Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Sales	219,661	217,692	0.9	- Sales slightly increased from the previous year’s result. Although sales dropped sharply in North America, mainly because the Company’s Canadian subsidiary discontinued production, the fall was more than offset by the positive effects of the weaker yen and other factors.
Operating income	1,337	6,120	(78.2)	- Income fell significantly from the previous year mainly because of a decrease in sales at a Canadian subsidiary, changes in sales mix, and costs incurred both for establishing new plants and for preparing for new model launches.
Ordinary income	4,635	9,326	(50.3)
Net income	1,627	5,593	(70.9)

Joint Ventures

<China>
-In 2013, the Company set up two new automotive seat joint ventures in China. Both JVs are formed by Tachi-S China Co., Ltd. (Guangdong) (Tachi-S’s fully-owned subsidiary in China) and Chinese manufacturer, Lear Dongfeng Automotive Seating Co., Ltd. This will allow Tachi-S to quickly respond to the business expansions of Japanese automakers, who are its main customers in China. (From an article in the Nikkan Jidosha Shimbun on August 30, 2013)

-In 2013, the Company is going to establish a new automotive seating plant in Dalian City, Liaoning Province, China through a joint project with Lear Dongfeng Automotive Seating Co., Ltd. (headquarters: Wuhan City, Hubei Province), a Chinese joint venture of Lear Corporation. The plant is expected to have the capacity to produce seats for approximately 200,000 vehicles a year. Construction work will begin in 2013 based on a plan to supply seats for about 100,000 vehicles a year initially to Nissan Motor's new joint-venture facility that will commence production in 2014. In the area of seat business for Nissan vehicles built outside Japan, Tachi-S has already been in partnership with Lear, a major seat supplier based in the U.S. By bolstering its relationship with the global supplier, the company aims to enhance its support to Nissan, which is stepping up production in China. (From an article in the Nikkan Jidosha Shimbun on Feb. 13, 2013)

<Malaysia>
-on January 29, 2013, the Company announced that it would establish a new company in Selangor, Malaysia through a joint investment with a local seat manufacturer, Auto Parts Holdings Sdn. Bhd. Tachi-S' first Malaysian plant will produce automotive seats for 40,000 vehicles a year, starting in the second half of 2014. The seats will be supplied to the plants of Japanese automakers. The joint venture will be called APM Tachi-S Seating Systems Sdn. Bhd. Production operations will be initially outsourced to Auto Parts Holdings, to which Tachi-S is licensing-out technologies. APM Tachi-S Seating Systems will be capitalized at 3.5 million RM, of which 40 percent will be provided by Tachi-S Thailand Co., Ltd. and 60 percent by Auto Parts Holdings. The capital composition is planned to be adjusted when the factory is completed. Sales are expected to reach 3.2 billion yen by FY2015. (From an article in the Nikkan Jidosha Shimbun on Jan. 31, 2013)

Indonesian Business

-On May 31, 2013, the Company announced that it will make an additional investment of USD 8.5 million (approximately 850 million yen) in its Indonesian subsidiary, PT. Tachi-S Indonesia. The company is going to appropriate the fund in a new plant and equipment in order to start mass-production of automotive seats in November 2014. As a result of this capital injection, the subsidiary's capital will be increased to USD 15.25 million (approximately 1.52 billion yen). (From an article in the Nikkan Jidosha Shimbun on Jun 3, 2013)

Increased Imported Parts

-The Company will increase the ratio of imported seat covers used at its facilities in Japan to 70 percent by the fiscal year ending March 2017. The company is looking to boost the procurement volume from China, where it will open a new plant in Dalian, Liaoning Province. Seat cover production requires labor-intensive processes (such as sewing) that are difficult to automate. Tachi-S is expanding production in China to take advantage of a large working population and lower wages. Meanwhile, the company will continue to manufacture seat covers for premium vehicles in Japan so that it can improve its ability to develop new products. (From an article in the Nikkan Jidosha Shimbun on July 26, 2013)

Business Collaboration

-In 2013, the Company entered into a business agreement with Viza Automocion, S.A.U., a Spain-based supplier of automotive seat frames, in order to enhance its supply system in Europe. Starting in 2014, the Company will outsource production of its lightweight, low-cost seat frames to Viza, which is headquartered in Vigo. As automakers are expanding their global production networks, the company intends to establish a stable supply system to deliver the next-generation seat frames worldwide. It is planning to establish a new production hub in Europe, following inaugurations of plants in North America, China, and Southeast Asia. The Company has been chosen as the sole supplier of seat frames for Nissan's next-generation pickup truck that will be manufactured at the automaker's global facilities. Production bases of the major customer include Spain, where the Company does not have its own production facilities. The seat frames made by Viza will be supplied to the plants of local seat supplier that will deliver complete seats to Nissan. (From an article in the Nikkan Jidosha Shimbun on July 10, 2013)

Outlook for FY ending Mar. 31, 2014

(in millions of JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	248,000	219,661	12.9
Operating income	4,200	1,337	214.1
Ordinary income	6,700	4,635	44.6)
Net income	3,200	1,627	96.7

>>>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	4,716	4,026	3,418

-The Company's planned expects R&D expenditure for FY ending Mar. 31, 2015 is 4,547 million yen.

R&D Facilities

Tachi-S Technology Center	Ome City, Tokyo
Advanced Technology Center	Ome City, Tokyo
Tachi-S Technology Center Aichi	Anjo City, Aichi Pref.
Tachi-S Engineering U.S.A. Inc.	Michigan, USA
Tachi-S Engineering Europe S.A.R.L.	Velizy-Villacoublay, France
Tachi-S Engineering China Co., Ltd.	Fuzhou, China
Tachi-S Engineering Latin America S.A. DE C.V.	Aguascalientes, Mexico
Tachi-S Engineering Vietnam Co., Ltd.	Ho Chi Minh, Vietnam

R&D Structure

-The Company, in order to conduct effective and efficient R&D activities, has positioned its technical center in Japan as the main function accountable for product development and fundamental technology. In addition, however, the Company works with its operations in the U.S.A. and Europe, and with technical-licensing and partner companies, in order to gather information on the latest technologies and peripheral technologies. Also, the Company makes sales presentations to global OEMs and parts suppliers about its wealth of technology on new products and new production methods. Currently, some of these technologies are being used by customers.

-The Company formed two commercial alliances, the first one with Fuji Kiko (in August 1999) and the second with Kasai Kogyo (in November 2006). These alliances are designed to improve its R&D capabilities in the areas of structural products and plastic molded parts, with the idea of jointly using each other's R&D functions outside Japan.

-Based on its decision to consolidate all the functions directly involved with product creation, namely development, production, and purchasing, the Company opened its R&D/Product Creation Center in August 2012 in Ome City, Tokyo.

-In May 2012, the Company established Tachi-S Engineering Latin America, S.A. De C.V. in Aguascalientes, Mexico, as its technical center responsible for the Central and South American regions.

R&D Activities

Developing Seats and Proprietary Structural Parts
-The Company develops the following products as seat-systems: seats for cars and other types of vehicles, recliner devices, slide rails, large-size movable lifters, underfloor storage devices, long slide-rails for RVs (and related peripheral parts), rotary units, and other items. It is working to win customers.

Developing Enhanced Safety Technology
-As a means to enhancing occupant safety, the Company develops the following items as seat systems, which are already being installed: seats with three seatbelts, seats with side airbags, occupant sensing seats with smart airbags, and seats that mitigate neck injuries. In addition, the Company conducts R&D activities on the structural nature of safety seats in terms of their responding to front, rear, or lateral collisions.

Developing Environmentally Compliant Technology
-In the area of developing technology that complies with environmental concerns, the Company develops new materials that improve fuel efficiency and comply with the total phase-out of environmentally harmful substances; and develops ultra-lightweight seats that incorporate the latest structural technology. It is making sales presentations to customers, who are using these products.

Developing Products for Adapted Vehicles
-The Company develops special seats designed for vehicles adapted for use by the physically challenged. These seats offer excellent assistance in terms of their easy operation and their ease of letting occupants get in and out of vehicles. It is making sales presentations to customers, who are using these products.
 
Developing Lower-cost Products
-The Company develops low-cost, next-generation seats made possible through standardization, which are already being equipped by customers in and outside Japan.

Developing Production Technology
-The Company develops technology that improves the adhesion and molding of seats, technology that can foam mold single-unit headrests and armrests, and technology that reduces work and increases automation in the seat-assembly processes. It works on mold-making and die-making based on CAD and CAM. In addition, the Company has constructed a mixed production-line that can handle small lots of numerous product items, enabling it to respond to the increasing number of both vehicle models and product items.

Seat R&D
-Under the aim of creating more comfortable seats, the Company is continuing its efforts at evaluating the level of "seating comfort", doing its own research into seat structures and designs in terms of how seats should be. In addition, in order to find the perfect design in a short period of time, i.e., a design that balances performance, quality/quantity, and costs, the Company conducts CAE analysis in reducing development time and costs.

Seat-design R&D
-The Company is developing designs on its own that are connected to all the sectors that the Company is engaged in such as seats. This includes working on future seat concepts and developing new product designs and corporate designs. The Company had made presentations to customers, who are currently using these products.

Standard frame
The Company developed an original standard frame that can be shared among various vehicle models. The standard frame is already used on vehicles produced by the Company' major customers.

New R&D Center

-The Company will set up a new development center in Guangzhou City, China. The new R&D facility is scheduled to start operations in 2014 to support Japanese automakers' facilities in Guangzhou, which are stepping up their R&D activities to develop vehicles for the China market. The seat supplier will construct a new building to accommodate approximately 100 engineers who will develop new products that meet the needs of Japanese OEMs. (From an article in the Nikkan Jidosha Shimbun on August 27, 2013)

Licensing of Technology from Other Companies

(As of Mar. 31, 2014)

Partner	Country	Contract	Contract period
Isringhausen GmbH & Co. KG	Germany	-Licensing-in of manufacturing technology and distributorship for suspension systems. -Sharing and licensing of manufacturing technology and sales know-how for seats (patented items are excluded)	Nov. 1985 - for an indefinite period (Subject to expiration with a prior notice of 6 months)

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	9,075	4,535	4,808

- Major investment projects during FY ended March 2014 included new plant construction in Latin America, and work undertaken to deal with new orders and model changes.

-The Company expects capital expenditure for FY ending Mar. 31, 2015 to be 10,298 million yen.

<Japan>
- Investment totaled JPY 1,223 million. The Company invested mainly in preparing production lines to deal with new orders and model changes.

<North America>
-The Company invested a total of 1,822 million yen mainly in production facilities, in order to respond to vehicle model changes.

<South America>
- Investment totaled JPY 4,546 million. Major investment projects included new plant construction in Mexico, and work undertaken to deal with new orders and model changes.

<Europe>
- The Company spent JPY 76 million mainly on preparing production lines to deal with new orders.

<China>
- The Company spent JPY 661 million mainly on preparing production lines to deal with new orders and on retooling equipment.

Expanded Production Capacity

<Mexico>
-In 2013, the Company announced that it will make an additional investment of 314 million pesos (approximately 1.9 billion yen) in its Mexican subsidiary, Setex Automotive Mexico S.A. de C.V., in April 2013. As a result of this capital increase, the subsidiary is going to expand its capacity to produce automotive seats, demand for which is projected to outstrip the originally expected level. This will allow Tachi-S to establish an efficient local supply system to meet Japanese automakers' demand promptly. Setex Automotive Mexico, initially capitalized at 50,000 pesos (approximately 300,000 yen), will ensure a production capacity of 280,000 units a year by fiscal year 2017. (From an article in the Nikkan Jidosha Shimbun on Apr. 20, 2013)

<China>
-The Company is going to double the production capacity at its Wuhan Plant in Hubei, China to seats for 200,000 vehicles a year by the summer of 2013. The expansion plan is based on a new program the company won from Dongfeng Honda Automobile (Wuhan) for its new vehicle models. Taking advantage of this additional business opportunity with the customer, the Japanese major seat manufacturer is poised to enhance its supply structure in China and expand sales to the Honda Group. Up until now, Tachi-S' Chinese plants have been making seats mainly for Nissan vehicles. The Group is now looking to enhance its presence in China further by stepping up business with Honda as well. (From an article in the Nikkan Jidosha Shimbun on Jan. 24, 2013)

Planned Capital Investments

(As of Mar. 31, 2014)

Company Office	Investment targets	Estimated amount of investment (million JPY)	From	To
Tochigi Plant	Equipment for manufacturing automotive seats	584	Nov. 2014	Jan. 2015
Musashi Plant	Equipment for manufacturing automotive seats	278	May 2014	Sep. 2014
Suzuka Plant	Equipment for manufacturing automotive seats	206	Mar. 2014	Jun. 2014
Technical Monozukuri Center	IT system	347	Apr. 2014	Mar. 2015
Setex Inc. (USA) Headquarter Plant	Equipment for manufacturing automotive seats	373	Apr. 2014	Mar. 2015
Industria de Asiento Superior, S.A. de C.V. (Mexico) New Plant	Plant for assembly and sewing operations	1,770	Dec. 2012	Aug. 2014
Industria de Asiento Superior, S.A. de C.V. (Mexico) Headquarter Plant	Plant for assembly and sewing operations	1,166	Jan. 2014	Jul. 2014
TACHI-S China Co., Ltd.	R&D center	480	Jan. 2014	Dec. 2014
Wuhan TACHI-S Johnson Controls Automotive Seat Co., Ltd. (China)	Plant for assembly and sewing operations	415	Jan. 2014	Aug. 2014