Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Sales	209,584	216,574	(3.2)	1)
Operating income	3,835	11,392	(66.3)	2)
Ordinary income	2,097	9,783	(78.6)
Current net income	(3,215)	5,265	-

Factors

1)
-During the first half of the year, the Company's customers produced fewer finished vehicles because of the Great East Japan Earthquake. However, during the second half of the year the Company experienced a recovery in production levels. Nevertheless, performance was lower year-on-year, also being affected by the continued high evaluation of the yen that caused negative currency translation and impacted the final results.

2)
-The Great East Japan Earthquake and the flooding in Thailand severely impacted the Company's ability to operate its production facilities and even procure substitute parts. This caused exorbitant costs increases such as those for raw materials. In addition, the Company faced higher labor costs and won a considerable amount of new business in North America, but which turned out to be unprofitable.
-The Company posted losses for unprofitable business it won in North America. It faced a hardship in terms of deferred tax assets that resulted from a change in the tax structure in Japan. Plus, it could not record a portion of deferred tax assets in North America.

<Japan>
-The Company posted 96.2 billion yen in operating revenue, which was a 3.2% gain year-on-year. Although the Company was impacted by a reduction in production volumes by its customers because of the Great East Japan Earthquake and the flooding in Thailand, it experienced a recovery in the volume of new program business it won during the second half of the year due to a quick rise in production volumes by its customers.
-Operating revenue was 5.9 billion yen, or a 16.7% year-on-year decrease. This was the result of the skyrocketing prices of raw materials, higher labor expenses, costs incurred for establishing a global operating structure, and expenses to generate power in-house so as to avoid any power shortages due to natural disasters or public-utility power failures.

<North America>
-Operating revenue, which was 96.3 billion yen, decreased by 10.0% year-on-year because of fewer orders from Japanese OEMs who had lowered their production volumes of finished vehicles due to the Great East Japan Earthquake. Performance was also lower because of negative currency translation due to the high evaluation of the yen.
-The region suffered an operating loss of 5.4 billion yen, including a 1.7 billion yen reversal recorded under the “Special Account for the Transfer of Subsidiary Operations” (both in and outside Japan). The current period loss was also because of the increased volume of money-loosing business it won from Robert Bosch, and because of the skyrocketing prices of raw materials for mainly cast metal and bearings. For reference, the region recorded an operating profit of 400 million yen during the previous fiscal year.

<Europe>
-Operating revenue, which was 5 billion yen, increased 11.9% year on year, thanks to increased new business the Company won from European and American OEMs.
-The Company, however, recorded an operating loss of 400 million yen due to several negative factors, including the exorbitant cost increases for raw materials. Another factor was the increase in expenses the Company incurred because it had to outsource some production to other companies in Japan, Europe, and North America as a result of winning more new business than its own production capacity could handle. For reference, the European operations recorded an operating loss of 30 million yen during the previous fiscal year.

<Indonesia>
-The operations in Indonesia continued to win strong new orders from Japanese OEMs operating in the country building four- and two-wheel vehicles. However, the Company's operations were forced to reduce production volume because of the flooding in Thailand. In addition, the strong yen resulted in negative currency translation. As a result, operating revenue was lower by 1.6% year-on-year, to 14.0 billion yen; while operating profit was down by 1.5% year-on-year, to 2.5 billion yen.

<China>
- As a result of the operations in China continuing to win strong orders from Japanese OEMs operating in the country, operating revenue increased 3.2% year-on-year to 5.3 billion yen. However, due to increased labor costs and other expenses, the operating profit at the Chinese operations was down 2.8% year-on-year, to 800 million yen.

<Thailand>
-The operations in Thailand were hampered first by the Great East Japan Earthquake that caused a temporary reduction in orders, and then they were hampered by the flooding in Thailand that caused a tremendous drop in production levels. Due to these negative factors, operating revenue, which was 2.8 billion yen, was down 13.0% year-on-year and operating profit drastically fell by 51.3% year-on-year, to 200 million yen.

New Company

-The Company announced on February 7 that it is going to establish a wholly owned subsidiary in Mexico to manufacture automotive brakes. With the establishment, the company is looking to meet growing demand for brakes, as automakers are increasing production or planning new projects in the country. The new facility will allow the company, which has been supplying its products to its customers in Mexico through exports from Japan and elsewhere, to shift to local production for local consumption. The new company, Akebono Brake Mexico S.A. de C.V., will be established in Guanajuato, Mexico on April 1. The plant will be constructed on approximately 100,000 square meters of land. It will start production operations in June 2013, aiming to generate 4.5 billion yen in sales in the year ending March 2016. (From an article in the Nikkan Jidosha Shimbun on February 9, 2012)

-The Company announced on August 8 that it will establish a new company on the outskirts of Hanoi, Vietnam in partnership with an Indonesian-based PT Astra Otoparts Tbk. in November. Akebono's products for Vietnam have so far been exported from its group companies in Indonesia and Thailand. Production of parts for the local market will begin as early as July next year with the production equipment transferred to Vietnam. The new company called "Akebono Brake Astra Vietnam" aims to achieve 1.2 billion yen in sales in 2015. At the start of operation, it will assemble disc brakes, brake pads and master cylinders for motorcycles at the local Yamaha plant. Thereafter, the joint venture intends to expand production capacity with an eye on production of motorcycle components, as well as of automobile brake components in the future. (From an article in the Nikkan Jidosha Shimbun on August 9, 2011)

Contract

-The Company was awarded the first contract for the disc brake system, including friction materials and calipers, from European automakers. The Japanese braking supplier, which is already doing business with five European automakers like Daimler, has so far been engaged in supply of only friction materials. "We have landed two new customers and agreed with them to deliver the disc brake system as a total set," said a company executive. Deliveries will start in 2012. Akebono is now confident that its target to increase sales in the European operation 20 percent to 6 billion yen by fiscal 2013 from the fiscal 2011 plan is certain to be achieved. (From an article in the Nikkan Jidosha Shimbun on December 7, 2011)

Restructuring

-The Company announced on December 20, 2011 that its eight consolidated subsidiaries in the U.S. will be merged into one wholly-owned subsidiary and its corporate name will be changed with the aim of improving efficiency in management and reinforcing financial structure in the North American operations. The merger of the eight existing subsidiaries will take place as of January 1, 2012 with Akebono Corporation (North America) as a surviving entity and the remaining seven companies to be liquidated. After the consolidation, the corporate name will be changed to Akebono Brake Corporation. Also, $99,792,000 (7.78 billion yen) will be added to the capital, raising the capital and capital reserves after the increase to $250,992,000 (approximately 19.5 billion yen). (From an article in the Nikkan Jidosha Shimbun on December 22, 2011)

-The Company is accelerating its turnaround plans for its deficit-ridden North American operations. Although the company had once achieved a gradual recovery from the impact of the global financial crisis that was triggered by the Lehman's fall in the autumn of 2008, its operating margin has been decreasing again since 2010 when it acquired the brake business of Bosch. The deterioration was attributable to a number of loss-making departments transferred from the Bosch Group. Akebono Brake is now set to reinforce its business structure by clarifying the functions of its four production bases worldwide, which include Bosch's former facilities, while improving cost efficiency. It is aiming to bring the North American business back to profitability as early as next year. (From an article in the Nikkan Jidosha Shimbun on November 12, 2011)

Business Plan

-The Company has decided on locating in eastern Europe a new brake caliper plant, construction of which has been discussed as part of the business expansion strategy in Europe. A final decision will be made by September. In connection with this project, Akebono will establish an R&D center primarily for development of a brake caliper in Germany. The supplier of brake products is set to enhance its development and production capabilities of key brake parts in Europe in a bid to increase responsiveness to needs of local automakers mainly in Germany. (From an article in the Nikkan Jidosha Shimbun on June 24, 2011)

-The Company announced its mid-term business plan through FY 2013, "akebono New Frontier 30 rolling plan 2011." Numerical targets and tasks of the previous mid-term plan developed in May last year have been partially revised to reflect the changing market environment. The new plan features the FY 2013 sales target of 230 billion yen, up 6.1% from FY 2010 and the operating profit target of 18 billion yen, up 57%, while new risk countermeasures are included in consideration of the Great East Japan Earthquake in March. As for overseas markets, Akebono Brake aims to bring its North American business into the black in FY 2013. In Europe, it will strengthen its development capabilities and consider building a new caliper plant. In Asia, the market with high growth potential, it will study possible manufacturing operations in Vietnam and India. (From an article in the Nikkan Jidosha Shimbun on June 16, 2011)

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

Outlook for FY ending Mar. 31, 2013

(in 100 million of JPY)

	FY ending Mar. 31, 2013	FY ended Mar. 31, 2012	Year-on-year Fluctuation
Sales	2,138	2,096	42
Operating income	85	38	47
Ordinary income	70	21	49
Net income	65	3	62
Investment Expenditure	30	(32)	62

Sales by Region

(in 100 million of JPY)

	FY ending Mar. 31, 2013	FY ended Mar. 31, 2012	Year-on-year Fluctuation
Japan	922	962	(40)
North America	995	963	32
Europe	52	50	2
China	72	53	19
Thailand	49	28	21
Indonesia	158	140	18
Asia	279	221	59
Consolidated Elimination	(110)	(99)	(11)
Overall	2,138	2,096	42

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	1,747	1,256	1,129

R&D Activities

<Japan>
-The Company has been conducting R&D activities mainly in the area of high-performance and low-cost brake pads for passenger vehicles, making them superior in terms of  both noise and vibration, and in terms of reduced wheel-dust, which has been a recent focus of attention. In addition, the Company is developing high-quality products that use safe and environmentally friendly friction materials.

-The Company is focusing its R&D activities on brakes and drum breaks in two main areas, namely “high performance” and “low-cost”. The Company's aluminum-alloy opposed-brake shoes designed for high-performance cars have been well received by customers.

-In working to develop environmentally friendly products in terms of improving fuel consumption, the Company is conducting revolutionary R&D activities to make lighter braking systems with reduced drag.

-The Company is developing technology on products such as electric brakes in which an electric signal controls the braking function, and electric parking brakes in which only the parking function is motorized. This is being made possible by equipping a compact, electrically powered motor in the braking systems.

-Akebono Brake Research and Development Centre is engaged mainly in the following R&D activities:
1) Developing materials (especially controlled friction materials, low environmental impact materials, and those dealing with crisis management).
2) Developing next-generation friction materials (compact, lighter, greater functionality).
3) Researching the phenomenon of friction, i.e., the mechanism of friction behavior.
4）Developing processes to improve productivity and reduce environmental impact.

<U.S.A.>
-The Company is developing new friction materials and next-generation brakes that comply with new environmental regulations on friction materials that came into law in various states such as Washington.
-In its R&D activities in the brake sector, the Company developed a new disk-brake made from a lighter aluminum alloy. It is also working on commercially producing disk-rotors and drums.

<Europe>
-The European R&D activities specialize in developing friction materials. In terms of developing these kinds of friction materials, the Company's R&D activities are responding to a wide range of needs, from developing friction materials meeting required performance in the European market by complying with the strict European environmental regulations since REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) was introduced, to friction materials compliant with European cars that are being exported to the Japanese and American markets.
<China>
-In order to deliver products that better respond to the market needs in developing countries, the Company set up its China R&D Center in 2011, which conducts product development and design.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Total	14,300	5,100	5,400

-The Company invested the following amounts in facilities and equipment in its global operations: Japan: 7.1 billion yen, North America: 4.9 billion yen, Europe: 100 million yen, Indonesia: 800 million yen, China 1.1 billion yen, and Thailand: 400 million yen.
-More specifically, the company invested in the following: Japan: facilities for generating electric power in-house in case there are power outages due to natural disasters or power failures; North America: facilities to enhance R&D capabilities so as to respond to new products; Europe: facilities and equipment; and Indonesia, China, and Thailand: facilities to boost production capacity
-The Company has received 800 million yen in subsidies to be used for facilities and equipment in Japan.

Investment Activity

<Domestic>
-The Company  has developed an environmentally friendly production equipment, which offers more than a 50 percent improvement in energy efficiency for brake pad production. Mass production operation using the new system will begin at the company's subsidiary in Yamagata, Japan in August 2012. Projecting that electricity utility rate and other energy cost will be increasing in the future, the company aims to curb its otherwise surging energy costs by replacing its existing equipment with a more compact device suitable for limited volume production. After conducting a trial production on the testing line of its development facility in Hanyu, Saitama Prefecture, the company will introduce the equipment to Akebono Brake Yamagata Manufacturing Co., Ltd., its production subsidiary. As compared to the current level of minimum production volumes set at 4,8 or 16 based on a high-volume manufacturing system, the new production equipment will allow the company to produce only a single unit, which will eliminate excessive energy consumption. The company will initially adopt the new system for producing brake pads for replacement use, while intending to use it also on brake pads for new vehicles. Hit by the financial crisis started in September 2008, Akebono Brake dramatically cut down on its yearly capital investment in FY2009 and FY2010 to the 5 billion yen levels. Nevertheless, in FY2011, its total capital outlay is expected to total 19 billion yen with its domestic spending already reaching 10 billion yen, which includes quake-related cost. Meanwhile, the company is intending to invest 26 billion yen globally during the two-year period from April 2012 to March 2014 with a goal of achieving its long-term vision towards 2015. It is likely to invest heavily both in Japan and overseas. (From an article in the Nikkan Jidosha Shimbun on January 24, 2012)

<Mexico>
-The Company has decided to establish a new plant in Mexico to manufacture brake products. The company aims to improve its cost competitiveness further, while gaining momentum of its growing market share in the country. The site of the plant, which is now under study, will be determined as early as the end of this year. The new facility will have production lines to make drum brakes, as well as brake calipers for the local market. Its operation is slated to begin in the middle of 2013. In Mexico, a number of automakers based in Japan, the U.S. and Europe are intending to step up production. The company will pursue low cost production operations in this growing market, looking to use the plant also as its export hub in the future. Of all sales generated at Akebono Brake's U.S. operations, nearly 10 percent comes from sales to Mexico. Combined with brakes using knockdown parts made in Japan and elsewhere, Akebono's share in the Mexican market has already exceeded 30 percent. The establishment of the new plant will allow the company to meet increasing orders from car manufacturers, by which it intends to hike its market share further. The company is initially spending 20 million to 30 million dollars (approximately 15 to 23 billion yen) in the facility, while looking for a future facility expansion to add brake rotors and friction materials to its product lineup. The plant is likely to start exporting its product to North America in the early stage, while aiming to begin export to Brazil as well, where global automakers are planning production increases. (From an article in the Nikkan Jidosha Shimbun on November 9, 2011)

<China>
-The Company is going to double its capacity to manufacture automotive brake parts in China by the second half of 2012. The expansion is based on Japanese automakers' moves to increase their production capability in the country from 2012 through 2015, which is expected to boost local demand for brake products as well. The brake supplier is planning to establish additional production lines at Akebono Corporation (Guangzhou) in Guangzhou, Guangdong Province, one of its two subsidiaries in China. The Guangzhou facility, which supplies products such as disc brakes and drum brakes, will complete the third brake caliper production line at the end of 2011, aiming to start mass production at the beginning of 2012. This project is followed by establishment of the fourth brake caliper production line in 2012, which is scheduled to launch operation by the middle of 2012. The addition is intended to accommodate demand from Japanese automakers, which are planning to start selling new vehicle models in the market in 2013. Investment in these two new production lines is projected to reach 1 billion yen, boosting Akebono Brake's brake caliper production capacity in China from 850,000 units to 1.7 million units a year. For the fiscal year 2011, the company has appropriated 19 billion yen in capital investment, which is twice the amount invested in the previous year. By region, it is going to spend 10 billion yen in Japan for installing advanced production equipment, 5.5 billion yen in North America, and 3.3 billion yen in Asia. While Akebono Corporation (Guangzhou) caters mainly to Japanese automakers, Akebono's another production subsidiary in China, Akebono Corporation (Suzhou) in Suzhou, Jiangsu Province, manufactures friction materials like brake pads mainly for European and U.S. automakers, including Volkswagen and General Motors. (From an article in the Nikkan Jidosha Shimbun on November 9, 2011)

Planned capital investments

Company/plant (Location)	Facilities & Activities	Total investment (millions of yen)	Start date	Completion
Headquarters and and other facilities (Tokyo, Japan)	Casting production facilities, equipment for new production methods, information equipment	5,742	Apr. 2012	Mar. 2013
Development division (Saitama Pref., Japan)	Testing and R&D facilities, high-performance brake development facilities	755	Apr. 2012	Mar. 2013
Akebono Brake Iwatsuki Manufacturing Co., Ltd. (Saitama Pref., Japan)	Production facilities manufacturing disc brakes and drum brakes	1,274	Apr. 2012	Mar. 2013
Akebono Brake Fukushima Manufacturing Co., Ltd. (Fukushima Pref., Japan)	Production facilities  manufacturing brake linings, industrial machinery, and railway products	244	Apr. 2012	Mar. 2013
Akebono Brake Yamagata Manufacturing Co., Ltd. (Yamagata Pref., Japan)	Production facilities  manufacturing disc brake pads	541	Apr. 2012	Mar. 2013
Akebono Brake Sanyo Manufacturing Co., Ltd. (Okayama Pref., Japan)	Production facilities  manufacturing disc brakes and drum brakes	200	Apr. 2012	Mar. 2013
Akebono Research & Development Center Ltd. (Saitama Pref., Japan)	Testing and R&D facilities	444	Apr. 2012	Mar. 2013
Akebono Brake Corporation (Kentucky, USA and others)	Facilities to conduct R&D activities, and manufacture disk-brakes, drum-brakes, and disk-brake pads	6,000	Jan. 2012	Dec. 2012
Akebono Brake Mexico S.A. de C.V. (Guanajuato, Mexico)	Facilities to manufacture drum-brakes	700	Apr. 2012	Dec. 2012
Akebono Europe S.A.S. (Gonesse, France)	R&D facilities, production facilities  manufacturing disc brake pads	70	Apr. 2012	Mar. 2013
Akebono Advanced Engineering (UK) Ltd. (Wokingham, UK)	Facilities to develop high-performance brakes	330	Apr. 2012	Mar. 2013
Akebono Corporation (Suzhou) (Suzhou, China)	Production facilities for manufacturing disc brake pads	603	Jan. 2012	Dec. 2012
Akebono Corporation (Guangzhou) (Guangzhou, China)	Production facilities for manufacturing disc brakes and drum brakes	797	Jan. 2012	Dec. 2012
PT. TriDharma Wisesa (Jakarta, Indonesia)	Facilities to produce disc brakes and disc brake parts	1,200	Jan. 2012	Dec. 2012
Akebono Brake Astra Vietnam Co., Ltd. (Hanoi, Vietnam)	Facilities to manufacture disk-brakes and master cylinders	300	Jan. 2012	Dec. 2012
Akebono Brake Thailand Co., Ltd. (Chonburi , Thailand)	Production facilities  manufacturing disc brakes	800	Jan. 2012	Dec. 2012