Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	569,711	507,985	12.2	-
Operating income	37,480	30,020	24.9	-
Ordinary income	41,436	34,907	18.7	-
Net income	24,677	20,333	21.4	-
Suspension Springs Division
Sales	120,422	103,213	16.7	-New-vehicle production increased both in and outside Japan.
Operating income	15,284	10,245	49.2	-
Seat Division
Sales	245,549	208,773	17.6	-New-vehicle production of major customers increased both in and outside Japan.
Operating income	12,615	13,543	(6.9)	-Income decreased due to initial startup costs at a new company in China.
Precision Parts Division
Sales	128,620	123,373	4.3	-Sales increased due to greater vehicle production volumes both in and outside Japan and because of favorable currency translation, in spite of lower production volumes of HDDs.
Operating income	5,597	2,919	91.7	-

New Company

<Japan>
-The Company announced that it will establish a wholly owned production subsidiary in Fukuoka Prefecture, Japan in June 2014. The new company, NHK Spring Kyushu (tentative name), will take over production of coil springs and stabilizers for the Kyushu region from NHK Spring's Shiga Plant. New operations are scheduled to begin in April 2016. Approximately JPY 2 billion will be invested in the new facility, which will cover 40,000 square meters of land and will introduce cost-efficient and compact new production lines. The plant will be located adjacent to Faurecia-NHK Kyushu, NHK Spring's seat production joint-venture with Faurecia of France. Having received a new program from Nissan, the joint venture's major customer that is increasing local sourcing, the Group has decided to make spring products locally in Fukuoka as well. It hopes to supply its springs also to the local facilities of other automakers. Annual sales at the subsidiary are expected to reach JPY 1.5 billion by the fiscal year ending March 2019. (From an article in the Nikkan Jidosha Shimbun on May 14, 2014)

<Europe>
-The Company said that it will establish a holding company in the Netherlands and the subsidiary's branch in Germany. The new wholly-owned subsidiary, NHK Spring Europe B.V. (tentative name) is scheduled to be established in Amsterdam in March 2014. It will serve as the company's European base. The new branch in Germany will contribute to providing better customer services in Europe. It will be capitalized at EUR 350,000 (JPY 49.3 million). NHK Spring will increase the subsidiary's capital by contributing all the 40.17% shares that it holds in another subsidiary in Spain, Iberica de Suspensiones S.L. The German branch will be located in Wolfsburg. (From an article in the Nikkan Jidosha Shimbun on March 7, 2014)

<Mexico>
-The Company announced that its Mexican subsidiary, NHK Spring Mexico S.A. de C.V., will start production in February 2015. After having secured a stabilizer supply contract, the company has also received an order for coil springs. Sales are expected to reach USD 29 million (JPY 2.755 billion) in fiscal year ending March 2019. The new subsidiary has been capitalized at USD 22 million (approximately UPY 2.09 billion), fully invested by a US subsidiary of NHK Spring, NHK International Corporation. A plant with floor space of 7,500 square meters will be constructed at a site of 60,000 square meters. NHK Spring has two automotive suspension spring plants and one seating plant in the U.S., but this is the first time for it to locate a plant in Mexico.

-In April 2013, Topura Co., Ltd., a member of the NHK Spring Group, announced that it will set up Topura Fastener de Mexico S.A. de C.V. to produce automotive screws and bolts in Guanajuato, Mexico in June 2013. The new subsidiary will be capitalized at 183 million pesos (approx. JPY 1.4 billion), of which 44.6% will be funded by Topura, 22.1% by Topura's U.S. subsidiary TAF, and 33.3% by NHK International, a U.S. subsidiary of NHK Spring. A plant with the building area of 11,000 square meters will be built in the premises of NHK Spring's new Mexican subsidiary NHK Spring Mexico, which will start operations in April 2015. This is the first time for Topura to manufacture products in Mexico, and the company will do so in response to increased production at its customers' local facilities. Topura Fastener de Mexico targets at achieving sales of 221 million pesos (approx. JPY 1.7 billion) in fiscal year ending March 2018. (From an article in the Nikkan Jidosha Shimbun on Apr. 18, 2013)

<Indonesia>
-The Company announced that it has set up a seat production joint-venture in Indonesia with a local seat parts supplier and Faurecia S.A. of France. The new company will construct a plant in Purwakarta, West Java, which will supply automotive seats for Nissan Motor's new model to be built in the country. Seat production is scheduled to begin in March 2014. Sales are expected to reach IDR 396 billion (JPY 3.5 billion) in fiscal year 2015. This is the first time that the Company has established a manufacturing site in Indonesia. (From an article in the Nikkan Jidosha Shimbun on August 30, 2013)

<India>
-The Company, Faurecia of France and Krishna Group of India have set up a joint venture and a plant to produce automotive seats near Chennai, South India. The plant will commence production in December 2013. This is the first automotive seat production plant for the Company in India. The joint venture, NHK F. Krishna India Automotive Seating Private Limited, is 51% funded by NHK Spring, 30% by Indian auto parts manufacturer Krishna Group, and 19% by Faurecia. The plant will be located in the Oragadam Industrial Estate, near Chennai, having a total floor space of 3,500 square meters on an 8,000-square-meter land. The Company has tied up with Faurecia in supplying seats to Nissan Motor. The joint venture will also supply seats to Nissan Motor in India. (From an article in the Nikkan Jidosha Shimbun on Mar. 14, 2013)

Restructuring

<China>
-On March 6, 2014, the Company held a board meeting and decided to liquidate its Chinese subsidiary, NHK Seating (Guangzhou) Co., Ltd. (located in Guangzhou, Guangdong Province). The liquidation will be completed at the end of March 2015. The Chinese subsidiary was established in March 2011 for manufacturing and sales of automobile seat components. The Company, however, decided that keeping its operations might be difficult. Some of the development and design work handled by NHK Seating (Guangzhou) will be transferred to another Chinese subsidiary, NHK Seating (Hubei) Co., Ltd. in Xiangyang, Hubei Province. (From an article in the Nikkan Jidosha Shimbun on March 7, 2014)

Mid-term Business Plan (FY ending March 2015 - FY ending March 2017)

-The Company announced its new medium-term management plan. The Company has set its sales target for the fiscal year ending March 2017 (FY2016) at JPY 670 billion, up 17.6% from FY2013. Planned capital investment for FY2014-FY2016, mainly aimed at increasing sales in Japan and abroad, is JPY 76 billion, exceeding the level in the previous plan. The Company will enhance the production capacity of suspension springs in China and India, while trying to win more orders for seats in and outside Japan to improve profitability. The new management plan is based on the assumption that 9.7 million vehicles will be produced in Japan in FY2016, 14.3 million in North America, 28 million in China and 2.6 million in Thailand. The Company targets an operating profit of JPY 51 billion, up 36.3% from FY2013, and a net income of JPY 34 billion, up 38.2% from FY2013. The Company aims to achieve a substantial increase in operating profit with an increase in sales coupled with business streamlining. The total capital investment for the next three years will amount to JPY 26 billion for suspension springs and JPY 17.1 billion for seats, both exceeding the figures in the previous mid-term management plan. Projected growth rate of suspension springs is especially high at 85.7%. The Company will increase upfront investments to strengthen its global supply networks. (From an article in the Nikkan Jidosha Shimbun on June 2, 2014)

-Performance targets for Mid-term management plan (ending in March 2017)

• Sales: JPY 670 billion
• Operating income: JPY 51 billion (profit margin 7.6%)
• Ordinary income: JPY 54 billion (profit margin 8.1%)
• Net income: JPY 34 billion (profit margin 5.1%)

Outlook for FY ending Mar. 31, 2015

(in millions of JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	580,000	569,711	1.8
-Suspension springs	115,600	120,422	(4.0)
-Seating	253,600	245,549	3.3
-Precision Components	132,100	128,620	2.7
Operating income	36,000	37,480	(3.9)
Ordinary income	38,000	41,436	(8.3)
Net income	24,000	24,677	(2.7)

-FY ending March 2015, the sales for Suspension springs seems to decline because of vehicle production slow down in Japan and in Thailand.

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	13,803	11,750	10,055
Ratio of R&D expenses to sales (%)	2.4	2.3	2.3

-R&D Expenditure for FY ending March 2015 is planned to be JPY 16,534 million.

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 2014, the Company had 944 staffs working in R&D, which is 5.8% of the workforce.

R&D Activities

Suspension Spring Division
-R&D Expenses: JPY 2,148 million
-Major issues: Making coil-springs and stabilizers with FSD (Fully Stressed Design)： a design method for balancing/equalizing stress distribution, regardless of position; stronger; making leaf-springs stronger.
-Major achievements: The Company succeeded in development of products with improving durability, ensuring quality.
-Future areas of R&D activities: Development of processes of making stronger, lighter-weight products while using low cost material; as well as development of processes that reduce costs.

Seat Division
-R&D Expenses: JPY 5,579 million
-Major R&D Activities: In reducing product weight, the Company researched a new structural design for seat frames, applied high-tensile steel, and switched from steel to new materials. It also improved structural parts. In addition, it conducted R&D activities to reduce seating fatigue and improve riding comfort, designs, overall seat performance, product appeal and competitiveness. Especially, in working to quantify the evaluation of riding comfort, the Company developed a superior designed cushion in terms of dynamic attitude stability, aiming to find a means for reducing seat-frame vibration.
-Major achievement: Established a production method that combines thin sheet metal and CFRP (Carbon Fiber Reinforced Plastics) materials, wining new orders for standard seat frames and fully assembled automotive seat systems.

Precision Parts Division
-R&D Expenses: JPY 3,462 million
-The Company developed precision springs for automotive engines and transmissions. In working on next-generation products, it developed motor cores by using technology on high-precision stamping processes; parts for fuel cells, and weight-reduction technology that works to improve fuel efficiency.

Product Development

Plastic Seatback Frame
-The Company has developed a new plastic seat-back frame designed to reduce the weight of a seat drastically. The product is made of carbon fiber reinforced plastic (CFRP) and therefore is both lightweight and highly rigid. The Company will propose the new frame to automakers and aims to begin mass production as soon as possible. The use of CFRP in the seat-back frame has reduced the weight by 33% compared to a lightweight metallic seat frame with the same specification. The Company intends to propose the frame for fuel-efficient gasoline, electric, and ultra-micro electric vehicles. (From an article in the Nikkan Jidosha Shimbun on May 23, 2014)

Interior Material made of Bamboo
-The Company has developed a new automotive interior material made of bamboo, which is abundantly indigenous to Thailand. The Company will propose the new material to automakers' facilities in Thailand, aiming to start mass production during 2014. Using the locally procured material contributes to meeting automakers' demand for cost cutting and local sourcing. The Company developed the new material in celebration of the 50th anniversary of NHK Spring (Thailand) Co., Ltd., located in Samut Prakan Province. The new material is made from a blend of bamboo powder and binder fibers, which is formed into a sheet by use of a paper-making method and then hot-pressed to harden it. The Company is poised to propose the new material to automakers for use in seat backboards, as well as to suppliers in other industries for various applications such as building materials. (From an article in the Nikkan Jidosha Shimbun on May. 24, 2013)