NOK CORPORATION and Consolidated Subsidiaries Consolidated Financial Results for Fiscal Year Ended March 31, 2014 (Japanese GAAP)

Transcription

1 Member of Financial Accounting Standards Foundation NOK CORPORATION and Consolidated Subsidiaries Consolidated Financial Results for Fiscal Year Ended March 31, 2014 (Japanese GAAP) Date: May 9, 2014 Company name: NOK Corporation Listed on the Tokyo Stock Exchange Securities code: 7240 URL Representative: Masato Tsuru Telephone: Chairman of the Board and President Inquiries: Takashi Kamata Department Manager Corporate Planning Department Date of general shareholders meeting (as planned): June 26, 2014 Annual securities report filing date (as planned): June 26, 2014 Dividend payable date (as planned): June 27, 2014 Supplemental material of annual results: None Convening briefing of annual results: Yes (Fractions are rounded down to the nearest million yen.) 1. Consolidated Financial Results for Fiscal 2013 (April 1, 2013 to March 31, 2014) (1) Consolidated operating results (Percentage figures represent year-on-year changes.) Net sales Operating income Ordinary income Net income million yen % million yen % million yen % million yen % FY , , , ,757 (2.1) FY , ,519 (11.6) 35, , Note: Comprehensive income: 62,693 million yen, 22.5% (as of March 31, 2014); 51,171 million yen, 301.3% (as of March 31, 2013) Net income per share Diluted net income per share Net income to Ordinary income to Operating income to shareholders equity ratio total assets ratio net sales ratio yen yen % % % FY FY Reference: Investment profit on equity method: 4,272 million yen (as of March 31, 2014); 3,146 million yen (as of March 31, 2013) (2) Consolidated financial positions Total assets Net assets Capital adequacy ratio Net assets per share million yen million yen % yen FY , , , FY , , , Reference: Owner s equity: 331,547 million yen (as of March 31, 2014); 293,458 million yen (as of March 31, 2013) (3) Consolidated cash flows Cash flows from Cash flows from investing Cash flows from financing operating activities activities activities Cash and equivalents, end of period million yen million yen million yen million yen FY ,426 (46,644) (26,823) 78,598 FY ,740 (53,395) 4,644 65, Dividends Dividend per share Ratio of total amount of Payout ratio First Second Third Fiscal year Total dividend paid dividends to net assets Total (Consolidated) quarter quarter quarter end (Consolidated) yen yen yen yen yen million yen % % FY , FY , FY 2014 (Projection) Note: Although the Company stipulates its dividend record dates as September 30 and March 31 in its Articles of Incorporation, the projected dividend amount for the fiscal year ending March 31, 2015 is not yet determined. 3. Consolidated Forecasts for Fiscal 2014 (April 1, 2014 to March 31, 2015) (Percentage figures represent year-on-year changes.) Net sales Operating income Ordinary income Net income Net income per share million yen % million yen % million yen % million yen % yen Half year 310, , , , Full year 634, , , ,

2 * Notes (1) Material changes in subsidiaries during this period (Changes in scope of consolidations resulting from change in subsidiaries): None (2) Changes in accounting policies and accounting estimates, retrospective restatement i) Changes in accounting policies based on revisions of accounting standard: Yes ii) Changes in accounting policies other than ones based on revisions of accounting standard: None iii) Changes in accounting estimates: None iv) Retrospective restatement: None (Note) For details, please refer to 3. Consolidated Financial Statements (5) Notes Concerning the Consolidated Financial Statements (Change in Accounting Policies) on page14 of the attached document. (3) Number of issued and outstanding shares (common stock) i) Number of issued and outstanding shares at the FY 2013 end of fiscal year (including treasury stock) 173,138,537 shares FY ,138,537 shares ii) Number of treasury stock at the end of fiscal year FY ,602 shares FY ,921 shares iii) Average number of shares FY ,457,788 shares FY ,140,252 shares (Reference) Outline of individual financial results Individual results for the fiscal 2013 (April 1, 2013 to March 31, 2014) (1) Individual operating results (Percentage figures represent year-on-year changes.) Net sales Operating income Ordinary income Net income million yen % million yen % million yen % million yen % FY , , , ,461 FY , ,468 (24.4) 13,088 (23.0) (6,650) Net income per share Diluted net income per share yen yen FY FY 2012 (38.60) (2) Individual financial positions Total assets Net assets Capital adequacy ratio Net assets per share million yen million yen % yen FY , , FY , , (Reference) Owner s equity: 144,566 million yen (as of March 31, 2014); 132,049 million yen (as of March 31, 2013) * Audit procedures This summary of the consolidated financial results for FY 2013 is not in conformity with the audit procedures as provided for under the Financial Instruments and Exchange Act. As of the date on which this summary of the consolidated financial results for FY 2013 was released as a flash report, the above-mentioned audit procedures were being implemented. * Proper use of the projections for financial results, and other important matters: 1. Forward-looking statements such as projections of future financial results and other descriptions concerning our future business included in this document are based on currently available information and certain assumptions that we consider to be reasonable, and no representation or warranty is given with regard to the realization of such projections, etc. Actual financial results may differ significantly due to various factors. For assumptions, etc., used as the basis for the projections for financial results, please see 1. Analysis of Operating Results and Financial Position (1) Analysis of Operating Results on page 2 of the attached document. 2. Dividend projections for fiscal 2014 are yet to be determined. We intend to disclose our dividend projections as soon as disclosure is possible.

3 Table of Contents of Attached Document 1. Analysis of Operating Results and Financial Position...2 (1) Analysis of Operating Results...2 (2) Analysis of Financial Position...4 (3) Principal Policy on Dividends and Dividend Distribution for Fiscal 2013 and Management Policy...6 (1) Principal Management Policy...6 (2) Medium- to Long-Term Management Strategies and Challenges Consolidated Financial Statements...7 (1) Consolidated Balance Sheet...7 (2) Consolidated Income Statement and Consolidated Comprehensive Income Statement...9 (Consolidated Income Statement)... 9 (Consolidated Comprehensive Income Statement)...10 (3) Consolidated Statement of Changes in Net Assets...11 (4) Consolidated Cash Flow Statement...13 (5) Notes Concerning the Consolidated Financial Statements...14 (Notes Concerning the Going Concern Assumption)...14 (Change in Accounting Policies)...14 (Additional Information)...14 (Segment Information)...14 (Per Share Information)...16 (Significant Subsequent Events)

4 1. Analysis of Operating Results and Financial Position (1) Analysis of Operating Results i. Fiscal 2013 operating results With regard to the operating environment surrounding the NOK Group during the current consolidated fiscal year, the U.S. economy remained robust while the European economy showed signs of recovery. The Chinese economy has been expanding gradually despite some weak developments, and Southeast Asia also showed a mild recovery. In Japan, exports picked up on the back of the government s financial and economic policies, which led to an increase in production and a mild recovery trend overall. In the automobile industry, demand remained robust in Japan as the negative drop after the termination of the government subsidy for eco-friendly car purchases turned out to be short-lived, and due to positive effects seen from introducing new cars on the back of a rise in popularity of mini vehicles cars in addition to a last minute surge in demand prior to the rise in consumption tax, among other factors. Overseas, while demand decreased in Thailand due to the termination of the car purchase subsidy scheme as well as the impact of political unrest, demand in countries including China and the U.S. rose. In the electronic equipment industry, although demand for smartphones and tablet terminals was robust, demand for digital cameras and PCs remained weak due to the shift in demand to such devices. In the office machine industry, demand for color printers and copiers recovered in Japan as well as Europe and the U.S. market, and remained robust along with demand for monochrome machines. Under these circumstances, the operating results of the Group by business segment were as follows: In the seal business, sales to automobile manufacturers increased on the back of robust vehicle production overseas due to a recovery in demand for Japanese cars in China, where demand had dropped owing to the deterioration of Japan-China relations, among other factors, and due to positive effects from the launch of new cars as well as a last minute surge in demand prior to the rise in consumption tax in Japan, among other factors. Sales to manufacturers of general industrial machinery also climbed due to an increase in demand for construction machinery in Japan on the back of a rise in order intake for public works as well as a recovery in demand for construction machinery in China. As a result, net sales ended at 284,861 million yen (up 10.4% year on year). Operating income totaled 27,729 million yen (up 31.3% year on year) due to increased revenue despite increases in personnel and other costs in emerging nations. In the electronic device product business, sales volumes decreased due to sluggish sales for digital cameras and PCs despite strong demand for smartphones and automobiles. However, sales increased on the back of the impact of favorable exchange rate fluctuations. As a result, net sales improved to 266,444 million yen (up 9.0% year on year). Operating income was at 2,045 million yen (down 57.6% year on year) due to the impact of a temporary but sharp decline in production volume, among other factors, despite efforts to contain personnel and other costs. In the roll business, sales increased owing to favorable exchange rate fluctuations despite a slump in demand for printers and copiers as well as replacement parts for copiers. As a result, net sales increased to 28,712 million yen (up 7.4% year on year). Operating income was 2,008 million yen (compared with an operating loss of 12 million yen for the previous consolidated fiscal year) owing to a reduction in personnel and other costs due to the implementation of drastic business structure reforms, as well as favorable exchange rate fluctuations, among other factors. In other businesses including specialty lubricants, net sales dropped to 11,370 million yen (down 3.0% year on year). Operating income rose to 768 million yen (up 37.5% year on year) due to an improved mix of items sold. In summary, the Group s operating results for the current consolidated fiscal year were as follows: Net sales totaled 591,388 million yen (up 9.3% year on year); operating income rose to 32,586 million yen (up 22.9% year on year); ordinary income amounted to 42,313 million yen (up 20.2% year on year); and net income decreased to 21,757 million yen (down 2.1% year on year) due to an extraordinary loss of 5,507 million yen as an expected contribution by the Company following a recall by a client. ii. Projections for fiscal 2014 The future operating environment surrounding the Group is likely to continue to be unpredictable. Factors causing uncertainty include the recovery pace of the U.S. economy, the sustainability of economic growth in China and developments in emerging economies, although a gradual recovery trend is expected to continue in Japan despite the negative drop likely to occur after the last minute surge in demand prior to the rise in consumption tax. In the seal business, matters such as a rise in local personnel costs and intensified competition from overseas competitors are expected despite an increase in production at overseas production bases on the back of a rise in demand for automobiles in emerging nations such as China and Southeast Asia, etc. In order to address these challenges, we will continue to make efforts in personnel saving and automation as well as improving the efficiency of our production system based on the concepts of optimum production location and local production for local consumption. In the electronic device product business, while a rise in demand for smartphones and tablet terminals is expected, matters such as the drop in product selling prices due to intensified competition and increased fluctuation in demand have become more serious. In order to address such concerns, we will strive to improve and strengthen our profitability by further raising competitiveness through quality improvement and personnel savings, as well as by expanding usage to automobiles and 2

5 medical equipment, among others. In the roll business, sales have been sluggish due to changes in the environment such as advances made in office machinery technology and shrinkage of the replacement parts market owing to a rise in durability. We therefore intend to seek increased profitability by making efforts across the sales, production and technology divisions to expand profitability by further promoting management efficiency. In summary, we expect consolidated operating results for the next term to be as follows: Net sales will total billion yen (up 7.3% year on year); operating income will increase to 42.0 billion yen (up 28.9% year on year); ordinary income will end at 46.8 billion yen (up 10.6% year on year); and net income will rise to 27.4 billion yen (up 25.9% year on year). The following changes, which are planned in the fiscal year ending March 31, 2015, have been incorporated into the consolidated forecasts: i. Change in accounting period, etc. of consolidated subsidiaries The Company plans to change the closing date of overseas subsidiaries to March 31, or to carry out a provisional settlement of accounts on March 31 for consolidation. The profit or loss for the three months due to this change is to be adjusted by a decrease or increase in retained earnings. ii. Change in depreciation method of property, plant and equipment The Company and its domestic consolidated subsidiaries had primarily adopted the declining-balance method for depreciation of property, plant and equipment. This method is planned to be changed to a straight-line method starting from the fiscal year ending March 31, Due to this change, operating income is expected to increase by approximately 5.2 billion yen. The above forecasts include projections of the future based on currently available information. Actual results may differ from the stated forecast figures due to future business operations and changes both in Japan and abroad, including exchange rate fluctuations. 3

6 (2) Analysis of Financial Position i. Assets, liabilities and net assets Total assets as of March 31, 2014 equaled 663,265 million yen, an increase of 61,307 million yen compared with the previous fiscal year-end. This mainly reflected an increase in various assets of overseas subsidiaries due to a weaker yen, in addition to the increase in fair value of investment securities following a rise in share prices. Total liabilities as of March 31, 2014 amounted to 298,853 million yen, an increase of 17,112 million yen compared with the previous fiscal year-end. This was due to a number of factors including an increase in liabilities concerning employee retirement benefits owing to the application of the accounting standard for retirement benefits, etc. Net assets totaled 364,411 million yen as of March 31, 2014, an increase of 44,194 million yen compared with the previous fiscal year-end due to an increase in foreign currency translation adjustment owing to exchange rate fluctuations and an increase in retained earnings resulting from higher net income. As a result, the capital adequacy ratio was 50.0%. ii. Cash flows Cash and cash equivalents (hereinafter, cash ) as of the end of fiscal 2013 amounted to 78,598 million yen. This represented an increase in cash of 13,332 million yen compared with the previous fiscal year-end. Cash flows during fiscal 2013 are summarized below. [Cash flows from operating activities] Net cash provided by operating activities totaled 79,426 million yen, up 122.2% year on year. This was primarily attributable to an increase in income before income taxes and minority interests and a decrease in accounts receivable-trade and inventory. [Cash flows from investment activities] Net cash used in investment activities, which mainly consisted of acquisitions of property, plant and equipment, amounted to 46,644 million yen (down 12.6% year on year). [Cash flows from financing activities] Net cash used in financing activities amounted to 26,823 million yen (an income of 4,644 million yen in the previous fiscal year). This mainly reflected the repayment of loans payable. The trend of cash flow indicators is as follows: FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Capital ratio (%) Market capitalization to total assets (%) Interest-bearing liabilities to cash flow (annualized) Interest coverage ratio (multiple) Capital ratio = Shareholders equity / Total assets Market capitalization to total assets = Market capitalization / Total assets Interest-bearing liabilities to cash flow = Interest-bearing liabilities / Cash flow Interest coverage ratio = Cash flows / Interest payments Notes: 1. All indices above are calculated based on consolidated financial statements. 2. Market capitalization is calculated on the basis of the number of issued and outstanding shares excluding treasury stock. 3. Operating cash flow is used as cash flow in the above calculation. 4. Interest-bearing liabilities represent all liabilities on the consolidated balance sheet on which we pay interest. 4

7 (3) Principal Policy on Dividends and Dividend Distribution for Fiscal 2013 and 2014 As to dividend payment to our shareholders, it is our basic policy to continue a certain stable level of dividend corresponding to the medium- to long-term business performance. Meanwhile, saving a reasonable portion for internal reserve is also critical in preparation for our future business development and reinforcement of financial position. We will, therefore, determine the dividend by taking all these factors into consideration. Taking into full consideration the aforementioned basic dividend distribution policy along with the level of net income for fiscal 2013, we propose to pay an annual dividend of 20 yen per share for fiscal 2013 (a 10-yen interim dividend plus a 10-yen term-end dividend). We plan to pay an interim dividend of 10 yen for fiscal Dividend projections for the term-end are yet to be determined. We will disclose our dividend projections as soon as possible, taking into account the trend of the Group s performance. 5

8 2. Management Policy (1) Principal Management Policy It is our basic philosophy that a firm is the common asset of its shareholders, employees, and society. At the same time, the goal of NOK is to become an entity in which all of its stakeholders including customers, suppliers, and financial institutions can take pride. For such purposes, we concentrate our efforts to create a vigorous, highly profitable corporate group through manufacturing and distributing unique and useful products with high technical capabilities throughout the world and at appropriate prices. This is the main policy under which NOK conducts its business. (2) Medium- to Long-Term Management Strategies and Challenges The NOK Group has formulated a new three-year plan (from fiscal 2014 to fiscal 2016), which we will implement in an effort to achieve sustainable growth and development towards the future, by focusing on appropriate management of the ever-expanding overseas business, further improvement in quality, development of new products and the fostering of personnel involved in these endeavors. The NOK Group intends to make efforts across the group based on the following initiatives: [Slogan] Building Foundations for Sustainable Growth Strengthen existing businesses and develop new products and new businesses [Initiatives] 1. Reviewing MONOZUKURI, the framework of manufacturing 2. Continuing to strive for unrivalled quality 3. Developing new products, new technologies and new businesses 4. Utilizing and fostering our people properly 6

9 3. Consolidated Financial Statements (1) Consolidated Balance Sheet (million yen) FY 2012 (as of March 31, 2013) FY 2013 (as of March 31, 2014) Assets Current assets Cash and deposits 65,342 78,633 Notes and accounts receivable-trade 163, ,606 Merchandise and finished goods 21,657 26,268 Work in process 25,470 24,885 Raw materials and supplies 17,397 15,747 Deferred tax assets 4,850 8,621 Other 11,676 12,591 Allowance for doubtful accounts (751) (570) Total current assets 309, ,784 Noncurrent assets Property, plant and equipment Buildings and structures 140, ,243 Accumulated depreciation (74,363) (81,527) Buildings and structures, net 66,438 78,715 Machinery, equipment and vehicles 255, ,556 Accumulated depreciation (185,314) (206,435) Machinery, equipment and vehicles, net 70,347 80,121 Tools, furniture and fixtures 60,553 67,350 Accumulated depreciation (48,524) (52,897) Tools, furniture and fixtures, net 12,029 14,452 Land 18,238 20,853 Lease assets 2,073 1,710 Accumulated depreciation (997) (854) Lease assets, net 1, Construction in progress 12,338 5,133 Total property, plant and equipment 180, ,132 Intangible assets Goodwill Other 1,403 2,515 Total intangible assets 1,477 2,556 Investments and other assets Investments securities 85, ,112 Long-term loans receivable from employees 5,987 5,492 Deferred tax assets 2,849 3,485 Other 16,868 18,952 Allowance for doubtful accounts (289) (251) Total investments and other assets 110, ,791 Total noncurrent assets 292, ,480 Total assets 601, ,265 7

10 FY 2012 (as of March 31, 2013) (million yen) FY 2013 (as of March 31, 2014) Liabilities Current liabilities Notes and accounts payable-trade 61,251 67,653 Short-term loans payable 81,541 83,887 Income taxes payable 3,605 6,011 Provision for bonuses 8,150 8,227 Provision for business structure improvement 1,503 1,760 Provision for recall loss 300 Deposits received from employees 16,023 15,849 Other 29,906 34,228 Total current liabilities 201, ,918 Noncurrent liabilities Long-term loans payable 29,304 14,277 Provision for retirement benefits 43,362 Liabilities concerning retirement benefits 59,315 Other 7,091 7,342 Total noncurrent liabilities 79,758 80,935 Total liabilities 281, ,853 Net assets Shareholders equity Capital stock 23,335 23,335 Capital surplus 22,450 22,450 Retained earnings 239, ,894 Treasury stock (997) (642) Total shareholders equity 284, ,038 Accumulated other comprehensive income Valuation difference on available-for-sale securities 22,865 30,181 Foreign currency translation adjustment (13,832) 12,920 Accumulated adjustments concerning retirement benefits (14,594) Total accumulated other comprehensive income 9,032 28,508 Minority interests 26,758 32,864 Total net assets 320, ,411 Total liabilities and net assets 601, ,265 8

11 (2) Consolidated Income Statement and Consolidated Comprehensive Income Statement (Consolidated Income Statement) FY 2012 (April 1, 2012 to March 31, 2013) (million yen) FY 2013 (April 1, 2013 to March 31, 2014) Net sales 540, ,388 Cost of sales 449, ,808 Gross profit 91, ,580 Selling, general and administrative expenses 64,814 71,994 Operating income 26,519 32,586 Non-operating income Interest income Dividends income 962 1,290 Foreign exchange gains 5,025 5,201 Equity in earnings of affiliates 3,146 4,272 Rent income Other 1,447 2,175 Total non-operating income 11,874 14,261 Non-operating expenses Interest expenses 2,729 3,097 Other 462 1,436 Total non-operating expenses 3,191 4,534 Ordinary income 35,202 42,313 Extraordinary income Gain on sales of noncurrent assets Insurance income 2,541 1,347 Other Total extraordinary income 3,565 1,951 Extraordinary loss Loss on sales and retirement of noncurrent assets 963 1,256 Business structure improvement expenses 4, Recall loss contribution 5,207 Provision of allowance for recall loss 300 Other Total extraordinary loss 5,902 7,915 Income before income taxes and minority interests 32,865 36,349 Income taxes-current 10,177 13,035 Income taxes-deferred (2,272) (1,561) Total income taxes 7,905 11,474 Income before minority interests 24,959 24,874 Minority interests in income 2,743 3,117 Net income 22,216 21,757 9

12 (Consolidated Comprehensive Income Statement) (million yen) FY 2012 (April 1, 2012 to March 31, 2013) FY 2013 (April 1, 2013 to March 31, 2014) Income before minority interests 24,959 24,874 Other comprehensive income Valuation difference on available-for-sale securities 6,494 7,275 Foreign currency translation adjustment 16,489 26,498 Share of other comprehensive income of associates accounted for using equity method 3,226 4,044 Total other comprehensive income 26,211 37,818 Comprehensive income 51,171 62,693 (Detail) Comprehensive income attributable to owners of the parent 46,080 55,827 Comprehensive income attributable to minority interests 5,090 6,866 10

13 (3) Consolidated Statement of Changes in Net Assets FY 2012 (April 1, 2012 to March 31, 2013) (million yen) Shareholders equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders equity Balance at the beginning of current period 23,335 22, ,432 (1,417) 264,801 Changes of items during the period Dividends from surplus (3,011) (3,011) Net income 22,216 22,216 Purchase of treasury stock (0) (0) Disposal of treasury stock Change of scope of equity method affiliates Net changes of items other than shareholders equity Total changes of items during the period 19, ,624 Ending balance 23,335 22, ,637 (997) 284,425 Valuation difference on available-forsale securities Accumulated other comprehensive income Accumulated Foreign adjustments currency concerning translation retirement adjustment benefits Total accumulated other comprehensive income Minority interests Total net assets Balance at the beginning of current period 16,332 (31,164) (14,831) 22, ,174 Changes of items during the period Dividends from surplus (3,011) Net income 22,216 Purchase of treasury stock (0) Disposal of treasury stock 419 Change of scope of equity method affiliates Net changes of items other than shareholders 6,532 17,332 23,864 4,553 28,418 equity Total changes of items during the period 6,532 17,332 23,864 4,553 48,042 Ending balance 22,865 (13,832) 9,032 26, ,217 11

14 FY 2013 (April 1, 2013 to March 31, 2014) (million yen) Shareholders equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders equity Balance at the beginning of current period 23,335 22, ,637 (997) 284,425 Changes of items during the period Dividends from surplus (3,447) (3,447) Net income 21,757 21,757 Purchase of treasury stock (5) (5) Disposal of treasury stock Change of scope of equity method affiliates (51) (51) Net changes of items other than shareholders equity Total changes of items during the period 18, ,613 Ending balance 23,335 22, ,894 (642) 303,038 Valuation difference on available-forsale securities Accumulated other comprehensive income Accumulated Foreign adjustments currency concerning translation retirement adjustment benefits Total accumulated other comprehensive income Minority interests Total net assets Balance at the beginning of current period 22,865 (13,832) 9,032 26, ,217 Changes of items during the period Dividends from surplus (3,447) Net income 21,757 Purchase of treasury stock (5) Disposal of treasury stock 360 Change of scope of equity method affiliates (51) Net changes of items other than shareholders 7,316 26,753 (14,594) 19,475 6,105 25,581 equity Total changes of items during the period 7,316 26,753 (14,594) 19,475 6,105 44,194 Ending balance 30,181 12,920 (14,594) 28,508 32, ,411 12

15 (4) Consolidated Cash Flow Statement (million yen) FY 2012 (April 1, 2012 to March 31, 2013) FY 2013 (April 1, 2013 to March 31, 2014) Net cash provided by (used in) operating activities Income before income taxes and minority interests 32,865 36,349 Depreciation and amortization 32,126 37,431 Increase (decrease) in allowance for doubtful accounts (84) (227) Increase (decrease) in provision for bonuses (125) 21 Increase (decrease) in provision for retirement benefits (1,140) Increase (decrease) in liabilities concerning retirement benefits 197 Increase (decrease) in provision for business structure improvement 1, Interest and dividends income (1,310) (1,704) Interest expenses 2,729 3,097 Foreign exchange losses (gains) (626) (3,623) Equity in (earnings) losses of affiliates (3,146) (4,272) Insurance income (2,541) (1,347) Loss (gain) on sales and retirement of property, plant and equipment Decrease (increase) in notes and accounts receivable-trad (11,475) 29,001 Decrease (increase) in inventories (903) 5,165 Increase (decrease) in notes and accounts payable-trade (3,415) (4,595) Other, net 2,831 (1,175) Subtotal 47,655 95,429 Interest and dividends income received 1,700 2,228 Interest expenses paid (2,775) (3,054) Proceeds from insurance income 2,541 1,347 Payments for extra retirement payment (2,934) Income taxes paid (13,381) (13,589) Net cash provided by (used in) operating activities 35,740 79,426 Net cash provided by (used in) investment activities Decrease (increase) in time deposits Purchase of investment securities (3,757) (6,729) Purchase of property, plant and equipment (51,736) (40,111) Proceeds from sales of property, plant and equipment 1, Purchase of intangible assets (91) (1,013) Other, net (190) 673 Net cash provided by (used in) investment activities (53,395) (46,644) Net cash provided by (used in) financing activities Net increase (decrease) in short-term loans payable 20,047 (7,433) Proceeds from long-tem loans payable 8,507 6,328 Repayment of long-term loans payable (19,870) (21,838) Repayment of finance lease obligations (973) (414) Proceeds from stock issuance to minority shareholders 789 Cash dividends paid (3,001) (3,449) Cash dividends paid to minority shareholders (484) (1,182) Other, net Net cash provided by (used in) financing activities 4,644 (26,823) Effect of exchange rate change on cash and cash equivalents 3,470 7,373 Net increase (decrease) in cash and cash equivalents (9,540) 13,332 Cash and cash equivalents at beginning of period 74,806 65,266 Cash and cash equivalents at end of period 65,266 78,598 13

16 (5) Notes Concerning the Consolidated Financial Statements (Notes Concerning the Going Concern Assumption) None. (Change in Accounting Policies) (Implementation of accounting standard for retirement benefits, etc.) The Accounting Standard for Retirement Benefits (May 17, 2012, Accounting Standards Board of Japan (ASBJ) Statement No. 26., hereinafter, the Accounting Standard ) and the Guidance on Accounting Standard for Retirement Benefits (May 17, 2012, ASBJ Guidance No. 25. hereinafter, the Guidance ) have been implemented since the end of fiscal 2013 (excluding the stipulations stated in the text from Item 35 of the Accounting Standard and the text from Item 67 of the Guidance). The posting method has been changed to post retirement benefit obligations minus the amount of pension assets as liabilities concerning retirement benefits, and the unrecognized actuarial loss and unrecognized prior service costs have been posted in liabilities concerning retirement benefits. The implementation of accounting standard for retirement benefits, etc. conforms with the transitional treatment stipulated in Item 37 of the Accounting Standard, and the effect of the said change is adjusted in the accumulated adjustments concerning retirement benefits of accumulated other comprehensive income at the end of fiscal As a result, 59,315 million yen in liabilities concerning retirement benefits were posted at the end of fiscal In addition, accumulated other comprehensive income decreased by 14,594 million yen. The impact on information per share is stated in the relevant sections. (Additional Information) (Implementation of a consolidated taxation system) The Company and some of its consolidated subsidiaries have applied for approval of the consolidated taxation system during fiscal 2013, which resulted in the implementation of the taxation system starting fiscal Since fiscal 2013, therefore, accounting has been based on the implementation of the taxation system in accordance with the Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 1) (March 18, 2011, ASBJ Practical Issue Task Force (PITF) No.5) and the Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 2) (June 30, 2010, ASBJ PITF No. 7). (Segment Information) [Segment Information] 1. Outline of reportable segments NOK s reportable segments are constituents of NOK for which separate financial information is available, and that are reviewed by the Board of Directors on a regular basis in order to evaluate business results and determine the best distribution of management resources. The NOK Group classifies business segments by taking into consideration the product series and similarities between the markets. Each department controlling the relevant segments establishes comprehensive business strategies concerning the products and services to develop respective business activities. The businesses of the NOK Group consist of four reportable segments: the seal business, electronic device product business, roll business and other businesses. In the seal business, NOK is the main company of the Group to manufacture and sell seal products for manufacturers of automobile, construction machinery and general industrial machinery. In the electronic device product business, Nippon Mektron, Ltd. is the Group s leader in the manufacture and sale of electronic parts, etc., mainly for the electronic equipment industry. In the roll business, Synztec Co., Ltd. manufacturers and sells roll products, etc., mainly for the office machine industry. And in other businesses, NOK and NOK Klueber Co., Ltd. are Group leaders in the manufacture and sale of specialty lubricants, etc. 2. Calculation method for net sales, income (loss), assets and other items by reportable segment The principles and procedures of the accounting method for reportable business segments are the same as those used in the preparation of consolidated financial statements. Reportable segment income represents the amount of operating income. Inter-segment sales and transfers are based on current market prices. 14

17 3. Information regarding net sales, income (loss), assets, liabilities and other items by reportable segment FY 2012 (April 1, 2012 to March 31, 2013) Seal Reportable segments Electronic device product Roll Other Total Adjustments (Note 1) (million yen) Amount included in the consolidated financial statement (Note 2) Net sales Net sales to external customers 257, ,419 26,739 11, , ,859 Inter-segment sales/transfers 3, ,476 (4,476) Total 261, ,550 26,740 12, ,335 (4,476) 540,859 Segment income (loss) 21,119 4,825 (12) , ,519 Segment assets 249, ,243 19,774 7, ,534 95, ,958 Other items Depreciation and amortization 18,142 12,765 1, ,126 32,126 Increase in property, plant and equipment and intangible assets 24,495 27, ,802 52,802 Notes: 1. Adjustments are as shown below: (1) The amount of 28 million yen in Adjustments of segment income (loss) represents the result of elimination in the inter-segment transactions. (2) The amount of 95,423 million yen in Adjustments of segment assets includes 101,098 million yen in corporate assets which are not allocated to individual reportable segments and (5,675) million yen in offset elimination of inter-segment claims and debts. 2. Segment income is adjusted with operating income stated in consolidated financial statements. FY 2013 (April 1, 2013 to March 31, 2014) Seal Reportable segments Electronic device product Roll Other Total Adjustments (Note 1) (million yen) Amount included in the consolidated financial statement (Note 2) Net sales Net sales to external customers 284, ,444 28,712 11, , ,388 Inter-segment sales/transfers 3, ,699 (3,699) Total 288, ,458 28,712 11, ,087 (3,699) 591,388 Segment income 27,729 2,045 2, , ,586 Segment assets 278, ,614 24,019 8, , , ,265 Other items Depreciation and amortization 19,546 16,652 1, ,431 37,431 Increase in property, plant and equipment and intangible assets 21,914 18, ,615 40,615 15

18 Notes: 1. Adjustments are as shown below: (1) The amount of 33 million yen in Adjustments of segment income represents the result of elimination in the inter-segment transactions. (2) The amount of 103,734 million yen in Adjustments of segment assets includes 110,538 million yen in corporate assets which are not allocated to individual reportable segments and (6,803) million yen in offset elimination of inter-segment claims and debts. 2. Segment income is adjusted with operating income stated in consolidated financial statements. (Per Share Information) FY 2012 (April 1, 2012 to March 31, 2013) FY 2013 (April 1, 2013 to March 31, 2014) Net assets per share 1, yen 1, yen Net income per share yen yen Notes: 1. Diluted net income per share is not shown as there are no residual securities. 2. As stated in Change in Accounting Policies, the accounting standard for retirement benefits, etc. is applied and the figures conform with the transitional treatment stipulated in Item 37 of the Accounting Standard. As a result, net assets per share decreased by yen in fiscal The basis of the computation of net assets per share is as shown below: FY 2012 (April 1, 2012 to March 31, 2013) FY 2013 (April 1, 2013 to March 31, 2014) Total net assets (million yen) 320, ,411 Deductions from total net assets (million yen) 26,758 32,864 (Minority interests) [26,758] [32,864] Net assets at the end of current period attributable to common stock (million yen) 293, ,547 Number of shares at the end of current period (1,000 shares) 172, , The basis of the computation of net income per share is as shown below: FY 2012 (April 1, 2012 to March 31, 2013) FY 2013 (April 1, 2013 to March 31, 2014) Net income (million yen) 22,216 21,757 Amount not attributable to common stock (million yen) Net income attributable to common stock (million yen) 22,216 21,757 Average number of shares during the period (1,000 shares) 172, , Shares of the Company held by the Employee Stock Ownership Plan Trust (ESOP Trust) account have been deducted from the Number of shares at the end of current period and the Average number of shares during the period. (Significant Subsequent Events) None. 16