Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	440,752	456,198	(3.4)	-
Operating income	22,493	32,757	(31.3)	-
Ordinary income	23,884	33,407	(28.5)	-
Net income	16,741	19,420	(13.8)	-
Suspension Springs Division
Sales	90,334	91,206	(1.0)	-Performance was lower year-on-year due to production decreases by OEMs based outside of Japan.
Operating income	6,814	7,168	(4.9)
Seat Division
Sales	175,714	181,426	(3.1)	-Performance was lower year-on-year due to production decreases by OEMs based outside of Japan.
Operating income	8,134	9,842	(17.4)
Precision Parts Division
Sales	99,961	113,306	(11.8)	-Performance was considerably lower year-on-year due to several factors, including production decreases by OEMs based outside Japan, lower production volumes of HDDs, industry reorganizations, and negative currency translation.
Operating income	3,508	11,818	(70.3)

Recent Development Outside Japan

-The Company and Faurecia S.A. announced that they have decided to broaden their 50/50 Faurecia NHK (FNK) joint-venture to continue serving Nissan. The new agreement foresees the establishment of branches in China and the U.S. FNK develops and manufactures automotive seating. In 2011, FNK sales exceeded 600 million euros, while the 1 billion euros mark is expected to be reached in 2015. (From a press release on March 29, 2012)

-The Company plans to expand its complete seat business overseas. It will manufacture complete seats at the new plant to be launched in FY 2011 in Thailand and supply the products to local plants of Mitsubishi Motors Corp. and General Motors Co. It will also build a new complete seat plant in Henan, China to supply to Japanese automakers' local operations. By expanding overseas operations to directly supply the complete seats with cushions locally, the spring manufacturer aims to upgrade its sales in emerging countries where demand growth is expected. (From an article in the Nikkan Jidosha Shimbun on November 25, 2011)

Acquisitions

-In a bid to enter into the business of precision springs, including valve springs for automobile engines, in India, the Company announced it will purchase the relevant business from a local supplier Bombay Burmah Trading Corporation Ltd., by way of NHK Automotive Components India Private Limited, which was established in July. Capitalized at 500,000 rupees (approx. 850,000 yen), which is expected to be increased when the purchase is materialized, the subsidiary is owned 99.9 percent by NHK and 0.1 percent by NHK (Hong Kong). The deal is expected to be completed in October. The precision spring unit to be purchased is located in Aurangabad, Maharashtra State and engaged in manufacture and sales of valve springs and other springs for automatic transmissions. The sales for the term ended March 2011 were 1.1 billion rupees (approx. 1.87 billion yen). (From an article in the Nikkan Jidosha Shimbun on September 13, 2011)

Restructuring

-The Company announced on November 18 that it will make the following two subsidiaries its wholly owned subsidiaries effective April 1, 2012: NHK Sales Co., Ltd. and Topura Co., Ltd. The company will acquire a 100 percent ownership of these companies through a stock swap. The acquisition is intended to accelerate the Company's restructuring efforts in the matured Japanese domestic market as well as expansion strategies in the emerging markets. NHK will also step up its product development and quality assurance activities. (From an article in the Nikkan Jidosha Shimbun on November 21, 2011)

New Company

-The Company announced that it will establish a subsidiary in Zhengzhou, Henan Province, China to produce automobile seats. It plans to start production in 2014 to achieve sales of 506 million Yuan (approx. 6.6 billion yen) in 2015. The new company will be formed in December, capitalized at 82 million Yuan (approx. 1.1 billion yen). Taro Umemura, Corporate Officer in charge of automotive seats production, will represent the new subsidiary. With the annual production capacity of seats for 200,000 vehicles, it will supply to Japanese automakers. The Company plans to invest a total of 146 million Yuan (approx. 1.9 billion yen). This will be its 9th subsidiary and its 4th automotive seats production company in China. The company also plans to launch a new subsidiary in the spring of 2012, which will manage the group's operations in China. (From an article in the Nikkan Jidosha Shimbun on November 12, 2011)

-The Company announced it will establish an administrative company in Guangzhou, China. The new company, which is slated to be set up in the spring of 2012 with capital of 30 million USD, will be responsible for planning investments in China, overseeing group companies in China, and providing assistance to them in administration and business expansion. (From a press release on August 8, 2011)

Outlook for FY ending Mar. 31, 2013

(in millions of JPY)

	FY ending Mar. 31, 2013 (Forecast)	FY ended Mar. 31, 2012 (Actual Result)	Rate of Change (%)
Sales	530,000	440,752	20.2
Operating income	38,000	22,493	68.9
Ordinary income	39,000	23,884	63.3
Net income	27,000	16,741	61.3

>>>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, 2012	FY ended Mar. 31, 2010
Overall	10,055	9,786	9,612
Rate of expenditure to sales (%)	2.3	2.1	2.4

-The Company's planned R&D expenses for the 2013 fiscal year is 9,717 million yen, which accounts for a 1.8% of expected total sales.

R&D Structure

-R&D activities at the company are conducted by the following functions: Headquarters R&D Center, Technical Development Center, each of the production and business divisions' R&D functions, design functions, and R&D functions at each subsidiary.

-As of March 2012, the Company had 820 staff working in R&D, which is 5.8% of the workforce.

R&D Activities

Suspension Spring Division
-R&D Expenses: 1,491 million yen
-Major issues: To reduce the costs of coil springs and develop tapered coil springs. To improve the durability of stabilizers and address the issue of three-dimensional bending. To develop high-strength leaf springs.
-Major achievements: The Company succeeded in improving durability, ensuring quality, and further reducing prices.
-Future areas of R&D activities: Development of strong, light-weight, and inexpensive materials; as well as development of processes that reduce costs.

Seat Division
-R&D Expenses: 3,346 million yen
-Major R&D Activities: To reduce weight, the Company is developing new design seat-frames, applying high-tensile materials, creating new materials to replace steel, and reducing the size of mechanical parts by redesigning them. To lower costs, the Company is improving productivity by standardizing products, using improved welding methods, and making integrated, single units by combining thin and thick sheets.
-Major achievement: The Company won new orders for standard seat frames and completed seats for passenger vehicles.
-The Company also conducted research and development activities to improve the basic performance of car seats such as by reducing occupant fatigue and improving seating comfort.

Precision Parts Division
-R&D Expenses: 3,365 million yen
-The Company is working on precision springs by developing new mechanics designed for use in automotive engines, transmissions, and safety devices. It is also developing new technologies that reduce fuel consumption; and motor parts, connector parts and others in which high-precision stamping technology is being applied to respond to the demand predicted for next-generation vehicles.

Product Development

Hollow coil spring
-The Company is exhibiting its hollow coil spring, a new suspension spring technology, at the Tokyo Motor Show 2011. Unlike conventional coil springs made from spring steel, the new product is made from high-strength pipe offering a 25 percent reduction in weight, while achieving the same level of performance as steel products. The Company is presenting the hollow coil spring to automakers, aiming to start its sales for passenger vehicle application in 2013. (From an article in the Nikkan Jidosha Shimbun on December 8, 2011)