AKEBONO REPORT 2016

AKEBONO REPORT 2016

AKEBONO REPORT 2016 Issued August 2016

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/

E-mail [email protected] 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). Akebono’s Journey About Akebono About Akebono

akebono’s Corporate Mission Brand Slogan Brand Statement Since 1929 – Through “Friction and Vibration, their Absolute safety; Since 1929, akebono has brought assurance and Control and Analysis,”we are determined Unparalleled control peace of mind to our customers and end-users to protect, grow and support every everywhere as a global industry leader in brake The Dawn of the Japanese Automobile Industry individual life design and production. We take pride in our history of achieving safety without compromise, and continue to pursue new The Akebono Group was founded as Japan’s first brake lining (friction material) manufacturer in January 1929, standards of perfection with innovation. just at the dawn of the country’s motorization. Looking to the future, we are inspired by the prospect of delighting and satisfying our customers, and never Since then, we have striven to fulfill our mission of providing customers with reliability and safety. A look cease in the challenge to succeed in this goal. back at our more than 87 years of history shows that three major phases of transition have marked our Absolute safety; Unparalleled control. transformation from automotive brake lining producer to comprehensive brake manufacturer. Putting a smile on people’s faces all over the world.

1960 1986 2010 First phase of Second phase of Third phase of transition transition transition

Launched as a comprehensive brake manufacturer First full-scale overseas expansion Acceleration of globalization

2000 Starts using (Billions of yen) the new 250 corporate logo 2007 Participates in the F1 with 1982 providing brake components for AD Type disc brakes win the the Vodafone McLaren Mercedes 1958 1982 Japan Society of team Mechanical Engineers Medal Akebono resin brake shoes and disc brake linings are used on 200 Japanese National 1960 Railways’ Kodama Signs brake-related technical express trains assistance agreement with a global brake manufacturer Bendix 2001 Corporation in the United States New corporate headquarters, 1986 the Akebono Crystal Wing 2014 Establishes Ambrake (ACW) is completed in Establishes Akebono Corporation as a joint Hanyu City, Saitama Brake Slovakia s.r.o. venture with General Prefecture in Slovakia 150 Motors in the United States

100 2016 Receives the Fiscal 2015 1929 Japan Society of Mechanical Engineers Founded as Japan’s first brake Medal for New lining manufacturer at the dawn of Technology in the Japan’s motorization 1996 Acquires equity interest in “development and PT. Tri Dharma Wisesa in 1998 2004 2009 mass production of high-performance Indonesia (currently PT. Establishes Akebono Arras Chinese local subsidiaries Signs a contract with Robert Bosch brakes for road cars” Akebono Brake Astra S.A. production facility in Akebono Corporation (Guang- GmbH to acquire its North Indonesia) France (currently Akebono zhou) and Akebono Corporation American brake business Net sales trend First step to establish a Europe S.A.S. [Arras]) (Suzhou) are established Accelerates globalization from 2010 business foundation in Asia

1 AKEBONO REPORT 2016 AKEBONO REPORT 2016 2 A About Akebono About Akebono

Akebono 2016 – the Akebono Group Today

A A

Akebono’s Business Fields B P OE1

P A 20 Since our foundation in 1929, we have One in every five vehicles worldwide have provided safety and reliability in OEM share brake pads made by Akebono numerous fields R 20% O A A A 20 2 *1 Equipped on new vehicles *2 Akebono research 43%

Highest net sales since our foundation N E 000 P 21 B Business operations in 13 countries

Net sales by region A 2

Number of employees by region 0 Europe Asia 22 4% 14% Japan O N A 0 27% E 2 A Expansion A 21 mainly in North N A E America. Europe A North America 201 and Asia follow 0 55%

3 AKEBONO REPORT 2016 AKEBONO REPORT 2016 4 About Akebono Editorial Policy We compiled the AKEBONO REPORT 2016 based on “integrated thinking,” a concept proposed by the International Integrated Reporting Council (IIRC). In doing so, we have focused on actual examples of the Akebono Group’s operations, the kind of growth it aims to achieve and how it will fulfill its akebono’s Corporate Mission commitment to delivering safety and peace of mind through brake products. To effectively convey above mentioned content to our stakeholders, we Business Plan Midterm prepared both printed booklet and web editions of the AKEBONO REPORT 2016. In the printed booklet, we put greater emphasis on reader-friendliness T A while narrowing the content to matters that we want to communicate to a broader range of stakeholders. We hope that readers wanting further details on topics presented in the printed booklet will visit our website and gain a deeper understanding of our initiatives. It is our hope that the aforementioned articles help readers understand Akebono’s determination to lead the way in realizing unparalleled competitive- Contents Top Message ness as a specialized manufacturer with a lean organization and independent status. In preparing this edition, we referred to the Guiding Principles set forth by the IIRC as well as the Global Reporting Initiative Sustainability Reporting About Akebono 1 Guidelines (G4) and ISO 26000. Akebono’s Journey / Akebono in Figures Reporting Period akebono’s Declaration for the 21st Century This report covers the annual results data for the 2015 fiscal year (April 1, 2015 Midterm Business Plan Financial Highlights Financial and Non- to March 31, 2016). In addition, the report contains references to some ongoing activities undertaken after the latter date to provide readers with a better Top Message understanding of latest status of initiatives. 21 Financial and Non-Financial 11 Organizations Highlights Japan: Akebono Brake Industry (including development, manufacturing, Value Creation Model production engineering, purchasing, quality assurance, automotive sales, aftermarket sales departments and administrative departments as well as Value Creation Model 1 Tatebayashi Foundry), domestic Group companies including four production Value Creation based on Our Corpo- 1 R plants (Yamagata, Fukushima, Iwatsuki and Sanyo), Akebono Brake Industrial rate Mission / Markets and Products Machinery & Rolling Stock Component Sales, Alocs Corporation, Akebono 2 A Research & Development Centre, APS and Akebono 123, and Akebono Review of Operations 21 Advanced Engineering; Overseas: ABC, AEC, ABE, ABG, ABCT and ABCS Japan / North America / Europe / Asia / (U.S.); ABM (Mexico); AENV (Belgium); AESA, AASA and AECE (France); AEG R&D and Quality Control Review of Operations A (Germany); AAE (UK); ABSK (Slovakia); AKBT, A&M (Thailand); two Chinese subsidiaries (Guangzhou and Suzhou); AAIJ (Indonesia); and AAVH (Vietnam). Initiatives for Society and 2 Please refer to “Akebono Locations” on pages 45 to 46 for the formal names of Environment those organizations that are presented in the above listing as abbreviations. Environment / Purchasing / A Human Resources and Diversity / Definition of Fiscal Year Workplace Safety and Health / To present content in a consistent and easy-to-follow manner, in this report, the Social Contribution and Environment Initiatives for Society period referred to as the fiscal year represents the fiscal period from April 1 to March 31 of the next year. The financial statements are also presented on a Corporate Governance fiscal year basis. Economic Report Consolidated Balance Sheets / The AKEBONO REPORT 2016 booklet presents financial and non-financial information Consolidated Statements of Income and on the Akebono Group’s fiscal 2015 initiatives with a focus on readability. Corporate Governance For detailed data on each initiative, please visit our website. Comprehensive Income / Consolidated Statements of Changes in Corporate Goals Net Assets (Summary) / Website Consolidated Statements of Cash Flows Detailed data on each initiative is disclosed in our website. Corporate Information

1 Directors and Officers / Company Economic Report Booklet Outline / Shareholder and Investor 2 T Matters related to priority themes are concisely discussed in the booklet. Information / Akebono Locations E

Cautionary Statement Concerning Outlook Publication date : August 2016 Current plans, projections, strategies, business performance and (Last publication: August 2015;

other statements reported herein that are not historic facts represent Corporate Information next scheduled publication: August 2017) forecasts made under Akebono’s assumptions and views based on Inquiries : Akebono Brake Industry Co., Ltd. information available at the time this report was prepared. These Corporate Communications Office statements, therefore, are exposed to risks and uncertainties, Tel : +81 (0) 3-3668-5183 including but not limited to those associated with the economic Fax : +81 (0) 3-5695-7391 climate surrounding Akebono’s business domain, trends in market Website : The AKEBONO REPORT 2016 web edition is available on our competition, exchange rates, tax systems and various institutions. website. Please note that actual business performance may differ significantly URL : http://www.akebono-brake.com from Akebono’s forecast due to various factors.

5 AKEBONO REPORT 2016 AKEBONO REPORT 2016 6 Midterm Business Plan

akebono New Frontier 30 – 2016 Business Plan Midterm A N 0 2016 N02016 201 1 N A 2 E B A

2013-2015 2016-2018 1 Rebuilding the North American Operations 3 Expanding High Performance Brake Business N0201 B P New aNF30-2016 Midterm Business Plan 0 and Recreating European Operations R - Strengthen high performance brake development structure Building a foundation By introducing product-based Long-term Goals - Strengthened management and centered in Europe for achieving Global30 business units and deploying them A 0 Initiative 1 organizational improvements led globally, we aim to take on new - Strengthen integrated production of high performance T Fiscal 2020 Goals R AB by Akebono Brake Corporation fields and rebuild our management aluminum caliper brakes at Slovakia Plant O 10 A foundations N A E A Absolute commitment to differentiated products, Initiative 2 - Necessary adjustments to sales R&D light weight, high performance, enhanced design and purchasing prices Strategy and high quality

- Utilization of Mexico Plant Expand on technologies gained through business aNF30-2016 Fundamental Strategies Initiative 3 - Strengthen foundations with a Sales in Europe, especially with premium German return to fundamentals in terms Strategy automakers, to develop and increase sales of high Shift priority from achieving sales targets to sustainable growth of safety, quality and lead times performance products to other companies

Establishing Global Networks Based P B B R N A 2 1 on Product-based Business Units Europe Return to a sound 2 E - Establish product-based business units responsible for sales, financial condition Germany R&D, purchasing, production, manufacturing engineering and North America Japan 3 E other functions Sales and R&D E - Establish a global strategy through enhanced regional United States (calipers) Slovakia (calipers) Japan (pads and calipers) marketing functions Production and R&D Production Production and R&D - Carry out a global product strategy based on the concept of France (pads) standardization and topping (S+t) Production and R&D - Rationalization effects achieved through global purchasing T activities N02016 201 Business Main products A B 2016 201 201 High performance disc brakes, High Performance 281.3 271.3 265.0 255.0 brake pads Return to a Sound Financial Condition

N Disc brakes, drum brakes, Initiative 1 APE Annual CAPEX Foundation Brakes 16 amount ¥15.0 billion mechanical parts, etc. 201 maximum

Infrastructure Products for rolling stock, Initiative 2 A 8.0 10.0 and Mobility industrial machinery and sensors 1 12% R A 201 by Fiscal 2018 O 1.6 Friction Brake pads, lining and other friction materials Initiative 3 Reduce R&D (3.8) R costs to ¥10.0 billion P R R by Fiscal 2018 Brake pads, linings and Aftermarket 5.0 other aftermarket parts 0.2 3.0 *Selling, general and administrative expenses P (19.5)

E 116 12 11 166

N E 2 0 2

26 1 20

7 AKEBONO REPORT 2016 AKEBONO REPORT 2016 8 Top Message

We Take Our Performance Results Seriously, and to Achieve Sustainable Growth, Will Devote All of Our Efforts to Executing Our New Midterm Business Plan

In addition, in our endeavor to enter a new field five product-specific business units, each with its own by providing high-performance brakes to European sales, R&D, purchasing , production and manufacturing manufacturers, our products were so highly regarded engineering capabilities, and by formulating a global that we won more orders than anticipated. Because strategy not limited by region, we will enhance product- Top Message we had expected to launch production on a small scale, by-product profitability and strengthen our global we were unable to build out our production capacity in competitiveness. While this represents a major challenge Europe in time to handle these large-scale orders, forcing for Akebono, we believe that restructuring our business us to take on production at our plant in Columbia, South this way is imperative. Carolina, with a resulting increase in transportation costs As for the third goal of expanding the high as products were shipped from North America to Europe. performance brake business and recreating European operations, ramping the Slovakia Plant up to full akebono New Frontier 30 – 2016 Midterm production will enable us to create an integrated structure Business Plan for producing and supplying disc brakes in Europe. Given these results, and to return Akebono once again By applying the technology we have accumulated in to a path to growth, we have established a new midterm the development and production of high-performance business plan, akebono New Frontier 30 – 2016, covering the brakes to brakes for other vehicles, we hope to further three years through fiscal 2018. The plan aims to break away differentiate our products. from an emphasis on achieving sales targets, and focus on rebuilding our management foundations for the future. Leveraging Our Unique Position as a Small, Goals of the new midterm plan include “rebuilding Specialized, Independent Manufacturing Company the North American operations”, “establishing global We will work to rebuild our business as quickly as networks based on product-based business units”, possible and achieve sustainable growth, by devoting all and “expanding high performance brake business and of our energies to creating a new structure in response to recreating European operations”. By achieving these market changes, and to implementing strategies designed goals, Akebono aims to return the company to a sound to enhance corporate value. The entire group is working Review of the akebono New Frontier 30 - 2013 Major Losses in North America financial condition and facilitate sustainable growth. together to quickly return to be profitable and earn back Midterm Business Plan In response to the changing economic environment in North In terms of rebuilding our North American operations, the trust of our stakeholders. To accomplish this, we “akebono New Frontier 30 - 2013” midterm business America since 2005, Akebono has worked to strengthen we strengthened our management structure with local must take full advantage of our unique position as a small, plan, covering the three year period from fiscal 2013, was the competitiveness of its North American operations by leadership, first by welcoming a new CEO with experience specialized, independent manufacturing company. By concluded at the end of March, 2016. However, due primarily restructuring the business. In 2008, we scaled down our in corporate turnarounds to Akebono Brake Corporation taking advantage of the swift decision-making capability to the continuing impact of production-related problems production capacity in North America. In 2009, we acquired in April 2016, and then by hiring a new CFO as well. With that comes with our small organization. We will leverage that arose in our North American operations in 2014, this two North American manufacturing locations from Robert the assistance of outside consultants, we also began our deep, specialized knowledge of friction and vibration year marked the second consecutive period of consolidated Bosch LLC, which was, at that time, reducing its production working to understand a wide range of management and as we take on the challenge of further expanding the losses, and most unfortunately resulted in a failure to meet capacity in response to rapid sales declines caused by a financial data and identify issues. Going forward, we will range of our business. We will attempt to break into new our quantitative targets by a significant margin. US financial crisis. This acquisition transformed Akebono tie this information into efforts to optimize our production fields by taking advantage of the freedom that comes Aside from those quantitative targets, however, into a truly global company. While the acquisition price for sites, reduce SG&A expenses, develop human resources with being independent, creating something from nothing we made progress with three main goals. In “making the assets fairly reflected certain loss-making products management and rationalize personnel. through a focus on manufacturing. And because human a difference with next-generation technologies,” we at those plants, Akebono focused on quickly improving Establishing global networks based on product-based resources are so important to the company, we will work began providing brakes to European manufacturers of profitability by taking orders for new products at more business units essentially means shifting from a region- to develop truly global personnel. high-performance vehicles. Another achievement was favorable pricing. Just as we had proceeded to rebuild the centric to a product-centric business. By establishing the creation of an organization for developing electro- business by scaling down production capacity and acquiring With an unwavering commitment to delivering safety and mechanical brakes. Under the strategy of “continuous new business, around 2013, the economic recovery in peace of mind, Akebono is poised to take on the challenge drastic cost reduction and its global implementation,” we North America accelerated, and with that recovery came of a new phase in global management. We ask for your successfully shifted drum brake production from Iwatsuki a rapid increase in automobile sales, leaving us with more understanding and ongoing support with those efforts. Manufacturing to Sanyo Manufacturing. Overseas, orders than our production capacity could handle. Because June 2016 however, we were unable to achieve our targets due we were forced to move to a round-the-clock, three-shift to production problems in North America. In terms of labor system (operating seven days a week, 24 hours a “acceleration of globalization encompassing Japan, day) to meet orders, labor costs increased significantly. North America, Europe and Asia,” in addition to plants in Furthermore, continuous operation of equipment resulted in Mexico and Vietnam, in 2015 we established and began more breakdowns, and to meet delivery deadlines, products production at a new high performance brake plant in had to be shipped by air, resulting in additional logistics Slovakia. We expect to see profits improve as the plant costs. The convergence of these and multiple other issues ramps up to full production going forward. resulted in significant operating losses for fiscal 2015. Hisataka Nobumoto, President and CEO

9 AKEBONO REPORT 2016 AKEBONO REPORT 2016 10 Financial and Non-Financial Highlights Akebono Brake Industry Co., Ltd. and Consolidated Subsidiaries Years Ended March 31

Billions of yen Billions of yen 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Net sales ¥ 142.3 ¥ 173.2 ¥ 184.7 ¥ 159.6 ¥ 130.6 ¥ 216.6 ¥ 209.6 ¥ 206.0 ¥ 236.7 ¥ 254.2 ¥ 281.3 Gross profit 30.9 35.1 36.6 14.6 19.8 30.4 24.9 23.5 26.8 24.3 16.5 Ratio of gross profit to sales (%) 21.7 20.3 19.8 9.2 15.2 14.0 11.9 11.4 11.3 9.6 5.9 Selling, general and administrative expenses 19.1 21.3 21.4 20.9 15.1 19.0 21.1 19.2 18.7 20.3 20.2 Ratio of selling, general and administrative expenses to sales (%) 13.5 12.3 11.6 13.1 11.6 8.8 10.1 9.3 7.9 8.0 7.2

Operating income (loss) 11.7 13.9 15.2 (6.3) 4.7 11.4 3.8 4.3 8.1 4.0 (3.8) Ratio of operating income (loss) to sales (%) 8.2 8.0 8.2 (3.9) 3.6 5.3 1.8 2.1 3.4 1.6 (1.3) Profit (loss) attributable to owners of parent 5.9 6.6 6.6 (16.3) 2.1 5.3 (3.2) 0.5 2.4 (6.1) (19.5) Ratio of net income (loss) to sales (%) 4.1 3.8 3.6 (10.2) 1.6 2.4 (1.5) 0.3 1.0 (2.4) (6.9) Return on assets (ROA) (%) 4.3 4.3 4.2 (10.2) 1.3 3.0 (1.8) 0.3 1.3 (2.9) (9.0)

Return on equity (ROE) (%) 17.2 15.0 13.7 (42.2) 5.8 11.6 (7.1) 1.2 4.9 (11.5) (50.1) Financial Highlights Financial and Non-

Capital investment 8.2 8.9 14.9 17.8 5.4 5.1 14.3 19.8 21.8 20.8 22.7 Depreciation and amortization 7.6 9.3 9.9 11.4 10.0 9.8 9.8 8.6 8.9 10.8 13.1

Cash flow from operating activities 12.2 10.8 15.1 4.2 3.2 7.4 2.9 7.6 18.9 10.2 7.5 Cash flow from investing activities (11.9) (9.1) (16.0) (13.6) (13.4) (8.6) (23.8) (4.1) (20.3) (17.7) (10.1) Cash flow from financing activities (3.2) (3.3) 0.1 38.6 (0.0) 18.2 1.4 (2.0) (6.2) 5.8 11.2

Thousands Thousands Number of outstanding shares at the end of period (including treasury stock) 110,816 110,992 110,992 110,992 135,992 135,992 135,992 135,992 135,992 135,992 135,992

Yen Yen Net income (loss) per share—basic ¥ 56.60 ¥ 61.86 ¥ 61.85 ¥ (151.65) ¥ 17.80 ¥ 39.75 ¥ (24.25) ¥ 3.90 ¥ 18.24 ¥ (45.83) ¥ (146.31) Cash dividends per share 6.00 6.00 10.00 5.00 5.00 10.00 10.00 10.00 10.00 10.00 –

Billions of yen Billions of yen Total assets ¥ 150.1 ¥ 155.6 ¥ 163.3 ¥ 155.4 ¥ 164.1 ¥ 186.0 ¥ 181.0 ¥ 186.6 ¥ 199.2 ¥ 225.9 ¥ 204.4 Net interest-bearing debt 40.3 40.2 40.2 47.7 39.5 36.9 52.4 68.1 76.2 95.8 99.4 Net debt-equity ratio 1.0 0.8 0.8 1.7 0.9 0.8 1.2 1.46 1.45 1.78 4.17 Net equity (Equity minus minority interests minus stock subscription rights) 41.0 47.3 49.8 27.4 43.8 47.1 43.3 46.5 52.7 53.9 23.8 Net equity ratio (%) 27.3 30.4 30.5 17.6 26.7 25.4 23.9 24.9 26.4 23.9 11.6

Net sales R&D expenses* and ratio of Capital investment and ratio of Number of associates and ratio CO2 emissions and CO2 Water resource usage and water R&D expenses to net sales CAPEX to net sales of overseas associates emissions per net sales resource usage per net 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) 300 15 6.0 30 12.0 10,000 100 300 300 200 200 281.3 9,238 8,828 262 272 266 263 254.2 4.8 9.6 8,279 8,505 249 236.7 4.6 4.2 4.4 4.4 9.2 8.1 8,000 7,800 80 209.6 8.2 150 150 206.0 65 157 200 10 11.7 4.0 20 21.8 8.0 61 63 200 200 149 10.5 11.9 20.8 60 141 140 138 10.0 6.8 19.8 22.7 6,000 57 60 9.2 127 100 100 119 115 14.3 4,000 40 105 6 94 6 100 5 2.0 10 4.0 100 100 56 50 50 2,000 20

0 0 0 0 0 0 0 0 0 0 0 2011 2012 201 201 201 2011 2012 201 201 201 2011 2012 201 201 201 2011 2012 201 201 201 2011 2012 201 201 201 2011 2012 201 201 201 (FY) (FY) (FY) (FY) (FY) (FY)

R&D expenses (left axis) Capital investment (left axis) Number of associates (left axis) Total CO2 emission (left axis) Water resource usage (left axis) Ratio of R&D expenses to net sales Ratio of CAPEX to net sales (right axis) Ratio of overseas associates (right axis) CO2 emissions per net sales (right axis) Water resource usage per net sales (right axis) (right axis) *Note: Includes expenses arising from daily operations aimed at achieving improvements

11 AKEBONO REPORT 2016 AKEBONO REPORT 2016 12 Value Creation Model O

Sales Ratio by Product (Fiscal 2015) Sales Ratio by Main Customers (Fiscal 2015)

As an Independent Manufacturer Specialized in Brakes Mazda % Products for industrial 2 machinery/rolling stock % Other 8 % 4 Daihatsu 2% Yamaha 2% GM A A Other automotive Disc brakes Replacement products 3% Industrial machinery 27% parts Net sales 43% and rolling stock brakes 3% Net sales T 23% Mitsubishi 4% ¥281.3 billion ¥281.3 billion Isuzu 5%

Nissan Disc brake Fiat Chrysler 6% 14% pads Drum brakes Honda 6% 20% 10% Ford 7% Toyota11%

Globalization

OEM Products (for New Cars) Aftermarket Products

High-performance vehicles Formula One Value Creation Model racing Passenger High High cars Brake shoes Brake pads Brake linings Brake pads and linings quality performance

T A

Disc brakes Drum brakes Brake calipers Wheel cylinders Reliable Durable Motorcycles Commercial vehicles

Rolling stock Industrial machinery Sensor clusters Vehicle behavior detection IT tilt-measurement (acceleration sensor + angular velocity sensor) device for rolling stock system

Development of Next-Generation Technologies

Akebono’s Corporate Mission Core Technology and Seamless Application of Technologies Main Products

Value Creation based on Working in Diverse and Numerous Fields A Solid Track Record in OEM Aftermarket Parts Developed

Our Corporate Mission The development and manufacture of automotive brake-related products is Our main OEM customers include Toyota, Nissan, with Expertise In 1999, Akebono established “akebono’s Corporate Akebono’s main business. Our product lineup ranges from passenger cars Honda, Mitsubishi, Isuzu and all other domestic Akebono provides customers all over the world Mission” as a guideline that indicates the path that through to high-performance vehicles. Moreover, we provide products for various automakers as well as overseas automakers, with aftermarket products designed in the company should take. “Friction and Vibration, motorsports, including Formula One—the most prestigious motorsport including GM, Ford, Fiat Chrysler, Porsche and accordance with their needs, backed by the their Control and Analysis” is Akebono’s original category—with the aim of enhancing our technological strengths. We also Mercedes. Currently, Akebono’s share of the solid technologies and quality that has theme. Guided by the Corporate Mission, Akebono produce brakes for motorcycles, rolling stock and industrial machinery, drawing domestic OEM market for automotive disc brake developed through diverse OEM operations will continue to create value and contribute to the on our core technologies cultivated in brake development. We supply sensor pads stands at approximately 43%. with the world’s leading automakers. development of a sustainable society. products that leverage our vibration analysis technologies, and our goal now is to expand into the fields of social infrastructure and mobility.

13 AKEBONO REPORT 2016 AKEBONO REPORT 2016 14 COLUMN Value Creation Model P

Basic Principles of Brakes Providing Safety and Peace of Mind A 0 A A

B T B

It is a device that utilizes friction to cause a vehicle Each of the four wheels on an automobile is to decelerate and/or stop by converting kinetic equipped with a brake. Depending on the usage and energy into heat energy. Sudden braking at 100 characteristics of the car, the wheels may have disc km/h generates enough heat to raise the tempera- brakes or drum brakes. Disc brakes have the ture of two liters of water from 0°C to boiling capability to stop a car in a stable manner even at a (100°C). Brakes are relatively small compared with high speed, while drum brakes have the capability to other major automobile components, and the space stop heavier vehicles. A vehicle can be equipped where they are mounted is restricted. Complex with different combinations of disc and drum brakes. controls are required to absorb the output power of Some vehicles use disc brakes on the front and rear the engine and brake safely. Brakes are considered wheels, while others use disc brakes on the front

an important safety component in an automobile and drum brakes on the rear. Value Creation Model because of their key role in ensuring vehicle safety.

Disc Brakes Drum Brakes Products for Automobiles

Brake pads clamp the rotor to stop its rotation Lining is pushed out to drum from the inside to stop its rotation Piston 3 2 2 (application Drum mechanism) 3 Disc brake Drum brake Pad

1 Rotor 1 ン Hydraulic piston Hydraulic piston 機 Pad (friction material) グ Lining Lining Piston (friction material) Products for Motorcycles (application mechanism)

Drum (rotor) Rotor Main Parts of Disc Brakes Main Components of Drum Brakes

Disc rotor Brake shoe

Pad Brake lining

Piston Piston seal Piston boot Return spring Shim Piston Wheel cylinder Pad Bleeder screw Boot ring Disc brake caliper Master cylinder Bleeder screw Drum

Back plate Brake shoe Mounting bracket

Guide pin Bleeder screw cap

Cylinder body Anchor plate Drum Parking brake lever Pad clip Pin boot Lock pin Brake lining Adjuster

Disc brake

15 AKEBONO REPORT 2016 AKEBONO REPORT 2016 16 Value Creation Model P COLUMN

Motorsports Challenge A Products for Rolling Stock

B R Formula One (F1) Akebono has been supplying brake systems to the McLaren team to support their participation in the world’s most prestigious motorsport – Formula One racing since 2007. In this demanding environment where rotor temperatures can soar to 800°C when braking to enter a corner, we strive to create brakes that always deliver reliable and stable performance by applying exacting standards in all aspects of our products, including structure, materials, and surface processing. Formula One (F1)

Bullet train disc brake Bullet train disc brake lining FIA World Endurance Championship (WEC) Akebono provides brake calipers for the cars of the TOYOTA GAZOO Racing team, which is participating in the World Endurance Championship series, including the Le Mans 24-hour race. In 2016, our brake calipers were used on the new model Value Creation Model TS050 HYBRID. FIA World Endurance Championship (WEC) Nürburgring 24 Hour Endurance Race

Monorail disc brake The Nürburgring 24 Hour Endurance race is said to be the PICK UP toughest production car race in the world. The race was held from May 28 to 29, 2016, and Akebono supplied brake calipers Contribution in Railway Field and brake pads for the class-champion LEXUS RC F of TOYOTA GAZOO Racing with TOM’S team. Akebono has provided the brakes for many Japanese bullet trains, from the first generation Type 0 series to Nürburgring 24 Hour Endurance Race the latest N700A series, as well as conventional trains and monorails. Developing the Infrastructure & Products for Industrial Machinery Mobility Business B Using its expertise in products for rolling stock, products for industrial machinery, and sensor products, Akebono will open up new businesses in various fields such as civil engineering and construc- tion, agriculture, shipping, energy, and urban development.

Drum brake Disc brake Concrete filling rate for a forklift for a rough-terrain crane detection system

17 AKEBONO REPORT 2016 AKEBONO REPORT 2016 18 Value Creation Model P

Global Business Expansion Sales Ratio by Region Ratio of Associate Numbers by Region (Fiscal 2015) (As of March 31, 2016)

Asia A 1 14% Asia Europe 23% N Japan Number of Japan 4% Net sales 27% associates 35% A E A Europe (consolidated) ¥281.3 billion 3% North 9,238 America North America 55% 39%

Akebono Brake Corporation Akebono Brake Akebono Brake Akebono Europe S.A.S. (Arras) [AASA] Akebono Corporation (Suzhou) (Elizabethtown) [ABC] Yamagata Fukushima Akebono Brake, Manufacturing Co., Ltd. Manufacturing Co., Ltd. Elizabethtown Plant [ABE]

Brake pads Brake pads

Brake linings Brake pads Disc brakes Drum brakes Akebono Brake Europe N.V. [AENV] Akebono Corporation (Guangzhou)

Akebono Europe GmbH [AEG] Value Creation Model

Brake pads Brake pads Europe Disc brakes Drum brakes Akebono Brake Corporation [ABC] Akebono Engineering Center [AEC] Akebono Brake Akebono Brake Astra Vietnam Co., Ltd. [AAVH] Slovakia s.r.o. [ABSK] North Akebono Brake, Glasgow Plant [ABG]

Motorcycle disc brakes Motorcycle master cylinders Disc brakes America Akebono Engineering Center, Akebono Brake (Thailand) Co., Ltd. [AKBT] Japan Disc brakes Brake pads Europe S.A.S. [AECE]

Akebono Europe S.A.S. (Gonesse) [AESA] Tatebayashi Foundry (Centre de Recherche Européen Akebono) [CREA] Disc brakes Brake pads Akebono Brake, Columbia Plant [ABCS] Akebono Brake Mexico S.A. de C.V. [ABM] A&M Casting (Thailand) Co., Ltd. [A&M] Asia Akebono Advanced Engineering (UK) Ltd. [AAE]

Castings Disc brakes Corner modules Akebono Brake Iwatsuki Drum brakes Disc brakes Castings Manufacturing Co., Ltd. Akebono Brake Industry Co., Ltd. Representative Office (Singapore） Akebono Brake Akebono Brake, Sanyo Clarksville Plant [ABCT] Manufacturing PT. Akebono Brake Astra Indonesia [AAIJ] Disc brakes Co., Ltd.

Corner modules Drum brakes

Brake pads Motorcycle master cylinders Brake linings Drum brakes Drum brakes

Akebono Research & Development Rotors Disc brakes Centre, Ltd.(Hanyu City) Disc brakes Motorcycle disc brakes Drum brakes

19 AKEBONO REPORT 2016 AKEBONO REPORT 2016 20 Review of Operations

Review of Operations

Operating Results During fiscal 2015*1, Akebono recorded a decline in in a consolidated operating loss of ¥3.8 billion, (compared domestic sales on the back of continued weak with operating income of ¥4.0 billion in the previous automobile production in Japan. Nevertheless, fiscal year). The impact of foreign exchange losses and Japan consolidated net sales rose 10.7% year over year to a interest payments also contributed to ordinary losses of record-high ¥281.3 billion thanks to a record level of ¥6.8 billion yen (compared with ordinary income of ¥2.8 Review of Fiscal 2015 impact of a drop in orders and an increase in R&D automobile sales in North America, an increase in new billion yen in the previous fiscal year). While the The impact of an additional tax introduced in expenses for group companies overseas resulting orders in China, expansion of the brake caliper business Company posted extraordinary income from the sale of fiscal 2015 targeting mini cars (displacement from globalization efforts. This was despite the in Europe, and the impact of foreign exchange translation certain investment securities, the posting of impairment less than 660cc) resulted in sluggish demand effects of lower performance-linked bonuses and due to the weaker yen, the latter of which contributed losses on tangible assets in North America, primarily at for those vehicles, affecting the domestic other labor costs, rationalization of production and ¥22.2 billion to sales growth. On the earnings front, an ABE, provision for business structure improvement, and automobile market as a whole. Akebono’s procurement, and other cost reductions. expansion of orders in China, rationalization of production loss on recall issue*2 resulted in a loss attributable to business in Japan also saw a significant impact and procurement functions at sites in Japan and Asia, owners of parent of ¥19.5 billion (compared to a loss from weak automobile production in the form of Fiscal 2016 Strategy and Outlook and efforts to reduce costs were effective in securing attributable to owners of parent of ¥6.1 billion in the lower earnings and a drop in sales of aftermarket While there are uncertainties ahead, including the positive earnings in those regions. However, the previous fiscal year). products for export, and domestic net sales fell by impact of the Kumamoto Earthquake on domestic prolonged influence of the production-related problems ¥3.6 billion year on year, or 4.2%, to ¥83.1 billion. demand, we expect both net sales and operating that occurred in North American operations in 2014 *1 (1) January 2015 to December 2015 for North America, China, Thailand Looking at earnings, operating income fell 9.5%, income in Japan to be about level with fiscal 2015. and Indonesia continued to have a significant impact in terms of higher (2) April 2015 to March 2016 for Japan and Europe or ¥0.3 billion, year on year to ¥3.3 billion with the costs of labor and expedited shipment of parts, resulting *2 As announced in the “General Motors Safety Recall” dated June 12, 2015.

At a glance TOPICS

Akebono Exhibits High Performance Brake Calipers for Large SUVs at Review of Operations Net sales Operating income Net sales Operating income/loss (Billions of yen) (Billions of yen) (Billions of yen) (Billions of yen) the 44th Tokyo Motor Show 2015. 120.0 7.5 200.0 5.0 96.2 89.5 89.2 5.9 166.9 0.1 0.7 Bringing together the expertise in brake the industry’s first 10-pot production calipers 86.7 83.1 150.0 140.3 0 80.0 5.0 122.8 technology it has acquired through years of with stable braking performance designed for 3.4 3.6 96.3 98.4 3.3 100.0 -5.0 (3.2) involvement in motorsports, Akebono has passenger vehicles. These brakes represent 40.0 2.5 2.3 (5.4) 50.0 -10.0 developed a 10-pot opposed brake caliper the full-scale launch of Akebono’s European

0 0 0 -15.0 (11.2) (five to each side, for a total of 10 pistons per business. 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 (FY) (FY) (FY) (FY) caliper) that provides superb brake performance The product was first exhibited at the 44th at high speed, under high brake load and high Tokyo Motor Show 2015 held between October Japan North America heat conditions, along with the comfortable, and November, 2015. Also on display were a low-noise brake experience demanded in 6-pot opposed high-performance brake caliper, Sales ratio Sales ratio luxury high-performance vehicles. Intended as well as McLaren P1TM super car equipped Net sales for use in the large SUV class, the calipers with the Akebono brake system. 27% 55% accommodate larger brake pads to absorb the ¥281.3 energy generated by high brake loads, to realize billion Europe Asia Sales ratio Sales ratio 4% 14% Net sales Operating income/loss Net sales Operating income (Billions of yen) (Billions of yen) (Billions of yen) (Billions of yen) 15.0 0 60.0 6.0 4.7 10.9 (0.4) (0.5) 42.0 4.2 10.0 8.9 -1.0 (0.6) 40.0 36.2 4.0 3.5 3.8 7.4 (0.8) (0.9) 32.6 24.3 2.4 5.0 4.9 22.1 5.0 -2.0 20.0 2.0 10-pot opposed brake caliper Akebono’s booth at the 44th Tokyo Motor Show 2015

0 -3.0 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 (FY) (FY) (FY) (FY)

21 AKEBONO REPORT 2016 AKEBONO REPORT 2016 22 Review of Operations

North America TOPICS Dr. Wilm Uhlenbecker Takes Over as CEO at U.S. Subsidiary Tapped to Review of Fiscal 2015 result. The aluminum casting equipment was Lead North American Management Reforms Automobile sales in the Unites States reached eventually repaired, and with the recovery in record levels, boosted by falling oil prices and production capacity expedited-shipping cost To begin work on fundamental management and manufacturing footprint restructuring. Under aggressive sales financing. Akebono’s North dropped significantly; but orders continued to rise, reforms in the North American business, his leadership, the North American business American business also saw an increase in orders generating additional overtime and other costs as including resolving production-related problems will move forward with locally-driven efforts to from major automakers, reflecting soaring demand, winter holidays were cancelled to handle fourth there and strengthening governance, Dr. Wilm strengthen its management structure. and with the impact of foreign currency translation quarter orders for certain automakers. Uhlenbecker has been appointed president contributing ¥20.1 billion, sales increased 19.0%, Quickly returning its North American and CEO of Akebono Brake Corporation or ¥26.7 billion, year on year to ¥166.9 billion. On operations to stable profitability remains a top (ABC), the U.S.-based Akebono subsidiary the other hand, operating loss, including Mexico, priority for Akebono management. To achieve this, that functions as its headquarters in North increased to a loss of ¥11.2 billion from an the Company has revamped its local management America. Dr. Uhlenbecker holds a doctorate operating loss of ¥3.2 billion in the previous fiscal structure, reviewed its product lines, and has in mechanical engineering as well as a master year, significantly below the initial plan, despite the begun working on reforms in its North American of business administration degree, both from implementation of a variety of measures, including business, including changes to its production RWTH Aachen University in Germany. His prior productivity improvements and the transfer of structure. While these efforts have begun to show experience includes management positions in production to other facilities in an effort to resolve solid results, to accelerate its reforms, at the end engineering, quality control, and numerous other production-related problems. of fiscal 2015 the Company decided to implement fields. He has a successful record of corporate While various effective measures have been impairment accounting on property, plant and turnarounds through strategic cost reductions undertaken to address production-related problems equipment of ABE to about US$69 million. The Dr. Wilm Uhlenbecker at ABE that began in 2014, including facilities Company also posted impairment losses against Review of Operations maintenance support dispatched from Japan individual non-operational production facilities at and the transfer of some production, due to a ABCS and ABCT. At the same time, it posted continuing high volume of orders, ABE was unable ¥0.5 billion in extraordinary losses related to costs to completely eliminate the three-shift, 24h/7 associated with structural management reforms in days a week production schedule. This made it its North American business (provision for business Europe impossible to reduce labor costs, and forced ABE structure improvement, including provision for to post a loss for a second consecutive year. retirement allowances.) Review of Fiscal 2015 building a sales structure for the caliper business At ABG, a surge in orders at the end of 2014 Automobile sales increased over the previous year ahead of future expansion. Nevertheless, also led to higher labor costs due to increased Fiscal 2016 Strategy and Outlook due to the impact of a gradual economic recovery, optimization of disc brake pad pricing and the work hours, and the plant continued to generate While net sales are forecasted to decline with the although levels remained below those prior to the emerging impact of improvements in production expedited-shipment cost and other additional transfer of some production from North America European debt crisis. In its European operations, processes combined with the effects of costs due to the production crunch. In response, to other regions, on the earnings side, losses the Company saw a drop in some areas of its procurement rationalization kept the operating production lines were added in May of last year, and are expected to shrink. Efforts to prioritize order aftermarket products business, but strong sales loss to ¥0.9 billion, as compared to an operating a team of specialists in maintenance and production profitability, reduce production loads and improve of products for global platform cars (common loss of ¥0.5 billion in the previous fiscal year. was dispatched from Japan to implement productivity via transfer of some production, along platforms used on a worldwide basis), particularly improvements in production efficiency. Measures with a significant reduction in expedited-shipping products imported from the Company’s Asian Fiscal 2016 Strategy and Outlook also included the gradual transfer of some disk cost, will lead to smaller operating losses. In terms facilities, and of high-performance brakes Net sales are forecasted to drop slightly in fiscal brake pad production to Japan and other global of management structure, Akebono has hired a imported from the Company’s North American 2016. Operating losses are expected to continue, production facilities. However, ABG continued to new CEO with a track record in the United States, facilities. As a result, net sales rose ¥2.0 billion, due in part to the change to a product-based require expedited-shipping in some cases, partly and subsequently also hired a new CFO. Together or 22.2%, year on year to ¥10.9 billion. On the structure, as well as to increased costs related because productivity did not improve as expected. with additional consultant support, Akebono is earnings front, the Company recorded increased to the future launch of high performance brake ABCS also experienced excessive production accelerating its management reforms. While fiscal costs generated by added labor and depreciation production. loads. In addition, to avoid delays in deliveries due 2016 will not see the complete elimination of expenses associated with the start of operations to a drastic drop in plant operating rates caused operating losses (estimated at ¥4.5 billion), by fiscal at the Slovakia Plant, and costs associated with by the failure of aluminum casting equipment, 2017 the effects of these and other measures will enormous expedited shipping costs were begin to appear in the operating results (operating generated (air transportation and other transport profit of ¥1.2 billion), and Akebono aims for ¥3.5 fees), and ABCS posted significant losses as a billion in operating profit by fiscal 2018.

23 AKEBONO REPORT 2016 AKEBONO REPORT 2016 24 Review of Operations

In Thailand, domestic sales of new cars and a drop in production as Japanese automobile continued to be sluggish, but production of manufacturers adjusted inventories at the end of automobiles in Thailand hit a record high, boosted the fiscal year, as well as decreased orders from TOPICS as export numbers reflected the impact of motorcycle manufacturers. However, sales of Manufacturing Subsidiary Akebono Brake Slovakia s.r.o. Begins Mass worldwide sales expansion of eco-cars in addition brake-related products for global platform cars and Production and Supply of Disc Brakes in Europe to pickup trucks. In Akebono’s Thailand operations, being marketed in Europe were strong. As a result, stagnant domestic demand was compensated by sales rose by 1.1% year on year, or ¥0.2 billion, to To strengthen its operating base in Europe, Republic, Mr. Akio Egawa. Akebono was strong exports, and increased aftermarket sales ¥16.6 billion. Operating income fell 7.6%, or ¥0.1 in 2014 Akebono established disc brake represented by the President and CEO of for Middle East markets. As a result, sales rose by billion, year on year to ¥1.7 billion, largely due to a manufacturing subsidiary Akebono Brake Akebono Brake Industry, Hisataka Nobumoto, 9.8% year on year, or ¥0.5 billion, to ¥6.0 billion. drop in orders, a rise in labor costs, and an increase Slovakia s.r.o. (ABSK), in Trencin, the Slovak along with several executives and associates. On the earnings side, while depreciation costs in depreciation costs. Republic. While the Company has a presence Events included a tree planting ceremony, increased, the increase in orders for aftermarket in Europe with AASA of France, which also the presentation of commemorative items, products contributed significantly, and operating Fiscal 2016 Strategy and Outlook manufactures disc brake pads, the addition of and a ribbon cutting ceremony, as well as the income rose 81.1% year on year, to ¥0.5 billion, for Akebono will continue its aggressive business ABSK is part of Akebono’s strategy to create plant tour. ABSK currently handles cast-iron increases in both sales and profits. expansion centered on China, and expects sales to a total supply structure for brakes in Europe brake caliper assembly operations, and plans In Indonesia, both production and sales of increase. However, operating income is expected and strengthen competitiveness on a global to start mass production in August of 2016. automobiles and motorcycles in fiscal 2015 fell to remain flat due to changes in product mix, basis. An opening ceremony for ABSK was The company is also considering expanding below those of the previous year, but the domestic persistently high labor costs, and an increase held in June 2015. Approximately 50 guests operations by adding state of the art facilities for sales market is expected to expand further over in expenses associated with environmental attended the ceremony, including The First manufacturing aluminum brake calipers for high the medium to long term. Akebono’s operations in measures, among other factors. State Secretary of the Ministry of Economy of performance vehicles, which will make the new Indonesia experienced sluggish domestic demand the Slovak Republic, Mr. Rastislav Chovanec, plant a strategic manufacturing location. the Mayor of Trencin, Mr. Richard Rybnicek, and the Ambassador of Japan to the Slovak (Note: Titles are as of the date of the ceremony.) Review of Operations Outline of Subsidiary

(1) Name: Akebono Brake Slovakia s.r.o. (2) Location: Trencin, Slovak Republic TOPICS (110 km northeast of Bratislava, the capital) (3) Representative: Jean de Montlau A&M Casting (Thailand) Co., Ltd., Established as Part of Strengthening (4) Business: Manufacturing and sale of automotive brakes Global Competitiveness, Holds Furnace Ignition Ceremony (5) Capital: €12,000,000 (6) Date of establishment: April 1, 2014 In October 2014, Akebono established A&M in anticipation of market trends. The new Akebono Brake (7) Equity ratio: Akebono Brake Europe N.V. Slovakia s.r.o. Casting (Thailand) Co., Ltd. for the production company is also considering sales of cast-iron (ABSK) opening (Wholly-owned subsidiary of Akebono Brake of cast-iron automotive parts, in a joint venture components to other companies in Thailand. ceremony Industry) 100% with Mohka Manufacturing Co., Ltd. The joint A cornerstone-laying ceremony was held in 2 (8) Lot area: Approx. 42,000 m venture’s production will center on cast-iron December 2014, followed by a furnace ignition (9) Building area: Approx. 12,000 m2 brake caliper components for Akebono Brake ceremony in December 2015, attended by (10) Start of production: August 2015 ABSK office building (Thailand) Co., Ltd. Production volume will be executives from both Akebono Brake Industry 600 tons per month until 2017, and from 2018 and Mohka Manufacturing. is scheduled to rise to 1,300 tons per month

Outline of Subsidiary

(1) Name: A&M Casting (Thailand) Co., Ltd. Asia (2) Location: Ratchaburi Industrial Estate, Ratchaburi Province, Kingdom of Thailand Review of Fiscal 2015 customers, and the impact of foreign currency (approx. 100 km west of Bangkok) (3) Representative: Masami Nagasaki Automobile sales in China in the first half of translation (¥2.0 billion). As a result, sales increased (4) Business: Manufacture and sale of cast-iron automotive fiscal 2015 rose only slightly year on year, due 36%, or ¥5.1 billion, year on year to ¥19.4 billion. components to sluggish demand and a build-up of inventory. At the same time, operating income rose by (5) Date of establishment: October 2014 In the second half, however, demand increased 50.5%, or ¥0.8 billion, year on year to ¥2.5 billion, (6) Equity ratios: Akebono Brake Industry Co., Ltd. 74.9% significantly due to the impact of a tax reduction on reflecting increased earnings with the expansion Mohka Manufacturing Co., Ltd. 25.1% compact cars (those with a displacement of less of orders and the impact of production and (7) Lot area: approx. 37,000 m2 than 1600 cc). Operations in China saw an increase procurement rationalization and cost reductions, Executives and employees attended the ignition ceremony (8) Building area: approx. 5,000 m2 in sales of products for global platform cars, despite increases in depreciation costs and labor (9) Start of production: August 2016 (tentative) expansion of orders, including business with new costs, among others.

25 AKEBONO REPORT 2016 AKEBONO REPORT 2016 26 Review of Operations R&D and Quality Control

Akebono is working to improve brake performance and to develop the next generation technology. We are also focused on developing products and technologies that will reduce environmental burden.

FNC Finished Rotors Development of New Brakes for Greater Fuel Upgrading Ai-Ring to Secure Competitiveness priority from the design stage. This will enable us to Akebono supplies rotors for trucks produced by U.S.-based Efficiency in the Global Market conduct comprehensive brake testing from bench testing, General Motors Company. These rotors are finished using We are developing a new automobile braking system that Ai-Ring is one of the largest test courses to be operated through dyno testing, to vehicle testing in a single facility. the ferritic nitrocarburizing (FNC) process and thus deliver improves fuel efficiency by weight savings. In addition, by an automotive parts manufacturer in Japan. The Akebono will also shorten development lead times by superior braking performance as well as low noise and we aim to contribute to resource savings by reducing the facility enables various types of brake testing using actual improving its vehicle testing capabilities and enhancing its vibration while boasting an industry-leading product life, number of parts. vehicles, such as high-speed braking tests. A new Ai-Ring NVH* analysis and simulation technologies. With the new which, in turn, contributes to resource savings. Moreover, is scheduled for completion in October 2016. The plans for facility we aim to establish a global development structure since FNC finishing provides greater abrasion resistance, ■ Electro-Mechanical Brakes the facility include expanding various type of test course, that will enhance our R&D competitiveness. At the same it also reduces the generation of dust, which not only This new brake system employs an electric operating such as a new winding road, rough roads, and slopes. We time, Ai-Ring will help us to integrate testing techniques often mars the appearance of wheels, but poses an mechanism to press down the disc brake pads. The will use these courses to further enhance the performance employed at R&D bases worldwide while providing a environmental burden. system helps to improve fuel efficiency by saving weight. and quality of our products for high-performance vehicles, place for training designers and engineers who will be Moreover, this system can contribute to environmental and to bolster our development of electro-mechanical able to propose their own ideas as brake experts. preservation by eliminating use of hydraulic brake fluid, brakes. We also plan to increase our dyno testing facilities *NVH: Noise vibration harshness which must be properly disposed of whenever repairs (brake testing machines) to help ensure safety as a top are made. FNC Finished Rotors Quality Management Systems (ISO/TS16949, ISO26262) With the aim of promoting its corporate branding initiative, Satisfying U.S. Regulations on Chemicals Used Akebono has acquired and maintains the ISO/TS16949 in Brake Friction Materials quality management system certification that has been In 2014, new regulations were enforced in California Arrow indicates widely introduced by automakers overseas, in addition to the electro-mechanical actuator and the state of Washington, the United States, setting ISO9001. Review of Operations limits on copper and other specified substance content Moreover, efforts are now underway to acquire ISO in brake pads, linings and friction materials produced on ■ Low Drag Caliper 26262 certification with regard to automotive electronic and after January 1, 2014. The regulations are intended In a conventional disc brake there is always slight contact and electrical safety-related systems with help from to prevent the impact of such substances on ecosystems between the brake pads and the rotor, even when the external specialists. in rivers and oceans. Moreover, the regulations oblige brakes are released. This creates rotational resistance of manufacturers to label their pads and linings using Friction the rotor and negatively affects fuel economy. Also, if the Ai-Ring Materials Edge Code Markings that indicate compliance. gap between the rotor and pad alters, however subtle In response, a number of Akebono’s business the change, it affects how far the pedal must travel to units, including its U.S., Japanese and Asian production initiate braking. This reduces driver confidence. The low bases that manufacture friction materials destined for drag caliper incorporates specially designed components Akebono Receives Award in the Japan Society of Mechanical Engineers Medal the American market, as well as development, quality to ensure that the pad to rotor gap is precisely maintained TOPICS for New Technology assurance, sales and production engineering sections at the micron level. In this way, brake drag is reduced, worldwide, have striven to ensure compliance with these contributing to improved fuel economy. For achievement in the “development and mass production of high- requirements through across-the-board collaboration. performance brakes for road cars” Akebono was awarded the FY2015 Looking ahead, we will painstakingly continue to Japan Society of Mechanical Engineers (JSME) Medal for New implement measures aimed at complying with state laws Technology. The brake systems are used in the ultra-high performance and other regulations, such as package labeling statutes. road car “P1TM” made by the U.K. automaker McLaren. Established in 1958 with the aims of encouraging research activities and development of mechanical engineering in Japan, the JSME Medal has been presented annually to outstanding papers, technologies and Low Drag Caliper products. In awarding the medal, the judges recognized Akebono’s high achievement in “stability when braking at ultra-high speed and high temperature levels,” “significant weight reduction,” and “comfortable A copper-free brake pad braking in city driving.” (prototype pictured) This is the second time in 34 years that Akebono has received the Brake system for McLaren P1TM award, the previous time being in 1982.

27 AKEBONO REPORT 2016 AKEBONO REPORT 2016 28 Initiatives for Society and Environment

Environment ｜Environmental Management Environment ｜Product Life Cycles and Environmental Impact Mass Balance

The Akebono Group has a shared Environmental Declaration and Basic Environmental We will work to reduce environmental impacts at every stage in the product life cycle, from Policies that govern its efforts to reduce the environmental impact of its business activities design and development through to recovery and recycling. and promote development of environmentally considerate products.

Basic Policy and Structure Design and Development The Environmental Declaration and Basic Environmental environmental preservation activities led by the Global ● MSDS evaluations of materials

Policies that were formulated in 2001 will be shared Environment Committee. ● Response to ELV directive

● Reduction of environmentally throughout the Group, and we will continue to undertake hazardous substances

● Reduction of VOCs

● Response to REACH regulations

● Response to the North American Environmental Declaration Basic Environmental Policies chemical substance regulations ● Response to laws and regulations in Based on our Corporate Mission and Declaration for 1. From the early development and design stages, we will actively pursue every country the 21st Century, we will continue to create new initiatives that give consideration to both safety and the environment. We INPUT value in the new millennium, contributing to both the will promote the development of technologies and products that minimize Parentheses indicate fiscal Purchasing Company and the environment. As a global corporate environmental impact. 2014 values ● Green purchasing citizen, we will also strive to protect the environment ● CSR purchasing 2. Each and every associate will make ongoing efforts to reduce environmental [Purchased power and fuel used] on a global scale and implement ongoing voluntary impact and promote an eco-friendly society by conserving energy and Electric power: 117,000,000 kWh activities aimed at creating a safe, vibrant society that (111,000,000 kWh) resources, recycling and reducing waste. co-exists in harmony with the environment. Fuel oil: 1,800 kl(1,500 kl) OUTPUT 3. In addition to complying with environmental laws, regulations and agreements, Heating oil: 2,000 kl(2,400 kl) Parentheses indicate fiscal LPG: 1,800 t(1,900 t) 2014 values Established 2001 we will endeavor to enhance our environmental management by establishing voluntary management standards both in Japan and overseas. [Emitted, recycled and pumped into the atmosphere] 4. We will actively disclose information to increase understanding of our Production CO2: 56,100 t(58,100 t) ● Initiatives for 3Rs environmental initiatives and encourage positive relationships with communities (reduce, reuse and recycle) NOx: 54.5 t(41.4 t)

with the aim of creating a better living environment. ● Reduction of CO2 emission SOx: 2.4 t(2.1 t)

● Pursuit of zero-emissions Smoke dust: 1.2 t(1.0 t) Established 2001 ● Reduction of industrial waste Final volume of waste for disposal: 0 t(0 t) ● Promotion of ISO 14001 Recycled volume: 25,300 t ● CO2 emission volume 56,100 tons (27,200 t) Recycling rate: 100%(100%)

Logistics Environmental and CSR Global Environment Committee Management System ● Implementation of modal shift •AKEBONO REPORT ● Adopting recyclable shipping materials Secretariat OUTPUT ● Response to revised Energy Parentheses indicate fiscal and Environment Initiatives for Society Sectional committees Conservation Law 2014 values Manufacturing Division, Production ● CO2 emission volume 2,860 tons R&D Division Engineering Division Purchasing Division Administrative Departments CO2: 2,860 t(3,004 t) Technology and Environment Manufacturing Environment Green Purchasing*7 Task Human & Social Environment Task Force Task Force Force Task Force Sectional committees Sectional committees Sectional committees Sectional committees •SOC*1 free •Logistics environment •Green purchasing •Facilitation of Sales and Consumption promotion exchanges with local •VOC*2 reduction •3R*5 communities ● Recycling activities ● Information on end users •Improvement of •Surface finishing technology •CO2 reduction project working environment ● Information on customers for all workers ● Legal and regulatory trends •LCA*3/PRTR*4 promotion •Zero-emissions*6 ● Social trends

*1 SOC (Substance of Concern): Environmentally hazardous substances, including mercury, cadmium, lead and hexavalent chromium ● Industry trends *2 VOC (Volatile Organic Compound): Toluene and xylene are representative of this group’s compounds, which are suspected of involvement in the development of substances that cause health concerns, including oxidant and airborne particulate matters *3 LCA (Life Cycle Assessment): A technique for analyzing and assessing the environmental impact associated with the entire life cycle of a product (mining of materials, manufacturing, use, recycling and disposal) *4 PRTR (Pollutant Release and Transfer Register): Japan’s Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in the Environment and Promotion of Improvements to the Management Thereof (PRTR Act) was passed into law in 1999 and enforced in 2001. Under the law, business operators which handle more than a certain amount of specified chemical substances are required to submit reports to the competent minister annually. *5 3R: Acronym for reduce, reuse and recycling of resources, activities that contribute to a recycling society * Mass balance is a quantitative balance that represents the balance of resources consumed and waste emitted (including gas, smoke dust, etc.) during the entire life *6 Zero-emissions: Proposed by the United Nations University in 1994, a system wherein companies aim to emit no waste, engaging rather in resource recycling and the effective utilization of waste cycle of a given material, from generation through use, emission, recovery, recycling and re-use after recycling to final disposal. *7 Green purchasing: Affirmative selection and acquisition of products that impose less negative environmental impact; scope includes materials used in products as well * Values for NOx, SOx and smoke dust represent total emission volumes from facilities subject to regulations as secondary materials used in the course of manufacturing. The manufacture of “Green Products” requires the practice of green purchasing. * Scope of calculation covers operations in Yamagata, Fukushima, Tatebayashi, Iwatsuki and Sanyo * REACH: Registration, Evaluation Authorization and Restriction of Chemicals

29 AKEBONO REPORT 2016 AKEBONO REPORT 2016 30 Initiatives for Society and Environment Purchasing Human Resources and Diversity

Akebono is working to reduce environmental and social impacts in cooperation As Akebono globalizes its operations, the Group is working to recruit and develop human with its suppliers. resources who can work in and outside of Japan, and taking a proactive approach on issues such as managing diversity and achieving a work-life balance.

Promoting CSR and Green Purchasing* * Conflict Minerals communication skills, flexibility in dealing with diverse Akebono introduced its Green Purchasing Guideline in Section 1502 of the Dodd-Frank Act targets minerals containing Basic Human Resources Policy cultures and their linguistic abilities. Addressing tungsten, tantalum, gold, and tin produced in the Democratic Republic 2005, revising it in 2011. Under the guidelines we are of Congo and neighboring countries that provide sources of funding To provide opportunities to all associates differences in training programs and personnel systems considering the environment and CSR from the purchasing for armed groups involved in the conflict. and to support them so that they can by location, we are working to enhance our Japanese stage by working together with suppliers to procure associates’ ability to operate in global business settings, * GADSL (Global Automotive Declarable Substance List) share the company’s successes. materials, components, and secondary materials that have A list of chemical substances requiring proper management putting emphasis on training those who have had few Akebono believes that the most important factor that a low environmental impact. We are also encouraging our formulated by automobile manufacturers, their parts suppliers and opportunities to engage in duties with peers from other guides a company to success is human talent (our suppliers to improve their environmental management material suppliers in Japan, the United States and Europe. It is an countries with different cultures and native tongues. industrywide standard targeting the following substances, which associates).Guided by that belief, we set forth our basic performance by recommending activities to acquire are possibly contained in parts and materials supplied to automotive human resource policy that “each associate must be given external accreditation such as ISO 14001. manufacturers: the opportunity to exert their abilities and be continuously Nurturing Globally Capable Human Resources 1. Substances that are subject to regulation under the laws of each supported to share their success with the company.” We As a part of training programs for newly recruited associates, country are striving to build our long-term global personnel policy * Green Purchasing Akebono has prepared globally unified educational 2. Substances that are expected to come under legal regulation as well as to facilitate associates’ ability to establish their Green purchasing refers to the preferential selection and acquisition 3. Substances with a proven negative impact on health and/or the individuality and foster mutual respect and trust. materials for use at all Group business locations. In fiscal of products that cause less negative environmental impact. The scope environment of products covers materials, secondary materials, office articles Moreover, we are working on human rights education 2011, Akebono has issued the Akebono Starter Book, a The list contains substances classified into such categories as and equipment used in the course of manufacturing. Manufacture of “Substances prohibited from use in all applications,” “Substances and enlightenment with high regard for human rights standard educational package that features the Company’s “Green Products” requires the practice of green purchasing. prohibited from use in certain applications or that must be declared to achieve an organization with abundant diversity and corporate history since its founding, characteristics of its creativity. if used” and “Substances that must be declared if usage exceeds operations in each region and explanations of APS (Akebono defined threshold limits.” Ranking and Management of Environmental Impact Production System or Akebono Philosophy and Spirit), its Substances under Green Purchasing a Guidelines Supply Chain Safety Promotion Human Resources Nurturing and Personnel System corporate culture and philosophy as well as corporate brand Targeted chemical substances are categorized into three Akebono is taking steps to ensure safety across its supply We strive to ensure that our associates are assigned management activities. The book is being used in training ranks and controlled as follows: chains by working to eliminate occupational accidents. optimal positions and work locations based on their programs. By learning through this book, all associates are We urge our suppliers to create safer, more secure work competencies, regardless of their nationality. To this equally informed of the basic knowledge and concepts

Examples of control places by raising the theme of safety at our suppliers end, our human resource recruitment, nurturing and necessary to act as Akebono business persons. Moreover, Rank Chemical substances measures meetings held throughout the world and in our Seiwa Kai administration systems are premised on abundant respect with the addition of programs that reflect local concerns, Substances that are study sessions consists of major suppliers. for human rights as well as associates’ individuality, we are developing human resource educational programs Prohibit use/draw up Usage strictly banned from use plans for abolishment if privacy rights and diverse value systems. optimized for each region and location. prohibited and production by law there is substance in use and regulation Response to Substances of Very High Concern* In particular, we are developing our associates’ In cooperation with our suppliers, Akebono performs

Substances which are and Environment Initiatives for Society projected to come under Conduct research on testing of purchased products to determine if they contain Usage legal regulation and alternative materials or substances of very high concern (SVHC*) or banned restricted substances for which reduction methods and emission regulations are draw up reduction plan substances. The tests are performed on the individual set under existing laws product level and their results are communicated back to “Ai-Village” Proper Substances listed Ensure proper the suppliers. A Center for Nurturing Globally Capable Associates management in GADSL* that is, management of usage of usage substances requiring information and work * Substance of Very High Concern information declaration of usage toward reduction of Since its establishment in 2012, Ai-Village global training these are language training programs aimed at nurturing required amount usage A substance may (but not necessarily must) be designated as SVHC if it meets one or more of the following criteria: it is carcinogenic, center has served as a training ground for numerous globally capable associates as well as lectures on basic mutagenic or toxic for reproduction, and in addition is either persistent, associates. Around half of the training sessions held knowledge about manufacturing and Akebono products. Response to the Conflict Minerals* Issue bioaccumulative and toxic, or very persistent and very bioaccumulative. there consist of programs spearheaded by the Human Looking ahead, we will continue to strive to fully utilize The U.S. Congress passed the “Conflict Minerals Rule,” Such substances are identified as having probability of causing serious Resources Department, in addition to which there are job this facility to nurture competitive human resources. adverse effects to human health or the environment. which aims to cut off sources of funding for armed groups level-based training programs and training for selected in the Democratic Republic of Congo and neighboring associates organized by operating departments, such countries. The rule requires manufacturers to ensure as those handling development, technology, sales and production. In addition to being used as a place for public disclosure and reporting related to “conflict retreat-type training sessions, there were some instances minerals,” obliging them to thoroughly track the origins of where Ai-Village was used by associates trapped by minerals that are supplied to them. inclement weather. To maximize the site’s utilization, in Akebono conducts investigations in accordance with fiscal 2014 the Company decided to expand the lineup industry standards from a CSR procurement perspective of training programs, initiating Ai-Campus, a series of and has not found any use of conflict minerals. open seminars comprising around 80 courses. Among View of Ai-Village

31 AKEBONO REPORT 2016 AKEBONO REPORT 2016 32 Initiatives for Society

and Environment 34 AKEBONO REPORT 2016 Kurumin Mark In addition, Akebono obtained theKurumin Mark—an thinking initiatives with an eye withan thereby initiatives to issues, future thinking the social environment. To create a working environment will we styles, working flexible and diverse offers that feedback from associates. securing a corporate structureresponsive to changesin continuously enhance theseprograms by incorporating authorization mark awarded by Japan’s Minister of Health, support theupbringing of future generations,Novemberin 2007 and renewed it in June 2013. Labour and Welfare to certify thatproactively businesses , , a booklet that Reduced working-hours plan: Associates can use the system multiple times until children graduate from Reduced working-hours plan: Associates can use the system multiple times until children graduate elementary school. Child care aid plan: A fixed monthly aid until the March following the child’s third birthday Reduced working-hours plan: Associates can work reduced hours for a total of up to three years per family Reduced working-hours plan: Associates can work reduced hours for a total of up to three years per member to provide nursing care. These can be taken in multiple parts. •  • Flex time plan •  •  • Flex time plan Note: Akebono has a child care leave plan that exceeds legal standards. Note: Akebono has a child care leave plan that exceeds legal Associates can take leave until the March after the child’s third birthday while receiving aid. This can be taken in Associates can take leave until the March after the multiple parts. due to family duties with opportunities to later rejoin Akebono A program that provides those who left the Company period of within five years after their resignation. Eligible associates include those who had served for a continuous three years or more before leaving and meet other prescribed criteria. a stipend Associates can take up to two years leave per family member to provide nursing care while receiving to nurse sick or Associates can take up to five days of leave per year (ten days for associates with two or more children) is separate from injured children or for children’s doctor visits until the child graduates from elementary school. This leave annual paid leave. Child care plans Nursing care plans Life Supporter We distribute Going forward, we willalso implement forward- For example, wehave designed variousprograms Child care leave plan Career partner plan Nursing care leave plan Child nursing care plan Measures to reduce working hours Improvements to company environment Promoting Work-Life Balance Promoting Work-Life Akebonoputs great associatesemphasis onhelping strike working hours or take leave for child rearing and nursing nursing and rearing for child leave or take hours working with theof aim facilitating theutilization of theprograms Akebono’s Main Initiatives working to realize a working environment that accommodates accommodates that environment a working torealize working forassociates andraising thosechildren caring for their familymembers toassist them with theirefforts tostrike abalance between their workand familyobligations allows thereinstatement of those wholeft Akebono agood work-lifebalance. Accordingly, we areconstantly such aschildrearing andnursing care. Some of these care. Moreover, we also offer a Career Partner Plan that Plan Partner offer we a also Career Moreover, care. We todue reasons. support prescribed also associates’ career development efforts while offering opportunities to summarizes thecontent of these and otherprograms diverse work stylesneeds. to meetindividual programs allow associateseligible to opt forshorter participate in self-improvement activities. by associates. Promotion of work-life balance An diversity employee capable of organization Promotion of maximizing the abilities of each Eru Boshi Mark (Third Grate) Basic Themes of Diversity Management Basic Themes of Diversity Career support Akebono Receives “Eru Boshi Designation” based on the Act Concerning Promotion of Akebono Receives “Eru Boshi Designation” Women’s Career Activities

Official nickname for the designation of the General Business Owner Official nickname for the designation of the General Business Owner Complying with the Standard based on the Act for Promoting the Advancement of Women. Akebono is promoting diversityAkebono promoting is because it recognizes * TOPICS Boshi In April 2016, Akebono received the Eru of the Designation (Third Grade)* from the chief Saitama Labor Bureau. The Eru Boshi Designation have system provides business owners who women’s performed excellent activities to promote career by applying their detailed plan to prefectural labor bureau. The designation is received from the Minister of Health, Labour and Welfare. There are five evaluation criteria and accredited between grade 1 and grade 3 based on a result of the evaluation. Akebono achieved the top rank of Grade 3. We will continue working to be a company where all of our associates can work with motivation and enthusiasm, regardless of gender.

Initiatives for Society and Environment Society for Initiatives Promoting Diversity their value system or cultural background. In line with line In background. system or value cultural their diversity management promoting are we recognition, this Akebono aims to strengthenits corporate capabilitiesin that as it it is becomingexpands increasingly globally, centered on three key initiatives, namely, diversity initiatives, onnamely, centered key three development assistance. each associate realize their full potential regardless potential of each full their associaterealize a way thatreflects high respect the it has for the values promotion; work-life balance promotion; and career career and promotion; balance work-life promotion; ofeach associate and theirdiversity. otherIn words, the will turn, in which, duties, of course their the creativityin important corporatea establish helps to that structure Companycherishes associates’ aspirationsindividual

regarding work lifeand so that each can develop their bringhelp about amore vibrantcompany overall. Human Resources and Diversity AKEBONO REPORT 2016 33 Initiatives for Society

and Environment 36 AKEBONO REPORT 2016 In fiscal 2015, we invited more than 159 students In fiscal 2015, we invited more than 159 these tours In addition to a briefing on the Company, Looking ahead, we will implement initiatives with Elementary school students visiting Ai-City the scope of eligible participants being expanded to the scope of eligible overseas Group members as well include trainees from Approximately 60 attendees as Japanese expatriates. these forums, which facilitate participate in each of of countries around the world mutual understanding on local industries and cultures through presentations sessions. Going forward, we and question and answer opportunities for exposure to diverse will provide further a greater cultures and value systems, thereby nurturing succeeding on number of human resources capable of the global stage. Offering Office and Plant Tours as Akebono proactively invites external companies and junior high well as students from local elementary Japan. schools to tour its offices and plants across Prefecture to from four elementary schools in Saitama tour Ai-City headquarters. Museum) and a involved a visit to “Ai-Museum” (Brake educational presentation by our mobile brake technology hands- center as well as programs aimed at providing Monozukuri on experience of manufacturing at the awareness Center. Such tours help raise visitors’ safety Akebono and its while facilitating their understanding of products. local enterprises and communities in regions around our domestic and overseas locations. Learning from and inspiring each other, we will grow in tandem with our stakeholders. Spain, Thailand, Slovakia, Germany, Turkey, France, Finland, Portugal, Portugal, Finland, France, Turkey, Germany, Slovakia, Thailand, Spain, * National Origins of Origins National * Interns United States, United Kingdom, Italy, India, Greece, Sweden, Sweden, Austria, Greece, India, Italy, Kingdom, States, United United Mexico, Morocco, Canada, Hungary, Netherlands, Poland The Vocational Scholarship Program is currently The Vocational Scholarship Program is currently has Over its 50-year-long history, the program with local We strive to maintain robust relationships is a On the site of Fukushima Manufacturing Internships Vocational Scholarship Program; Assisting Vocational Scholarship Their Pursuit of Education Future Leaders in Since 1965, Akebono has provided scholarships through Since 1965, Akebono Program, a program that allows its Vocational Scholarship by working at Akebono while students to earn wages fees for a period of three also covering their academic has supported junior college studentsyears. This program childhood education or nutrition earning degrees in early fields. to acquire specialist qualifications in these Manufacturingoperated only at Akebono Brake Fukushima in the Co., Ltd. The scholarship students live together work to pursue corporate dormitory and engage in shift pay to cover their studies while working. By using their their own efforts their course fees, they can graduate by their and acquire qualifications. Once they complete other companies, qualifications, they will go on to work at or as kindergarten teachers or nursery workers. students, who provided scholarships to more than 3,000 include some second generation recipients. programs residents through the provision of scholarship dreams. aimed at helping young people realize their had dormitory called “To-En-Ryo”. As the dormitory completion aged, it was rebuilt in fiscal 2015 and the ceremony was held in March 2016. Not only does Akebono proactively accept interns from abroad, it also organizes exchange events where interns and associates find their sense of being part of an international concern nurtured through the exchange of ideas. In fiscal 2012, the Company began holding such events under the title “Internship Forums” under set themes. Stepping up this initiative, in fiscal 2014 these events were renamed “Diversity Forums,” with Akebono is contributing to society through various activities. to society through is contributing Akebono The rebuilt “To-En-Ryo” Social Contribution Social 41 16 562 619 (+3) (+3) Total 0 0 113 113 (+1) (+1) Neighbors 0 0 37 37 of ex- Families Families associates 41 16 Ex- 412 469 (+2) (+2) associates Asbestosis found Pneumoconiosis found No findings Total Response to the Problem of Asbestos Response to the Breakdown of Number of Examinees (from August 2005 to March 2016) year Figures in parentheses represent increases from the previous Well ahead of otherdomestic companies, Akebonobegan thedevelopment of asbestos-freeproducts in 1970s. the and by1992 new for cars products OEM to asbestos-free commercial vehicles by 1994, wehave not manufactured serviceparts containing asbestos since 2000. Weprovide ex-associatesand their familymembers. total,In people 619 the future. in checks these to Wecontinue plan 2016. healthconsultations relating to asbestoshave and implemented complementaryhealth checks forneighbors, haveundergone asbestoshealth checks as ofMarch 31, Notonly did welead the fieldincompleting the transition “Safety Knowledge” booklet T A O Safety and Health Promotion Department

E R Associate Safety Meeting Central Safety Environment Committee Initiatives for Society and Environment Society for Initiatives Striving to ensure the safety and health of its associates, Striving to ensure the the Occupational Safety the Akebono Group established Structure, with the aim of and Health Management various risks related to its operations,thoroughly addressing and other emergencies. including disasters, accidents on securing the safety of Placing the utmost emphasis set the rules that allow no newly our personnel, we have engage in actual recruited associate or contract worker to required safety operations unless they have undergone the education. We also distribute Need-to-Know about Safety issues,Knowledge, a booklet summarizing important safety to all associates to raise their safety awareness. Occupational Safety and Health Management Occupational Safety At Akebono we aim to create safe workplaces and an even better environment for all for even better environment and an create safe workplaces we aim to At Akebono associates.

Akebono’s Safety and Health Management Structure Akebono’s Safety and Health Management Workplace Safety and Health AKEBONO REPORT 2016 35 Corporate Governance 38 AKEBONO REPORT 2016 meetings Frequency of In principle once every three months, with extraordinary meetings as needed In principle once every three months, with extraordinary meetings as needed head Internal Internal director director Director Compensation Advisory Committee Director Nomination Advisory Committee Risk Management Committee Compliance Committee Committee (Chairperson) 2 1 1 2 1 1 Reporting & advising Participating A company with auditors Yes Two years Representative Director, Chairman and President Nine Three Three 15 98% Five Three Three 100% Nomination Advisory Committee, Compensation Advisory Committee Deloitte Touche Tohmatsu Composition Management Conference Internal director Outside director Outside expert Internal director Outside director Outside expert Tohmatsu, and the Internal Audit Department closely cooperate together by mutually exchanging information planssuch and as auditreports, annual by and holding regular opinion-exchanging meetings. Advance deliberation Election & dismissal President & CEO Board of Directors Board of Executive Officers General Meeting of Shareholders Election, dismissal & supervision Group Companies Inside Each Department and Country Direction Role Audit Election & dismissal Audit & 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 Formulation of selection criteria of directors, Audit & Supervisory Board members, including outside members, and executive officers, nomination of candidates, and appropriate involvement in the selection and development plans of successor candidates such as for Chief Executive Officer, together with reporting to the Board of Directors Audit Department Supervisory Board Independent Auditor Internal audit Three-way audit system Director Director Advisory Advisory The members of the Audit & Supervisory Board, Committee Committee Nomination Committee Compensation Type of governance model Executive Officer System Director’s term stipulated by the articles of incorporation Chairman of the Board Number of acting directors Of whom, outside directors Of whom, those registered as independent directors fiscal 2015 Number of Board of Directors meetings held during rate during fiscal 2015 Outside directors’ average board meeting attendance 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 2015 Board of Directors’ advisory committees Independent auditor members’ names Corporate Governance Structure Corporate Governance Structure (Fiscal 2015) Outline of Akebono’s Corporate Governance Board of Directors’ advisory committees Akebono’s independent auditorAkebono’s Deloitte Touche through consultation with the Audit &Supervisory Board. ofShareholders, and the allocationsindividual aredecided Theremuneration for directors and Audit &Supervisory The chairperson assigns a certain department(or an In In order to ensure that the compensation system Management information and issuchlike shared through In In order to ensure appropriatebusiness execution The performance-based potion is determined based on the the on based determined is potion performance-based The Audit & Supervisory Board Members attend essential the Audit &Supervisory Board, and executive officers, the the Nomination Advisory Committee. tocomplement thefunctions of theBoard of Directors total amount of directors’ remuneration is determined by determined is remuneration of directors’ amount total the GeneralMeeting of Shareholders, and theindividual total amount of Audit& Supervisory Board members’ Thesemembers also exchange opinions with directors accordance with prescribed internal rules. Furthermore, Furthermore, accordance rules. with prescribed internal and strengthen the transparency and soundness of and the compensation criteria are clearly disclosed. criteria are clearly disclosed. the compensation and andperformance-based remuneration. The fixed portion is allocations aredecided by theBoard ofDirectors. The the Board of Directors or the Board of Executive Officers, as Officers, Executive of Board the or Directors of Board the applied to theseapplied officersdegree high ofpossesses a selection criteria and candidates for theBoard ofDirectors, appropriate,by ofmember the Board theor theexecutive auditedby the Audit & SupervisoryBoard members and the objectivityand transparency, theCompany receives electronicmedia, thereby ensuring efficientinformation sharing amongmanagement officers. The execution status of business matters that have been decided is reported to officer who isin charge. This status isalso periodically Compensation Advisory AsregardstheCompensation Committee. Compensation for directors consists of fixed remuneration basic compensation for duties andis based onpositions. performance of theCompany andindividual directors. The performance, and thenrespond promptly. Compensation Advisory Committee. receiving andconsidering contributions and advice from management, theCompany has established theDirector remunerationis also determinedby the GeneralMeeting body. The secretariatis responsible for conducting paperworksuch asnotices of agendaminutes. and bymembers ofmanagement, a three-way auditsystem reportsabout thebasics of thesystem from the in order to examine without delay anymatters that could have aserious impact on Akebono’smanagement or individual) as the secretariat of each internal important is appliedby means of the Audit & SupervisoryBoard membersand the Audit& Supervisory Board, the independent auditor, and theInternal AuditDepartment. managementmeetings, such as theBoard ofDirectors meetings, tomonitor theprocesses of important decision- making and theexecution status ofbusiness operations. Nomination Advisory Committee and the Director Board ofExecutive Officers.operatein These bodies Board membersis determined by rules the Company’s Board of by aftertheseDirectors determines resolutions Internal Audit Department. Introduced an Outside Director System and elected one outside director Established the Compensation Advisory a performance-based introduced and Committee remuneration system for directors  Reduced the number of directors from 25 to 12 - -  Increased the number of outside Audit & Supervisory Board members from one to two Increased the number of outside directors from one to two Increased the number of outside Audit & Supervisory Board members from two to three Increased the number of outside directors from two to three Established the Director Nomination Advisory Committee Introduced an Executive Officer System -

TheBoard ofDirectors meetsregularly once a month, In line withline In thisconviction, wehave positioned the

June 2006 June 2007 June 2010 June 2014 December 2015 June 2005 April 2000 Corporate Governance Corporate April2000 toclarify theresponsibility and theauthority for Akebonohas adopted “companythe with auditors” Overview of Corporate Governance System Initiatives to Strengthen Corporate Governance Initiatives to Strengthen Corporate Governance Basic Approach to Corporate Governance to Corporate Basic Approach tomake prompt and accurate judgments onimportant values through monozukuri(value-added manufacturing) and we believe that it is important to maintain and promote Akebonohas formulated the followingcorporate mission: and reviews,and Akebonoestablished variousimportant andextraordinary meetings areheld asneeded. orderIn governance model. We have built a corporate governance acorporate governance Wehavebuilt model. governance & Audit Directors, of Board the on centered system oversight of management. and local communities in order to achieve sustainable Supervisory Board members, and the Audit & Supervisory strengthening ofcorporate governance asimportant an structureconsisting ofsuchbodies as theBoard of growth and development. striving toincrease shareholder value and corporate value even furtherlinein with ourcorporate goals of“Customer Asnetwork”. amaker of safety global essential equipment, are determined toprotect, grow and support everyindividual bodies,including theManagement Council and the business execution, and to enhancemanagement efficiency. managementmatters through sufficientdiscussion managementissue, establishing a solid governance healthy and friendlyrelationship withstakeholders all customers,including shareholders, suppliers, our associates, needs “Technology first”, “Establishingand a realignment”, Board. WeBoard. introduced Executivethe Officer Systemin Directors and the Audit& Supervisory Board, with every life.” Under this life.” corporate mission, we are creatingnew Board member committed to maintaining the vigilant

“Through ’Friction and Vibration, their Control and Analysis, ’we Corporate Governance System AKEBONO REPORT 2016 37 Corporate Governance Corporate Governance System

Outside Directors and Outside Audit & members, thereby ensuring that the audit system Outside Audit & Supervisory Board Members (as of March 31, 2016) Supervisory Board Members functions from a more independent perspective, and Attendance at Board of Directors Of the nine current directors, Akebono has appointed strengthening the audit function of management. meetings(a)/ Audit & Supervisory three independent outside directors with a variety of Akebono aims to collaborate with outside directors Board meetings(b) Name Reasons for Election (Attended/Convened in Fiscal 2015) experience and skills. Their role is to strengthen the and Audit & Supervisory Board members and to corporate governance structure by reinforcing the Board strengthen its corporate governance system. It therefore Mr. Endo has extensive knowledge and experience as a certified public accountant. He was nominated as an outside Audit & Supervisory Board member based on his (a) 15/15 Kesao Endo of Directors’ management monitoring functions, and regularly convenes opinion-exchanging meetings between specialist perspective and highly independent status from management to bring to (b) 15/15 contributing advice to management that will help improve representative directors and outside directors, and bear his knowledge and experience in the performance of audits. medium- and long-term corporate value. between representative directors, outside directors, and A lawyer, Mr. Homma has extensive knowledge and experience in corporate legal Furthermore, three out of the five Audit & Supervisory outside Audit & Supervisory Board members. affairs. He was nominated as an outside Audit & Supervisory Board member based (a) 15/15 Michiyoshi Homma Board members are outside Audit & Supervisory Board on his specialist perspective and highly independent status from management to (b) 14/15 bring to bear his knowledge and experience in the performance of audits.

Outside Directors (as of March 31, 2016) Mr. Tannawa has extensive knowledge and experience as a management, organizational and human resources consultant in addition to as a corporate manager. (a) 15/15 Attendance at Board of Keizo Tannawa He was nominated as an outside Audit & Supervisory Board member based on his (b) 14/15 Any Important Representation of Other Directors Meetings(Attended/ specialist perspective and highly independent status from management to bring to Name Reasons for Election Entities Convened in Fiscal 2015) bear his knowledge and experience in the performance of audits. - Adjunct Professor, Graduate School of Commerce and Management, Mr. Ito has extensive knowledge and performance-based remuneration. The fixed portion is Hitotsubashi University Compensation a wealth of experience in corporate - Director, Center for CFO Education and ■ Basic Policy for Determining Compensation Paid to basic compensation for duties and is based on positions. management cultivated over his years Research, Hitotsubashi University as a university professor (Accounting & Directors and Audit & Supervisory Board Members The total amount of fixed remuneration must be approved - Special Appointed Professor, Chuo Management) and as an outside director Akebono has formulated the basic policy for determining by the Ordinary General Meeting of Shareholders. University Graduate School of Strategic Kunio Ito at other companies. He was nominated 14/15 Management the compensation for directors and Audit & Supervisory The performance-based portion is determined based as an outside director to bring to bear his - Outside Director, Sumitomo Chemical knowledge and experience when providing Board members as follows. on the performance of the Company and individual Company, Limited advice and recommendations regarding 1. Acquire and develop talented human resources Directors in the preceding fiscal year. The upper limit - Outside Director, Kobayashi the Company’s business judgments and Pharmaceutical Co., Ltd. 2. Motivate them to continuously improve corporate for performance-based remuneration is set at 100% of decision-making processes. - Outside Director, Seven & i Holdings Co., Ltd. performance and value the fixed portion. Of this amount 40% (cash) may be - Outside Director, Toray Industries, Inc. 3. Maintain a high level of fairness and rationality provided as short-term performance-based remuneration; Mr. Tsurushima served as a corporate To maintain an objective and fair compensation 20% (subscription rights to shares) as medium-term leader at a number of companies, including system for Directors, we have established a performance-based remuneration; and 40% (subscription as President & CEO of Tokyo Stock Exchange,Inc. He was nominated as an Compensation Advisory Committee, which reviews the rights to shares) as long-term performance-based outside director to bring to bear his extensive basic matters relating to director compensation. Based on remuneration. Takuo Tsurushima 15/15 knowledge of and experience in corporate the results of this review, the amount of compensation for The compensation for outside directors consists of management when providing advice and recommendations regarding the Company’s each director will be determined at the Board of Directors’ fixed remuneration only. business judgments and decision-making Meeting within the limit of the total amount approved by The compensation for each Audit & Supervisory processes. the Ordinary General Meeting of Shareholders. Board Member is determined through discussion by the Mr. Okazaki has not previously been Compensation for directors (excluding outside Audit & Supervisory Board, within limits approved by the involved in corporate management. directors) consists of fixed remuneration and Ordinary General Meeting of Shareholders.

However, he possesses specialized Corporate Governance - Institute Professor, Tokyo Institute of advanced academic knowledge in the fields Technology of environmental protection, energetics Total Amount of Compensation Paid to Directors and Audit & Supervisory Board Members (Fiscal 2015) Ken Okazaki - Visiting Professor, World Premier 15/15 and thermal engineering. Mr. Okazaki was International Research Center Initiative, nominated as an outside director to bring to Compensation by category (Millions of yen) Kyushu University bear his knowledge and capability to provide Performance-based remuneration Number of appropriate supervision and advice in aid of Amount of Fixed Medium-term Long-term directors/Audit the Company’s business operations. compensation remuneration Short-term (subscription (subscription & Supervisory (Millions of yen) (Cash) (Cash) rights to shares) rights to shares) Board members Cooperation among Audit & Supervisory Board the Internal Audit Department comprise a mutually Directors 254 245 9 - - 9 Audit & Supervisory Members, the Independent Auditor, and the complementary system in order to enhance the 54 54 - - - 5 Internal Audit Department effectiveness of each audit. They cooperate together Board members The Audit & Supervisory Board members and the Audit in conducting the pre-adjustment of the fiscal year’s Total 309 300 9 - - 14 & Supervisory Board receive appropriate explanations activities policy, in arranging the monthly report meeting, (Outside directors and Audit & Supervisory 42 42 - - - 6 about the audit content from the independent auditor, and in the mutual distribution of the audit report, together Board members) and provide cooperation, such as witnessing the audits with conducting joint audits. Furthermore, the Internal Upper limits of annual compensation for directors and Audit & Supervisory Board members upon resolution of the Ordinary General Meeting of Shareholders of the independent auditor, if necessary. In addition, they Audit Department and the independent auditor formulate (Annual amount) have regular meetings with the independent auditor as audit plans related to assessments of internal control over (1) Directors Fixed Remuneration 300 million Short-term performance-based remuneration 120 million(excluding outside directors) regards the audit system, the audit plan, and the audit financial reporting. The results of these audit plans are Medium-term performance-based remuneration 60 million(excluding outside directors) implementation status. discussed at meetings held from time to time on a regular Long-term performance-based remuneration 120 million(excluding outside directors) The Audit & Supervisory Board members and basis, as necessary. (2) Audit & Supervisory Board members Fixed remuneration 60 million

39 AKEBONO REPORT 2016 AKEBONO REPORT 2016 40 Corporate Governance 42 AKEBONO REPORT 2016 To share what our stakeholdershave to say with our When we carried out our fiscal survey, 2015 we set a Going forward, weapply will our survey results to Recently, the scope of the survey was expanded Corporate Brand Awareness Survey and Corporate Brand Brand Reports Thai, Indonesian, Vietnamese and Spanish—wide-ranging Akebono conductsits own surveys annual on corporate “Brand Report 2015” newsletter from 79.5% in theprevious from 79.5% fiscal year to 85.1%. furtherraise associates’ awareness, therebyenhancing the quality of their daily operations. targets of or 80% higher withregard to ourcorporate brand to ainclude widerange of ourdomestic and overseas associates worldwide, weissueReport,Brand the which initiatives greaterto oursecurethe future reflected in are ourbases inNorth Japan, America,Europe and Asia. The summarizes—in Japanese, French, English, Chinese, stakeholder feedback and opinionsgleaned from these surveys. Thishelps ensure such feedback and opinions satisfaction ofour stakeholders. eachIn fiscal field. 2015, we conductedsurvey a all of corporatebrand management. These surveyshave been conducted every year since 2005, when corporatebrand drives ourbranding promotion activities. previous fiscal year to 68.3%, and at Alocs Corporation at and Corporation Alocs year fiscal toprevious 68.3%, businesslocations, such as customers and suppliersin of respondents totaled number 6,928. rate recognition initiative associates. among management the in Ltd. 55.1% from Co., rates atManufacturing Sanyo brand brand awareness in order to effectively put into practice part of theDo,Plan, Check and Act(PDCA) cycle that management was introduced, as was theyintroduced, essential are management an In fiscal 2015, fiscalIn we 2015, wereable to significantlyimprove the

Corporate Brand Management and Corporate Corporate and Management Brand Corporate Social Responsibility Branding “good company” “great company” Fulfilling corporate social responsibility “favorite company” Sustainably achieving

Akebono’s Corporate Mission Strategic CSR Regular CSR

Information disclosure

Compliance Basic Risk management requirements Social contribution Environmental

manufacturer activities Human rights/ products and services Providing high-quality Maintaining status as a labor relations technologically advanced Akebono considers its fulfilling corporate social In other activitiesis CSR ofIn itswords, pursuit regular CSR Policy: Differentiating Level of Safety and characteristics Corporate Mission society with safety put into practice our Constantly providing achievement and peace of mind to quality Our Corporate Brand Management and Our Corporate Brand Activities Positioning of CSR At the same time, corporate branding initiatives reflectAt initiatives corporate the same time, branding Sustainably achieving Akebono’s Corporate Mission by establishing the relevant policies the relevant policies by establishing Mission Akebono’s Corporate achieving Sustainably related activities. training and other in employee fully engaged and being The Relationship between Corporate Brand and CSR the Company’s strategic CSR initiative aimed at strategic the Company’s aimed initiative further CSR the expectations of stakeholders,namely, customers, aninitiative aimed atenhancing corporate valueby meeting fiscal 2008 onward, we have focused on two aspects of torealize greater brandrecognition by theenhancing an essential part of maintaining its operating foundation. its foundation. operating part ofessential an maintaining safety with people provides consistently that a company andpeace ofmind throughits operations. shareholders and associates, with anequal emphasis advancedmanufacturer. Since then, wehave been striving enhancingits social andcorporate value. Torealize our 2005, Akebono went on to formulate the Brand Statement, Statement, Brand the to went on Akebono formulate 2005, From competitive Company’s the edge. strengthening our corporate image, namely, the provision of high-quality Corporate Mission, we promote will corporatebranding placed oneach of thesekey stakeholder October In groups. Company’s attractivenessCompany’s strengths. and business operations. products andservices and ourstatus as a technologically responsibility (CSR) to be indispensable to (CSR) to continued responsibility be indispensable remaining to greater corporate secure strength, initiatives implementing the full-scale launch of its corporate brand managementinitiative with the of aim encouraging pride in the Akebonobrand among associates and thereby In 2005,In Akebonoinitiated corporatebrand management, Management Systems Moreover, in recent years, in light of the increasing In the future,at thesame timeas continuing to In November 2015, AkebonoNovember madethe In public 2015, fact that Information Security Activities further strengthening its information its security. information Asfurther strengthening part where an information security personnel or information Akebono has established an Information Security activities, we will continue to regularly conduct toregularly continue weactivities, will assessmentsby an external vendor for domestic to implement appropriate measures protecting information fordata ownedin-house orprovided by customers or verified the andpositioning functioning of this committee, companies in fiscal 2015. countermeasures tocyber-attacks, whichare becoming of these efforts, security information we implemented andguidelines througheducation and training, theCompany other socialnorms, and strives to achieve the continuous expansion,growing dependence IT on and the assets appropriately. Weclarify measures according to toonce every twomonths. At thesame time, weagain toimprove business the Company’s and workplace system administratorin each section carries out their own checksagainst theinformation security risks to which their event thata violationdoes occur, suchas withregard to the and worked to improve the committee’s effectiveness, effectiveness, committee’s the improve to worked and guidelines and rules for the handling of information in order and the Company theand decided toincrease the frequencyof Group companiesin and fiscal 2014 for overseasGroup Company’s rules of employment, it is strictly dealt with. The it is strictly with. dealt ofrules employment, Company’s Companycomplies withrelevant all laws andregulations and communication. implement globaleducation and awareness-raising our strengthen and security information assessments, increasingly sophisticated. improvement of its management systems, including in response to changesin the environment. risk of information leakage due to global business increased liquidity of employment, the Company is businesspartners from allkinds of threats,including Committee, as well asinformation security policies, respective operations are vulnerable.UsingPDCA a cycle to raise awareness of and adherence to the variousregulations is working toensureinformation security. theunlikelyIn has also set up a working group, and established a system system a established and group, a working up set also has materialityrisk, and in order toprovide appropriateprotection negligence, accidents,natural disasters, andcriminal acts. ComplianceCommittee meetings from once aquarter notably by increasing its members and their training. it had uncovered an incidence of inappropriate accounting, Under the Information Security Committee, the Company Company the Security Committee, Information the Under Corporate Governance, Compliance and Compliance Governance, Corporate Security Activities Information

: Amanagement methodology that controls company’s

Toprevent compliance violations or to detect them Torespond to the globalization of management, Moreover, Akebono conducts hearings about

Corporate Governance Corporate As it expands globally, it is important that Akebono, VicePresident. Under the former’ssupervision, thelatter Compliance Structure Risk Management Supporting a solid corporate structure, every Akebono associate is committed to ensuring committed to ensuring associate is every Akebono structure, a solid corporate Supporting information and implementing legal compliance and risk management thoroughgoing security policies. were given to all associates in Japan, and a month dedicated dedicated month a and Japan, in associates to all weregiven Akebononot only conducts compliancebut also endeavors Accordingly, we have set up the Compliance Committee, Committee, Compliance the up set have we Accordingly, Akebono’srisk management structureis supported by toraise thelevel of awareness ongeneral compliance issues to strengthening compliancegenerated thoughtful workplace the akebonoStandard Global ofBehavior, and we also work toimprove awareness of compliance,by conducting a variety to correctly recognize and carryto and correctly itsout recognize corporate social theRiskManagementCommittee, comprising agroup of activities from the fouraspects Do(implementation of(planning), Plan compliance for associates ofdomestic group companies every year. The results of these hearings can help at an early stage, and resolve them, Akebono has sethas up Akebono resolve them, atand early stage, an of entrustedbeen has to the outsourced consultation At of all agencies. Akebonothesecounters, specialized doesnot that consultation ensures personthe seeking addition to in this, fiscalcompliance proficiency 2015 tests and is and bychaired the Representative Director & Executive and the Risk EvaluationandRisk the Committee, whichoversees the ofCheck a plan), (checking the outcome) and Act(effecting consultationcounters, both in-house and outsourced, to contractemployees and some Among these, employees. such asinformation control prevention and ofharassment In discussions. of educationalprograms. Aspart of these effortsin our job- directors by chaired Representativethe Director & CEO, protects thedetails of theconsultation and thepersonal improvementbased on the check) *PDCA provide counseling for associates, all temporaryincluding information of theperson seeking the consultation, and treatment. receive anyprejudicial promoted the akebonoCode Global ofConduct together with Standard ofBehavior” to be observedby each associate. beyond complying with thelaw regulations,and correctly plays twokey risk management functions, controlling Groupwide criticalrisks andpromoting business continuity responsibility. To this end, wehave established and management (BCM) activities. (BCM) management implementation of thePDCA* cyclein risk management level-based trainingprogram, weinclude compliance training under thedirection of thepresident, and established the understands and fulfills its corporate social responsibility.

“akebono Code Global of Conduct”“akebono and Global Management Systems AKEBONO REPORT 2016 41 Economic Report 44 0 1 250 5,153 5,686 4,603 5,104 6,893 2,129 (9,676) 75,638 14,694 13,539 39,722 40,888 20,006 28,001 12,927 29,204 59,824 29,352 53,750 (17,569) 144,275 750,382 682,412 796,480 176,956 115,117 190,060 102,573 108,705 267,157 (171,931) (Note) 2016 1,546,862 U.S. Dollars $ 257,012 $1,814,019 Thousands of AKEBONO REPORT 2016 - - 26 72 754 466 444 653 319 248 6,733 1,737 3,345 5,348 4,489 2,269 4,259 3,324 6,572 4,725 5,771 (1,993) 15,000 16,538 50,403 65,495 19,939 12,978 21,266 31,678 10,606 22,222 59,919 100,480 165,975 2015 ¥225,894 ¥ 29,602 0 - 28 581 641 519 575 777 Millions of Yen 240 8,523 1,656 1,526 4,607 3,155 4,476 2,254 1,457 3,291 6,741 3,307 6,057 (1,980) (1,090) 16,257 76,894 84,553 89,747 19,939 12,971 21,416 11,558 12,249 30,103 (19,373) 174,300 2016 ¥ 28,960 ¥204,404 Current portion of long-term loans payable Lease obligations Income taxes payable Accrued expenses Deferred tax liabilities Provision for bonuses Notes payable—facilities Provision for business structure improvement Long-term loans payable Long-term accounts payable—other Lease obligations Deferred tax liabilities for land revaluation Provision for director’s retirement benefits Provision for director’s Net defined benefit liabilities Deferred tax liabilities stock Treasury Capital stock Capital surplus Retained earnings Valuation difference on available-for-sale securities difference on available-for-sale Valuation Revaluation reserve for land Foreign currency translation adjustment Remeasurements of defined benefit plans Notes and accounts payable—trade Notes and accounts Short-term loans payable Current portion of bonds Current liabilities Noncurrent liabilities Shareholders’ equity Accumulated other comprehensive income Subscription rights to shares Non-controlling interests Total net assets Total

Other Other Total Liabilities Total

LIABILITIES AND NET ASSETS LIABILITIES AND NET

liabilities and net assets Total (613) (575) 8,583 9,185 24,342 17,057 12,760 23,848 36,166 19,648 43,347 20,052 100,305 138,091 905,362 112,892 191,649 326,517 110,812 746,223 231,889 345,084 (Note) 2016 1,067,796 U.S. Dollars $1,814,019 $ 181,070 Thousands of (76) (265) 2,710 3,537 1,173 1,213 2,454 4,369 2,632 3,792 1,049 3,259 25,676 31,522 13,507 21,656 40,605 12,547 80,353 26,360 47,331 145,540 111,308 2015 ¥225,894 ¥ 12,365 (69) (65) 967 Millions of Yen 2,743 1,922 1,438 2,687 4,075 2,214 4,884 1,035 2,259 11,302 15,560 12,721 21,595 36,792 12,486 84,084 26,129 38,884 120,319 102,016 2016 ¥204,404 ¥ 20,403

Investment securities Net defined benefit assets Deferred tax assets Allowance for doubtful accounts Other, net Other, Construction in progress Merchandise and finished goods Merchandise and finished Work in process Raw materials and supplies Accounts receivable—other Deferred tax assets Allowance for doubtful accounts Buildings and structures, net equipment and vehicles, net Machinery, Notes and accounts receivable—trade Notes and accounts Cash and deposits

The value of the U.S. dollar is, purely for the sake of convenience, calculated using the approximate exchange rate as at March 31, 2016, which was ¥112.68 to $1 The value of the U.S. dollar is, purely for the sake of convenience, calculated using the approximate exchange (figures are rounded down to the nearest $1,000). Noncurrent assets Intangible assets Investments and other assets Property, plant and equipment Property, Current assets

Total assets Total Other

Other Land

ASSETS Economic Report Economic Note: 

Akebono Brake Industry Co., Ltd. and Consolidated Subsidiaries Years Ended March 31, Ended March Years Consolidated Subsidiaries Co., Ltd. and Brake Industry Akebono 2015 2016 and Consolidated Balance Sheets Balance Consolidated AKEBONO REPORT 2016 43 Economic Report 46 8 (7) (1) (1) 71 48 174 (665) (343) (170) 8,243 (5,903) (9,695) (1,330) (6,095) (1,210) (86,044) 60,089 net net net (29,816) (19,462) ¥59,919 ¥30,103 (172,723) (264,607) Total Total Total ¥60,432 ¥59,919 $531,763 $267,157 assets assets assets 286 286 2,534 2,534 7,552 (1,781) (1,781) ¥5,771 ¥6,057 ¥7,552 ¥5,771 $51,216 $53,750 Non- Non- Non- interests interests interests controlling controlling controlling AKEBONO REPORT 2016 (8) (8) 49 49 (70) (70) 199 ¥248 ¥240 ¥199 ¥248 $2,200 $2,129 shares shares shares rights to rights to rights to Subscription Subscription Subscription 9,975 9,975 (9,973) (9,973) other (88,508) (88,508) other other 12,247 income income income ¥22,222 ¥12,249 ¥12,247 ¥22,222 $197,212 $108,705 Accumulated Accumulated Accumulated comprehensive comprehensive comprehensive 996 996 (676) ¥(676) (1,410) (1,410) ¥ 319 plans plans plans $(9,676) (12,510) (12,510) $ 2,835 ¥ 319 ¥(1,090) of defined benefit Remeasurements of defined benefit of defined benefit Remeasurements Remeasurements 1,451 3,273 3,273 (1,417) (1,417) ¥4,725 ¥3,307 (12,579) (12,579) ¥1,451 ¥4,725 $29,352 $41,931 Foreign Foreign Foreign currency currency currency translation translation translation adjustment adjustment adjustment 169 169 183 183 1,498 1,498 6,389 ¥6,572 ¥6,741 land ¥6,389 ¥6,572 land land $59,824 $58,325 reserve for reserve for reserve for Revaluation Revaluation Revaluation Millions of Yen Millions of Yen 5,082 5,524 5,524 (7,315) (7,315) on on on (64,917) (64,917) $29,204 $94,121 ¥10,606 ¥ 3,291 ¥ 5,082 ¥10,606 for-sale for-sale for-sale Valuation available- Valuation available- Valuation available- securities securities securities difference Accumulated other comprehensive income difference difference Accumulated other comprehensive income Accumulated other comprehensive income Accumulated other comprehensive 8 Thousands of U.S. Dollars (Note) (7) (1) (1) 71 48 174 (665) (343) (5,903) (1,330) (6,095) (1,210) (8,414) Total 40,092 Total Total equity (20,120) (19,462) equity equity ¥31,678 ¥11,558 (172,723) (178,563) ¥40,435 ¥31,678 $ 281,136 $(102,573) shareholders’ shareholders’ shareholders’ (7) (1) (1) 14 14 76 77 121 128 (2,069) ¥(1,993) ¥(1,980) ¥(2,069) ¥(1,993) $(17,569) $(17,690) shares shares shares Treasury Treasury Treasury 174 (665) (343) (5,903) 8,005 (1,330) (6,095) (7,250) ¥8,348 ¥ 754 (20,128) (19,462) (178,627) (172,723) $(171,931) ¥ (19,373) ¥ ¥ 754 $ 6,695 $ earnings earnings earnings Retained Retained Retained (6) (6) (58) (58) (28) Shareholders’ equity Shareholders’ equity Shareholders’ equity (1,210) (1,239) 14,217 ¥12,978 ¥12,971 $115,117 $115,175 ¥14,217 ¥12,978 Capital Capital Capital surplus surplus surplus - - - 19,939 ¥19,939 ¥19,939 ¥19,939 ¥19,939 $176,956 $176,956 stock stock stock Capital Capital Capital 2015 2016 2016 Cumulative effects of changes in accounting policies Restated balance Dividends from surplus Loss attributable to owners of parent (net loss) Purchases of treasury shares Disposal of treasury shares Purchase of shares of consolidated subsidiaries Net changes of items other than shareholders’ equity Net changes of items other than shareholders’ equity Loss attributable to owners of parent Purchases of treasury shares Disposal of treasury shares Dividends from surplus Loss attributable to owners of parent Purchases of treasury shares Disposal of treasury shares Net changes of items other than shareholders’ equity Dividends from surplus Balance at the beginning of period Changes of items during period Reversal of revaluation reserve for land changes of items during period Total Balance at end of current period changes of items during period Total Balance at end of current period

Balance at the beginning of period Balance at the beginning period Changes of items during changes of items during period Total Balance at end of current period Balance at the beginning of period Changes of items during period Consolidated Statements of Changes in Net Assets in Net Assets of Changes Statements Consolidated (Summary) Akebono Brake Industry Co., Ltd. and Consolidated Subsidiaries Years Ended March 31, Ended March Years Consolidated Subsidiaries Co., Ltd. and Brake Industry Akebono 2016 and 2015 - - - 74 594 155 5,000 5,990 3,953 1,619 2,259 4,614 4,619 7,089 1,048 6,528 7,586 1,007 4,399 9,885 1,498 43,998 44,747 33,626 15,192 17,741 25,327 (60,478) (33,380) (64,917) (17,388) (12,272) (93,079) 105,072 121,781 146,126 179,505 (137,512) (162,839) (255,918) (261,231) 2,350,687 (Note) (Note) 2016 2016 $ (162,839) $ 5,313 $ $2,496,813 $ (172,723) U.S. Dollars U.S. Dollars Thousands of Thousands of - - - - 89 33 59 15 218 277 319 429 197 450 235 102 364 446 138 357 987 (616) 3,271 2,369 1,197 1,204 3,726 2,833 1,935 2,326 4,261 4,004 1,217 5,524 3,983 5,973 4,055 (4,877) 24,314 20,310 10,850 (6,095) ¥ (4,877)

229,843 ¥ 1,918 ¥ ¥254,157

2015 2015 8

- - - 67 18 563 520 445 182 255 520 799 736 675 118 855 496 113 169 Millions of Yen Millions of Yen 5,042 3,789 1,712 4,958 1,999 2,854 1,114 (6,815) (3,761) (7,315) (1,959) (1,383) 11,840 13,722 16,465 20,227 (15,495) (18,349) (10,488) (28,837) (29,435) 264,875 ¥(18,349) ¥ 599 ¥ (19,462) ¥ 281,341 2016 2016

Ordinary income (loss) Loss before income taxes Gross profit Operating income (loss) Profit (loss) Loss attributable to owners of parent

The value of the U.S. dollar is, purely for the sake of convenience, calculated using the approximate exchange rate as at March 31, 2016, which was ¥112.68 to $1 The value of the U.S. dollar is, purely for the sake of convenience, calculated using the approximate exchange (figures are rounded down to the nearest $1,000). Subsidy income assets Loss on sales and retirement of noncurrent Impairment loss Provision for business structure improvement Expenses for product compensation Amortization of business commencement expenses Miscellaneous expenses Loss on recall issue Loss on reduction of noncurrent assets Interest expenses Foreign exchange losses Environmental expenses Miscellaneous income Gain on sales of noncurrent assets Gain on sales of investment securities Income taxes—current Income taxes—deferred Dividend income equity method Share of profit of entities accounted for using Foreign exchange gains securities difference on available-for-sale Valuation Interest income Loss attributable to non-controlling interests Foreign currency translation adjustment Revaluation reserve for land Total other comprehensive income Total Comprehensive income attributable to owners of the parent Comprehensive income attributable to non-controlling interests

Extraordinary income Depreciation Non-operating expenses Non-operating income Extraordinary loss

Profit (loss) Net sales Cost of sales expenses Selling, general and administrative

Income taxes

Remeasurements of defined benefit plans, net of tax

Comprehensive income

Economic Report Note:  Consolidated Statements of Comprehensive Income * See accompanying Notes to Consolidated Financial Statements. Consolidated Statements of Income Consolidated

Comprehensive Income Comprehensive 31, Ended March Years Consolidated Subsidiaries Co., Ltd. and Brake Industry Akebono 2016 and 2015 Consolidated Statements of Income and and of Income Statements Consolidated AKEBONO REPORT 2016 45 Economic Report 48 − − − ¥254,157 ¥ 4,004 ¥254,157 ¥281,341 ¥281,341 ¥ (3,761) $ (33,380) $2,496,813 $2,496,813 Consolidated total (Note 2) Consolidated total (Note 2) Consolidated total (Note 2) − − AKEBONO REPORT 2016 (17,876) (21,532) (191,088) (Note 1) (Note 1) (Note 1) ¥ − ¥ ¥ (21,532) ¥ ¥ (17,876) ¥ 348 ¥ 381 $ (191,088) $ $ 3,383 Adjustment Adjustment Adjustment 17,876 21,532 Total Total Total 191,088 ¥272,033 ¥ 3,656 ¥254,157 ¥302,873 ¥281,341 ¥ (4,142) $2,687,901 $2,496,813 $ (36,762) $ 2,020 3,081 27,339 ¥ 1,821 ¥16,372 ¥14,352 ¥ 1,683 ¥16,551 ¥13,471 $146,887 $119,549 $ 14,934 Indonesia Indonesia Indonesia 357 577 5,117 ¥5,496 ¥ 262 ¥5,138 ¥ 474 ¥6,034 ¥5,457 $53,546 $48,428 $ 4,205 2015 2016 2016 Thailand Thailand Thailand Millions of Yen Millions of Yen 352 401 3,560 2,531

China China China ¥14,286 ¥ 1,681 ¥13,934 ¥19,430 ¥ ¥19,028 Thousands of U.S. Dollars (Note 3) $172,432 $168,871 $ 22,459 Segment Segment Segment 2,135 1,682 14,923 ¥ (544) ¥8,880 ¥6,745 ¥10,851 ¥ 9,169 $ (7,868) ¥ (887) $96,299 $81,376 Europe Europe Europe 3,031 4,941 43,848 North North North America America America ¥ (3,165) ¥140,259 ¥137,228 ¥ (11,202) ¥166,911 ¥161,970 $1,481,284 $1,437,436 $ (99,418) 9,981 96,300 10,851 Japan Japan Japan ¥ 3,602 ¥86,740 ¥76,759 ¥83,096 ¥ 3,259 ¥72,245 $ 28,925 $737,454 $641,154 The value of the U.S. dollar is, purely for the sake of convenience, calculated using the approximate exchange rate as at March 31, 2016, which was ¥112.68 to The value of the U.S. dollar is, purely for the sake of convenience, calculated using the approximate exchange $1 (figures are rounded down to the nearest $1,000). 1. Adjustment to operating income (loss) to eliminate intersegment transactions. 1. Adjustment to operating income (loss) to eliminate intersegment of income. 2. Operating income (loss) after adjustments to reconcile total with figure presented in the consolidated statements 3.  Operating income (loss) Total sales Total Total sales Total Operating income (loss) Sales to customers Intercompany sales/ transactions Sales to customers Intercompany sales/ transactions Total sales Total Operating income (loss) Intercompany sales/ transactions Sales to customers ■ Segment Information A summary of information mainly in the production and sale of brake products. Co., Ltd. and its consolidated subsidiaries engage Akebono Brake Industry 31, 2016 and 2015 is as follows: of the Company for the years ended March classified by reporting segment Notes: (5) - - - - (74) (164) 1,464 5,406 4,619 4,513 4,131 4,845 7,082 3,858 (9,061) (1,863) (2,044) (5,406) (3,658) (4,667) (5,480) (5,926) (1,377) (6,517) 99,345 76,054 99,590 14,558 28,409 66,701 15,192 71,388 (43,998) (15,460) (22,591) (89,474) 105,072 382,067 109,733 116,025 (133,120) (147,314) (155,722) (Note) $ (137,512) 2016 $ 181,070 U.S. Dollars Thousands of - (1) - - - (47) (18) (15) 583 224 405 113 260 519 114 (248) (583) (880) (221) (308) (528) (585) (712) (952) 2,671 3,271 5,812 1,212 1,044 1,204 1,082 (1,189) (9,761) (3,213) (1,331) (2,850) (1,167) 13,666 20,019 13,532 10,756 10,210 (20,585) (17,708) ¥ (616) ¥ ¥12,365 2015 (8) (1) - - - - (18) 609 165 509 546 520 465 435 798 Millions of Yen (210) (230) (609) (412) (526) (617) (668) (155) (734) 3,201 8,570 8,038 1,640 7,516 1,712 (1,021) (1,742) (2,546) (4,958) 11,840 11,194 43,051 11,222 12,365 13,074 (16,599) (17,547) (15,000) (10,082) ¥ (15,495) ¥ 20,403 2016

Cash flows from investing activities Cash flows from financing activities Cash flows from operating activities

Purchases of intangible assets Increase (decrease) in allowance for doubtful accounts Increase (decrease) in Interest and dividend income received Interest expenses paid Repayments of long-term loans payable Other, net Other, Interest and dividend income Purchases of investment securities Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation net Other, Increase (decrease) in net defined benefit liabilities Increase (decrease) in Proceeds from sales of property, plant and equipment plant and Proceeds from sales of property, Purchases of property, plant and equipment Purchases of property, Impairment loss Loss before income taxes Cash dividends paid Decrease (increase) in notes and accounts receivable—trade Increase (decrease) in notes and accounts payable—trade Decrease (increase) in inventories Income taxes paid Proceeds from withdrawal of time deposits Proceeds from long-term loans payable Redemption of bounds Share of (profit) loss of entities accounted for using equity method Share of (profit) loss of entities accounted for Loss (gain) on sales and retirement of noncurrent assets Loss (gain) on sales and retirement of noncurrent Loss (gain) on sales of investment securities Increase (decrease) in provision for business structure improvement Increase (decrease) in provision for business structure Proceeds from state subsidy Proceeds from sales of investment securities Dividends paid to non-controlling interests Decrease (increase) in treasury shares Other, net Net increase (decrease) in short-term loans payable Interest expenses Proceeds from stock issuance to non-controlling shareholders Purchase of treasury shares of subsidiaries Proceeds from sales and leasebacks

Cash and cash equivalents end of period

Effect of exchange rate change on cash and cash equivalents

CASH FLOW FROM OPERATING ACTIVITIES: CASH FLOW FROM OPERATING

Subtotal

CASH FLOW FROM INVESTING ACTIVITIES:

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Depreciation

CASH FLOW FROM FINANCING ACTIVITIES:

Economic Report

Akebono Brake Industry Co., Ltd. and Consolidated Subsidiaries Years Ended March 31, Ended March Years Consolidated Subsidiaries Co., Ltd. and Brake Industry Akebono 2015 2016 and Consolidated Statements of Cash Flows of Cash Statements Consolidated AKEBONO REPORT 2016 47 O Corporate Information O Corporate Information (As of March 31, 2016)

Ai-City (Headquarters): Akebono Crystal Wing (ACW) (Hanyu City, Saitama, Japan)

Directors (As of June 17, 2016) Audit & Supervisory Board Company Outline (As of June 17, 2016) Company Name Akebono Brake Industry Co., Ltd. Audit & Supervisory Board Member (Standing) Takeshi Okumura Founded January 27, 1929 Audit & Supervisory Board Member (Standing) Takunobu Okada Global Head Office 19-5 Nihonbashi Koami-cho, Chuo-ku, Tokyo 103-8534, Japan Audit & Supervisory Board Member Kesao Endo ** Global Head Office: Ai-City (Headquarters) 5-4-71 Higashi, Hanyu City, Akebono Nihonbashi Building (Chuo-ku, Tokyo) Audit & Supervisory Board Member Keizo Tannawa ** Saitama 348-8508, Japan Audit & Supervisory Board Member Tomohiro Katayama ** President and CEO Hisataka Nobumoto ** Outside members in accordance with Article 2-16 of the Corporation Law Paid-in Capital ¥19.9 billion (as of March 31, 2016) Net Sales ¥281.3 billion (fiscal 2015) Representative Director & Representative Director & Number of Associates 9,238 (as of March 31, 2016) Member of the Board Member of the Board Executive Officers (As of July 1, 2016) Ai-Museum (brake museum) Hisataka Nobumoto Yoshimasa Ogino Opening hours: Every Wed. 14:00-16:00 Chairman, President & CEO Hisataka Nobumoto

Executive Vice President Yoshimasa Ogino Investor Information

Executive Vice President Kazuo Matsumoto Stock Listing Tokyo Stock Exchange, First Section (Code: 7238)

Senior Managing Executive Officer Kanji Miyajima Common Stock Authorized: 440,000,000 Shares Issued: 135,992,343 Shares Principal No. of shares held % of Senior Managing Executive Officer Takeshi Saito Shareholders Shareholders (1,000 shares) issued common stock Toyota Motor Corporation 15,495 11.4 Senior Managing Executive Officer Jean de Montlaur Robert Bosch L.L.C. 12,597 9.3 Senior Managing Executive Officer Yuji Ando Isuzu Motors Limited 12,111 8.9 Itochu Corporation 5,546 4.1 Representative Director & Member of the Board Senior Managing Executive Officer Katsuji Hidaka BBH Boston for Metzler Investment GmbH, Frankfurt 5,261 3.9 Member of the Board Kanji Miyajima Kazuo Matsumoto Managing Executive Officer Seiji Onoda Japan Trustee Services Bank, Ltd. (trust account) 4,146 3.0 Deutsche Bank AG Frankfurt-Domestic Custody Services 3,900 2.9 Managing Executive Officer Yoichi Shinagawa Aisin Seiki Co., Ltd. 3,133 2.3 Managing Executive Officer Seiji Nishimura Akebono Brake SEIWAKON Employee’s Shareholding Association 2,142 1.6 Marubeni-Itochu Steel Inc. 2,000 1.5 Managing Executive Officer Toshiyuki Negishi KYB Corporation 2,000 1.5 Managing Executive Officer Wilm Uhlenbecker SECOM CO., LTD. 2,000 1.5

Executive Officer Masaaki Ando Note: The Company’s holding of treasury stock is not included in the above list of principal shareholders.

Executive Officer Kiyoshi Tanaka Transfer Agent & Mitsubishi UFJ Trust and Banking Corporation Registrar Corporate Agency Department, 7-10-11 Higashisuna, Koto-ku, Tokyo 137-8081, Japan Executive Officer Takao Watanabe Annual Shareholders’ The annual shareholders’ general meeting is normally held in June each year. Member of the Board Member of the Board General Meeting Kunio Ito * Takuo Tsurushima * Advisors (As of July 1, 2016) Independent Auditor Deloitte Touche Tohmatsu LLC No. of Executive Advisor J.W. Chai Shareholders Category No. of shareholders shares held(100 shares) Japanese Individuals & Others 13,398 325,087 Honorary Senior Advisor Hidemitsu Kuwano Japanese Government & Municipal Corporations 0 0 Executive Technical Advisor / Financial Institutions (Excluding Securities Firms) 31 193,567 Assistant to the President & CEO Shunji Yokoo Securities Firms 27 13,396 Other Japanese Corporations 144 540,174 Assistant to the President & CEO Sachiyuki Ishige Non-Japanese Shareholders & Others 136 286,646 Technical Advisor Takashi Kudo TOTAL 13,736 1,358,870 No. of Shares in less than units of 100 — 105,343 shares Technical Advisor Toshifumi Maehara Note: The number of treasury shares as of March 31, 2016 was 2,938,199. Of these, 2,938.1 thousand shares are included under Advisor “Japanese individuals & others,” and 99 shares are included under “No. of shares in less than units of 100.” Member of the Board Masahiro Miyamoto The number of shares in the name of the Japan Securities Depository Center as of March 31, 2016 is 3,500. Of these, 3.5 thousand

Ken Okazaki * shares are included under “Other Japanese corporations.” The number of treasury shares indicated in the shareholders’ list is 2,938,199, whereas the actual number as of March 31, 2016 was 2,937,199.

* Outside directors in accordance with Article 2-15 of the Corporation Law Corporate Information Percentage of Non-Japanese Shares Held by shareholders & others 210 Japanese individuals & others 22 Shareholder Category (%) Other Japanese Financial institutions (excluding securities firms) 12 corporations Securities firms 0

49 AKEBONO REPORT 2016 AKEBONO REPORT 2016 50 Corporate Information A

Akebono Group (Japan) (As of June, 2016) Akebono Group (Overseas) (As of June, 2016)

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

Global Head Office Akebono Advanced Engineering Co., Ltd. Akebono Brake Corporation AB Akebono Brake (Thailand) Co., Ltd. AKBT 19-5 Nihonbashi Koami-cho, Chuo-ku, Tokyo (R&D of high-performance brake systems) (North American Head Office) (Manufacture and sales of disc brakes and Pads) 103-8534, Japan 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan 34385 W. Twelve Mile Road, Farmington Hills, MI 700/880 Amata Nakorn Industrial Estate Moo.1, 48331, U.S.A. Tambol Panthong Amphur Panthong,Chonburi 20160, Thailand Ai-City Akebono Brake Yamagata Manufacturing Co., Ltd. Akebono Engineering Center AE (R&D) 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan (Manufacture of disc brake pads and other brake Akebono Corporation 34385 W. Twelve Mile Road, Farmington Hills, MI components) (Manufacture and sales of disc brakes and drum brakes) 48331, U.S.A. Chubu Office 161-3 Chuo Kogyo Danchi, Sagae City, Yamagata No. 8 Hefeng 1st Street, Yonghe Economic Zone of 3-13 Obayashi-cho, Toyota City, Aichi 473-0902, Japan 991-0061, Japan Akebono Brake Corporation (Elizabethtown) AB Guangzhou Development District, Guangzhou, China (North American Co-head Office, sales and marketing) 511356 Sapporo Sales Office Akebono Brake Fukushima Manufacturing Co., Ltd. 310 Ring Road, Elizabethtown, KY 42701, U.S.A. (Manufacture of drum brake linings, disc brake pads and Akebono Corporation 3-2-66 Kitaokadama Sanjo, Higashi-ku, Sapporo City, Akebono Brake, Elizabethtown Plant ABE (Manufacture and sales of disc brake pads) Hokkaido 007-0883, Japan other brake components) (Manufacture of disc brakes, drum brakes and disc 10 Aza-Shinjuku, Oaza-Narita, Koori-machi, Date-gun, brake pads) TingLan Road No. 168 ChangYang Street, Industrial Fukushima 969-1652, Japan Park, Suzhou, China 215021 Sendai Sales Office 300 Ring Road, Elizabethtown, KY 42701, U.S.A. 3-7-13 Hinode-machi, Miyagino-ku, Sendai City, Akebono Brake Iwatsuki Manufacturing Co., Ltd. Akebono Brake, Glasgow Plant AB PT. Akebono Brake Astra Indonesia AA Miyagi 983-0035, Japan (Manufacture of disc brakes, drum brakes and brake (Manufacture of disc brakes and disc brake pads) (Manufacture and sales of disc brakes, drum brakes, components) 1765 Cleveland Avenue, Glasgow, KY 42141, U.S.A. pads, linings, master cylinders and other brake Kanto Sales Office 1190 Oaza-Kanamuro, Iwatsuki-ku, Saitama City, Akebono Brake, Clarksville Plant ABT components) 5-4-71 Higashi, Hanyu City, Saitama 348-8501, Japan Saitama 339-8601, Japan (Manufacture of disc brakes, disc rotors, drum brakes, Jl. Pegangsaan Dua Blok A1, Km. 1, 6 Kelapa Gading, corner modules and other brake components) Jakarta, 14250, Indonesia Tokyo Metropolitan Sales Office 780 International Boulevard, Clarksville, TN 37040, Akebono Brake Sanyo Manufacturing Co., Ltd. Akebono Brake Astra Vietnam Co., Ltd. AA 19-5 Nihonbashi Koami-cho, Chuo-ku, Tokyo (Manufacture of drum brakes and wheel cylinders) U.S.A. 103-8534, Japan (Manufacture and sales of disc brakes and master 1966-8 Kushiro, Soja City, Okayama 710-1201, Japan Akebono Brake, Columbia Plant AB cylinders for motorcycles) (Manufacture of disc brakes, corner modules, Plot F-3, Thang Long Industrial Park II, Lieu Xa Commune, Osaka Sales Office Alocs Corporation castings and other brake components) Yen My District, Hung Yen Province, Vietnam 2-17 Enoki-cho, Suita City, Osaka 564-0053, Japan (Logistics) 201 Metropolitan Drive, West Columbia, SC 29170, 255-1 Ainohara, Iwatsuki-ku, Saitama City, Saitama U.S.A. A&M Casting (Thailand) Co., Ltd. A Hiroshima Sales Office 339-0071, Japan Akebono Brake Mexico S.A. de C.V. AB (Manufacture and sale of cast-iron automotive 4-1-13 Yanonishi, Aki-ku, Hiroshima City, Hiroshima (Manufacture of disc brakes, drum brakes and other components) 736-0085, Japan Akebono Research & Development Centre Ltd. brake components) Ratchaburi Industrial Estate 155/63 Moo.4, T.Chet Samian, (R&D) Av. Mineral de Valenciana 186 Fracc, Industrial Santa A.Photharam, Ratchaburi 70120, Thailand Fukuoka Sales Office 5-4-71 Higashi, Hanyu City, Saitama 348-8511, Japan Fe II, Guanajuato Puerto Interior, Silao, Guanajuato, Akebono Brake Industry Co., Ltd. 6-12-41 Itazuke, Hakata-ku, Fukuoka City, Fukuoka C.P. 36275, Mexico 812-0888, Japan Akebono 123 Co., Ltd. Representative Office (Cleaning-related services, packing, and printing of 80 Robinson Road #10-01A Singapore 068898 Europe Tatebayashi Foundry business cards) 6012 Aza-Tobu Kogyo Danchi, Oshima-cho, 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan Akebono Brake Europe N.V. AEN Tatebayashi City, Gunma 374-0001, Japan (European Head Office, sales and marketing) NeoStreet Inc. Pegasuslaan 5, 1831 Diegem, Belgium Ai-Ring T (Web shop) 5-4-71 Higashi, Hanyu City, Saitama 348-8501, Japan Akebono Europe S.A.S. (Gonesse) AEA 41-42 Aza-Osaruda, Uwadaira, Ogawa-machi, Iwaki R E A REA City, Fukushima 979-3112, Japan (Sales and R&D) 6 Avenue Pierre Salvi BP 90111, 95505 Gonesse Ai-Museum B Cedex, France 5-4-71 Higashi, Hanyu City, Saitama 348-8508, Japan Akebono Europe S.A.S. (Arras) AAA Ai-Village (Manufacture of disc brake pads) 5-11-26 Higashi, Hanyu City, Saitama 348-0052, Japan Site Artoipôle, 244 Allée d’Espagne, 62118 Monchy-le-Preux, France Akebono Europe GmbH AE (Sales) Auf der Heide 11-13, 65553, Limburg-Dietkirchen, Germany Akebono Advanced Engineering (UK) Ltd. AAE (R&D) 415 Wharfedale Road, Winnersh Triangle, Wokingham, Berkshire RG41 5RA, United Kingdom

Akebono Brake Slovakia s.r.o. ABK Corporate Information (Manufacture and sales of disc brakes) Bratislavská 581, 911 05 Trencin, Slovak Republic Akebono Engineering Center, Europe S.A.S. AEE (R&D for foundation brakes) Bezannes, France

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