Financial Report Year Ended March 31, 2016

Transcription

1 Financial Report 2016 Year Ended March 31, 2016

2 TBK Group Management Philosophy The TBK Group is a major player in the development, production and sales of components such as brakes, water pumps for engine cooling and oil pumps for engine lubrication. These components are essential to the safety and efficiency of light-duty to heavy-duty vehicles and buses. In the recent years, the TBK group expanded the product line to other engine components such as engine camshafts, cylinder head, cylinder blocks, and turbocharger bearing housings. TBK upholds its flagship policy of producing customer-oriented products while contributing to the well-being of society. Since our customers demand high levels of environmental friendliness, consumer safety and affordability, TBK realizes the need for adding value through its quality assurance policy of "providing customers with products excelling in safety and reliability." Fulfilling our corporate social responsibility allows TBK to enhance business and management. This in turn enables TBK to meet the requirements of all its stakeholders. Contents Consolidated Financial Highlights... 1 Message from the President... 2 TBK Business Segment... 6 Corporate Governance System... 8 Consolidated Financial Statements Corporate Data... 16

3 Consolidated Financial Highlights and Consolidated Subsidiaries For the years ended March 31, 2016, 2015 and 2014 For the years ended March 31, Millions of yen Thous;ands of U.S. dollars (Note) Net sales... 47,086 47,058 45,607 $417,873 Operating income... 1,345 2,934 3,422 11,936 Net income attributable to owners of the parent ,152 2,675 5,617 As of March 31, Total net assets... 29,819 32,079 28,435 $264,634 Total assets... 63,349 61,399 53, ,202 Per share data: Net income $ Net assets , Cash dividends (Non-Consolidated) Yen U.S. dollars (Note) Key ratios: Equity ratio % 50.2% 51.6% Net income to equity % 7.4% 10.2% Note: U.S. dollars amounts are translated, for convenience only, at U.S.$1= , the rate prevailing on March 31, Consolidated Net Sales ( millions) Operating Income ( millions) Equity Ratio (%) 3, ,914 45,607 47,058 47,086 43,008 3,240 3, , ,

4 Message from the President A General Overview of Fiscal 2015 In the following paragraphs, I report on the business performance trends and the management policy development situation at TBK and Consolidated Subsidiaries during Fiscal 2015 (the year ended March 31, 2016). The domestic business environment has shown steady growth during the year under review, due to renewed demand that has arisen in reaction to the long-term dampening in investment, as well as a rise in demand for public construction projects. These and other factors have led to an increase in registrations for medium-duty trucks (with payloads of four tons or more) nationwide by 42,312 units in the first half of the fiscal year and by 45,951 units in the second half, for a total of 88,263 units for the entire year, an increase of 0.1% compared to the same period last year. On the other hand, while truck manufacturers saw an upswing in exports to some areas of the North American market, overall they have been experiencing a downturn trend due to the decline in exports to ASEAN countries. In the industrial and construction equipment industry as well, exports to resource-rich countries and emerging countries and other markets overseas have remained at low levels. As a result, though TBK group s consolidated net sales for the period under review were supported by steady domestic demand, the significant downturn in demand for components for export from truck manufacturers led to a decline in domestic sales (truck and bus business). However, our expansion of new commercial rights overseas, chiefly in Thailand, compensated for this decline and pushed net sales slightly past the previous period by 0.1%, to 47,086 million. With regard to profits and losses, the situation took an unfavorable turn in Japan, with our investments in production rationalization and the decline in our domestic sales brought on by dwindling exports by truck manufacturers; and in Thailand too, where we have been engaged in such business expansion activities as new plant construction, capital investment and advance dispatching of personnel, the overall expense burden has been greater than anticipated. Domestically, TBK group has been committed to engaging in sales promotion activities in tandem with new product development and new commercial rights acquisition. Net sales by business segment (FY ) (+0.1%) ( 2.9%) Changes of net sales (FY ) 25 2 Changes of operating income (FY ) (+17.5%) ( 10.1%) QFY14 4QFY15 4QFY14 Japan Asia U.S.A 4QFY15 4QFY14 Japan Asia U.S.A 4QFY15 Truck and bus business Oversea sales Engine components 2

5 With regard to new product development, we have been moving forward with the development and market-introduction of cost-reducing lightweight drum brakes, and the acquisition of new commercial rights for electric pumps designed for non-commercial vehicles. We have been aggressively expanding our businesses overseas as well. At our base of operations in Thailand, we are constantly engaged in enlarging our production of turbo engine components for passenger vehicles, as well as in acquiring commercial rights for new products and launching their production systems. Our pump product line and other businesses are also being expanded at our base in India, which is now a consolidated subsidiary, as of the current period. In China, on the other hand, as the economic slowdown and other factors have created a harsh business environment, we have been treating the Chinese market in a medium-term manner, and engaging in the building of production systems through new commercial rights acquisition and cost reduction. The Initiative for Our 13th Mid-Term Business Plan It has become clear through the execution of our 12th mid-term business plan (for the three-year period through Fiscal 2015) that from a global perspective, the demand for trucks is continuing to grow, and among the Japanese-affiliated truck manufacturers that form the core of TBK Group s client base, overseas production is steady, while overseas component procurement is accelerating. In view of this situation, we have endeavored to raise the bar of cost competitiveness so as not to loose out to component manufacturers overseas. At the same time, we have been focusing on strengthening production systems at our bases of operation in all overseas subsidiaries. On the basis of the successes of our 12th mid-term business plan, we are now embarking on TSP (TBK Step-up Plan), our new Mid-Term Business Plan, which will be in effect from April 2016 to March 2019 and is TBK s 13th Mid-Term Business Plan. We aspire to be a world-class player in the vehicle components industry, and to become one of Asia s leading companies. It is anticipated that our business environment will be affected by the slowdown in the domestic market, while the growth of markets in emerging countries is expected to continue. As such, our objectives are the following: further enlargement of net sales, strengthening of global competitiveness, development of global human resources, and continued establishment of corporate reliability. 1. Enlargement of Net Sales While carrying out further improvements in product quality and reliability, strengthening of corporate reliability and reinforcement of global competitiveness, in our 13th Mid-Term Business Plan, we have set the following management goals: Consolidated Net Sales: 55,000 million Consolidated Ordinary Income: 4,400 million Consolidated Ordinary Income Rate: 8.0% 2. Strengthening of Global Competitiveness To realize this enlargement in sales, we are carrying out investment overseas in order to acquire new commercial rights in the Asian region with a focus on Thailand and to create production-increasing systems that respond to local production expansion by Japanese-affiliated truck manufacturers, and we are also focusing on launching production at our newly constructed plant in Thailand in the near future. 3

6 World Truck/Bus/Construction Equipment Manufacturers Qiaotou (China) and five TBK group companies In China TBKK (Thailand) Co., Ltd. (New Plant) and TBK India Private Ltd. TBK America, Inc. TBK, Japan and global l manufacturing/ marketing network In Japan, we are engaged in development and order-taking activities for electric pumps and other energysaving, environmentally-responsible products, and we are also working on strengthening the competitiveness of our domestic businesses through investment in production rationalization and other efforts. Furthermore, in view of our responsibilities as a vehicle components manufacturer, we are continually improving our quality control system so as to meet the needs of our overseas business expansion. 3. Development of global human resources Based on the recognition that human resources are the wellspring of a corporation s competitiveness, we believe that maintaining and training global human resources is what will support the global expansion of our businesses. Therefore, we have set up an education center at our Fukushima plant, and are engaged in the training of the employees who will be TBK Group s next generation of technicians and managementlevel personnel. 4. Establishment of Corporate Reliability At TBK, by engaging in business activities that are in harmony with society and the environment and are based on compliance and risk management, we endeavor to maintain healthy, favorable relationships with all stakeholders, and to contribute to the development of society and fulfill our social responsibilities as a corporation. Outlook for the Future The truck manufacturing industry with which TBK Group is associated is expected to continue showing steady growth in the domestic market. In overseas markets, particularly in the ASEAN region, from a medium- and long-range perspective we are regarding this growth as extending into the future. Moreover, it is thought that economic recovery in the ASEAN region will take some time, and there are also the increases in depreciation costs that accompany our capital investment, mainly at our base of operations in Thailand, and we anticipate that profitability will continue to be difficult. In light of this situation, it is our intention to maintain our focus on sales promotion both domestically and overseas, to carry out improved production efficiency and radical cost reduction activities, and to work toward enhancing TBK Group s overall performance. 4

7 Consequently, for Fiscal 2016 (ending March 31, 2017), we are aiming for 47,000 million in consolidated net sales, 1,700 million in operating income, and 900 million in net income belonging to parent company stockholders. Net sales (Forecasts) Net sales (Process) Operating income (Process) ( 4.4%) ( 17.5%) ( 1.4%) FY15 FY16 (forecast) Japan Asia U.S.A Japan Asia U.S.A (forecast) (forecast) Truck and bus business Oversea sales Engine components Distribution of Profits and Raising of Corporate Value At TBK Group, we treat return on profits to our shareholders as one of our most important management tasks. On having built a stable, long-term earnings base and established a sound and efficient financial base, a return on profits may be carried out that is appropriate to both the earnings situation and the maintenance of stable dividend distribution; this is a fundamental aspect of our company policy. On the basis of this policy, taking into account a mid-term earnings situation that is based on the current-period net income that belongs to the parent company stockholders, we are aiming for surplus dividends with a dividend payout ratio of 30.0%. Profits distribution policy In addition, we are implementing measures to further demonstrate our corporate reliability within society. We will do our utmost to maintain and deepen healthy, favorable relationships with all parties with interests in TBK Group by engaging in business activities that are founded on compliance and risk management, and are in harmony with society and the environment. Moreover, we will endeavor to contribute to the sustainable development of society and to fulfill our social responsibilities as a corporation. From this point forward, as we commence our 13th mid-term business plan, we will strive to further strengthen our business base and raise our corporate value. Takaaki Kishi President 5

8 TBK Business Segment TBK Group develops and manufactures important safety parts for medium-to-heavy commercial and passenger vehicles, such as brakes, water pumps for engine cooling, oil pumps for lubrication, and a wide range of engine components and other products. As a major supplier to automotive manufacturers, we control a large share of the market for such products in Japan, especially in the brakes and pumps sectors. Real estate lending: 1.2%, 538 million For construction equipment: 9.3%, 4,371 million For vehicles: 5.5%, 2,624 million Other Engine Components 14.8% For construction equipment: 5.7%, 2,696 million Pumps 36.5% For vehicles: 30.8%, 14,493 million Others: 5.0%, 2,381 million Engine Components: 51.3% Brakes: 42.5% Vehicle component manufacturing: 98.8%, 46,548 million For vehicles: 41.9%, 19,708 million For construction equipment: 0.6%, 275 million Total: 47,086 million BRAKES Drum brakes TBK Group develops and manufactures important safety parts for to-heavy duty commercial and passenger vehicles, such as medium- 71% Shares in Japan Linings Pads Wheel sylinders/expanders Retarders TBK Group develops and manufactures important safety parts for medium-toheavy duty commercial and passenger vehicles, such as Retarders for heavy-duty vehicles Retarders for medium-duty vehicles Regeneration-type retarders 6

9 ENGINE COMPONENTS Water Pumps TBK Group develops and manufactures important safety parts for medium-to-heavy duty commercial and passenger vehicles, such as 65% Shares in Japan Oil Pumps TBK Group develops and manufactures important safety parts for medium-to-heavy duty commercial and passenger vehicles, such as 85% Shares in Japan Energy-saving oil pumps (electronic) Electromotive Pumps Energy-saving oil pumps (mechanical) Other engine components OTHER COMPONENTS Engine camshafts Turbocharger bearing housing Sylinderheads Crankcase Hubdrums (front) Hubdrums (rear) 7

10 Corporate Governance System Basic Approach At TBK, our basic approach to corporate governance places emphasis on expediting management decision-making and carrying out smooth execution of business operation activities, as well as ensuring transparency in decision-making and execution processes, and eliminating illegality via mutual checks and balances. Furthermore, we believe that in addition to providing for rapid, strategic decisionmaking and oversight by a board of directors that is well-acquainted with the vehicle components manufacturing industry and the management concerns of this company, a two-tier system consisting of oversight and auditing by an outside director and outside corporate auditors is an efficient way to ensure the trust of our shareholders and investors. As such, we have decided that the Company with Board of Corporate Auditors model is a suitable one for our company. With respect to the Corporate Governance Code formulated by the Tokyo Stock Exchange, TBK actively applies such items as are applicable in line with its stipulated principles, carries out increased strengthening of its corporate governance, and aims to realize sustainable growth and enhanced corporate Value. Shareholder s Meeting Appointment Appointment Appointment Report Board of Directors Management Monitoring Risk/Compliance Committee and Internal Audit Committee Operational Audit Office Cooperation Board of Corporate Auditors Management System Items Decision Board of Executive Officers Execution Management Management Meeting Cooperation Audit/Preventive measure Notify Audit Cooperation Report Indicate Audit Independent Auditors Divisions and Subsidiaries Compliance Structure In order to improve actual compliance effectiveness, TBK is reconfiguring its compliance promotion structure to enable company officers and all employees to act in accordance with laws, regulations, articles of incorporation and management principles. We are also moving forward with education and recommendations for punishment to address any violations committed by company officers or employees. 8

11 Risk Management System In order to implement our risk management system, we have established a set of risk management and compliance rules. Risk and compliance committee meetings and subcommittee meetings are held regularly once per quarter, with discussions that include reports from subsidiaries, which are conveyed periodically to the board of directors so that appropriate measures and follow-up verification are carried out. Internal Auditing and Auditing by Corporate Auditors Internal auditing at TBK is carried out primarily by the Business Operation Auditing Office, and with regard to the legality, effectiveness, efficiency and other concerns of the operations of each division and at domestic and foreign subsidiaries, audits are performed that include measures for product quality and the environment. Concerning legality, in view of our social responsibility as a publicly listed company, we are also paying special attention to the Subcontract Act, the Antimonopoly Act and other laws. Auditing by corporate auditors is carried out by all the corporate auditors (outside corporate auditors), who convene each month for the meeting of the board of corporate auditors, and attend and convey opinions at the meeting of the board of directors as well. Standing corporate auditors in particular are responsible for performing audits of the Executive Operations Division, including subsidiary operations, and do so by attending and conveying their opinions at executive officer meetings and all other committee meetings. Outside Directors and Outside Corporate Auditors In order to oversee the directors performance of duties and enhance the functioning of the board of directors from an independent standpoint, TBK has appointed two (2) outside directors and three (3) outside corporate auditors. The criteria for their appointment are based on rules concerning independence set forth by the Stock Exchange. Outside directors Hiroshi Takahashi and Masayuki Yamazaki, on the basis of their broad knowledge and insight, and their wealth of experience and achievement in corporate management at banks and industrial firms, have been selected to oversee the directors performance of duties from an independent standpoint. There is no relationship of vested interest between the outside directors and TBK at this time. Outside corporate auditor and standing corporate auditor Keisuke Fukumoto, on the basis of his experience handling internal auditing duties at life insurance companies, his broad knowledge of and insight into corporate governance and his preservation of independence, has been selected to oversee the directors performance of duties with a fair and objective standpoint. Concurrently, Mr. Fukumoto holds the post of part-time corporate auditor for Group companies TSK, TBR, TBK Sales and TBK Tosho. Outside corporate auditor Mitsunori Matsumoto, on the basis of his experience in corporate management and his broad knowledge and insight, as well as his prior two-year track record as an outside corporate auditor for TBK, has been judged capable of auditing the directors performance of duties with a fair and objective standpoint. Outside corporate auditor Keiichi Otsuka, on the basis of his high level of expertise with finance and accounting as a certified public accountant, and his wealth of experience in accounting auditing, has been judged capable of auditing the directors performance of duties with a fair and objective standpoint. 9

12 Consolidated Balance Sheets and Consolidated Subsidiaries As of March 31, 2016 and 2015 Millions of yen Thousands of U.S. dollars (Note) ASSETS Current Assets: Cash on hand and at bank... 2,398 3,043 $ 21,281 Notes and accounts receivable... 11,900 11, ,608 Inventory assets... 3,851 3,739 34,176 Corporate tax receivable ,970 Deferred tax assets ,248 Other... 1, ,116 Reserve for possible loan losses... (5) (5) (44) Total current assets... 20,211 19,513 $179,366 Property, Plant and Equipment: Tangible Fixed Assets: Buildings and structures... 10,584 8,982 $ 93,929 Machinery and equipment... 11,069 9,400 98,233 Land... 11,841 11, ,085 Construction in progress... 3,363 3,423 29,845 Other... 1, ,877 37,971 34, ,980 Intangible Fixed Assets: Software ,008 Other ,674 Investment and Other Assets: Investment securities... 3,438 4,533 30,511 Corporate bond of affiliate company Investment in capital ,626 Long-term loans ,036 2,396 Deferred tax assets ,860 Others ,038 Allowance for possible loan losses... (13) (12) (115) Reserve for possible investment losses... (131) (165) (1,162) 4,751 7,104 42,163 Total property, plant and equipment... 43,137 41, ,827 Total Assets... 63,349 61,399 $562,202 Note: U.S. dollars amounts are translated, for convenience only, at U.S.$1= , the rate prevailing on March 31,

13 Millions of yen Thousands of U.S. dollars (Note) LIABILITIES AND NET ASSETS Current Liabilities: Notes and accounts payable... 6,599 6,273 $ 58,564 Short-term debt... 6,379 3,669 56,611 Lease obligations ,665 Accrued income taxes ,073 Accrued bonuses to employees ,653 Accrued bonuses to board of directors Provision for product warranties ,739 Notes payable equipment ,572 Other... 1,848 2,085 16,400 Total current liabilities... 17,183 13, ,493 Non-Current Liabilities: Long-term debt... 6,987 5,412 62,007 Lease obligations ,490 Deffered tax liabilities ,073 Deferred tax liabilities on revaluation of land... 2,317 2,440 20,562 Net defined benefit liability... 2,891 2,812 25,656 Other... 3,184 3,353 28,257 Total non-current liabilities... 16,346 15, ,065 Total liabilities... 33,530 29, ,568 Net Assets: Shareholders' equity: Common stock... 4,617 4,617 40,974 Capital surplus ,307 Retained earnings... 18,128 18, ,880 Treasury stock, at cost... (36) (35) (319) 22,969 23, ,842 Revaluation adjustment: Valuation difference on available-for-sale securities ,330 6,576 Revaluation reserve for land... 5,385 5,262 47,790 Foreign currency translation adjustment ,412 5,307 Remeasurements of defined benefit plans... (505) (208) (4,481) 6,221 7,797 55,209 Minority interests ,266 5,564 Total net assets... 29,819 32, ,634 Total liabilities and net assets... 63,349 61,399 $562,202 11

14 Consolidated Statements of Income and Consolidated Subsidiaries For the years ended March 31, 2016 and 2015 Millions of yen Thousands of U.S. dollars (Note) Net sales... 47,086 47,058 $417,873 Cost of sales... 41,725 40, ,296 Gross profit... 5,360 6,503 47,568 Selling, general and administrative expenses... 4,015 3,569 35,631 Operating income... 1,345 2,934 11,936 Other income (expenses): Interest income (expenses)... (239) (143) (2,121) Dividend income Provision of allowance for investment loss... (39) (88) (346) Foreign exchange gains (losses)... (64) 25 (567) Gain (loss) on sale and disposal of property, plant and equipment, net... (66) (5) (585) Gain on liquidation of subsidiaries and affiliates Others, net Total... (261) (28) (2,316) Income before income taxes and minority interests... 1,084 2,906 9,620 Income taxes: Current ,396 Prior Deferred ,339 Net income ,186 5,280 Net income (loss) attributable to non-controlling interests... (33) 33 (293) Net income attributable to owners of the parent ,152 $5,617 Consolidated Statements of Comprehensive Income and Consolidated Subsidiaries For the years ended March 31, 2016 and 2015 Thousands of Millions of yen U.S. dollars (Note) Net income ,186 $ 5,280 Other comprehensive income (loss): Net unrealized holding gain on securities... (588) 672 (5,218) Difference in revaluation of land ,091 Translation adjustments... (911) 1,173 (8,084) Remeasurements of defined benefit plans... (302) 16 (2,680) (1,678) 2,117 (14,891) Comprehensive income... (1,083) 4,303 $(9,611) Comprehensive income attributable to shareholders of the Company... (942) 4,112 $(8,359) Comprehensive loss attributable to minority interests... (141) 191 (1,251) 12

15 Consolidated Statements of Changes in Equity and Consolidated Subsidiaries For the years ended March 31, 2016 and 2015 Millions of yen Shareholders' equity Total Retained Trearusy stock, shareholders' Common stock Capital surplus earnings at cost equity Balance at April 1, , ,664 (33) 21,497 Cumulative effect of changes in accounting policies (193) (193) Restated balance 4, ,470 (33) 21,304 Changes during the year: Cash dividends (439) (439) Net income 2,152 2,152 Purchases of treasury stock (2) (2) Change of scope of consolidation Purchase of shares of consolidated subsidiaries Net changes in items other than shareholders' equity Total changes during the year 1,712 (2) 1,710 Balance at March 31, , ,183 (35) 23,015 Cumulative effect of changes in accounting policies Restated balance 4, ,183 (35) 23,015 Changes during the year: Cash dividends (469) (469) Net income Purchases of treasury stock (0) (0) Change of scope of consolidation (219) (219) Purchase of shares of consolidated subsidiaries Net changes in items other than shareholders' equity Total changes during the year 10 (55) (0) (45) Balance at March 31, , ,128 (36) 22,969 Millions of yen Accumulated other comprehensive income (loss) Net Remeasurements Total accumulated unrealized of defined other holding gain Revaluation Translation benefit plans, comprehensive Minority Total net on securities adjustment adjustments net of taxes income, net interests assets Balance at April 1, , (224) 5,837 1,099 28,435 Cumulative effect of change in accounting policies (193) Restated balance 657 5, (224) 5,837 1,099 28,242 Changes during the year: Cash dividends (439) Net income 2,152 Purchases of treasury stock (2) Change of scope of consolidation Purchase of shares of consolidated subsidiaries Net changes in items other than shareholders' equity , , ,126 Total changes during the year , , ,837 Balance at March 31, ,330 5,262 1,412 (208) 7,797 1,266 32,079 Cumulative effect of changes in accounting policies Restated balance 1,330 5,262 1,412 (208) 7,797 1,266 32,079 Changes during the year: Cash dividends (469) Net income 633 Purchases of treasury stock (0) Change of scope of consolidation (219) Purchase of shares of consolidated subsidiaries 10 Net changes in items other than shareholders' equity (588) 123 (813) (296) (1,575) (639) (2,214) Total changes during the year (588) 123 (813) (296) (1,575) (639) (2,260) Balance at March 31, , (505) 6, ,819 13

16 Thousands of U.S. dollars Shareholders' equity Total Retained Trearusy stock, shareholders' Common stock Capital surplus earnings at cost equity Balance at April 1, 2015 $40,974 $2,218 $161,368 $(310) $204,250 Cumulative effect of change in accounting policies Restated balance 40,974 2, ,368 (310) 204,250 Changes during the year: Cash dividends (4,162) (4,162) Net income 5,617 5,617 Purchases of treasury stock (0) (0) Change of scope of consolidation (1,943) (1,943) Purchase of shares of consolidated subsidiaries Net changes in items other than shareholders' equity Total changes during the year 1,126 (488) (0) (399) Balance at March 31, 2016 $40,974 $2,307 $160,880 $(319) $203,842 Thousands of U.S. dollars Accumulated other comprehensive income (loss) Net Remeasurements Total accumulated unrealized of defined other holding gain Revaluation Translation benefit plans, comprehensive Minority Total net on securities adjustment adjustments net of taxes income, net interests assets Balance at April 1, 2015 $11,803 $46,698 $12,531 $(1,845) $69,195 $11,235 $284,691 Cumulative effect of change in accounting policies Restated balance 11,803 46,698 12,531 (1,845) 69,195 11, ,691 Changes during the year: Cash dividends (4,162) Net income 5,617 Purchases of treasury stock (0) Change of scope of consolidation (1,943) Purchase of shares of consolidated subsidiaries 88 Net changes in items other than shareholders' equity (5,218) 1,091 (7,215) (2,626) (13,977) (5,670) (19,648) Total changes during the year (5,218) 1,091 (7,215) (2,626) (13,977) (5,670) (20,056) Balance at March 31, 2016 $6,576 $47,790 $ 5,307 $(4,481) $55,209 $5,564 $264,634 14

17 Consolidated Statements of Cash Flows and Consolidated Subsidiaries For the years ended March 31, 2016 and 2015 Millions of yen Thousands of U.S. dollars (Note) Cash flows from operating activities: Income before income taxes... 1,084 2,906 $ 9,620 Adjustment: Depreciation... 3,541 3,068 31,425 Increase (decrease) in allowance for employee bonuses... (13) (109) (115) Increase (decrease) in allowance for board of director bonuses... (50) (10) (443) Decrease in net defined benefit liability... (301) (148) (2,671) Interest and dividend income... (115) (87) (1,020) Interest expenses ,351 Loss (gain) on sales of property, plant and equipment (2) 195 Loss on disposal of property, plant and equipment Loss on liquidation of subsidiaries and affiliates... (42) Changes in assets and liabilities: (Increase) in receivables... (487) (858) (4,321) (Increase) decrease in inventories... (160) (137) (1,419) Increase (decrease) in notes and accounts payable ,964 (Increase) in consumption taxes receivable (168) 1,073 (Decrease) in consumption taxes payable... (351) 318 (3,115) (Decrease) in account payable... (6) 57 (53) Others, net ,008 Sub-total... 4,267 5,404 37,868 Interest and dividend received ,020 Interest paid... (211) (132) (1,872) Income tax paid... (635) (799) (5,635) Net cash provided by operating activities... 3,535 4,560 31,372 Cash flows from investing activities: Payment for purchases of property, plant and equipment... (7,123) (6,673) (63,214) Proceeds from sales of property, plant and equipment ,239 Payment for purchases of intangible assets... (33) (46) (292) Payment for perchase of investments in securities... (530) (148) (4,703) Payment for subscription Payment by loans... (1,092) (103) (9,691) Proceeds from collection of loans ,088 Payment for refunding of the long-term security deposits... (180) (180) (1,597) Others, net Net cash used in investing activities... (8,236) (6,947) (73,091) Cash flows from financing activities: Increase (decrease) in short-term loans, net... 2,191 (34) 19,444 Increase in long-term loans, net... 2,993 3,427 26,561 Cash dividend paid to non-controlling subsidiaries... (174) (1,544) Payments from changes in ownership interests in subsidiaries that do not result in changes in scope of consolidation... (302) (2,680) Payment of dividend... (468) (440) (4,153) Others, net... (154) 292 (1,366) Net cash provided by (used in) financing activities... 4,083 3,245 36,235 Effect of exchange rate changes on cash and cash equivalents... (104) 125 (922) Net increase (decrease) in cash and cash equivalents... (722) 984 (6,407) Cash and cash equivalents at beginning of the year... 3,043 2,059 27,005 Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation Cash and cash equivalents at end of year... 2,398 3,043 $ 21,281 15

18 Corporate Data Corporate Information (As of March 31, 2016) Head Office , Minami Naruse, Machida, Tokyo , Japan TEL: FAX: Paid in Capital: 4,617 million Number of authorized shares: 76,000,000 shares Number of shares issued: 29,424,635 shares Share units: 100 shares Number of shareholders: 11,971 Stock Listing: Tokyo Stock Exchange Fukushima No. 1 Plant Fukushima No. 2 Plant Fukushima No. 3 Plant Tokachi Proving Ground Group Companies: Tokyo Seiko Co., Ltd. (Japan) TBR Co., Ltd. (Japan) TBK Sales Co., Ltd. (Japan) TBK America, Inc. (U.S.A.) TBKK (Thailand) Co., Ltd. (Thailand) Full Win Developments Ltd. (Hong Kong) Qiaotou (China) TBK China Co., Ltd. (China) Chang an (China) Changchun TBK SHILI Auto Parts Co., Ltd. (China) Changchun FAWSN (China) TBK India Private Ltd. (India) Major Shareholders (As of March 31, 2016) Number of shares held (thousands) Percentage of shares held (%) Isuzu Motors Limited 2, BBH for Fidelity Puritan Fidelity Series Intrinsic Opportunity Fund 1, Asahi Mutual Life Insurance Company 1, Sumitomo Mitsui Banking Corporation 1, The Bank of Yokohama, Ltd. 1, Mitsubishi Heavy Industries, Ltd. 1, BBH for Fidelity Low Priced Stock Fund (Principal All Sector Subportfolio) 1, Japan Trustee Services Bank, Ltd.(Trust Account) CBNY DFA INTL SMALL CAP VALUE PORTFOLIO Teikyo University *percentage of held is calculated exclusive of 95,645 treasury stocks. Type of Shareholders Treasury Stock 0.33 % Financial Institutions % Individuals and Others % Domestic Institutional Investors % Foreign Institutional Investors % 16

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