Financial Overview

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Sales	172,456	144,089	19.7	-Initiatives to reorganize the business structure, strong automotive sales in North America, favorable currency translation, etc.
Operating income	6,725	4,479	50.1
Ordinary income	7,077	4,574	54.7	-
Net income	3,319	(3,131)	-	-
Japan
Sales	30,170	32,905	(8.3)	-A change in the vehicle model lineup built in Japan by OEMs, localization of production at subsidiaries overseas, etc.
Operating income	1,331	(942)	-	-Reduction in fixed costs as a result of initiatives to change the business structure, income based on doing R&D on consignment, from having established subsidiaries overseas
North America
Sales	102,209	82,270	24.2	-Strong new-car sales by customers in the strong North American market and favorable currency translation due to the weak yen
Operating income	3,940	4,406	(10.6)	-Expenses incurred from launching a production plant in Mexico and strengthening local R&D functions
Asia
Sales	40,077	28,913	38.6	-Recovery from the previously sluggish sales of Japanese automobiles in China, and the suppressed production levels caused by the flooding in Thailand; in addition to favorable currency translation because of the low evaluation of the yen.
Operating income	1,157	993	16.5	-

Business Plan

-In 2014, the Company formulated its 12th mid-term management plan, which covers the period between the fiscal year ending in March 2015 and the fiscal year ending March 2017. Under the slogan of “Aim to be a chassis-system maker with extremely strong competitive advantages”, the Company set the following performance targets:

• Sales: JPY 200,000 million
• Operating income: JPY 10,000 million

-The basic policies are outlined below:

1. Reorganize the chassis-system operations
-Develop integrated, multi-function, single-unit chassis systems built from individual components such as sub-frames, suspension arms, etc.:
The Company is planning to reorganize its development structure in line with its initiatives to modularize its products. By collaborating with its parts suppliers in the area of sub-frames, its major products, the Company aims to develop functional modules, which will include components such as anti-vibration rubber parts and ball joints. Modularization technology is already adopted by European and U.S. suppliers, and F-Tech's initiatives are based on a request from one of its U.S. customers. The Company will set approaches and methods implemented by European and U.S. manufacturers as benchmarks, as it works on expanding its development capability to remain competitive in the global market. (From an article in the Nikkan Jidosha Shimbun on September 18, 2013)

2. Advance global operations
-Making use of the Japanese operations as the base functions, advance sales, R&D, production, and sales functions at operations outside Japan such as in North America, China, and Southeast Asia.
-Launch strong operations at newly established facilities in Indonesia and Mexico, in order to win new business in expanding markets.
-Develop global human resources

3. Strengthen capabilities in environmentally friendly technology
-Build chassis systems that are even lighter in weight; and conduct deeper research in core technologies such as hydroforming, friction stir welding, and tube/pipe annealing.
-Work to have electronic pedal parts and electronic technology applied in chassis.
-Establish optimal production technologies suited to every region under the aim of innovating proprietary technology such as precision stamping, laser-based welding/joining, etc.

Restructuring

-The Company will integrate its domestic stamping operations into the Kameyama Plant in Mie Prefecture, Japan. Besides the Kameyama Plant, the Company has another stamping facility at the Kuki Plant in Saitama Prefecture. Reorganization of stamping activities is to correspond to the decrease in production volumes of automobiles, as well as those of stamping parts due to automakers' move to produce smaller vehicles. The Company had once considered the possibility of transferring its stamping operations to emerging countries due to the superstrong yen. As the yen has started to drop since late 2012, the Company decided to leave its stamping operations in Japan. (From an article in the Nikkan Jidosha Shimbun on May 10, 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	2,667	2,367	1,840

-By region for FY ended March 2014: Japan (JPY 1,330 million), North America (JPY 1,169 million), and Asia (JPY 167 million).

R&D Structure

-The Haga Technical Center in Tochigi Prefecture suffered extensive damage from the Great East Japan Earthquake. However, a new administration building was completed in November 2013 and became the last restoration project.

-R&D activities that meet regional needs are being conducted through collaboration among the engineers in Japan, North America, and Asia.

-The Company, which established an office in Troy, Michigan because the number of vehicles under development are increasing even further, launched business with GM mainly based on its North American and Chinese R&D centers. This is enabling the Company to promote even further R&D activities as a result of better communication.

R&D Activities

-The Company was able to significantly reduce the weight of front sub-frames it supplies to the new Honda Fit, based on its proprietary, optimal designs that elicit the best in terms of frames, thickness, and board assembly.

-The Company further advanced its technology on hydro processing for crushed torsion beams by combining it with annealing processing technology. This has enabled the Company to create technology that can be applied to cars with weights in the minivan class.

-In addition, the Company further advanced hydro-processing technology and is developing low-cost crushed torsion beams for light-weight, entry-level cars.

Technology Licensing-out Agreement

(As of Mar. 31, 2014)

Partners	Country	Type of Support	Contract Period
Cheng Yu Industry Co., Ltd.	Taiwan	Technical support dealing with manufacturing and sales	Dec. 21, 1994 - Dec. 20, 1999 Annual automatic renewal from then on
Gestamp Tallent Ltd.	UK	Technical support dealing with manufacturing and sales	Jul. 18, 2011- Jul. 17, 2016 Or for as long as the production of the subject products continues.
Progressive Tools & Components Pvt. Ltd.	India	Technical support dealing with manufacturing and sales	Nov. 29, 1996 - and after, with the contract to continue while financing is being provided.
YPS Limited	Turkey	Technical support dealing with manufacturing and sales	Sep. 30, 2010 - Sep. 29, 2015 Or for as long as the production of the subject products continues.
Benteler Componentes Automotivos Ltda.	Brazil	Technical support dealing with manufacturing and sales	May 20, 2011 - May 19, 2016 Or for as long as the production of the subject products continues.
SMC Co. Ltd.	South Korea	Technical support dealing with manufacturing and sales	Apr. 4, 2006 - Apr. 3, 2011 Annual automatic renewal from then on
Cosma do brasil	Brazil	Technical support dealing with manufacturing and sales	Sep. 27, 2007 - Sep. 26, 2012 Will continue indefinitely until production of the product subject to receiving the technical support ceases.
Formex Mexico, S.A. de C.V.	Mexico	Technical support dealing with manufacturing and sales	Aug. 30, 2010 - Aug. 29, 2015 Or for as long as the production of the subject products continues.

 

Technology Licensing-in Agreement

(As of Mar. 31, 2014)

Partners	Country	Company name	Details	Contract period
F-Tech, F&P Mfg Inc., F&P America Mfg Inc.	UK	TI Corporate Services Limited (Variform, Inc.)	Technological support dealing with pipe forming	Oct. 20, 1994- Oct. 20, 2023

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	12,715	10,696	7,873

-By region for FY ended March 2014: Japan (JPY 3,011 million), North America (JPY 4,296 million), and Asia (JPY 5,767 million)

Planned Capital Investments

(As of Mar. 31, 2014)

Company Name Location	Segment	Planned investment (in million yen)	Start	Completion	Increased capacity after completion
The Haga Technical Center (Tochigi, Japan)	R&D facilities	629	Apr3 2013	Mar. 2016	Expanding R&D capacity
The Company Kuki Plant (Saitama, Japan) Kameyama Plant (Mie, Japan)	Initiatives to reorganize the business structure	1,300	July 2013	Mar. 2016	Through in-house production, lower costs of goods and lower logistics expenses will be possible
	Businesses related to automotive components	2,174	Dec. 2013	Mar. 2015	Facility expansion in line with launch of a new model
F&P America Mfg., Inc. (Ohio, USA)	Businesses related to automotive components	2,453	Apr. 2014	Mar. 2015	Facility expansion in line with launch of a new model
F-Tech Zhongshan Inc.	Businesses related to automotive components	2,201	Apr. 2014	Mar. 2015	Facility expansion in line with launch of a new model
F.tech Wuhan Inc.	Businesses related to automotive components	2,760	Apr. 2014	Mar. 2015	Facility expansion in line with launch of a new model