Financial Overview

(in millions of JPY)

	FY2010	FY2009	Rate of change (%)	Factors
Overall
Sales	530,055	452,745	17.1	- Sales and profit increased, thanks to a recovery in demand from its customers worldwide.
Operating income	24,559	1,399	1655.5
Ordinary income	21,096	(647)	-
Current net income	14,399	(2,014)	-
Automotive business
Sales	344,407	300,856	14.5	-
Operating income	3,546	(8,541)	-	-

Joint-ventures

- The Company and Luoyang LYC Bearing Co., Ltd., a China-based bearing manufacturer, have signed an agreement to form a 50-50 joint-venture company to produce and sell automotive bearings in China. The new entity, NTN-LYC (Luoyang) Bearing Corporation, will be established in Luoyang City, Henan Province in February 2011. The facility will start mass producing hub bearings and needle bearings in October 2012. The joint venture will be capitalized at 73.80 million US dollars, and the total investment is expected to reach 93.50 million US dollars. Its yearly sales are projected to reach approximately 7 to 8 billion yen in fiscal year 2015, when NTN aims to achieve 100 billion yen in sales in China. (From a press release on October 12, 2010)

Acquisitions

- The Company announced the name change of its consolidated subsidiary in France from "SNR ROULEMENTS" to "NTN-SNR ROULEMENTS" for the purpose of reinforcing the collaboration between NTN and SNR in the areas of development, production and sales. The change was decided at SNR's general shareholders meeting held on July 23 (July 22 local time in France). SNR manufactures and sells bearings for automotive and industrial machinery, including railways and aircrafts. NTN first acquired equity in SNR in March 2007, and increased its share to 51 percent in April 2008, turning it into a consolidated subsidiary. The share was again raised to 80 percent in April 2010. (From an article in the Nikkan Jidosha Shimbun on July. 26, 2010)

- The Company announced that it will purchase the assets of tedrive do Brasil, a subsidiary of tedrive, an auto parts supplier in the Netherlands, and establish a subsidiary "NTN do Brasil Producao de Semi-Eixos Ltda." in June for manufacture and sales of constant velocity joints (CVJ). The subsidiary, which will be capitalized at about 1.7 billion yen, will be invested 70 percent by NTN and 30 percent by NTE, a European subsidiary of NTN. It will be located in Guarulhos in Sao Paulo. The new company aims to achieve sales of about 7 billion yen in fiscal 2015. (From an article in the Nikkan Jidosha Shimbun on May. 13, 2010)

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

Mid-term business plan

The Company is conducting business based on the "Yakushin 2013" mid-term business plan covering the three year period between April 2011 and March 2014. 

 Production operations
- In China, the Company largely increased the capacity of its local production companies manufacturing ball bearings, needle roller bearings, and bearings for railroad cars. It established NTN-LYC (Luoyang) Bearing Corporation in China through a joint investment with Luoyang LYC. The joint-venture company will manufacture and sell hub bearings and needle bearings, targeting automakers operating in China. Mass production is scheduled to begin in June 2012. 

- In India, the Company is constructing an additional plant in the suburbs of Chennai. The new facility will produce and sell constant velocity joints and hub bearings, starting in April 2012.

- In Brazil, the Company will manufacture constant velocity joints at NTN do Brasil Producao de Semi-Eixos Ltda. established in May 2010. Mass production is scheduled to begin in June 2011. The expansion is intended to increase the Group’s business in the region where it has been winning new programs for hub bearings.
 
- In the U.S., where demand for automobiles has been recovering significantly, the Company is expanding its capacity to manufacture complete hub bearings for U.S. automakers. In December 2010, the Company formed NTA Precision Axle Corporation to integrate front-end production processes for hub bearings, including forging, turning and heat treatment. Production at the new subsidiary began in June 2011.

- In Europe, the Company is increasing its capacity to produce industrial bearings at NTN-SNR Roulements in order to respond to projected growth in demand in the aircraft and wind-power generation industries. 

- In Japan, the Company established NTN Noto Corporation in Ishikawa Prefecture in December 2010, which will serve as the Group’s additional supply hub for industrial bearings, together with NTN Hakui Corp. and NTN Houdatsushimizu Corp. The establishment allows the Company to diversify risks and increase capacity.

Sales operations
- In February 2010, the Company reorganized its business structure and established the Automotive Division and Industrial Machinery Division. The Automotive Division integrates sales, technology and production operations for automotive products. In addition, the Company is stepping up its activities of each specialized team to enhance support to industrial machinery suppliers and sales agents.

- With the aim of enhancing its global operations, the Company has been reinforcing the planning and development functions of both divisions, while placing all its production subsidiaries under the management of either unit since April 2011.

- The Company established the EV systems department in April 2011 for accelerating commercialization of its electric vehicle components such as in-wheel motor systems and one-motor type electric vehicle drive systems.

- In China, the Company established the Nanjing Branch of NTN (China) Investment Corporation as its new sales office in October 2010, while enhancing collaborations with major sales agents. Further, it is going to add more branches and outlets in the inland area. 

R&D operations
- The Company reorganized its R&D structure in April 2011. It adopted new names, which are the Research Center for Elemental Technologies and the Research Center for Advanced Technologies, based on its strategy to focus on technologies that contribute to the creation of next generation markets. It also established the Composite Materials Department to increase sharing of material technologies among powder alloy materials, engineering plastics and other areas.  

Expansion of global business
- NTN China Technical Center was established in Shanghai, China in May 2011 to conduct designing and evaluation testing. The Company will strengthen its development operations also in India and Brazil. 

Improving profit structure
- In order to improve the profitability of its automotive business, the Company worked on cost reduction through reviewing and changing product designs, materials, and production processes. It will also expand sales of profit-earning products, such as industrial machinery and aftermarket products to raise its profit margin. At the same time, the Company will further increase local production, global procurement, imports of products made overseas to establish a business structure insusceptible to exchange rate fluctuations.
 

R&D Expenditure

(in millions of JPY)

	FY2010	FY2009	FY2008
Bearing related products	N.A.	10,410	12,010
Constant-velocity joint related products	N.A.	3,537	4,500
Precision apparatus products	N.A.	739	890
Company wide	15,697	14,687	17,401

R&D Achievement

 One motor type electric vehicle drive system
- The company has developed "One motor type electric vehicle (EV) drive system" with an automatic transmission, which contributes to the weight reduction and high efficiency of one motor type electric vehicles (one motor EV). This system consists of a compact and lightweight drive motor, differential and inverter, using a new two-speed automatic transmission which is an alternative to the conventional fixed type transmission. The two-speed automatic transmission mechanism was developed as the transmission mechanism using a unique actuator for shifting. NTN will offer this system as the "NTN-one motor type EV power train" by adding a constant-velocity joint, multi axis load sensor integrated hub bearing and others. (From a press release on March 11, 2011)

In-wheel motor system for electric commuters
- The company has developed an "In-wheel motor system for electric commuters" which conforms to the functions and applications in two-seater electric commuters and one-seater electric minicars. The "In-wheel motor system for electric commuters" achieved a smaller size and weight reduction which can be applied to electric commuters, by changing the mechanism of the hub bearing, reduction gear and motor, which are the component parts of the already developed "In-wheel motor system". (From a press release on March 11, 2011)

Steering system for steer-by-wire
- The company has developed a "Steering system for steer-by-wire" as a next-generation vehicle steering system, which transmits the steering wheel operation by an electrical signal. This system is equipped with a sub-motor for right and left independent wheel-turning operations including a main motor for the wheel-turning operation, and is the system to secure safety by instantly switching the sub-motor to a wheel turning function at the time of a failure, such as the burning out of the main motor. (From a press release on March 11, 2011)

Integrated Bearing Dynamic Analysis Syste  m (IBDAS)
- The company announced development of the Integrated Bearing Dynamic Analysis System (IBDAS), one of the most advanced systems in the industry to analyze ball bearings and roller bearings.  IBDAS calculates behavior and stress of rolling elements and bearing cages during bearing revolution, which conventional analyses and evaluation tests were not capable of.  Through more precise and quicker analysis of bearing specifications that meet customer demands, NTN will improve the speed of designing and making presentations.  The company has already used IBDAS in various bearing applications that generate large contact force on cages, including planetary decelerators and engines.  It plans to expand its application to bearing specifications meeting different customer needs, such as high load capacity, long life, reliability, low torque and compactness. (From an article in the Nikkan Jidosha Shimbun on February 28, 2011)

The self-mount type chain tensioner
- The company announced "the self-mount type chain tensioner" for the timing chain of four-wheelers and two wheelers. It can be mounted or dismounted from outside of the engine cover and a bolt is unnecessary to fix it. A die-cast aluminum housing is used. The new chain tensioner will decrease the number of parts, make the inside of the engine cover more compact and therefore reduce the vehicle weight, which leads to higher fuel efficiency. Man-hours for vehicle production and maintenance will be cut as well. NTN plans to achieve 500 million yen sales per year in 2012. (From an article in the Nikkan Jidosha Shimbun on October. 2, 2010)

New torque diode for automotive seat lifters
- The company announced a new torque diode for automotive seat lifters. The new product was developed jointly with Shiroki Corporation. The joint engineering team was able to make the unit thinner than conventional torque diodes by modifying the design of its components. Decreasing the width resulted in more space between the door and the seat lifter lever, contributing to improving the seat design like the lever layout. The new torque diode is made from high-strength components having improved static torque capacity to maintain the position of the seat, which allows the unit to bear heavier loads. Introduction of this technology can simplify the load transfer mechanisms used in seat systems, helping seat manufacturers and automakers reduce the weight of vehicle seats. NTN is expecting to generate 1.2 billion yen in sales of the new torque diode in 2013. (From an article in the Nikkan Jidosha Shimbun on June. 3, 2010)

Intelligent In-Wheel
- The company announced it has developed the "Intelligent In-Wheel" system for electric vehicles installed with in-wheel motors. The structure consists of axle units with a motor built into each wheel, electric brakes and multi-axis load sensors. The new technology provides optimal control of brake energy regeneration and vehicle stability by reining in in-wheel motors integrated with high precision magnetic angular sensors as well as electric brakes, based on information from multi-axis sensors. It contributes to improving fuel efficiency and driving safety. NTN aims to put the new product on the market in 2012. (From an article in the Nikkan Jidosha Shimbun on May 24, 2010)

New light-weight high-performance drive shaft
- The company unveiled its new light-weight high-performance drive shaft for exclusive use on rear-wheel drive cars. The product was developed in response to demand for improving fuel efficiency and riding comfort of premium cars with a rear-wheel drive system. With an eye on the high-end car market in Europe and Japan, NTN is aiming to achieve yearly sales of 500 million yen in 2013. (From an article in the Nikkan Jidosha Shimbun on May. 20, 2010)

Low-torque Roller Lifter Unit
- The company announced its "Low-torque Roller Lifter Unit, " for application in an automotive direct-injection engine in the fuel pump's drive section. By adopting a specification using retainers to prevent roller-to-roller contact, the rotation torque of the bearing is reduced by up to 30% compared to conventional products, while it has also been developed so as to respond to high-speed operation. The required strength for the lifter has been achieved by NTN's unique technology for its longer operating life as well as analysis techniques including the finite element method (FEM). Its weight has been reduced by 10% compared to conventional products. NTN will target automakers and fuel pump suppliers in promoting this product in order to achieve 200 million yen sales in FY 2013. The lifter is a device in the drive section of a direct-injection engine's fuel pump, which reduces the friction drag by its roller operating between the cam and the plunger in order to achieve smooth operation. For the contact area with the cam, the sliding type predominated in conventional products. Automakers, however, increasingly adopt the full-type-roller bearing type in order to decrease the friction loss, but the full-type-roller bearing has its problems of heat generation from roller-to-roller contact and increased rotational torque. (From an article in the Nikkan Jidosha Shimbun on April. 30, 2010)

High precision magnetic sensor
- The company announced a high precision magnetic sensor that can detect the position of the rotation axis of a motor by combining a magnetic encoder with a magnetic sensor. Integration of the magnetic encoder with the bearing provides compact installation space and easy attachment of the sensor as well. The magnetized encoder is integrated with the rotating wheel of the bearing, which allows the whole sensor unit to be installed in a tiny space within 8 mm from the bearing. This will make for reduction in size and weight of a motor. The magnetized sensor must have capacity to accurately read magnetic patterns. NTN has applied high-resolution technique it has jointly developed with SNR, a major French bearing manufacturer. NTN is willing to expand marketing activities of the new product targeted mainly at motors used in automobiles. (From an article in the Nikkan Jidosha Shimbun on April. 20, 2010)

Technical License Agreements

(As of Mar. 31, 2011)

Company	Country	Contractual coverage	Contract period
National Engineering Industries Ltd.	India	Technical license related to manufacture of ball bearings etc.	Nov. 5, 1985- Nov. 1, 2011
Tung Pei Industrial, Co., Ltd.	Taiwan	Technical license related to manufacture of constant velocity joints	March 26, 2003- March 25, 2013
Unidrive Pty. Ltd.	Australia	Technical license related to assembly of constant velocity joints	Feb. 15, 1983- June 9, 2013

Capital Expenditure

(in millions of JPY)

	FY2010	FY2009	FY2008
Overall	29,700	21,504	49,594

 

Major investment activities in FY2010

Japan
The Company invested 11,534 million yen in projects such as installing bearing production facility at a new facility of NTN Houdatsushimizu Corp., and installing additional bearing production facility at the Kuwana Works headquarters.

U.S.A.
The Company invested 8,097 million yen in the U.S. Its major investment activities included building a new plant building at NTA Precision Axle Corporation, adding bearing production facilities at America NTN Bearing Mfg. Corporation and NTN-Bower Corporation, and adding CV joint production equipment at NTN Driveshaft, Inc.

Europe
The Company invested 4,570 million yen in projects involving adding bearing production facilities at NTN-SNR Roulements.

Asia and other regions
The Company invested 5,552 million yen mainly in constructing a new building and adding bearing production equipment at Shanghai NTN Corporation.

 

 - The company announced a plan to construct a second production facility in India. Its subsidiary “NTN NEI Manufacturing India (NNMI)” will build a new plant in Chennai. The plant to be established at the site of about 41,000 square meters with a building space of about 11,000 square meters in the Mahindra World City Industrial Park in the suburbs of Chennai will begin mass production of constant-velocity joints and third generation hub bearings for supply to Japanese, European and American automakers operating in the southern part of India. NTN has already been producing constant-velocity joints at the NNMI Bawal plant in the North since June 2007. The company aims to boost sales in India from the current level of 4 billion yen to 20 billion yen in fiscal 2015. (From an article in the Nikkan Jidosha Shimbun on March 1, 2011)

Facilities (New, Eliminated, etc.)

Name	Type of facility	Total amount (in million JPY)	Start	Completion	Purpose
NTN Corporation
R&D Division	R&D facility	3,186	June 2006	July 2012	Enhance R&D capabilities
Kuwana Works (Kuwana City, Mie Pref.)	Facility for bearings	5,575	April 2007	Feb. 2012	Increase production volume and streamline operations
Iwata Works (Iwata City, Shizuoka Pref.)	Facility for bearing, CVJ, precision apparatus products etc.	3,348	May 2007	Jan. 2012	Increase production volume and streamline operations
Okayama Works (Bizen City, Okayama Pref.)	Facility for bearings, CVJs	1,418	April 2007	March 2012	Increase production volume and streamline operations
Nagano Works (Minowa Machi, Nagano Pref.)	Facility for bearings	416	May 2007	March 2012	Streamline operations
Subsidiaries and affiliates
NTN Driveshaft, Inc. (Indiana, USA)	Facility for CVJs	1,210	May 2010	Jan. 2012	Increase production volume
American NTN Bearing Mfg. Corp. (Illinois, USA)	Facility for bearings	1,092	Sep. 2010	June 2011	Increase production volume
NTA Precision Axle Corporation (Illinois, USA)	Facility for bearings	5,446	Nov. 2010	July 2012	New facility
SNR Rolamentos Do Brasil Ltda. (Parana, Brasil)	Facility for bearings	1,626	Octo. 2010	Dec. 2012	Increase production volume
NTN-SNR Roulements (Annecy, France)	Facility for bearings	4,561	April 2008	Sep. 2013	Increase production volume
NTN-SNR Rulmenti (Sibiu, Romania)	Facility for bearings	1,207	Aug. 2010	Jan. 2012	Increase production volume
NTN Transmissions Europe Crezancy (Crezancy, France)	Facility for CVJs	1,140	June 2010	March 2012	Streamline operations
Shanghai NTN Corporation (Shanghai, China)	Facility for bearings	7,437	June 2010	Feb. 2013	Increase production volume
NTN NEI Manufacturing India Private Limited (Rewari, India)	Facility for bearings and CVJs	1,096	Dec. 2009	April 2012	Increase production volume