Financial Overview

(in million JPY)

	FY ended Mar. 2014	FY ended Mar. 2013	Rate of change (%)	Factors
Overall
Sales	191,337	177,288	7.9	-Sales increased as a result of last-minute new-car buying before the consumption tax increased in Japan; and due to favorable currency translation due to the weak yen.
Operating income	5,231	3,210	63.0	-Income grew as a result of the Company’s increasing its sales of highly profitable products and reducing fixed costs.
Ordinary income	4,441	3,326	33.5	-
Net income	3,342	1,358	146.1	-

Mid-term Management Plan

-The Company set a mid-term management plan for the fiscal years 2013 to 2015. Fiscal year 2015 ends in March 2016, and the Company has set the following business targets to be achieved by then. Sales: JPY 230 billion (29.7% increase compared to the results of the fiscal year that ended March 2013), operating margin of 5.0% (or 3.2 points higher). The main points are as follows:

1. Strengthen its operations in onboard devices focusing on Smart Access, a could-based information service; expand the capabilities of devices enabling vehicle-to-outside communication, and strengthen operations in the sensoring camera sector.
Reinforcement of cloud computing and image recognition
-The Company will offer mid-career positions in the field of cloud computing and image recognition, starting from April 2014. The Company will increase the number of engineers with expertise in information and safety technologies, so as not to lag behind competitors in the fast-growing fields. As stated in the mid-term growth strategy, the Company is strengthening development of "Smart Access", the Company's own cloud-based information network service, as well as sensing cameras and control technologies. The Company's product lineup will shift from car navigation and audio equipment to cloud-based in-vehicle information devices and image recognition technologies for the safe driving assistance system. Over a medium and long-term, the Company intends to develop a system to integrate and control information from a car navigation system, gauges, audio equipment and in-vehicle cameras. (From an article in the Nikkan Jidosha Shimbun on January 17, 2014)

2. Expand operations in emerging countries
Increasing the ratio of sales generated outside Japan
-The Company is aiming to increase the ratio of sales generated outside Japan from the current level of 45 percent to 60 percent by FY2015. It will make group-wide efforts to introduce and sell car navigation systems and audio equipment that best suit the needs of emerging markets, where the automotive industry is quickly expanding. In response to growing demand from customers, the Company is adding production capacity in Thailand to ensure a stable supply system. In its mid-term business plan covering from FY2013 through FY2015, the Company has set a global sales target of 230 billion yen, which represents a gain of about 30 percent from FY2012. By developing and presenting optimum products for emerging countries, the Company intends to boost sales outside Japan to achieve the mid-term target. (From an article in the Nikkan Jidosha Shimbun on Jun 5, 2013)

Recent developments in production operations

Returning some production operations to Japan
-The Company is considering bringing back production of products for the Japanese market from its overseas facilities. Due to the sharp depreciation of the yen, the Company has recently been suffering from soaring import costs, which are putting pressure on its profitability. When the value of the yen slips 1 yen against the dollar, the Company will be losing JPY 100 million per year. The Company hopes to reduce the impact by transferring part of the production operations back to Japan. Clarion has 8 plants in 6 countries outside Japan. Approximately 50 percent of products for the Japanese market are currently procured from its Chinese facilities. (From an article in the Nikkan Jidosha Shimbun on November 6, 2013)

Introduction of traceability system through manufacturing process
-The Company will introduce a traceability system to its domestic production facility during business year ending March 2015. The Company is poised to enhance its monitoring system in each manufacturing process ranging from substrate mounting to final inspection, aiming to establish a thorough quality management system. This is expected to lead to new orders from European automakers with a high awareness of traceability, while increasing business with existing customers. The traceability system will be installed at Clarion Manufacturing and Service Co., Ltd. in Fukushima Prefecture. The subsidiary produces car navigation systems, in-vehicle cameras, controllers, and tuners for global OEMs and the aftermarket. (From an article in the Nikkan Jidosha Shimbun on Apr. 10, 2013)

Outlook for FY ending Mar. 2015

(in million JPY)

	FY ending Mar. 2015 (Forecast)	FY ended Mar. 2014 (Actual Results)	Rate of Change (%)
Sales	200,000	191,337	4.5
Operating income	7,000	5,231	33.8
Ordinary income	6,300	4,441	41.8
Net income	4,700	3,342	40.6

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

Awards

-Major award won during FY ended Mar. 2014:

Awarding Company	Award
Daihatsu	Product-Improvement Award
Nissan	Global Innovation Award
Mitsubishi Fuso Truck and Bus	Fuso Supplier Award 2013 (Electronics/Electrical Sector)
Honda Access	Special Appreciation Award (R&D sector)

R&D Expenditure

(in million PY)

	FY ended Mar. 2014	FY ended Mar. 2013	FY ended Mar. 2012
Overall	166	15	14

R&D Activities

(1)  Expanding Smart Access, the Company's onboard cloud telematics service:
-The Company began delivering its Intelligent Voice from the fiscal year that ended in March 2013. This is a cloud-based IT service make it possible to use the same service onboard vehicles, with mobile devices, and with home-based devices by combining Clarion's proprietary automotive cloud technology, Google's speech-recognition technology, and Google's local search.

(2) Driver assistance function enhanced by improving image recognition technology using onboard cameras:
-In the fiscal year that ended in March 2014, the Company developed the following: (1) a front-mounted camera that helps reduce the work involved with high-speed driving, (2) an onboard wireless camera, and (3) a system that automatically steers when the car is being parked by making use of SurroundEye, a monitoring system capable of showing a full, 360 degree view.

-By meeting the challenge of developing technology on spatial recognition that improves upon conventional picture recognition technology, the Company successfully tested an automatic parking system that raised the level of obstacle sensoring and eliminates the need for steering and braking.

(3) R&D activities on diversified auto-interior acoustics technology
-During the fiscal year that ended March 2014, the Company commercialized a new function that creates the true presence and sensation of sound-surround in automotive interiors.

(4) Development of a fully digitalized speaker
-During the fiscal year that ended March 2014, the Company developed a fully digitalized speaker that can be built into the ceilings of homes and in rooms such as bathrooms.

Technological Alliance

-The Company announced that it has concluded an agreement with Google of the U.S. for deployment of voice recognition (Google Voice) and search technologies (Google Places) provided by Google. With this agreement, The Company will start to offer facility and location information around the globe owned by Google via Clarion's own cloud-based information network service "Smart Access" for the search function of its car navigation system. Compared with the information installed in the car navigation system, the new service allows the constant provision of the latest information in great volumes. With a new product scheduled for market launch by the end of this year, the Company will work aggressively to expand its sales globally, including retail and dealer option markets and OEM customers. The Company is the first car navigation supplier that has concluded a contract with Google. (From an article in the Nikkan Jidosha Shimbun on May 11, 2013)

Technology Licensed-in Agreement

(As of Mar. 31, 2014)

Partner	Country	Outline of Licensing Agreement	Contract period
Discovision Associate	U.S.A.	Licensed patent on manufacturing optical disc players	Dec. 1, 1994 to the patent expiry date
Vehicle Information and Communication System Center	Japan	License on the use of VICS technical information	Nov. 28, 1995 - expiry date agreed by two parties
Google Inc.	U.S.A.	License on the use of voice-recognition and retrieval technology	Apr. 30, 2013 - Aug. 31, 2016

Capital Expenditure

(in million JPY)

	FY ended Mar. 2014	FY ended Mar. 2013	FY ended Mar. 2012
Total	2,888	4,298	3,361

Investment in Japan

-The Company invested JPY 457 million in production equipment/facilities, dies, and other equipment.

Investment Outside Japan

<Americas>
-The Company invested JPY 411 million in renewing equipment and facilities for the EMS operations at Electronica Clarion, S.A. de C.V.

<Europe>
-The Company invested JPY 327 million in production equipment/facilities and other equipment..

<Asia/Australia>
-The Company invested JPY 1,692 million to renew plant facilities in China, manufacture dies for products to be used on new-model vehicles, and to expand manufacturing facility in Clarion Asia (Thailand) Co., Ltd.