Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Sales	204,053	218,805	(6.7)	-Even though sales in the second half had recovered, the Company still posted lower revenue year-on-year as a result of several negative factors that impacted business during the first half of the year. These included fewer orders from customers who had been affected by the Great East Japan Earthquake, and negative currency translation due to the high evaluation of the yen.
Operating income	7,582	11,526	(34.2)	-
Ordinary income	10,156	13,563	(25.1)	-
Net income	6,358	8,729	(27.2)	-

Contract

-The Company won seat orders for the next generation Honda "Fit". This is the Company's first business with Honda for its global production model. Seats will be delivered to Honda facilities in Mexico, Brazil and China for more than half a million cars a year. To meet this new demand, the Company will set up its supply network in Mexico, Brazil and China by the fall 2013 in tandem with its largest shareholder Johnson Controls Inc. (JCI) based in the U.S. The company plans to establish jointly plants with an annual production capacity of 200,000 in Mexico and Brazil. In Mexico, it will choose a construction site for its new plant from among three candidates in the neighborhood of Honda's new plant location. In Brazil, JCI already has its own plant, but because it is situated far away from Honda's automobile plant in Sao Paulo, Tachi-S is studying the possibility of building its own new plant. There is an existing plant of JCI also in China. However, Tachi-S will weigh building of a new facility dedicated to Honda. A total investment in projects in Mexico and Brazil combined, which is likely to amount to several billions yen, will be shared with JCI to mitigate investment risks. (From an article in the Nikkan Jidosha Shimbun on December 26, 2011)

New Company

-The Company announced that it will establish a regional headquarters in Mexico and a new company in Brazil. The new regional headquarters in South and Central America, which will be tentatively called Tachi-S Engineering Latin America, S.A. de C.V., will be formed within the company's production subsidiary in Mexico, INSA. The new headquarters will be engaged in development, management and investment in the companies in the South and Central America region. Capitalized at approximately 5 million USD, the new headquarters will be established in April 2012. Meanwhile, the new Brazilian subsidiary, which will be tentatively called Tachi-S Brasil Ltda, will develop and invest in an automotive seat production company to be established in Brazil. The new Brazilian company is scheduled to be formed in August 2012. (From a press release on February 24, 2012)

-The Company announced that it will establish the new companies in China and Indonesia in November 2011. The company will form a management company Tachi-S China Co., Ltd., which is 100% equity of Tachi-S in Guangzhou, Guangdong province, China. It will be capitalized at 3 million USD (approximately 230 million yen). As of the end of September, 2011, the company has eight manufacturing companies and one development subsidiary in China. Tachi-S will also establish a new local subsidiary PT. Tachi-S Indonesia, which is 100% equity of Tachi-S in Indonesia to provide automotive seats with local Japanese automobile manufacturer. It will be capitalized at 7 million USD (approximately 540 million yen). The new company will start its production from November 2011, however the production is scheduled for 2013 at own plant, and produce 150 thousand units per year in 2015. The annual sales are estimated to be approximately 4 billion yen in the same year. (From a press release on October 28, 2011)

-The Company announced that it has established a regional headquarter Tachi-S (Thailand) Co., Ltd. in Bangkok, Thailand with the aim of managing the business at ASEAN and India. The new company will be capitalized at 250 million Baht (approximately 640 million yen). The Company also plans to establish the manufacturing plant in Indonesia and selecting the location. (From a press release on September 28, 2011)

Joint Venture

-The Company said on May 19 that its affiliate in China, Zhengzhou Taixin Interia Co., Ltd, has set up a joint venture Zhengzhou Lear-DFM Taixin Automotive Seating Co., Ltd. in Hunan Province jointly with Lear Dongfeng Automotive Seating Co., Ltd. for the purpose of supplying automotive seats to Dongfeng Nissan Passenger Vehicle for its own brand "Venucia." A new joint venture is expected to go into operation in early 2012 and produce seats for 120,000 vehicles in 2013. The new company capitalized at about 620 million yen is invested 49 percent by Zhengzhou Taixin Interia and 51 percent by Lear Dongfeng Automotive Seating. The plant, which will be constructed on the land of about 33,000 square meters with a building area of about 12,000 square meters, is scheduled to be completed in December. (From an article in the Nikkan Jidosha Shimbun on May 20, 2011)

Recent Developments in Japan

-The Company is set to develop a new cost efficient seat frame for global compact cars based on the low cost seat structure on mini-vehicles. A simple, basic function, low cost frame will be made a benchmark for low price vehicles in the global market. The Company is seeking economies of scale by increasing the number of common parts used in the seat frame in response to low price vehicles most rapidly increasing in the future. Cost cutting measures will include reduction in the number of parts in the frame and more efficient stamping and welding processes. Such design changes will lead to minimized use of high tensile steel, which requires high level processing technology and is difficult to be procured in emerging countries, thereby contributing to reducing both cost and weight. (From an article in the Nikkan Jidosha Shimbun on April 12, 2011)

Management plan "Global Challenge 177"

-The Company set March 2016 as the deadline for reaching its goals set under its latest management plan, called Global Challenge 177, which has set three fundamental aims: "quality control No. 1", "operating profit margin 7%", and "worldwide share 7%". Based on this plan, the Company intends to establish the organizational framework to improve its competitive edge and survive as a viable player in the market. The following six strategies form the basis of the Plan.

1) Global Operations
-The Company will set up a strategy to operate as a global company by improving its competitive advantages in terms of the pricing and the technological strengths of its products, challenging the task of winning more customers and increasing sales. In addition, in order to strengthen the home office and other functions accountable for overseeing the global operations, it clarified their roles, reorganizing their operating structure and developing their global human resources.

2) R&D
-The Company further enhanced its R&D capabilities in terms of identifying its own, particular competitive advantages; researching fundamental technologies; and developing technologies for creating appealing products (the core technology) by designing an R&D structure based on four main technical centers responsible for global R&D activities. Along with this, the Company enhanced its R&D functions outside Japan in order to respond to its customers' global R&D activities.

3) Product Creation
-The Company, by setting up its Technical and Product-creation Center, aims to strengthen its own, particular areas of technological expertise and develop human resources who are globally savvy. In addition, it will work to further standardize product creation worldwide. Plus, the Company will optimize its production facilities worldwide.

4) Procurement
-The Company, in coordinating with management companies accountable for overseeing local operations around the globe, will strengthen its procurement functions. This includes finding the most appropriate suppliers worldwide, strengthening its supply chain, and improving its cost competitiveness.

5) Quality Assurance
-As it aims to be No. 1 in quality, the Company will enhance its organization to provide excellence in terms of quality assurance worldwide, ensuring the quality of luxury brands and achieving its customers' objectives in terms of quality.

6) Reorganization
-In order to optimize its operations worldwide, the Company will enhance its global businesses engaged in seat-parts. One element of this strategy was achieved when the Company established a subsidiary to build seat-frames in Zhejiang Province, China. In addition, in order to strengthen its abilities to respond to global demands, the Company will develop human resources and install business-management systems.

Outlook for FY ending Mar. 31, 2013

(in millions of JPY)

	FY ending Mar. 31, 2013 (Estimate)	FY ended Mar. 31, 2012 (Result)	Rate of Change (%)
Sales	215,000	204,053	5.4
Operating income	7,700	7,582	1.6
Ordinary income	10,600	10,156	4.4
Net income	6,500	6,358	2.2

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	3,418	2,695	2,482

-The Company's planned expects R&D expenditure for FY ending Mar. 31, 2013 is 3,735 million yen.

R&D Facilities

Tachi-S Technology Center	Oume City, Tokyo
Tachi-S Technology Center Aichi	Anjo City, Aichi Pref.
Tachi-S Engineering U.S.A. Inc.	Michigan, USA
Tachi-S Engineering Europe S.A.R.L.	Velizy-Villacoublay, France
Tachi-S Engineering China Co., Ltd.	Fuzhou, China

R&D Structure

-The Company, in order to conduct effective and efficient R&D activities, has positioned its technical center in Japan as the main function accountable for product development and fundamental technology. In addition, however, the Company works with its operations in the U.S.A. and Europe, and with technical-licensing and partner companies, in order to gather information on the latest technologies and peripheral technologies. Also, the Company makes sales presentations to global OEMs and parts suppliers about its wealth of technology on new products and new production methods. Currently, some of these technologies are being used by customers.

-The Company formed two commercial alliances, the first one with Fuji Kiko (in August 1999) and the second with Kasai Kogyo (in November 2006). These alliances are designed to improve its R&D capabilities in the areas of structural products and plastic molded parts, with the idea of jointly using each other's R&D functions outside Japan.

-The Company plans to increase research and development staffs to 800 by FY ending Mar. 31, 2016.

R&D Activities

Developing Seats and Proprietary Structural Parts
-The Company develops the following products as seat-systems: seats for cars and other types of vehicles, recliner devices, slide rails, large-size movable lifters, underfloor storage devices, long slide-rails for RVs (and related peripheral parts), rotary units, and other items. It is working to win customers.

Developing Enhanced Safety Technology
-As a means to enhancing occupant safety, the Company develops the following items as seat systems, which are already being installed: seats with three seatbelts, seats with side airbags, occupant sensing seats with smart airbags, and seats that mitigate neck injuries. In addition, the Company conducts R&D activities on the structural nature of safety seats in terms of their responding to front, rear, or lateral collisions.

Developing Environmentally Compliant Technology
-In the area of developing technology that complies with environmental concerns, the Company develops new materials that improve fuel efficiency and comply with the total phase-out of environmentally harmful substances; and develops ultra-lightweight seats that incorporate the latest structural technology. It is making sales presentations to customers, who are using these products.

Developing Products for Adapted Vehicles
-The Company develops special seats designed for vehicles adapted for use by the physically challenged. These seats offer excellent assistance in terms of their easy operation and their ease of letting occupants get in and out of vehicles. It is making sales presentations to customers, who are using these products.
 
Developing Lower-cost Products
-The Company develops low-cost, next-generation seats made possible through standardization, which are already being equipped by customers in and outside Japan.

Developing Production Technology
-The Company develops technology that improves the adhesion and molding of seats, technology that can foam mold single-unit headrests and armrests, and technology that reduces work and increases automation in the seat-assembly processes. It works on mold-making and die-making based on CAD and CAM. In addition, the Company has constructed a mixed production-line that can handle small lots of numerous product items, enabling it to respond to the increasing number of both vehicle models and product items.

Seat R&D
-Under the aim of creating more comfortable seats, the Company is continuing its efforts at evaluating the level of "seating comfort", doing its own research into seat structures and designs in terms of how seats should be. In addition, in order to find the perfect design in a short period of time, i.e., a design that balances performance, quality/quantity, and costs, the Company conducts CAE analysis in reducing development time and costs.

Seat-design R&D
-The Company is developing designs on its own that are connected to all the sectors that the Company is engaged in such as seats. This includes working on future seat concepts and developing new product designs and corporate designs. The Company had made presentations to customers, who are currently using these products.

Product Development

Next-generation seat frame
-The Company developed a next-generation seat frame and will begin its mass production in 2012. Most of the structure is commonly designed for both electric powered and manually operated seats to achieve a substantial reduction in weight and cost. The new seat frame has advantages, such as adaptability to multiple vehicle types and easy access to local materials for processing in emerging countries. Touting the new seat frame as a future global benchmark model, the Company will urge automakers to adopt the new product, shifting from the conventional type. The prevailing seat frame is different in structure between the electric and manual type. But, the unitary type frame uses the same materials for the seat surface and seat back. Parts connecting points are reduced by 21 percent and the number of parts by 23 percent respectively, resulting in reduction of workload. Smaller amount of materials for fewer components reduces weight by 30 percent, thus cutting down on both weight and cost. A hip point as low as 160 mm, which is characteristic of the Company's seats, is maintained so that the frame will have the versatility to adapt to a variety of vehicle types, including electric vehicles holding batteries under the seat and low-height sports cars. The Company supplies seats mainly to Nissan and Honda from its production facilities in major automobile production countries in the world, such as Japan, North America, China, India and Thailand. Taking advantage of its global supply bases, the Company is intent on expanding application of the new product. (From an article in the Nikkan Jidosha Shimbun on December 20, 2011)

Licensing of Technology from Other Companies

(As of Mar. 31, 2012)

Partner	Country	Contract	Contract period
Isringhausen GmbH & Co. KG	Germany	-Licensing-in of manufacturing technology and distributorship for suspension systems. -Sharing and licensing of manufacturing technology and sales know-how for seats (patented items are excluded)	Nov. 1985 - for an indefinite period (Subject to expiration with a prior notice of 6 months)

Licensing of Technology to Other Companies

(As of Mar. 31, 2012)

Partner	Country	Contract	Contract period
Auto Parts Manufacturers Co., Sdn. Bhd.	Malaysia	-Licensing-out of manufacturing know-how for agreed items -Technological assistance on manufacturing equipment for agreed items (specific agreement is required) etc.	Mar. 2000 - Mar. 2015

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	4,808	1,873	1,072

-The Company invested mainly in the following projects: construction of the Technology and Product-creation Center; and preparation of new facilities and equipment to handle new program business and vehicle model changes.

-The Company expects capital expenditure for FY ending Mar. 31, 2013 to be 6,002 million yen.

<Japan>
-In Japan, the Company invested 3,712 million yen to construct the Technology and Product-creation Center, and to prepare new facilities and equipment to handle new program business and vehicle model changes.

<U.S.A.>
-The Company invested a total of 452 million yen mainly in production facilities, in order to respond to vehicle model changes.

<Mexico>
-The Company invested 346 million yen in its Mexico operations, mainly to upgrade production facilities and make preparations to respond to vehicle model changes.

<China>
-The Company invested 295 million yen in its Chinese operations mainly to upgrade production facilities and make preparations to respond to vehicle model changes.

Planned Capital Investments

(As of Mar. 31, 2012)

Company Office	Investment targets	Estimated amount of investment (million JPY)	From	To
Tochigi Plant	Equipment for manufacturing automotive seats	1,173	Dec. 2012	Feb. 2013
Suzuka Plant	Equipment for manufacturing automotive seats	766	May 2012	Mar. 2013
Ohme Plant	Equipment for manufacturing automotive seats	250	Aug. 2012	Sep. 2012
Setex Inc. Headquarter Plant	Equipment for manufacturing automotive seats	1,165	Apr. 2012	Mar. 2013
Industria de Asiento Superior, S. A. de C. V. Headquarter Plant	Equipment for manufacturing automotive seats	782	Jan. 2012	Dec. 2012
Wuhan Tachi-S Johnson Controls Automotive Seat Co., Ltd. Headquarter Plant	Equipment for manufacturing automotive seats	331	June, 2012	Dec. 2012