AKEBONO REPORT 2018

AKEBONO REPORT 2018

AKEBONO REPORT 2018 Issued August 2018

Corporate Planning Division, Corporate Communications Office 19-5 Nihonbashi Koami-cho, Chuo-ku,

Tokyo 103-8534, Japan Akebono Brake Industry Co., Ltd. TEL +81 (0) 3-3668-5183 FAX +81 (0) 3-5695-7391 URL http://www.akebono-brake.com/english/ Please send your opinions and impressions to the above office.

This report was printed on Forest Stewardship Council-certified paper, sourced from well-managed forests and other controlled sources. In addition, the printing involved no volatile organic compounds (VOCs). Contents

Message Top Message ...... 03

Akebono’s Journey ...... 05 akebono’s Through “Friction and Vibration, their Control and Analysis,” Akebono 2018 ...... 07 we are determined to protect, grow and support every individual life About Akebono Product Introduction ...... 09 Corporate Mission Basic Principles of Brakes ...... 11 Established 1999 Global Expansion ...... 13

Overview of Sustainability Management ...... 15 We will continue to create value long into the 21st century as we Expand into Next-Generation Technology pursue our Corporate Mission. Next-Generation Friction Materials ...... 17 We declare that we will: Next-Generation Electro-Mechanical/High Performance Brakes 1. Recognize the real value of what we create and provide. 1: Next-Generation Brakes ...... 18 akebono’s 2. Assure our own indispensability by continuously creating new 2: High Performance Brakes ...... 19 Declaration for value. Sensor Technologies ...... 20 the 21st Century 3. Accomplish our tasks with speed and the courage of our E : Initiatives to Reduce Environmental Impact convictions without fear of failure. Environmental Management ...... 21 4. Achieve our aspirations through the pride of each and every Initiatives in Purchasing ...... 22 individual. Medium- to Established 1999 Long-Term Initiatives in Production ...... 22 Growth Model Initiatives in Logistics ...... 23

S : Strengthen Ties with Stakeholders 1. Customer needs first Human Resources and Diversity ...... 24 Corporate Goals 2. Technology realignment Together with Local Communities ...... 28 3. Establishing a global network Established 1990 Providing Safety and Security ...... 29 Initiatives to Raise Corporate Value ...... 30

G : Corporate Value Improvement through Stronger Governance Corporate Governance System ...... 31 Management Systems ...... 35 Brand Slogan Brand Statement Conversation with the President and Outside Director ...... 36 Since 1929, akebono has brought assurance and peace of mind to our customers and end-users everywhere as a Financial and Non-Financial Highlights ...... 37 global industry leader in brake design and production. We Progress of akebono New Frontier 30 - 2016 ...... 39 Review of Operations take pride in our history of achieving safety without Review of Operations ...... 42 Absolute safety; compromise, and continue to pursue new standards of Review of Operations by Region ...... 42 Unparalleled control perfection with innovation. Looking to the future, we are inspired by the prospect of Directors and Officers ...... 45 delighting and satisfying our customers, and never cease Corporate Information Company Outline/ Investor Information ...... 46 in the challenge to succeed in this goal. Akebono Locations ...... 47 Absolute safety; Unparalleled control. Putting a smile on people’s faces all over the world.

Established 2005

Editorial Policy Reporting Period Definition of Fiscal Year Publication date August 2018 We compiled the AKEBONO REPORT 2018 based on “integrated thinking,” a This report covers the annual results data for the 2017 fiscal year (April 1, 2017 to To present content in a consistent and easy-to-follow manner, in this (Last publication: August 2017; next scheduled publication: August 2019) concept proposed by the International Integrated Reporting Council (IIRC). In March 31, 2018). In addition, the report contains references to some ongoing report, the period referred to as the fiscal year represents the fiscal Inquiries Akebono Brake Industry Co., Ltd. doing so, we have focused on actual examples of the Akebono Group’s activities undertaken after the latter date to provide readers with a better period from April 1 to March 31 of the next year. The financial Corporate Planning Division, Corporate Communications Office operations, the kind of growth it aims to achieve and how it will fulfill its understanding of the latest status of initiatives. statements are also presented on a fiscal year basis. Tel +81 (0) 3-3668-5183 commitment to delivering safety and peace of mind through brake products. To effectively convey abovementioned content to our stakeholders, we Organizations The AKEBONO REPORT 2018 booklet presents financial and nonfinancial Fax +81 (0) 3-5695-7391 prepared both printed booklet and web editions of the AKEBONO REPORT 2018. Japan: Akebono Brake Industry (including HP BU, Foundation BU, Infrastructure information on the Akebono Group’s fiscal 2017 initiatives with a focus Web The AKEBONO REPORT 2018 web edition is available on our website. In the printed booklet, we put greater emphasis on reader-friendliness, focusing & Mobility Systems (AIMS) BU, Friction Material BU, Aftermarket BU, and R&D, on readability. For detailed data on each initiative, please visit our URL http://www.akebono-brake.com/english/index.html on matters that we want to communicate to a broader range of stakeholders. In automotive sales, production, production engineering, quality assurance, website. this year’s report, we have presented various Company initiatives from the purchasing department, and administrative departments as well as Tatebayashi standpoint of ESG (Environment, Society, and Corporate Governance) and SDGs. Foundry), domestic Group companies including four production plants (Yamagata, Website Cautionary Statement Concerning Outlook We hope this will help you understand the business we are promoting with the Fukushima, Iwatsuki and Sanyo), Alocs Corporation, Akebono Research & Detailed data on each initiative is disclosed aim of sustainable growth. Further details on topics presented in the printed Current plans, projections, strategies, business performance and other statements reported Development Centre, Akebono 123, and Akebono Advanced Engineering; on our website. booklet can be found on our website. herein that are not historic facts represent forecasts made under Akebono’s assumptions and Overseas: ABC, AEC, ABE, ABG, ABCT and ABCS (U.S.); ABM (Mexico); AESA views based on information available at the time this report was prepared. These statements, It is our hope that the aforementioned articles help readers understand (Gonesse), AESA (Arras) (France); AEG (Germany); AAE (UK); ABSK (Slovakia); Booklet therefore, are exposed to risks and uncertainties, including but not limited to those associated Akebono’s determination to lead the way in realizing unparalleled competitiveness AKBT, A&M (Thailand); two Chinese subsidiaries (Guangzhou and Suzhou); AAIJ Matters related to priority themes are with the economic climate surrounding Akebono’s business domain, trends in market as a small, specialized, independent manufacturing company. (Indonesia); and AAVH (Vietnam). Please refer to “Akebono Locations” on pages In preparing this edition, we referred to the Guiding Principles set forth by the concisely discussed in the booklet. competition, exchange rates, tax systems and various institutions. Please note that actual 47 to 48 for the formal names of those organizations that are presented in the business performance may differ significantly from Akebono’s forecast due to various factors. IIRC as well as the Global Reporting Initiative Sustainability Reporting Guidelines above listing as abbreviations. (G4) and ISO 26000.

01 AKEBONO REPORT 2018 AKEBONO REPORT 2018 02 Top Message Message

Amid change, with a medium- to long-term perspective, we will proactively carry out measures that leverage Akebono's strengths.

Progress of Akebono New Frontier 30 - 2016 Midterm growth by actively responding to changes in the its business by not only providing products, but also Business Plan automotive industry. At the same time, it hopes to meet solutions such as information and services. Akebono has finished the second year of its three-year the needs of society by incorporating measures that • Manufacturing capacity increase/Productivity midterm business plan, of which fiscal 2018, the current contribute to solving global environmental and social improvement: In the improvement and renovation of fiscal year, is the final year. In the plan, we are working issues in its business activities. facilities and development of new construction methods, on initiatives based on three basic policies under the In November 2017, Akebono announced its "medium- we are committed to rigorous energy conservation and theme of "sustainable growth." to long-term vision" that lays out a direction for dealing seek to eliminate CO2 emissions during production in • Rebuilding the North American operations: We have with the global environment and seeking sustainable 2050. We are also improving production and logistics implemented four measures to rebuild from the growth. Based on this medium- to long-term vision, efficiency and safety. Iwatsuki Manufacturing, which manufacturing problems that occurred in our North Akebono will deepen its knowledge of "Friction and introduced a new plating facility in May 2018, has made American business, and business performance is Vibration, their Control and Analysis," a company strength, the process as compact as possible and has increased gradually recovering. In "Fundamental organizational and focus on the development of brake technologies that energy saving, production efficiency, and safety. reforms," we seek to change key personnel and send can be deployed not only in automobiles, but in a wide experts in manufacturing and quality assurance from range of fields such as rolling stock including bullet trains A Company that Grows with Local Communities and its Japan to speed up the reforms. In “Productivity and industrial machinery, while taking on new challenges Associates improvement,” we improved yields and raised caused by further changes in the business environment. Since 1965, Akebono has operated a Vocational productivity by transferring production items, reviewing We will also develop products that leverage our sensor Scholarship Program that allows students to earn processes, and other measures. In "Manufacturing technologies to improve the safety and security of social qualifications by attending junior colleges and vocational capacity increase," we introduced new production infrastructure and increase operational efficiency. At the schools while working. More than 3,000 graduates have facilities, primarily at ABCS* and ABG*. In "Improvement same time, we will implement measures to reduce the already made use of this program. In May 2018, of earnings structure," we have reduced purchasing environmental impact and improve the workplace safety "Akebono Nursery School” (commonly known as “Ai- costs and labor costs, and optimized inventory. of our production facilities. Kids”) was opened as a part of our “workstyle reforms” * ABCS: Columbia Plant in Columbia, South Carolina, USA • Technological Development: Next-generation and to enrich our benefits program for associates. We * ABG: Glasgow Plant in Glasgow, Kentucky, USA friction materials: We are pursuing research on solicited the advice of graduates when opening the plant-derived materials from the viewpoint of utilizing nursery school. In addition, Akebono has promoted • Establishing global networks based on product- sustainable resources for the raw material used in health management and was designated as a "Company based business units: In fiscal 2016, Akebono friction materials and changing over to substances with Excellent Health Management 2018 (White 500)" in launched five product-based business units with with low environmental impact. We are pursuing recognition of its initiatives in this area. I hope to marketing, research and development, purchasing, wide-ranging research and development on brake dust, continue to implement various measures to maintain production and sales functions. In fiscal 2017, the an expected future problem, including unharmful our growth with local communities and associates. Company standardized product specifications that vary materials for friction materials and technology for In an automotive industry undergoing change according to customer and region by strengthening measuring brake dust. Since Akebono’s founding, "providing safety and The automotive industry, Akebono's main business collaboration among business units. We will further • Technological Development: Next-generation security" to customers has been the basis of all its field, is undergoing a major shakeup. The symbolic strengthen collaboration among business units, electro-mechanical/high performance brakes: corporate activities. Although we have caused our keyword is "CASE". This acronym of "Connected functions and regions, and seek to further generate Akebono researches the practical application of electro- customers a great deal of concern due to production (progress of connectivity/connection)," "Autonomous cash through the optimal allocation of business mechanical service brakes that will replace hydraulic brakes problems that occurred in the United States, we are (realization of automatic driving)," "Shared & Service resources. We are now building a global database, in the future and the next-generation "MR fluid brakes” now on track to recovery from last year thanks to the (development of shared services) " and "Electrification which will form the foundation of this collaboration. which does not rely on friction. Akebono also develops various measures we have taken. While it is said that (electrification of mechanisms)" represents the wide • Expanding high performance brake business and pneumatic brakes to be used in large European trucks. the automotive industry enters a period of change once range of new value that automobiles can provide. recreating European operations: In fiscal 2017, we • Technological Development: Sensor technologies every one-hundred-years, I view this as an opportunity While a major trend is occurring in the electrification completed the installation of the manufacturing line at (Infrastructure & Mobility business): Akebono to change how we work and return to Akebono’s of automobiles, demand for internal combustion the Slovakia Plant and the transfer of the high develops sensor products for a wide range of fields Corporate Mission, forge ahead with Monozukuri engines in emerging countries and other regions is performance brake caliper business from ABCS. including automotive, rolling stock, civil engineering, (manufacturing excellence) and develop human expected to remain strong. Due to consumer Furthermore, the number of customers are increasing, agriculture, and energy by utilizing its sensor resources with the aim of sustainable growth. preferences, the hot-selling vehicle model has shifted mainly in Europe. In fiscal 2018, we will work to technologies. In the future, Akebono intends to expand We ask our stakeholders for their continued support from Sedan to SUV. In urban areas, the automobile improve production quality at the Slovakia Plant and and for your frank opinions and comments on this report. market has changed substantially, with the emergence develop the business in the US and Japan. of a sharing economy, as seen in the shift from June 2018 ownership to shared ownership of vehicles. Balancing Medium- to Long-Term Growth with With various changing factors related to technology Sustainability and markets occurring simultaneously, for us suppliers As seen by the adoption of the United Nation’s Hisataka Nobumoto to survive, we need to reaffirm our strength as "small, "Sustainable Development Goals (SDGs)" and the President and CEO specialized, independent manufacturing company" and international "Paris Agreement" on the mitigation of further reinforce our management foundation while climate change, companies are now being strongly producing creative value with a medium- to long-term encouraged to preserve the global environment. Given perspective and achieving sustainable growth. these circumstances, Akebono will seek sustainable

03 AKEBONO REPORT 2018 AKEBONO REPORT 2018 04 About Akebono Akebono’s Journey

Since 1929 Akebono was founded as Japan’s first brake lining (friction material) manufacturer at the dawn of the Japanese automotive industry. About Akebono

1960 First phase of transition 1986 Second phase of transition 2010 Third phase of transition Launched as a comprehensive First full-scale overseas Acceleration of globalization brake manufacturer expansion

2007 Participates in Formula One providing (Billions of yen) brake components as the official 1982 supplier for the McLaren team 250 AD Type disc brakes win the Fiscal 1981 Japan Society of Mechanical Engineers Medal 1986 Establishes Ambrake Corporation as a joint venture with General Motors in the United States 2001 1958 New corporate headquarters, the Akebono resin brake shoes Akebono Crystal Wing (ACW) is 2016 200 and disc brake linings are completed in Hanyu City, Saitama Receives the Fiscal 2015 Japan used on Japanese National Prefecture Society of Mechanical Engineers Railways’ Kodama express Medal for New Technology in the trains “development and mass production of 2000 high performance brakes for road cars” Starts using the new corporate logo 150 1960 Signs brake-related technical assistance agreement with a 2014 global brake manufacturer Bendix Corporation in the United States Establishes Akebono Brake Slovakia s.r.o. in Slovakia 1929 100 Founded as Japan’s first brake lining motorization

1996 Acquires equity interest in PT. Tri Dharma Wisesa in Indonesia 1998 2004 Net sales trend (currently PT. Akebono Brake Astra Establishes Akebono Arras S.A. Chinese local subsidiaries Akebono 2009 Indonesia) production facility in France Corporation (Guangzhou) and Signs a contract with Robert Bosch GmbH to acquire First step to establish a business (currently Akebono Europe S.A.S. Akebono Corporation (Suzhou) are its North American brake business foundation in Asia Arras Plant) established Accelerates globalization from 2010

05 AKEBONO REPORT 2018 AKEBONO REPORT 2018 06 About Akebono Akebono 2018

Akebono TODAY Sales Ratio by Region (Fiscal 2017) Leveraging our position in Japan and overseas as a “small, specialized, independent manufacturing company.”

Asia About Akebono % of sales are overseas 17% Japan 71 Europe 29% Since entering the overseas market in 1986, we have 5% Net Sales expanded our business in North America, Europe and Asia. Passenger cars ¥264.9 Since fiscal 2015 our overseas sales ratio has exceeded 70%. billion High performance vehicles Business Fields Motorcycles 7 North America Akebono’s 49% Leveraging technologies cultivated in the automotive Business brake field in a wide array of fields including Fields motorcycles, rolling stock and industrial machinery. Sensors Commercial vehicles Opening up new markets with technologies and expertise only a specialized manufacturer possesses. Conducting Business with a Wide-Range of Global Automobile Manufacturers Rolling stock Industrial machinery Various manufacturers in Japan and around the world use products made by Akebono as an independent, comprehensive brake manufacturer.

Sales Ratio by Customer (Fiscal 2017) Sales Ratio by Product (Fiscal 2017)

Mazda % Hino % 2 1 Products for industrial Daihatsu 2% Other 6% machinery/rolling stock Small Specialized Independent Manufacturing Company VW 2% Other 3% Disc brakes Distributors 2% automotive GM 28% parts Yamaha 3% Able to react Focus on Independence People can Many can Industrial machinery/ 4% 22% swiftly friction and can create more add value achieve what rolling stock vibration opportunities through it one can not FCA 4% 47%

Isuzu 4% 20% Mitsubishi 4% Nissan 15% Disc brake Ford 6% pads 8% Brake Pad OEM (fitted in new cars) Market Share (2017) Honda 6% Toyota 11% Drum brakes For our mainstay product, brake pads, we maintain a high global market share of approximately 19% and a domestic market share of approximately 47%*. One in every five vehicles worldwide have brake pads made by Akebono.

Business operations at Ratio of Associates by Region (as of March 31, 2018)

Japan Asia % bases in countries 25% Japan 47 32 11 Number of 34% Associates Akebono employs 9,240 people around the world. Europe (consolidated) We are developing and training global human resources 4% 9,240 Global as a truly global company. North America % 37% 19 * Akebono research * Number of bases includes sales offices

07 AKEBONO REPORT 2018 AKEBONO REPORT 2018 08 About Akebono Product Introduction

Akebono draws on its comprehensive brake technologies to develop and supply brake and sensor products for automobiles, motorcycles, rolling stock and industrial machinery and contribute to safety improvement. About Akebono

Products for Automobiles Products for Rolling Stock

• Disc brake calipers • Drum brakes • Bullet train disc brakes • Brake shoes for rolling stock • Disc brake pads • Drum brake shoes • Bullet train disc brake linings • Disc brake lining for subways • Disc brake rotors • Drum brake linings

Disc brake Drum brake

Bullet train disc brakes Bullet train disc brake lining

Pick Up Contribution in the Railway Field Akebono has provided the brakes for Japanese bullet trains, from the first generation Type 0 series to the latest N700A series, as well as conventional trains. Brake shoes for rolling stock Disc brake lining for subways

Products for Motorcycles Products for Industrial Machinery

• Disc brake calipers • Drum brakes for forklifts • Brake shoes for elevators • Disc brake pads • Disc brakes for cranes • Clutch facings for car air conditioning units • Master cylinders

Master cylinder Disc brake

Drum brake for forklifts Disc brake for rough terrain cranes

Brake shoe for elevators Clutch facings for car air conditioning units

09 AKEBONO REPORT 2018 AKEBONO REPORT 2018 10 About Akebono 12

AKEBONO REPORT 2018 AKEBONO REPORT Aftermarket brake pads for the U.S. market Blue: Safe Thickness of 10 - 6 mm Caution (time for replacement) Yellow: Thickness of 4 mm or less Red: Danger (replace immediately) Thickness of 2 mm or less Aftermarket Parts Business Brakes support customer safety and security support customer safety Brakes 4. brakes been adopted as OEM products have Akebono global automobile major cars) by in new (fitted high quality provides Akebono manufacturers. produced and developed products brake aftermarket gathered from the knowledge with high technology throughout the to customers OEM business provided world. from the time the cycle, life throughout the vehicle’s until the end of its lifetime. car startsnew running parts are brake the aftermarket During this lifecycle, when the brake example, for replaced when necessary, provides Akebono away. pads and linings are worn dealers and the both automaker parts for aftermarket carefully Company The brand globally. Akebono customer needs and plans and develops analyzes from. that customers can choose brakes aftermarket Aftermarket brake pads for the Japanese market K4 disc brakes for mini cars* launched in Japan (* Displacement under 660cc) Steel fiber Cashew particle Phenol resin Graphite Aramid fiber The thickness of the new pad is about 10 mm (1 cm). It pad is about 10 of the new thickness The the residual these are only guidelines, please check As Intermixing of Friction Materials of Friction Intermixing Binders Reinforcements Friction Modifiers Advice to Customers Criteria for Brake Pad Replacement and become thinner through will wear pads Brake might cause damage to the disk continuous use, which rotors and could lead to replacement of the entire brake. of about 7 to 8 mm. When can be used at a thickness recommend pad is 4 mm or less, we residual thickness sake. safety’s replacement for of the pads at a car maintenance facility. thickness Friction Raw Materials 3. linings are made by brake pads and drum Disc brake the materials. Since to 20 kinds of raw intermixing 10 on the depending varies required performance the been changing have type, we customer and vehicle use. The that we materials and compositions raw are friction materials requirements for performance the usage by not be easily affected that they strength, heat resistance, mechanical environment, and environment- less noise and vibration, durability, high and produces develops Akebono friendly material. and security to safety quality products that deliver and customers based on its unique knowhow technology. manufacturing Boot ring screw Bleeder screw Bleeder cap Cylinder body pin Lock pinGuide Piston boot Piston Piston seal Back plate Back Anchor plate Parking lever brake lining Brake Wheel cylinderWheel screw Bleeder Brake shoe Brake Adjuster Return spring Piston Pad Shim Pin boot Pin Disc rotor Pad Brake shoe Brake lining Brake Types of Types Brake A vehicle can be equipped with different combinations different can be equipped with A vehicle 2. wheels on an automobile is equipped of the four Each usage and Depending on the with a brake. disc have the wheels may of the car, characteristics the have brakes Disc brakes. or a drum brakes at a capabilitystop a car in a stable to even manner capability the to have brakes high speed, while drum vehicles. stop heavier use disc brakes Some vehicles brakes. of disc and drum wheels, while others use discon the front and rear on the rear. brakes on the front and drum brakes Drum bracket Pad clip Drum Mounting Disc brake caliper brake Disc Main Parts of Drum Brakes Main Parts of Disc Brakes Pad (friction material) (friction Pad Piston mechanism) (application 1 1 Lining (friction material) (rotor)Drum Hydraulic pistonHydraulic Hydraulic pistonHydraulic 2 グ 機 ン 2 Rotor Lining (friction material) Pad Rotor Piston

3 3 (application mechanism) (application

What a Brake? is Drum Drum brakes Disc brakes its rotation Lining is pushed out to drum from the inside to stop Brake pads clamp the rotor to stop its rotation water from 0°C to boiling (100°C). Brakes are relatively relatively are Brakes from 0°C to boiling (100°C). water other major automobile parts, andsmall compared with is restricted. are mounted the space where they to absorb the output controls are required Complex are also Brakes safely. of the engine and brake power part in an automobileconsidered an important safety safety. role in ensuring vehicle because of their key 1. to a vehicle friction to cause that utilizes It is a device into kinetic energy converting by decelerate and/or stop generates km/h Sudden braking at 100 heat energy. of two liters of the temperature enough heat to raise Basic Principles of Brakes Principles Basic AKEBONO REPORT 2018 AKEBONO REPORT

11 About Akebono Global Expansion

Akebono is building a global business structure for responding to various market needs. About Akebono

Akebono Europe S.A.S. Arras Plant [AESA (Arras)] Akebono Corporation (Suzhou)

Brake pads Brake pads Akebono Brake Yamagata Akebono Brake Fukushima Manufacturing Co., Ltd. Manufacturing Co., Ltd. Akebono Brake Corporation (Elizabethtown) [ABC] Akebono Corporation (Guangzhou) Akebono Brake, Elizabethtown Plant [ABE]

Akebono Europe GmbH [AEG] Brake pads Brake linings Disc brakes Drum brakes Disc brakes Drum brakes Europe Akebono Brake Astra Vietnam Co., Ltd. [AAVH] Clutch facings Brake pads North Brake pads Motorcycle disc brakes Motorcycle master cylinders America Akebono Brake Corporation [ABC] Akebono Engineering Center [AEC] Clutch facings Akebono Brake Slovakia s.r.o. [ABSK] Akebono Brake (Thailand) Co., Ltd. [AKBT] Japan Akebono Brake, Glasgow Plant [ABG]

Tatebayashi Foundry High performance brakes Disc brakes Brake pads

Disc brakes Brake pads A&M Casting (Thailand) Co., Ltd. [A&M] Castings Akebono Brake, Columbia Plant [ABCS]

Akebono Brake Iwatsuki Akebono Europe S.A.S. [AESA (Gonesse)] Asia Manufacturing Co., Ltd.

Castings

Disc brakes High performance brakes Akebono Advanced Engineering (UK) Ltd. [AAE] Disc brakes Akebono Brake, Clarksville Plant [ABCT]

Akebono Brake Sanyo Manufacturing Co., Ltd. Drum brakes Corner modules Drum brakes PT. Akebono Brake Astra Indonesia [AAIJ]

Drum brakes

Rotors Disc brakes Bullet train disc brakes

Brake pads Motorcycle master cylinders Brake linings Akebono Research & Development Akebono Brake Mexico S.A. de C.V. [ABM] Centre Ltd. (Hanyu City)

Disc brakes Motorcycle disc brakes Drum brakes Drum brakes Disc brakes

13 AKEBONO REPORT 2018 AKEBONO REPORT 2018 14 Medium- to Long-Term Growth Model Initiatives to Reduce Environmental Impact Environment ▶ see page 21-23 Overview of Sustainability Management

Pursue management based on “the sustainability of Akebono and society”

Leveraging its unique position as a small, specialized, independent manufacturing Expand into Next-Generation company in the rapidly changing automotive industry, Akebono is contributing to Technology a sustainable society (sustainability) and working to raise corporate value. Seamless Application of Technologies Major Products Priority Issues Next-Generation Friction

Low impact to Materials see page 17 Medium- to Long-Term Growth Model environment • Resin mold friction materials • Sintering friction materials • Low environmental Brake pads impact substances Akebono’s • Zero emissions Formula One racing Corporate Mission Friction materials • Recycling High performance Passenger cars Brake linings vehicles Next-Generation Electro-Mechanical/ High Energy saving High quality Through “Friction and performance High Performance Brakes Vibration, their Control Motorcycles • Small/Lighter weight Next-Generation Brakes see page 18 Strengthen Ties with and Analysis,” Core • Electro-Mechanical Brakes • Energy circulation Stakeholders we are determined to technologies Disc brakes • MR Fluid Brakes protect, grow and support Social every individual life Risk management Reliable Durable ▶ see page 24-30 Mechanical parts Sensors Commercial vehicles • Less exhaustible resources Drum brakes • Less strategic materials High Performance Brakes see page 19 • Brake Calipers Rolling stock Industrial machinery • Electro-Mechanical Parking Brakes Safety/comfort

• Performance/ function • IoT Sensor products Sensor clusters (Accelerometers + Angular rate sensors) • Big data/AI Sensor Technologies see page 20 • Fully autonomous • Vehicle behavior detection devices drive • Monitoring Systems Global initiatives are progressing thanks to the adoption of the UN’s Sustainable Development Goals (SDGs) and international agreements including the Paris Agreement on the mitigation of climate change. In these circumstances, not only is Akebono improving customer satisfaction through its products and services that SDGs are 17 goals and 169 targets set to realize a sustainable world by 2030. leverage its core technologies, it is also Corporate Value Improvement through creating economic value through its business activity processes and pursuing Stronger Governance management based on “the sustainability of Akebono and society,” which contributes to solving this global social issue. Governance ▶ see page 31-36

15 AKEBONO REPORT 2018 AKEBONO REPORT 2018 16 Medium- to Long-Term Growth Model Expand into Next-Generation Technology

Expand into Next-Generation Technology– 1 Expand into Next-Generation Technology– 2 Next-Generation Friction Materials Next-Generation Electro-Mechanical/High Performance Brakes 1: “Next-Generation Brakes” Developing Products Free of Environmentally Developing Proprietary Materials Hazardous Substances The Research & Development Centre develops friction What is an Electro-Mechanical Brake? microns in diameter suspended in the fluid align with The use of brake friction materials generates brake dust. materials that reduce environmental impact. Based on An Electro-Mechanical Brake is a system that includes a the direction of the magnetic field, forming chain- In North America, regulations on environmentally the material technology, the Centre develops new device that operates until the driver applies the brakes shaped particle clusters that change the fluid to a semi hazardous substances have been tightened due to materials which can be applied in new fields other than and a device that operates with electrical power within solid state. anxiety over the impact of brake dust on the brakes. Akebono seeks to establish an advantage by the connection between the devices. Because hydraulic MR fluid brakes are constructed with a space filled ecosystems of rivers and gulfs. In response, Akebono is differentiating itself from its competitors. piping is no longer necessary, the brakes help improve with MR fluid between a disc fixed to the vehicle and a striving to develop technologies that reduce the volume For example, as Akebono’s original material, the R&D fuel efficiency by reducing disc that rotates together with the wheel hub bearing. of brake dust generated from friction materials while Centre succeeded in developing phenol resin with wood vehicle weight and also When electricity is passed through a magnetic coil extending the product life of brake pads. It is also powder. A special feature of this new material is that contribute to environmental mounted inside the brake, a magnetic field is generated Medium- to Long-Term Growth Model conducting research to create methods to analyze and fibers miniaturized to nano size based on coniferous preservation because they in an orthogonal direction to the discs, causing chain- evaluate brake dust. wood powder are uniformly dispersed in phenol resin. do not use brake fluid, which shaped particle clusters to form between the fixed disc Also, Akebono promotes the development of The new material makes it possible to achieve greater must be properly disposed of and the rotating disc. As the rotating disc continues to products with a lower environmentally hazardous strength in the brake’s operating temperature range whenever repairs are made. Electro-Mechanical Brake rotate, the chain-shaped particle clusters are broken by substance content. In accordance with in-house than with conventional phenol resin. As a result, the shear stress, and then form connections to the guidelines, which set forth stricter regulations on brake new material helps improve the wear resistance of Types of Electro-Mechanical Brakes neighboring cluster, before being broken again in a raw materials than required by law, Akebono brake pads and improves noise and vibration (NV Electro-Mechanical Service Brakes repeated cycle that generates a resistance force on the painstakingly examines these materials' possible impact characteristic). This brake system employs an electro-mechanical rotating disk. This resistance force is the braking force. on the environment and work environment from the operating mechanism that presses the disc brake pad Using MR fluid for brakes can reduce the emission of product design and development stages. We avoid against the brake rotor. Stepping on the brake pedal environmentally damaging substances by eliminating using materials that fall under the category of while driving generates an electric signal, starts up the abrasion powder because the brakes do not wear. environmentally hazardous substance and when it is motor built into in the brake caliper, and generates Moreover, MR fluid responds to a magnetic field in less determined that a substance has a significant impact on braking force on the wheel. Since minute movements than a micro second, enabling sensitive and stable people and the environment, we use alternative materials. can be controlled through software programming, safety braking. Since the voltage (excited magnetic force) is and comfort will be improved. electronically controlled, users can select their preferred Development and Promotion of Copper-Free Friction Electro-Mechanical Parking Brakes brake feel from among several preset patterns. Materials This electro-mechanical brake system activates the In collaboration with the Institute of Fluid Science, Tree powder Wood fiber Woody nanofibers In the U.S. states of Washington and California, state Composite phenol resin Composite phenol resin parking brake. Instead of the conventional parking brake Tohoku University (Professor Masami Nakano), Akebono laws have been enforced regarding restrictions on lever, which requires force to operate, the parking brake conducted research and development on ultra-compact chemicals contained in automotive brake friction In addition, Akebono has developed inorganic can be operated with a switch or a pedal, thereby mobility and completed its prototype product in March materials to prevent the impact of emissions of such particles with unique shapes as its new material for new reducing the driver’s burden. Because it is controlled by 2015. We will continue to test and improve MR fluid substances on river and marine ecosystems. In the business fields. This material is a uniquely shaped an electronic control unit (ECU), this brake helps to brakes as a smart brake suitable for smart cities and state of California, restrictions on copper will be particle that draws fully upon synthetic processes prevent the parking brake operation failure and improves smart mobility, aiming for implementation in 2020. enforced from 2021, and from 2025 onward, it will be cultivated in material development for brake friction safety.

illegal to fit new vehicles with friction materials materials and cannot be stably obtained by usual Magnetic field = 0 containing 0.5% or more of copper. Conventional methods. We are working on developing various fields Low Drag Calipers Rotating disc friction materials have used copper to ensure safe and of application by controlling the physical and chemical The low drag caliper is a brake that ensures that the pad Strongly magnetic particles (iron powder) effective performance at high temperature. Akebono properties resulting from this unique shape. to rotor gap is precisely MR fluid are suspended in a fluid such as oil. developed copper-free friction materials and started to maintained at the micron market them for aftermarket products in 2007 and level. This reduces brake drag Fixed disc

supply them as OEM parts to automakers since 2014. due to contact between the Applied magnetic field By combining multiple component materials, Akebono pad and rotor when the brake Magnetic field > 0 North pole When acted upon by a magnetic field, achieved the same performance as copper contained is released, contributing to Rotating disc the magnetic particles join up to form pads while keeping the cost at the same level. improved fuel economy. Low Drag Caliper chain-shaped clusters (chain structures) MR fluid Around 80%* of Akebono brand aftermarket brake Shear stress applied when the disc on one pads have a copper content that is lower than the 2025 MR Fluid Brakes that Emit No Brake Dust side moves in parallel at a constant speed standard for the state of California. Furthermore, we are At the Akebono Research & Development Centre, we Fixed disc This resistance force acts as the braking South pole force also working to quickly develop antimony-free materials, are conducting research and development into magneto as these could potentially be targeted under future rheological (MR) fluid brakes that eliminate brake dust. MR Fluid Brake Principle regulations. This product accommodates the increasing use of Akebono will continue electro-mechanical systems in automobiles and is to comply steadily with environmentally friendly. laws, including A functional material that has been researched since Washington state laws the 1960s, MR fluid has the characteristic that it going forward. changes from a liquid to a semi-solid state in reaction to

*Shipment volume basis magnetism. When a magnetic field is applied, the Copper-free brake pad strongly magnetic particles (iron powder) several MR fluid brake (prototype) and ultra-compact mobility vehicle fitted with it

17 AKEBONO REPORT 2018 AKEBONO REPORT 2018 18 Medium- to Long-Term Growth Model Expand into Next-Generation Technology

Expand into Next-Generation Technology– 3 Expand into Next-Generation Technology– 4 Next-Generation Electro-Mechanical/High Performance Sensor Technologies Brakes 2: High Performance Brakes Akebono is engaged in the development and sales of various sensors for infrastructure in non-automotive fields High Performance Automotive Brakes Ai-Ring through its application of vibration analysis technologies developed in the automotive field. (Opposed piston disc brake calipers) Ai-Ring is one of the largest proving grounds operated Opposed piston disc brake calipers, which are mainly by an automotive parts maker in Japan. More than used in high performance vehicles, are a type of disc 720,000m2 in size, Ai-Ring’s facility is equipped with test Infrastructure & Mobility Business brake caliper with pistons on both sides of the brake tracks, high-speed 3,016-meter (one lap) oval, a low μ rotor Opposed piston-type caliper features include road and winding road. The facility suffered costly Civil engineering and construction Agriculture field Building field Railroad field field stable braking power and high controllability. damage in the Great East Japan Earthquake of March • Horizontal control systems for tractors • Earthquake detectors for long-wave • Suspension control systems for • Inclinometers • Horizontal control systems for seismic motion high-speed trains 6-pot Opposed Brake Caliper 2011, but the high-speed oval was subsequently • Concrete filling & compaction detection radio-controlled helicopters used for • Friction materials for vibration damping • Vehicle behavior detection devices Akebono mass-produced 6-pot opposed-type brake restored and the facility reopened in November 2012. systems (Jutender) pesticide spraying • Portable vibration measurement devices Medium- to Long-Term Growth Model • Inclination monitoring system for bridge • Continuous micro vibration monitoring calipers have a total of six pistons, three on each side, From 2013, the second stage of restoration commenced construction systems for railway bridge and is adopted for use in high performance SUVs and with the restoration of the comprehensive test track and • Light emitting inclination sensors (LEIS)/ • Wireless vibration measurement devices sports cars that require high braking performance. the low μ road, the further expansion of slopes, the Pocket • Drive wheel slip prevention installation of a new winding road and rough-road, and system for caterpillar tracks

the expansion of dynamometer facilities. This has Sensor in horizontal control Earthquake detectors for longwave seismic motion enabled us to conduct brake assessment under system for tractors conditions closer to global real world. The ability to Inclinometer Vehicle behavior detection device conduct comprehensive evaluation from bench testing to actual vehicle testing in a single facility has speeded up the development process. In April 2018, we began 10-pot Opposed Brake Caliper loaning out the The 10-pot brake caliper mass-produced by Akebono has track (including a total of 10 pistons, five on each side, and is adapted part of the for use in large high performance vehicles. maintenance shop) to companies. For further details, please fill out the inquiry form on our website. Ai-Ring

Development and Supply of Formula One Brakes These brake calipers depend on brake technology Since 2007, Akebono has been supplying its brake knowhow developed by Akebono through its various systems to the McLaren team that competes in motor sports activities and possess such characteristics Formula One (F1), the pinnacle of motorsports. To as high-speed, high-load, and high-temperature braking continue to supply highly reliable brakes that always performance along with the comfort required for high- exhibit stable performance and achieve higher price vehicles. performance, even in harsh environments where rotor temperatures reach as high as 800 degrees Celsius Electro-Mechanical Parking Brake Opposed-type Rear immediately after hard braking, we are intensely Brake Caliper (Prototype) committed to every aspect of design including structure, This is an opposed-type electro-mechanical parking material, and surface treatment. brake developed for the rear wheels of high performance vehicles. This was developed for existing electro-mechanical parking brakes with the aim reducing weight and enhancing design. Marine field Energy field (supply) Energy field (development) Automotive field Motorcycle field • Position correcting systems for • Position monitoring systems for • Oil/gas layer monitoring systems • ESC (electronic stability control equipment) • Suspension satellite/GPS compasses power transmission cables • Car navigation systems control systems • Position correcting systems for fish • Inclination and vibration monitoring • ABS brakes finders systems for steel towers • Suspension control systems • Rollover airbags • Displays of inclination angle • Operation support systems for commercial vehicles • Hill-start assist systems

Sensor in suspension control system

Sensors in position correcting system Position monitoring system for Ultra low noise accelerometer for for satellites/GPS compasses power transmission cables oil/gas layer monitoring system ESC

19 AKEBONO REPORT 2018 AKEBONO REPORT 2018 20 Medium- to Long-Term Growth Model 22

3 AKEBONO REPORT 2018 AKEBONO REPORT Partial view of the Suzhou air purification system Low temperature plasma is air that has around Initiatives to Reduce Environmental Impact– Reduce Environmental Initiatives to This initiative has been carried out since fiscal 2010. out since fiscal 2010. has been carried initiative This Iwatsuki Manufacturing upgraded its wastewater upgraded its wastewater Manufacturing Iwatsuki problem, In China, where air pollution is a growing Low temperature plasma treatment: 1% plasmarized (separated into positive ions and electrons) so that it contains plasma ions at room temperature (a few degrees Celsius) and is able to dissolve organic matter. *  Engineers to Design Environmentally Developing Young Considerate Facilities engineers who will is looking to develop Akebono conducting a by of the future design the facilities production line for “building a miniature program for processes that can be operated by manufacturing brake Under the program, a team of young a single motor.” of their years engineers who are within the first five assignment to the production engineering division with line building” concurrently “miniature undertake their ordinary undertaking work, all steps from planning and design to production. six junior associates produced a miniature In fiscal 2017, calipers. The high performance for facility manufacturing and is the installed was in Hanyu original facility producing aluminum opposed for facility manufacturing European manufacturers. type for disc brakes Akebono is reducing the environmental impact of its Akebono is reducing lowering the power consumption production sites and of its production facilities and Air Treatment Introduction of Wastewater Purification Systems treatment and air has introduced wastewater Akebono and is carryingpurification systems out environment- friendly production activities. standards by and cleared wastewater treatment system Akebono fiscal 2018, In a wide margin in fiscal 2017. that In Guangzhou, China plans to introduce a system it to and expects volume reduces total wastewater heavy metalmeet the standard content in for wastewater. voluntary area apply standards. in each industrial zones air cleaning system establishedIn Suzhou, we a new that uses an electrostatic precipitator and low plasma treatment* and applied voluntarytemperature and regulations. those of the law standards that exceed the air. also helps to deodorize air cleaning system This Initiatives in Production Initiatives View of the Suzhou air purification system 2 measures Examples of control up reduction plan Ensure proper management of usage information and work toward reduction of usage Prohibit use/draw up plans for abolishment if there is substance in use Conduct research on alternative materials or reduction methods and draw Chemical substances which emission regulations are set under existing laws Substances listed in GADSL that is, substances requiring declaration of usage amount Substances that are strictly productionand use from banned by law and regulation Substances which are projected to come under legal regulation and substances for Initiatives to Reduce Environmental Impact– Reduce Environmental Initiatives to Rank required Usage restricted Usage prohibited Proper management of usage information Response to Substances of Very High Concern Response to Substances of Very performs Akebono In cooperation with our suppliers, products to determine if they testing of purchased contain substances or of very high concern (SVHC*) on the banned substances. tests are performed The and their results are individual product level are also to the suppliers. We communicated back items in line with laws promoting labeling of purchased and regulations. High Concern Substances of Very A substance may (but not necessarily must) be designated as SVHC if it meets one or more of the following criteria: it is carcinogenic, mutagenic or toxic for reproduction, and in addition is either persistent, bioaccumulative and toxic, or very persistent and very bioaccumulative. Such substances are identified as having probability of causing serious adverse effects to human health or the environment. Initiatives in Purchasing Initiatives to reduce its environmental and Akebono is working the cooperation of its suppliers. social impact with Green Purchasing Guideline in Purchasing introduced its Green Akebono are Under the guideline we 2005, it in 2011. revising and CSR from the considering the environment to together with suppliers stage working by purchasing and secondaryprocure materials, components, are environmental impact. We a low materials that have their also encouraging our suppliers to improve by environmental management performance recommending activities to acquire external Going forward, our as ISO 14001. accreditation such practices at overseas is to promote these challenge next bases as well. Green Purchasing of products that Green purchasing refers to the preferential selection and acquisition cause less negative environmental impact. The scope of products covers materials, course of manufacturing. secondary materials, office supplies and equipment used in the purchasing. Manufacture of “Green Products” requires the practice of green Impact Ranking and Management of Environmental Substances under Green Purchasing Guidelines three into substances are categorized chemical Targeted ranks and controlled as follows:

37 tons 115 tons 125 tons Established 2001 Established 2001 Removal Products Recycling 0 tons Soil 11 tons For some time now, Akebono has been engaged in has been engaged Akebono some time now, For initiatives are designated as “Top-Level Office” and Office” “Top-Level as are designated initiatives Office.” “Semi-Top-Level use we Among these initiatives, activities. energy-saving heat use of waste that make generation facilities power by our lighting more efficient make hot water, and waste our energy use generation, and make using solar power visible with a building energy management system. Business sites that implement especially effective Business sites that implement especially effective 0 tons Atmosphere Akebono Brake Industry Co., Ltd. 1 Water bodies Water Initiatives to Reduce Environmental Impact Environmental Reduce to Initiatives E emissions associated with business 2 emissions. The certificate was issued in April 2017. April 2017. issued in was certificate emissions. The

2 288 tons Initiatives to Reduce Environmental Impact– Reduce Environmental Initiatives to To reduce CO To environmental management by establishing voluntaryenvironmental management by management standards and overseas. both in Japan Each and every associate will make ongoing efforts to reduce environmental impact and promote an eco-friendly society by environmental impact and promote an eco-friendly society to reduce by ongoing efforts every associate will make and Each conserving reducing waste. and energy and resources, recycling to enhance our will endeavor we regulations and agreements, laws, In addition to complying with environmental relationships with communities with the aim of creating a better living environment. of creating a better relationships with communities with the aim We will actively disclose information to increase understanding of our environmental initiatives and encourage positive encourage positive and to increase understanding initiatives our environmental of disclose information will actively We the environment. We will promote the development of technologies and products that minimize environmental impact. environmental and products that minimize of technologies will promote the development We the environment. From the early development and design stages, we will actively pursue initiatives that give consideration to both safety and consideration to both safety that give pursue initiatives will actively design stages, and we the early development From

conducting outstanding measures to reduce the volume conducting outstanding measures to reduce the volume of CO introduced the cap-and- activities, Saitama Prefecture from fiscal 2011. trade emissions trading system Ai-City (Headquarters) in Hanyu, Saitama Prefecture was was SaitamaAi-City Prefecture (Headquarters) in Hanyu, in the Excellent Office certified as a Semi-Top-Level under Saitama Large-Scale Business Facility category, for cap-and-trade emissions trading system Prefecture’s Certified as an Excellent Large-Scale Business Facility under Saitama’s Cap-and-Trade Emissions Trading System Emissions Trading Cap-and-Trade Certified as an Excellent Large-Scale Business Facility under Saitama’s 4. Basic Environmental Policies  1. 2.  3.  Environmental Declaration in the new value will continue to create new we the 21st Century, Mission and Declaration for on our Corporate Based to protect will also strive we citizen, a global corporate As environment. and the to both the Company millennium, contributing vibrant societyon a global scale and implement ongoing voluntary that the environment activities aimed at creating a safe, with the environment. in harmony co-exists PRTR targeted substances PRTR (Pollutant Release and Transfer Register): A system for understanding, gathering data, and disclosing the amount of target substances that are transferred externally in the form of Register): A system for understanding, gathering data, and disclosing PRTR (Pollutant Release and Transfer emissions or waste processing by businesses that manufacture, use, and emit such substances. * the same time, we are taking steps to promote effective use of resources, and striving to achieve manufacturing that manufacturing use of resources, and striving to achieve are taking effective steps to promote the same time, we society. can contribute to creation of a recycling Emissions of PRTR Targeted Substances (Fiscal 2017) Emissions of PRTR Targeted At substance emissions. and chemical usage and waste water resources and minimize to recycle is working Akebono

Environmental Declaration and Basic Environmental Policies Environmental Declaration to its efforts that govern Environmental Policies Declaration and Basic Environmental Group has a shared Akebono The of environmentally considerate promote development impact of its business activities and reduce the environmental products. Environmental ManagementEnvironmental AKEBONO REPORT 2018 AKEBONO REPORT

21 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Medium- to Long-Term Growth Model 24

AKEBONO REPORT 2018 AKEBONO REPORT Promotion of work-life balance An diversity associate Promotion of capable of organization maximizing the abilities of each Basic Themes of Diversity Management Akebono is promoting diversity management is promoting diversity Akebono Career support Promoting Diversity its corporate capabilities in aims to strengthen Akebono the values for that reflects the high respect it has a way Company The associate and their diversity. of each aspirations regarding individual associates’ cherishes their creativity in can develop so that each and life work will help bring in turn, which, the course of their duties, is Akebono overall. company about a more vibrant that as it it recognizes because promoting diversity important it is becoming increasingly globally, expands that helps each to establish a corporate structure their full potential regardless of their associate realize further promote To background. or cultural system value is promoting recruitment the Company diversity, activities that target nationalities. people of all diversity namely, initiatives, centered on three key balance promotion, career support, and work-life to double the number of will work Akebono promotion. 2020 through by levels managers from 2014 female going forward. promotion efforts further diversity 1 Strengthen Ties with Stakeholders with Ties Strengthen S Strengthen Ties with Stakeholders– Ties Strengthen Moreover, we are working on human rights on human are working we Moreover, As a part of its training programs, Akebono has Akebono a part of its training programs, As Basic Human Resources Policy Basic Human Resources and to provide opportunities to all associates To they can share the Company’s support them so that successes. that that the most important factor believes Akebono to success is human talent (our guides a company our set forth we belief, that associates). Guided by associate must “each policy that basic human resource their abilities and be to exert the opportunity be given to share their success with the continuously supported build our long-term global are striving to We Company.” associates’ as to facilitate personnel policy as well ability to establish mutual their individuality and foster respect and trust. for education and enlightenment with high regard an organization with abundant human rights to achieve diversity and creativity. by location, so we are working to enhance our are working so we location, by ability to operate in global business settings, associates’ to engage in opportunities had few have since they duties with peers from other countries with different tongues. and native cultures prepared globally unified educational materials for locations. at all group business recruits training new a Starter Book, Akebono has issued the Akebono the that features standard educational package corporate history since its founding, Company’s region and of its operations in each characteristics or System Production APS (Akebono of explanations and Spirit), its corporate culture Philosophy Akebono as corporate brand management as well and philosophy book is being used in training programs. activities. The By learning through this book, all associates are equally and concepts of the basic knowledge informed business persons.necessary Akebono to act as that reflect local with the addition of programs Moreover, human resource educational are developing concerns, we region and location. each for programs optimized Global Human Resource Nurturing and Personnel Global Human Resource Nurturing and System to ensure that our associates are assigned strive We locations based on their optimal positions and work this To competencies, regardless of their nationality. and nurturing end, our human resource recruitment, are premised on abundant administration systems as associates’ human rights as well respect for In systems. value rights and diverse privacy individuality, our associates’ are developing we particular, diverse in dealing with communication skills, flexibility have we and their linguistic abilities. Up to now, cultures training programs and personnel systems had different Human Resources and Diversity Resources Human Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Through various efficiency improvement activities, activities, improvement efficiency various Through Akebono also received the Excellence Award at the Award the Excellence also received Akebono Alocs Corporation’s control screen that gives driving instructions based on real-time control screen Alocs Corporation’s truck position and traffic information from Alocs Corporation headquarters Truck Associates in charge of truck operation management use operation of truck in charge Associates so that driver to each timely instructions the data to give to ensure that routes and helps crowded can avoid they are taking as needed. In these ways, breaks drivers truck and environment-friendly is ensuring safe Akebono also enables objective the system operations. In addition, eco-driving by of drivers’ determination and ranking recording data about idling time and sudden acceleration the system as these, measures such and braking. Through and eco-driving for motivation can be used to increase to save working will continue Akebono driving. safe operations, its distribution energy and rationalize the environment. while protecting ensuring safety and associate productivity, is helping to improve Akebono transportation reducing energy resources. costs by lower management and is challenges more working comprehensively on environmental conservation activities from a global perspective. efficiency and improving waste heat utilization efficiency. heat waste and improving efficiency this time receiving its 2013, Cogeneration Grand Prize fulfill its corporate social responsibility, To second award. itsone of as environmental problems global views Akebono most important 4 emissions by emissions by 2 Initiatives to Reduce Environmental Impact Environmental Reduce to Initiatives E Initiatives to Reduce Environmental Impact– Since the introduction of cogeneration in 2011, Akebono Akebono Since the introduction of cogeneration in 2011, utilization, cutting electric power supply to the outside supply to electric power utilization, cutting during peak hours, contributing to the electric power the introduction of advanced combining business by energy, heat with renewable waste equipment that utilizes generation gas engine power as consistently raising as well Cogeneration and Energy Utilization Center Japan), Akebono Cogeneration and Energy Utilization Center Japan), Mention (in the Industry an Honorable received Category) and reducing greenhouse gas efficiency “Improving for emissions through cogeneration systems”). to reduce CO has been building systems with the goal of daily capacity efficiency overall improving In February 2018, at the Cogeneration Grand Prize 2017 2017 at the Cogeneration Grand Prize 2018, In February (Advanced Foundation the Cogeneration sponsored by Received Honorable Mention for the Cogeneration Grand Prize Building miniature production lines involves considering lines involves production Building miniature speed, driving speed, acceleration rate and location. This speed, driving speed, acceleration rate and location. This to the headquarters. data is automatically transmitted solution company) is employing a truck operation dynamic a truck is employing solution company) data utilizes on individual system The management system. as engine from onboard sensors, such gleaned vehicles dynamic management system. Initiatives in Eco-Friendly Driving (a logisticsAlocs Corporation Group member Akebono The Akebono promotes energy saving and rationalization in Akebono promotes energy saving and rationalization truck operation its distribution operations through the Miniature line for the high performance caliper manufacturing facility produced in fiscal Miniature line for the high performance caliper manufacturing 2017 and production team members Initiatives in Logistics skills to designing energy-saving, high efficiency facilities. high efficiency skills to designing energy-saving, coordination over the entire line and so forth. This resulted in resulted This and so forth. the entire line over coordination of moving the weight as reducing such innovations various engineers who will will develop ahead, we parts. Looking their own of the entire line and apply take a birds-eye-view the operability of each process as well as the timing as well process the operability of each AKEBONO REPORT 2018 AKEBONO REPORT

23 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Medium- to Long-Term Growth Model 26

(%) 100 75 50 25 0 (FY) (FY) Men Men 6 0 AKEBONO REPORT 2018 AKEBONO REPORT 100 2017 2017 15 16 Women Women Women 1 5 95 2016 2016 30 43 1 0 100 2015 2015 27 27 0 1 Ratio of associates taking child care leave after delivery 100 2014 2014 25 21 Reduced working-hours plan: Associates can work reduced hours Flex time plan for a total of up to three years per family member to provide nursing care. These can be taken in multiple parts. Nursing care plans •  •  2 0 88 2013 24 2013 21 0 0 10 10 20 20 30 30 50 40 40 Reduced working-hours plan for child care (Japan) plan for child Reduced working-hours Child care leave (Japan) (Associates) (Associates) Kurumin Mark Reduced working-hours plan: Associates can use the system Flex time plan Child care aid plan: A fixed monthly aid until the March following multiple times until children graduate from elementary school. third birthday the child’s A program that provides those who left the Company due to family duties with opportunities to later rejoin Akebono within five years after their Akebono within A program that provides those who left the Company due to family duties with opportunities to later rejoin more before leaving and meet other prescribed resignation. Eligible associates include those who had served for a continuous period of three years or criteria. a stipend Associates can take up to two years leave per family member to provide nursing care while receiving to nurse sick or injured children or for Associates can take up to five days of leave per year (ten days for associates with two or more children) paid leave. doctor visits until the child graduates from elementary school. This leave is separate from annual children’s Child care plans •  •  •  for new managers regarding the need to consider associates balance of work and home life. • Training • Provision of useful information for balancing work and home life through pamphlets and the Intranet. a chance to visit the workplace. summer holidays to give associates’ families • Akebono Visit Day was held each year during children’s can recuperate from unforeseen illness or injury Associates receive 12 days of medical leave per year in addition to their annual paid vacation, so they without worrying about work. free from the end of work to the start of work Ensure that long working hours are rectified, and associates get sufficient rest time by leaving 11 hours on the next day. Associates can take leave until the March after the child’s third birthday while receiving aid. This can be taken in multiple parts. third birthday while receiving aid. This can be Associates can take leave until the March after the child’s Note: Akebono has a child care leave plan that exceeds legal standards. We distribute Life Supporter, a booklet that a booklet Supporter, distribute Life We will also implement forward-Going forward, we Career partner plan Nursing care leave plan Child nursing care plan Measures to reduce working hours Improvements to company environment Medical leave system interval plan Work Child care leave plan Promoting Work-Life Balance Work-Life Promoting workstyles With the various the aim of accommodating various has designed Akebono associate, of each and those children associates raising programs for with their members to assist them family caring for obligations these a balance between to strike efforts and their work. and other programs the content of these summarizes the with the aim of facilitating by utilization of the programs a result of these As associates. the received Akebono initiatives, from Saitama mark “Kurumin” Labor Bureau in October 2016, that recognizing it as a company in supports child-raising actively on Measures Act accord with the of the to Support Development Company Generation. The Next 2013, 2007 and June in November this award received has received Akebono making this the third time that mark. the “Kurumin” issues, thereby to future with an eye thinking initiatives to issues and responsive securing a corporate structure create a working To in the social environment. changes working and flexible diverse that offers environment programs by styles, will continuously enhance these we from associates. incorporating feedback Main Initiatives (Japan) Akebono’s (FY) 5.1 2017 L-boshi Mark 4.8 2016 4.1 2015 3.8 2014 4.2 2013 a wide range of businesses and implemented measures in response to the needs of the times. and behavioral attitudes the values, Further, been handed guidelines required of associates have as the akebono and summarized unchanged down in 2017. form and stated in written Way akebono Way has developed Akebono in 1929, Since its founding In April 2016, we received the L-boshi Designation the received we April 2016, In 6 5 4 3 2 1 0 Official nickname for the designation of the General Business Owner Complying with Official nickname for the designation of the General Business the Standard based on the Act for Promoting the Advancement of Women. the Standard based on the Act for Promoting the Advancement accredited between grade 1 and Akebono grade 3 based on a result of the evaluation. the top rank of Grade 3. achieved Ratio of female managers (Japan) Talks with Directors with Talks discuss and directors to associates for Creating venues from different and advice and obtain views matters of all horizons helps broaden the perspectives associates. in the Workplace of Women Promoting the Advancement where to be a company will continue working Akebono and motivation with can work all of our associates of gender. enthusiasm, regardless of the SaitamaLabor Grade)* from the chief (Third recognizes system L-boshi designation Bureau. The in excellently performed that have business owners of women promoting the advancement for initiatives from among those who formulate Act an action plan based on the Women's of Concerning Promotion and submit the Activities Career designation details of the plan. The from the Minister of is received There Welfare. Health, Labour and criteria and evaluation are five * (%) (Year) 7 2017 4 2016 4 2015 7 2014 9 2013 11 Strengthen Ties with Stakeholders with Ties Strengthen 2012 S 15 2011 12 2010 10 2009 11 2008 4 2007 3 2006 Through these ongoing activities, we aim to evolve aim to evolve ongoing activities, we these Through 2 0 6 4 8 12 10 16 14 A networking event clearly define their ideal career. Dream Map Workshops help A part of career training, these workshops targets (dreams) and their future associates visualize Forming connections among female associates connections among female Forming anxieties that can help resolve establishes a platform and issues related to work. the entire company into an organization where each and into an organization where each the entire company their abilities. every associate can maximize Networking Office has engaged in activities that support career Office as networking, Dream Map such advancement, to talk with directors. and opportunities Workshops, Career Support Activities Implementation Diversity Akebono’s Since fiscal 2015, and Russia Numbers of Interns Accepted (Interns) Sweden, Austria, Spain, Thailand, Slovakia, Germany, Germany, Slovakia, Thailand, Spain, Austria, Sweden, Morocco, Mexico, Portugal, Finland, France, Turkey, Nigeria, Tunisia, Netherlands, Poland, Canada, Hungary, countries. National Origins of Interns India, Greece, United States, United Kingdom, Italy, countries. It also organizes exchange events for interns interns for events exchange countries. It also organizes global human help to nurture and associates, which with more associates providing resources by of other values to encounter diverse opportunities Welcoming Interns from Various Countries Interns from Various Welcoming interns from various accepts proactively Akebono AKEBONO REPORT 2018 AKEBONO REPORT

25 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Medium- to Long-Term Growth Model 28

(FY) Akebono 2017 2.42 2.42% 4.50 Akebono 2016 4.40 2.48

AKEBONO REPORT 2018 AKEBONO REPORT 4.50% 2 2015 3.91 2.32 2014 4.03 2.32 Akebono Brake and Akebono 123 2013 3.88 2.28 2012 3.75 2.20 2.0% 2011 3.47 2.05 people with disabilities Akebono Brake and Akebono 123 Statutory employment rate of 2010 1.98 3.37

2009 2.03 3.40 3.17 2008 2.02 2007 2.00 2.94 1.92 2006 2.88 1.72 2.31 2005 1.64 2004 2.33 2.33 Ai-Museum such 300 exhibits brake-related museum houses over and rolling brakes, motorcycle as automobile brakes, as a brake Akebono progress of The brakes. stock can be seen through the historically manufacturer products and materials. valuable The Ai-Museum which exhibits our brake technology technology our brake exhibits Ai-Museum which The establishedAkebono was in 2004 to commemorate 75th anniversary. 800 Industry’s The m Brake from 2:00 pm to 4:00 pm Open: Every Wednesday Akebono’s employment ratio for workers with with workers ratio for employment Akebono’s September 2003 Founding of Akebono 123 Employment of People with Disabilities Employment a special-purpose subsidiary Co., Ltd., of 123 Akebono for employment provides Group that Akebono the to help them achieve is working people with disabilities, Akebono April 2016, In through duties. personal growth Saitama Prefecture designated as an Excellent was consecutive a fourth for Employer Disability-Inclusive Akebono’s recognized prefecture time). The (10th year where people to create workplaces initiatives proactive use their abilities. with disabilities can stood at 2.42%, end of fiscal 2017 disabilities as of the higher than the statutory rate of 2.0%. Akebono Group Employment Rate of People with Disabilities in the 0 5 4 3 2 1 (%) 2 Interior view of To-En-Ryo In January 2018, To-En-Ryo was awarded the 34th awarded was To-En-Ryo In January 2018, Strengthen Ties with Stakeholders– Ties Strengthen Fukushima Prefecture Architecture Cultural Awards’ Awards’ Cultural Architecture Prefecture Fukushima Fukushima sponsored by Special Category Prize highly living space was dormitory’s The Prefecture. living space and sense of the bright acclaimed for unity it produces, especially the hall that becomes an amphitheater when the partition is closed and the open staircase. To-En-Ryo Awarded the 34th Fukushima Prefecture Awarded To-En-Ryo Special Category Prize Architecture Cultural Prize’s On the site of Fukushima Manufacturing is a Manufacturing On the site of Fukushima to support the “To-En-Ryo” dormitory called was which the dormitory, As students. scholarship dormitory aged, a new built in had was built in 1971, innovations building includes various new The 2016. while working. it easier to study to make Exterior view of To-En-Ryo The Vocational Scholarship Program is currently is currently Program Scholarship Vocational The to maintain robust relationships with local strive We Together with Local Together Communities Assisting Future Scholarship Program; Vocational of Education Leaders in Their Pursuit through scholarships has provided Akebono Since 1965, that a program Program, Scholarship Vocational its Akebono at working by wages to earn students allows a period of for their academic fees while also covering junior college program has supported This three years. education earning degrees in early childhood students fields. to acquire specialist qualifications in these Fukushima Brake Akebono operated only at live students scholarship Co., Ltd. The Manufacturing together in the corporate dormitory alternating and work By using while working. to pursue their studies shifts can graduate they their course fees, to cover their pay qualifications. Once and acquire efforts their own by will go on to complete their qualifications, they they or at other companies, or as kindergarten teachers work more than 3,000 have students nursery Today, workers. 50 more than used this program that has continued for including some second-generation recipients. years, programs of scholarship residents through the provision their dreams. people realize aimed at helping young improve its improve working environment with the aim of being “a that company associatesmakes happy.” Interior view of Akebono Nursery School In the planning and management of this nurseryIn the planning and management of this in accordance with a “company-led childcare business” childcare “company-led in accordance with a nursery The school’s the Cabinet Office. promoted by of the children and is intended for children capacity is 12 to open in Group associates. It is scheduled Akebono 2018. May of advice from a graduate received we school, Program. Scholarship Vocational Akebono’s Scholarship Program” on page 28) (* Please see “Vocational Exterior view of Akebono Nursery School Akebono Nursery School (Ai-Kids) NurseryAkebono established School Akebono the as within the company “Ai-Kids”) as (commonly known and to enhance the a part of workstyle reforms seeks to balance Akebono benefits package. company’s establish human resources, raise and childcare, work and corporate brand image, and satisfaction associates’ of male associates about childcare raise the awareness this facility to nurture competitive human resources. competitive to nurture this facility View of Ai-Village programs aimed at nurturing globally capable associates, globally capable associates, programs aimed at nurturing about around 80 courses on basic knowledge products are offered. Akebono and manufacturing to fully utilize will continue to strive ahead, we Looking Akebono as a company that provides an excellent working working an excellent provides that as a company Akebono will continue to Akebono in October 2017. environment Commendation ceremony Strengthen Ties with Stakeholders with Ties Strengthen S as a place for retreat-type training sessions, there were retreat-typeas a place for training sessions, there were associates used by Ai-Village was some instances where further increase the To inclement weather. trapped by the Company scope of training programs, in fiscal 2014, Ai-Campus. In addition to language training launched center has served numerous as a training ground for Around half of the training sessions held associates. training programs and there consist of job level-based the Human by organized selected associates training for various Furthermore, Department. Resources sales, technology, as development, departments such and production also hold them. In addition to being used Ai-Village Training Center Ai-Village Training Ai-Village global training Since its establishment in 2012, program that picks up employee feedback on a timely on feedback up employee program that picks a result, plant productivityAs improved basis. and absentee rates and the turnover significantly, August in overtime zero achieved decreased, and we and the Ministry of evaluated activities were These 2017. commended Vietnam Province, Yen Labor of Hung Akebono Brake Astra Vietnam (AAVH) was commended for its workstyle reforms based on overtime work reduction based on overtime its workstyle reforms was commended for (AAVH) Astra Vietnam Akebono Brake rate due to the problems of had a high turnover AAVH pursued initiatives we Therefore, increasing overtime. into full plan that went work including a zero-overtime suggestion and an improvement 2017 in February effect In April 2017, Akebono created the Health ManagementAkebono April 2017, In In February 2018, Akebono was recognized as a “Company with Excellent Health Management 2018 (White 500),” which honors large corporations that practice excellent health management and Industry and Nippon Kenko Kaigi. Trade and is jointly promoted by the Ministry of Economy, have undertaken in the past in order to take a more undertaken in the past in order to take have to promoting mental and physical approach focused health, and raise health consciousness. allows the company to grow along with its associates to grow the company allows in fulfilling lives healthy helping associates live while we initiatives systemized have and body. We mind both Declaration, which expresses the Company’s commitment Company’s the expresses Declaration, which measures that promote good advancing to proactively to society. declaration This health as a part of giving back mental and physical health, with the ultimate objective of health, with the ultimate objective mental and physical productivity and creativity. improving the safety and health of associates and requiring and health of associates and requiring the safety associate associates to protect their health. By raising conditions, work of their health and improving awareness to that is conducive aim to create an environment we Health Management has promoted health Akebono Since fiscal 2017, to attention requiring managers to pay management by AKEBONO REPORT 2018 AKEBONO REPORT

27 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Medium- to Long-Term Growth Model 30

AKEBONO REPORT 2018 AKEBONO REPORT Recently, the scope of the survey was expanded to expanded the scope of the survey was Recently, the questions on the survey survey, In the fiscal 2017 will begin full the business unit (BU) system Because Identifying Social Needs and Working to Provide to Provide Identifying Social Needs and Working Solutions more is contributing to the creation of a safer, Akebono identifying perspectives, secure society from various solutions through to provide social needs and working on developing are focused we its business. In particular, as products that are such technologies next-generation will also work We easy on people and the environment. the developing by to enhance our corporate value supporting urban & Mobility business for Infrastructure lives. everyday and people’s development Corporate Brand Awareness Survey Brand Awareness Corporate on corporate surveys annual its own conducts Akebono into practice put in order to effectively brand awareness been have surveys These corporate brand management. 2005, since when corporate brand conducted every year an essential are as they introduced, management was that (PDCA) cycle Act and Check part of the Plan, Do, activities. our branding promotion drives of our domestic and overseas include a wide range suppliers in as customers and such business locations, of a survey again conducted we field. In fiscal 2017, each Asia. America, Europe and North all our bases in Japan, number of respondents totaled 6,356. The more them make to substantially were changed form stateconcise and specific so that the current of could be strengths and challenges Akebono’s concerns that associates’ were highlighted. There had capabilities technical Akebono’s impressions of that their survey score shows The year. by declined year confirming turn, taken an upward now impressions have “Branding activities including the of series of the effect held in Fest.” Technology akebono 2017 Activities Technology tours of the By holding September 2017. seek to plant, we manufacturing at each Fest. direct and to expose create opportunities proactively 2018. in fiscal to our technology indirect employees will continue to conduct the we operation in fiscal 2018, survey on impressions from corporate brand awareness associated with changes Akebono inside and outside of steadily in the organization and personnel. We results in undertake countermeasures based on the and thereby awareness order to raise associates’ quality in all aspects of operations. improve

Branding 4 unparalleled (precondition to (establishing an corporate brand) continue business “good company” “great company” operations in society) Fulfilling corporate “favorite company” social responsibility Sustainably achieving

Akebono’s Corporate Mission Akebono’s Strategic CSR Regular CSR

Information disclosure Compliance Basic Risk management requirements Social contribution

CSR Policy: Environmental manufacturer activities Corporate Mission society with safety put into practice our Constantly providing and peace of mind to Providing high quality

products and services Human rights/ Strengthen Ties with Stakeholders– Ties Strengthen Maintaining status as a

technologically advanced labor relations Differentiating characteristics

Akebono considers fulfilling its corporate social Akebono Level of Safety and achievement quality Initiatives to RaiseInitiatives Value Corporate Management and Positioning of Our Corporate Brand CSR Activities initiated corporate brand Akebono In 2005, at enhancing corporate aimed management, an initiative meeting the expectations of stakeholders, by value associates, with customers, shareholders and namely, of these key on each an equal emphasis placed on went Akebono stakeholder groups. In October 2005, the Brand Statement, the implementing to formulate brand management of its corporate full-scale launch with the aim of encouraging pride in the initiative brand among associates and thereby Akebono edge. competitive strengthening the Company’s responsibility to continued (CSR) to be indispensable its pursuit of business operations. In other words, of maintainingregular CSR activities is an essential part At the same time, corporate its operating foundation. strategic CSR reflect the Company’s branding initiatives aimed at further enhancing its social and initiative our Corporate Mission, we realize To corporate value. to secure will promote corporate branding initiatives that company greater corporate strength, remaining a and peace of people with safety consistently provides mind through its operations. and CSR The Relationship between Corporate Brand 41 16 572 (+4) 629 (+4) Total 0 0 116 (+2) 116 (+2) Neighbors 3 0 0 37 37 Families of ex-associates 41 16 419 (+2) 476 (+2) Ex-associates Strengthen Ties with Stakeholders– Ties Strengthen A settlement was reached on December 25, 2015 on a on December 25, 2015 reached was A settlement In Japan, Akebono has established a management Akebono In Japan, Asbestosis found Pneumoconiosis found No findings Total Breakdown of Number of Examinees (from August 2005 to March 2018) Figures in parentheses represent increases from the previous year Providing Safety and Safety Providing Security safety issues to all associates to raise their safety issues to all associates to raise their safety safety to regular opportunities as provide as well awareness, starting from fundamentals.learn about safety Response to the Problem of Asbestos domestic companies, ahead of other Japanese Well of asbestos-free began the development Akebono lead the field in only did we Not products in the 1970s. OEM productscompleting the transition to asbestos-free 1994, by and commercial vehicles 1992 cars by new for service parts containing not manufactured have we health consultationsasbestos since 2000. provide We implemented relating to asbestos and have neighbors who have for complementary health checks plants, ex-associates,Akebono and their family near lived undergone asbestos members. In total, 629 people have plan to continue We 31, 2018. as of March health checks in the future. these checks associates former by 2012 28, on November filed lawsuit compensation for seeking relatives and bereaved asbestos. injuries to health caused by damages for Occupational Safety and Health Management Occupational Safety and health management its global safety improve To holds a Global Safety regularly Akebono capability, facilities that all of its global production Workshop attend. Environment Safety centered on the Central system to ensure strive we this system, Through Committee. of and health of associates with the aim the safety risks related to our identifying and reducing various of disasters, accidents operations, including prevention emphasis and other emergencies. Placing the utmost set have of our personnel, we on securing the safety or contract associate recruited no newly that allow rules have operations unless they to engage in actual worker education beforehand. undergone the required safety also distribute a booklet summarizing important We Strengthen Ties with Stakeholders with Ties Strengthen S Points about brake maintenance and market activities are maintenance and market about brake Points Looking ahead, we will implement initiatives with will implement initiatives ahead, we Looking Mobile Brake Technology Educational Center training session Educational Center training Mobile Brake Technology participating in local community events, and more. participating in local community events, we provide training on brake maintenance at brake servicing at brake maintenance training on brake provide we in conducting associate are also active sites. In addition, we elementary students, training, visits, tours for family school concerning brakes are deepened and their feedback and are deepened and their feedback concerning brakes comments are later reflected in product development. and comfortable driving a reality, customer safety make To explained using samples and images taken from actual from actual using samples and images taken explained skills technical and knowledge Attendees vehicles. mechanisms in an easy to understand way to auto to understand in an easy way mechanisms nationwide dealers, automobile repair shops and others about the auto mechanics car salesmen and to teach brakes. of disc and drum structure More than 200 training sessions are held each year year More than 200 are held each training sessions Educational Technology “Mobile Brake the employing braking specially designed to display a vehicle Center,” Elementary school students visiting Ai-City Educational Center Our Mobile Brake Technology companies and communities in regions around our domesticcompanies and communities from and inspiring each locations. Learning and overseas in tandem with our stakeholders. will grow we other, raise visitors’ safety awareness while facilitating their awareness safety raise visitors’ and its products. Akebono understanding of of the mobile brake technology educational center as well educational center as well technology of the mobile brake of hands-on experience at providing as programs aimed tours help Such Center. at the Monozukuri manufacturing elementary schools in Saitama Prefecture visited Ai-City visited elementary in Saitama Prefecture schools tours. In of their social studies headquarters as part included this visit on the Company, addition to a briefing Museum) tour and observation (Brake “Ai-Museum” an Offering Office and Plant Tours Offering Office from three than 280 students more In fiscal 2017, AKEBONO REPORT 2018 AKEBONO REPORT

29 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Medium- to Long-Term Growth Model 32

AKEBONO REPORT 2018 AKEBONO REPORT Internal director 3 Outside director 3 Internal director In principle once every half with special meetings year, as needed Director Compensation Director Compensation Advisory Committee Compensation structure of directors (including executive officers), compensation standards, process of compensation determination (including evaluation criteria and allocation) and other setting verifications, and reporting to the Board of Directors Director Nomination Advisory Director Nomination Committee of Formulation of selection criteria Board directors, Audit & Supervisory members, including outside members, of and executive officers, nomination candidates, and appropriate deliberation in the selection and development plans of successor candidates such as for Chief together with Executive Officer, reporting to the Board of Directors Internal director 3 Outside director 3 Internal director with In principle once every half year, special meetings as needed Role names Members and the Audit Department comprise a Audit Members and the Furthermore, three out of the five Audit & SupervisoryAudit three out of the five Furthermore, aims to collaborate with outside directors Akebono member meetings Committee Committee Composition Frequency of (Chairperson) between representative directors and outside directors, directors, outside directors, representative and between & SupervisoryAudit and outside Members. Board Cooperation among Audit & Supervisory Board Members, and the Audit Department the Independent Auditor, & Supervisory Audit Audit Members and the The Board & Supervisory appropriate explanations receive Board about the audit content from the independent auditor, as witnessing the audits cooperation, such and provide In addition, if necessary. of the independent auditor, with the independent regular meetings have they the audit plan, and auditor as regards the audit system, & Audit the audit implementation The status. Supervisory Board complementarymutually in order to enhance system cooperate in audit. They of each the effectiveness conducting the pre-adjustment of the fiscal year’s the monthly report arranging in activities policy, distribution of the audit meeting, and in the mutual report, together with conducting joint audits. Outside Directors and Outside Audit & Supervisory Outside Directors and Outside Audit & Board Members has appointed Akebono directors, Of the six current of a variety three independent outside directors with role is to strengthen the and skills. Their experience the Board reinforcing by structure corporate governance management monitoring functions, and of Directors’ will help contributing advice to management that medium- to long-term corporate value. improve & SupervisoryAudit Members are outside Board Board ensuring that the supervisoryMembers, thereby and functions from a more independent perspective, strengthening the audit function of management. & SupervisoryAudit and Members and to Board It therefore system. strengthen its corporate governance meetings opinion-exchanging regularly convenes Board of Directors’ Advisory Committees (voluntary) Advisory Board of Directors’ A company with an Audit & Supervisory Board Yes 2 years Chairman and President Representative Director, 6 3 3 14 100% 5 3 3 97% Nomination Advisory Committee, Compensation Advisory Committee Tohmatsu Deloitte Touche The chairperson assigns a certain assigns division (or an chairperson The by business execution In order to ensure appropriate & SupervisoryAudit directors and remuneration for The & SupervisoryAudit members of the The Board, Type of governance model Type Executive Officer System term stipulated by the Director’s articles of incorporation Chairman of the Board Number of acting directors Of whom, outside directors Of whom, those registered as independent directors Number of Board of Directors meetings held during fiscal 2017 Number of Board of Directors meetings held during fiscal 2017 Number of Audit & Supervisory Board members Of whom, outside members Of whom, those registered as independent auditors Outside Audit & Supervisory Board members’ board meeting attendance rate during fiscal 2017 Board of Directors’ advisory organs (voluntary) Independent auditor Outline of Akebono’s Corporate Governance Structure Outline of Akebono’s (Fiscal 2017) Supervisory Department. Audit and the Members Board internal important as the secretariatindividual) of each conducting secretariat for The is responsible body. as notices of agenda and minutes. paperwork such is system audit a three-way members of management, & SupervisoryAudit means of the Membersapplied by Board & Supervisory Audit and the the independent auditor, Board, & SupervisoryAudit Department. Audit Board and the as such essential management meetings, Members attend to monitor the processes of of Directors meetings, the Board of status importantdecision-making and the execution opinions members also exchange business operations. These matters any without delay with directors in order to examine management Akebono’s on impact serious a have could that and then respond promptly. or performance, rules the Company’s Members is determined by Board disclosed. and the compensation criteria are clearly remuneration fixed of directors consists for Compensation portion is fixed remuneration. The and performance-based positions. duties and is based on basic compensation for portion is determined based on the performance-based The and individual directors. The of the Company performance is allocated within director each amount of remuneration for the General Meeting of Shareholders. by limits approved & SupervisoryAudit total The amount of Members’ Board of the General Meeting remuneration is also determined by are decided Shareholders, and the individual allocations & SupervisoryAudit through consultation with the Board. Tohmatsu, Touche Deloitte independent auditor Akebono’s mutually closely cooperate by Department Audit and the plans and audit as annual such information exchanging meetings. holding regular opinion-exchanging reports, and by Risk Management Committee Compliance Committee Director Nomination Advisory Committee Director Compensation Advisory Committee replying Reporting Reporting & Management Conference Advance deliberation Management information and suchlike is shared and suchlike Management information selection criteria and candidates for the Board of the Board selection criteria and candidates for & Supervisory Audit Directors, the and executive Board, of Directors determines these by the Board officers, the discussed and reported on by being resolutions after addition, In Advisory Committee. Director Nomination are compensation system of the director basic matters of Directors after resolution of the Board determined by the Director being discussed and reported on by that the to ensure Advisory Committee Compensation and transparent. is highly objective compensation system ensuring efficient through electronic media, thereby The sharing among management officers. information been that have of business matters status execution of Directors or the Board decided is reported to the Board the member of as appropriate, by Officers, of Executive This who is in charge. officer or the executive the Board & Audit the audited by is also periodically status Overview of Corporate Governance System Overview of Corporate & Audit with an “company has adopted the Akebono built a have Supervisory model. We governance Board” of Board centered on the system corporate governance & SupervisoryAudit Directors, Members, and the Board & Supervisory the Executive introduced Audit We Board. April 2000 in the responsibility to clarify System Officer and to enhance execution, business and the authority for of Directors meets Board The management efficiency. and extraordinaryregularly once a month, are meetings prompt and accurate to make held as needed. In order through judgments on important matters management establishedAkebono discussion and reviews, sufficient importantvarious bodies, including the Management bodies These Officers. of Executive Council and the Board rules. operate in accordance with prescribed internal of the Board to complement the functions of Furthermore, and soundnessDirectors and strengthen the transparency has established theof management, the Company the Director and Advisory Committee Director Nomination regards theAs Advisory Committee. Compensation 1 President & CEO Board of Directors Board of Executive Officers General Meeting of Shareholders Election, dismissal & supervision Election & dismissal Divisions/Business Units/Group Companies Direction Corporate Value Improvement through Stronger Governance Stronger through Improvement Value Corporate Audit G Election & dismissal Reduced the number of directors from 25 to 12 Introduced an Outside Director System and elected one Established the Compensation Advisory Committee and outside director introduced a performance-based remuneration system for directors Increased the number of outside directors from 1 to 2 Increased the number of outside Audit & Supervisory Board members from 2 to 3 Increased the number of outside directors from 2 to 3 Established the Director Nomination Advisory Committee Introduced an Executive Officer System •  •  •  Increased the number of outside Audit & Supervisory Board members from 1 to 2 Audit &

Audit Department Supervisory Board Independent Auditor

Internal audit Collaboration Collaboration

Corporate Value Improvement through Stronger Governance– Improvement through Corporate Value

Collaboration June 2010 June 2014 December 2015 June 2006 June 2007 June 2005 April 2000 Corporate Governance Structure Three-way audit system Initiatives to Strengthen Corporate Governance Board member committed to maintaining the vigilant member committed Board of management. oversight strengthening of corporate governance as an important strengthening of corporate governance management issue, establishinga solid governance of bodies as the Board consisting of such structure Supervisory & Audit Directors and the with every Board, suppliers, our associates, and local communities in ordersuppliers, our associates, and local communities In line sustainable and development. growth to achieve positioned the have we with this conviction, essential safety equipment, we believe that it is important believe equipment, we essential safety relationships and friendly to maintain and promote healthy shareholders,with all stakeholders including customers, corporate value even further in line with our corporate even corporate value realignment”, “Technology “Customer needs first”, goals of of a maker As “Establishing a global network”. and every individual life.” Under this corporate mission, we are we Under this corporate mission, every individual life.” (manufacturing through Monozukuri values creating new and value and striving to increase shareholder excellence) Basic Approach to Corporate Governance Basic Approach to Corporate corporate mission: the following has formulated Akebono Vibration, their Control and and ‘Friction “Through and support to protect, grow are determined we Analysis,’ Corporate Governance System Governance Corporate AKEBONO REPORT 2018 AKEBONO REPORT

31 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Medium- to Long-Term Growth Model 34

7 6 13 6 Number of AKEBONO REPORT 2018 AKEBONO REPORT Supervisory Board members directors/Audit & – – – – (Fiscal 2017) rights to shares) Long-term (subscription Method for determining compensation for senior More time to discuss sales strategy, technology More time to discuss sales strategy, development strategy, and future vision, and progress made development strategy, toward their achievement management, directors and executive officers • CEO and management succession planning •  •  – – – – Through a review of the organizational structure, we will seek a substantive debate on the sales, technology development, and product strategies at the will routinely review and discuss the Board of Directors meeting. We progress of the midterm business plan. will provide a preliminary explanation of Board proposals jointly with We Outside Directors and Audit & Supervisory Board Members and provide more venues for exchanging views between Outside Directors and Audit & Supervisory Board Members about Board proposals to strengthen cooperation between them. Regarding training of the CEO and management successor planning, “human resource discovery and development, and training plan” is discussed at the Director Nomination Advisory Committee. The results of this discussion will be reported to the Board of Directors. The method of determining compensation of senior management, directors and executive officers, will be further discussed at the Board of Directors meeting taking into account the results of the review of the “Evaluation method for determining compensation and introduction of a stock compensation program” by the Director Compensation Advisory Committee. rights to shares) Performance-based remuneration 1. 2. 3. 4. Areas in need of improvement 3. Future Action to Improve Effectiveness Medium-term (subscription Medium-term (subscription – – – – Compensation by category (Millions of yen) by category (Millions Compensation

(Cash) Short-term ¥300 million ¥120 million (excluding outside directors) ¥60 million (excluding outside directors) ¥120 million (excluding outside directors) ¥60 million 167 50 217 42 Fixed (Cash)

remuneration 167 50 217 42 Amount of compensation (Millions of yen) Duties and responsibilities of the Board of Directors (especially oversight functions) Structure of Board of Directors Matters for discussion and time allocation at the Board of Supervises the operational status of compliance activities Composition of the Nomination Advisory Committee and the Support system for Outside Directors and Audit & (ratio of inside and outside directors) Directors and Internal Reporting System Compensation Advisory Committee, which are voluntary bodies Supervisory Board Members 4. Support framework for outside directors 5. Support framework for outside auditors 6. Relationship with investors and shareholders •  •  •  •  •  • Engages in dialog with investors/shareholders The Company’s directors and auditors The Company’s From mid-February to mid-March 2017 1. Structure of the Board of Directors 2. Operation of the Board of Directors 3.  Fixed Remuneration Short-term performance-based remuneration Medium-term performance-based remuneration Long-term performance-based remuneration Fixed remuneration Total Directors Areas in good standing Scope Survey Timeframe Question Topics 2. Effectiveness Evaluation and Analysis Board Evaluation and of the Group the sustainable growth with the aim of achieving of the Board the effectiveness evaluates Akebono its effectiveness to further improve and initiatives in fiscal 2016 results of this evaluation The corporate value. improving are outlined below. 1. Evaluation Details Board members Board members) Audit & Supervisory Board members Audit & Supervisory Audit & Supervisory (Outside directors and As of the end of fiscal 2017, the Company had 6 Directors and 5 Audit & Supervisory Board Members. As of the end of fiscal 2017, the & Supervisory Board Members upon Upper limits of annual compensation for directors and Audit (annual amount) resolution of the Ordinary General Meeting of Shareholders The above table includes one Director and one Audit & Supervisory Board Member who retired at the close of the 116th Ordinary General Meeting of Shareholders held on June 16, 2017. of the 116th Ordinary General Meeting of Shareholders at the close and one Audit & Supervisory Board Member who retired The above table includes one Director Total Amount of Compensation Paid to Directors and Audit & Supervisory Board Members Supervisory Board and Audit & Paid to Directors Amount of Compensation Total * * (1) Directors (2)  14/14 14/14 14/14 Meetings (a) 14/14 (b) 13/14 (a) 14/14 (b) 14/14 (a) 14/14 (b) 14/14 Attendance at Board of Directors Attendance at Board of Directors (Attended/Convened in Fiscal 2017) (Attended/Convened in Fiscal (Attended/Convened in Fiscal 2017) Audit & Supervisory Board meetings(b) Attendance at Board of Directors meetings(a)/ The compensation for each Audit & SupervisoryAudit each for compensation The The performance-based portion is determined based performance-based The remuneration; 20% (subscription rights to shares) as remuneration; and medium-term performance-based 40% (subscription rights to shares) as long-term compensation for remuneration. The performance-based remuneration only. Outside Directors consists of fixed the is determined through discussion by Member Board & Supervisory by Audit within limits approved Board, the Ordinary General Meeting of Shareholders. remuneration. The fixed portion is basic compensation for portion is basic compensation for fixed remuneration. The total amount of duties and is based on positions. The the Ordinary by must be approved remuneration fixed General Meeting of Shareholders. and individual of the Company on the performance upper limit for The Directors in the preceding fiscal year. of the remuneration is set at 100% performance-based be Of this amount 40% (cash) may portion. fixed short-term performance-based as provided The results of these audit plans are discussed at audit plans are discussed results of these The as on a regular basis, held from time to time meetings necessary. Adjunct Professor, Graduate School of Commerce and Graduate School of Commerce Adjunct Professor, Limited Sumitomo Chemical Company, Outside Director, Institute of Technology Tokyo Institute Professor, Premier International Research World Visiting Professor, Management, Hitotsubashi University Center Initiative, Kyushu University

•  •  Pharmaceutical Co., Ltd. Kobayashi • Outside Director, i Holdings Co., Ltd. Seven & • Outside Director, Inc. Industries, Toray • Outside Director, •  •  Any Important Representation of Other Entities Any Important Representation (as of March 31, 2018) Reasons for Election Corporate Value Improvement through Stronger Governance Stronger through Improvement Value Corporate G Reasons for Election (as of March 31, 2018) Member based on his specialist perspective and highly independent status from management to bring to bear status from management to bring Member based on his specialist perspective and highly independent his knowledge and experience in the performance of audits. legal Katayama has extensive knowledge and experience in the A lawyer and certified public accountant, Mr. on and financial audit profession. He was nominated as an Outside Audit & Supervisory Board Member based and his specialist perspective and highly independent status from management to bring to bear his knowledge experience in the performance of audits. Mr. Endo has extensive knowledge and experience as a certified public accountant. He was nominated as an He was nominated Endo has extensive knowledge and experience as a certified public accountant. Mr. status perspective and highly independent Outside Audit & Supervisory Board Member based on his specialist in the performance of audits. from management to bring to bear his knowledge and experience knowledge and experience as a management, organizational and human resources has extensive Tannawa Mr. Board He was nominated as an Outside Audit & Supervisory consultant in addition to as a corporate manager. and thermal engineering. Mr. Okazaki was nominated as an Okazaki was nominated and thermal engineering. Mr. to outside director to bring to bear his knowledge and capability provide appropriate supervision and advice in aid of the business operations. Company’s Mr. Tsurushima served as a corporate leader at a number of Tsurushima Mr. Stock Exchange, companies, including as President & CEO of Tokyo Inc. He was nominated as an outside director to bring to bear his extensive knowledge of and experience in corporate management when providing advice and recommendations regarding the processes. business judgments and decision-making Company’s Okazaki possesses specialized advanced academic Mr. knowledge in the fields of environmental protection, energetics Mr. Ito has extensive knowledge and a wealth of experience in Ito has extensive knowledge and a wealth of experience Mr. over his years as a university corporate management cultivated and as an outside professor (Accounting & Management) was nominated as an outside director at other companies. He and experience when director to bring to bear his knowledge regarding the Company’s providing advice and recommendations business judgments and decision-making processes. performance and value performance Motivate them to continuously improve corporate them to continuously improve Motivate Keizo Takuo Takuo 2.  and rationality of fairness 3. Maintain a high level compensation system maintain and fair an objective To 1. Acquire and develop talented human resources and develop Acquire 1. Name Name Kunio Ito Tannawa Tomohiro Tomohiro Katayama Basic Policy for Determining Compensation Paid to Directors and Audit & Supervisory Board Members Tsurushima Kesao Endo  Ken Okazaki consists of fixed remuneration and performance-based remuneration and performance-based consists of fixed for each Director is allocated within limits approved by the by Director is allocated within limits approved each for Ordinary General Meeting of Shareholders. Outside Directors) Directors (excluding Compensation for Compensation Advisory Committee, which reviews the reviews which Advisory Committee, Compensation relating to Director compensation. Based basic matters of compensation the amount on the results of this review, for Directors, we have established a Director have we Directors, for Supervisory Members as follows. Board Akebono has formulated the basic policy for the basic policy for has formulated Akebono & Audit Directors and determining the compensation for Compensation • Outside Audit & Supervisory Board Members Outside Audit & Supervisory Board Members assessments of internal control over financial reporting. over of internal control assessments Outside Directors Furthermore, the Audit Department and the Department and Audit the Furthermore, related to audit plans auditor formulate independent AKEBONO REPORT 2018 AKEBONO REPORT

33 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Medium- to Long-Term Growth Model 36

AKEBONO REPORT 2018 AKEBONO REPORT I want to return Akebono to a company that to a company Akebono return to I want The electrification of the braking mechanism of the braking mechanism electrification The Akebono should pull the world along with should pull the world Akebono

measures, but it needs to pay even more attention to more attention even measures, but it needs to pay this issue. Nobumoto on the electro- refocus will we Therefore, is inevitable. An even including the control system. brake mechanical of the focus The larger issue is that of the environment. starts from midterm business plan, which three-year to find like I would is the environment. year, fiscal next from the environmental business opportunities problems. Okazaki to develop However, its original technology. technology, management is important because the technology, generate a must quickly funds are still required. We cycle. growth positive Nobumoto driven. is technologically speed never seen before. The The seen before. speed never most important point is electrification. "E-mobility" is and hybrid term for the blanket electric vehicles, plug-in hybrid and fuel cell vehicles. vehicles, its popularityAs the spreads, will drastically of brakes world will be the regenerative One of these changes change. decreases, demand for wear friction brake As brake. are repair parts decreases. Once electric motors to be also have will brakes wheel, mounted to each occur will likely properly fit. This so they miniaturized off, seem a long way around 2040, and though it may need to think about now. things we there are many "E-mobility" the is addressing More important than even to is becoming increasingly difficult This environment. that has led is a company Akebono do in these times. environmental to advance in its efforts the world Hisataka Nobumoto Hisataka President & CEO Ken Okazaki Institute of Technology) Tokyo Professor, Outside Director (Institute Akebono has Akebono

Nobumoto but I technologies, various question whether it is our utilize that we sufficient only in fields technologies do business. now where we Deeper pursuit of these a might provide technologies This is not just a technology issue. Although issue. just a technology is not This Recently, I have found that to develop new new that to develop found I have Recently, since the passed have years More than 100 As a technology specialist, I think the Board of specialist, I think the Board a technology As

our technology, and on the development direction. and on the development our technology, Okazaki it is necessary that 1) the management technology is solid, 2) there is the financial capacity to foundation and without these development, in technology invest is impossible. Therefore, development two, technology to consider what kind of technology need we to pursue and discuss it at the board of development must Still, we directors meeting or at other venues. a dream just in having is no point a dream. There have we to motivate, a dream. But, if the dream fails to have that inspire. technologies will not develop Nobumoto one has to perform work be a lot of repetitive there may in all get buried time if you your waste you’ll day, each of that without a dream. Okazaki at a things are changing but now invented, car was Conversation with the President and Outside Director Director Outside and the President with Conversation Hisataka and Mr. of the Company, Director Okazaki, an Outside Ken Mr. introduce We directors the role of outside who discuss Company, & CEO of the the President Nobumoto, industry. in the automotive and changes Okazaki advisory my opinion on mission is to express Directors’ technological Akebono’s direction of the future in a difficult is now Since the Company development. to speak from every effort I make business situation, original Akebono’s the standpoint to leverage of how in it, and what kind of to invest how technology, should develop. business model we us given have I’m very grateful that you picture. new on the possibility of perspective insight from a technical in other fields, on evaluating using these technologies Moreover, in recent years, in light of the increasing in recent years, Moreover, continues to implement Akebono while In the future, based on cybersecurity management guidelines, adopt securitynew measures, build the organization and contingencies, and in preparation for structure which strengthen its countermeasures to cyber-attacks, are becoming increasingly sophisticated. disasters, and criminal acts. Under the Information Information disasters, and criminal acts. Under the has also set up a the Company Security Committee, where group and established a system working system security personnel or an information information out their own carries section administrator in each security risks to which the information against checks a operations are vulnerable. Using their respective of and adherence to the to raise awareness PDCA cycle regulations and guidelines through education various to ensure is working and training, the Company that a violation event In the unlikely security. information rules Company’s as with regard to the such does occur, Company it is strictly dealt with. The of employment, and regulations and laws complies with all relevant continuous to achieve other social norms, and strives including in of its management systems, improvement in the environment. response to changes leakage due to global business risk of information and the dependence on IT growing expansion, has the Company increased liquidity of employment, so that its environment strengthened its network globally. a certain level security exceeds activities, it will global education and awareness-raising continue to routinely conduct security assessments activities are supported by the Risk Management the Risk Management supported by activities are by directors chaired a group of comprising Committee, and the Risk & CEO, Director the Representative of the Risk a subcommittee Committee Evaluation the by that is chaired Management Committee The Vice President. Director & Executive Representative controls Group-wide critical Committee Risk Evaluation confirmed the the Company risks. In fiscal 2017, of countermeasures implementation and efficacy status addition, the Company critical Group-wide risks. In for its major plan for promoted a risk management locations. overseas Information Security Activities has established Security Akebono an Information security policies, as information as well Committee, in the handling of information for guidelines and rules to protect order to implement appropriate measures clarify measures assets properly. information We according to materiality in order to provide and risk, data in-house or owned appropriate protection for customers or business partners from all by provided natural kinds of threats, including negligence, accidents, 2 Corporate Value Improvement through Stronger Governance Stronger through Improvement Value Corporate G

Corporate Value Improvement through Stronger Governance– Improvement through Corporate Value

To prevent compliance violations or to detect them at compliance prevent To To respond to the globalization of management, To reduce them. We also conduct risk management reduce them. We damage activities aimed at minimizing the impact of any risk management Akebono’s that might materialize. Risk Management System the to identify the risks surrounding strives Akebono and conducts risk control and monitoring to Company also ensures that the person seeking consultation does prejudicial treatment because of making any not receive a report or seeking consultation. At all of these counters, the personnel in charge keep keep At all of these counters, the personnel in charge the name of the person seeking the consultation and Akebono of their consultation confidential. the nature associates, including temporary employees and contract associates, including temporary employees Among these, some of the outsourced employees. agencies. specialized to consultationentrusted been has compliance hearings for associates selected at random, compliance hearings for and has set up consultation counters, both in-house and counseling from all outsourced, to accept requests for discussions. Furthermore, in fiscal 2017, we introduced a introduced we in fiscal 2017, discussions. Furthermore, global compliance e-learning program. conducts Akebono them, an early stage, and resolve tests were given to all associates in Japan, and in to all associates in Japan, given tests were held a month dedicated to strengthening we November thoughtful workplace generated compliance, which level of awareness on general compliance issues such on general compliance issues such of awareness level of harassment. In control and prevention as information compliance proficiency addition to this, in fiscal 2017 outsourcing operations and training on insider trading outsourcing operations and training on training in our job level-based regulations. Moreover, the include compliance training to raise program, we Behavior, and we also work to improve awareness of of awareness to improve also work and we Behavior, of educational conducting a variety compliance by include training on Japan’s programs. Specific examples that carry workplaces out subcontracting act for its corporate social responsibility. To this end, we have have this end, we To its corporate social responsibility. Code of Global established akebono and promoted the Global Standard of Conduct together with the akebono by each associate. each by carry and recognize out to correctly endeavors Akebono Compliance Committee, chaired by the president, and the by chaired Compliance Committee, and Global Code of Conduct” “akebono established the to be observed Global Standard of Behavior” “akebono beyond complying with the law and regulations, complying with the law beyond understandscorrectly and fulfills its corporate social set up the have we Accordingly, responsibility. Compliance Akebono, it is important that globally, it expands As Management Systems Management AKEBONO REPORT 2018 AKEBONO REPORT

35 Medium- to Long-Term Growth Model Model Growth Long-Term to Medium- Review of Operations Financial and Non-Financial Highlights

Financial and Non-Financial Highlights Akebono Brake Industry Co., Ltd. and Consolidated Subsidiaries, the Fiscal Year Beginning April 1 to March 31 of the Following Year

(Billions of yen) (Billions of yen) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net sales ¥ 184.7 ¥ 159.6 ¥ 130.6 ¥ 216.6 ¥ 209.6 ¥ 206.0 ¥ 236.7 ¥ 254.2 ¥ 281.3 ¥ 266.1 ¥ 264.9 Gross profit 36.6 14.6 19.8 30.4 24.9 23.5 26.8 24.3 16.5 26.6 29.5 Ratio of gross profit to sales (%) 19.8 9.2 15.2 14.0 11.9 11.4 11.3 9.6 5.9 10.0 11.2 Selling, general and administrative expenses 21.4 20.9 15.1 19.0 21.1 19.2 18.7 20.3 20.2 22.3 21.4 Ratio of selling, general and administrative expenses to sales (%) 11.6 13.1 11.6 8.8 10.1 9.3 7.9 8.0 7.2 8.4 8.1

Operating profit (loss) 15.2 (6.3) 4.7 11.4 3.8 4.3 8.1 4.0 (3.8) 4.2 8.1 Ratio of operating profit (loss) to sales (%) 8.2 (3.9) 3.6 5.3 1.8 2.1 3.4 1.6 (1.3) 1.6 3.1 Profit (loss) attributable to owners of parent 6.6 (16.3) 2.1 5.3 (3.2) 0.5 2.4 (6.1) (19.5) 0.4 0.8 Ratio of net profit (loss) to sales (%) 3.6 (10.2) 1.6 2.4 (1.5) 0.3 1.0 (2.4) (6.9) 0.1 0.3 Return on assets (ROA) (%) 4.2 (10.2) 1.3 3.0 (1.8) 0.3 1.3 (2.9) (9.0) 0.2 0.4 Return on equity (ROE) (%) 13.7 (42.2) 5.8 11.6 (7.1) 1.2 4.9 (11.5) (50.1) 1.4 3.0

Capital investment 14.9 17.8 5.4 5.1 14.3 19.8 21.8 20.8 18.6 18.7 11.6 Depreciation 9.9 11.4 10.0 9.8 9.8 8.6 8.9 10.8 13.1 11.9 12.4

Cash flow from operating activities 15.1 4.2 3.2 7.4 2.9 7.6 18.9 10.2 7.5 14.1 19.4 Review of Operations Cash flow from investing activities (16.0) (13.6) (13.4) (8.6) (23.8) (4.1) (20.3) (17.7) (10.1) (15.9) (11.1) Cash flow from financing activities 0.1 38.6 (0.0) 18.2 1.4 (2.0) (6.2) 5.8 11.2 (2.8) (11.3) (Thousands) (Thousands) Number of outstanding shares at the end of period (including treasury stock) 110,992 110,992 135,992 135,992 135,992 135,992 135,992 135,992 135,992 135,992 135,992 (Yen) (Yen) Net profit (loss) per share—basic ¥ 61.85 ¥ (151.65) ¥ 17.80 ¥ 39.75 ¥ (24.25) ¥ 3.90 ¥ 18.24 ¥ (45.83) ¥ (146.31) ¥ 2.66 ¥ 5.87 Cash dividends per share 10.00 5.00 5.00 10.00 10.00 10.00 10.00 10.00 – – – (Billions of yen) (Billions of yen) Total assets ¥ 163.3 ¥ 155.4 ¥ 164.1 ¥ 186.0 ¥ 181.0 ¥ 186.6 ¥ 199.2 ¥ 225.9 ¥ 204.4 ¥ 201.8 ¥ 194.3 Net interest-bearing debt 40.2 47.7 39.5 36.9 52.4 68.1 76.2 95.8 99.4 102.5 97.0 Net debt-equity ratio (times) 0.8 1.7 0.9 0.8 1.2 1.46 1.45 1.78 4.17 4.09 3.59 Net equity (Equity minus minority interests minus share acquisition rights) 49.8 27.4 43.8 47.1 43.3 46.5 52.7 53.9 23.8 25.1 27.0 Net equity ratio (%) 30.5 17.6 26.7 25.4 23.9 24.9 26.4 23.9 11.6 12.4 13.9

R&D expenses* and ratio of R&D Capital investment and ratio of Number of associates and ratio of CO emissions and CO emissions Water resource usage and water Net sales 2 2 expenses to sales CAPEX to sales overseas associates per sales resource usage per sales (Akebono group worldwide) (Akebono group worldwide)

(Billions of yen) (Billions of yen) (%) (Billions of yen) (%) (Associates) (%) (1,000t) (t /¥100 million) (10,000m3) (10m3 /¥100 million) 400 15 6 30 12 12,000 100 400 300 200 200

165 164 4.6 9.2 9,457 314 316 318 157 4.4 9,238 9,240 4.2 8,828 291 296 149 300 281.3 4.1 8.2 9,000 8,505 66 66 75 300 225 150 138 150 266.1 264.9 3.9 63 65 254.2 10 11.7 4 20 8 61 236.7 10.5 21.8 7.0 11.9 10.8 20.8 6.6 10.3 200 18.7 6,000 50 200 133 150 100 100 18.6 114 119 120 4.4 105 59 62 61 5 2 10 4 58 56 11.6 100 3,000 25 100 75 50 50

0 0 0 0 0 0 0 0 0 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 (FY) (FY) (FY) (FY) (FY) (FY)

R&D expenses (left axis) Capital investment (left axis) Number of associates (left axis) Total CO2 emissions (left axis) Water resource usage (left axis) Ratio of R&D expenses to sales (right axis) Ratio of CAPEX to sales (right axis) Ratio of overseas associates (right axis) CO2 emissions per sales (right axis) Water resource usage per sales (right axis) *Note: Includes expenses arising from daily *Going back to fiscal 2013, the Ai-City headquarters operations aimed at achieving improvements has been added to the figures.

37 AKEBONO REPORT 2018 AKEBONO REPORT 2018 38 Review of Operations Progress of akebono New Frontier 30 - 2016

Progress of akebono New Frontier 30 - 2016

The midterm business plan, “akebono New Frontier 30 – 2016 (aNF30-2016),” ending in fiscal 2018, contains the goals of 1 Rebuilding North American operations 1 rebuilding North American operations, 2 establishing global networks based on product-based business units, and 3 expanding high performance brake business and recreating European operations. By realizing these goals, Akebono As a result of taking measures to rebuild North American system. Challenges caused by the implementation of plans to achieve a sound financial condition and facilitate sustainable growth. Although we produced some positive operations, in fiscal 2017, operating profit improved by major reforms led by U.S. management have also emerged, results in fiscal 2017, the second year of the plan, new challenges have emerged. The Company will unite to solve these about JPY4.8 billion to JPY1.5 billion, returning to profitability. and therefore I believe we have entered a reform phase Despite achieving positive results, such as restoring that cannot be dealt with by local management alone. To challenges and achieve these goals. profitability, sales are expected to decline for several years achieve growth, we will go back to the basics of a being due to the withdrawal from sedan model by a customer manufacturing company based on Japanese Monozukuri and losing business opportunities for subsequent (manufacturing excellence), further strengthening 2013-2015 2016-2018 Future Vision models because of production problems. Nevertheless, cooperation between Japan and the United States. We aNF30-2013 Midterm Business Plan New aNF30-2016 Midterm Business Plan Global 30 we will continue our efforts to optimize the production work to further improve North American operations.

Building a foundation for achieving Global 30 By introducing product-based business units Long-term Goals Strengthen North American • Technology differentiation and deploying them globally, we aim to take • Achieve Global 30 Restructuring of the • Drastic cost reductions on new fields and rebuild our management Measure 1: management and implement Fiscal 2020 Goals company foundation Restore • Acceleration of globalization in Japan, foundations • Operating profit of 10% fundamental organizational reforms North America, Europe and Asia customer trust Strengthened cost Measure 2: Optimize sales and purchase prices management aNF30-2016 Fundamental Strategies Shift priority from achieving sales targets to sustainable growth Reinforce our foundation and return Restore Improvement in Measure 3: to the basics of safety, quality, and profitability productivity delivery Review of Operations 1 Rebuilding North American operations Return to a sound financial 2 Establishing global networks based on product-based business units • Initiatives to optimize the production system continue condition • Emergence of challenges due to implementation of North American-led reforms 3 Expanding high performance brake business and recreating European operations Back to the basics of a being a manufacturing company based on Japanese Monozukuri and stronger cooperation with Japan Financial targets (Billions of yen) aNF30-2016 Ensure stable profits through further improvement of North American operations

Targets Actual Forecast FY2016 FY2017 FY2018*

271.3 265.0 255.0 2 Establishing global networks based on product-based business units (BUs) While improving each product’s profitability, we have measures aimed at completing the transition by the end Net sales 266.1 264.9 244.4 launched five business units (BUs) responsible for of fiscal 2018 as originally planned. The current major marketing, product development, production and sales challenges include promoting efficient collaboration in various fields with the aim of strengthening our global between BUs and headquarter functions, as well as competitiveness. Although the transition to the BU BUs and overseas operations, but we will work on 10.0 structure is still in progress, we are taking various these to achieve the midterm business plan. 8.0

Operating profit Business Units (BU) Start-up Main Products 8.1 7.5 1.6 4.2 HP BU January 2016 HP (High performance) disc brakes

Foundation BU January 2016 Disc brakes, drum brakes and other mechanical parts

5.0 Infrastructure and Mobility (AIMS) BU April 2016 Products for industrial machinery, rolling stock, and sensors

Profit (loss) attributable 3.0 Friction Material BU October 2016 Brake pads, lining and other friction materials to owners of parent 0.8 Aftermarket BU October 2016 Aftermarket products 0.2 0.4 2.0

Equity ratio (%) 12.3% 12.4% 14.1% 13.9% 16.6% 15.3% BU HQ function

Next generation product development, Net D/E ratio (times) 4.0 4.1 3.5 3.6 2.9 3.1 Business operation by products cooperation new material and technology including marketing, R&D, production, Free cash flow 1.4 (1.7) 2.0 8.3 3.5 7.0 development for new area, new sales and profit management *Exchange rate assumptions for fiscal 2018: USD: 110.0, EUR: 130.0, CNY: 16.5, THB: 3.4, IDR: 0.0080 business model development

39 AKEBONO REPORT 2018 AKEBONO REPORT 2018 40 Review of Operations Progress of akebono New Frontier 30 - 2016 Review of Operations Review of Operations

Review of Operations

3 Net sales in fiscal 2017* were JPY264.9 billion (0.4% and JPY5.8 billion (JPY0.8 billion for the last fiscal year), Expanding high performance brake business and recreating European operations year-on-year decrease) reflecting decreases in sales in respectively. Profit attributable to owners of parent was The expansion of the high performance brake (high brake products from the Columbia Plant in the United North America despite strong sales in the European and JPY0.8 billion (JPY0.4 billion for the last fiscal year) mainly performance brakes for mass-produced vehicles) States was largely completed in 2017. The high Asian regions. Profits increased due to the effects of as a result of posting impairment loss for non-current business is proceeding smoothly and in line with plans. performance brake business plans to begin to expand measures taken to improve profits in North American assets in the Arras Plant and the Slovakia Plant in Europe. Full-scale production at the Slovakia Plant began in 2016, globally including Europe, as well as North America and operations, increased orders received in the Asian and the transfer of the production of high performance Japan. region and others. Operating profit and ordinary profit “Consolidated fiscal year North America/China/Thailand/Indonesia: January 2017 - December 2017 were JPY8.1 billion (JPY4.2 billion for the last fiscal year) Japan/Europe: April 2017 - March 2018 Basic policy Akebono’s strengths Performance by geographical segment Absolute commitment to differentiated products, • Realize both high performance and high quality by combining high performance R&D Strategy light weight, high performance, enhanced design brake technologies accumulated through F1 activity, superior NVH knowhow and Net sales Operating profit Change from Foreign Change from Foreign and high quality cutting-edge manufacturing technology. FY2016 FY2017 FY2016 FY2017 (Billions of yen) last fiscal year exchange rate* last fiscal year exchange rate* Japan 80.9 81.4 + 0.5 – 4.1 3.3 (0.8) – Expand sales especially in Europe with high • Mass production of 6-pot opposed high performance brake calipers USA 152.4 138.8 (13.6) +3.0 (2.9) 1.8 +4.7 +0.0 performance technologies gained through brake • Developed and supply world’s first mass production 10-pot opposed brake calipers Mexico 0.8 1.1 + 0.3 +0.0 (0.4) (0.3) +0.1 (0.0) development for premium German automakers. • Appeal of advanced technology Europe 11.6 14.1 +2.6 +1.2 (1.3) (2.0) (0.8) (0.2) China 20.0 22.5 +2.5 +0.3 2.6 2.6 +0.1 +0.0 Sales Strategy Thailand 6.6 7.9 +1.3 +0.5 0.4 0.5 +0.1 +0.0 Indonesia 16.3 18.8 +2.4 +0.4 1.4 2.0 +0.6 +0.0

Asia 43.0 49.2 +6.2 +1.2 4.4 5.1 +0.7 +0.1 Review of Operations Eliminations (22.4) (19.6) +2.8 – 0.2 0.2 +0.0 – Total 266.1 264.9 (1.2) +5.5 4.2 8.1 +3.9 (0.0) 6-pot opposed brake caliper 10-pot opposed brake caliper * Foreign currency exchange rates (FY2016 FY2017) USD: 109.6 112.0, EUR: 118.9 130.3, CNY: 16.4 16.6, THB: 3.1 3.3, IDR: 0.0082 0.0084

Return to a sound financial condition Review of Operations by Region Japan Akebono plans to return to a sound financial condition compared with 14.0% in the previous fiscal year, against by steadily implementing the three pillars of aNF30- the 12% target. In addition, Akebono spent JPY10.3 Review of Fiscal 2017 in next-generation R&D expenses related to electro- 2016, namely 1) rebuilding North American operations, billion on development. The Company intends to invest In products for automobiles, the Akebono Group posted mechanical brakes, environment-friendly friction 2) establishing global networks based on product-based JPY10.0 billion annually on development, while shifting net sales of JPY81.4 billion (0.6% year-on-year increase), materials. business units, and 3) expanding high performance the allocation of funds from application development to favorably affected by increases in orders received for brake business and recreating European operations. In focus on advanced research and development. In fiscal products mainly for new SUVs, as well as also strong Outlook for Fiscal 2018 fiscal 2017, the second year of aNF30-2016, Akebono 2018, the final year of aNF 30-2016, Akebono will sales of industrial machinery and rolling stock products The Akebono Group expects net sales to be JPY79.9 made progress in line with the plan, achieving its capital accelerate measures with the aim of achieving the such as those for forklifts and vehicle behavior detection billion (1.8% year-on-year decrease) and operating profit investment target of JPY11.6 billion. The SG&A ratio for targets of the midterm business plan as early as devices for rolling stock, but adversely affected by to be JPY3.0 billion (10.2% year-on-year decrease) due domestic operations was 14.4% in fiscal 2017, possible. sluggish exports of compact trucks to the Middle East to efforts to rationalize production, despite the effects of and decreases in orders received due to production declining sales and rising labor costs. suspension caused by automakers’ inspection failings. FY2016 Actual FY2017 Actual Operating profit was JPY3.3 billion (19.0% year-on-year decrease) due to the effects of a surge in market prices Initiative Control Investment CAPEX ¥ 14.9 billion ¥ 11.6 billion of steel and other materials, rising labor expenses Net sales Operating profit 1 Control CAPEX under ¥15.0 billion including performance-linked bonuses as part of the (Billions of yen) (Billions of yen) 120 6 Akebono Group’s compensation system, and increases SG&A 89.2 86.7 Initiative Reduce SG&A* 83.1 80.9 81.4 ratio in 14.0% 14.4% 79.9 4.1 2 Aim for SG&A ratio in Japan under 12% 80 4 3.6 Japan 3.4 3.3 3.3 3.0

Prioritize R&D costs 40 2 Initiative R&D Shift priority from application R&D to advanced R&D billion billion 3 costs ¥ 10.8 ¥ 10.3 Reduce R&D costs to ¥10.0 billion 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 (FY) Forecast (FY) Forecast * Selling, general and administrative expenses K4 disc brakes for mini cars* launched in Japan (* Displacement under 660cc)

41 AKEBONO REPORT 2018 AKEBONO REPORT 2018 42 Review of Operations Review of Operations

Review of Operations by Region North America Review of Operations by Region Asia

Review of Fiscal 2017 initiatives—(1) Fundamental organizational reforms, (2) Review of Fiscal 2017 sales for products for new MPVs (multi-purpose vehicles) Net sales came to JPY139.9 billion (8.7% year-on-year Productivity improvement, (3) Increase of manufacturing In China, the Akebono Group posted net sales of JPY22.5 and increases in orders received for products for global decrease), affected by decreased sales caused mainly capacity, and (4) Improvement of earnings structure, the billion (12.5% year-on-year increase) due to strong sales platform vehicles (common platforms for global by some U.S.-based automakers’ withdrawal from Akebono Group successfully posted operating profit of of products for SUVs and newly received orders for new distribution) exported to Europe, and for motorcycles. sedan models and tentative inventory adjustment in the JPY1.8 billion in the United States alone in fiscal 2017. models. Operating profit was JPY2.6 billion (2.8% Operating profit increased soared to JPY2.0 billion (41.4% aftermarket products market, although sales increased year-on-year increase) mainly due to favorable orders year-on-year increase) due to the absence of one-time thanks to strong orders received for products for pickup Outlook for Fiscal 2018 received for highly profitable friction material products expenses associated with the new business startup that trucks and SUVs and optimization of sales prices. Akebono expected net sales to be JPY114.5 billion and successful rationalization of production, despite began operation last year, the rationalization of production Operating profit soared to JPY1.5 billion (operating (18.2% year-on-year decrease) and operating profit to be increases in labor costs, depreciation, and costs of and increased orders, despite higher labor costs. loss of JPY3.2 billion for the last fiscal year) mainly due JPY0.0 billion (compared to operating profit of JPY1.5 complying with environmental regulations, thus to one-time expenses such as external consultant fees billion in the last fiscal year) due to the impact of showing year-on-year increase in sales and profits. Outlook for Fiscal 2018 were not incurred and expedited freight was significantly declining sales, despite improving labor costs and cost In Thailand, net sales came to JPY7.9 billion (19.0% Net sales of JPY49.4 billion (0.4% year-on-year increase). reduced through stabilized operations and labor costs reductions activities. year-on-year increase) due to increased orders received Operating profit is expected to remain largely reduction through reduced overtime and holiday work for products for both domestically sold and exported unchanged from that of the last fiscal year because of were achieved, despite the effects of decreased sales compact cars and to favorable orders received for higher sales and rationalization effects, despite negative and rising steel and other material prices. aftermarket friction material products. Operating profit factors such as rising labor costs and increasing Net sales Operating profit/loss As a result of various measures taken for the four was JPY0.5 billion (14.4% year-on-year increase) due to depreciation expenses associated with capital investment. (Billions of yen) (Billions of yen) 200 5 increased sales despite the effects of higher labor costs

166.9 1.5 and the cost of starting up a foundry that began 0.7 153.1 0.0 Net sales Operating profit 140.3 139.9 operations last year, thus showing year-on-year 150 0 (Billions of yen) (Billions of yen) 122.8 increases in sales and profits. 60 6

114.5 Review of Operations 5.2 (3.2) (3.2) In Indonesia, net sales climbed to JPY18.8 billion 49.2 49.4 5.1 100 -5 4.7 4.4 (14.9% year-on-year increase) mainly due to favorable 42.0 43.0 4.2 40 36.2 4 3.8 50 -10 32.6 (11.2) Akebono’s EURO® Ultra-Premium Ceramic Disc 0 -15 Brake Pads for the U.S. Market Received the 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 20 2 Best Overall Import Aftermarket Product Award (FY) Forecast (FY) Forecast for the Third Time

0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 (FY) Forecast (FY) Forecast Review of Operations by Region Europe Thai casting plant A&M

Review of Fiscal 2017 mix resulting from declines in the friction material business Net sales were JPY14.1 billion (22.1% year-on-year in the Arras Plant in France, which is highly profitable. increase) on increased sales of disc brake calipers for Cash Flow Status mass-produced high performance vehicles, despite Outlook for Fiscal 2018 decreased sales in the aftermarket friction material An increase in sales is expected mainly due to higher Cash and cash equivalents at the end of the fiscal year Cash flows from financing activities business. sales of disc brake products for mass-produced high under review decreased by JPY2.9 billion from the end The main factors behind the net cash outflow include a Akebono posted an operating loss of JPY2.0 billion performance vehicles and the operating loss is expected of the last fiscal year to JPY12.7 billion. Free cash flows JPY3.4 billion net decrease in short-term loans payable, (compared to an operating loss of JPY1.3 billion in the to JPY0.9 billion due to the impact of an increase in out of cash flows from operating activities minus cash repayment of JPY25.3 billion long-term loans payable, last fiscal year) mainly due to various expenses incurred sales and a reduction in scrap cost resulting from an flows from investing activities came to JPY8.3 billion. and JPY3.1 billion dividends paid to non-controlling interests, while there were inflows of JPY19.2 billion in the Slovakia Plant resulting from its efforts toward improving yield rate. Cash flows from operating activities through proceeds from long-term loans payable and thestart of full-scale production, increased depreciation The main factors behind the net cash inflow include JPY2.1 billion through proceeds from sale and leaseback. expenses associated with increased manufacturing profit before income taxes of JPY4.2 billion, depreciation lines, rising labor costs associated with the increased Net sales Operating profit/loss of JPY12.4 billion, a JPY2.9 billion increase in working Cash flows for FY 2017 (Billions of yen) number of personnel, and delay in the planned (Billions of yen) (Billions of yen) capital, while income taxes of JPY2.8 billion were paid rationalization, as well as a change in the product sales 25 0 out. (11.1) 19.1 +19.4 20 (0.5) (0.6) Cash flows from investing activities -1 (11.3) 14.1 (0.9) (0.9) The main factor behind the net cash outflow was the 15 +0.1 10.9 11.6 (1.3) payment of JPY11.4 billion for the purchase of property, 15.6 10 8.9 plant and equipment in connection with capital 12.7 7.4 -2 (2.0) investments, mainly in Japan, the U.S., and Europe. 5 March 31, Cash flows Cash flows Cash flows Exchange March 31, 2017 from from from rate 2018 Cash and cash operating investing financing change Cash and cash 0 -3 equivalents activities activities activities equivalents 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Slovakia Plant where full-scale (FY) Forecast (FY) Forecast production has started

43 AKEBONO REPORT 2018 AKEBONO REPORT 2018 44 Corporate Information Directors and Officers Corporate Information Company Outline/ Investor Information (as of March 31, 2018)

Directors (As of June 15, 2018) Executive Officers (As of June 15, 2018) Company Outline

Chairman, President & CEO Hisataka Nobumoto Company Name Akebono Brake Industry Co., Ltd.

Executive Vice President Yoshimasa Ogino Founded January 27, 1929

19-5 Nihonbashi Koami-cho, Chuo-ku, Tokyo Executive Vice President Kazuo Matsumoto Global Head Office 103-8534, Japan Senior Managing Executive Officer Kanji Miyajima 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Global Head Office: Ai-City (Headquarters) Akebono Nihonbashi Building (Chuo-ku, Tokyo) Senior Managing Executive Officer Takeshi Saito Japan President and CEO Hisataka Nobumoto Senior Managing Executive Officer Jean de Montlaur Capital ¥19.9 billion Senior Managing Executive Officer Yuji Ando Representative Director & Member of Representative Director & Member of the Board the Board Net Sales ¥264.9 billion (Fiscal 2017) Hisataka Nobumoto Yoshimasa Ogino Senior Managing Executive Officer Katsuji Hidaka Number of Associates 9,240 Senior Managing Executive Officer Yoichi Shinagawa Ai-City (Headquarters): Akebono Crystal Wing (ACW) Ai-Museum (Brake museum) (Hanyu City, Saitama Prefecture, Japan) Opening hours: Every Wed. 14:00-16:00 Managing Executive Officer Seiji Nishimura

Managing Executive Officer Toshiyuki Negishi Investor Information

Managing Executive Officer Wilm Uhlenbecker Stock Listing Tokyo Stock Exchange, First Section (Code: 7238)

Managing Executive Officer Hiroshi Idei Common Stock Authorized: 440,000,000 Shares Issued: 135,992,343 Shares

Executive Officer Kiyoshi Tanaka Principal No. of shares held % of issued Shareholders Shareholders (1,000 shares) common stock Representative Director & Member of Member of the Board Executive Officer Takao Watanabe Toyota Motor Corporation 15,495 11.4 the Board Kunio Ito*1 Isuzu Motors Limited 12,111 8.9 Kazuo Matsumoto Executive Officer Keiichi Oka Japan Trustee Services Bank, Ltd. (trust account) 3,815 2.8 Aisin Seiki Co., Ltd. 3,133 2.3 Executive Officer Takeshi Kashimura Akebono Brake SEIWAKON Employee’s Shareholding Association 2,436 1.8 Marubeni-Itochu Steel Inc. 2,000 1.5 Executive Officer Seiya Odaka KYB Corporation 2,000 1.5

SECOM CO., LTD. 2,000 1.5 Corporate Information STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST, BOSTON SSBTC A/C UK Executive Officer Takunobu Okada 1,805 1.3 LONDON BRANCH CLIENTS- UNITED KINGDOM Japan Trustee Services Bank, Ltd. (trust account 5) 1,774 1.3 Note: The Company’s holding of treasury stock is not included in the above list of principal shareholders. Advisors (As of June 15, 2018) Transfer Agent & Mitsubishi UFJ Trust and Banking Corporation, Corporate Agency Department Executive Advisor J. W. Chai Registrar Mail address: Shin-Tokyo Post Office post office box No.29 137-8081, JAPAN

Annual Shareholders’ Member of the Board Member of the Board Honorary Senior Advisor Hidemitsu Kuwano The annual shareholders’ general meeting is normally held in June each year. Takuo Tsurushima*1 Ken Okazaki *1 General Meeting Executive Technical Advisor / Shunji Yokoo *1 Outside directors in accordance with Article 2-15 of the Corporation Law Assistant to the President & CEO Independent Auditor Deloitte Touche Tohmatsu LLC

Special Assistant to the President Shareholders Category No. of shareholders No. of shares held (100 shares) Sachiyuki Ishige & CEO Japanese Individuals & Others 19,171 501,918 Audit & Supervisory Board (As of June 15, 2018) Japanese Government & Municipal Corporations 0 0 Technical Advisor Takashi Kudo Financial Institutions (Excluding Securities Firms) 32 204,202 Audit & Supervisory Board Member Securities Firms 50 40,505 Hiroshi Ikegami (Standing) Technical Advisor Toshifumi Maehara Other Japanese Corporations 161 482,240 Non-Japanese Shareholders & Others 155 130,037 Audit & Supervisory Board Member TOTAL 19,569 1,358,902 Tatsuya Shinoda Technical Advisor Takashi Kunimi (Standing) No. of Shares in less than units of 100 – 102,143 shares Advisor Masahiro Miyamoto Note: The number of treasury shares as of March 31, 2018 was 2,752,644. Of these, 2,752.6 thousand shares are included under “Japanese individuals & others,” and Audit & Supervisory Board Member Tomohiro Katayama*2 44 shares are included under “No. of shares in less than units of 100.” The number of shares in the name of the Japan Securities Depository Center as of March 31, 2018 is 3,500. Of these, 3.5 thousand shares are included under “Other Advisor Seiji Onoda Japanese corporations.” 2 Audit & Supervisory Board Member Hitoshi Takahashi* The number of treasury shares indicated in the shareholders’ list is 2,752,644, whereas the actual number as of March 31, 2018 was 2,751,644.

2 Audit & Supervisory Board Member Yuji Itagaki* Percentage of Shares Held by Shareholder Non-Japanese Category shareholders & others *2 Outside members in accordance with Article 2-16 of the Corporation Law 9.57% Japanese individuals & others Other Japanese 36.93% corporations 35.49%

Financial institutions Securities firms (excluding securities firms) 2.98% 15.03%

45 AKEBONO REPORT 2018 AKEBONO REPORT 2018 46 Corporate Information Akebono Locations

Akebono Group (Japan) (As of June 2018) Akebono Group (Overseas) (As of June 2018)

Akebono Brake Industry Co., Ltd. Akebono Affiliates North America Asia

Global Head Office Akebono Advanced Engineering Co., Ltd. Akebono Brake Corporation [ABC] Akebono Brake (Thailand) Co., Ltd. [AKBT] 19-5 Nihonbashi Koami-cho, Chuo-ku, Tokyo 103-8534, Japan (R&D of high performance brake systems) (North American Head Office) (Manufacture and sales of disc brakes and disc brake pads) 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan 34385 W. Twelve Mile Road, Farmington Hills, MI 48331, U.S.A. 700/880 Amata Nakorn Industrial Estate Moo.1, Tambol Panthong Amphur Ai-City (Headquarters) Panthong, Chonburi 20160, Thailand Akebono Brake Yamagata Manufacturing Co., Ltd. Akebono Engineering Center [AEC] 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan A&M Casting (Thailand) Co., Ltd. [A&M] (Manufacture of disc brake pads, clutch facings and other brake components) (R&D) 161-3 Chuo Kogyo Danchi, Sagae City, Yamagata 991-0061, Japan 34385 W. Twelve Mile Road, Farmington Hills, MI 48331, U.S.A. (Manufacture and sales of cast-iron automotive components) Chubu Office Ratchaburi Industrial Estate 155/63 Moo.4, T.Chet Samian, A.Photharam, 3-13 Obayashi-cho, Toyota City, Aichi 473-0902, Japan Akebono Brake Corporation (Elizabethtown) [ABC] Ratchaburi 70120, Thailand Akebono Brake Fukushima Manufacturing Co., Ltd. (North American Co-head Office, sales and marketing of brake components) Sapporo Sales Office (Manufacture of drum brake linings, disc brake pads, clutch facings and other 310 Ring Road, Elizabethtown, KY 42701, U.S.A. Akebono Corporation (Guangzhou) brake components) 3-2-66 Kitaokadama Sanjo, Higashi-ku, Sapporo City, Hokkaido 007-0883, (Manufacture and sales of disc brakes and drum brakes) 10 Aza-Shinjuku, Oaza-Narita, Koori-machi, Date-gun, Fukushima 969-1652, Akebono Brake, Elizabethtown Plant [ABE] No. 8 Hefeng 1st Street, Yonghe Economic Zone of Guangzhou Development Japan Japan (Manufacture and sales of disc brakes, drum brakes and disc brake pads) District, Guangzhou, China 511356 300 Ring Road, Elizabethtown, KY 42701, U.S.A. Sendai Sales Office Akebono Brake Iwatsuki Manufacturing Co., Ltd. Akebono Corporation (Suzhou) 3-7-13 Hinode-machi, Miyagino-ku, Sendai City, Miyagi 983-0035, Japan (Manufacture of disc brakes, drum brakes, bullet train disc brakes and other Akebono Brake, Glasgow Plant [ABG] (Manufacture and sales of disc brake pads) brake components) (Manufacture and sales of disc brakes and disc brake pads) TingLan Road No. 168 ChangYang Street, Industrial Park, Suzhou, China Kanto Sales Office 1190 Oaza-Kanamuro, Iwatsuki-ku, Saitama City, Saitama 339-8601, Japan 1765 Cleveland Avenue, Glasgow, KY 42141, U.S.A. 215021 5-4-71 Higashi, Hanyu City, Saitama 348-8501, Japan Akebono Brake Sanyo Manufacturing Co., Ltd. Akebono Brake, Clarksville Plant [ABCT] PT. Akebono Brake Astra Indonesia [AAIJ] Tokyo Metropolitan Sales Office (Manufacture of drum brakes and wheel cylinders) (Manufacture and sales of disc brakes, disc rotors, drum brakes, corner (Manufacture and sales of disc brakes, drum brakes, pads, linings, master cylinders and other brake components) 19-5 Nihonbashi Koami-cho, Chuo-ku, Tokyo 103-8534, Japan 1966-8 Kushiro, Soja City, Okayama 710-1201, Japan modules and other brake components) 780 International Boulevard, Clarksville, TN 37040, U.S.A. Jl. Pegangsaan Dua Blok A1, Km. 1, 6 Kelapa Gading, Jakarta, 14250, Indonesia Osaka Sales Office Alocs Corporation Akebono Brake, Columbia Plant [ABCS] 2-17 Enoki-cho, Suita City, Osaka 564-0053, Japan (Logistics and packing) Akebono Brake Astra Vietnam Co., Ltd. [AAVH] 255-1 Ainohara, Iwatsuki-ku, Saitama City, Saitama 339-0071, Japan (Manufacture and sales of disc brakes, corner modules, castings and other brake components) (Manufacture and sales of disc brakes and master cylinders for motorcycles) Hiroshima Sales Office 201 Metropolitan Drive, West Columbia, SC 29170, U.S.A. Plot F-3, Thang Long Industrial Park II, Lieu Xa Commune, Yen My District, Akebono Research & Development Centre Ltd. Hung Yen Province, Vietnam 4-1-13 Yanonishi, Aki-ku, Hiroshima City, Hiroshima 736-0085, Japan (R&D) Akebono Brake Mexico S.A. de C.V. [ABM] 5-4-71 Higashi, Hanyu City, Saitama 348-8511, Japan Corporate Information Fukuoka Sales Office (Manufacture and sales of disc brakes, drum brakes and other brake components) 6-12-41 Itazuke, Hakata-ku, Fukuoka City, Fukuoka 812-0888, Japan Akebono 123 Co., Ltd. (Special subsidiary company) Av. Mineral de Valenciana 186 Fracc, Industrial Santa Fe II, Guanajuato (Cleaning-related services, packing, and printing of business cards) Puerto Interior, Silao, Guanajuato, C.P. 36275, Mexico Tatebayashi Foundry 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan (Casting of brake components) 6012 Aza-Tobu Kogyo Danchi, Oshima-cho, Tatebayashi City, Gunma 374- Akebono Kids Care Co., Ltd. 0001, Japan (Management of nursery school) Europe 5-8-4 Higahi, Hanyu City, Saitama 348-0052, Japan Ai-Ring Akebono Europe S.A.S. [AESA (Gonesse)] (Testing and evaluation) NeoStreet Inc. Akebono Advanced Engineering (UK) Ltd. [AAE] 41-42 Aza-Osaruda, Uwadaira, Ogawa-machi, Iwaki City, Fukushima 979- (Sales and R&D of brake components) (Web shop) (R&D of high performance brake systems) 3112, Japan 6 Avenue Pierre Salvi BP 90111, 95505 Gonesse Cedex, France 5-4-71 Higashi, Hanyu City, Saitama 348-8501, Japan 415 Wharfedale Road, Winnersh Triangle, Wokingham, Berkshire RG41 5RA, United Kingdom Ai-Museum (Brake museum) Akebono Europe S.A.S. Arras Plant [AESA (Arras)] 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan (Manufacture and sales of disc brake pads) Akebono Brake Slovakia s.r.o. [ABSK] Site Artoipôle, 244 Allée d’Espagne, 62118 (Manufacture and sales of high performance disc brakes) Ai-Village (Global training center) Monchy-le-Preux, France Bratislavska 581 911 05 Trencin, Slovak Republic 5-11-26 Higashi, Hanyu City, Saitama 348-0052, Japan Akebono Europe GmbH [AEG] (Sales, marketing and R&D of brake components) Auf der Heide 11-13, 65553 Limburg-Dietkirchen, Germany

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