Financial Overview

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	144,890	126,245	14.8	-
Operating income	13,639	10,964	24.4	-
Ordinary income	16,115	13,124	22.8	-
Net income	13,148	7,942	65.6	-
Automotive Clutch Division
Sales	67,161	55,240	21.6	-Sales increased year-on-year due to customers in North America producing greater volumes, the Company’s selling more products to Ford, and favorable currency translation, in spite of Honda converting its transmissions to CVT type.
Operating income	4,661	3,798	22.7	-

New Company

<Mexico>
-The Company established FCC Automotive Parts de Mexico, S.A. de C.V in San Luis Potosi, Mexico to manufacture and sell automotive clutches. The new subsidiary was established in June this year and will commence production in the spring of 2015. It will primarily supply products to Honda's new CVT plant in Mexico, which is scheduled to begin production in late 2015. FCC Automotive Parts de Mexico was initially capitalized at MXN 50,000 (approximately JPY 380,000). 99 percent of the initial capital was invested by F.C.C. Co., Ltd., while the remaining amount was provided by FCC (North America), Inc.. F.C.C. said it would increase the subsidiary's capital to MXN 300 million (approximately JPY 2.3 billion) at the end of July to fund facilities and provide equipment. Total investment is forecast to reach JPY 4.5 billion by fiscal year 2016, while sales are expected to reach approximately JPY 6 billion in fiscal year 2017. (From an article in the Nikkan Jidosha Shimbun on August 1, 2013)

Contracts

<Ford>
-The Company announced that its Chinese subsidiary, Chengdu Yonghua. F.C.C. Clutches Co., Ltd., has received a new order to supply its clutch assemblies and friction plates to Changan Ford Automobiles. These parts are for use in 6-speed automatic transmissions for front-wheel drive vehicles. Production is scheduled to start in May 2014. (From a press release on February 24, 2014)

<Chrysler>
-The Company announced that it has received a contract from Chrysler Group LLC to supply clutch assemblies and friction plates for use in automatic transmissions. This is the first time that F.C.C. will provide its products to Chrysler. The Company plans to produce the components at its U.S. subsidiaries. FCC (Indiana), LLC. will assemble clutches, and FCC (North Carolina), LCC. will manufacture friction plates and core plates. Aluminum die-casting parts will be produced at FCC (Adams), LCC. in Indiana. (From an article in the Nikkan Jidosha Shimbun on August 27, 2013)  

<ZF>
-The Company announced that it has started producing clutch assemblies and clutch disc sets for a supply contract that the Company received from ZF Friedrichshafen AG in June 2011. These parts are for use in 9 speed automatic transmissions for front-wheel drive vehicles. Since May 2013, F.C.C. has been manufacturing clutch assemblies at FCC (Indiana), LLC. and aluminum die-casting parts at FCC (Adams), LCC., both of which are located in Indiana, USA. FCC (North Carolina), LCC. also began producing friction plates and core plates for ZF's transmissions during the same period. These components are supplied to ZF Transmissions Gray Court, LLC in South Carolina. Product sales are expected to reach approximately JPY 7 billion in fiscal year 2016. (From a press release on August 22, 2013)

Business Plan

Operations to continue at Tenryu Factory
-The Company announced that it has decided to maintain operations at its Tenryu Factory in Shizuoka Prefecture, which had been scheduled to stop production by October 2014. In order to avoid risks of tsunami and liquefaction from future earthquakes, the Company was going to transfer the plant's friction plate production lines from the coastal city of Iwata to the Hosoe Factory. According to an earthquake damage estimation report released by Shizuoka Prefecture on June 27, however, tsunami and liquefaction potentials were found to be minimal in the area where the Tenryu Factory is situated. The Company has thereby canceled its plan and decided to continue its operations. (From an article in the Nikkan Jidosha Shimbun on August 27, 2013)  

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

R&D Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	3,168	2,983	2,933
-Automobile clutches	1,909	1,745	1,658

R&D Structure

-The Company has a Technology Laboratory and Production Technology Center in Hamamatsu City, Shizuoka Prefecture.

R&D Activities

Automobile clutches
-The Company conducted R&D on wet friction-materials for automatic transmissions (which include CVTs) and dry friction-materials for manual transmissions as the underlying framework to developing clutches that are lighter in weight and lower in cost, and which contribute to better fuel efficiency.

-The Company began commercial production of torque limiters for hybrid cars, after developing them based on technology on wet-friction materials and wet-friction technology for automatic transmissions that were improved in terms of fuel performance and durability based on the segmented method of friction-plate production, which is the Company's proprietary technology.

-The Company developed a clutch featuring a new design structure, which is capable of responding to new, multi-speed automatic transmissions.

-The Company will develop its first wet clutches for dual clutch transmissions (DCTs) for automobiles. The Company already sells clutches for motorcycle DCTs. While there are wet-type and dry-type clutches, the Company chose to make the new clutches wet-type and aims to commercialize them between 2016 and 2017. The Company sees higher potential in wet-type clutches as they provide smoother performance at gear changes. Wet-type clutches also demonstrate higher heat resistance as they are cooled by lubricating oil. Wet clutches, however, tend to be subject to slip losses more when they are engaged and disengaged, compared to dry clutches. Dry-type clutches are already in widespread use for manual transmissions and thus competitive in terms of cost. F.C.C.'s main customer Honda uses a 7-speed DCT using dry-type clutches provided by Schaeffler of Germany for the hybrid system of the Fit Hybrid. (From an article in the Nikkan Jidosha Shimbun on March 20, 2014)

New product development
-The Company is conducting research on porous fiber catalytic sheets, i.e., paper catalysts, developing them for use in purifying engine exhaust gas.

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Motorcycle clutches	3,026	5,059	5,593
Automobile clutches	16,115	6,038	4,883
Company-wide (all functions)	1,232	677	575
Total	20,374	11,774	11,051

-For the mid term, the Company focused its investments in product areas and R&D areas that are expected to grow, investing in products that require less labor, and contribute to improving reliability and rationalization.

Investment outside Japan

Incresing production capacity for automatic transmission clutches
-The Company will beef up production capacity for automatic transmission clutches in the U.S. and China for U.S. and European customers. It will raise the combined annual capacity in the two countries to 1.5 million units in early 2015. The Company has signed a new deal for supply to German transmission manufacturer ZF. The Company expects to make up for a drop in clutch output for Honda in late 2014 by attracting new customers. It plans to gradually expand the capacity even after 2015, hoping to tap into further demand from U.S. and European customers. Its U.S. subsidiary in Indiana will add an assembly line for ZF and start the production in fiscal 2013. The U.S. unit currently produces automatic transmission clutches for Honda, but it will make better use of its existing capacity for the new customer. Its Chinese unit in Chengdu, Sichuan, will install an assembly line capable of handling 400,000 units annually and start the production for U.S. and European customers around fiscal 2014. (From an article in the Nikkan Jidosha Shimbun on Apr. 5, 2013)

Planned Capital Investments

(As of Mar. 31, 2014)

Name (Location)	Business segment	Type of facility	Planned total investment (million yen)	Start	Planned completion
F.C.C Co., Ltd
Hamakita Plant (Shizuoka Pref., Japan)	Automobile clutches	Building, Production facility for clutches	2,301	Apr. 2014	Mar. 2015
Suzuka Plant (Mie Pref., Japan)	Motorcycle clutches Automobile clutches	Production facility for clutches	477	Apr. 2014	Mar. 2015
Technology Research Center (Shizuoka Pref., Japan)	R & D	Testers and measuring instruments	434	Apr. 2014	Mar. 2015
Ryuyo Factory (Shizuoka Pref., Japan)	Motorcycle clutches Automobile clutches	Production facility for clutches	337	Apr. 2014	Mar. 2015
Subsidiaries
FCC Adams , LLC. (Indiana, USA)	Automobile clutches	Production facility for clutches	4,281	Apr. 2014	Mar. 2015
FCC Automotive Parts de Mexico S.A. de C.V. (San Luis Potosi, Mexico)	Motorcycle clutches Automobile clutches	Building, Production facility for clutches	4,079	Jan. 2014	Dec. 2014
FCC (North Carolina) LLC. (North Carolina, USA)	Motorcycle clutches Automobile clutches	Production facility for clutches	3,537	Apr. 2014	Mar. 2015
FCC (Indiana), LLC. (Indiana, USA)	Automobile clutches	Production facility for clutches	3,133	Apr. 2014	Mar. 2015
PT. FCC Indonesia (Karawang, Indonesia)	Motorcycle clutches Automobile clutches	Production facility for clutches	1,717	Apr. 2014	Mar. 2015
Chengdu Yonghua. F.C.C. Clutches Co., Ltd. (Sichuan, China)	Motorcycle clutches Automobile clutches	Production facility for clutches	1,149	Jan. 2014	Dec. 2014