Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	430,929	428,977	0.5	-During the first half of the year, automotive production fell dramatically because of the Great East Japan Earthquake. However, during the second half, automotive production significantly rose, with sales of automotive lighting products, it main line of business, recording strong growth. However, performance for the year remained relatively on par with last year’s performance.
Operating income	31,725	37,434	(15.3)	-
Ordinary income	31,496	34,319	(8.2)	-
Current net income	13,391	10,012	33.7	-

Business Overview

<Japan>
-Automotive production fell during the first half of the year because of the Great East Japan Earthquake and the high evaluation of the yen against other currencies. During the second half of the year, the hoped for recovery in auto production occurred, enabling the Company to record 254.7 billion yen in operating income for the year, almost the same as that of the previous year.

<North America>
-The annual results of the North American operations suffered because of negative currency translation due to the high evaluation of the yen, in addition to the drop in production of Japanese vehicles caused by the Earthquake in Japan. As a result, operating revenue dropped 10.4% year-on-year, to 40.6 billion yen.

<China>
-Amid sluggish production volumes of Japanese vehicles, the China operations strengthened sales activities by focusing on winning business from local OEMs so as to increase sales. As a result, operating revenue increased 4.7% year-on-year, to 87.5 billion yen.

<Asia>
-Although the earthquake in Japan and the flooding and Thailand were significant issues that the Asia operations faced during the year, the region was able to increase its operating revenue by 5.4% year-on-year, to 33 billion yen, thanks to increased program business won in Thailand and strong production volumes generated in Indonesia.

<Europe>
-Even though the European economy continued to stagnate, the Europe operations were able to increase operating revenue by 19.8% year-on-year, to 14.9 billion yen. This resulted from strong sales of automotive lighting products mainly to local OEMs.

Recent Development Outside Japan

<USA>
-In order to be able to respond to the growth in new business, its North American subsidiary, North American Lighting, Inc. (NAL), built a second production plant on its Alabama plant premises. The new plant, which has been designed to produce headlights exclusively, started commercial production in January 2012. Also, the Company opened a die-casting plant in Indiana in order to strengthen its R&D functions and become more cost-competitive by producing plastic-forming dies in-house. As a result of these business expansions, the Company through NAL has strengthened and augmented its production and development capabilities by producing automotive lighting at its plants in Paris, Flora, and Salem, Illinois; and at its plant in Alabama; by producing dies at its plant in Indiana; and conducting R&D at its technical center in Michigan.

<Thailand>
-In line with the growth of motorization, the automotive industry in Thailand has experienced sudden growth due to an increase in local demand in Thailand and surging exports. The Company's subsidiary, Thai Koito Co., Ltd. (TK), which has also been winning more business as a result, built its forth production plant in Thailand. This new plant, which is located in Prachin Buri Province in the southeast of the country, started production in April 2012. TK, as a result of manufacturing products at four plants in the country, namely the three in Bang Phli, Mueang Samut Prakan Province and the one in Prachin Buri Province, has achieved building a business framework that can respond to increases in production and earn greater revenue.

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	17,600	17,177	17,300

-Total R&D expenses for the year were 17.6 billion yen. By region, the expenses were as follows. Japan: 11.1 billion yen, North America: 2.5 billion yen, China: 3.3 billion yen, Asia: 0.3 billion yen, and Europe: 0.2 billion yen.

R&D Structure

-The Company's R&D structure is based on functions located in four regions, which are the Central R&D Center and local R&D departments in Japan ; the North American Lighting Technical Center the U.S.A.; the Technical Center at Koito Shanghai Lighting; and the Koito Europe NV Technical Center in Europe. The Company's R&D activities are designed to respond to R&D activities being conducted by global car makers that are becoming multi-polarized. In total, there are 2,114 staff members working in R&D at the Group.

R&D Activities

<Japan>
-Developing core technologies in the field of automotive lighting, namely in the areas of optics, electronics, machinery, structural mechanics, etc.
-Developing production technology
-Developing simulation technology
-Developing electronic parts for railroad cars
-Developing systems that will serve as ITS equipment
-Developing systems that respond to the Internet
-Developing auto parts outside of the lighting sector
-Developing aircraft parts
-Developing new products for new business areas.

<North America, China, Asia, and Europe>
-Developing core technologies in the field of automotive lighting, namely in the areas of optics, electronics, etc.
-Developing production technology

Product Development

Next generation headlamp system
-The Company has developed a headlamp fully automated to switch between the low and high beams by detecting vehicles ahead with an onboard camera. The Company is presenting this technology as the next generation headlamp system to secure clear visibility for safe driving, expecting to start its delivery to Japanese domestic automakers by the end of 2012, with the first installation possibly on Toyota's premium model due to be launched in Europe by the end of 2012. While the supplier is developing this new technology for discharge lamps, it is also aiming to expand its application to LED lamps. (From an article in the Nikkan Jidosha Shimbun on May 31, 2011)

Licensing of Technology to Other Companies

(As of Mar. 31, 2012)

Company	Products	Associates	Contract Period
Electro Optica, S.A. de C.V (Mexico)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	20 years from Apr. 22, 1992
Industrias Arteb S.A (Brazil)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	10 years from Dec. 12, 2006
Farba Otomotiv Aydinlatma ve Plastik Fabrikalari A.S. (Turkey)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	15 years from Oct. 24, 1997
Automotive Lighting UK Ltd. (UK)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	21 years from Feb. 24, 1993
Hella Australia Pty Ltd. (Australia)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	20 years from May 1, 1994
Lumotech (Pty.) Ltd. (South Africa)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	10 years from May 4, 2006
EP Polymers (M) Sdn. Bhd. (Malaysia)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	20 years from Apr. 29, 1995
AuVitronics Ltd. (Pakistan)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	10 years from Mar. 7, 2005

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	21,400	16,400	15,700
Automotive business	-	-	14,500

 
-The Company invested in its facilities and equipment mainly in Japan for the purpose of rationalizing and renewing production operations, enhancing the level of product quality, and reducing the cost of goods. The following is a breakdown of capital investments by region: 7,300 million yen in Japan, 4,700 million yen in North America, 5,700 million yen in China, 3,200 million yen in Asia and 300 million yen in Europe.

Planned Capital Investments

(As of Mar. 31, 2012)

Company / Plant	Equipment to be introduced	Estimated amount of investment (in million JPY)	Project Period
			From	To
Shizuoka Plant (Shizuoka Pref., Japan)	Manufacturing equipment for automotive lamps, etc.	3,545	Apr. 2012	Mar. 2013
Haibara Plant (Shizuoka Pref., Japan)	Manufacturing equipment for automotive lamps, etc.	1,783	Apr. 2012	Mar. 2013
Koito Kyushu Ltd. (Saga Pref., Japan)	Manufacturing equipment for automotive lamps, etc.	2,652	Mar. 2012	Mar. 2013
North American Lighting Inc. (Illinois, USA)	Manufacturing equipment for automotive lamps, etc.	2,709	Mar. 2012	Mar. 2013
Guangzhou Koito Automotive Lamp Co., Ltd. (Guangzhou, China)	Manufacturing equipment for automotive lamps, etc.	5,275	Mar. 2012	Mar. 2013
Thai Koito Co., Ltd. (Samutprakarn, Thailand)	Manufacturing equipment for automotive lamps, etc.	5,569	Mar. 2012	Mar. 2013