Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	Rate of change (%)	Factors
Overall
Sales	539,594	543,468	(0.7)	1)
Operating income	7,278	20,723	(64.9)
Ordinary income	2,512	18,691	(86.6)
Current net income	(14,195)	5,993	-
Automotive Market
Sales	356,626	342,888	4.0	-Demand from customers decreased in Europe, but sales increased in the Americas, Asia and other regions.
Operating income	(8,981)	(3,180)	-	-Operating loss expanded mainly because of special expenses incurred for boosting production in the Americas, where demand grew significantly.

Factor
1)
<Japan>
-Sales to the automotive industry showed a sign of recovery from last year when production decreased substantially after the Great East Japan Earthquake. Overall sales, however, declined year-over-year because of a fall in demand for its products for use in vehicles destined for exports.

<Americas>
-Automotive product sales increased year-on-year due to a recovery in customer demand.
-Operating profit in the OEM business fell from last year mainly because of special expenses incurred to boost production.

<Europe>
-Sales largely dropped in Europe, where the economy remained sluggish reflecting the continued uncertainties over financial conditions.

<Asia and Others>
-Sales to Japanese automakers decreased in China. Sales to the automotive industry increased in other Asian countries, where production recovered from last year when operations were hit by the heavy flooding in Thailand. Demand from customers also grew in these countries.

Recent Development Outside Japan

<Europe>
-The Company is working to enhance its auto parts production operations in Europe. Having acquired a majority share in France-based SNR Roulements S.A. (now called NTN-SNR Roulements S.A.) in 2008, the Company is going to increase supply from the subsidiary's Romanian Plant. In addition to manufacturing bearings, the group's major products, the Romanian facility will also commence production of constant velocity joints, expanding its product lineup for the automotive industry. In addition, NTN-SNR Roulements will transfer some auto parts production lines now located in France to Romania in order to raise cost efficiency. Through such initiatives, NTN aims to strengthen support to Japanese and global automakers operating in western Europe, while meeting increasing demand from the growing auto industry in eastern Europe and Russia. (From an article in the Nikkan Jidosha Shimbun on Mar. 14, 2013)

<Increase of Local Content Rartio>
-The Company is aiming to achieve a 90% local content ratio at its all overseas bases as early as FY2014, while enhancing comprehensive production operations of automotive parts overseas. The Company will enhance its collaboration with Japanese affiliated companies in producing bearings, hub bearings and constant-velocity joints, and process half-finished products by joint operations. Exports from Japan will be moved to local production. The Company will also enhance procuring parts and steel materials overseas, part of which will be supplied to Japan. The Company's earnings are affected by increased foreign exchange risks due to the yen appreciation. With this, the Company plans to cut its exports of components including half-finished parts that have been supplied from Japan, and focus on implementing start-to-finish production at each overseas base. At its facilities in Thailand where the Company's joint projects are fully in progress, local sourcing of parts and materials are stepping up and exports of more products, including semi-finished parts, to other countries are proceeded. While reducing the risk of exchange rate fluctuations,　the Company plans to increase its profitability of auto parts by taking advantage of Free Trade Agreement with ASEAN countries.

<Increase of Local Production Ration>
-The Company will increase the ratio of overseas production volume to 45 percent by FY ending Mar. 31, 2014. The percentage, which stood at 36 percent in FY ended Mar. 31, 2011, will be raised by 2 to 3 percent each year, as the company aims to improve profitability. Special focus will be put on Asia, especially in Thailand. In May 2012, the Company launched production of constant velocity joints at its new Pinthong Plant, its second facility in Thailand. In India, at its second plant, production of constant velocity joints and the third-generation hub bearings will be launched.

New Company

-The Company announced that it has completed construction of NTN Akaiwa Corporation in Akaiwa City, Okayama Prefecture, Japan. NTN Akaiwa was established for manufacturing various bearings for automobiles and industrial machinery. The land area of the plant is approximately 66,000 square meters with a total floor area of approximately 16,000 square meters. Capitalized at 1.25 billion yen, the new plant will employ some 160 associates in 2014. (From a press release on August 28, 2012)

Medium-term Management Plan "Revival 2014" (FY ending Mar. 31, 2014 - FY ending Mar. 31, 2015)

-Basic Policy: "Reform business structure to generate profit"

1. Measures of Sales field	-Establish “The ASEAN, Pacific, India and West Asia Division” to oversee operations in the fast growing markets. -Accelerate business expansion project in China led by the China Division.
2. Measures of Production field	-Utilize local material and greater integrated production of parts for China local car makers. -Production launch of constant velocity joints in Pinthong plant in Thailand -Production launch of constant velocity joints in Chennai plant in India.
3. Measures of R&D field	-Strengthen development of module and system products. -Full operation of Electric Vehicle (EV) system products -Development of composite material products and market deployment

Outlook for FY ending Mar. 31, 2014

(in millions of JPY)

	FY ending Mar. 31, 2014 (Forecast)	FY ended Mar. 31, 2013 (Actual Results)	Rate of Change (%)
Sales	600,000	539,594	11.2
Operating income	30,000	7,278	312.2
Ordinary income	23,000	2,512	815.6
Net income	10,000	(14,195)	-

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	16,174	17,156	15,697

R&D Structure

-In Japan, R&D activities are centered on cutting edge technologies to lead the company's global operations.
-In Europe, the Company is developing technologies for products sold in the local market.
-The Company is offering technical services in Japan and other Asian countries, the Americas and Europe to support its customers in each market.
-In May 2011, construction of NTN China Technical Center completed.

R&D Facilities

Facility	Location
Industrial Technical Center	Mie Pref., Japan
Advanced Technology R&D Center	Mie Pref., Japan
NTN R&D Center	Shizuoka Pref., Japan
New Product Development R&D Center	Shizuoka Pref., Japan
Production Engineering R&D Center	Shizuoka Pref., Japan
CVJ·Axle Unit Technical Center	Shizuoka Pref., Japan
NTN Bearing Corp. of America - Industrial Engineering Dept.	Illinois, USA
NTN Bearing Corp. of America - NTN Automotive Center	Michigan, USA
NTN Waelzlager (Europe) G.m.b.H. - Engineering Dept.	Erkrath, Germany
NTN Transmissions Europe - Research and Development Dept.	Allonnes, France
NTN-SNR Roulements	Annecy, France
NTN China Technical Center	Shanghai, China

Joined the real-world demonstration testing of Electric Vehicle (EV)

-The Company announced that the Company has completed the world's first pilot program of modified electric vehicles (converted EVs) that it had conducted in Iwata, Shizuoka Prefecture. The real-world demonstration testing using converted EVs equipped with the Company's in-wheel motor system was launched as a joint project with the city of Iwata in October 2011. The Company has collected the city road and expressway driving data of the two EVs, which were utilized as the city's official vehicles for about a year. According to the driving results reported at the Iwata City Hall on January 17, the EVs covered a total of 11,104 kilometers during the whole test period, while achieving a range of up to 95 kilometers per charge. The cost for driving 1 kilometer was limited to 1.6 yen, only one-fifth of that of a gasoline engine vehicle. (From an article in the Nikkan Jidosha Shimbun on Feb. 6, 2013)

-The Company announced that it will launch demonstration tests of a two-seater compact EV equipped with its in-wheel motor system in Annecy, France. By conducting experiments in Europe where the popularity of EVs is growing continuously, the Company aims to accelerate its development activities for electrified vehicle technology on a global basis. The Company's "In-wheel motor system for compact EVs" features a compact and lightweight motor module integrated with a hub bearing and a reducer that can be installed in the wheel. Building on the demonstration project, the company will step up its efforts to promote the next-generation EV system. (From an article in the Nikkan Jidosha Shimbun on July 13, 2012)

Product Development

Product Name	Feature	Explanation
"Hollow Ball Screw Unit"	Thin and lightweight, designed for the electrification of various vehicle actuators	-The "Hollow Ball Screw Unit" uses a ball screw with a low rolling resistance to double the thrust conversion efficiency. By utilizing hollow screw shaft, the unit can be positioned along the same axis as the CVT (Continuously Variable Transmission) pulley mechanism.
"Self-lubricating Sintered Bearing"	By using special graphite as a solid lubricant, lubricating oil can be omitted.	-This new application allows for the product to be operated in environments in which oil cannot be used or in high-temperature surroundings where the oil may evaporate or adhere to surrounding parts, reducing product performance.
"Hub Joint with Incorporated Advanced Sensor Technology" >>> Image	Combining a hub bearing and a constant velocity joint (CVJ) utilizing proprietary bonding technology	-The integration allows for the new product to be 12% lighter compared to existing products, realizing high torque transmission efficiency. The new system can offer better fuel economy and a lighter unsprung mass, which contributes to delivering superior riding comfort. The Company intends to market the new hub joint as modular product to enhance the function of next-generation electric and hybrid vehicles on a global basis.
"Corrosion Resistance BEARPHITE"	For use in environments that result in fast corrosion of bearings, such as within gasoline	-The new product delivers outstanding corrosion resistance using aluminum bronze without the need to use nickel. The Company has already started to propose the developed product to manufacturers in the automotive industry, and in the future will propose the product in industrial machinery fields where bearings are used in corrosive environments such as salt water.
"Multi Layer Bearphite Bearing"	By using a new sintering molding method	-The Company engineered the oil-impregnated sintered bearing employing the world’s first double-molding method to cast internal and outer layers made of different materials integrally. The bearing, which offers high strength and outstanding wearing resistance, is suitable for parts requiring high-load conditions, such as the joints of construction machinery. The company is going to introduce the double-molding technology into gears and other sintered machinery parts as well, expecting to win a wide range of automobile applications.
"Amorphous Core" for reactors and choke coils >>> Image	Made from injection-molded magnetic material comprising of a mixture of amorphous powder and resin.	-The technology is expected to offer a high reliability in electric vehicles (EVs), hybrid vehicles (HVs), and solar power generators used under increasingly harsh conditions such as greater currents and faster drive frequencies. In addition, adoption of the injection molding technique provides superior design flexibility, allowing the Company to produce a greater variety of coils, including larger products.
"High Speed and Low Torque Deep Groove Ball Bearing" for use in motors and reducers mounted in electric vehicles (EV) and hybrid vehicles (HEV) >>> Image	Can be used at greater rotational speeds and efficiency	-Adopting "Low Torque Plastic Retainers Capable of High Speeds" to maintain reliable, low torque operation at high speeds under oil lubrication. This new type of retainer consists of two retainers of the same shape in a layout that helps limit distortion in the other retainer due to centrifugal forces, allowing high speed operation up to 1.2 million DN. The use of a shield shape on the side of the retainer limits the quantity of grease flowing into the bearing to drastically reduce stirring resistance. The internal design of the bearing has also been optimized to reduce rolling viscosity resistance, which helps to reduce torque by 50% or more compared to conventional deep groove ball bearings.
"Press Cut Spline Hub Joint" >>> Image	Utilizing a proprietary  joint method to fasten the hub joint and CVJ together makes lighter weight and eliminates any backlash	-Utilizing a proprietary press-cut spline joint for the pre-spline (the smaller spline) inside bore surface of hub bearing reduces the load required for the fitting, and features a bolt to fasten the hub joint and CVJ together. This allows the newly developed product to be used on automobile manufacturer assembly lines without having to change the current third generation hub bearing and CVJ assembly process in use today.
"Self-formed Seal Low Torque Deep Groove Ball Bearing" for transmission >>> Image	To improve efficiency of power transmission through parts and contribute to lower fuel consumption by automobiles	-The newly developed ball bearing for transmission is capable of reducing rotational torque by up to 80% compared to the conventional seal ball bearing. For bearings for transmissions, sealed ball bearings are used in order to prevent a reduction in operating life due to the penetration of foreign objects. Yet the sealed one's rotational torque is often larger than ball bearings without seals. The newly developed NTN “Self-formed Seal” self-forms minute gaps between the inner ring and seal during the initial stages of bearing operation and therefore is a non-contact type that is capable of reducing rotational torque.
"Next Generation High Efficiency Fixed Type CVJ 'CFJ'" for transmission >>> Image	To improve efficiency of power transmission through parts and contribute to lower fuel consumption by automobiles	-The newly developed NTN constant-velocity joint reduces frictional forces and decrease the torque loss ratio by 50% compared to the existing CVJ. CVJs suffer from a greater torque loss ratio as the operating angle increases, however this new product uses a proprietary structure to reduce the torque loss ratio over a wide range of operating angles. It will greatly improve fuel efficiency of vehicles as SUVs, which require a large operating angle.

Technology License-out Agreement

(As of Mar. 31, 2013)

Company	Country	Contractual coverage	Contract period
National Engineering Industries Ltd.	India	Technical license related to manufacture of ball bearings etc.	Nov. 2, 2011- Nov. 1, 2014
Tung Pei Industrial, Co., Ltd.	Taiwan	Technical license related to manufacture of constant velocity joints	Mar. 26, 2003- Mar. 25, 2018
Unidrive Pty. Ltd.	Australia	Technical license related to assembly of constant velocity joints	Feb. 15, 1983- Jun. 9, 2013

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	48,979	54,440	29,700

 

Main Investments in FY ended Mar. 2013

Region	Name	Content	Total amount (in million JPY)
Japan	NTN Akaiwa Corporation	Bearing production facilities at the new plant	13,321
Americas	American NTN Bearing Mfg. Corp.	Adding bearing production facilities	14,665
	NTN-Bower Corp.	Adding building and adding bearing production facilities
Europe	NTN-SNR Roulements	Adding bearing production facilities	7,168
China	Nanjing NTN Corporation	Building new plant and adding bearing production facilities	13,927
	NTN-LYC (Luoyang) Bearing Corporation

Planned Capital Investment

(As of Mar. 31, 2013)

Name	Type of facility	Total amount (in million JPY)	Start	Completion	Purpose
NTN Corporation
R&D Division	R&D facility	4,036	Apr. 2013	Mar. 2015	R&D and others
Kuwana Works (Kuwana City, Mie Pref.)	Facility for bearings	2,129	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
Iwata Works (Iwata City, Shizuoka Pref.)	Facility for bearings, CVJs, precision apparatus products etc.	1,953	Apr. 2013	Mar. 2015	Streamline operations
Okayama Works (Bizen City, Okayama Pref.)	Facility for bearings and CVJs	1,937	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
Nagano Works (Minowa Machi, Nagano Pref.)	Facility for bearings	279	Apr. 2013	Mar. 2015	Streamline operations
Subsidiaries and affiliates
NTN Akaiwa Corporation (Akaiwa City, Okayama Pref.)	Facility for bearings	1,243	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN-Bower Corp. (Illinois, USA)	Building and facility for bearings	3,782	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
American NTN Bearing Mfg. Corp. (Illinois, USA)	Facility for bearings	2,828	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN Driveshaft, Inc. (Indiana, USA)	Facility for CVJs	2,203	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTA Precision Axle Corporation (Illinois, USA)	Facility for bearings	1,320	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN do Brasil Producao de Semi-Eixos Ltda. (Guarulhos, Brazil)	Facility for CVJs	1,365	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN-SNR Roulements (Annecy, France)	Building and facility for bearings	7,558	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN-SNR Rulmenti (Sibiu, Romania)	Building and facility for bearings	2,435	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN Transmissions Europe (Allonnes, France)	Facility for CVJs	2,896	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN Manufacturing (Thailand) Co., Ltd. (Rayong, Thailand)	Building and facility for bearings and CVJs	3,994	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTPT Co., Ltd. (Chonburi, Thailand)	Facility for CVJs	1,163	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
Shanghai NTN Corporation (Shanghai, China)	Facility for bearings	3,656	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
Guangzhou NTN-Yulon Drivetrain Co., Ltd. (Guangzhou, China)	Facility for CVJs	2,516	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
Nanjing NTN Corporation (Nanjing, China)	Facility for bearings	1,140	Apr. 2013	Mar. 2015	Increase production volume
NTN-LYC (Luoyang) Bearing Corporation (Luoyang, China)	Facility for bearings	1,036	Apr. 2013	Mar. 2015	Increase production volume