Answer(1) We have specified a dedicated department and a person responsible.
(2) We have specified a dedicated department or a person responsible.
(3) We handle such matters each time,
when necessary.
(1) We have stipulated them in company rules or a code of conduct ora human rights policy, etc.
(2) We have not specifically stated therules, but they have been tacitly
agreed upon.
(3) We do not necessarily have a clear
policy or rules.
(1) Yes, routinely and for nearly all
employees.
(2) Yes, at odd intervals or for some
employees.
(3) Only when needed.

(1) We routinely conduct an investigaDo you ascertain throughtion to ascertain the situation.
internal investigations
that no infringement(2) At odd intervals, we have con5of human rights has
ducted investigations to ascertain
occurred in businessthe situation.
operations?
(3) Not particularly.

CSR Checksheet Analytical Results (example)
Organizational governanceCommunity contribution

Choices(1) By and large we have figured out theHave you figured out theimportant legislation pertaining tolegislation pertaining tohuman rights.
respect for human rights
1 (including the elimination (2) We have figured out some of theof discrimination and thelegislation.
prevention of harass(3)We figure it out each time, whenment)?
necessary.

Have you decided on a(2) We have not specifically stated the
CSR structure (dedicatedrules, but they have been tacitly
1 department or a responagreed upon.
sible person/person in(3) We make decisions each time,
charge)?
as needed.

Do you have a written
2 policy and philosophy
regarding CSR?

Question

Respect for human rights

Ensuring product safety

Prohibition of childand forced labor

Export trade

6

Fair wages

Cooperating with the Repeat Hotline of the Honda
Motor Workers’ Union and Making Wheelchairs
More User-Friendly
The Honda Motor Workers’ Union has developed a volunteer-run Honda
Repeat Hotline in which members refit wheelchairs at nursing homes andassisted-living facilities, making them more user-friendly. Since setting up thishotline, the group has already refitted about 2,500 wheelchairs. Techniques
cultivated by TS TECH in the manufacture of automobile seats are utilized inthis initiative.

Cooperating in the Voluntary
Refitting of Wheelchairs
The Honda Repeat Hotline began in 1993
and TS TECH provides assistance inchanging the models of seats and peripheral equipment. The Company listens to therequests of the wheelchair users and theunion members who actually perform therefitting and ensures the wheelchairs arerefitted so that they are easier to use andmore comfortable.

Using Technology Cultivated in Seat
Manufacturing

Message from Mr. Moriguchi

Example of specificinitiatives

P

Statutoryworking hours

Dialogue and discussion
with employees

Competition law

Chemical substancemanagement

D

Working environment

Resource conservation, waste

Greenhouse gases

China

Asia and Europe

C

Roll out CSR
Check Sheet

Air, water, soil

AmericasA

Put CSR measures
into practice

Issue analysis

Overall average

Wheelchair refitted with a seatmade by TS TECHThe TS TECH Group has been cooperating with the Honda Repeat Hotline since

Reflect CSR measuresin business plans
Corruption
prevention

its inception. At present, it is involved in
the refitting of 120 wheelchairs per year
through the supply of seats and peripheral
equipment, whose designs are based on
minicars. During this time, the Company
has provided people with wheelchairs thathave more comfortable seats and are easier
to use, by making the seats easy to remove
and install and by improving the reclining
back angle. The technology that has been
researched and developed over a long
period by TS TECH in order to provide automobile users with a safe and comfortable
driving experience is now being put to use
in a new way, to the delight of many people.

21

TS TECH Report 2012

Organizational Governance

TS TECH Report 2012

Isao Moriguchi, Director of Welfare and Social Contribution Department, Honda Motor Workers’ Union

CSR Checksheet (extract)

Members of the Honda Motor Workers’
Union refitting a wheelchair

The Honda Motor Workers’ Union conducts a variety of social contribution activities
in order to fulfill its social responsibility and with the aim of expanding the spirit ofvolunteerism among our members. One of those important initiatives is the Honda
Repeat Hotline. It has already been nearly 20 years since the hotline began and it isthanks to the cooperation of TS TECH that we have been able to contribute to society this long. We always receive positive feedback, since the wheelchairs we havedelivered to facilities are so comfortable.
At present we are asking TS TECH to develop new specifications for aluminum
wheelchairs and we hope that they will continue to contribute to society together
with the Honda Motor Workers’ Union by cooperating with the hotline for many
years to come.

TS TECH Co., Ltd.

TS TECH Report 2012

Chapter 2 Sharing Pleasure with Stakeholders

Practicing the Seven Attitudes of TS TECH

Summary

Main stakeholders

Association with Seven Attitudes
in the TS Guidelines for Conduct

Page

In order for organizations to fulfill their social responsibility, it is important that they have a mechanism for effective decision-making to achieve their objectives and roles. Organizational governanceis the foundation for an organization to fulfill its social responsibility. Organizational governancerequires communication with outside stakeholders as well as internal employees, to reliably
implement accountability and transparent decision-making, and to demonstrate leadership
through action.

Shareholders,
employees,
administration

Human Rights

In order to create a society in which all people are free from discrimination based on gender, age,
ethnicity, and so forth, it is important that individuals be aware of human rights, respect the humanrights of people inside and outside the organization, and take care not to infringe upon human rights
either directly or indirectly. The organization must check to make sure its activities do not infringe
upon human rights and that it has not created an environment that might prove to invite humanrights infringement. It is also important to have a mechanism for making improvements in the eventthat acts have been committed or an environment created that infringes upon human rights.

Employees

Our attitude while working for the Company

P.26

Labour Practices

Labour practices have a big impact on society and the economy in the sense that an organization
creates jobs and maintains and improves the living standard of workers by paying wages. Basedon the fundamental principle that “labour is not a commodity” (International Labour Organization[ILO]), organizations are asked to ensure equal employment opportunities to all workers, provide
working conditions and an environment that are fair and safe for workers and their health, andengage in public dialogues such as negotiations, discussions, and exchanges of information
with representatives of government, employees, and workers.

Employees

Our attitude while working for the Company

P.27

The Environment

Modern society is faced with a number of environmental problems and all organizations can besaid to have some impact on the environment. In addition to complying with laws and regulations,organizations must take responsibility for the environmental impact caused by their actions. Whenthe environmental impact exceeds an acceptable level, the organization is asked to bear the costs.
It is also important for organizations to take preventive measures to minimize impact on the environment as much as possible, even if that impact is uncertain.

General public

Attitude toward the general public

P.28

Fair Operating
Practices

Issues in the subject of fair operating practices for an organization to fulfill its social responsibility
include the prevention of corruption, responsible political involvement, fair competition, and respect
for property rights. The foundation of fair operating practices is an organization carrying out operations based on an ethical code of conduct. For this reason, organizations also ask their suppliers
and other related organizations to practice ethical operations. It is important in this way for organizations to strive to promote ethical behavior by society as a whole.

Suppliers

Attitude toward suppliers

P.32

Consumer Issues

It is important for organizations to take responsibility for the products and services they provide, toavoid putting consumers in danger through the provision of products that have a safety defect. It isalso important that when consumers use those products and services they do not have an adverse
effect on society, such as by causing environmental damage. It is important to practice consumption in such a way that neither the organization nor consumers have an adverse effect on society.

Customers andend users

Attitude toward customers and end users

P.33

Community Involvement
and Community
Development

It is important for organizations to communicate with the communities that they belong to, to be
actively involved in community growth and revitalization, and to grow together with their communities. Organizations are required to participate and contribute in diverse ways, including theenhancement of dialogues with community residents and education and culture in the community
through their involvement in the community.

Local
community

Attitude toward the local community

P.34

Our attitude while working for the Company

P.24

Attitude toward administration

23

Organizational
GovernanceAttitude toward shareholders

TS TECH Report 2012

The ISO 26000 seven core subjects

22

TS TECH Report 2012

The TS TECH Group carries out principles-based business operations in order to maintain good
relationships and grow together with all its stakeholders. Below is an explanation of the association
between the core subjects of social responsibility defined by ISO 26000 and the Seven Attitudesof TS TECH in the TS Guidelines for Conduct, as well as an overview of specific initiatives theGroup is taking in relation to the core subjects.

TS TECH Co., Ltd.

TS TECH Report 2012

Organizational GovernanceFurthermore, the TS TECH Group has
established an effective and appropriate internal control system to ensure the reliabilityof financial reports based on the Financial
Instruments and Exchange Act. The Group
continually evaluates the status of development and operation of that system andtakes the necessary corrective measures
to maintain an efficient system.

made public in those ways is also posted to
the TS TECH website when appropriate.
The Group discloses information in accordance with the Financial Instruments andExchange Act, other laws and ordinances,and the rules of the financial instruments
exchanges where its marketable securities
are listed. Even when not subject to those
provisions, the Group judges whether information is useful and appropriate for stakeholders and discloses it proactively.

TS Guidelines for Conduct

The TS TECH Group is striving to establish sound andhighly transparent management that abides by the law
and observes rules and regulations.

Attitude toward shareholders

Main stakeholders:
The ISO 26000 core subject:
Association with Seven Attitudes
in TS Guidelines for Conduct:

Shareholders, employees, administration
Organizational governanceAttitude toward shareholders; Our attitude whileworking for the Company; Attitude towardadministration

Basic Policy on Corporate
Governance
TS TECH’s corporate philosophy calls fora “Company Welcomed with Joy,” firstly
by its customers and shareholders, as wellas its suppliers, the community, and its
employees. The Company recognizes that
establishing corporate governance is an
important step in fulfilling its social responsibility and becoming a “Company Welcomedwith Joy” by all its stakeholders, and so is
carrying it out enthusiastically.
Based on this philosophy, TS TECH
has established the TS TECH Corporate
Governance (TSCG) System and is working
to enhance compliance and risk management and improve corporate ethics.

Status of Risk Management System
A risk management officer is appointed
from among the representative directors as
the person responsible for overseeing risk
management. The risk management officer
is charged with carrying out regular verification of risks in every operating division andverifying safety systems at all manufacturing
facilities, in an effort to prevent risks in business operations. If problems occur or there
is some defect that could cause a problem,
improvements and corrections are made.
On the off chance that a crisis involving loss
occurs, the TS TECH Group is prepared totake emergency measures based on crisis
management rules and manuals for specificrisks.

In order for the Company tomaintain a high degree oftransparency, I make a positive
disclosure of information with aview to ensuring a high degreeof transparency in corporate
management.
Our attitude while working
for the Company
In order for the Company tobe an entity of high ethicalstandards, I observe theCompany rules and regulations
faithfully.

The Group discloses accurate corporate
information in a prompt and fair manner
to stakeholders, including shareholders
and other investors. For that reason, it hasestablished the Disclosure Policy, which isobserved by officers and employees.
Disclosures are mainly made through theTimely Disclosure Network (TDnet), provided by the Tokyo Stock Exchange, and
TS TECH’s press releases. The information

IR by the Management TeamThe Group holds results briefings mainly forinstitutional investors twice a year, at yearend and at the end of the second quarter.
Additionally, top management attends directinterviews with investors and explains management policy and performance trends.
In these and other ways, the Group works
enthusiastically at IR.

TSCG System
TS TECH has adopted an operating officer system, to improve the mobility of the Board of Directors and enhance its oversight andto strengthen its regional and on-site management systems.
General Meeting of Shareholders

Attitude towardadministration
In order for the Company to
be strictly law-abiding, I abideby the law faithfully as a memberof society.

❶ Board of Directors (12 members)
Corporate Ethics Committee❷

Status of the Internal Control
SystemIn order to identify any potential problem
regarding compliance and risk management
as early as possible and to address theenvisaged issues, TS TECH has establishedthe TSCG Self-Verification System to check
the Company’s status in terms of legal compliance, risk management, and corporate
ethics.

Based on the provision of the Companies
Act, the General Meeting of Shareholders
held on May 11, 2006, passed a resolution
on Basic Guidelines for the Formation of
an Internal Control System. Since then, theBoard of Directors has checked the statusof operation of the system every year at its
end-of-fiscal-year meeting. Whenever there
are changes, they are voted on at Board
meetings held as needed.

❺ Board of Auditors (4 members)

Executive Committee (3 members)
President

TSCG Office
Risk Management Officer
TS Corporate Ethics Consultation OfficeCompliance Officer❸ Executive General Managers Committee

Corporate Managerial
Planning Office

Corporate Business
Administration
Division

Corporate
Administration
Division

Corporate Quality
Assurance Division

Manufacturing
Division

Corporate
Purchasing Division

Development andEngineering Division

Sales Division

Departments
and Offices

Departments

Departments

Plants, Centers,
Offices

Departments

Departments
and Offices

Departments
and Offices

Domestic Affiliated Companies❹

Americas Regional Management Committee
Overseas
affiliated companies

China Regional Management Committee

Operation of TSCG Self-Verification
SystemTS TECH Report 2012

To Be a “Company Welcomed with Joy”

25

24

TS TECH Report 2012

Disclosure Policy

Asia and Europe Regional Management Committee❶ Board of Directors❷ Executive Committee

It comprises 12 members andconvenes once a month inprinciple. It makes decisions
regarding management policies,
important management issues,
and matters mandated by laws
and regulations, as well as
supervises the execution of
the Company’s operations.

It comprises the Company’s
three representative directors. It
conducts preliminary deliberations on such matters as resolutions to be put to the Boardof Directors, and, within thescope of the authority assigned
to it by the Board of Directors,
discusses important mattersrelating to the execution of theduties of the directors.

❸ Executive General
Managers Committee❹ Regional Management Committees

It comprises directors andother members. It discusses
matters relating to the policies,
planning, and control of eachbusiness division’s overall operations to enhance efficiencyof management.

They comprise directors
and other managers in theAmericas, China, and Asia
and Europe, and deliberate on
important matters affecting
management in their respective
areas.

❺ Board of Auditors
It comprises four members(including two outside corporate auditors). Each corporate
auditor audits the directors’
execution of duties in accordance with the audit policy
determined by the Board ofAuditors through attendance
at important meetings suchas meetings of the Board of
Directors, various examinations,and the regular exchange of
opinions with the directors.

TS TECH Co., Ltd.

TS TECH Report 2012

TS Guidelines for Conduct

To Create New Value and a Safe and Comfortable Workplace

TS Guidelines for Conduct

The TS TECH Group is determined to remain a company
that acts under the notion that people are equal and positively promotes mutual acceptance of individual personalities and differences amongst the people of the world.

Our attitude while working
for the Company

TS TECH does all it can to create a safe and healthy
environment for its employees, where they can takepride in their company and work and maintain apositive attitude.

Our attitude while working
for the Company

Main stakeholders:
The ISO 26000 core subject:
Association with Seven Attitudes
in TS Guidelines for Conduct:

Employees
Human rights
Our attitude while working for the Company

Basic Policy on Human Rights
As it says in the TS Guidelines for Conduct,
TS TECH does not discriminate on account of birth, nationality, creed, religion,sex, race, ethnicity, age, intellectual/physicalhandicap, clinical history, hobby, academic
career, or social standing.
Moreover, TS TECH does not use words
that are considered to be discriminatory
terms or expressions. It also does not use
terms that may produce misunderstanding.

CSR Checksheet on Human Rights
Used Outside JapanTS TECH has developed a CSR checksheet(see p.20) for local subsidiaries outside
Japan on basic points relating to humanrights, to help them recognize the kind ofcompany TS TECH wants to be and to
identify current challenges.

Awareness Building about Human
RightsTS TECH strives to raise awareness ofhuman rights in each region. For example,
in North America, the Company puts up
anti-discrimination posters and distributed
handbooks. In China, it holds education
sessions.

Corporate Ethics Consultation
OfficeTS TECH has established a Corporate
Ethics Consultation Office, for the early
detection of legal violations and violationsof the TS Guidelines for Conduct concealedin the Company, and makes corrections toprevent recurrences.

In order for the Company to
be non-discriminatory andfair to everybody, I act under
the notion that all people are
equal, while positively promoting
mutual acceptance of individual
personalities and differencesamongst the people of theworld.
•Prohibition of discrimination
I do not discriminate on
account of birth, nationality, creed, religion, sex, race,
ethnicity age, intellectual/physical handicap, clinical history,
hobby, academic career, or
social standing.
•Prohibition of use of
discriminatory expressions
and terms
I do not use words that areconsidered to be discriminatory terms or expressions
and terms that may produce
misunderstanding.

Main stakeholders:
The ISO 26000 core subject:
Association with Seven Attitudes
in TS Guidelines for Conduct:

Employees
Labor practices
Our attitude while working for the Company

People—The Decisive Factor ina Company
TS TECH believes that people are thedecisive factor in a company. It is part of
the Company’s management policy to “tryto create a bright working atmosphere,
respecting harmony and communication
among people.” TS TECH is, thus, striving
to create safe and comfortable workplaces.

Human Resources Development
A key policy in TS TECH’s 11th MediumTerm Management Plan is to “Build an infrastructure of “people” who can strive globally.” As a truly global company, TS TECH isdeveloping more global human resources. It
provides “on-the-job training” (OJT), outsidetraining sessions, and correspondence education (Off-JT) and has put in place a job
rotation (JR) system in an effort to develop
employees who can play an active role ina diverse world.

Employment of Persons with Disabilities(Japan)Posters calling for an end to sexual
harassment and power harassment (Japan)

Anti-discrimination posters (North America)

Employment rate ofpersons with disabilities

2010

2011

1.93%

1.80%

In order for the Company torespond to the challenge ofsearching for new values,
I take pride in my company andwork, and keep an open mind
to everything.
•Communication
I try to create a bright working atmosphere, respecting
harmony and communication
among people.

Diversity
TS TECH actively seeks out diverse human resources, through the employment ofJapanese who have lived overseas, persons
with foreign citizenship, and persons withdisabilities, as well as older persons througha reemployment system. Additionally, we
are working at developing a human resources system that eliminates gender
distinctions, in order to enable more women
to be appointed to managerial posts, andreconsidering the workplace environment
in roundtable discussions attended only byfemale employees, so that female employees will feel motivated and have a sensethat their work is worthwhile.

Relationship with the Labor Union
TS TECH holds regular discussions with the
TS TECH Labor Union to improve working
conditions and the working environment,so that its workplaces are pleasant, andactively promotes work–life balance. For 15
years straight, all its employees have taken
their full annual paid leaves.
Occupational Accident Occurrence(Japan)2010

2011

Total frequency rate

4.02%

3.13%

Rate of lost work time due tooccupational injuries

1.51%

0.00%

•Efficient work
I work in a balanced manner,giving consideration to timeand priority.
•Self-fulfillment
I strive persistently for the fulfillment of my own vision.
In order for all people to besafe and comfortable at all
times, I try to create a safeand healthy environment
for working.

27

To Be a Non-discriminatory and Fair Company

TS TECH Report 2012

Labour Practices

26

TS TECH Report 2012

Human Rights

TS TECH Co., Ltd.

TS TECH Report 2012

The Environment
Environmental Impact of Business Activities and Environmental Initiatives
The TS TECH Group is moving ahead with its 11th Medium-Term Management Plan toward the realization of its vision for 2020:
to be an “Innovative Quality Company.”
The Group is working at environmental preservation activities to cut and reduce the environmental impact generated as it carries
out its business operations.

The TS TECH Group is making Group-wide efforts toprotect the Earth, working to eliminate and reduce
environmental impact generated through business
operations.

Attitude toward the generalpublicMain stakeholders:
The ISO 26000 core subject:
Association with Seven Attitudes
in TS Guidelines for Conduct:

General public
The environment
Attitude toward the general public

Basic Environmental Policy
With respect for the global environment and a sustainable recycleoriented society, we will endeavor to make unlimited progress andcontinuous improvement so as to protect all life from pollution asa manufacturer according to laws and regulations; and become
an environmentally friendly “Company Welcomed with Joy.”

Action Plan
1. Strive to minimize and properly treat waste materials and contaminants with respect
to life cycle assessment (LCA) at each stage of a product’s development, manufacturing, sale, and disposal.
2. Make efforts to use materials effectively in product development, manufacturing, andall other business activities, and work on material recycling and efficient use of resources and energy.
3. Be actively involved as a member of society in maintaining personal health, preserving
the global environment, and living in harmony with the local community.
4. Positively promote environmental protection activities with the whole related companies as the TS TECH Group.
5. Comply with local environmental standards in overseas business activities and transfer
environmental protection technologies overseas.

In order for the Company to be
an entity promoting positive
attitude toward environmental preservation, I take positive actions for environmental
protection.
•Proper disposal of wastes
and pollutants
I dedicate my best efforts tothe cause of minimization andproper disposal of wastes andpollutants.
•Efficient use and recyclingof resources
I dedicate my best efforts tothe cause of efficient use andrecycling of resources.
•Measurement, recording,and reporting pursuant to
the relevant ordinances
I carry out environmental
measurement, recording
and reporting concerningsoil, underground water,
the atmosphere, noise, andsmell pursuant to the relevant
environmental ordinances andinternal rules.

Ozone depletion
Air pollution
Water pollution
Soil pollution
Waste materials

s $ESIGN PRODUCTS FOR IMPROVED RECYCLABILITY
s $O NOT USE MATERIALS CONTAINING REGULATED CHEMICALS
s %MPLOY ENERGY SAVING AND RESOURCE SAVING FACILITIES AND PROCESS DESIGN
s %MPLOY ENERGY SAVING AND RESOURCE SAVING MANUFACTURING

Manufacturing
Managements #ONTROL AND REDUCE VOLATILE ORGANIC COMPOUND 6/# EMISSIONS INTO THE ATMOSPHEREs #ONTINUE TO MAINTAIN ZERO EMISSIONS
s 0ROMOTE PROPER DISPOSAL AND RECYCLING OF INDUSTRIAL WASTE
s 2EDUCE PARTS MADE USING REGULATED CHEMICALS

Purchasing
Distributions )MPROVE DISTRIBUTION EFFICIENCY
s 0ROMOTE GREEN PURCHASING

Status of ISO 14001 Certification In and Outside JapanThe TS TECH Group has acquired ISO 14001 certification at seven sites in Japan and 20 sites outside Japan (nine in the Americas,
six in China, four in other parts of Asia, and one in Europe). The Group encourages its main suppliers to also make efforts to acquire
ISO 14001 certification.

Main Environmental Targets and Results in 2011 and Targets for 2012 (non-consolidated)
The TS TECH has established the reduction of CO2 emissions as a priority environmental target in its 11th Medium-Term
Management Plan. In line with that plan, the Company is aiming for an annual 1% reduction in CO2 emissions per unit of production*1
compared to 2010.
Environmental Targets and Results (TS TECH CO., LTD.)
Item

CO2

2011
Targets

Measures2012
Results•Took measures to save electricity
in summer•Used energy-efficient manufacturing
CO2 emissions per unit of production
equipment; conducted energyCO2 emissions per unit of production
Up 3% from 2010
efficient operations of manufacturing
Down 1% from 2010(2011 results: 0.096 t-CO2/million
equipment2
yen*3)(2010 results: 0.093 t-CO2/million yen* )•Used energy-efficient lighting andair conditioners; conducted energyefficient operations of lighting and air
conditioners
Waste output per unit of production

Waste Down 1% from 2010(2010 results: 0.0120 t/million yen)
Water usage per unit of production

Water Down 1% from 2010(2010 results: 1.729 m3/million yen)

TS TECH Report 2012

TS Guidelines for Conduct

28

TS TECH Report 2012

Resource depletion
To Be Proactive in Environmental Preservation

Product Development
Technology

Environmental Protection Efforts

29

Global warming

DomainReduce global environmental impact
associated with business operations

Environmental Impact

Targets

Measures

CO2 emissions per unit ofproduction
Down 1% from 2011

•Reduce standby mode electricity
consumption when not in operation•Reduce losses by improving
processes; conduct energy-efficientmanufacturing operations•Promote recycling•Reduce product defect rate

•Promoted recycling•Reduced product defect rate

Waste output per unit of production
Up 9% from 2010*3(2011 results: 0.0131 t/million yen)

Waste output per unit ofproduction
Down 1% from 2011

•Saved water usage in all businesssites•Inspected leakage at water supply
facilities

Water usage per unit of production
Down 14% from 2010(2011 results: 1.481 m3/million yen)

Water usage per unit of•Save water usage in all business sites
production•Inspect leakage at water supply
Below 1.729 m3/million yen facilities*1 “Per unit of production” refers to the amount of CO2 and other waste emitted or the amount of water used, as calculated based on TS TECH’s standards, in proportion
to production (sales amount) from business operations.
*2 Figures reported last year have been revised to reflect revised scope of focus on CO2 emissions.
*3 The target for CO2 and waste emissions was not achieved in 2011 as a result of a drop in productivity and the generation of non-operational waste, both due to theeffects of a natural disaster.

TS TECH Co., Ltd.

TS TECH Report 2012

Manufacturing Plants that Are Kind to People and the Environment:
An Interview with the Executive General Manager of the Manufacturing Division
Fiscal 2011 Environmental Accounting
Environmental Conservation Cost

(unit: millions of yen)
Investment

Cost

Investment

Cost

Pollution prevention cost

Prevention of air, water, and soil pollution, etc.

35

21

2

8

Global environmental
conservation cost

Prevention of global warming and ozone depletion and otherenvironmental preservation efforts

86

48

55

30

—

48

3

46

30

TS TECH Report 2012

Resource circulation cost Recycling, waste treatment and disposal, and water-saving efforts
Upstream/downstream cost

Purchase of environmentally friendly products and raw materials
Purchase of products for energy savings

—

1

—

1

Administration cost

Environmental management system (EMS) development andoperation, environmental monitoring and measuring, andenvironmental education activities for employees

15

78

14

72

R&D cost

Research and development of new technology with a high positiveenvironmental impact, such as reducing VOCs (not using paints),
reducing the weight of products, and developing recyclable materials

—

86

54

132

Social activity cost

Environmental measures such as nature protection, greening, andscenery preservation

—

2

—

6

Environmental remediation cost

Remediation of soil pollution, etc.

—

—

—

—

136

284

128

295

Total

1 The scope is as follows:•Companies included: TS TECH and five sites in Japan•Period covered: April 1, 2011, to March 31, 2012
2 The above figures include portions ascertained by estimation, such as apportionment.
3 Materials relating to environmental accounting, such as guidelines and guidebooks published by the Ministry of the Environment of Japan, were referenced when
preparing the spreadsheet.
4 Costs do not include depreciation costs.
5 See the environmental data (pp.75–77) published in this report regarding results.

Examples of Environmental Preservation Initiatives
1. Reuse of Rainwater—Thailand

3. Tree Planting and Other Volunteer Activities—Brazil
The VIDA (Portuguese for“life”) Project, formed by an
employee volunteer group,
has been carrying out environmental activities.

Plant No. 1 set up tanks tocollect and reuse rainwater.
In 2011, it reduced its watersupply water usage by
1,470 m3.

Tanks set up to collect rainwater (TS TECH (THAILAND)
CO., LTD.)

Planting flowers in a rotary on
the road leading to the plant(TS TECH DO BRASIL LTDA.)

2. Environmental Dducation Contest—Mexico

4. Environmental Education at Training Sessions
for New Hires—Japan

Environmental Education
Contest for Children held at aplant (INDUSTRIAS TRI-CON
DE MEXICO, S.A. DE C.V.)

The Nuevo Laredo Plant in
Tamaulipas, Mexico, sponsored an Environmental
Education Contest for Children. Plant employees andtheir families participated in
the event, which included anenvironmental picture drawing contest with the purposeof raising awareness ofglobal environmental problems and the acquisition ofknowledge.

Conducting environmental
education during a training
session for new hires(TS TECH CO., LTD.)In April 2012, in Tokyo, newhires received environmental
education on three topics:(1) global environmental
problems, (2) TS TECH’s
environmental activities, and(3) green ecosystem conservation activities. In addition
to the above, the TS TECH
Group makes efforts to reduce environmental impact,
such as by improving theefficiency of lighting andconserving resources in
production activities.

Tatsuo Wada, Managing Director, Executive General Manager of the Manufacturing Division
Latest report from the production floor:
Examples of environmental measures at the site of product manufacturing

With a new plant that will be the hub in a global production network, the TS TECH Group is aiming
to create new value by building plants that are kind to people and the environment.

Q

How does the
Manufacturing Division
regard the environment?

Under our policy of “creating plants thatare welcomed with joy by the community,” the environment is a very important
topic for the manufacturing departmentsthat operate the plants. In light of this, theManufacturing Division is pushing ahead
with efforts to make plants that are kind topeople and the environment, with a view
toward creating a recycling-oriented society.
Specifically, young workers in the plants areplaying a central role in efforts to improve
the working environment by such means
as using Japan’s traditional non-electricalmechanisms. For example, we make it easy
to lift heavy parts by attaching springs towork benches and parts tables. We actively incorporate into production lines suchcontrivances that reduce the work burden
without relying on electricity or other formsof energy and without costing much money.
I think that the environment is a big key,both in terms of our harmonious existencein the local communities where employees
and their families live and in creating pleasant workplaces. Of course we green site
grounds and take other measures with theaim of making plants that community residents feel that they would like to see.

Q

Please tell us about the newseat manufacturing plant.

A state-of-the-art seat manufacturing plantis currently being constructed on the site of
the Saitama Plant and is scheduled to start
operations in January 2013. We will halve
electricity usage through centralization of air

conditioning and temperature control. We
will also attempt to improve productivity byshortening the flow of materials, which will
reduce occupational accidents and help
ensure worker safety. Of course, we will
push eco-lines even more than before, suchas those using the mechanical contrivances
I mentioned earlier, and will endeavor to
make the plant more efficient by soliciting
ideas from employees.
The new plant will bring together theGroup’s most advanced manufacturing
technology and we aim to achieve worldclass productivity and to further enhance
the quality control system. We hope that theplant will become the hub in the TS TECH
Group’s global production network, a basefor the deployment throughout the world of
the know-how learned here.

What would you like to ac-

by making plants
Q complishthat are kind to people andthe environment?
I think that the creation of new value is important in efforts to build plants that are kindto people and the environment. In conventional manufacturing, a plant’s added value
was thought of only in terms of revenue.
With the new plant, we have lifted up theconcept of a plant that cares about people,
a plant that is environmentally friendly, andthis is a new value that differs from revenue.
If productivity increases due to attempts to
help people and the environment, revenue
will expand as a result, and this will bring
benefits to stakeholders without burdening
people and the environment. I think that efforts toward the creation of that kind of newvalue will begin from the new plant.

TS TECH Report 2012

Business area cost

Main Efforts

Interview

2011

31

Category

2010

The Saitama Plant uses electricity generated by solar panels
for some of its power needs.

TS TECH Co., Ltd.

TS TECH Report 2012

Fair Operating Practices

Consumer Issues

Interview

Interview

TS Guidelines for Conduct

Winning Trust as a Company that Makes High-quality Products

TS Guidelines for Conduct

We practice procurement based on fair transactions inorder to develop good products and grow together with
our suppliers.

Attitude toward suppliers

We are further strengthening our quality management
system as we strive to realize quality that meets global
market needs.

Attitude toward customers

Suppliers
Fair operating practices
Attitude toward suppliers

What does the Corporate

Division focus
Q Purchasing
on in procurement?
The Corporate Purchasing Division procures diverse
materials and parts, ranging from hard steel to soft
sewn products. However, we hardly ever buy standard items in the market. The TS TECH Group has
established Four Principles for TS Procurement tothoroughly ensure fair transactions and environmental compliance. In our procurement work we always
collaborate with the development department andmake decisions based on consideration of all criteria,
including safety and quality. In Japan there are laws
to protect small enterprises, such as the Act against
Delay in Payment of Subcontract Proceeds, Etc., to
Subcontractors (Subcontracting Act). Naturally wecomply with this act, since 70% of the Group’s suppliers in Japan are covered by it.
Today, there is a tendency toward global procurement in the automotive industry. The TS TECH Group,on the other hand, has a long record of development
and growth together with suppliers here in Japan.
How do we balance these two? That is a big challenge in procurement.
For example, when we expand outside Japan, if
a supplier is a major manufacturer we have themmake the move overseas together with us. If a
supplier is not so big but has technical advantages,
we pay compensation for technical support. In such
ways we pursue methods to secure cheap and goodmaterials while obtaining the satisfaction of Japanesesuppliers.

Is there some difference
between green procurement
and usual procurement?

As with usual procurement, the basic procedure forgreen procurement, which is aimed at environmental

preservation, is to continually buy reliable materials from reliable sources while working together
with the development department. However, green
procurement is not a topic limited to the procurement
department; I think that there are areas in which
each employee can contribute—for example, whena manufacturing site makes an effort to achieve
the maximum yield and reduce scrap. I think thatawareness-building and education for employees is
one issue that we should pursue in cooperation withother departments.

Q

What initiatives are you
taking to make procurement
more competitive?

The Corporate Purchasing Division’s goal is to deliver
the world’s cheapest and best products in a timely
manner to our customers. In the future, I think agreater sense of speed will be needed to achieve
timely delivery worldwide. That is why we are developing a groundbreaking system that can simultaneously manage procurement costs, including currency
fluctuations and distribution, at each base worldwide.
However, even if the system is completed, it is people
who will use it, and it will be pointless unless theemployees who operate it understand the system’s
purpose. The people involved need to clearly understand what kind of benefit this system will bring for
the Corporate Purchasing Division and for the Groupand they need to spread that message from Japan tosites around the world. From this point of view, there
is significant meaning in one of the Group’s beliefs:“Due regard for human resources.” I think that inorder for us and our suppliers to continue growing together, due regard must also be given to the humanresources of our suppliers—that is, due regard forsuppliers.

In order for the Company tomaintain a fair and soundrelationship with its suppliers,
I deal with suppliers in a fair andsound manner•Selection of a supplier
When a product or service is
procured, I select the optimum
supplier from among several
suppliers by comparing andevaluating their terms and conditions with an unbiased eye.
•Prohibition of unreasonable gifts or businessentertainment
I do not offer suppliers nor
receive from suppliers any giftor business entertainment thatis beyond what is generally
acceptable.
•Prohibition of unreasonable
use of organizational position
or authority
I do not make unreasonable
use of my organizational position or authority to afford convenience to the interested partyor make the interested party
afford convenience to me.

Main stakeholders:
The ISO 26000 core subject:
Association with Seven Attitudes
in TS Guidelines for Conduct:

Q

Customers, end users
Consumer issues
Attitude toward customers (customer companies
and end users

Please explain the role andfunctions of the Corporate
Quality Assurance Division.

To provide our customers and end users with highquality products, the TS Tech Group positions its
Quality Manual as the overriding concept on which its
quality management is based. Detailed rules are set
out in the Quality Management Rules, each operational site’s Procedural Manual, and the Standard Job
Sheet that staff must follow. Hence, our manufacturing operations are conducted under this establishedsystem. The functions of the Corporate Quality
Assurance Division are to be involved in the development of this quality management system, ensure that
staff are following the stipulated procedures, andcontinuously verify whether the procedures are being
followed.
The Corporate Quality Assurance Division oversees
the Corporate Quality Control Department, which
comprises three sections. The roles of these sections are to incorporate the quality objectives into thedevelopment of new models, undertake analysis andfeedback regarding defects identified by end users, and develop systems covering all processes. By
fulfilling these roles, we strive to enhance customer
satisfaction.

Q

Do you implement yourquality management systemon a global level?

Under the Company’s 11th Medium-Term
Management Plan, the Corporate Quality Assurance
Division is building a quality management system
based on international quality standards ISO 9001
and ISO/TS 16949. Furthermore, we are undertaking improvement measures as a joint effort between
development and production functions with theobjective of having zero cases of defective products
shipped to customers. In addition, by transferring theresults of these programs to our overseas facilities,
we are striving to establish a global quality management system.
To ensure that end user needs are reflected in our
product quality, we regularly analyze survey data fromreliable sources, including the Initial Quality Study(IQS) produced by customer satisfaction researchfirm J.D. Power and Associates of the United States,
and incorporate research findings into the new model
development process.

How does the Corporate

Assurance Division
Q Qualityinteract with otherdivisions?
A convenient way to conceptualize our system is
to use the analogy of “separation of powers”—theCorporate Quality Assurance Division corresponds
to the Group’s “judiciary” in relation to quality, theDevelopment and Engineering Division corresponds
to the “legislature,” and the Manufacturing Division
corresponds to the “executive.” We are always
acutely aware of the heavy responsibility associated with decisions affecting the quality of products
delivered to customers and end users and responses
when quality-related issues arise.
Quality is the result of linkages between all business operations, including development, design,
procurement, and manufacturing. We liaise closelywith all divisions to ensure that the TS TECH Group
maintains the trust of its customers and end users
worldwide as “a company that provides products of
the highest quality.” In doing so, we aim to constantly
deliver quality that exceeds the expectations of thesestakeholders.

In order for TS TECH to provide customers and end users
with a high degree of satisfaction, I always set myself a creative task from the customer’s
viewpoint and then proceed withmy task while imagining myself
in the customer’s position.
•Offer of Quality Products
I offer quality products, always
placing myself in the customer’s position.

TS TECH Report 2012

To Grow Together with Our Suppliers

Main stakeholders:
The ISO 26000 core subject:
Association with Seven Attitudes
in TS Guidelines for Conduct:

Q

Minoru Maeda, Director, Executive General Manager of the Corporate Quality Assurance Division

33

32

TS TECH Report 2012

Yoshiaki Yui, Managing Director, Executive General Manager of the Corporate Purchasing Division

TS TECH Co., Ltd.

TS TECH Report 2012

The TS TECH Group actively engages in social
contribution through community exchange, social
welfare promotion, and disaster support as a memberof the community.

Attitude toward the local
community

Main stakeholders:
The ISO 26000 core subject:
Association with Seven Attitudes
in TS Guidelines for Conduct:

Local community
Community involvement and development
Attitude toward the local community• Examples of community involvement by overseas subsidiaries
Raising Money to Support Cancer
Patients—United States

Helping Improve the Environmentof Nursing Homes—Philippines

Relay For Life is a volunteer activity to raisemoney for the purpose of investigating andresearching various cancer treatments.
TS TECH Alabama participated in thisfundraiser. Team members held a bake saleand bazaar, sold doughnuts, and held otherevents to raise money. The climax of Relay
For Life is a walk relay from evening until
the next morning. In the morning, TS TECH
Alabama had the most members still on the
track and won a Golden Pillow Award.

Representatives of TS TECH Trim
Philippines visit nursing homes and donate furniture with the aim of creating anenvironment where elderly people can live
comfortably. The company donates chairs
and desks handmade in the company anda CSR team of about 30 employees leads
this and other activities.
Last year, volunteers helped create anenvironment where nursing home residents
could live with peace of mind by building
and donating a block wall to protect thenursing home from flood damage caused
by a nearby waterway during the rainy season and when typhoons strike.

Relay For Life team (TS TECH Alabama)

Constructing a protective block wall for anursing home (TS TECH Trim Philippines)

In order for the Company totake root in the local community, I make a positive contribution to the local community as amember of the community.
•Cultural exchange with thecommunity
I try to promote cultural exchange with the community
through positive participation
in local events.
•Social welfare
I extend help positively to mentally or physically handicapped
persons.

Helping Improve the Educational
Environment in Elementary
Schools—China
Guangzhou TSK Auto Parts Co., Ltd., donated a total of 90,000 yuan for repairs toelementary schools and for the constructionof an agricultural reservoir to help support
impoverished areas in the city of Meizhou,
Guangdong Province. The company also
donates writing supplies to children from
impoverished areas and contributes to theimprovement of the educational environment of local schools and the agricultural
production environment.

TS TECH Report 2012

TS Guidelines for Conduct

Donating Writing and Office
Supplies—Indonesia
TS TECH Indonesia, together with 11 otherJapanese companies in the local industrial complex, has been donating writing
supplies and whiteboards to elementary
schools since 2004.
In May 2011, company representatives
visited schools near the plant and donateddesks and chairs to be used at the schools.

35

To Be a Company Firmly Rooted in the Local Community

34

TS TECH Report 2012

Community Involvement and Community Development•Disaster relief
I will give positive aid to thevictims when and if a disasteroccurs.
•Volunteer
I join or support volunteer
activity in a positive manner.

Supporting schools(Guangzhou TSK Auto Parts)

Employees presenting writing supplies(TS TECH Indonesia)• Examples of community involvement in Japan
Reusing Waste Food Oil and Food
Scraps—Tochigi
Waste food oil from facilities in the Tochigi
area are turned into biodiesel fuel (BDF) in
the town of Takanezawa in Shioya-gun andused as fuel by the town’s school lunch
delivery trucks.
Also, food scraps from the cafeteria
are composted at the Takanezawa Soil
Production Center and used by local
farmers.

Creating BDF from Waste Food Oil
Used as fuel by school
lunch delivery trucks

Technical Center (Tochigi area)

Collection by the town

In fiscal 2011, TS TECH
provided 508 liters of waste
Two of the town’s three school
food oil for recycling.
lunch delivery trucks run on BDF

BDF manufactured in Takanezawa

Photos provided by the town of Takanezawa

TS TECH Co., Ltd.

TS TECH Report 2012

Donation of Wheelchairs andWelfare Vehicles to Local Cities—
Head Office, all Business Sites
Every year since 2006, the TS TECH head
office has donated wheelchairs to the city of
Asaka. The donated wheelchairs contributeto the local community, such as by their use
in the city’s free wheelchair rental service
for the elderly and persons with physicaldisabilities.
In July 2011, TS TECH marked its 50th
anniversary. In expression of its gratitude,
the Company donated one welfare vehicle
each to the six cities and towns where its
business sites are located. The vehicles
donated feature either passenger seat lifts
to help people get in and out of the vehicle
or wheelchair-loading ramps. Presentation
ceremonies were held in each municipality
and letters of appreciation received.
From here on, the Group will continue
to contribute to the local community fromvarious angles in addition to the donation ofwheelchairs.

Plant Tour for Elementary SchoolStudents—Hamamatsu Plant
In November 2011, the Hamamatsu Plant
held a plant tour at the request of the local
Hamamatsu Elementary School. On thatday, 63 third graders visited the plant,
eagerly watched the manufacture of seats
for the first time, and listened carefully to
explanations by plant staff. The children
asked many questions during the Q&A
time, indicating great interest in manufacturing. The TS TECH Group will continue toengage in such activities enthusiasticallyfrom here on, in order to contribute to theeducation of local children.

Let’s give green back to the Earth!
Green Ecosystem Preservation
Campaign—Head Office, Saitama
Plant, Hamamatsu Plant
TS TECH is working at green ecosystempreservation under the concept that the
TS TECH Group gives back to the Earththrough the creation of new green spaces
and nature protection efforts at businesssites around the world. The policy for thisinitiative is that the TS TECH Group and its
employees contribute to the creation of asustainable society by working to protect
the environment and restore biodiversity
and natural habitats.
TS TECH’s business sites in Saitama
Prefecture cooperated with the town ofYorii, in Osato county and thinned someJapanese cedar and cypress forests in
April 2012. In cooperation with the townof Minano, the Company planted sawtooth oak and konara oak trees, which arethought to have inhabited the area in thepast. The Company also planted big mountain cherry and painted maple trees to meetthe needs of the town. TS TECH hopes tocreate a forest that can be inhabited 50 and
100 years from now by the flying squirrel
Petaurista leucogenys nikkonis and thegiant purple butterfly, which are indicatorspecies of Saitama Prefecture.
In March 2012, the Hamamatsu Plant
signed a “Shizuoka Future Forest Supporter
Agreement” with Shizuoka Prefecture. In
the future the plant plans to continuously
raise forest trees and plants in a prefecturalforest park so that it becomes a “forestof healing” for prefectural residents, paying due consideration to biodiversity in thetarget area.

Vision for 2020

Innovative Quality Company
Welfare vehicle donated on
TS TECH’s 50th anniversary

Best component competitiveness in the world

13th Medium-Term
Management Plan

12th Medium-Term
Management Plan
Elementary school students on
a plant tour

11th Medium-Term
Management Plan
2011

2012

2013

s(ONDAS GLOBAL GROWTH PARTNER
s%XPANDING BUSINESSES BESIDESTHOSE WITH (ONDA
Commemorative photo after
planting trees

Progress in Initiatives (2011)
1. Strengthening the foundations to compete in the global arena
2. Strengthening the organizational structure to acquire new customers
3. Developing new technology (new frames to improve parts-competitiveness)

Contents

Signing ceremony for “Shizuoka
Future Forest Supporter
Agreement”

Sales Expansion Structure
Performance
Financial Section
Business and Other Risks
Main Environmental Data
Directors and Auditors
Global Network
Corporate Data and Stock Information

38
39
40
44
75
77
78
80

TS TECH Report 2012

The TS TECH Group’s competitive environment is no longer limited to the old framework; it is now the
arena of fierce global competition. In this situation, the Group believes it cannot respond only to the needs of
its existing main clients. In order to expand the size of the Company and improve its corporate value, it mustalso acquire new commercial rights, by aggressively developing new customers.
In the fiscal year ended March 2012, the business climate the Group faced brought tougher circumstances
than it had ever experienced, with one natural disaster after another and an excessively strong yen. Nevertheless, based on its 11th Medium-Term Management Plan, TS TECH built a foundation for survival in a fiercely competitive environment by rolling out measures to (1) strengthen the foundations to compete in the global
arena, (2) strengthen the organizational structure to acquire new customers, and (3) develop new technology(new frames to improve parts-competitiveness).
The TS TECH Group is determined to pursue steady growth toward the achievement of its vision for 2020.

37

36

TS TECH Report 2012

Chapter 3 System and PerformanceTS TECH Co., Ltd.

TS TECH Report 2012

Sales Expansion Structure—the Driving Force to Fight in the Global Arena:
An Interview with the Sales Division Executive General Manager

Performance, Proof of Top-tier Company Status: An Interview with the
Corporate Business Administration Division Executive General Manager

Interview

Kazuhiko Hikida, Managing Director, Executive General Manager of the Corporate Business Administration Division

Human resources are the driving force for promoting sales expansion
strategies globally

Aspiring to Be a Top-tier Company by Continually Improving Profitability

TS TECH is winning orders from European manufacturers through advanced technical development capability
and quality human resources. The TS TECH Group is focusing on theoretical and practical human resources
development, with the aim of developing new customers.

We will continue to push forward with our business efforts so that all end users and clients associate seatswith the TS TECH name.

Q

What is TS TECH’s strategy
to succeed in the current
intense global competition?

Until now the TS TECH Group achieved
growth through a one-global-specification
formula. However, as the axis of growthshifts to emerging markets, there is moredemand for diverse products that meet theneeds of local users. We have to alter our
strategy to stay in step with these changes.
We have already strengthened our sales,development, and purchasing functions ineach location by increasing the number ofresident officers. From here on we will succeed in intense global competition by
rolling out products that precisely meet
local needs.

Q

What was the purpose of
establishing a business development department inApril 2012?

In April 2011, the TS TECH Group received seat frame orders from Germany’s
Volkswagen (VW) for the next year’s sportutility vehicle (SUV) models, thanks to thehigh assessment of our “one-motion double
fold-down” feature and lightweight technology. Winning new customers like this has
become essential to achieve further growth,and we need to put our experience andperformance on the front lines of sales, towork as an organization on a global scale inorder to develop customers. That is why weestablished a new business development
department and developed a system toexpand sales abilities—which tended to bereliant on individual skills—throughout theorganization and to push new customer developments forward by integrating externalsales units with a business development
office that is in charge of new business.

Q

Q

What are your thoughts
on “due regard for humanresources” from the perspective of future businessdevelopment?

The TS TECH Group’s sales staff habitually
strive for sales that present solutions bygetting a feel for customers’ mindsets andthe background to their requests.
The two Swedish staff members who
made overtures to European manufacturers together with Japanese staff members
when we ventured into Europe in 2005 now
have a fully sufficient understanding of theTS philosophy. I think that the reason we
received high praise from VW was in largepart due to this kind of quality human resources in addition to our advanced technical and development capabilities.
In Japan as well, we are working out
a consensus with each division and thelabor union and putting effort into thedevelopment of global human resources.
We not only provide language educationand overseas experience, we also conduct
theoretical and practical human resources
development, such as by providing ample
opportunity for LPL in front of top executives (see pp.10-12) and for report andassessment meetings in which administrator-class employees explain new projects
and new products. The development of
global human resources will likely become
increasingly important as we head towardachieving the goal of bolstering the competitiveness of our products to a level thatmatches the world’s major automobile seatand interior trim manufacturers by 2030.

TS TECH
DeutschlandGmbH
Base in Germany
TS TECH has strengthened its
base in Germany, including establishing a new company there inJune 2012.

Rate of increasing resident
officers at each base
(April 2012, compared to the number of staff
on March 31, 2012, in each area)

North America

Up 29%South America

Up 33%

China

Up 33%

Asia

Up 24%

EuropeUp 57%In April 2012, 121 resident staff weredispatched outside Japan.

Please tell us about the
Corporate Business
Administration Division’s
structure.

The Corporate Business Administration Division
is made up of four departments and offices: theCorporate Accounting Department, the Affiliates
Administration Department, the Foreign Trade
Management Office, and the Business Audit Office.
The areas they deal with are different, but the desire
to make the Company better is the same in each.
The Corporate Accounting Department strives toachieve optimal management in terms of money. The
Affiliates Administration Department tries to enhanceGroup governance. The Foreign Trade Management
Office works at optimizing logistics worldwide. And
the Business Audit Office aims to make the Company
even sounder.
The Corporate Business Administration Division’s
medium- to long-term challenge is to create a solid
corporate structure that will enable the Company tocontinue growing perpetually.

Q

What is your assessment of
the consolidated results forthe fiscal year ended March2012?

The business climate the Group faced in the fiscal
year ended March 2012 brought tougher circumstances than we had ever experienced, with anexcessively strong yen on top of a decline in thenumber of orders, due to natural disasters such as
the Great East Japan Earthquake and flooding in
Thailand. Although the Group made a concerted
effort to recover quickly from the earthquake andflood damage and we worked at reducing costs andincreasing savings on expenses, we were forced torecord a drop in revenue and profits compared tothe previous consolidated fiscal year. Even though
the climate was so harsh, we did see some hopefulsigns: In the second half of the year, the measures

TS TECH Report 2012

Toyohide Ishii, Senior Managing Director (Representative Director), Executive General Manager of the Sales Division

39

38

TS TECH Report 2012

Interview

to improve profitability that we had been working onin the Americas produced results and we recorded
an increase in revenue and profits compared to thesecond half of the previous consolidated fiscal year.
From here on we will continue carrying out various
measures in an effort to improve profitability.

As a member of theBusiness
Q Corporate
Administration Division,

Flooded building belonging to
TS TECH Thailand

how do you see CSR?
The TS TECH Group carries out a range of activities
and initiatives in order to be a “Company Welcomedwith Joy.” To achieve our goal, we recognize that
we have to become a top-tier company. A top-tiercompany, for example, when considered from thepoint of view of shareholders, is judged based on
financial indicators such as operating margins, returnon equity (ROE), dividends payout ratio, and total
return ratio. The TS TECH Group is aiming to achieve
at least a 6% operating margin on a consolidated
basis as a management goal of our 11th MediumTerm Management Plan. We are also developing ourbusiness in other ways to meet the expectations ofshareholders.
On the other hand, in order for the TS TECH
Group to be a “Company Welcomed with Joy,” wecannot focus solely on securing revenue; we mustalso be accepted by the world. Companies that
ignore the concept “for the world, for the people,”cannot stay in business for long. During the floodingin Thailand we continued to pay a salary to employees even when operations were suspended. I think it
is because we have this kind of attitude that values
people—“due regard for human resources”—that
the Group was able to smoothly restart production
and keep the business going. When end users andclients associate seats with the TS TECH name, thatwill be proof that we are a top-tier company, thereby
fulfilling a wish shared by all our employees. I believethat this recognition will spread as we continue topush forward with our business efforts.

Operating Profit (Profit Ratio)of the Americas Segment(Millions of yen)(%)

10,000

8

7,500

6

5,000

4

2,500

2

0

0
2009 2010 2011 2012 2013
(Forecast)
Operating profit
Profit ratioTS TECH Co., Ltd.

TS TECH Report 2012

Financial Section

40

TS TECH Report 2012

Contents
Management's Discussion and Analysis
Business and Other Risks
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report

41
44
46
48
49
50
51
53
74

Total assets as of March 31, 2012, the end of FY2012, were 189,343
million yen on a consolidated basis, up 8,503 million yen (4.7%) fromthe prior year. Current assets totaled 126,602 million yen, a year-onyear increase of 10,991 million yen (9.5%). The rise primarily reflects anincrease of 7,183 million yen in cash and deposits and an increase of
3,128 million yen in notes and accounts receivable-trade, as a result ofhigher sales in North America and Japan for the fourth quarter of the
FY2012. Noncurrent assets amounted to 62,741 million yen, a declineof 2,488 million yen (3.8%) from the end of the previous fiscal year. Thisdecline was primarily attributable to a drop of 2,747 million yen inproperty, plant, and equipment, mainly due to the effect of exchange
rates and depreciation, offsetting an increase of 421 million yen in
investments and other assets, mainly reflecting greater capital investments in subsidiaries and affiliates, as a result of establishing a subsidiary in Germany.
Total liabilities at the end of FY2012 came to 77,096 million yen
on a consolidated basis, an increase of 8,151 million yen (11.8%) year
on year. This is primarily due to an increase of 5,260 million yen innotes and accounts payable-trade, reflecting a higher number ofpurchases during the fourth quarter of the FY2012, and an increaseof 2,424 million yen in short-term loans payable.
Net assets at the end of FY2012 totaled 112,248 million yen,rising 353 million yen (0.3%) from the end of the previous fiscal year,
chiefly attributable to an increase of 2,998 million yen in retained
earnings, which offset an increase of 2,272 million yen in the negativebalance for foreign currency translation adjustments.

2. Analysis of Cash Flows
Cash and cash equivalents (hereinafter “cash”) at the end of the
FY2012 was 43,394 million yen, up 10,107 million yen (30.4%) fromthe end of the previous fiscal year.
(Net cash provided by (used in) operating activities)
Net cash provided by operating activities amounted to 18,599
million yen, a drop of 15,077 million yen (44.8%) year over year. This
result reflects, among other factors, a year-on-year decrease in income
before income taxes of 10,708 million yen, to 10,563 million yen, and ashift to decrease of 3,307 million yen in notes and accounts receivabletrade from a 5,722 million yen increase in notes and accounts receivable-trade in the previous fiscal year, which offset a change to a 5,259
million yen increase in notes and accounts payable-trade from a 580

million yen increase in notes and accounts payable-trade in theprevious fiscal year.
(Net cash provided by (used in) from investing activities)
Net cash used in investing activities came to 5,410 million yen,a decrease of 4,919 million yen (47.6%) from the previous fiscal year,
primarily reflecting the fact that a net change in time deposits derivingfrom payments into time deposits and proceeds from the withdrawal oftime deposits came to a net increase of 2,667 million yen comparedwith a net outlay of 2,135 million yen in the previous fiscal year.
(Net cash provided by (used in) financial activities)
Net cash used in financing activities was 1,930 million yen,a decline of 2,852 million yen (59.6%) year over year. This reflects,
among other things, a net increase in short-term loans payable of
2,596 million yen compared with a net outlay of 346 million yen in
the previous fiscal year.

3. Analysis of Operating Performance
Net sales for the FY2012 amounted to 305,483 million yen on aconsolidated basis, a decrease of 52,006 million yen (14.5%) from theprevious fiscal year, primarily because of a decrease in orders from themain customers caused by the effects of the Great East Japan Earthquake and the flooding in Thailand, as well as the negative impact of
exchange rates. Looking at profits, operating income stood at 9,401
million yen, a decrease of 10,763 million yen (53.4%) year on year, due
mainly to a decrease in net sales, despite savings on expenses andcost reduction effects. Ordinary income was 10,928 million yen, adecrease of 10,581 million yen (49.2%) from the previous fiscal year.
Net income stood at 4,713 million yen, a decrease of 7,042 million yen(59.9%) year on year.
Operating performance by geographic segment is as follows:(Japan)The management environment became extremely severe, mainlyreflecting the appreciation of the super-strong yen, in addition to
the effects of the Great East Japan Earthquake and the flooding in
Thailand. In these conditions, the Group began producing seats for
Honda’s new Fit Shuttle and for the new CR-V. In addition, it decided
to construct a new seat production plant (on the site of the Saitama
plant) to further strengthen the competitiveness of its automobile seatbusiness. Through these initiatives, the Group sought to steadily
develop robust operations.

Total Equity

Equity Ratio

Operating Income(Millions of yen)(%)

(Millions of yen)

120,000

60

30,00090,00050
20,00060,00040

30,00030

10,0000202008 2009 2010 2011 201202008 2009 2010 2011 20122008 2009 2010 2011 201241

1. Analysis of Financial Condition

TS TECH Report 2012Management’s Discussion and Analysis

TS TECH Co., Ltd.

TS TECH Report 201242

Year-on-year(12,053)

Changes(10.1)%

4,115

2,971

(1,144)(27.8)%

Main factors for year-on-year changes
Net sales
A decline in sales mainly reflected a fall in the numberof parts supplied overseas, in addition to a decreasein orders from main customers caused by the effectsof the flooding in Thailand and the Great East Japan
Earthquake.
Operating income Operating income declined, mainly reflecting theeffects of lower sales, despite cost-cutting and otherpositive effects.
(Americas)
The Group began manufacturing seats and interior products for
Honda’s new CIVIC in April 2011 in North America. However, primarilyreflecting the impact of the Great East Japan Earthquake on production, the management environment in the first half of the FY2012
became very difficult. Nonetheless, despite a further disruption in
production due to flooding in Thailand, during the second half of theyear, post-disaster orders, mainly for the new CIVIC, recovered, andorders for seats and interior products for Honda’s new CR-V, which
the Group started to produce in North America in December 2011,
remained strong. Given a recovery in production in the second half of
the FY2012, as well as the effects of earnings improving measures that
the Group took under the 9th Medium-Term Management Plan (from
April 1, 2005 to March 31, 2008), the Group recorded higher sales andincome year on year.
The operating performance of the Americas segment is as follows:(Unit: Million yen)
Net sales
OperatingincomeFY2011
139,648

FY2012
121,738

3,307

2,495

Year-on-year(17,911)

Changes(12.8)%(812)(24.6)%

Main factors for year-on-year changes
Net sales
Sales declined, mainly because of a decrease inorders from the Group’s main customers, reflecting
the effects of the Great East Japan Earthquake andthe flooding in Thailand, as well as the negative
impact of exchange rates.
Operating income Operating income declined, mainly reflecting theeffects of lower sales, despite the effects of cost
reduction and other positive factors.

(China)The management environment became even more severe, mainly due
to the effects of the Great East Japan Earthquake on production andhigher labor costs. In this environment, the Group started producing
seats and interior products for Li Nian S1, the concept brand of
Guangqi Honda*, as well as seats for Honda’s new CIVIC. Moreover,the Group strengthened its local development capabilities in accordance with local needs and the needs of main customers by bolstering
the regional control and management structure. It also increased its
sales capabilities with respect to Chinese automobile assemblers, andsought to further increase the rate of local procurement by increasing
the number of local business partners. Through these initiatives, theGroup managed to develop its operations with an eye on the Chinese
market in the future.
The operating performance of the Chinese segment is as follows:(Unit: Million yen)
Net sales
OperatingincomeFY2011
77,199FY201267,752Year-on-year(9,447)

Changes(12.2)%

10,433

5,796(4,637)(44.4)%

Main factors for year-on-year changes
Net sales
Sales declined, mainly because of a decrease inorders from the Group’s main customers, reflecting
the effects of the Great East Japan Earthquake, as
well as the negative impact of exchange rates.
Operating income Operating income declined, reflecting lower sales andhigher labor costs, as well as the negative impact of
exchange rates.
* Guangqi Honda: Guangqi Honda Automobile Co., Ltd.
(Asia and the U.K.)
The management environment became very severe, mainly due to theeffects of the Great East Japan Earthquake and the flooding in Thailand. In these conditions, the Group started producing seats for
Honda’s Brio in Thailand and India. A subsidiary in Thailand, whichsustained inundation damage in the wake of the flooding, suspended
its operations from early October 2011, but resumed production in
March 2012 following a major restoration effort. The subsidiary is now
making its utmost effort to make up the lost production.
The operating performance of the Asia and U.K. segment is as follows:(Unit: Million yen)
Net sales
OperatingincomeFY2011
48,260FY2012
31,940Year-on-year(16,320)

Changes(33.8)%

5,928

1,735

(4,193)(70.7)%

Basic Net Income per Share

Cash Dividends per Share

(Yen)
250

(Yen)
30

200
20
150
100
10
50
0

0
2008 2009 2010 2011 20122008 2009 2010 2011 2012

* Per share information for the fiscal year ended March 31, 2008, is calculated based on the numberof shares after the stock split.

Main factors for year-on-year changes
Net sales
Sales declined, mainly due to a decrease in orders
from the Group’s main customers, reflecting theeffects of the Great East Japan Earthquake, and thesuspension of operations due to flooding in Thailand.
Operating income Operating income declined, mainly reflecting theeffects of lower sales, despite the benefits of reduced
expenses and other positive factors.
Sales by business segment are as follows:(Unit: Million yen)
FY2011FY2012

Sales ratio
1.5%

Sales ratio

Year-on-year Changes

Motorcycles

5,429

6,764

2.2%

1,335

24.6%

Automobiles

348,928

97.6% 295,297

96.7%(53,631)(15.4)%(Seats)294,797

82.5% 258,468

84.6%(36,329)(12.3)%(Interior products)

54,131

15.1%

36,82912.1%(17,302)(32.0)%

Other businesses

3,133

0.9%

3,422

1.1%

290

9.2%

Total

357,489

100.0% 305,483

100.0%(52,006)(14.5)%

Main factors for year-on-year changes
Sales of the Motorcycle segment increased, given an increase inorders from main customers in Japan. Sales in the automobile segment fell, however, with a decline in orders from main customers,reflecting the effects of the Great East Japan Earthquake and theflooding in Thailand.

4. Forecasts for the Fiscal Year Ending March 31, 2013
The Group’s consolidated forecasts for the FY2013 are as follows:
Consolidated net sales
363.0 billion yen (Year-on-year Up 18.8%)
Consolidated operating income 21.5 billion yen (Year-on-year Up 128.7%)
Consolidated ordinary income 23.0 billion yen (Year-on-year Up 110.5%)
Consolidated net income
12.5 billion yen (Year-on-year Up 165.2%)
The Group’s forecasts by segment are as follows:(Japan)(Unit: Million yen)

107,572

FY2013
Forecasts
99,750

2,971

4,820

FY2012
Net sales
OperatingincomeYear-on-year

Changes(7,822)(7.3)%

1,849

62.2%

Main factors for year-on-year changes
Net sales
Sales are expected to fall, given a decline in orders
from the Group’s main customers, despite higher
sales of parts for the overseas market.
Operating income Operating income is expected to rise, mainly reflecting earnings contributed by overseas operations andthe effects of cost cutting, despite the negative
impact on earnings from a fall in sales.

(Americas)(Unit: Million yen)

121,738

FY2013
Forecasts
154,640

2,495

8,530

FY2012
Net sales
OperatingincomeYear-on-year

Changes

32,902

27.0%

6,035

241.9%

Main factors for year-on-year changes
Net sales
Sales are expected to rise, reflecting an increase inorders from the Group’s main customers.
Operating income Operating income is expected to increase, given an
improvement in earnings in addition to an increase inrevenue due to higher sales, despite an increase in
expenses associated with increase in orders.
(China)(Unit: Million yen)

67,752FY2013
Forecasts
83,990

5,796

8,200

FY2012
Net sales
OperatingincomeYear-on-year

Changes

16,238

24.0%

2,404

41.5%

Main factors for year-on-year changes
Net sales
Sales are expected to rise, reflecting an increase inorders from the Group’s main customers.
Operating income Operating income is expected to rise, given theeffects of higher sales, offsetting a rise in labor costs.
(Asia and Europe)*(Unit: Million yen)

31,940FY2013
Forecasts
49,300

1,735

4,330

FY2012
Net sales
OperatingincomeYear-on-year

Changes

17,360

54.4%

2,595

149.5%

Main factors for year-on-year changes
Net sales
Sales are expected to rise, reflecting an early recovery in production, which was disrupted by flooding in
Thailand, and an increase in orders from the Group’s
main customers.
Operating income Operating income is expected to rise due to theeffects of higher sales, despite an increase in expenses associated with increased orders.
*TS TECH has changed ”Asia and the U.K.” segment to “Asia and Europe” onApril 1, 2012

The Group also plans a capital investment of 9.8 billion yen, up 24.0%
year-on-year.
Regarding full-year average exchange rates, the Group has assumed
1 USD = 78.0 yen and 1 CNY= 12.3 yen.

TS TECH Report 2012

TS TECH Report 2012

Net sales
OperatingincomeFY2012
107,572

43(Unit: Million yen)
FY2011
119,624

TS TECH Co., Ltd.

TS TECH Report 2012

Business and Other Risks

44

The TS TECH Group operates in regions around the world, including
Japan, North America, South America, China and other countries in
Asia, and Europe. The decline in the economies of these regions andreduced consumer spending resulting from trends in the costs ofgoods that has led to reduced sales of motorcycles and automobiles
may have an adverse effect on the Group’s operating performance.

[2] Level of dependence on sales to Honda MotorCo., Ltd., and Honda Group
Since its founding, the TS TECH Group has worked to quickly andflexibly develop business locations and pursue a development andproduction system to meet the needs of Honda Motor Co., Ltd. andits affiliates (the Honda Group). As a result, sales to the Honda Groupaccounted for a high percentage of consolidated net sales in FY2012,at 91.6%. (Including indirect sales to the Honda Group via other
Honda Group partners, the Honda Group was the final customer for
94.0% of sales.)The TS TECH Group participates in new vehicle model projects
from the planning and development stages, and strives to carry out
product development that meets customer needs by providing plansand proposals. However, the pursuit of such a strategy does notguarantee that the Group will receive ongoing orders for each model.
If the Group were to unexpectedly fail to win an order with the Honda
Group, the Group’s operating performance may be affected.
In addition, the TS TECH Group has regular opportunities tocommunicate with the Honda Group through which it reaffirms thebusiness direction being pursued by both groups. However, thebusiness performance of the Group may be affected by such factors
as (1) changes in the Honda Group’s business strategies or purchasing policies; (2) adjustments in the Honda Group’s production; (3)transfer of the production location of special models produced by the
Honda Group; (4) reorganization of the Honda Group’s production
locations; and (5) the marketing launch date and marketing trendsof Honda Group models that incorporate the Group’s products.

guarantee that the Group will be able to maintain or expand its
market share in the future.

[4] Latent risks inherent in international
operations and overseas expansion
In an operating environment in which automobile manufacturers
are focusing increasingly on the optimization of their procurement
systems on a global level, automobile component manufacturers
are also facing expanding requirements related to optimum global
procurement, where local production and local parts procurement
comprise a fundamental part of the business model. Responding
successfully to this globalization is an essential prerequisite tosurvival in the current competitive environment.
Reinforcing local production capabilities is a core strategy for
the TS TECH Group. In North America, South America, China, othercountries in Asia, and Europe, the Group has established local
manufacturing subsidiaries and is pursuing an aggressive strategy
of overseas business development. We expect this trend to continue.
In FY2011, sales in Americas accounted for 37.0% of consolidated
sales, China 20.6%, and Asia and the U.K. 9.7%.
As a result of this overseas business development, the management results and financial condition of the Group may be influenced by factors such as the unexpected establishment of or changes to overseas laws and regulations, the positions of tax authorities
regarding transfer pricing taxation, changes in the politics and economies of different countries, changes to the management policies andbusiness environments of joint ventures, difficulty in acquiring humanresources and insufficient infrastructure.

[5] Exposure to the credit risk of business
partners
As a manufacturer of automotive parts, the TS TECH Group has
many business partners. While we regularly verify the management
status of our business partners, in the event of an unexpected
deterioration in the credit or failure of a partner, the Group’s operating
performance may be adversely affected.

[3] Competition[6] Impact of fluctuations in raw material markets
The appearance of new competitors or cooperation among existing
competitors may result in such companies, or alliances, rapidly
gaining market share.
The TS TECH Group aims continually for technical innovation
to reinforce its position as a manufacturer specializing in automobile
seats and interiors. The Group focuses on the development ofhigh-quality, high-value-added automobile seats and interiors asa means of enhancing its competitiveness. However, there is no

The TS TECH Group’s main product, automobile seats, is made ofsteel, resin, polyurethane, and covering materials. The Group takes
steps to ensure the stable procurement of these materials by concluding basic purchase contracts with our suppliers of raw materials
and parts.
However, in the event of an insufficient supply of raw materials
that cannot be addressed or absorbed by the Group, or sharp price[7] Impact of foreign exchange fluctuations
The TS TECH Group operates globally and is susceptible to foreignexchange fluctuations in its foreign currency-denominated transactions. While the Group conducts exchange hedging transactions for
major currencies to minimize the risk of foreign exchange fluctuations,
as it is impossible to hedge against all exchange risk, the Group’s
operating performance may be affected by changes in the foreignexchange market.
The Group’s operating performance may also be affected bychanges in management results following the conversion to yen
based on the conversion rate used in the consolidated financial
statements.

[8] Impact of disasters, accidents and otherincidents on the Group’s production lines[10] Response to legal procedures
Investigations of the TS TECH Group in lawsuits under related laws
and regulations or decisions against the Group in ongoing legal
procedures may adversely affect the operating performance andfinancial condition of the Group.

[11] Response in case of a product defect
The TS TECH Group’s manufacturing plants take steps to preventthe occurrence of product defects by constructing a quality assurance system for manufacturing processes and operating ISO 9001
international standard for quality management systems.
Moreover, the Group hedges the risk of product liability claims
for product defects through insurance coverage, construction of asystem of traceability (tracing of manufacturing history) and othermeans. However, a product recall or similar event that incurred
substantial cost and led to a decline in confidence in the Groupmight have an adverse effect on the Group’s business performanceand financial condition.

[12] Response to laws and regulations
To minimize the latent risk of disruptions to its production lines, the
TS TECH Group carries out regular accident prevention and safety
inspections as well as equipment maintenance inspections on all
equipment at its plants.
However, there is no guarantee that the Group will be able tocompletely prevent or mitigate the effect of disruptions to its production lines.
In addition, although the Group endeavors to enhance its
manufacturing capacity by undertaking measures to improve processes on its production lines, making its equipment more versatile,and installing production equipment that enables the flexible transfer
of production between different plants, among other measures, if anearthquake, contagious disease, or other large-scale natural disasterwere to occur, or some other situation arose that caused the suspension of operations, it is possible that production capacity would beseverely constrained. This event may have an adverse effect on theGroup’s operating performance.

In its business activities, which extend across many countries, the TS
TECH Group is subject to a wide range of legal restrictions, such as
safety and environmental regulations and laws. The Group operates
in compliance with the relevant laws and regulations. In particular, in
response to legal requirements in Europe and the United States relating to automobile safety, the Group has prepared a research anddevelopment system that enables it to adequately respond to futurechanges in the regulatory framework in this area.
However, in response to any future strengthening of regulationsor the introduction of new regulations in a wide range of areas, if
the Group is unable to fully comply with new legal requirements,
its business activities may be restricted.
Moreover, any strengthening of regulations or introduction of
new regulations may lead to increased costs for the Group. This
scenario could adversely affect the Group’s operating performanceand financial position.

[9] Protection of intellectual property rights[13] Retirement benefit liabilities

Although the TS TECH Group has accumulated significant technology and expertise related to the manufacture of its products, in the
future it is possible that these intellectual property rights would not becomprehensively protected. Moreover, the Group’s operations could
be adversely affected if its intellectual property rights were to beillegally infringed on a large scale.
In addition to the situations outlined above, although the Groupdevelops products and technologies while taking full and appropriate
care to ensure that it does not infringe the intellectual property rights
of other companies, it is possible that products and technologies
developed by the Group could be deemed to infringe on the intellectual property rights of third parties.

The retirement benefit costs and liabilities of the TS TECH Groupare calculated based on assumptions such as the discount rateand expected rate of investment income. As a result, should actual
results differ from these assumptions or should these assumptions
change, the Group’s operating performance and financial condition
may be affected.

TS TECH Report 2012

TS TECH Report 2012

[1] Changes in the market environment

increases induced by changes in the regulations surrounding raw
materials, reduced production by raw materials manufacturers, andchanges in raw materials markets, the Group’s operating performance may be negatively affected.

45

The business performance and financial condition of the TS TECH Group may be affected by the following risks, andwe believe that the risk factors outlined may materially affect the investment decisions of investors. Although theGroup has established appropriate risk management systems in response to these risks, users of this information
should be aware that it is not possible to anticipate all contingencies.
Any statements contained herein regarding the future are based on judgments made by the Group as of thetime this report was produced.

TS TECH Co., Ltd.

TS TECH Report 2012

Consolidated Balance Sheets
TS TECH Co., Ltd. and Consolidated Subsidiaries
March 31, 2012 and 2011

Millions of Yen

2011

2012

¥ 43,395¥ 33,288$ 527,983

52,111306
19,943
190
2,196
8,485
(24)
126,60249,013276
18,175362
2,513
12,024(40)
115,611

634,034
3,719
242,641
2,314
26,718103,243(290)
1,540,362

9,148
34,42046,76338,001
2,047
130,379(87,385)
42,9949,300
34,69946,84437,857
1,755
130,455(84,713)45,742

111,306
418,788568,971
462,351
24,902
1,586,318(1,063,209)
523,109

Millions of Yen

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Notes and accounts payable (Note 12):
Trade

2012

2011

2012

¥ 47,635¥ 42,348$ 579,571

Unconsolidated subsidiaries and associated companies
Short-term bank loans (Notes 6 and 12)
Current portion of long-term debt (Notes 6 and 12)
Accrued bonuses
Accrued bonuses to directors and corporate auditors
Income taxes payables (Note 12)
Deferred tax liabilities (Note 9)
Other
Total current liabilities

327
4,298
678
1,922
87
933
174
11,31467,368

354
1,874
584
1,906
93
1,007
93
9,852
58,111

3,973
52,2998,254
23,387
1,058
11,354
2,116
137,659
819,671

LONG-TERM LIABILITIES:Long-term debt (Notes 6 and 12)
Liability for employees’ retirement benefits (Note 7)
Liability for directors’ and corporate auditors’ retirement benefits
Deferred tax liabilities (Note 9)
Other
Total long-term liabilities

2,787
595
87
4,888
1,370
9,727

3,001
393
78
4,833
2,529
10,83433,9097,234
1,063
59,477
16,665
118,348

4,700
5,163
99,214
(3)

4,700
5,163
96,216(3)

57,18562,8191,207,128
(39)

7,089
(15,216)
100,947
11,301
112,248¥189,343

6,440(12,944)
99,572
12,323111,895¥180,840

86,254(185,134)
1,228,213
137,495
1,365,708$ 2,303,727

47

Cash and cash equivalents (Note 12)
Notes and accounts receivable (Note 12):
Trade
Unconsolidated subsidiaries and associated companies
Inventories (Note 3)
Income taxes receivable (Note 12)
Deferred tax assets (Note 9)
Prepaid expenses and other current assets
Allowance for doubtful accounts
Total current assets

2012

46

TS TECH Report 2012ASSETS
CURRENT ASSETS:

Thousands of
U.S. Dollars(Note 1)TS TECH Report 2012

Thousands of
U.S. Dollars(Note 1)PROPERTY, PLANT, AND EQUIPMENT (Note 4):Land
Buildings and structures
Machinery and equipment
Furniture and fixtures
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

CONTINGENT LIABILITIES (Note 14)

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 12)
Investments in and advances to unconsolidated subsidiaries
and associated companies
Long-term loans (Note 12)
Intangibles
Deferred tax assets (Note 9)
Other
Allowance for doubtful accounts
Total investments and other assets
TOTAL
See notes to consolidated financial statements.

13,12912,990159,737

2,270
655
1,174
843
1,845
(169)
19,747¥189,343

1,301
424
1,335
776
2,722
(61)
19,487¥180,840

27,616
7,970
14,282
10,261
22,451(2,061)
240,256$ 2,303,727

EQUITY:
Common stock—authorized, 272,000,000 shares;
issued, 68,000,000 shares in 2012 and 2011
Capital surplus
Retained earnings
Treasury stock—at cost, 1,645 shares in 2012 and 1,630 shares in 2011
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Total
Minority interests
Total equity
TOTAL

TS TECH Co., Ltd.

TS TECH Report 2012

TS TECH Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2011
Thousands of
U.S. Dollars(Note 1)Millions of Yen

48

TS TECH Report 2012

NET SALESCOST OF SALES
Gross profit

2012¥305,483
273,813
31,6702011¥357,489
315,110
42,3792012$ 3,716,790
3,331,469
385,321SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES (Note 10)
Operating income

22,2699,401

22,215
20,164

270,940
114,381

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Loss on sale and disposal of property, plant, and equipment
Gain on sale and disposal of property, plant, and equipment
Foreign exchange losses
Losses on disaster (Note 19)
Equity in earnings of associated companies
Rent income
Other—net
Other income —net

1,239
(228)
(318)
205
(287)
(976)
401
236
890
1,162

842
(163)
(314)
83
(380)
(126)
530
251
384
1,107

15,081(2,773)(3,869)2,489(3,486)(11,872)
4,880
2,874
10,81614,140

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

10,563

21,271

128,521

3,833

46,637(1,743)44,894

INCOME TAXES:
Current:
Income taxes
Refund of income taxes
Deferred
Total income taxes

(143)
3,690

5,693
(368)
(481)
4,844

NET INCOME BEFORE MINORITY INTERESTS

6,873

16,427

83,627MINORITY INTERESTS IN NET INCOME(2,160)(4,672)(26,286)

4,713¥ 11,755

NET INCOME¥$

U.S. Dollars(Note 1)Yen

PER SHARE OF COMMON STOCK:
Basic net income
Cash dividends applicable to the year

¥ 69.31
24.00¥ 172.87
24.00

Thousands of Shares

Number of common shares outstanding for the period
See notes to consolidated financial statements.

68,00057,34168,000

$

0.84
0.29

Thousands of
U.S. Dollars(Note 1)Millions of Yen

NET INCOME BEFORE MINORITY INTERESTS

2012¥ 6,873

2011¥16,4272012$ 83,627

OTHER COMPREHENSIVE INCOME (Note 15):
Unrealized gain (loss) on available-for-sale securities
Foreign currency translation adjustments
Share of other comprehensive income in associates
Total other comprehensive income

649(2,973)18(2,306)(413)(4,976)(50)(5,439)7,899(36,191)
225(28,067)

COMPREHENSIVE INCOME (Note 15)

4,567

10,98855,560TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO (Note 15):
Owners of the parent
Minority interests¥ 3,090
1,477¥ 7,184
3,804$ 37,596
17,964

See notes to consolidated financial statements.

TS TECH Report 2012

Consolidated Statements of Comprehensive Income

TS TECH Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 201149

Consolidated Statements of Income

TS TECH Co., Ltd.

TS TECH Report 2012

TS TECH Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2011

Thousands

TS TECH Report 2012
50

BALANCE, APRIL 1, 2010
Adjustment of retained earnings
due to an adoption of PITF No.
16 and No. 18 (Note 2.b, c)
Net income
Cash dividends, ¥22 per share
Contribution to employee
welfare fund
Purchase of treasury stock
Takeover of retained earnings
for merger of nonconsolidated
subsidiary
Net change in the year
BALANCE, MARCH 31, 2011
Net income
Cash dividends, ¥25 per share
Contribution to employee
welfare fund
Purchase of treasury stock
Takeover of retained earnings
for merger of nonconsolidated
subsidiary
Net change in the year
BALANCE, MARCH 31, 2012

IssuedNumber of
Shares ofCommonStockCommonStockCapitalSurplusRetained
Earnings

UnrealizedGain(Loss)
Foreign
on Available- Currency
Treasury for-Sale
Translation
Stock
Securities Adjustments

68,000¥4,700¥5,163¥86,230¥(3)¥6,844¥ (8,828)(24)
11,755(1,496)
(113)
(0)

(136)
68,000

4,700

5,163

96,216
4,713(1,700)

(3)

(404)
6,440

(4,116)(12,944)(93)¥4,700¥5,163¥99,214

Millions of Yen

Total

Minority
Interests

Total
Equity¥ 94,106¥11,383¥105,489(24)
11,755(1,496)(24)
11,755(1,496)

(113)
(0)

(113)
(0)

(136)
(4,520)99,572
4,713(1,700)940
12,323(136)(3,580)111,895
4,713(1,700)

(0)

(93)
(0)

(93)
(0)

¥(3)

78
(1,623)¥ 100,947

78(2,645)¥112,24878
68,000649¥7,089(2,272)¥ (15,216)(1,022)¥11,301

Thousands of U.S. Dollars (Note 1)
Accumulated Other
Comprehensive Income(Loss)

CommonStock

BALANCE, APRIL 1, 2011
Net income
Cash dividends, $0.30 per share
Contribution to employee
welfare fund
Purchase of treasury stock
Takeover of retained earnings
for merger of nonconsolidated
subsidiary
Net change in the year
BALANCE, MARCH 31, 2012

Thousands of
U.S. Dollars(Note 1)Millions of Yen
Accumulated Other
Comprehensive Income(Loss)

CapitalSurplusRetained
Earnings

Unrealized
Gain onForeign
Available-for- Currency
Treasury
Sale
Translation
Stock
Securities Adjustments$57,185 $62,819 $1,170,652 $(39)57,341(20,683)(1,127)(0)945$57,185 $62,819 $1,207,128

See notes to consolidated financial statements.

$(39)

Total

Minority
Interests$78,351 $ (157,487) $1,211,481 $149,934
57,341(20,683)(1,127)
(0)

945
7,903
(27,647)(19,744) (12,439)$86,254 $ (185,134) $1,228,213 $137,495

Total
Equity$1,361,415
57,341(20,683)(1,127)(0)945(32,183)$1,365,708

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes paid
Depreciation and amortization
Impairment loss on long-lived assets
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Equity in earnings of associated companies
Losses on disaster undisbursed
Changes in assets and liabilities, excluding effects
of newly consolidated subsidiaries:(Increase) decrease in trade notes and accounts receivable(Increase) decrease in inventories(Decrease) increase in interest and dividends receivable
Increase in trade notes and accounts payable
Increase (decrease) in interest payable
Increase in liability for employees’ retirement benefits
Proceeds from reimbursement of insurance
Other—net
Total adjustments
Net cash provided by operating activities

2012

2011

2012

¥10,563¥21,271$128,521(3,810)8,578
6(3,785)9,319
26(46,353)
104,366
74

(401)
750

106
(530)
126

(4,880)9,127(3,308)(2,259)
(15)
5,259
1
227
722
2,286
8,036
18,599

5,722
432
485
581
(1)
70
(145)
12,40633,677(40,243)(27,491)(186)
63,986
17
2,762
8,791
27,807
97,777226,298

INVESTING ACTIVITIES:
Increase (decrease) in time deposits
Proceeds from sale of property, plant, and equipment
Payment for purchase of property, plant, and equipment
Proceeds from sale of investment securities
Payment for purchase of investment securities
Proceeds from collection of loan receivables

2,667
596
(7,019)8(46)418(2,135)265(7,803)(367)
344

32,451
7,257(85,399)
93
(562)
5,086

Payment of loan receivables
Payment for purchase of unconsolidated subsidiary
Other—net
Net cash used in investing activities(642)(1,159)(233)(5,410)

(276)
(176)
(181)
(10,329)(7,807)(14,101)(2,841)(65,823)

2,597
(455)

31,597(5,534)(218)(0)(3,854)(1,930)

(346)
(570)
350
(208)
(1)
(4,008)(4,783)(2,656)(0)(46,892)(23,485)¥11,259¥18,565$136,990

FINANCING ACTIVITIES:
Increase (decrease) in short-term bank loans
Repayment of finance lease obligations
Proceeds from long-term debt
Repayment of long-term debt
Payment for purchase of treasury stock
Dividends paid
Net cash used in financing activities
FORWARDTS TECH Report 2012

Consolidated Statements of Cash FlowsTS TECH Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 201151

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

TS TECH Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2011

TS TECH Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2011
Thousands of
U.S. Dollars(Note 1)Millions of Yen

FORWARD52

TS TECH Report 2012

CASH AND CASH EQUIVALENTS INCREASED BY MERGERWITH UNCONSOLIDATED SUBSIDIARIESFOREIGN CURRENCY TRANSLATION AND OTHER
ADJUSTMENTS ON CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

2012

2011

2012

¥ 11,259¥18,565$ 136,990

123

69

1,496

(1,275)(1,540)(15,512)

10,10733,288¥ 43,395

17,094
16,194¥ 33,288

122,974
405,009$ 527,983

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act and its related accounting regulations and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from International Financial ReportingStandards (“IFRS”).
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial
statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2011 consolidated financial statements to conform to the classifications used in 2012.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which TS TECH Co., Ltd. (the “Company”) is
incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥82.19 to $1, the approximate rate of exchange at March 31, 2012. Such translations
should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31, 2012 include the accounts of the Company and its 29 significant(29 in 2011) subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over
operations are fully consolidated and those companies over which the Group has the ability to exercise significant influence are accounted
for by the equity method.
Investments in two (two in 2011) associated companies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If the equity method of accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not
be material.
The excess of the cost of an acquisition over the fair value of the net assets of an acquired subsidiary at the date of acquisition is being
amortized over a period of five years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in
assets resulting from transactions within the Group is eliminated.
Under Japanese GAAP, a difference of less than three months between the fiscal year end of the parent company and its subsidiaries is
not required to be adjusted for purposes of the consolidation. The fiscal year end of subsidiaries except for in Japan, North America, andIndia is December 31.
b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—In May 2006,
the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task Force (PITF) No. 18, “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements.” PITF No. 18 prescribes: (1)the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar
circumstances should in principle be unified for the preparation of the consolidated financial statements, (2) financial statements preparedby foreign subsidiaries in accordance with either IFRS or U.S. GAAP tentatively may be used for the consolidation process, (3) however,the following items should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese
GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss of pensions that has
been directly recorded in equity; (c) expensing capitalized development costs of research and development (R&D); (d) cancellation of thefair value model accounting for property, plant, and equipment and investment properties and incorporation of the cost model accounting,and (e) exclusion of minority interests from net income, if contained in net income.
c. Unification of Accounting Policies Applied to Foreign Associated Companies for the Equity Method—In March 2008, the ASBJ
issued ASBJ Statement No. 16, “Accounting Standard for Equity Method of Accounting for Investments.” The new standard requires
adjustments to be made to conform the associate’s accounting policies for similar transactions and events under similar circumstances tothose of the parent company when the associate’s financial statements are used in applying the equity method unless it is impracticable
to determine such adjustments. In addition, financial statements prepared by foreign associated companies in accordance with either
IFRS or U.S. GAAP tentatively may be used in applying the equity method if the following items are adjusted so that net income is accounted for in accordance with Japanese GAAP, unless they are not material: (1) amortization of goodwill; (2) scheduled amortization of
actuarial gain or loss of pensions that has been directly recorded in equity; (3) expensing capitalized development costs of R&D; (4)cancellation of the fair value model accounting for property, plant, and equipment and investment properties and incorporation of the costmodel accounting, and (5) exclusion of minority interests from net income, if contained in net income.
d. Business Combination—In October 2003, the Business Accounting Council issued a Statement of Opinion, “Accounting for Business
Combinations,” and in December 2005, the ASBJ issued ASBJ Statement No. 7, “Accounting Standard for Business Divestitures” andASBJ Guidance No. 10, “Guidance for Accounting Standard for Business Combinations and Business Divestitures.” The accounting
standard for business combinations allows companies to apply the pooling-of-interests method of accounting only when certain specificcriteria are met such that the business combination is essentially regarded as a uniting of interests. For business combinations that do not

TS TECH Report 2012

TS TECH Report 201253

TS TECH Co., Ltd.

TS TECH Co., Ltd.

e. Cash and Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and that are exposed
to insignificant risk of changes in value. Cash equivalents include time deposits which mature or become due within three months of thedate of acquisition.
f. Inventories—Inventories are stated at the lower of cost, determined by the first-in, first-out method, or net selling value, except for
certain items stated at cost on a specific identification method or supplies stated at cost determined by the most recent purchase pricemethod.
g. Allowance for Doubtful Accounts—The allowance for doubtful accounts is stated in amounts considered to be appropriate based on
the Group’s past credit loss experience and an evaluation of potential losses in the receivables outstanding.
h. Property, Plant, and Equipment—Property, plant, and equipment are stated at cost. Depreciation for the Company and its consolidated domestic subsidiaries is computed substantially by the declining-balance method, while the straight-line method is principally
applied by consolidated foreign subsidiaries and for buildings acquired after April 1, 1998. The range of useful lives is from 2 to 50 years
for buildings, from 2 to 20 years for machinery and equipment and from 2 to 20 years for furniture and fixtures.
i. Investment Securities—Investment securities are all classified as available-for-sale securities. Marketable available-for-sale securities
are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity. The costof securities sold is determined based on the moving-average cost method. Nonmarketable available-for-sale securities are stated at cost
determined by the moving-average method. For other-than-temporary declines in fair value, investment securities are reduced to net
realizable value by a charge to income.
j. Investments in Unconsolidated Subsidiaries and Associated Companies—Nonmarketable available-for-sale investments in unconsolidated subsidiaries and associated companies are stated at cost determined by the moving-average cost method.
k. Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate thecarrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount ofan asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of theasset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual dispositionof the asset or the net selling price at disposition.
l. Other Assets—Intangible assets are carried at cost less accumulated amortization, which is calculated by the straight-line method
principally over 3 to 20 years for intangible assets of the Company and its consolidated domestic subsidiaries and over the estimateduseful life for intangible assets of the consolidated foreign subsidiaries. Goodwill and negative goodwill incurred before March 31, 2010
have been amortized by straight-line method over 5 years.
m. Employees’ Retirement Benefits—The Company has a defined contribution plan, retirement lump-sum payment plan and pre-paid
retirement plan covering substantially all of their employees. The domestic subsidiaries mainly have a contributory funded pension planand retirement lump-sum payment plan. Certain consolidated subsidiaries have a defined benefit plan.
The Company accounts for the liability for retirement benefits based on projected benefit obligations and plan assets at the balance sheet
date. The past service cost is amortized over 17 years, which is less than the employees’ average residual service period, starting fromthe fiscal year when recognized. The actuarial gain or loss is amortized over 17 years, which is less than the employees’ average residual
service period, starting from the following fiscal year.

o. Asset Retirement Obligations—In March 2008, the ASBJ published ASBJ Statement No. 18 “Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21 “Guidance on Accounting Standard for Asset Retirement Obligations.” Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from theacquisition, construction, development, and normal operation of a tangible fixed asset and is associated with the retirement of suchtangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimateof the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability.
The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time,
the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate ofundiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of
the related asset retirement cost.

TS TECH Report 2012

In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No. 21, “AccountingStandard for Business Combinations.” Major accounting changes under the revised accounting standard are as follows: (1) The revised
standard requires accounting for business combinations only by the purchase method. As a result, the pooling-of-interests method of
accounting is no longer allowed. (2) The previous accounting standard required research and development costs to be charged to income
as incurred. Under the revised standard, in-process research and development costs (IPR&D) acquired in the business combination are
capitalized as an intangible asset. (3) The previous accounting standard provided for a bargain purchase gain (negative goodwill) to besystematically amortized over a period not exceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchasegain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been identified after a review of the procedures used in the purchase allocation. The revised standard was applicableto business combinations undertaken on or after April 1, 2011.

n. Liabilities for Directors’ and Corporate Auditors’ Retirement Benefits—Liabilities for directors’ and corporate auditors’ retirement
benefits of domestic subsidiaries which rules them in their company policies, are recorded to state the liability at the amount that would
be required if all directors and corporate auditors retired at each balance sheet date.
Liability for directors’ and corporate auditors’ retirement benefits are paid subject to approval of the shareholders in accordance with theCompanies Act of Japan (the “Companies Act”).

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54

TS TECH Report 2012

meet the uniting-of-interests criteria, the business combination is considered to be an acquisition and the purchase method of accounting
is required. This standard also prescribes the accounting for combinations of entities under common control and for joint ventures.

TS TECH Report 2012

p. Research and Development Costs—Research and development costs are charged to income as incurred.
q. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” which revised theprevious accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions was
effective for fiscal years beginning on or after April 1, 2008.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were
capitalized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain “as if capitalized”
information was disclosed in the note to the lessee’s financial statements. The revised accounting standard requires that all finance leasetransactions be capitalized by recognizing lease assets and lease obligations in the balance sheet.
The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company continues to account for leases
which existed at the transition date and do not transfer ownership of the leased property to the lessee as operating lease transactions.
All other leases are accounted for as operating leases.
r. Bonuses to Directors and Corporate Auditors—Bonuses to directors and corporate auditors are accrued at the fiscal year-end towhich such bonuses are attributable.
s. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statements ofincome. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequencesof temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.
Certain consolidated foreign subsidiaries file a tax return under the consolidated corporate tax system, which allows companies to basetax payments on the combined profits or losses of the parent company and its wholly owned subsidiaries.
t. Foreign Currency Transactions—All short-term and long-term monetary receivables and payables denominated in foreign currencies
are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation
are recognized in the consolidated statements of income to the extent that they are not hedged by forward exchange contracts.
u. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries are translated into
Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate.
Differences arising from such translation were shown as “Foreign currency translation adjustments” under accumulated other comprehensive income in a separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into
yen at the average exchange date.
v. Derivatives and Hedging Activities—The Group uses derivative financial instruments to manage its exposures to fluctuations in foreignexchange and interest rates. Foreign exchange forward contracts and interest rate swaps are utilized by the Group to reduce foreign
currency exchange and interest rate risks. The Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statement of income, and (2) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high

TS TECH Co., Ltd.

3. INVENTORIESInventories as of March 31, 2012 and 2011 consisted of the following:

Merchandisex. Accounting Changes and Error Corrections—In December 2009, ASBJ issued ASBJ Statement No. 24 “Accounting Standard for
Accounting Changes and Error Corrections” and ASBJ Guidance No. 24 “Guidance on Accounting Standard for Accounting Changes
and Error Corrections.” Accounting treatments under this standard and guidance are as follows:(1) Changes in Accounting Policies—When a new accounting policy is applied with revision of accounting standards, the new policy isapplied retrospectively unless the revised accounting standards include specific transitional provisions. When the revised accounting
standards include specific transitional provisions, an entity shall comply with the specific transitional provisions. (2) Changes in Presentations—When the presentation of financial statements is changed, prior-period financial statements are reclassified in accordance with thenew presentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in the period of thechange if the change affects that period only and is accounted for prospectively if the change affects both the period of the change andfuture periods. (4) Corrections of Prior-Period Errors—When an error in prior-period financial statements is discovered, those statements
are restated. This accounting standard and the guidance are applicable to accounting changes and corrections of prior-period errors
which are made from the beginning of the fiscal year that begins on or after April 1, 2011.
y. New Accounting Pronouncements
Accounting Standard for Retirement Benefit—On May 17, 2012, ASBJ issued ASBJ Statement No. 26 “Accounting Standard for
Retirement Benefits and ASBJ Guidance No. 25 “Guidance on Accounting Standard for Retirement Benefits,” which replaced the Accounting Standard for Retirement Benefits that had been issued by Business Accounting Council in 1998 with effective date of April 1,
2000 and the other related practical guidances being followed by partial amendments from time to time through 2009.

Finished products

¥

2012

2011

789

¥ 1,256

1,463

1,470

2012
$

9,596
17,801Work in process

1,901

1,639

23,125

Raw materials

13,367

12,397

162,635

Supplies

2,423

1,413

29,484¥ 19,943¥18,175$ 242,641

Total

4. LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of March 31, 2012 and 2011. As a result, the Group recognized an impairment loss of ¥6
million ($74 thousand) and ¥26 million, respectively, as other expenses due to the significant decline in the market value of identified machinery andequipment. The total book values of the relevant assets were written off.

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TS TECH Report 2012

w. Per-Share Information—Basic net income per share is computed by dividing net income available to common shareholders by theweighted-average number of common shares outstanding for the period.
Diluted net income per share is not disclosed because it is antidilutive.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective
years, including dividends to be paid after the end of the year.

Thousands of
U.S. Dollars

Millions of Yen

5. INVESTMENT SECURITIESInvestment securities as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥ 12,971¥ 12,756$ 157,812

158

234

1,925

¥ 13,129¥ 12,990$ 159,737

Noncurrent:
Marketable equity securities
Nonmarketable equity securities
Total

The costs and aggregate fair values of investment securities at March 31, 2012 and 2011 were as follows:
Millions of Yen

Major changes are as follows:(a) Treatment in the consolidated balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are notrecognised in the consolidated balance sheet, and the difference between retirement benefit obligations and plan assets (hereinafter,“deficit or surplus”), adjusted by such unrecognized amounts, are recognized as a liability or an asset.
Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss
shall be recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and the deficit or surplus shallbe recognized as a liability (liability for retirement benefits ) or asset (asset for retirement benefits).
(b) Treatment in the consolidated statement of income and the statement of comprehensive income
The revised accounting standard would not change how to recognize actuarial gains and losses and past service costs in profit or loss.
Those amounts would be recognized in profit or loss over a certain period no longer than the expected average remaining working livesof the employees. However, actuarial gains and losses and past service costs that arose in the current period and yet to be recognized in
profit or loss shall be included in other comprehensive income and actuarial gains and losses and past service costs that were recognizedin other comprehensive income in prior periods and then recognized in profit or loss in the current period shall be treated as reclassification adjustments.
This accounting standard and the guidance are effective for the end of annual periods beginning on or after April 1, 2013 with earlier
application being permitted from the beginning of annual periods beginning on or after April 1, 2013. However, no retrospective application of this accounting standard to consolidated financial statements in prior periods is required.
The Company expects to apply the revised accounting standard from the end of the annual period beginning on April 1, 2013 and is in
the process of measuring the effects of applying the revised accounting standard for the year ending March 31, 2014.

TS TECH Report 2012

correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until
maturity of the hedged transactions.
Foreign currency forward contracts are utilized to hedge foreign currency exposures in procurement of raw materials from overseas
suppliers. Trade payables denominated in foreign currencies are translated at the contracted rates if the forward contracts qualify forhedge accounting.

TS TECH Report 2012

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥ 2,060¥ 10,911¥ 12,971¥ 2,019¥ 10,737¥ 12,756

Cost

Unrealized
Gains$ 25,061$ 132,751

March 31, 2012
Securities classified as available-for-sale equity securities
March 31, 2011
Securities classified as available-for-sale equity securities

Thousands of U.S. Dollars
Unrealized
LossesFair
Value

March 31, 2012
Securities classified as available-for-sale equity securities$ 157,812

Available-for-sale securities whose fair value is not readily determinable as of March 31, 2012 and 2011 were as follows:
Carrying AmountThousands of
U.S. Dollars

Millions of Yen

Available-for-sale equity securities

2012

2011

2012

¥158

¥234

$1,925For other-than-temporary declines where fair values of securities at the end of the fiscal year become less than 50% of their acquisition costs,
investment securities are reduced to net realizable value by a charge to income.
There is no impairment loss on available-for-sale equity securities for the year ended March 31, 2012. In 2011, impairment loss was ¥34 million
recorded in other-net in other income.
Proceeds from sales of available-for-sale equity securities for the year ended March 31, 2012 are ¥8 million ($93 thousand). There were noproceeds from sales of available-for-sale equity securities for the year ended March 31, 2011. There was no gross realized gain on these sales,
computed on the moving-average cost basis for the year ended March 31, 2012.

TS TECH Co., Ltd.

TS TECH Report 2012

7. EMPLOYEES’ RETIREMENT BENEFITS

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

Prepaid pension expenses incurred from contribution plan using outside financial institutions to save plan assets. While liabilitiy for employees’
retirement benefit incurred from retirement lump-sum payment plan.

¥4,298¥1,874$52,299

As of March 31, 2012, the plan assets are overfunded. However, Japanese GAAP allows deferred recognition of the actuarial loss as indicatedabove. As a result, the Company recorded prepaid pension expenses.

Long-term debt as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars

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TS TECH Report 2012

2012

2011

2012

The liability for employees’ retirement benefits at March 31, 2012 and 2011 consisted of the following:

Loans from financial institutions—From banks,
1.18% to 3.85% (1.65% to 3.85% for 2011):

Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥ 13,303¥12,234$ 161,857(9,823)(9,434)(119,516)

Collateralized
Unsecured¥3,465¥3,585$42,163

Projected benefit obligation

Total

3,465

3,585

42,163

Fair value of plan assets
Funded status

3,480

2,800

42,341

Unrecognized actuarial loss

(3,424)(3,272)(41,660)

Less current portionLong-term debt, less current portion

(678)

(584)

(8,254)¥2,787¥3,001$33,909

Prepaid pension expenses
Annual maturities of long-term debt as of March 31, 2012 for the next five years and thereafter were as follows:

Net liability

539
¥

595

865
¥

393

6,553
$

7,234

Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars

2013

¥ 678

$ 8,254

2014

2,501

30,438

2015

207

2,515

2016

69

839

Service cost

2017

9

107

Interest cost

232

228

2,820

2018 and thereafter

1

10

Expected return on plan assets

(219)

(208)

(2,661)¥ 3,465$ 42,163

Recognized prior service cost

178

Recognized actuarial loss

416

439

Other

206

205

2,504

1,555

1,425

18,915Total

The components of net periodic benefit costs for the years ended March 31, 2012 and 2011 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Net periodic benefit costs

2012

2011

2012

¥ 742

¥ 761

$ 9,026

2,165
5,061

Assumptions used for the years ended March 31, 2012 and 2011 are set forth as follows:
2012

2011

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

2.5%

2.5%

Amortization period of prior service cost

17 years

17 years

Recognition period of actuarial gain/loss

17 years

17 years

8. EQUITY
Japanese companies are subject to the Companies Act. The significant provisions in the Companies Act that affect financial and accounting matters
are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution
at the shareholders’ meeting. For companies that meet certain criteria such as; (1) having a board of directors, (2) having independent auditors,(3) having a board of corporate auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal
term by its articles of incorporation, the board of directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year
if the company has prescribed so in its articles of incorporation.
The Companies Act permits companies to distribute dividends in kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the board of directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The
limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained
at no less than ¥3 million.

TS TECH Report 2012

Millions of Yen

59

Short-term borrowings—From banks,
0.73% to 2.12% (0.68% to 1.65% for 2011)

Employees whose service with the Company is terminated are, under most circumstances, entitled to retirement and pension benefits determined byreference to basic rates of pay at the time of termination, length of service, and conditions under which the termination occurs.

TS TECH Co., Ltd.

TS TECH Report 2012b. Treasury Stock
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the board of
directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determinedby a specific formula.

was to decrease deferred taxes liabilities (after netting the deferred tax assets) in the consolidated balance sheet as of March 31, 2012 by ¥423
million ($5,145 thousand) and to decrease income taxes-deferred in the consolidated statement of income for the year then ended by ¥122 million($1,480 thousand).

10. RESEARCH AND DEVELOPMENT COSTS
Research and development expenses included in selling, general, and administrative expenses and cost of sales for the years ended March 31,
2012 and 2011 were as follows:

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TS TECH Report 2012

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2012 and2011 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

Research and development expenses

2012

2011

2012

¥ 9,642¥ 9,621$117,309

Deferred tax assets:
Accrued bonus

¥ 709

¥ 727

$ 8,632

11. LEASES

Accrued expenses

828

776

10,079Reserve for retirement benefits for directors

221

242

2,688

Pension and severance costs

188

122

2,287

Allowance for doubtful accounts

61

70

745

Inventories

282

186

3,430

Depreciation and amortization

460

451

5,603

ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” requires that all finance lease transactions be capitalized to recognize leaseassets and lease obligations in the consolidated balance sheet. However, ASBJ Statement No. 13 permits leases without ownership transfer of theleased property to the lessee and whose lease inception was before March 31, 2008 to continue to be accounted for as operating lease transactions
if certain “as if capitalized” information is disclosed in the note to the financial statements. The Company applied ASBJ Statement No. 13 effective
April 1, 2008 and accounted for such leases as operating lease transactions. Pro forma information of leased property whose lease inception was
before March 31, 2008 is omitted due to immateriality of the balance as of March 31, 2012.

Research and development costs

905

804

11,004Foreign tax credit carryforwards

277

147

3,371

Tax loss carryforwards

339

432

4,119

Other

630

881

7,664

Total deferred tax assets
Valuation allowance

4,900

4,838

Millions of Yen

Thousands of
U.S. Dollars

Due within one year

¥ 492

$ 5,980

59,622

Due after one year

1,502

18,276

Total¥ 1,994$ 24,256

(794)

(415)

(9,658)(1,067)(1,134)(12,985)¥ 3,039¥ 3,289$ 36,979

Depreciation of foreign subsidiaries

¥ 860

¥ 338

$ 10,464

Net unrealized gains on marketable securities

3,791

4,252

46,120Prepaid pension expense

189

346

2,296

Foreign currency translation adjustments

372

410

4,531

Other

917

714

11,167

Offset to deferred tax liabilities
Total deferred tax assets, net
Deferred tax liabilities:

Total deferred tax liabilities

6,129

6,060

74,578

Offset to deferred tax assets(1,067)(1,134)(12,985)¥ 5,062¥ 4,926$ 61,593

Total deferred tax liabilities, net

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated
statements of income for the years ended March 31, 2012 and 2011 is as follows:
2012
2011
Normal effective statutory tax rate

39.8%

39.8%

Permanent differences mainly arisen from non-taxable dividend income(16.2)(7.1)

Tax credit

(1.4)

(2.3)

Dividend income from subsidiaries eliminated by consolidation

20.7

10.7

Difference in statutory tax rates of foreign subsidiaries(15.9)(17.0)

Income taxes—prior year

(0.1)

(0.6)

Undistributed earnings of tax-haven subsidiaries

3.1

1.8

Valuation allowance

4.1

Other—net

0.8

(2.5)

Actual effective tax rate

34.9%

22.8%

The minimum rental commitments under operating leases at March 31, 2012 were as follows:

On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective statutory tax rate from approximately 39.8%
to 37.2% effective for the fiscal years beginning on or after April 1, 2012 through March 31, 2015, and to 34.8% afterward. The effect of this change

TS TECH Report 2012

Thousands of
U.S. Dollars

Millions of Yen

61

9. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal
effective statutory tax rate of approximately 39.8% for the years ended March 31, 2012 and 2011.

TS TECH Co., Ltd.

TS TECH Report 2012

Millions of Yen
March 31, 2011

Fair
Value

Unrealized
Gain/Loss

Cash and cash equivalents¥ 33,288¥ 33,288

Notes and accounts receivable

49,28949,289

Income taxes receivable

362

362

(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies are exposedto the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign currencies, is hedged by using foreign
currency forward contracts. Investment securities, mainly held-to-maturity securities and equity instruments of customers and suppliers of theGroup, are exposed to the risk of market price fluctuations. Long-term loans are mainly for the suppliers of the Group.
Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, those risks are netted against the balance of receivables denominatedin the same foreign currency as noted above.
Maturities of bank loans are less than five years after the balance sheet date.
Derivatives mainly include foreign currency forward contracts, which are used to manage exposure to market risks from changes in foreign
currency exchange rates of receivables and payables. Please see Note 2.v for more detail about derivatives.

Investment securities

12,756

12,756424

381¥ (43)

Total¥ 96,119¥ 96,076¥ (43)

Notes and accounts payable¥ 42,702¥ 42,702

1,874

1,874

3,001

2,960

(41)

Total

¥ 49,168¥ 49,133¥ (35)(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Groupmanages its credit risk from receivables on the basis of internal guidelines, which include monitoring of payment terms and balances of major
customers by each business administration department to identify the default risk of customers in the early stages.

Derivatives¥¥

March 31, 2012

Carrying
AmountFair
Value$ 527,983$ 527,983

637,752

637,752

Market risk management (foreign exchange risk)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in foreign currency exchange rates. Suchforeign exchange risk is hedged principally by foreign currency forward contracts. Derivative transactions entered into by the Group have been
made in accordance with internal guidelines which regulate the authorization and credit limit amount. The execution and control of derivatives
are under the authority of the finance department. In addition, the counterparties to these derivatives are limited to major international financial
institutions, and the Group therefore does not anticipate any losses arising from credit risk.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on their maturity dates. The Group manages its
liquidity risk by conducting adequate financial planning by the corporate accounting department.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted price is not available, other rational valuation techniques are used instead. Please see Note 13 for details, on the fair value for derivatives.
(a) Fair value of financial instruments
Carrying
AmountFair
Value

Cash and cash equivalents¥ 43,395¥ 43,395

52,41752,417

Notes and accounts receivable

Unrealized
Gain/Loss

Income taxes receivable

190

190

Investment securities

12,971

12,971Long-term loans

505

471

¥ (34)

Total¥ 109,478¥ 109,444¥ (34)

Notes and accounts payable¥ 47,961¥ 47,961

4,299

4,299

678

683

Short-term bank loans
Current portion of long-term debt
Income taxes payables

¥

5

933

933
2,683

(104)

Total

¥ 56,658¥ 56,559¥ (99)

Derivatives

¥

¥

(2)

Long-term debt

590

1,007

1,007

6

¥ 6

6

Thousands of U.S. Dollars

Cash and cash equivalents
Notes and accounts receivable
Income taxes receivable

2,314

2,314

Investment securities

157,813

157,813Long-term loans

Unrealized
Gain/Loss

7,970

Allowance for doubtful accounts(1,825)

Subtotal

6,145

5,735

$

(410)

Total

$ 1,332,007$ 1,331,597

$

(410)

Notes and accounts payable$54$ 583,544$ 583,544

Short-term bank loans

52,29952,299Current portion of long-term debt

8,254

8,308

Income taxes payables

11,354

11,35433,90932,647(1,262)

Total$ 689,360$ 688,152$ (1,208)

Derivatives

$

$

(19)

(19)

(2)

Long-Term Loans
The fair values of long-term loans are determined by discounting the cash flows by an interest rate, such as the yield on government bonds, addedwith a credit spread.
Payables, Short-Term Bank Loans, and Income Taxes Payables

2,787

Long-term debt

Income taxes payables

584

Investment Securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for the equity instruments. Information on thefair values of investment securities by classification is included in Note 5.

(150)

Subtotal

Current portion of long-term debt

Cash and Cash Equivalents, Receivables, and Income Taxes Receivable
The carrying values of cash and cash equivalents, notes and accounts receivable, and income taxes receivable approximate fair value because of
their short maturities.

655

Allowance for doubtful accounts

Short-term bank loans

Long-term debt

Millions of Yen
March 31, 2012

Long-term loans

The carrying values of notes and accounts payable, short-term bank loans, and income taxes payables approximate fair value because of their shortmaturities.
Long-Term Debt
The fair values of the current portion of long-term debt and long-term debt are measured at the amounts to be paid at maturity discounted at theGroup’s assumed corporate borrowing rate.
Derivatives
Information regarding the fair value for derivatives is included in Note 13.

6362

TS TECH Report 2012

(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly long-term debt including bank loans, based on its capital financing plan. Cash surpluses, if any, areinvested in low-risk financial assets such as time deposits or other assets whose principal is guaranteed. Short-term bank loans are used to fundits ongoing operations. Derivatives are used not for speculative purposes, but to manage exposure to financial risks as described in (2) below.

Carrying
AmountTS TECH Report 2012

12. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESTS TECH Co., Ltd.

TS TECH Report 2012

13. DERIVATIVES(b) Carrying amount of financial instruments whose fair value cannot be reliably determined
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

Millions of Yen¥234$1,92564

TS TECH Report 2012

Cash and cash equivalents
Notes and accounts receivable
Income taxes receivable

Due in One Yearor Less

Due after One Yearthrough Five Years

190
¥ 655
¥ 56,615

Cash and cash equivalents$ 48,765

Notes and accounts receivable

637,752

Income taxes receivable¥ 655

Contract
Amount

At March 31, 2011

$ 688,831

Buying U.S. dollars
Buying Japanese yen

Due after One Yearthrough Five Years

Buying Euro¥(2)

Contract
AmountDue after
One Year

Fair
Value

Unrealized
Gain/Loss

¥ 244

¥6

¥6

1

(0)

(0)

162

0

0

Thousands of U.S. Dollars$ 7,970

At March 31, 2012

$ 7,970

Forward exchange contracts:

Contract
AmountBuying Japanese yen
Please see Note 6 for annual maturities of long-term debt.

¥(2)

Forward exchange contracts:

2,314Long-term loans
Total

¥ 301

52,417Due in One Yearor Less

Unrealized
Gain/Loss

Millions of Yen

Thousands of U.S. Dollars
March 31, 2012

Buying Japanese yen¥ 4,008

Long-term loans
Total

Fair
Value

Forward exchange contracts:

Millions of Yen
March 31, 2012

Contract
Amount

At March 31, 2012(5) Maturity Analysis for Financial Assets with Contractual Maturities

Contract
AmountDue after
One Year$3,660

Fair
Value

Unrealized
Gain/Loss

$(19)

$(19)

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
Derivative Transactions to Which Hedge Accounting Is Applied(1) Currencies
Millions of Yen
Contract
AmountDue after
One YearHedgedItem

Contract
AmountU.S. dollars

Receivables

¥978

¥945

British pounds

Receivables

566

542

Canadian dollars

Receivables

83

80

Thai baht

Receivables

59

59

At March 31, 2012

Fair
Value

Forward exchange contracts:
Selling:

Millions of Yen

At March 31, 2011

HedgedItem

Contract
AmountContract
AmountDue after
One Year

Fair
Value

Forward exchange contracts:
Buying:¥43

TS TECH Report 2012¥158

Contract
AmountDue after
One Year65

Investments in equity instruments that do nothave a quoted market price in an active market

Derivative Transactions to Which Hedge Accounting Is Not Applied
Currencies

U.S. dollars

PayablesJapanese yen

Payables

116

¥

115

44

Selling:
U.S. dollars

Receivables

1,406

1,394

British pounds

Receivables

922

922

Canadian dollars

Receivables

77

76

Thai baht

Receivables

184

180

TS TECH Co., Ltd.

TS TECH Report 2012

Thousands of U.S. Dollars

Contract
AmountFair
Value

The components of other comprehensive income for the year ended March 31, 2012 was as follows:
2012

2012

Millions of Yen

Thousands of
U.S. Dollars

Forward exchange contracts:
U.S. dollars

Receivables$ 11,900$ 11,499

British pounds

Receivables

6,891

6,597

Canadian dollars

Receivables

1,004

973

Reclassification adjustments to profit or loss

Thai baht

Receivables

715

712

Amount before income tax effect174

Income tax effect

475

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
(2) Interest

At March 31, 2012

Gains arising during the year

HedgedItem

Contract
AmountLong-term debt

Contract
AmountDue after
One Year

¥392

¥

¥

174

$

2,117
2,117
5,782

649

$

7,899

Foreign currency translation adjustments

Millions of Yen

Interest rate swaps—
fixed-rate payment, floating rate receipt

Unrealized gain on available-for-sale securities

Total

66

TS TECH Report 2012

Selling:¥240

Adjustments arising during the year

¥ (2,973)$ (36,191)

Total¥ (2,973)$ (36,191)

Gains arising during the year

¥

18

$

225

Total

¥

18

$

225

Share of other comprehensive income in associates

Total other comprehensive income¥ (2,306)$ (28,067)

Millions of Yen

At March 31, 2011

Interest rate swaps—
fixed-rate payment, floating rate receipt

HedgedItem

Contract
AmountContract
AmountDue after
One YearLong-term debt

¥544

¥392

Thousands of U.S. Dollars

At March 31, 2012

Interest rate swaps—
fixed-rate payment, floating rate receipt

HedgedItem

Contract
AmountContract
AmountDue after
One YearLong-term debt

$ 4,769$ 2,920

The corresponding information for the year ended March 31, 2011 was not required under the accounting standard for presentation of comprehensive income as an exemption for the first year of adopting that standard and not disclosed herein.

16. RELATED-PARTY DISCLOSURES
Transactions between the Group and a Major Shareholder
Honda Motor Co., Ltd. (“Honda”) holds shares of the Company’s common stock representing 22.6% of the total and is the largest principal shareholder of the Company. The Company sells significant quantities of its products to Honda and also purchases significant quantities of materials andmanufacturing components from Honda. Terms and conditions of transactions are determined individually through price negotiations and are
documented in a written agreement or estimate.
Transactions between the Company and Honda for the years ended March 31, 2012 and 2011 were as follows:

The above interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but thedifferential paid or received under the swap agreements is recognized and included in interest expense or income. In addition, the fair value of suchinterest rate swaps is included in that of hedged items (i.e., long-term debt).

Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

Sales of products¥ 58,897¥ 62,701$ 716,596

Purchases of materials and components

11,982

12,728145,784

14. CONTINGENT LIABILITIESThe balances due to or from Honda at March 31, 2012 and 2011 were as follows:

At March 31, 2012, the Group had the following contingent liabilities:

Thousands of
U.S. Dollars

Millions of Yen

Millions of Yen

Thousands of
U.S. Dollars

Trade notes endorsed

¥ 36

$ 439

Accounts receivable

Guarantees and similar items of bank loans

397

4,831

Accounts payable

2012

2011

2012

¥ 10,498¥ 5,119$ 127,730

272

203

3,305

Note: Consumption tax is excluded from the transaction amounts and included in the year-end balances.

Transactions between a Consolidated Subsidiary and Fellow Subsidiary
TS TECH USA CORPORATION Ltd.
Honda of America Mfg., Inc. is a subsidiary of Honda and, as such, is a fellow subsidiary of the Company, and TS TECH USA CORPORATION Ltd.
sells significant quantities of its products to Honda of America Mfg., Inc. Terms and conditions of transactions are determined individually throughprice negotiations and are documented in a written agreement or estimate.

TS TECH Report 2012

HedgedItem

15. COMPREHENSIVE INCOME
For the year ended March 31, 2012

67

At March 31, 2012

Contract
AmountDue after
One YearTS TECH Co., Ltd.

TS TECH Report 2012

Transactions between TS TECH USA CORPORATION Ltd. and Honda of America Mfg., Inc. for the years ended March 31, 2012 and 2011 were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥37,917¥41,341$461,331

The balances from Honda of America Mfg., Inc. at March 31, 2012 and 2011 were as follows:

2011

2012

¥14,752$96,223

2012$47,558

Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥47

¥2,108$571

Accounts receivable
Note: Consumption tax is excluded from the transaction amounts and included in the year-end balances.

Transactions between TS TECH ALABAMA, LLC. and Honda Manufacturing of Alabama, LLC. for the years ended March 31, 2012 and 2011 wereas follows:
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥29,609¥34,832$360,246

The balances from Honda Manufacturing of Alabama, LLC. at March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥3,173¥3,154$38,605

17. SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriations of retained earnings at March 31, 2012 were approved at the Company’s shareholders’ meeting held on June 22, 2012:

Year-end cash dividends, ¥12 ($0.15) per share

Millions of Yen

Thousands of
U.S. Dollars¥816$9,928

18. SEGMENT INFORMATION
For the years ended March 31, 2012 and 2011
Under the ASBJ Statement No. 17 “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance No. 20 “Guidance on Accounting Standard for Segment Information”, an entity is required to report financial and descriptive information about its reportable segments. Reportablesegments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of anentity about which separate financial information is available, and such information is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as
is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.

Note: Consumption tax is excluded from the transaction amounts and included in the year-end balances.

1. Description of reportable segments
TS TECH CANADA INC.
Honda Canada, Inc. is a subsidiary of Honda and also a related party of the Company, and TS TECH CANADA INC. sells significant quantities of its
products to Honda Canada, Inc. Terms and conditions of transactions are determined individually through price negotiations and are documented ina written agreement or estimate.

2. Methods of measurement for the amounts of sales, profit (loss), assets, liabilities, and other items for each reportable segment.

Transactions between TS TECH CANADA INC. and Honda Canada, Inc. for the years ended March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Sales of products

2012

2011

2012

¥17,545¥21,156$213,465

The balances from Honda Canada, Inc. at March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Accounts receivable

The Group’s reportable segments are those for which separately financial information is available and regular evaluation by the Company’s
management is being performed in order to decide how resources are allocated among the Group. The Group consists of Japan, America,
China, and Asia/UK. Japan represents Japan only. Americas consists of USA, Canada, Mexico, and Brazil. China consists of China and HongKong. Asia/UK consists of Thailand, the Philippines, India, Indonesia, and the UK.

2012

2011

2012

¥2,877¥2,543$34,999

Note: Consumption tax is excluded from the transaction amounts and included in the year-end balances.

TS TECH (THAILAND) Co., Ltd.
Honda Automobile (Thailand) Co., Ltd. is a subsidiary of Honda and also a related party of the Company, and TS TECH (THAILAND) Co., Ltd. sells
significant quantities of its products to Honda Automobile (Thailand) Co., Ltd. Terms and conditions of transactions are determined individually
through price negotiations and are documented in a written agreement or estimate.

The accounting policies of each reportable segment are consistent to those disclosed in Note 2.
3. Information about sales, profit (loss), assets, liabilities, and other items is as follows.

TS TECH Report 20122011
¥3,32468

TS TECH Report 20122012
¥3,909TS TECH ALABAMA, LLC.
Honda Manufacturing of Alabama, LLC. is a subsidiary of Honda and also a related party of the Company, and TS TECH ALABAMA, LLC. sells
significant quantities of its products to Honda Manufacturing of Alabama, LLC. Terms and conditions of transactions are determined individually
through price negotiations and are documented in a written agreement or estimate.

Accounts receivable2012¥7,909The balances from Honda Automobile (Thailand) Co., Ltd. at March 31, 2012 and 2011 were as follows:

Note: Consumption tax is excluded from the transaction amounts and included in the year-end balances.

Sales of products

Sales of products

Thousands of
U.S. Dollars

Millions of Yen

Accounts receivableThousands of
U.S. Dollars

Millions of Yen

69

Sales of products

Transactions between TS TECH (THAILAND) Co., Ltd. and Honda Automobile (Thailand) Co., Ltd. for the years ended March 31, 2012 and 2011were as follows:

TS TECH Co., Ltd.

TS TECH Report 2012

Millions of Yen

2012
Reportable Segment
Japan

Americas

China

Asia/UK

Total

Reconciliations

Sales to external customers¥ 87,274¥ 121,738¥ 64,622¥ 31,849¥ 305,483

Intersegment sales or transfers

20,2983,130

90

23,518¥ (23,518)

Consolidated¥12,990 million for the years ended March 31, 2012 and 2011, respectively.
3. The reconciliations of “segment liabilities,” ¥11,351 million ($138,106 thousand) and ¥10,325 million for the years ended March 31, 2012 and 2011, respectively,
are the intersegment eliminations.
4. The reconciliations of “depreciation,” ¥35 million ($431 thousand) and ¥34 million for the years ended March 31, 2012 and 2011, respectively, are the intersegment eliminations.

¥ 305,483

Total

107,572

121,738

67,752

31,939329,001(23,518)

305,483

Segment profit

2,971

2,495

5,796

1,735

12,997(3,596)

9,401

Segment assets

83,907

47,79942,20025,488199,394(10,051)

189,343

Segment liabilities

27,57927,50027,412

5,955

88,446(11,351)

77,095

3,769

2,509

1,006

1,377

8,661

(35)

8,626

5

768

Segment-Related Information
1. Information about products and services
Sales of single product and outside customers are more than 90% of the consolidated sales amount. Consequently, details are not presented.
2. Information about geographical areas(1) Sales

Other:
Depreciation

Increase in property, plant andequipment and intangible assets

Millions of Yen

2012

Investment in associated companies
in the equity method

763
¥

2,880

¥

2,466

¥

563

¥ 2,257

¥

768

8,166

¥

Japan

Americas

China

Asia/UK

Other

Total

¥86,419¥121,931¥65,015¥31,894¥224¥305,483

8,166

TS TECH Report 2012

TS TECH Report 2012

Sales

Millions of Yen

2011

2011

Reportable Segment
Japan

Americas

China

71

70

Millions of Yen

Asia/UK

Total

Reconciliations

Consolidated

Sales
Sales to external customers¥ 94,797¥139,647¥74,792¥ 48,253¥357,489

Intersegment sales or transfers

24,827

1

2,407

7

27,242¥ (27,242)

Total

119,624

139,648

77,19948,260384,731(27,242)

357,489

Segment profit

4,115

3,307

10,433

5,928

23,783(3,619)20,164

Japan

Americas

China

Asia/UK

Other

Total

¥93,876¥139,742¥75,399¥48,309¥163¥357,489¥ 357,489

Segment assets

79,25542,71839,94328,909190,825(9,985)

180,840

Segment liabilities

24,582

22,93323,895

7,860

79,270(10,325)

68,945

3,921

2,828

1,097

1,557

9,403

(34)

9,369

Other:

Thousands of U.S. Dollars

2012
Japan

Americas

China

Asia/UK

Other

Total

$1,051,459$1,483,531$791,028$388,050$2,722$3,716,790

Note: Sales are classified in countries or regions based on location of customers.

Depreciation(2) Property, Plant, and Equipment

Investment in associated companies
in the equity method
Increase in property, plant andequipment and intangible assets

867

9

876

876
Millions of Yen

¥

4,217

¥

2,920

¥

766

¥ 1,385

¥

9,288

¥

2012

9,288

Thousands of U.S. Dollars

Japan

Americas

China

Asia/UK

Total¥19,941¥13,466¥3,696¥5,891¥42,994

2012
Reportable Segment
Japan

Americas

China

Asia/UK

Total

Reconciliations

Consolidated

Millions of Yen

Sales

2011

Sales to external customers$1,061,853 $1,481,173

Intersegment sales or transfers$ 786,254

246,964$ 387,510 $ 3,716,790$ 3,716,790

38,082

1,099

286,145$ (286,145)

Total

1,308,817

1,481,173

824,336

388,609

4,002,935(286,145)

Segment profit

36,14830,351

70,518

21,115

158,132(43,751)

114,381

Segment assets

1,020,890

581,568

513,443

310,1122,426,013(122,286)

2,303,727

Segment liabilities

335,556

334,595

333,519

72,455

1,076,125(138,106)

938,01945,853

Investment in associated companies
in the equity method

9,284

Increase in property, plant andequipment and intangible assets$

35,035 $30,52630,00012,244$

6,849

16,756105,379

58

9,342$ 27,469 $

99,353

Americas

China

Asia/UK

Total¥21,011¥14,291¥4,242¥6,198¥45,7423,716,790

Other:
Depreciation

Japan

(431)

104,948
9,342$

99,353

Notes: The above reconciliations include the following:
1. The reconciliations of “segment profit,” ¥3,596 million ($43,751 thousand) and ¥3,619 million include intersegment elimination of ¥105 million ($1,275 thousand)and ¥451 million and the Company’s administrative expenses of ¥3,925 million ($47,761 thousand) and ¥3,601 million, which could not be allocated to each segment for the years ended March 31, 2012 and 2011, respectively.
2. The reconciliations of “segment assets,” ¥10,051 million ($122,286 thousand) and ¥9,985 million include the Company’s investments in subsidiaries, whichamounted to ¥12, 887 million ($156,801 thousand) and ¥12,887 million, intersegment elimination of receivable of ¥11,459 million ($139,421 thousand) and¥10,632 million, and long-term investment securities held by the Company and its subsidiaries, which amounted to ¥13,129 million ($159,737 thousand) andThousands of U.S. Dollars

2012
Japan

Americas

China

Asia/UK

Total$242,625$163,838$44,967$71,679$523,109

TS TECH Co., Ltd.

TS TECH Report 2012

19. INFORMATION ABOUT LOSS ON DISASTER
Due to severe flood in Thailand in October 2011, the Group recognized of ¥976 million losses. Expenses for the year ended March 31, 2012 are as
follows:

3. Information about major customers
Millions of Yen

2012
Sales

Related Segment Name

Honda Motor Co., Ltd.

¥ 62,052

Japan

Honda of America Mfg., Inc.

48,278Americas

Guangqi Honda Automobile Co., Ltd.

33,805

China

Millions of Yen

Name of Customers

Sales

Related Segment Name

Honda Motor Co., Ltd.

¥ 64,517

Japan

Honda of America Mfg., Inc.

53,270Americas

Guangqi Honda Automobile Co.,Ltd.

41,495

China

Sales

Honda Motor Co., Ltd.

Related Segment Name

$ 754,986

Japan

Honda of America Mfg., Inc.

587,391

Americas

Guangqi Honda Automobile Co., Ltd.

411,303

China

4. Information about impairment loss on long-lived assets by reportable segment
Millions of Yen

2012
Japan

Americas

Impairment losses of assets

China

Asia/UK

Other

Eliminations/
Corporate

Total

¥6

¥6
Millions of Yen

2011
Japan

Americas

Impairment losses of assets

China

Asia/UK

Other

Eliminations/
Corporate

Total

¥26

¥26
Thousands of U.S. Dollars

2012
Japan

Americas

Impairment losses of assets

China

Asia/UK

Other

Eliminations/
Corporate

Total

$74

$74

5. Information about goodwill by reportable segment
Due to low materiality, details are not presented.

6. Information about bargain purchase gain
Millions of Yen

2011
Japan

Bargain purchase gain

Americas

China

Asia/UK

Other

Eliminations/
Corporate

Total

¥19

The above bargain purchase gain was incurred due to additional investment in subsidiary, Sun Chemical Industry Co., Ltd. on July 15, 2010.
There is no bargain purchase gain in the year for the year ended March 31, 2012.

Loss on disposal of property, plant, and equipment¥ 364$ 4,428

Loss on disposal of inventories

229

2,785

Fixed cost during shutdown

145

1,758

Repair costs of machines, tools, and plants

135

1,644

Other

103

1,257

Total

¥ 976

$ 11,872

73

2012
Name of Customers

Thousands of
U.S. Dollars

For the year ended March 31, 2011, the Group recognized loss on disaster of ¥126 million ($1,534 thousand) as a result of the Great East Japan
Earthquake.

Thousands of U.S. Dollars

72

TS TECH Report 2012

2011

Millions of Yen

TS TECH Report 2012

Name of Customers¥19TS TECH Co., Ltd.

Independent Auditors’ Report

TS TECH Report 2012

Main Environmental Data

Environmental Data for the TS TECH Group
Total CO2 Emissions

Total Waste Output（t-co2）（t）（m3）

80,00025,000800,000

19,61759,781

554,32140,00012,5000400,000

0

0

2009

2010

2011

Japan

Americas

2009
Asia and Europe

2010

2011

2009

2010

2011

China

75

TS TECH Report 2012

643,052

18,813TS TECH Report 2012

58,457

718,759

21,80868,75874

Total Water Usage

Environmental Data for TS TECH
Total CO2 Emissions

Total Waste Output

Total Water Usage(t-co2)(t-co2/million yen)(t)(t/million yen)(m3)

(m3/million yen)

30,000

0.16

4,000

0.02

500,000

2.50

1.827
0.096

0.093

0.01220.096

15,000

0.08

9,844

10,308

9,427

2009

2010

2011

0

0

0.01200.0131

2,000

1.481
0.01

1,246

1,340

1,292

2009

2010

2011

0

1.729

250,000

1.25

186,767

192,591
145,823

0

0

0

2009

2010

2011

* Line graph values are per unit of production (right scales).

Material Flow

Input

Operations

s%NERGY INPUT

Product development

Outputs'REENHOUSE GAS EMISSIONS

238,499 GJ

9,427t-CO2
Procurement

s-ATERIAL INPUT
Amount of iron material purchased* 6,231t
Amount of non-ferrous
material purchased*
4,860tPRTR substances input volume
14.8t

Production

s0242 CHEMICAL SUBSTANCE EMISSIONS
Emissions to air
9.1t
Off-site emissions
5.7tManagement
s7ATER RESOURCES INPUT

s7ASTE GENERATION
145,823m3

Distribution

1,292t* Amount of iron material purchased and amount of non-ferrous material purchased are raw materials used at plants in Japan. Does not include
procured parts.

TS TECH Co., Ltd.

TS TECH Report 2012

Directors and Auditors (as of June 22, 2012)

Water Pollution Control Act / Sewerage Act

Directors

The TS TECH Group periodically monitors the release of water discharged to public water areas and drainage that soaks into theground from each business site to confirm that the Group is in compliance with effluent standards.

1. Toshio Komeji
President (Representative Director)

2. Michio Inoue
Head Office
Unit

Saitama Plant(Sayama)

Hamamatsu Plant

Suzuka Plant

Executive Vice President (Representative Director)

3. Toyohide Ishii
Senior Managing Director (Representative Director)

Regulatory
standards

Results

Regulatory
standards

Results

Regulatory
standards

Results

Regulatory
standards

Results

Regulatory
standards

Results

Regulatory
standards

Results

4. Kazuhisa Saito

PH

5.0~9.0

8.3

6.0~8.4

8.0

5.8~8.6

7.5

5.0~9.0

7.7

5.8~8.6

8.1

5.8~8.6

7.1

5. Takuo Arai

mg/l

600*

185

10

7.9

25

6.1

600*

53

160

18.8

25

14

6. Kazuhiko Hikida

mg/l

600*

422

25

13

60

6.0

600*

29

200

28.8

90

45

7. Tatsuo Wada

Senior Managing Director
Senior Managing Director

TS TECH Report 2012

Hydrogen ion
concentration
Biochemical oxygen
demand (BOD)
Suspended solids(SS)(Gyoda)Managing Director
Managing Director* The regulation values are self-imposed.

8. Yoshiaki Yui
Managing Director

9. Minoru Maeda

Chemical Substances (Pollutant Release and Transfer Register [PRTR]* Law)76

Handling of PRTR Substances in 2011
Saitama Plant(Gyoda)Director

10. Masanari Yasuda
Director

Amount Emitted into Air
Hamamatsu Plant

Suzuka Plant

11. Katsuyuki Kusano(t)

Director

20

Amount handled (t)

7.5

5.8

1.5

Amount emitted into air (t)

3.1

5.8

0.2

Amount transferred (t)

4.4

0.0

1.3

* PRTR is a system that requires that companies ascertain, compile, and make available
to the public: the amounts of specific hazardous chemical substances it released into
the environment, the sources of those substances, and the amount that was transferredoutside business premises in waste.

77

TS TECH Report 2012

Item

Tochigi area

65

12. Yoshitaka Nakajima

7

8

Director

15.2

4

2
9.1

10

3

1
9

11
0

2010

12

2011

10

Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes
TS TECH business sites are storing polychlorinated biphenyls (PCBs)* contained in power receiving equipment (transformers and capacitors) for waste
treatment, as indicated in the table on the right. The Company will continue tosafely store and manage PCB waste.
* PCBs are highly toxic, carcinogenic, and generally said to possibly cause damage toskin and internal organs.

PCB Storage in 2011
Business site

Weight (kg)Head Office514

Tochigi area

1,755

Saitama Plant

2,479

Suzuka Plant

2,315

Hamamatsu Plant

116

Total

7,179

Auditors
1. Masao Uzawa
Auditor (Full-Time)

2. Akira Nemoto
Auditor (Full-Time)

3. Hiroyasu Watatani
Auditor

4. Takeshi Hanamura

Survey of Suppliers’ CO2 Emissions
TS TECH started a CO2 emissions survey
targeted at its main manufacturing and processing suppliers in 2010. (Suppliers’ emission
reduction targets are set for 2013 onward.)

Auditor2011 Supplier CO2 Emissions Survey
Other

8%

Textiles5%

Urethane

9%

Plastic

31%

3
1

Manufacturing /processing
suppliers: 40

Metal

47%

CO2 emissions:
35,322t

Percentage of CO2 emissions, by industry, of manufacturing and processing suppliers

42

TS TECH Co., Ltd.

TS TECH Report 2012

Global Network
Consolidated
subsidiaries
in the fiscal year
ended
March 2012

TS TECH INDIANA, LLC
Y

Z
A
R Q
OM P
N S

XW
V

H
K

C DG
B F
E

I

Worldwide Expansion and Net Sales Over Time

J

Japan

WUHAN TS-GSK AUTO PARTS CO., LTD.
(Billions of yen)

4

GUANGZHOU TS AUTOMOTIVEINTERIOR SYSTEMS CO., LTD.

Overseas25

Non-consolidated net sales

400
T

Consolidated net sales

TS TECH UK LTD.

U300

TS TECH (THAILAND) CO., LTD.

LTS TECH USA CORPORATION

3 4
3 1
5

TRI-CON INDUSTRIES, LTD.

2

2 4

100

1

0

1970

1975

1980

1985

1990

1995

2000

2005

2010 2012

79

1965

78

1960

TS TECH Report 2012

TS TECH Report 2012200

Global Supply Capabilities
Meeting Local Needs
Optimally Througha Network of 12 Countries

Locations in Japan

Locations Overseas

1 HEAD OFFICEA

2 TECHNICAL CENTER

B

Manufacture of seats for automobiles, door trim, roof trim, andsteering wheels

CD

The TS TECH Group has established a regional control
system composed of the Americas, China, and Asia andEurope, with Japan at the center of the global operations.
The Group maintains close cooperation between regions,and has strengthened its system of production support fromJapan as well as its omni-directional management system.

Manufacture of seats for automobiles and door trim

E

F

1

KYUSYU T•S CO., LTD.

G

Manufacture of seats for motorcycles and resin-based products
2

SUN CHEMICAL INDUSTRY CO., LTD.

H

Rubber parts and resin-based products

TS LOGISTICS CO., LTD.

Manufacture of seats for automobiles

Manufacture of seats for automobiles

TS TECH NORTH AMERICA, INC.

NTS TECH ALABAMA, LLC.
TriMold LLC

P

4

TST NA TRIM, LLC.

Manufacture of wire frames for seats and resin-based products

SUZUKA PLANTJTRIMONT MFG. INC.
Manufacture of door trim and roof trim

Americas: TS TRIM
INDUSTRIES INC.

TS TECH (THAILAND) CO., LTD.
Manufacture of seats for automobiles and door trim

W

TS TECH SUN (INDIA) LIMITED
Manufacture of seats for automobiles, door trim and seatsfor motorcycles

X

TS TECH SUN RAJASTHAN PVT. LTD
Manufacture of seats for automobiles

Manufacture of door trimY

NINGBO FTZ TS TRIMONT AUTOMOTIVEINTERIOR INC.

ZTS TECH UK LTD.
Manufacture of seats for automobiles

TS TECH DEUTSCHLAND GmbH
Sales, development and related activities and others in Europe

NINGBO EPZ TS TRIMONT AUTOMOTIVEINTERIOR INC.
Manufacture of trim covers

R

WUHAN TS-GSK AUTO PARTS CO., LTD.
Manufacture of seats for automobiles and door trim

Manufacture of seats for automobiles

SOWA SANGYO CO., LTD.

TECHNICAL CENTERQ

PT. TS TECH INDONESIA
Manufacture of seats for automobiles, and door trim

V

GUANGZHOU TSK AUTO PARTS CO., LTD.

Manufacture of trim covers

TS TECH INDIANA, LLC

TS TECH CANADA INC.

UGUANGZHOU TECH INTERIOR TRIM
MANUFACTURING CO., LTD.
Manufacture of trim covers

O

Trim cover production control
I

TS TECH DO BRASIL LTDA.

TS TECH USA CORPORATIONM

TS TECH TRIM PHILIPPINES, INC.
Manufacture of seats for automobiles, door trim, and trim covers

GUANGZHOU TS AUTOMOTIVE INTERIORSYSTEMS CO., LTD.

Manufacture of seats for automobiles

T

Manufacture of seats for automobiles and door trim

Manufacture of resin-based products for automobiles

Logistics

SAITAMA PLANT (GYODA)

TS TRIM INDUSTRIES INC.

Manufacture of seats for automobiles

3

HEAD OFFICEL

Head office and research and development ofNorth America Group

5 SUZUKA PLANT

INDUSTRIAS TRI-CON DE MEXICO, S.A. DE C.V.
Manufacture of trim covers

Manufacture of door trim and roof trim

4 HAMAMATSU PLANT

Manufacture of seats for automobiles, motorcycles, door trim and seatsfor construction equipment and jet ski

K

Manufacture of seats for motorcycle, ATV andseat parts for automobiles

Research and development, sales, procurement, and quality management
3 SAITAMA PLANT

TRI-CON INDUSTRIES, LTD.

STS TECH (HONG KONG) CO., LTD.
Trade administration for China Group

China: GUANGZHOU TS
AUTOMOTIVE INTERIORSYSTEMS CO., LTD.

Asia: PT. TS TECH INDONESIA

UK: TS TECH UK LTD

TS TECH Co., Ltd.

Corporate Data and Stock Information (as of March 31, 2012)

Company NameTS TECH Co., Ltd.

Establishment

December 5, 1960

Head Office

3-7-27 Sakae-cho, Asaka-shi, Saitama 351-0012, Japan

Common Stock¥4,700,000,000

Corporate Representative

President, Toshio Komeji

Lines of Business

Manufacturing and sales of seats for automobiles; interior trim and interior components for automobiles;
motorcycle seats; and motorcycle parts and accessories

Number of Employees

14,434 (consolidated)
1,759 (non-consolidated)

Closing of Accounts

March 31

Securities Traded

Tokyo Stock Exchange (First Section)

Main Banks

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Saitama Resona Bank, Limited

Main Customers

Honda Motor Co., Ltd. / Honda R&D Co., Ltd. / Honda Trading Corporation / Honda Access Corp. /Suzuki Motor Corporation / Yamaha Motor Co., Ltd. / Kawasaki Heavy Industries, Ltd. /Fuji Heavy Industries, Ltd. / PARAMOUNT BED CO., LTD.

80

TS TECH Report 2012

Corporate Data

Stock Information
Total Number of Shares Authorized to Be Issued

272,000,000

Total Number of Shares Outstanding

68,000,000
13,602

Number of Shareholders

Major Shareholders

Foreign investors
14.1%
Individuals
and others
13.6%

Equity participation

Financial institutions
41.4%

Treasury stock
0.0%

Number of shares Voting stake (%)
held (thousands)

Ownership anddistribution ofshares（%）

Honda Motor Co., Ltd.

15,36022.6

Japan Trustee Services Bank, Ltd. (Trust Account)

4,228

6.2

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

2,784

4.1

Mitsui Sumitomo Insurance Company, Limited

2,451

3.6

Japan Trustee Services Bank, Ltd. (Chuo Mitsui Asset Trust andBanking Company, Limited Retrust Portion, Sumitomo Mitsui
Banking Corporation Pension Trust Account)

2,199

3.2

Sumitomo Life Insurance Company(Standing proxy: Japan Trustee Services Bank, Ltd.)

1,940

2.9

Tokio Marine & Nichido Fire Insurance Co., Ltd.

1,920

2.8

Saitama Resona Bank, Limited

1,720

2.5

Bridgestone Corporation

1,536

2.3

Nippon Life Insurance Company

1,424

2.1

Other domestic
corporations
30.2%

Securities companies
0.7%

3-7-27 Sakae-cho,
Asaka-shi, Saitama 351-0012, Japan
URL: http://www.tstech.co.jp

July 2012
Printed in Japan