Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of change (%)	Factors
Overall
Sales	638,970	539,594	18.4	-
Operating income	33,003	7,278	353.5	-
Ordinary income	28,670	2,512	141.3	-
Net income	(14,648)	(14,195)	-	-The Company posted a net loss due to a significant amount of extraordinary losses. These losses included a loss related to the Anti-Monopoly Act, an impairment loss, a loss reserve related to supporting affiliates, and costs for operational restructuring.
Automotive Market
Sales	433,944	356,626	21.7	1)
Operating income	11,999	(8,981)	-	-

Factor
1)
<Japan>
-Sales of automotive components increased year-on-year thanks to greater demand from customers, which more than offset the negative impact from the expiration of eco-car subsidy programs.

<Americas>
-Sales of automotive components increased from the previous year due to greater demand from customers.

<Europe>
-Sales of automotive components increased from the previous year due to greater demand from customers.

<Asia and Others>
-Overall sales of automotive components increased year-on-year due to recovery in sales to Japanese automakers and production launch based on new contracts in China. Sales in other Asian countries, however, decreased due to slowing demand from customers.

Electric Vehicle (EV) Business

-The Company has begun verification testing of a converted electric vehicle (EV) powered by an original two-motor drive system. It has offered the converted EV to Kuwana City in Mie Prefecture, which will provide various driving data to NTN during the testing period. NTN developed the converted EV by replacing the power source of the Suzuki Wagon R gasoline-engine vehicle with electric motors. Two motor units, which are integrated with reducers, are mounted onboard, one to control each front wheel. The independent control system ensures highly reliable drive power and provides outstanding driving safety, even on slippery surfaces such as snowy roads. (From an article in the Nikkan Jidosha Shimbun on November 2, 2013)

-The Company announced that it has started a demonstration project for the TOO'in microcompact electric vehicle (EV), equipped with its in-wheel motor system, on public roads in collaboration with the city of Annecy in France. The company had been using a compact EV for transportation within the premises of NTN-SNR Roulements, as well as between its facilities. The TOO'in, which offers a maximum speed of 75km/h and was registered as a European L7e category vehicle, will be used as an official city vehicle during the year-long large-scale road testing. The body of the TOO'in was manufactured by Lazareth, an Annecy-based vehicle manufacturer. (From a press release on June 17, 2013)

-The Company announced that it 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 NTN's in-wheel motor system was launched as a joint project with the city of Iwata in October 2011. NTN 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)

Award

-In 2013, NTN Bearing Corporation received recognition for its overall customer satisfaction from American Axle & Manufacturing Holdings.

Enhancing Operations in 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)

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

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

<Production>
-In January 2014, the Company and Kian Shen Corporation, a group member of Taiwan-based Yulon Motor Co., Ltd., jointly established Xiangyang NTN-Yulon Drivetrain Co., Ltd. in Xiangyang, Hubei Province, China to produce constant velocity joints (CVJs). The joint venture will serve as NTN's third plant in the country. It will supply CVJs to automakers operating in China, starting in April 2015.

-NTN Manufacturing (Thailand) Co., Ltd. started producing constant velocity joints (CVJs) at its new second plant. The new plant is located at the Pinthong Industrial Estate, Chonburi, where NTN's joint venture, NTPT CO., LTD, is located. The new CVJ plant will manufacture products by using forged and turned parts supplied from NTPT. The establishment will build an integrated local production structure, which includes materials sourcing and front-end production processes.

-The Company established NTN Manufacturing de Mexico, S.A.de C.V. in April 2013. The new company located in Aguascalientes will start supplying its products to automakers operating in Mexico in the fiscal year that ends in March 2016.

-In January 2014, NTN Fukuroi Corporation, a CVJ production subsidiary in Shizuoka Prefecture, Japan, launched an expansion work to establish a second plant.

<R&D activities>
-The Company is increasing focus on developing high value-added and highly profitable module products. It is also developing systemized products integrated with sensor technologies.

-Major new technologies for the automotive industry:
The Company began mass-producing mechanical clutch units that enhance the safety performances of next-generation electric steering systems and ball screw drive modules that control and improve the reliability of electronic hydraulic brake systems. In addition, it developed in-wheel motor systems that allow the vehicle to turn itself around at its position or move laterally. The Company is performing real-world testing programs for this in-wheel motor technology in various locations worldwide, as it aims to commercialize the technology for electric vehicles as soon as possible.

<Organizational change>
-In April 2014, the Company established the Global Human Resources Development division to cultivate global human resources to better compete in the international market.

Outlook for FY ending Mar. 31, 2015

(in millions of JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	660,000	638,970	3.3
Operating income	40,000	33,003	21.2
Ordinary income	33,000	28,670	15.1
Net income	20,000	(14,648)	-

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	17,820	16,174	17,156

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 China, NTN China Technology Center is fostering collaborations with universities, while performing various testing in order to develop products that meet the needs of local customers and suit local climate conditions.

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

Product Development

<Automotive products>
-The Company introduced and began mass-producing new module products. These products include ball screw drive modules for regenerative braking systems, which significantly enhance the energy efficiency of hybrid vehicles, and mechanical clutch units for the next-generation steering systems.

-The Company developed low-torque seal rings for automotive transmissions. The new seal rings contribute to downsizing automotive transmissions, improving engine efficiency, and reducing running resistance. It also developed a new hub bearing that further reduces friction losses.

-The Company developed an in-wheel motor system and an electric braking system for electric vehicles. It is working on commercializing these new technologies by collaborating with other auto parts suppliers. The Company is performing pilot programs for ultra-compact mobility that is equipped with its in-wheel motors in Japan and France. It has recently started a verification testing in Ise City, Mie Prefecture, where it aims to help promote the tourism industry with the new technology.

<Next-generation Mechanical Clutch Units (MCUs)>

-The Company developed a new clutch unit called the "Mechanical Clutch Unit (MCU) for Next-generation Steering." The new product was adopted by Nissan Motor Co., Ltd. for use in its Direct Adaptive Steering system. (From a press release on November 26, 2013)

<Ultra-low friction hub bearing>
-The Company has developed a new hub bearing called the "Super Low Friction Hub Bearing." The Company developed this technology by improving the ingredient composition and viscosity levels of grease, and by forming fine dimples on the sliding surface of the bearing's seal lip. These improvements led to a 33 percent reduction in rotational friction and an approximately 0.28 percent gain in fuel economy compared to existing products. (From a press release on November 22, 2013)

< Multi Driving System (MDS) for next-generation EVs>
-The Company announced that it has developed the "Multi Driving System (MDS)" for next-generation electric vehicles that integrates NTN's proprietary compact in-wheel motor system (IWM) and a newly developed steering system. The Company is demonstrating the Q'moII, a two-seater electric commuter, equipped with the MDS. The MDS turns both the left and right wheels by using one steering device. The system also controls driving and steering operations of all the wheels and allows the vehicle to turn itself around at its position or move laterally, while ensuring sufficient strength and safety of steering system components. Better compatibility with the suspension system helps lower the vehicle's center of gravity and ensure ordinary drivability at 60 km/h. (From a press release on November 20, 2013)

<Rear-wheel Independent Steering System>
-NTN Corporation has developed the "Rear-wheel Independent Steering System" that is capable of controlling the toe angle with a left-right combined-type steering system. The steering system applies the steer-by-wire steering system technology to the rear wheel steering. (From a press release on November 19, 2013)

<"Bearphite CL" sintered bearing>
The Company announced that it has developed a "Bearphite CL" sintered bearing, an iron-based bearing with a copper layer on the surface. The Company developed this technology by adding special copper powder to a low-cost, iron-based sintered material. Compared with bronze-based sintered bearings, which are higher in price, the new bearing offers improved sliding performance, and its wearing resistance was more than doubled. NTN will market the "Bearphite CL" for application in automotive electric components, such as power windows and fan motors, as well as copying machines, in which high sliding performance is required. Sales of the new bearings are expected to reach 400 million yen by fiscal year 2015. (From an article in the Nikkan Jidosha Shimbun on Apr. 4, 2013)

<Hollow Ball Screw Unit>
-The Company has developed a thin and lightweight "Hollow Ball Screw Unit" for automotive electric actuators. The "Hollow Ball Screw Unit" uses a ball screw with a low rolling resistance to double the thrust conversion efficiency. By utilizing a hollow screw shaft, the unit can be positioned along the same axis as the CVT (Continuously Variable Transmission) pulley mechanism. (From a press release on March 7, 2013)

<Self-lubricating sintered bearing>
-The Company announced that it has developed a new self-lubricating sintered bearing that does not require lubricating oil. The new bearing uses special graphite as a solid lubricant. 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. NTN is targeting yearly sales of 100 million yen with the product in FY2015. (From an article in the Nikkan Jidosha Shimbun on Feb. 27, 2013)

<Hub joint with built-in sensors>
The Company announced that it has developed a high-performance sensor-integrated hub joint, which combines a hub bearing and a constant velocity joint (CVJ), by utilizing its 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 a module product that enhances the function of next-generation electric and hybrid vehicles on a global basis. NTN aims to achieve sales of 3 billion yen with the new product in FY2017. (From an article in the Nikkan Jidosha Shimbun on Feb. 18, 2013)

Technology License-out Agreement

(As of Mar. 31, 2014)

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. 10, 2015

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	33,162	48,979	54,440

 

Main Investments in FY ended Mar. 2014

Region	Name	Content	Total amount (in million JPY)
Japan	NTN Fukuroi Corporation	Adding building and adding CVJ production facilities	8,757
Americas	NTN-Bower Corp.	Adding building and adding bearing production facilities	9,469
	American NTN Bearing Mfg. Corp.	Adding bearing production facilities
Europe	NTN-SNR Roulements	Adding building and adding bearing production facilities	7,121
	NTN Transmissions Europe	Adding CVJ production facilities
China	Shanghai NTN Corp.	Adding bearing production facilities	7,818
	Guangzhou NTN-Yulon Drivetrain Co., Ltd.	Adding CVJ production facilities
	NTN Manufacturing (Thailand) Co., Ltd.	Adding bearing production facilities

Planned Capital Investment

(As of Mar. 31, 2014)

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	3,981	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
American NTN Bearing Mfg. Corp. (Illinois, USA)	Facility for bearings	2,976	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN Driveshaft, Inc. (Indiana, USA)	Facility for CVJs	2,319	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTA Precision Axle Corporation (Illinois, USA)	Facility for bearings	1,389	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN do Brasil Producao de Semi-Eixos Ltda. (Guarulhos, Brazil)	Facility for CVJs	1,249	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN-SNR Roulements (Annecy, France)	Building and facility for bearings	8,188	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN-SNR Rulmenti (Sibiu, Romania)	Building and facility for bearings	2,637	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
NTN Transmissions Europe (Allonnes, France)	Facility for CVJs	3,138	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	3,900	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
Guangzhou NTN-Yulon Drivetrain Co., Ltd. (Guangzhou, China)	Facility for CVJs	2,684	Apr. 2013	Mar. 2015	Increase production volume and streamline operations
Nanjing NTN Corporation (Nanjing, China)	Facility for bearings	1,216	Apr. 2013	Mar. 2015	Increase production volume
NTN-LYC (Luoyang) Bearing Corporation (Luoyang, China)	Facility for bearings	1,105	Apr. 2013	Mar. 2015	Increase production volume