Financial Overview

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	597,502	472,843	26.4	-Overall sales increased year-on-year due to growth in domestic demand before the consumption tax hike in April. Increased vehicle production in North America, China, and Asia, and operation launch at the Company's new plants overseas also boosted sales.
Operating income	49,506	37,668	31.4	-
Ordinary income	51,895	40,007	29.7	-
Current net income	21,378	16,625	28.6	-
Sales by Segment
Japan	277,617	261,568	6.1	-Although production decreased in the first half of the year due to the negative impact from the expiration of the eco-car subsidy, sales increased year-on-year supported by larger demand from September through March before the consumption tax hike in April 2014.
North America	93,580	62,869	48.8	-Sales increased year-on-year supported by a recovery in vehicle demand and increased production by Japanese automakers. Sales were also boosted by new orders the Company received from U.S. automakers.
China	149,846	94,070	59.3	-Sales increased significantly from the previous year thanks to rising vehicle demand, increased business with local automakers, and operation launch at Guangzhou Koito Automotive Lamp’s second plant.
Asia	57,285	42,798	33.8	-Sales gained year-on-year, especially in Thailand, where the Company raised its market share. The Company also enjoyed strong sales in Indonesia where vehicle and motorcycle production increased.
Europe	19,171	11,536	66.2	-Despite the slumping local economy, sales increased year-on-year thanks to a recovery in vehicle sales and larger orders from customers.

Business Overview

<Japan>
-The Company's domestic share: approximately 60 percent of the headlamp market; and over 30 percent of the rear combination lamp market as of Mar. 2013
-The Company has a nearly 100 percent share of the truck headlamp market.

<North America>
-The Company operates two subsidiaries: North American Lighting, Inc. in the U.S. and North American Lighting Mexico, S.A. de C.V. in Mexico.

• North American Lighting, Inc. manufactures products for customers in northern U.S.
• North American Lighting Mexico, S.A. de C.V. manufactures products for customers in Mexico and southern U.S.

-These subsidiaries supply approximately 80 percent of their products to Japanese companies, especially Toyota. Their products are featured on a number of Toyota's global models including the Camry, the Corolla, and the Highlander.

<Europe>
-The Company has a single-digit share of the headlamp and rear combination markets in the region. Its major competitors include Automotive Lighting, Hella, and Valeo.

<China>
-The Company won new orders through Shanghai Koito Automotive Lamp Co., Ltd., which is expected to further increase its presence in the market.

<Asia>
-Major markets: Thailand and Indonesia
-Sales are growing dramatically in Indonesia, as the Company supplies its products for the popular Toyota Avenza and also for motorcycles built at PT Astra Honda Motor. In addition, the Company's products are featured on all four Low Cost Green Car (LCGC) vehicles: the Toyota Agya/the Daihatsu Ayla; the Nissan Datsun; the Honda Brio Sataya; and the Suzuki Kamurin Wagon R.

Mid-term Management Plan

-In 2013, the Company mapped out a new mid-term business plan for a three-year period between April 2014 and March 2016. In this plan, it aims to increase its annual sales to JPY 600,000 million and boost its operating profit to JPY 54,000 million (operating profit margin of 9.0 percent). Plans for each market are as described below:

Region	Major plans	Details
Japan	-Developing attractive new products	-
	-Introducing highly efficient production lines at all plants	-The Company will begin LED headlamp production at Haibara Plant, its rear lamp production base located in Makinohara, Shizuoka Prefecture, in 2014 or 2015. The plan was devised to deal with a rapid increase in the use of LED headlamps for new models. The Company is also expanding its production capacity at the Sagara Plant, also in Makinohara, Shizuoka Prefecture. With these production boosts, the Company will have the capacity to produce 1.5 million LED headlamps per year in the fiscal year ending March 2016 (FY2015), which is 2.2 times its production capacity outlook in FY2013. The Company had previously halved the production at the Haibara Plant when it reduced rear lamp production. Koito Manufacturing intends to meet the growing needs of LED headlamps in Japan by partially resuming operations at the plant. (From an article in the Nikkan Jidosha Shimbun on January 6, 2014)
North America	-Expanding new business toward Japanese and American OEM manufacturers	-
	-Improving production structure	-North American Lighting, Inc. (U.S.A.) completed expansion work at its Alabama Plant in January 2014. It completed expansion work at its Paris Plant in March 2014. -North American Lighting Mexico, S.A. de C.V., located in Mexico commenced its operation in July 2014.
Europe	-Expanding new business with Japanese and European OEM manufacturers	-
	-Improving business operations to become profitable	-
China	-Improving production and development structure	-The second plant of Guangzhou Koito Automotive Lamp started its operation in September 2013.
Asia	-Strengthening development functions in ASEAN countries	-The Company will increase the number of its development staff in Thailand to 120 by 2015. It will increase local development in order to shorten the development lead-time and to improve cost efficiency.
	-Expanding business for two-wheel vehicles	-

>>>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	24,700	20,000	17,600
-Japan	12,800	11,900	11,100
-North America	4,500	3,300	2,500
-China	4,400	2,600	3,300
-Asia	2,500	1,800	300
-Europe	300	300	200

R&D Structure

-R&D activities are aimed to respond to new developments at global OEM's, and are conducted at the following locations:

• Japan: R&D Headquarters, and R&D offices
• USA: Technical center at North American Lighting, Inc.
• Europe: Technical Section at Koito Europe NV in Belgium.
• China: Technical Center at Shanghai Koito Automotive Lamp Co., Ltd.
• Thailand: Technical Center at Thai Koito Company Limited.

-As of the end of March 2014, 2,513 employees are conducting R&D activities.

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 systems that will serve as ITS equipment
-Developing systems that respond to the Internet
-Developing auto parts outside of the lighting sector
-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

Technology Licensing-out Agreement

(As of Mar. 31, 2014)

Company	Agreement details	Contract Period
Hella Automotive Mexico S.A. de C.V. (Mexico)	Provide technological information, sales and manufacturing license	22 years from Apr. 22, 1992
Industrias Arteb S.A (Brazil)	Provide technological information, sales and manufacturing license	5 years from Oct. 4, 2012
Farba Otomotiv Aydinlatma ve Plastik Fabrikalari A.S. (Turkey)	Provide technological information, sales and manufacturing license	18 years from Oct. 24, 1997
Hella Australia Pty Ltd. (Australia)	Provide technological information, sales and manufacturing license	20 years from May 1, 1994
Lumotech (Pty.) Ltd. (South Africa)	Provide technological information, sales and manufacturing license	10 years from May 4, 2006
EP Polymers (M) Sdn. Bhd. (Malaysia)	Provide technological information, sales and manufacturing license	20 years from Apr. 29, 1995
AuVitronics Ltd. (Pakistan)	Provide technological information, sales and manufacturing license	10 years from Mar. 7, 2005
AMS Co., Ltd. (Korea)	Provide technological information, sales and manufacturing license	7 years from Jan. 16, 2013
AVTOSVET Limited Liability Company (Russia)	Provide technological information, sales and manufacturing license	5 years from Mar. 21, 2013

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Japan	10,100	8,300	7,300
North America	8,400	3,600	4,700
China	9,700	2,200	5,700
Asia	4,900	7,200	3,200
Europe	1,300	800	300
Total	34,500	22,200	21,400

Planned Capital Investment

(As of Mar. 31, 2014)

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.	3,857	Apr. 2014	Mar. 2015
Haibara Plant (Shizuoka Pref., Japan)	Manufacturing equipment for automotive lamps, etc.	5,241	Apr. 2014	Mar. 2015
Sagara Plant (Shizuoka Pref., Japan)	Manufacturing equipment for automotive lamps, etc.	1,830	Apr. 2014	Mar. 2015
Koito Kyushu Ltd. (Saga Pref., Japan)	Manufacturing equipment for automotive lamps, etc.	2,734	Apr. 2014	Mar. 2015
North American Lighting Inc. (Illinois, USA)	Manufacturing equipment for automotive lamps, etc.	8,554	Apr. 2014	Mar. 2015
North American Lighting Mexico, S.A. de C.V. (San Luis Potosi, Mexico)	Manufacturing equipment for automotive lamps, etc.	5,933	Apr. 2014	Mar. 2015
Shanghai Koito Automotive Lamp Co., Ltd. (Shanghai, China)	Manufacturing equipment for automotive lamps, etc.	2,639	Apr. 2014	Mar. 2015
Guangzhou Koito Automotive Lamp Co., Ltd. (Guangzhou, China)	Manufacturing equipment for automotive lamps, etc.	2,972	Apr. 2014	Mar. 2015
Fuzhou Koito Tayih Automotive Lamp Co., Ltd. (Fuzhou, China)	Manufacturing equipment for automotive lamps, etc.	1,120	Apr. 2014	Mar. 2015
Thai Koito Co., Ltd. (Samutprakarn, Thailand)	Manufacturing equipment for automotive lamps, etc.	2,552	Apr. 2014	Mar. 2015