Annual Report 2009 Year ended March 31, 2009

NTN 2010 for The Next Step

NTN Corporation Profile NTN, a precision equipment manufacturer, ranks among the top three in the world in bearing sales. The Company holds the largest share of the global market for axle bearings, critical automotive components that enable wheel axles to turn. In fields other than bearings, NTN holds the No. 2 global market share ofconstant- velocity joints (CVJs), a key component for automobile drivetrains. We are now aiming to capture the No. 1 spot in the world market. NTN is a global organization, with more than 60% of its approximately 20,000 employees working overseas. Since it began overseas sales, NTN has been building a five-sided sales and production network encompassing Japan, the Americas, Europe, Asia, and China. Today, the ratio of overseas sales to consolidated net sales exceeds 60%. From April 2008, SNR, which is the France’s No. 1 bearings manufacturer, has become a member of the NTN Group. This move is generating further synergies and enhancing our presence in the European region. NTN is aggressively developing business in newly emerging markets, which are achieving notable economic growth. In China, the Company already has five production bases manufacturing bearings and CVJs. Production has also commenced at a dedicated CVJ site recently established in India. In response to the recent drastic change in the global economic environment, NTN has now started a new medium-term management plan, “NTN 2010 for The Next Step,” covering the two years starting from April 2009. The first year of this new plan is the third and final year of “Growth through Creativity and Achievements 21,” NTN’s medium-term management plan which commenced in April 2007. Aiming to implement lean management that does not rely solely on business scale, NTN is strengthening its corporate structure following the fundamental principle of technological leadership.

Contents

Management Financial Section Eleven-year Consolidated Financial Highlights 2 Financial Review 28 To Our Shareholders 4 Risk Factors 33 Feature: Interview With the Top Management Consolidated Balance Sheets 34 New Medium-Term Management Plan “NTN 2010 for The Next Step” 6 Consolidated Statements of Operations 36 CSR Consolidated Statements of Changes in Net Assets 37 Corporate Governance 10 Consolidated Statements of Cash Flows 38 Management 11 Notes to the Consolidated Financial Statements 39 Compliance, Risk Management 12 Report of Independent Auditors 49 Corporate Social Responsibility (CSR) Activities 13 Corporate Information Intellectual Property Strategy 14 NTN Group Investment Holdings 50 Environmental Protection Initiatives 16 NTN’s Global Network 51 Business Investor Information 53 At a Glance 18 Bearings 19 Constant-Velocity Joints 24 Precision Equipment and Other Products 26

Notice: This annual report contains forecasts and projections regarding NTN’s future plans, strategies, and business results. Please note that actual business results may vary from the projections made herein by the Company.  NTN Annual Report 2009 etwork N echnology T ew N Our contribution to the global community Our contribution to the and of new technologies lies in our creation development of new products. to companies strictly adhere and employees of NTN Group The directors to be consistently fair and Company rules of conduct and strive these actions, NTN seeks business activities. Through in their responsible as well as its shareholders, responsibility to its to fulfill the NTN Group’s customers, local communities, and other stakeholders. Corporate Philosophy For – 0.13 (0.19) $3.83 96,498 (91,469) 504,876 465,835 177,156 (102,861) 1,956,866 $6,389,219 $5,365,978

8.31 8.00 8.78 0.8% 2.4% 9,274 9,726 4,067 35.3% 27,609 24,835 12,554 13,633 171,969 ¥371.39 ¥487,477 ¥325,812 – 6.50 9,779 9,675 (5.0%) (53.30) 29.1% 26,013 24,122 12,770 (15.6%) (41,822) (24,677) 143,874 ¥310.77 ¥494,677 ¥326,474 8.78 6.00 9.26 0.9% 3.0% 6,888 4,289 28.9% 24,123 23,402 10,618 12,619 14,335 138,625 ¥299.44 ¥478,945 ¥340,551 – 5.50 (701) (132) (0.29) 8,140 (0.1%) 29.9% 21,088 24,400 11,706 11,989 (0.03%) 138,532 ¥299.27 ¥462,895 ¥324,339 5.51 5.00 5.70 0.6% 1.9% 6,198 2,657 28.9% 20,785 25,264 23,838 12,255 11,810 134,928 ¥291.82 ¥467,198 ¥342,745 5.50 2.4% 8.0% 21.87 23.54 31.0% 24,709 18,181 11,032 38,092 23,979 13,543 11,885 142,487 ¥308.27 ¥460,341 ¥357,394 8.50 3.4% 32.94 35.83 11.1% 30.6% 33,201 26,586 16,740 49,670 24,870 14,952 12,788 2005 09/3 157,952 ¥341.93 ¥516,578 ¥388,349 08/3 07/3 3.6% 38.55 11.00 41.94 11.5% 32.6% 37,645 30,370 19,550 49,284 28,586 14,771 14,631 2006 183,247 ¥396.73 06/3 ¥561,494 ¥434,837 n 05/3

0 10 30 20 Net income (loss) Billions of yen Billions of ye -10 4.6% 53.74 16.00 58.34 13.8% 34.2% 46,793 45,170 27,014 59,347 32,693 14,221 17,306 2007 215,815 ¥445.61 ¥611,944 ¥483,818 ） 6 4 2 0 8 % 10 （ gin Millions of yen (except per share amounts) share Millions of yen (except per 09/3 Operating mar Operating income 4.4% 54.59 19.00 58.43 13.1% 33.3% 49,612 44,313 27,431 59,504 39,547 15,006 18,960 2008 ¥445.98 216,401 08/3 ¥629,464 ¥533,985 07/3

– 06/3 9,479 13.00 (19.14) (1.3%) (4.3%) 28.2% (8,985) 49,594 45,759 17,402 20,679 2009 ¥376.77 (10,104) 192,223 n ¥627,613 ¥527,100 05/3 0

80 60 40 20 Billions of yen/% Operating income/Operating margin Billions of ye 100 ...... 09/3 ...... 08/3 ...... 07/3 ...... 06/3 ...... n 05/3 - Basic - Diluted 0 Net income (loss)/Average total assets (ROA) Net income (loss)/Average equity (ROE) shareholders’ Net income (loss)/Average ratio equity Shareholders’ Cash dividends Net assets Net income (loss): Net assets/Shareholders’ equity Net assets/Shareholders’ Number of employees Total assets Total Depreciation R&D costs Income (loss) before income taxes Income (loss) before Net income (loss) Capital expenditures Operating income Net sales Billions of ye Net sales Billions of yen 100 300 200 500 400 600 OTHER INFORMATION PER SHARE DATA YEAR-END DATA U.S. dollar amounts have been converted from yen, for convenience only, using the approximate exchange rate on March 31, 2009, which was U.S.$1 = ¥98.23. 31, 2009, which exchange rate on March using the approximate yen, for convenience only, U.S. dollar amounts have been converted from FOR THE YEAR DATA NTN Corporation and consolidated subsidiaries Years ended March 31 ended March Years subsidiaries consolidated and NTN Corporation Eleven-year Consolidated Financial Highlights Financial Consolidated Eleven-year

Management  NTN Annual Report 2009 Management  NTN Annual Report 2009 es eciation Depr – 0.13 (0.19) 09/3 $3.83 Capital expenditur 96,498 (91,469) 504,876 465,835 177,156 (102,861) 1,956,866 2009 08/3 $5,365,978 $6,389,219

07/3 Thousands of U.S. dollars Thousands of (except per share amounts) (except per share 06/3 8.31 8.00 8.78 0.8% 2.4% n 9,726 4,067 9,274 35.3% 13,633 27,609 24,835 12,554 05/3 1999 ¥371.39 171,969 ¥325,812 ¥487,477 0 40 20 60 Capital expenditures/Depreciation Billions of ye Billions of yen – ） 5 0 -5 % 15 10 6.50 （ 9,675 9,779 ’ (5.0%) (53.30) 29.1% 26,013 24,122 12,770 2000 (15.6%) (41,822) (24,677) ¥310.77 143,874 ROE ¥326,474 ¥494,677 eholders equity 09/3 E Shar 08/3 8.78 6.00 9.26 0.9% 3.0% 07/3 6,888 4,289 28.9% 14,335 24,123 23,402 10,618 12,619 2001 ¥299.44 138,625 ¥340,551 ¥478,945 06/3 n 05/3 – 5.50 0 (701) (132) (0.29) 8,140 (0.1%) Shareholders’ equity/RO 300 200 100 Billions of yen/% Billions of ye 29.9% 21,088 24,400 11,706 11,989 2002 (0.03%) ¥299.27 138,532 ¥324,339 ¥462,895 ） 5 4 3 2 1 0 % -2 -1 （ Millions of yen (except per share amounts) share Millions of yen (except per ROA 09/3 5.51 5.00 5.70 otal assets 0.6% 1.9% 6,198 2,657 T 28.9% 20,785 25,264 23,838 12,255 11,810 2003 ¥291.82 134,928 08/3 ¥342,745 ¥467,198 07/3 A 06/3 5.50 2.4% 8.0% 21.87 23.54 31.0% 24,709 18,181 11,032 38,092 23,979 13,543 11,885 2004 ¥308.27 142,487 05/3 n ¥357,394 ¥460,341 0 200 600 400 800 Total assets/RO 1,000 Billions of yen/% Billions of ye 8.50 3.4% 32.94 35.83 11.1% 30.6% 33,201 26,586 16,740 49,670 24,870 14,952 12,788 ¥341.93 157,952 ¥388,349 ¥516,578 3.6% 38.55 11.00 41.94 11.5% 32.6% 37,645 30,370 19,550 49,284 28,586 14,771 14,631 ¥396.73 183,247 ¥434,837 ¥561,494

4.6% 53.74 16.00 58.34 13.8% 34.2% 46,793 45,170 27,014 59,347 32,693 14,221 17,306 ¥445.61 215,815 ¥483,818 ¥611,944 4.4% 54.59 19.00 58.43 13.1% 33.3% 49,612 44,313 27,431 59,504 39,547 15,006 18,960 ¥445.98 216,401 ¥533,985 ¥629,464

– 9,479 13.00 (19.14) (1.3%) (4.3%) 28.2% (8,985) 49,594 45,759 17,402 20,679 ¥376.77 (10,104) 192,223 ¥527,100 ¥627,613

...... - Basic - Diluted Shareholders’ equity ratio equity Shareholders’ Net sales Operating income income taxes Income (loss) before Net income (loss) Capital expenditures Depreciation R&D costs assets Total equity Net assets/Shareholders’ Number of employees Net assets Net income (loss): Cash dividends total assets (ROA) Net income (loss)/Average equity (ROE) shareholders’ Net income (loss)/Average FOR THE YEAR DATA YEAR-END DATA PER SHARE DATA OTHER INFORMATION Hirotsugu Mori Hirotsugu President We look forward to the support and understanding of our shareholders as NTN takes the steps shareholders to the support and understanding of our look forward We In “NTN 2010 for The Next Step,” NTN assumes that the recovery of demand in the automotive assumes that the recovery In “NTN 2010 for The Next Step,” NTN The NTN Group embraces the long-term vision of becoming a corporation that has unrivalled embraces the The NTN Group Yasunobu Suzuki Yasunobu Chairman and CEO achieve favorable business results. necessary to achieve its goal. June 2009 implementation of various measures following the fundamental principle of technological leadership, implementation of various measures Network.” During the two-year period philosophy of “For New Technology corporate based on NTN’s on business volume. NTN will realign of the plan NTN will carry out operations that do not rely acting, and thinking of ways conventional from deviation some allowing while order new a in structures conducting decision-making based on speed and decisiveness. The overriding goal is to thereby from the US financial crisis. To respond to the drastic change in the global economic situation, NTN respond to To the US financial crisis. from the medium-term management plan, “NTN 2010 for The Next Step,” covering a new has prepared and Creativity through and final year of “Growth the third reviewing April 2009, after two years from 2010. Achievements 21,” which ends March years. The plan calls for the more and industrial machinery sectors may take two or three “Rapid Advance 21,” which commenced in April 2004, and “Growth through Creativity and Creativity through in April 2004, and “Growth “Rapid Advance 21,” which commenced implementing growth in April 2007, NTN has been aggressively Achievements 21,” which commenced track, 2009, the economy was initially on a growth March strategies. During the business year ended In contrast, the economy encountered slow in the first half of the year. was generally although growth resulting in the second half of the year due to the global recession very challenging circumstances vicious cycle of the financial crisis and the slowdown of the real economies. Emerging countries, such the slowdown of the vicious cycle of the financial crisis and economic recession. as China and India, also experienced further in five (name recognition) in the world, a corporation with a presence and No. 1 businesses products corporation that of Asia, and a global China and the rest Europe, Japan, the Americas, key regions: Under the medium-term management plans and contributes to society. maximizes human resources During the business year ended March 2009, the economy in Japan moved from moderate growth in moderate growth economy in Japan moved from 2009, the year ended March During the business due to the global state in the second half of the year difficult year to an extremely the first half of the started in the US. This downturn by the financial crisis, which economic downturn forced triggered capital adjustments and reduce to successively make production including automakers manufacturers rapidly deteriorated, impacted by a in the US and Europe investments. Overseas, the economies To Our Shareholders Our Shareholders To Following the Fundamental Principle of the Fundamental Following Leadership Technological Strengthening the Corporate Framework Framework the Corporate Strengthening

Management  NTN Annual Report 2009 Management  NTN Annual Report 2009 Hirotsugu Mori Hirotsugu President Yasunobu Suzuki Yasunobu Chairman and CEO Feature: Interview With the Top Management New Medium-Term Management Plan “NTN 2010 for The Next Step”

Strengthening the Corporate Structure Standing on the NTN’s Technology-driven Fundamental Principle, “For New Technology Network”

Driving New Growth to Realize Our Long-Term Vision

Hirotsugu Mori President

Management Could you please explain the backgrounds the fiscal year ended March 31, 2009, the economic Q that led up to the preparation of the new environment saw gradual growth in the first half, but in the second half witnessed the onset of a sharp global economic medium-term management plan “NTN 2010 downturn as a result of the U.S. financial crisis. Overall, we for The Next Step”? therefore faced extremely difficult conditions over the past Under the medium-term management plans “Rapid Advance fiscal year. To respond flexibly to this change, NTN has now 21,” which covered the three years from April 2004, and prepared a new medium-term management plan, “NTN 2010  “Growth through Creativity and Achievements (GCA) 21,” for The Next Step,” covering the two years from April 2009, which covers the three years from April 2007, the NTN Group after reviewing plans for the third and final year of “GCA 21,”

NTN has been aggressively implementing growth strategies. During which ends March 31, 2010.

Annual Report 2009

Operating margin (%) 9.7 9.3 9.6 10 8.6 8.7 6.9 8 6.1 6 3.9 4 1.8 1.6 2 0 Net Sales Operating income (Billions of yen) (Billions of yen) 600 60 550.0 534.0 527.1 500 483.8 490.0 53.0 50 49.6 465.0 434.8 46.8 400 388.3 40 357.4 342.7 37.6 300 33.2 30

24.7 200 20.8 20 19.0

100 10 9.5 7.5 0 0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 Actual results Forecast Forecast Forecast Forecast Forecast

Growth through NTN 2010 for NEW Plan 21 Rapid Advance 21 Creativity and Achievements 21 The Next Step Management  NTN Annual Report 2009 e r u t c u r t s

s g n i n r a NTN Houdatsushimizu Corporation e

e h t emissions and environmental emissions and environmental

2 e c n a h n e

o t

s e r u s a e M From the standpoint of corporate social responsibility of corporate social responsibility the standpoint From

expenditures by enhancing the capacity utilization rate, while by enhancing expenditures cost efficiency by raising productivity personnel improving efficient human work operations. more through enhance group- (CSR), we will also maintain and continually (corporate wide internal systems and compliance control to risk management, countermeasures of ethics). In the area such as natural disasters and risks associated with hazards emphasized. of infectious diseases are the risk of the spread the Company has In terms of assisting female employees, including the construction been steadily working on programs to environmental Turning center. of an in-house day care continuously implementing group-wide considerations, we are CO our initiatives to reduce and eco-friendly impact. This includes developing people- and eliminating the use of products) (green products group-wide materials. Other hazardous environmentally built plants, the include, at newly measures environmental and solar power wind use of natural energy from proactive generation and the installation of energy efficient devices and equipment. processing the other hand, Takarazuka Works ended production in March in March production ended Works Takarazuka the other hand, strong due to of its closure the postponement 2009, after our realign we will continue to this manner, demand. In economic changes in global network in line with production of our plants in Japan the role conditions, while strengthening as mother plants. the Kuwana Ultra-large Factory No. 3 at Mie Corp. Plant No. 3 NTN Works ④ the earnings we are to enhance structure, As for measures asset efficiency in addition to working to drastically improve The Company seeks to minimize capital fixed costs. reducing

2 consumption and CO emissions reductions. torque, and stepping up and stepping torque, the development of for modular products electric vehicles. The goal the concernsis to address such of the auto industry, as the need for low-fuel s e r u s a s s e e r e r m u

u s d s a e a e t e a m l

m e

d r - d e t n e t a o l i a

l t e r e c - r u - s What concrete measures are you taking under you taking are measures What concrete Next Step” “NTN 2010 for The the new plan? management medium-term d

e D l o & r a P S R

Q Corporation. In addition, NTN Houdatsushimizu Corporation in October 2009. On will start production (Ishikawa Prefecture) demand for bearings for industrial machinery applications, such as large bearings, we have expanded production and operations at NTN Mie capacity at the Kuwana Works control, which is fundamental to MONOZUKURI control, (manufacturing) at NTN, and by raising the sophistication of to growing response and equipment. In processes production reduce inventories mainly by reviewing supply chains and supply inventories mainly by reviewing reduce on boosting quality focused are shortening lead times. Efforts production to small-lot our responsiveness and improving production This will be achieved by reforming requests. ③ working to we are measures, In terms of production-related Meanwhile, in the automotive sector, we are conducting sales we are Meanwhile, in the automotive sector, activities with an emphasis on earnings, with the aim of profitability. increasing such as wind power systems and rolling stock, while building such as wind power systems and rolling corporate framework. In the aftermarket and a stronger working to boost sales by we are distribution sector, enhancing services in emerging nations and parts markets. the industrial machinery sector and the aftermarket and the industrial machinery sector and the our In the industrial machinery sector, distribution sector. fields a technological edge in growing to establish priorities are ② expanding sales to we are measures, In terms of sales-related Elemental Technology R&D Center R&D Elemental Technology automotive sector, we are developing bearings and constant we are automotive sector, lower offer and lighter, smaller, velocity joints (CVJs) that are elemental technologies, the source of NTN’s competitive competitive of NTN’s elemental technologies, the source for R&D capabilities for products edge, and to reinforce the In bearings. large as such applications machinery industrial equipment. In June 2009, construction of the Elemental equipment. In June The was completed. R&D Center (Mie Prefecture) Technology into is to help the company delve deeper role center’s machinery sector, we are enhancing the development of enhancing the development we are machinery sector, to the global for applications that contribute unique products stock, and rolling such as wind power systems environment, and medical aircraft fields as cutting-edge and in such growth ① accelerating the we are Here, measures. First is R&D-related In the industrial value-added products. development of high We are implementing the following four types of measures. implementing are We Feature: Interview With the Top Management New Medium-Term Management Plan “NTN 2010 for The Next Step”

From 2008, SNR of France has become a SNR, which became a consolidated subsidiary of NTN in April Q member of the NTN Group. Progress in 2008, is the France’s No. 1 bearing manufacturer. By welcoming SNR, which has strong brand power in Europe, “Generating synergies with SNR,” and into the NTN Group, we believe that we can strengthen our overcoming any issues along the way, will be operating infrastructure, especially in Europe, and further crucial factors to achieving the goals of the enhance our presence in the market. This will be achieved by “NTN 2010 for The Next Step” plan. Could you integrating the technological capabilities, production resources please elaborate on this? and market development skills of both companies. Regarding synergies, we have bolstered sales capabilities by reorganizing the sales system along the lines of business sectors. Distribution centers have been integrated to improve services to customers. Through this new organizational structure, we are winning new orders from the automotive and industrial machinery sectors, and utilizing the sales and distribution channels of both companies to supply products to the aftermarket and distribution sector in a mutually complementary manner. In addition, we are fusing the technologies of both companies to promote the practical application of jointly developed products such as high- resolution rotational sensors. Going forward, the Company will Management strengthen its production, sales and technological capabilities to increase its presence in the European market.

 NTN

Annual Report 2009 ① NTN Plant in Germany ⑤ SNR H.Q. Annecy plant Meythet plant

Production sites in Europe

④ ①

② NTE ③ Argonay plant Sales ② Production ⑤ ⑦ R&D ⑥

③ NTE Crezancy Seynod plant

④ IFA-AT ⑥ Plant in Italy ⑦ Plant in Romania Ales plant Management  NTN Annual Report 2009 n millio ¥5,500 by sector Fiscal 2013 (target) Percentage to overall sales

)

result ( n Automobiles Industrial machinery, maintenance and repair millio ¥5,271 by sector NTN MANUFACTURING INDIA PRIVATE LTD. INDIA PRIVATE NTN MANUFACTURING Fiscal 2008 Percentage to overall sales addition, we will expand the aftermarket and MRO* business addition, we will expand the aftermarket parts for (including not only auto parts but also aftermarket the world. in markets around industrial machinery and aircraft) ourselves from work to differentiate we will Furthermore, for new processes competitors by speeding up development by a family of new products and developing products, with patents for next-generation establishing global standards to sharpen our distinctiveness and want technologies. We absolutely essential elemental technologies so as to make it with the view to creating for customers to use NTN products, truly in a class of their own. that are products and operation *Maintenance, repair NTN (CHINA) INVESTMENT CORPORATION

Could you please explain long-term vision? NTN’s Could you describe NTN’s approach approach describe NTN’s Could you markets? to the emerging

“Eco, New Energy, and New Markets” “Eco, New Energy, business scale New business models based on the themes of Ensuring that management does not rely solely on Ensuring that management does not rely Improving the business sector mix the business sector Improving

Q Q We will offer a full range of modular products for next- a full range of modular products will offer We generation automobile markets, including electric vehicles. In ③ to develop an earnings that can keep the company structure by a sharp even if net sales fall below initial forecast profitable 20%. By crafting a lean cost structure, we are determined to build determined we are By crafting a lean cost structure, an earnings that can generate earnings even if there structure our goal is now, in net sales. In five years from is a sharp drop automotive sectors to more than 50% of total sales. automotive sectors to more ② around 60% of total sales, while sales to non-automotive around 40% or so. Five years from sectors account for the remaining of sales to non- the percentage we aim to raise now, Over the past few years, we have focused especially on Over the past few years, we have focused and we businesses targeting the industrial machinery sector, our hand in this sector going intend to continue strengthening sales to the automotive sector account for Currently, forward. 2014, five years from now: 2014, five years from ① NTN’s long-term vision calls for the following three concrete concrete long-term vision calls for the following three NTN’s 31, ending March goals to be achieved by the fiscal year aircraft, machine tools and other repair products, products, and other repair machine tools aircraft, bases to strengthen and make full use of SNR’s businesses in Romania and Brazil. developing sales activities directed toward local toward directed developing sales activities also work to expand sales in will We manufacturers. parts, the parts market which handles automobile frameworks for China, India and other emerging frameworks for China, markets, NTN has markets. In these emerging of business transactions achieved a certain level and is now actively with Japanese customers, expanding sales to the industrial machinery sector expanding sales to this context, NTN In sector. and to the aftermarket its sales and production is working to strengthen As one of the sales-related measures we are taking taking we are measures the sales-related As one of The Next Step”, the new under “NTN 2010 for plan, we have been medium-term management e Assigns/ Removals Committe e Business Strategy r Executive Committee u t Accounting Auditors (Audit firm) c u r t S

g e c n ectors Assigns/ a Removals n r e v d of Dir o G Boar

Stockholder meetin (Other positions omitted) e t a s r o Audit p r o C Assigns/ Removals As a result of the assessments described above, NTN judged As a result The assessment of internal control over financial reporting The assessment of internal over financial control Corporate Auditors effectiveness of the Company’s internal controls. of the Company’s effectiveness reporting at the Company that its internal over financial control NTN’s review. as of the end of the fiscal year under was effective external accounting auditors also evaluated the Company’s internal as appropriate. control for internal control set forth in “On the Setting of the Standards of the Standards for internal set forth in “On the Setting control for Management Assessments and and Practice Standards Audits Concerning Internal Over Financial Reporting Control Accounting (Council Opinions)” published by the Business Council on February 15, 2007. 31, 2009, which is the end of the was conducted taking March date and conformed to reference as the review, fiscal year under for internal which are the assessment standards control generally accepted in Japan. In conducting this assessment, NTN evaluated internal that have an important impact controls reporting on a consolidated financial entire on the Company’s basis (“company-wide internal Based on the result, controls”). to be evaluated, analyzed NTN selected business processes that identified key controls these selected business processes, of the financial have an important impact on the reliability and assessed the design and operation of these key reporting, These actions enabled NTN to evaluate the controls. Improving Our Corporate Governance Our Corporate Structure Improving corporate its reinforce To an auditing system. NTN employs Company is strengthening the governance however, organization, its corporate auditors, its and, through of Directors its Board organization. management oversight NTN’s Internal System Control NTN’s Executive Officer System Board of Directors (meets at least once per month) of Directors Board Business Strategy Committee (meets twice per month) Business Strategy Committee (meets Basic Approach and Implementation of Basic Approach Internal Audit Department Corporate auditors and accounting audits

NTN Corporation has put in place and operates internal control NTN Corporation has put in place and operates internal control with the basic framework reporting in accordance over financial established as an independent auditing organization to audit the Company. business execution throughout ■ ■ internalRegarding audits, the Internal is Audit Department public auditing firm audits, and internal audits. There are no public auditing firm audits, and internal are audits. There between the outside or interests special business relationships auditors and NTN. Executive committees. The corporate auditors also strive to meeting the efficiency of the overall auditing process, increase their own corporate audits, independent to coordinate regularly management supervision system. The system is structured to management supervision system. The system is structured their enable standing auditors to participate and express opinions during meetings of the Business Strategy and auditors are responsible for auditing the performance of duties responsible auditors are meetings and Auditors attend board by members of the board. to maintain and their opinions as part of their efforts express and fairness the transparency of the Company’s improve ■ standing are NTN has four corporate auditors, two of whom of the four being outside auditors). The auditors (with three the Executive Committee, comprising Directors and Executive the Executive Committee, comprising Directors Officers. We introduced the Executive Officer System in June 2004 to the introduced We be taken as quickly enable decisions to be made and action to conducted by are as possible. Reviews of monthly performance The Business Strategy Committee discusses fundamental The Business Strategy Committee discusses strategies. business policies and important management ■ can also be convened at any time when necessary. ■ to fundamental business policies, statutory matters and to fundamental business issues, and to supervise the important management meetings performance of duties by its members. Extraordinary ■ is to make decisions relating of Directors of the Board The role priorities. In addition to continuing to establish efficient, sound to establish efficient, addition to continuing priorities. In all of our to provide we make every effort management practices, accurate and investors with the latest and most shareholders transparency. management greater information to ensure Basic Approach to Corporate Governance Basic Approach corporate governance and enhancing of our top is one Reinforcing Corporate GovernanceCorporate

CSR 0 NTN Annual Report 2009 1 CSR NTN Annual Report 2009 11 11 8 6 4 Yukiyoshi Hagimoto Yukiyoshi Inoue Hironori Kondo Tetsuya Kato Yoshio Hitoshi Takai 2 3 1 5 7 Hisaji Kawabata Director

. 9 11 10 Fukumatsu Kometani Ken Horiuchi Shigeyoshi Takagi de Conde Didier Sepulchre Kato Toshiharu Haruhito Tanobe Masashi Honma Director

Yoshikazu Fukumura Yoshikazu Managing Director .

. 7 10 Executive Officers Executive Officers Shouji Kido Hidenori Nishikawa Terada Yasunori Kazuyoshi Wakabayashi Seiichi Konishi Yasuda Yoshinobu Masaharu Yoshikawa Hirotsugu Mori Hirotsugu Osamu Wakisaka Osamu Kato Director President Deputy President Managing Director

. . . . 2 4 6 9 Kazuhiro Shigeta Kazuhiro Tadatoshi Kato Tadatoshi Kenji Okada Yasunobu Suzuki Yasunobu Director Managing Director Chairman and CEO Deputy President

. . . . Statutory Auditors Kagono Tadao Norifumi Ishii Akio Imanishi Mizuho Hikida Statutory Auditors Standing Statutory Auditors 8 5 1 3 Directors (As of June 25, 2009) (As of June Management Center Emergency in charge Management department Response by measures Emergency Measures to emergency information An incident occurs prevent recurrence Person in charge of managing Determining the level Emergency Management Manager and response Establishment of central task force Risk Management Committee Department Discussion about how to respond to the Discussion about how to respond new influenza virus Chairman: Chief Management Officer Manager Vice-Chairmen: Risk Management Departments Members: Managers from Promoting Emergency Management (General Affairs Department) Promoting Department Board of Directors measures Chief Management Officer address risk Preventative (Director in charge of risk management) of risk management measures to address risk Evaluation of measures to Evaluation of effectiveness Risk management planning Department Creation and implementation of (CSR Department) Risk Management Risk Management System Management Risk Strengthening Disaster Countermeasures Strengthening at completed construction to enhance earthquake resistance We in fiscal 2008. Similar construction is being the Iwata Works manufacturing divisions as part phased in at other domestic Group major earthquakes. Moreover, regarding of our countermeasures companies have adopted a system to confirm the safety Group of employees via the Internetand whereabouts or telephone in also conduct drills to test the we Each year, times of disaster. system based on simulations of potential disaster scenarios. Countering Risks from Infections Diseases Countering Risks from to Combat New In December 2008, we drafted a “Measures risk countermeasures Influenza Strains Manual” and implemented to crisis advance prevention incorporating everything from we began stockpiling masks, Accordingly, measures. response disinfectants and other a supplies, and offered pocket guide and prevention other information to employees and their families. In April 2009, we took swift to the action in response global H1N1 flu that started in Mexico, and made every infections to prevent effort within the NTN Group. External Help Desk of Conduct Business Code Legal Department (Director in charge of the Legal Department) Manages the Help Line Chief Management Officer Internal Help Desk of Conduct Employee Code Office (CSR Dept.) Personnel Department CSR Policy Directors and employees of the NTN Group CSR Legal Department Committee (Director in charge of CSR Management Department) Chief Management Officer CSR managers Compliance Subcommittee Corporate Philosophy CSR Persons in charge of CSR urthermore, if a serious crisis does occur, we will set up a central central a up set will we occur, does crisis serious a if urthermore, Spearheads compliance-related initiatives Spearheads compliance-related Department F Management task force department that will take measures to minimize any damage. any minimize to measures take will that department force task NTN is developing a comprehensive risk management system under under system management risk comprehensive a developing is NTN risk on based is and Committee, Management Risk the of control the prevention risk from everything encompass that rules management The materialized. has crisis a after measures response to measures well as risk, identifying for responsible is Committee Management Risk to Group NTN the by taken measures of management overall the for as with charged is department promotion business Each risk. counter face, they risks individual the for measures implementing and devising these of progress the confirms Committee Management Risk the while improvements. and corrections needed any for calls and efforts Risk Management System Management Risk CSR Guidebook Revision and and Revision Guidebook CSR Education Internal Rigorous CSR the revised we 2008 fiscal in compliance, strengthen To and laws compliance-related of review a conducting after Guidebook compliance on briefings held we Furthermore, examples. instructive department. every from managers business and managers CSR with on staff educate to opportunity an provided meetings These compliance reconfirm to staff for as well as law, the and compliance tests and materials instructional using self-learning through knowledge all for training and education similar hold to plan We understanding. of 2009. fiscal in employees Compliance Management Framework Management Compliance CSR the under established Sub-Committee Compliance the NTN, At and promoting comprehensively with charged is Committee sub- This Group. entire the for initiatives compliance managing CSR The departments. different three of comprised is committee and compliance analyzes and investigates Department Management activities awareness-raising and education of charge in is and risk on based issues judges Department Legal The compliance. to related line help our of charge in is and rules, internal NTN’s and law the evaluating of charge in is Department Personnel The management. policies. and measures personnel of perspective the from issues Compliance, Risk Management Risk Compliance, Compliance System Compliance

CSR NTN Annual Report 2009 12 CSR NTN Annual Report 2009 13 Ethibel “NTN Kigyo no mori” activities at the Okayama Works FTSE4Good MS-SRI In fiscal 2008, NTN was awarded the Konju Service Medal of In fiscal 2008, NTN was awarded NTN has been continuously selected in Japan by Morningstar Going forward, NTN has plans to steadily unveil similar facilities unveil similar facilities has plans to steadily NTN Going forward, NTN signed the 2008 at the Okayama Works, in August Similarly, “Corporate Cooperative Forest Development” agreement with the Development” agreement “Corporate Cooperative Forest we Under the agreement, city of Mimasaka in Okayama Prefecture. development under the “NTN Kigyo no mori” will take part in forest of charge free borrowed of municipal forest banner on 3.5 hectares 2013. March through Social Contribution Activities contributions to society is Our commitment to make proactive well as as corporate philosophy and CSR policy, enshrined in NTN’s in the Employee Code of Conduct. piano by the Kuwana Honor for the donation of a full concert grand as well as the gift of a gazebo and other facilities given by Works, Viewing social contribution activities as an the Iwata Works. our fundamental policy is to take the initiative investment in society, that society faces. some of the many problems in addressing Independent assessment NTN has been selected for inclusion in the following Socially the Responsible Investment (SRI) funds and SRI indices, reflecting evaluation by the stock market of NTN as a company that makes and social preservation environmental toward active efforts contribution. since 2003, and overseas by FTSE4Good since 2002, and Ethibel Pioneer and Ethibel Excellence since 2005 (as of June 2009). and Okayama Works. at its Kuwana Stewardship Forest NTN Corporate of with communities, is involved in a host NTN, in close partnership activities, one of which is our tree community contribution NTN operates. where activities in regions maintenance and upkeep the Iwata City in July 2008, NTN, together with At the Iwata Works on signed Prefecture, and Shizuoka Ward Property Shigaji Off-site as a member of the “Shizuoka Supporter” the Future of Forests with system. In cooperation and members of the prefectures today we are community, of these expanding the sphere activities as we develop “NTN Kigyo no mori” corporate activities that bring stewardship people into contact with nature. e Sales Planning Department

Procurement ” (CSR Dept.)

Department d n the Committee Offic a CSR Management Other Subcommittees Department in charge and L

Quality Management s

Department d i K e

r

Intellectual Property a Planning Department e B “ Environmental Management Department e Officer r u

t Personnel CSR Committee c

Chief Management Department u Compliance Subcommitte r t

S Legal

Department e n CSR Managers Persons in charge of CSR o i t General Affairs o Department m o Implementing Departments (plants, Engineering Departments, r

Corporate Planning Research & Development, Sales, & Head Office), and Subsidiaries P

Department R S CSR Report Subcommitte Managing departments C Corporate Social Responsibility (CSR) Activities (CSR) Responsibility Social Corporate of disaster. of disaster. structure. From the latter feature, the latter feature, From structure. eyeing the dual use of the we are center as a shelter during times environmentally friendly rooftop friendly rooftop environmentally solar power system and has a highly earthquake-resistant center, and take into consideration children who have food allergies. and take into consideration children center, The building itself, meanwhile, is a wooden, one-story structure natural wood. The made from center is equipped with an Iwata Works in April 2009. Along with temporary drop-off daycare, daycare, in April 2009. Along with temporary drop-off Iwata Works services to assist employees the center can also extend daycare at the prepared business hours. Meals are that work after regular opportunities for women. As part of the measures to promote a to promote opportunities for women. As part of the measures balance between work and home life, we opened “Bear Kids proper of the on the grounds center, first in-house daycare Land,” NTN’s Determined to create pleasant work environments, NTN has taken pleasant work environments, Determined to create steps to support the nurturing of the next generation of proactive that promotes young people, and to develop an environment Addressing Work-Life Balance Work-Life Addressing shareholders and investors, suppliers, employees, and local and investors, suppliers, employees, and shareholders communities. Officer (the director in charge of the CSR Department), NTN has Department), NTN has in charge of the CSR director Officer (the in Japan to worksite at every Group appointed CSR managers to the CSR activities. In so doing, we aim to respond promote stakeholders, including customers, expectations of all our CSR Activities by a Chief Management a CSR Committee headed Guided by ) a t a w I (

r e t n e C

D & R Aircraft Aircraft

Precision equipment Precision d e Medical treatment Medical treatment t

Measurement a r equipment

g Construction Sensing e t Railroads n I (Rotation, load, angle, remote (Rotation, load, angle, remote monitoring, wireless communication) monitoring, wireless Wind power Parts feeders Evaluation Analysis for cerebral arteries for cell manipulation Bearings for CT scanners Monitoring/MRO/Transport safety Monitoring/MRO/Transport Liquid-crystal repair equipment Metals Monitoring Mechatronics Treatment assistance equipment Treatment Abnormality detection emissions by making the products smaller and lighter, lighter, and smaller products the making by emissions New jet engine bearings 2 Ceramics High-speed micro-injection equipment Actuators for artificial joint surgery y Engineering plastics g Materials Special alloys key ideas of supporting the global environment and saving energy energy saving and environment global the supporting of ideas key NTN’s in lead the take will department The resources. and R&D. to importance greater even give that activities of development construction of the R&D Center for Elemental Technologies, which is is which Technologies, Elemental for Center R&D the of construction powder With generation. power wind and panels solar with involved of development and into research the pursuing is NTN technology, hybrid new of development the including bearings, next-generation fuse that materials) (tribological materials composite and bearings sintered as fields powder-related such in technologies core NTN’s strengthening is NTN automobiles, In ceramics. and plastics alloys, and consumption fuel low enable that applications for products CO reduced We modular. or electrical them making by or torque, the lowering or including products, modular of development the accelerate will also but vehicles) (hybrid HVs for only not units in-wheel intelligent the up speed will we Moreover, vehicles). (electric EVs for parts automakers, with collaborating by process development industries. other from manufacturers and manufacturers Property Intellectual & Products New of Establishment Department Strategy Intellectual & Products New the established NTN 2009, July In market understand accurately to Department Strategy Property the to relation in strategies business long-term formulate and trends o l o b i and smaller Lower friction (lower torque) r New energy More lightweight More (higher reliability) T Longer working life Design Ultra-high-speeds & special environments Greasing Global environment Global environment Oiling Technology Tree for Tribology Tree Technology

Coating & surface improving Processing Lubricating Joining Road safety Electric vehicles and motorization Polishing EV power modules In-wheel motor axle units

l Steer-by-wire steering modules Steer-by-wire a t Electric brakes Mechanical lash adjusters ) n Actuator ball screws Electric actuator units a Auto-tensioners e Forging Torque diodes Torque n Lathe turning m a e l w E u

r K Automobiles ( o

f

s r e i society e t g n o l e Bearings o C CVJs n

Axle units h D NTN is strengthening its unique products in such growth fields as fields growth such in products unique its strengthening is NTN Hub joints c & Toward a hydrogen a hydrogen Toward e R T elemental technologies and in June 2009 NTN completed completed NTN 2009 June in and technologies elemental the-art technologies. With wind power systems, we are responding responding are we systems, power wind With technologies. the-art wind- the ensure that systems monitoring of development the to ultra-large of and state, normal their in remain bearings power exploring further been have We systems. power wind ocean-based academia and the government in medical and engineering areas areas engineering and medical in government the and academia scanners, CT high-speed of development further the regarding state-of- other and hearts artificial for bearings magnetically-levitated aircraft and medical equipment. With aircraft, the number of projects projects of number the aircraft, With equipment. medical and aircraft increased. has aircraft next-generation various for engines axial for industry, with collaborating been has NTN equipment, medical With sensors, as regards loads and rotational frequency, jointly developed developed jointly frequency, rotational and loads regards as sensors, wind as fields such in machinery industrial for SNR and NTN by railways. and systems power making use primarily of the collaboration between Mie Prefecture in in Prefecture Mie between collaboration the of primarily use making industrial concerning France in Annecy of town the and Japan high-performance the of applications develop speedily to clusters Deepening Core Technologies and Open Innovation Open and Technologies Core Deepening markets, distributor and agent repair and machinery, industrial In global the to contribute which fields on focus particularly will NTN are We railways. and systems power wind as such environment, R&D to Accelerate Development of of Development Accelerate to R&D Products New Intellectual Property Strategy Strategy Property Intellectual

CSR NTN Annual Report 2009 14 Making Use of Japan/France Industrial Clusters research institutions and companies gathered together in Annecy to and Industry/Academia/Government cooperate to boost technological innovations. In Mie Prefecture, Collaborations where NTN’s Kuwana Works is located, the Advanced Materials Hub bearing with High-Resolution Rotational Sensor— Innovation Center and a mechatronic technologies cluster have jointly developed by NTN and SNR gathered together in Yokkaichi-shi. NTN recognizes the importance Aiming to establish global standards by the NTN Family of accelerating Open Innovation, including by further extending the SNR owns global-standard patents for ABS sensor technology for collaboration of NTN and SNR to the network of Japanese/French automobiles—the world’s foremost cooperation concerning industrial clusters. technology in this field. NTN possesses world-class technology for hub bearings for automobiles. The two companies have jointly developed a hub bearing with a High- Resolution Rotational Sensor that has an accuracy 40 times better than conventional sensors, and are already marketing it. Hub bearing with Going forward, we will develop products High-Resolution that apply this sensor technology to Rotational Sensor Mr. Bernard Accoyer, the President of the National Assembly of France, industrial machinery. These applications visits NTN’s facilities, including the Kuwana R&D Center include those for wind power systems (France and the rest of Europe will focus on new energy, especially wind power) and for Applications for growth fields of the global environment railways (fusing SNR and NTN technologies used in the TGV and and saving resources

Shinkansen trains, respectively). The NTN Group aims to establish NTN and SNR are both companies that were founded over 90 years CSR the global standards in these fields. ago. With the current integration of NTN and SNR, the two companies will use their combined technologies to develop modular Regional mechatronic technologies clusters products by applying the technologies they have built up over the in Japan and France years—for advance components, machinery and materials The Annecy region in France where the head office of SNR is applications—to the accelerating growth fields of the global located is at the center of an industrial cluster engaged in environment and saving resources, while collaborating with industry, 15 mechatronic technologies and materials processing. In 2005, academia and the government in the regions belonging to each NTN France promoted and strengthened support for the universities, company.

Annual Report 2009

Japan/France (Mechatronic Regional Clusters) Industry/Academia/Government Collaborations

Jointly developed by NTN and SNR

©SNR

Advanced materials cluster and Integrating knowledge and Industrial cluster in mechatronic technologies cluster Annecy region in France in Mie Prefecture forming networks

Accelerating innovations from automobile applications to wind power generation, Annecy region, France railroads, construction machinery, etc. Mie Prefecture, Japan March 1, 2009 March NTN Corporation Corporate Environmental Control Officer Control Corporate Environmental NTN Environmental Policy NTN Environmental environment social contribution activities By actively participating in regional activities, NTN will interact protection and natural environmental aiming to develop together with with the immediate community, the local region. procurement of materials and parts, through to manufacture, to manufacture, of materials and parts, through procurement distribution and sales. use waste by paying heed to efficient NTN will strive to reduce (reduce, application of the 3Rs of raw materials, and thorough recycle). reuse, management pollution by rigorous NTN will avert environmental used in impact that are of substances having an environmental and by active substitution of chemical or processes, products substances suspected of having harmful effects. of and implementation Observance of laws and regulations management systems environmental thorough NTN and ordinances, In addition to observing laws, regulations regional from will actively seek to comply with requests self- communities and customers by imposing tighter and internalkeeping to them. determined standards rules, and management organization NTN will establish an environmental and operational methods, and will conduct environmental corporate environmental audits to maintain and improve will also advance communication management systems. We with society at large by publishing information about our initiatives. environmental education. NTN will promote NTN will conduct environmental Policy and of this Environmental awareness improved to all persons working on behalf of protection environmental the NTN Group. the natural Activities to contribute to society and protect products. energy conservation by NTN will contribute to world-wide using products eco-conscious developing and providing processing tribological technologies and high precision technologies. energy global warming by improving NTN will work to prevent from the business process, efficiency activities throughout • • • • • • • • 3. 4. The NTN Group considers coexistence with the considers coexistence The NTN Group importance. We to be of utmost global environment the impact of to reduce efforts will make constant and to contribute environment, our activities on the development of our society. to the sustainable friendly of environmentally 1. Development and sales impact 2. Reduction of environmental er s l / l / ce ee ee ee ee s d tt tt tt s ur tt n ng fice fice ic fices fices an nces Center iti st t utio ta gy ll ternal gi Team In Aud ner bution Cent bution ral Reso ral Po Lo E Hazardou Prevention tu Subs Conservation Head Of Head Subcommi Management Environmenta Sales Of Sales stri Environmenta Subcommi Subcommi Subcommi Produc Sales Branches Sales Na Di / l l l fice fice e e e s te te te n n it ic it it . io io st any-wide gi mm Head Of Head mm mm Sales Division Sales Office Act Act mp Lo Co Co Co Management Environmenta Co Environmenta Environmenta l e t te it ment l rt reduction, industrial waste reduction industrial waste reduction reduction, t 2 mm *2 Strategy Business Presiden Team Co ts Depa Management rnal Environmenta ng ng te Plan iti Safety/ In Sections Environmen is in charge of these duties. Management Environmenta Aud g *1 Includes related companies in Japan *2 At some sites, the Administration Section or General Affairs Section urin fact ivision s D ee ce tt s d l ur Manu ee ee n *1 n n tt tt an nces vation io io ee e utio ta gy ll tt mmi mmi Act Act ner ral Reso ral Po onser on Commi on E Prevention Hazardou Co Co tu Subs C mmi On-sit Acti Na Co Management Environmenta In March 2009, we opted to completely revise our fundamental 2009, we opted to completely revise In March At a meeting convened in April 2008, the Environmental in April 2008, the Environmental At a meeting convened Environmental management structure our products and manufacturing processes that carry an and manufacturing processes our products load. environmental content of each. At the same time, we have added new content to content of each. At the same time, we have of information including the dissemination Policy, the Environmental of substances used in on action status, and the strict management our basic philosophy of advocating harmony with the global our basic philosophy arranged our as our most important issue, we have environment respective the action policies into four categories and clarified these targets. While retaining preservation. to environmental policy with respect Management Committee offered up companywide and site-specific up companywide offered Management Committee targets for CO environmental decided the content of initiatives for achieving and other goals, and spearheaded by the companywide Environmental Management Management Environmental by the companywide spearheaded to promote companies in Japan, Group Committee, which includes the environment. actions to protect Environmental Policy Environmental structure, management an environmental NTN is developing Environmental Protection Initiatives Protection Environmental

CSR NTN Annual Report 2009 16 CSR NTN Annual Report 2009 17 NTN Eco-Account Book Event for schoolchildren on manufacturing Event for schoolchildren arts held at NTN Kongo Corporation Turbo cooler for air conditioning system cooler for air conditioning system Turbo (NTN Kongo Corporation) From April to September, we held workplace excursions at our April to September, From eco-conscious activities in their own households. At NTN Kongo Corporation, meanwhile, we conducted a similar excursion event on manufacturing centered arts for local schoolchildren and promoted learning.environmental Household Eco-Account in which Book,” a program a large number of employees continue to take monthly part. By recording data, employees gain an understanding of their of raising awareness actual energy consumption in daily life, thereby 2,500 people took energy conservation in the home. Approximately in fiscal 2008. part in this program Communications Environmental with local At its business sites, NTN is deepening interaction as a central theme. For example, with the environment residents with community NTN Casting Corporation holds social gatherings its using these get-togethers to share members each year, activities for the years and to exchange viewpoints environmental gathered The opinions and requests with voices in the community. activities. improvement then used in its environmental are addition In employees. our of families the for specifically plants major to our to plant tours, these events included an introduction a power generation demonstration initiatives. Through environmental using a full-scale solar panel and a quiz about the environment, participants learned the importance of performing storage system, adopted an advanced high-efficiency compressor compressor high-efficiency adopted an advanced storage system, and oil upgrading the air conditioning and are Works, at the Iwata Corporation. at NTN Kongo cooling systems Energy Conservation in Employee Promoting Households Since fiscal 2007, NTN has issued and distributed to employees an “NTN (Fiscal year) (Fiscal year) y 555 8 7 42 59 31.7 Target 2010 200 4 emissions. 2 1 30 7 2 31. 28 2008 200 33 0 3 19 6 4 35. 2007 24 200 21 0 s 55 5 34. 2006 75 Solar 200 emissions factor from the local power compan 20 emissions. In fiscal 2008, we installed new emissions. In fiscal 2 9 2 4 51 33. 2005 61 200 Wind Total natural energy Domestic operation site 10 1 emissions 1 2 ) 31. Thermal storage tank for hydrate-slurry air conditioning system (Okayama Works) 2004 7 2003 6 *Based on the yearly CO 0 0 Total output (kW) 200 100 400 300 600 500 700 Total CO Natural energy output 10.0 30.0 20.0 40.0 (10,000 tons/year 50.0 conventional air conditioning system with a state-of-the-art thermal system with a state-of-the-art thermal conventional air conditioning voluntary emissions trading scheme announced at the close of fiscal scheme announced at the close of fiscal voluntary emissions trading CO steps to reduce 2008, and is taking vigorous the we replaced at the Okayama Works, Among other actions, generators, and 13 hybrid generators that produce both wind and generators that produce generators, and 13 hybrid to take part in the NTN has chosen Moreover, solar power. in the domestic call for participants Japanese government’s utilizing natural energy sources and performing energy-saving and performing energy sources utilizing natural CO upgrades to reduce and to date at the Kuwana and Mie Works, solar power generators power 14 wind power generators, 10 solar have introduced Preventing Global Warming Warming Global Preventing warming by actively global to do its part to prevent NTN is striving m e t s t s y s s n t e s t l r ,

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Business NTN Annual Report 2009 18 Business NTN Annual Report 2009 19 SNR t % 12 2009 09 (No. 3 in the world) 68.2 66.5 376.4 125.6 116.0 NTN’s Share of Overseas Marke Americas Asia and Others 08 75.3 67.2 54.2 338.5 141.8 Billions of yen (NTN’s estimates) Years ended March 31 Japan Europe 07 Total Bearing Sales 59.9 70.1 44.2 307.2 133.1 28% 2009 s (No. 2 in Japan) g NTN’s Share of Japanese Market n i In Asia and other areas, sales were strong in China of large in China strong sales were In Asia and other areas, r a applications fell due to rapid declines in demand for fluid dynamic applications fell due to rapid declines in demand demand for automotive bearings, and to bearings and decreased sales exchange rates. As a result, the impact of unfavorable foreign ¥0.7 billion, or 1%, year on year to ¥66.5 decreased in this region billion. bearings for wind power generation, and axle bearings and needle bearings for wind power generation, and axle in other areas bearings for automotive applications. However, roller and automotive in Asia sales in both general industrial machinery e B internationalNTN began the 1960s and of its sales in expansion a network of a global manufacturing the development followed with bearing its expertise as a leading NTN is using Today, decade later. and services to products new value-added to create manufacturer We in a wide range of industries. of customers meet the needs industrial industry and for for the automotive supply bearings stock, and wind rolling construction machinery, machinery including and we also serve the semiconductor power systems. In addition, sharply for our demand is growing particular, medical industries. In disk drives (HDDs). used in hard which are fluid dynamic bearings, alloy developed by NTN using sintered a from Manufactured currently bearings are these fluid dynamic technology, proprietary market. highly by the regarded In Europe, sales in both general industrial machinery and In Europe, In the Americas, sales in both general industrial machinery and In Japan, sales in both general industrial machinery and subsidiary of the Group. bearings for wind power generation increased. Against this bearings for wind power generation increased. ¥61.8 billion, or 114%, increased net sales in the region backdrop, the contribution to year on year to ¥116.0 billion yen, reflecting SNR, which became a consolidated sales from increased automotive applications fell due to declines in overall demand and exchange rates, although sales of large unfavorable foreign bearings for construction machinery and bearings for agricultural decreased net sales in the region As a result, machinery increased. a year earlier to ¥63.5 billion. ¥11.8 billion, or 16.0 %, from billion. automotive applications fell due to declines in overall demand and exchange rates, although sales of large unfavorable foreign and the export business, although sales of large bearings for wind net sales in the region As a result, power generation increased. a year earlier to ¥125.6 ¥16.2 billion, or 11.0 %, from decreased global economic environment. environment. economic global due to declines in overall demand automotive applications dropped Akaiwa Corporation in December 2008, and production was was production and 2008, December in Corporation Akaiwa current the In 2009. March in Works Takarazuka the at terminated production its realign to continue will NTN beyond, and year fiscal the in changes to response in overseas and Japan in both framework to sales growth. As a result, during the fiscal year under review the the review under year fiscal the during result, a As growth. sales to ¥376.4 to 11.0%, or billion, ¥37.9 rose bearings of sales net Group’s NTN the of construction of start the postpone to decided NTN billion. automakers. In other areas, sales fell due to a decrease in demand demand in decrease a to due fell sales areas, other In automakers. SNR, but rates, exchange foreign unfavorable of impact the and contributed Group, the of subsidiary consolidated a became which in demand worldwide for bearings and the impact of unfavorable unfavorable of impact the and bearings for worldwide demand in axle of sales applications, automotive In rates. exchange foreign by assisted China, in robust were bearings roller needle and bearings Japanese for mainly products new of production volume of start the machinery in the Americas region. However, sales of bearings bearings of sales However, region. Americas the in machinery for region Asian the in demand in decline sudden a to due decreased decrease a motors, (HDD) drive disk hard for bearings dynamic fluid In applications for general industrial machinery, sales were strong for for strong were sales machinery, industrial general for applications In the Japan, in generation power wind for used bearings large mining and construction for and China, and region European Review of Operations A X A J

2 © systems bearings Primary spindles for wind power Rocket engine turbo-pump The H-IIA rocket had used one The H-IIA rocket supplier of bearings for the H-IIB and the NTN Group’s rocket, technology is significantly contributing to space development worldwide. TOPICS 2009, the H-IIB In September was successfully rocket launched. This large Japanese was newly developed rocket in using the technology employed resulting the earlier H-IIA rocket, in higher performance levels. the To improve first-stage engine. launch H-IIB rocket’s performance, two first-stage used. In the H-IIB engines were engines, the roller rocket’s bearings used in the liquefied turbopump and hydrogen/oxygen the fuel valve, and the sliding bearings used in the direction- all mechanism, are control made by NTN or NTN products Engineering Plastics Corp. In is the only Japan, the NTN Group Wind Power Systems role in ensuring the reliability and long- in ensuring the reliability role term stability (long working lifetimes) of NTN has been this technology. capacity, expanding its production plant starting with the ultra-large third Kuwana Works at the Company’s in October which started production 2008 and NTN HOUDATSUSHIMIZU which started CORPORATION operations in October 2009, in demand of increasing preparation going forward. One response to environmental conservation has been the global spread conservation has been the global spread to environmental One response of CO of wind power systems, which supply clean energy free and sells the full range of bearings used emissions. NTN manufactures and generators found in wind for the primary spindles, speed controls, power systems. The Company has among reputation established a strong for its wind power system producers ©SNR France’s TGV train France’s Aircraft bearings bearings Aircraft Primary spindle bearings for Japan’s bullet train Japan’s Primary spindle bearings for Rolling Stock Aircraft Japan and Europe. people and large amounts of cargo can result in catastrophic damage. in catastrophic people and large amounts of cargo can result is delivering the primary spindle bearings used in The NTN Group TGV train, and is N700 series bullet train and France’s Japan’s establishing a supply framework for the high-speed railway networks in that consumes little energy. Sales of rolling stock are rising worldwide, stock are Sales of rolling that consumes little energy. special management and China. Everywhere, especially in Europe the quality of and improve being developed to preserve systems are stock, since even small defects in the rail cars used to transport rolling The railways are attracting attention as a means of mass transportation The railways are the world. Together with SNR which has a plentiful track record in with SNR which has a plentiful track record the world. Together is contributing to safe air travel. the NTN Group Europe, expected to increase significantly in the future. NTN provides the NTN provides significantly in the future. expected to increase axial high-rotative-speed high-precision, bearings used in the extremely on a global basis, and has earned the trust of General engines of aircraft in Japan and around manufacturers Electric and other aircraft-related In response to environmental issues, recently there has been increasing increasing has been there issues, recently to environmental In response to new their aircraft to update manufacturers all aircraft demand from size. These demands are reduce and to models with better efficiency, Bearings for Industrial Machinery for Industrial Bearings

Business NTN Annual Report 2009 20 Business NTN Annual Report 2009 21 Fluid dynamic bearings Bearings for machine tools Fluid Dynamic Bearings Machine Tools other companies, not causing any defects which render the data stored the data stored other companies, not causing any defects which render the benefits from real The bearings also offer on the disk unreadable. and cost competitiveness. production perspective of volume press The fluid dynamic bearings, used in the motor sections of the hard disk The fluid dynamic bearings, used in the motor sections of the hard devices of all kinds, from drives (HDDs) found inside electronic computers and digital video cameras to mobile devices, car navigation bearings that sintered systems and mobile phones, use oil-impregnated allow the inclusion of lubricating oil in the bearings themselves. As a these bearings have the notable characteristics of eliminating result, with the solid bearings of accidental etching phenomena and, compared For machine tools, the bearings used in the primary spindle must have bearings used in the primary spindle must have For machine tools, the speeds. At NTN, we continue rotation and exceptionally high precision and quality to our customers with the performance to supply products the initial from input to major manufacturers they need by providing of on the pursuit centered development stages. Our R&D activities are process the in generated technologies The imaginable. bearings best the for other development of products become the cornerstone of NTN’s industrial machinery and automobiles. scanners Low-vibration bearing for CT Construction machinery bearings Medical Equipment Construction Machinery Construction commitment to safeguarding human life. commitment to safeguarding NTN’s people-friendly bearing technology NTN’s will continue to evolve and play an active in the field of medicine as part of our role quickly and quietly. Shorter diagnosis times, quickly and quietly. in turn, make it easier to use CT scanners for and the elderly, for diagnosing children whom such tests can be particularly taxing. a demand for further advancement in CT scanner technology. a demand for further advancement in CT scanner technology. bearings for high-speed CT in NTN’s Successive improvements scanners have enabled these diagnostic devices to scan accurate images more In today’s medical field, where sophisticated diagnosis is a must, there is sophisticated diagnosis is a must, there medical field, where In today’s power provided by these large sturdy trucks. Construction machinery is trucks. Construction machinery by these large sturdy power provided can products and many of NTN’s critical to building vital infrastructure, of these machines, where be found in the wheels and drive components and energy. they support the development of resources NTN’s large bearings are used in the large dump trucks that typically used in the large large bearings are NTN’s of work materials, soil, sand and gravel at a transport large amounts to the contributing mines and construction sites, thereby time around Fourth generation hub bearings with CVJs to Unifying third-generation achieve a lightweight and compact product Vehicle suspension Vehicle the United States, Europe, and Asia, including China. Together China. Together and Asia, including States, Europe, the United NTN in axles with built-in sensors, with SNR, which is strong to automobile manufacturers supplies axle bearings has also developed a fourth- worldwide. The Company 4 hub joint) that combines third- generation hub joint (GEN with CVJs in one unit. This unique generation axle bearings in bearing prowess been made possible by NTN’s has product technologies. As this new product and CVJ manufacturing of to stand at the forefront illustrates, NTN continues modularization. With sensor Third generation Third s 09 90.4 11.7 20.2 37.1 21.4 Ultra lightweight sia and Others 2 Americas 08 9. 64.0 10.3 22.5 22.0 Billions of yen e A s Years ended March 31 Second generation 8 2 Europ Japan g Axle Bearing Sale 07 4. 6. 49.3 21.1 17.2 n i r a e B

e l x A In addition to having a complete lineup of all types of first- In addition to having a In the pursuit of greater ease of assembly, NTN has witnessed ease of assembly, In the pursuit of greater First generation through third-generation axle bearings, the Company has set up a axle bearings, third-generation through bases in Japan, global supply network by establishing production modularization of axle bearings progresses with each successive bearings progresses modularization of axle by compact products achieving lighter and more generation, we are the number of components. reducing movement. the generations of axle bearings. As the evolution of three Fitted to the wheels of automobiles, axle bearings enable the wheels axle bearings enable wheels of automobiles, Fitted to the Although to turn of the vehicle body. while also bearing the weight in vehicle basic, axle bearings play an essential role extremely Automobile Bearings Automobile

Business NTN Annual Report 2009 22 Business NTN Annual Report 2009 23 s 09 s 40.4 14.7 25.7 Oversea 08 50.6 17.4 33.2 Billions of yen Years ended March 31 Domestic 07 47.6 15.3 32.3 Various needle roller bearings needle roller Various Needle Roller Bearing Sale manufactures its own needle rollers and specializes in press- and specializes needle rollers its own manufactures competitiveness cost this of backdrop the Against cages. processed NTN has been actively developing a technology, and its strong in bases, beginning production network of overseas production In United States in 2000, and China in 2005. Thailand in 1999, the high-precision of to boost production 2006, the Company moved full-scale operations at costs with the start of reduce and rollers NTN Kamiina Corp. s g n i r a e B r e l l o R e l d e e N NTN commenced production of needle roller bearings in of needle roller NTN commenced production Automobile automatic transmission Japan in 1962. Having operated as a compact unit Japan in 1962. Having these sales, and technology, encompassing production, NTN operations have the full trust of their customers. automobile transmissions and other parts where there are space are there and other parts where automobile transmissions capacity requirements. conservation or high load-bearing relative to size. Needle roller bearings allow compact and bearings allow size. Needle roller to relative of these special Because machinery. lightweight designs for used in many applications for bearings are needle roller features, Needle roller bearings have relatively small-diameter, cylindrical, small-diameter, have relatively bearings Needle roller of needle elements. The outstanding feature needle-like rolling rigidity is their high load-bearing capacity and bearings roller s t n i o J y t i c o l e V - t The CSJ is the world’s first The CSJ is the world’s ball-type constant-velocity steering joint, and NTN was as having recognized succeeded in making this 50% approximately product lighter and smaller than conventional constant- velocity steering joints for steering systems. TOPICS Winner at Automotive Component Award the “2008 CHO MONOZUKURI Innovative Component Awards” constant-velocity steering joint “CSJ” developed for NTN’s and design light-weight compact, a features which automobiles, the Automotive was awarded enhanced functionality, at the “2008 ‘CHO (Super)’ MONOZUKURI Component Award for the held by the Conference Innovative Component Awards” of MONOZUKURI and Nikkan Kogyo Shimbun Ltd. Promotion n In Asia and other regions, net sales fell ¥1.8 billion, or 12.0%, In Asia and other regions, In Japan, sales declined by ¥6.7 billion, or 12%, year on year to In Japan, sales declined by ¥6.7 billion, or due to in the Americas and Europe Overseas, sales decreased a declines in demand and unfavorable exchange rates. In the declines in demand and unfavorable exchange year on year to Americas, net sales fell ¥19.0 billion, or 32.0%, ¥13.1 billion, or 36.0%, net sales dropped ¥40.2 billion. In Europe, a Driveshaft USA CORP., year on year to ¥23.1 billion. Seohan-NTN CVJs to delivering who are with the KOFCO Group joint venture modern in the Americas, started full-fledged operations. cars China from new orders year on year to ¥13.1 billion, largely due to of CVJs in NTN will expand production and Thailand. Going forward, to the automobile business in our response India and strengthen plants in Romania emerging markets by making full use of SNR’s and Brazil and other actions. sales in emerging markets, as a top supplier possessing advanced sales in emerging markets, as a top supplier smaller that are products technological capabilities, by proposing modular forms. made available in cassette or or are and lighter, demand and the ¥48.1 billion, mainly due to declines in overall export business. t s n o Based on technological expertise developed over the years, NTN has NTN expertise developed over the years, Based on technological C NTN started CVJ production in Japan in 1963, and in 2007 the number of in 2007 the number Japan in 1963, and in CVJ production NTN started million units. basis surpassed 400 on a cumulative CVJs produced in the 1990s, worldwide of production expansion aggressive Following to the to respond base of operations Company has a strong today the customers for major industry, needs of the automotive global sourcing system supported by a trilateral development are CVJs. These operations A of Japan, the Americas, and Europe. regions key covering the three as well as regions system encompassing these three and sales production of Asia has also been formed. China and other parts as a leader in the CVJ sector. established a solid reputation t % 25 s 2009 09 (No. 2 in the world) 13.1 40.2 23.1 48.1 124.4 NTN’s Share of Overseas Marke sia and Others Americas 08 14.9 59.2 36.2 54.8 165.1 Billions of yen e A (NTN’s estimates) Years ended March 31 Japan Europ 07 12.6 54.3 50.1 30.5 147.5 43% Constant-Velocity Joint Sale 2009 (No. 1 in Japan) NTN’s Share of Japanese Market Review of Operations foreign exchange rates. As a result, net sales decreased 25.0% from 25.0% from net sales decreased exchange rates. As a result, foreign fiscal year onwards, the current a year earlier to ¥124.4 billion. From earnings, and production NTN is working to increase and expand caused by the economic slowdown. In China, sales increased, sales increased, caused by the economic slowdown. In China, of the start of volume production mainly due to the contribution from due to a sales decreased however, In other regions new products. automakers and the impact of unfavorable decline in demand from (CVJs) were impacted by the rapidly intensifying economic recession impacted by the rapidly intensifying economic recession (CVJs) were yen, the financial crisis and caused by the vicious cycle of the strong production and sluggish automobile economy, the worsening real During the fiscal year under review, sales of constant-velocity joints review, During the fiscal year under

Business NTN Annual Report 2009 24 Business NTN Annual Report 2009 25 Propeller Shafts Propeller CVJs for CVJs for Driveshafts In recent years, there has been strong demand for developments demand for developments strong has been years, there In recent Because the function and quality of CVJs directly and indirectly indirectly and and quality of CVJs directly Because the function

that will reduce environmental impact, lighten component weight impact, lighten component environmental that will reduce achieve greater freedom), automobile design to greater (contributing (NVH). noise, vibration, and harshness compactness, and reduce at the functioning of automobiles, we have stayed the affect technology and have carried out a in automobile of trends forefront fully are requirements These variety of specific improvements. series, and the V series of E NTN’s products: by NTN’s addressed These for emerging markets. products high cost-performance by our recognized functionality is well improved products’ customers. approximate 60% reduction compared to the UJ). compared 60% reduction approximate EUJ-S—A High-efficiency Fixed-type CVJ A small lightweight CVJ with a high running-angle (50°) loss by about 30% transmission torque that reduces a lineup of the small, lightweight and high transmission efficiency At NTN, we offer transmission loss of our the torque reduced E series of CVJs, and we have already to the conventional UJ CVJs. EUJ CVJs by about 40% compared mass-produced developed EUJ-S has achieved high efficiency by Based on the EUJ, the recently internal design, as optimizing the joint’s frictional loss by such measures reducing the As a result, the surface and employing a newly developed grease. improving transmission loss has been cut by about a further 30% (an EUJ-S’ torque New Products Steering Shafts CVJs for Spurred by the oil shock in 1973, sales of front-wheel-drive by the oil shock in 1973, sales of front-wheel-drive Spurred setting up a network of production bases covering Japan, the bases covering Japan, production setting up a network of and Asia, including China. United States, Europe, their use of CVJs in halfshafts for rear-wheel-drive and in propeller in propeller and for rear-wheel-drive their use of CVJs in halfshafts demand the ride. As CVJ to improve shafts for 4WD vehicles by with global business development expands, NTN is proceeding vehicles began to climb because of their fuel efficiency. Production Production because of their fuel efficiency. vehicles began to climb increased automotive manufacturers of CVJs leaped. Furthermore, plunging CVJs to a driveshaft, the Company started supplying these the Company started supplying these plunging CVJs to a driveshaft, making front- that were to automotive manufacturers products wheel-drive vehicles. NTN was the first to bring fixed CVJs to the Japanese market in CVJs to the Japanese first to bring fixed NTN was the joint (DOJ), tripod double offset followed by adding the 1963, and fixed and to its lineup. Attaching other plunging CVJs joint (TJ) and s t c u d o r P r e h t O Compact free-type torque diode torque Compact free-type d n a t n these customers, NTN decided to a one-way clutch with good commercialize handling ability that can be embedded in plastic. Thus the model NCT was developed: a new one-way clutch with functions that employs the highly reliable existing model NCZ technology with its in the market and substantial track record that the customer can easily embed in plastic parts. e m p i u q equipment E

way clutch for office Model NCT new one- input prevention unit; it functions so that when an input shaft is unit; it functions so that when an input input prevention is but when the output shaft driven, an output shaft rotates, is and the driving force freely driven, only the output shaft rotates applications for this not transmitted to the input shaft. The primary between have been for automatic changeover systems product and rotational electric and manual for electric motor protection applications in small-type precision equipment. Targeting lighter weight, NTN has equipment such as cameras that require torque developed this ‘compact free-type diode,’ which is ultra small in size (1/3 ultra of conventional products), light in weight (2/5 of and low conventional products) (1/25 of conventional torque and has started products), supplying samples to customers. Development of the Model NCT New-Type Clutch for Office Equipment One-Way clutch that can be embedded in Highly reliable plastic parts the model NCT new- NTN has developed and commercialized type one-way clutch. The separation of various clutch parts its ease of handling in office equipment, and the NCT improves and can be easily embedded in plastic. It is highly reliable In achieves the same clutch functions as conventional products. for customers to mold has been a trend years, there recent with plastic external to the needs of products parts. In response New Products Smallest, Development of World’s Ultra-Small Ultra-Lightweight Diode’ Torque ‘Compact Free-Type changeover Realizing an automatic electric/manual equipment unit for small-type precision diode (TDF) developed in 2002 is a reverse- torque The free-type n o i s i c e r P The precision equipment business segment combines leading-edge segment combines equipment business The precision Using highly for special fi elds. and products products technology over the years, developed technologies mechatronic sophisticated characteristics. having special products this market with NTN supplies s 09

26.3 n 08 30.5 Billions of ye Years ended March 31 07 29.1 Other Products Sale Precision Equipment and NTN also offers a wide lineup of clutch products for everything a wide lineup of clutch products NTN also offers in recent years of new products such as the extra-large precision such as the extra-large precision years of new products in recent and inspection of tenth- XY table, designed for manufacture generation liquid crystal glass substrates. innovation and fluctuating production levels required by these major required levels innovation and fluctuating production sales promote as a step to aggressively customers. Going forward, launches conducted activities we will continue to pursue the timely and other precision equipment supplied to the semiconductor, equipment supplied to the semiconductor, and other precision devices and other industries, NTN has set up LCD, electronic technological separate divisions to adapt flexibly to the rapid tensioners found inside automobiles. As a result, net sales result, tensioners found inside automobiles. As a billion. ¥26.3 to earlier year a from 14.0%, or billion, ¥4.2 decreased products office equipment to automobiles. For mechatronic from the fiscal year under review, sales were robust of defect repair robust of defect were sales review, the fiscal year under but sales fell orders, equipment for flat panel displays due to new units and auto- for parts feeders used in plants, and of clutch As regards sales of precision equipment and other products during products equipment and other precision sales of As regards Review of Operations

Business NTN Annual Report 2009 26 Business NTN Annual Report 2009 27 Electric actuator unit Planetary roller-screw-type electric brake actuator *Planetary roller: This component fulfills the same role as a planetary gear in a role as a planetary This component fulfills the same *Planetary roller: mounted on the periphery shafts are gear mechanism. Screw planetary reduction of component, instead of gears. Electric Actuator Unit unit employing a In May 2009, NTN developed an electric actuator which the Company mass highly efficient, compact ball screw, for use in electric actuators for mechanical automatic produces transmissions and continuous variable valve systems. The new electric actuator unit uses a linear ball bearing for the sliding in high power output with outstanding efficiency position, resulting and response. Electric Brake Unit Electric Brake Unit developed a lightweight, compact and highly In October 2007, NTN as a type electric brake actuator, durable planetary roller-screw next-generation brake system for automobiles. electric vehicles in response to environmental issues. to environmental response electric vehicles in Adoption of Electric Vehicles of Electric Adoption In-wheel motor-type axle unit In-wheel motor-type the growing use of electronics in conventional gasoline vehicles. in conventional gasoline of electronics use the growing Product Development Initiatives Related to Electric Vehicles Electric to Related Initiatives Development Product Leveraging its core mechatronics (motor and control) and tribology (friction and lubrication) and tribology (friction and lubrication) (motor and control) mechatronics Leveraging its core In recent years, the automobile industry has accelerated the development of fuel-cell vehicles and the development of fuel-cell vehicles automobile industry has accelerated years, the In recent technologies, NTN is developing modular products for use in electric vehicles, and that mesh with use in electric vehicles, and that mesh for is developing modular products technologies, NTN Electric vehicle delivered to the Elemental Technology R&D Center to the Elemental Technology Electric vehicle delivered Technological Development Anticipating the Full-Scale the Full-Scale Anticipating Development Technological Article NTN has steadily phased in the use of electric vehicles that run on being put to These electric vehicles are no gasoline whatsoever. good use by NTN as a symbol of its commitment to developing innovative technologies and eco-friendly products. Developing Products for In-Wheel for Developing Products Motor Electric Vehicles a compact, lightweight in-wheel In October 2005, NTN introduced and motor, gear, motor type axle unit made up of a reduction This time, NTN has hubbearing as a drive unit for electric vehicles. lightest in-wheel motor type axle unit which developed the world’s in-wheel motor can drive a small passenger car and an inteligent type axle unit, which is an in- wheel motor type axle unit added with a NTN-developed electric brake and built-in will sensors. The product change the concept of the conventional motorvehicle as fuel consumption it improves and driving stability as well as flexibility in designing vehicle, motion and as it offers performance that users require. 09 s 08 h 31) rc s 07 g n i Constant-Velocity Joints n 06 r a ears ended Ma E (Y

05 d n a

Precision Equipment and Other Product Bearings 04 en) s e l a 0 S Sales by Business Segment Sales by Business (Billions of Y 600 500 400 300 200 100

Sales Performance decreased year on year despite strong sales of large bearings used year on year despite strong decreased and China, region for wind power systems in Japan, the European This and for construction machinery in the Americas region. in worldwide demand for was mainly due to a drop decrease bearings, including a sudden decline in demand for fluid dynamic and disk drive (HDD) motors in the Asian region, bearings for hard exchange rates. In automotive the impact of unfavorable foreign applications, in China sales of axle bearings and needle roller of assisted by the start of volume production robust, bearings were ■ • 31, 2009, March Consolidated net sales for the fiscal year ended of ¥6,885 million (1.3%) amounted to ¥527,100 million, a decrease Excluding the ¥43,657 million decrease fiscal year. the previous from in net sales of was an actual increase there exchange, currency from in sales from increase ¥36,772 million. Excluding the ¥85,325 million and its subsidiaries and the consolidation of S.N.R. ROULEMENTS was an exchange, there currency from the ¥33,280 million decrease in net sales of ¥58,930 million. Overseas sales actual decrease of ¥18,401 million (5.9%) year totaled ¥332,252 million, an increase Overseas sales accounted for 63.0% of net sales overall (the on year. 15.4%), 26.9%; and Asia and other areas Americas 20.7%; Europe fiscal year. the previous points from of 4.3 percentage an increase Sales by Business Segment Bearings overall sales In applications for general industrial machinery, 09 08 h 31) rc 07 n o 06 i t ears ended Ma a (Y d i 05 l o s n 04 en) o C

f 0 o 100 400 300 200 Net Sales (Billions of Y 600 500

e p o c S.N.R. ROULEMENTS KYOEI NTN CORP. ICSA Industria Cuscinetti S.p.A. NTN Houdatsushimizu Corporation G.m.b.H NTE Gardelegen NTN TRANSMISSIONS EUROPE CREZANCY S.N.R. ROULEMENTS and its 8 subsidiaries S (1 company removed) (1 company added) (1 company removed) (12 companies added)

Equity method affiliation Consolidation ◆ ◆ were accounted for by the equity method. The following changes to were were method equity the of application and consolidation of scope the review. made during the fiscal year under The scope of consolidation as of March 31, 2009, consisted of NTN The scope of consolidation as of March (12 domestic and 38 Corporation and 50 consolidated subsidiaries (all overseas affiliates) overseas subsidiaries). A total of 10 affiliates ■ Financial Review Financial

Financial Section NTN Annual Report 2009 28 Financial Section NTN Annual Report 2009 29 subsidiaries of the Group, and consequently contributed to sales subsidiaries of the Group, 51.3% year on increased net sales in the region As a result, growth. year to ¥141,674 million. Asia and other areas of large bearings for wind power strong In China, sales were bearings and CVJs for systems, and of axle bearings, needle roller sales in both in Asia however, automotive applications. In other areas general industrial machinery and automotive applications decreased although sales of large bearings for wind power systems increased. systems increased. although sales of large bearings for wind power a year from 11.5% decreased net sales in the region As a result, earlier to ¥194,848 million. Americas automotive Sales in both general industrial machinery and and unfavorable applications fell due to declines in overall demand exchange rates, although sales of large bearings for foreign construction machinery and bearings for agricultural machinery 19.5% from decreased net sales in the region As a result, increased. a year earlier to ¥109,289 million. Europe Sales in both general industrial machinery and automotive applications fell due to declines in overall demand and unfavorable exchange rates, although sales of large bearings for wind foreign S.N.R. Against this backdrop, power systems increased. ROULEMENTS and its subsidiaries became consolidated 09 08 a h 31) rc 07 Americ Asia and Other Areas 06 ears ended Ma (Y 05 Europe Japan 04 en) 0 Net Sales by Region 100 500 400 300 200 700 600 (Billions of Y applications dropped mainly due to declines in overall demand, applications dropped Sales by Region Japan Sales in both general industrial machinery and automotive tensioners. As a result, segment net sales for the fiscal year under tensioners. As a result, a year earlier to ¥26,271 million. 13.8% from decreased review In the precision equipment and other products segment, sales were segment, sales were equipment and other products In the precision equipment for flat panel displays due to new of defect repair robust but sales fell of parts feeders, clutch units and auto- orders, ¥124,445 million. Precision equipment and other products from the start of volume production of new products. In other of new products. the start of volume production from due to a decline in demand from sales decreased however, regions, exchange rates. automakers and the impact of unfavorable foreign a year earlier to 24.6% from net sales decreased As a result, Constant-Velocity Joints (CVJs) Constant-Velocity mainly due to the contribution Sales of CVJs in China increased, consequently contributed ¥85,325 million to sales growth. As a sales growth. consequently contributed ¥85,325 million to rose 11.2% review segment sales for the fiscal year under result, year on year to ¥376,381 million. fell due to a decrease in demand and the impact of unfavorable fell due to a decrease exchange rates. Nevertheless, S.N.R. ROULEMENTS and its foreign and of the Group, subsidiaries became consolidated subsidiaries new products mainly for Japanese automakers. In other areas, sales mainly for Japanese automakers. In other areas, new products 6 4 2 0 -2 （％） s e r u 09 t i d n 08 Ratio of Net Income (Loss) to Sales e p h 31) rc x 07 E

l Right a t i 06 p ears ended Ma a (Y C 05

d n Net income (Loss) en) a 04

D & 0 30 20 10 Net Income (Loss)/ (Loss) to Sales Ratio of Net Income (Billions of Y R -10 By segment, R&D costs for bearings were ¥12,010 million (up By segment, R&D costs for bearings were As a result, the Company reported a loss before income taxes a loss before the Company reported As a result, review totaled ¥4 dividend for the fiscal year under The year-end Left

R&D Costs machinery, aircraft and industrial machinery such as machine tools, aircraft machinery, R&D costs for the fiscal year markets. As a result, which have growth the totaled ¥17,402 million (up ¥2,397 million from under review 3.3% of consolidated net sales. representing fiscal year), previous ¥4,501 million (down ¥2,925 million year on year); CVJ costs were came to equipment and other products ¥539 million); and precision ¥891 million (up ¥11 million). securities, ¥498 million in loss on liquidation of affiliates, and ¥600 securities, ¥498 million in loss on liquidation compensation. defect for product of reserve million in provision of ¥10,104 million, down ¥54,417 million from and minority interests of ¥8,985 million, with a consolidated net loss year, the previous was ¥19.14 for the fiscal down ¥36,416 million. Net loss per share year under review. the with the interim dividend of ¥9 per share, Together per share. dividend for the full fiscal year amounted to ¥13 per share. ■ • NTN concentrated business environment, to the current In response development in the fields of wind in product business resources in demand is increasing stock, where power systems and rolling issues, and the fields of construction to environmental response 0 10 8 6 4 2 （％） 09 Operating margin 08 t h 31) Righ rc 07 06 ears ended Ma (Y 05 Operating income en) 04 0 Left 10 30 20 50 40 Operating Income/Operating Margin Operating Income/Operating (Billions of Y Other expenses amounted to a net expense of ¥19,583 million. Selling, general and administrative (SG&A) expenses amounted to Administrative (SG&A) Expenses Earnings Cost of Sales and Selling, General and Cost of Sales and Selling, General

fixed assets, ¥13,921 million in loss on devaluation of investment million in gain on customs duties for prior periods, which were offset offset million in gain on customs duties for prior periods, which were expense, ¥1,112 million in business by ¥5,310 million in interest expenses, ¥3,064 million in loss on impairment of reorganization Major contributors to other income included ¥1,059 million in interest Major contributors to other income included ¥1,059 million in interest and dividend income, ¥1,239 million in amortization of negative goodwill, ¥564 million in equity in earningsand ¥360 of affiliates, ¥40,133 million (80.9%) compared with the previous fiscal year. The fiscal year. with the previous ¥40,133 million (80.9%) compared points to 1.8%. operating margin declined 7.5 percentage • of Operating income amounted to ¥9,479 million, a decrease rates. of cost to overall sales rising 2.0 ¥72,368 million, with the percentage points to 13.7%. percentage Cost of sales amounted to ¥445,253 million, with the percentage of with the percentage Cost of sales amounted to ¥445,253 million, points to 84.5%. This was cost to overall sales rising 5.5 percentage exchange mainly due to surging steel prices and unfavorable foreign • decreased demand for automotive applications, and to the impact of decreased sales in this region exchange rates. As a result, unfavorable foreign 3.7% year on year to ¥81,289 million. decreased due to rapid declines in demand for fluid dynamic bearings and due to rapid declines in demand for fluid dynamic Financial Review Financial

Financial Section NTN Annual Report 2009 30 Financial Section NTN Annual Report 2009 31 ) 0 6 4 2 s imes o (T w o l F over rati

rn h 09 s a C

08 Inventory tu d n h 31) rc a

07 n ight o i R t 06 i s s ears ended Ma o (Y P 05

l a Inventorie i c 04 en) n a t n i Lef 0 50 F Total net assets at the end of the fiscal year amounted to ¥192,223 ¥192,223 to amounted year fiscal the of end the at assets net Total As a result, total assets at March 31, 2009, amounted to total assets at March As a result, ¥284,346 million, a were liabilities at the fiscal year-end Current Inventories/Inventory Turnover Ratio Inventories/Inventory (Billions of Y 150 100

Financial Position ■ decrease of ¥15,963 million, or 5.3%, year on year. Major factors of ¥15,963 million, or 5.3%, year on year. decrease in trade payables, a ¥24,930 included a ¥34,895 million decrease portion of long-term debt, and a in the current million decrease in short-term bank loans. Long-term ¥55,723 million increase the end of the 34.0% or ¥38,290 million from liabilities increased to ¥151,044 million, due primarily to an increase fiscal year, previous in long-term debt of ¥32,329 million. • amounted to ¥278,154 year-end assets at the fiscal current Total the end of the of ¥2,982 million, or 1.1%, from million, a decrease ¥25,325 million Major factors included a fiscal year. previous in deferred a ¥3,886 million decrease in trade receivables, decrease in inventories. Property, income taxes, and a ¥30,497 million increase million, an increase plant and equipment, net amounted to ¥288,418 fiscal year. the end of the previous of ¥15,016 million, or 5.5%, from Investments and other assets amounted to ¥61,041 million, a the end of the previous of ¥13,885 million, or 18.5%, from decrease in Major factors included a ¥5,983 million increase fiscal year. in investment income taxes, a ¥9,581 million decrease deferred of ¥11,764 million in investments in securities, and a decrease unconsolidated subsidiaries and affiliates. the of ¥1,851 million, or 0.3%, from ¥627,613 million, a decrease fiscal year. end of the previous 09 eciation Depr 08 h 31) rc 07 s re 06 ears ended Ma (Y 05 Capital expenditu en) 04 0 10 40 30 20 60 50 Capital Expenditures and Depreciation Capital Expenditures (Billions of Y All expenditures were funded from internal funded from funds and short-term were All expenditures In the CVJ segment, capital expenditures totaled ¥9,616 million In the CVJ segment, capital expenditures In the bearings segment, capital expenditures totaled ¥39,326 In the bearings segment, capital expenditures Capital Expenditures loans. Depreciation for the fiscal year under review amounted to for the fiscal year under loans. Depreciation fiscal year). the previous ¥45,759 million (up ¥6,212 million from expenditures totaled ¥652 million (up ¥132 million from the previous the previous totaled ¥652 million (up ¥132 million from expenditures fiscal year). (down ¥6,095 million from the previous fiscal year). Expenditures fiscal year). Expenditures the previous (down ¥6,095 million from equipment at NTN Driveshaft, Inc. in production included increases segment, capital equipment and other products In the precision BEARING MFG. Corporation, and increases in production equipment in production BEARING MFG. Corporation, and increases and the Company’s at S.N.R. ROULEMENTS, NTN-BOWER CORP. Okayama Works. expansion of facilities at the Company’s Kuwana Works and NTN Mie NTN and Works Kuwana Company’s the at facilities of expansion in increases realignment, Corporation in line with a production equipment and expansion of facilities at AMERICAN NTN production million (down ¥3,947 million from the previous fiscal year). the previous million (down ¥3,947 million from equipment and in production included increases Expenditures capacity, labor savings and rationalization, maintenance and labor savings capacity, and R&D for new safety, upgrading of existing facilities, improving products. Capital expenditures for the fiscal year under review amounted to for the fiscal year under Capital expenditures fiscal year). the previous ¥49,594 million (down ¥9,910 million from production was on increasing The main focus of expenditures • Free cash flow, the difference between net cash provided by between net cash provided the difference cash flow, Free Net cash used in investing activities decreased ¥20,633 million, or Net cash used in investing activities decreased by financing activities was ¥44,551 million, a Net cash provided of due to the effect Factoring in the ¥4,704 million decrease at the end of the fiscal year under review amounted to ¥30,996 at the end of the fiscal year under the end of the of ¥1,540 million, or 4.7%, from million, a decrease fiscal year. previous operating activities and net cash used in investing activities, of net cash provided amounted to -¥41,541 million. The proportion by operating activities to net sales was 4.1%. reflected outflows of ¥10,104 million in a loss before income taxes outflows of ¥10,104 million in a loss before reflected in trade payables; a ¥49,891 million decrease and minority interests; in inventories; and ¥8,540 million in a ¥14,338 million increase of ¥45,759 million income taxes paid; outweighed mainly by inflows in trade and amortization; a ¥45,255 million decrease in depreciation and a ¥13,921 loss on devaluation of investment receivables; securities. to ¥62,916 million. This was due mainly to 24.7% year on year, plant and of property, outlays of ¥54,273 million for purchases equipment. of ¥28,945 million, or 185.5%. This was due increase year-on-year of ¥53,979 million in long- and short-term mainly to a net increase ¥8,917 million in cash dividends paid. loans, which offset due to the exchange rate changes and the ¥154 million increase merging of unconsolidated subsidiaries, cash and cash equivalents 09 08 h 31) rc 07 06 ears ended Ma (Y 05 04 en) 0 50 200 150 100 Interest-Bearing Debt (Billions of Y 300 250 The inventory turnoverreview was ratio for the fiscal year under Net working capital was -¥6,192 million, an increase of ¥12,981 Net working capital was -¥6,192 million, an increase The shareholders’ equity ratio was 28.2% (declining 5.1 The shareholders’ Cash Flows year-on-year decrease of ¥44,888 million, or 67.7%. This mainly decrease year-on-year • by operating activities was ¥21,375 million, a Net cash provided 3.75 times (down 1.11 times year on year), while the turnover ratio of fiscal the end of the previous total assets was 0.84 (down 0.01 from year). This is a temporary situation resulting from the current portion of the current from This is a temporary situation resulting long-term debt of ¥11,927 million. million from the end of the previous fiscal year. The current ratio was ratio The current fiscal year. the end of the previous million from a year earlier). points from of 4.2 percentage 97.8% (an improvement fiscal year. Taking into account the ¥6,472 million decrease from from Taking into account the ¥6,472 million decrease fiscal year. debt expanded ¥69,594 adjustments, interest-bearing currency debt to total assets was 44.0% million. The ratio of interest-bearing points). (up 10.2 percentage year, were ¥376.77 per share (a decrease of ¥69.21 per share from a from of ¥69.21 per share (a decrease ¥376.77 per share were year, debt amounted to ¥275,996 million, an year ago). Interest-bearing the end of the previous of ¥63,122 million, or 29.7%, from increase percentage points from a year earlier). Total net assets per share, net assets per share, a year earlier). Total points from percentage outstanding at the end of the fiscal based on the number of shares fiscal year-end. The primary reasons were a ¥19,524 million decrease decrease million ¥19,524 a were reasons primary The year-end. fiscal translation in million ¥14,373 of decrease a earnings, retained in interests. minority in million ¥8,190 of increase an and adjustments, million, a decrease of ¥24,178 million, or 11.2%, from the previous previous the from 11.2%, or million, ¥24,178 of decrease a million, Financial Review Financial

Financial Section NTN Annual Report 2009 32 Financial Section NTN Annual Report 2009 33 individual countries economies business development is associated with the following risks: change in tax systems of or between unforeseen a. Risks from change in laws of individual countries unforeseen b. Risks from staff retaining appropriate c. Difficulty in hiring and emerging in relations labor unstable and levels technology Evolving d. e. Political instability in emerging economies 7) Product Defects 7) Product works to satisfy Group the NTN quality, product ensure To concerning functions and product customers’ requirements quality and product appropriate specifications, and strives to provide a substantial However, quality assurance globally. safety by enforcing defect leading to a serious accident, claim for damages, or product costs and warranty entail huge product could recall product business performance and the financial position of potentially affect has taken out global Although the NTN Group the NTN Group. liability insurance, complete coverage for loss is not product possible. 8) Intellectual Property generates a wealth of innovative technologies and The NTN Group development, representing of new product know-how in the process files patent for which the NTN Group valuable intellectual property business performance its rights. However, applications to protect if a legal may be affected and the financial position of the NTN Group intellectual its if or property intellectual its against initiated is challenge party. is infringed by a third property 9) Risks Associated with Global Operations develops its business operations worldwide with The NTN Group overseas sales exceeding 50% of consolidated sales. Overseas disasters such as earthquakes, floods, and fires. Although the NTN Although the and fires. as earthquakes, floods, disasters such systems and stands place crisis management has put into Group damage as much as to contain engage in measures to ready be completely eliminated. Business possible, risks cannot may be financial status of the NTN Group performance and the by a natural disaster or by accidents. affected on Specific Industries 6) Dependence half of its Bearings Division derives approximately The NTN Group’s accounts for which also the automotive industry, from sales revenues half of sales of components that the Constant-velocity than more to the for automotive power transmission Joints Division produces high. on the automotive industry is therefore drive axle. Dependence sales of bearings and works to increase Although the NTN Group to the industrial machinery sector and equipment products precision a rapid sales structure, implements policies to achieve a balanced the could potentially affect shift in demand in the automotive industry and financial position. business results NTN Group’s Overseas subsidiaries’ foreign currency-denominated business currency-denominated Overseas subsidiaries’ foreign Risk Factors Risk counterparts are exposed to the risk of damage from natural exposed to the risk of damage from counterparts are 5) Disasters and Accidents and its transaction plants and facilities of the NTN Group Production enhanced production yields and VA/VE methods. Nevertheless, yields and VA/VE enhanced production financial position may be and the NTN Group’s business results in raw materials costs. than expected increases by stronger affected which pose a high weighting in materials costs, measures have been which pose a high weighting in materials costs, measures higher materials taken such as mark-ups on selling prices to reflect through is targeting cost reductions cost. In addition, the Group 4) Rise in Raw Materials Prices outside a wide range of raw materials from procures The NTN Group especially of steel materials, deal with cost increases, To sources. quality and high added value, business results and the NTN Group’s and the NTN Group’s quality and high added value, business results on market pressure by downward financial position may be affected prices. reductions are mounting in the automotive industry, which accounts in the automotive industry, mounting are reductions works sales. Although the NTN Group for over half of the NTN Group of high costs while developing new products continuously to reduce products from China and Eastern Europe are gaining ground, ground, gaining and Eastern are China from Europe products by falling market prices. At the same bearings have been affected of global price competition, calls for price time, against a backdrop 3) Declines in Market Prices and sales production surrounding The competitive environment is becoming harsher worldwide. As activities of the NTN Group local procurement, effects of exchange rate fluctuations on business of exchange rate fluctuations effects local procurement, and financial positions cannot be fully eliminated. results export transactions with overseas customers of the Company are of the Company are export transactions with overseas customers hedges Although the NTN Group currencies. conducted in foreign and expansion of exchange contracts foreign forward risks through results and financial positions are converted to yen for the and financial positions are results many of consolidated financial statements. Moreover, preparation consolidated sales. This percentage is expected to increase further is expected to increase consolidated sales. This percentage business development of due to continued acceleration in the global the NTN Group. 2) Foreign Exchange Fluctuations Exchange 2) Foreign account for over 50% of Overseas sales of the NTN Group the financial position of the NTN Group operations may be affected may be affected operations of the NTN Group the financial position in specific countries and business by the economic conditions to which our customers belong. conditions in industries 1) Economy and sales networks, and operates global production The NTN Group and various industrial sectors. Business results supplies customers in subject to the following risks. It should be noted that forward-looking be noted that forward-looking following risks. It should subject to the of the NTN judgments in the following reflect statements contained of June 26, 2009. as Group Business results and the financial position of the NTN Group are are of the NTN Group the financial position and Business results (1,894) 2009 63,809 20,900 70,233 45,343 621,408 220,360 107,167 230,072 296,437 185,249 743,592 811,931 207,961 Thousands of 1,500,265 6,327,822 8,309,773 2,936,150 1,429,981 2,831,661 U.S. dollars (Note 1) (5,373,623) $6,389,219 $ 315,545

723 (142) 4,791 9,942 8,340 74,926 15,223 22,291 16,617 27,123 31,227 95,281 24,486 2008 142,524 563,865 748,735 273,402 109,970 281,136 105,081 (475,333) ¥ 32,536 ¥629,464

Millions of yen (186) 6,268 2,053 6,899 4,454 2009 61,041 18,197 10,527 22,600 29,119 21,646 73,043 79,756 20,428 147,371 621,582 816,269 288,418 140,467 278,154 (527,851) ¥ 30,996 ¥627,613

...... Accounts accounts Allowance for doubtful Notes Other assets Investments in unconsolidated subsidiaries and affiliates income taxes (Note 16) Deferred Less accumulated depreciation Buildings and structures equipment and vehicles Machinery, Construction in progress Investment securities (Note 3) Land Other current assets Other current Inventories (Note 4) taxes (Note 16) income Deferred

Short-term investments Short-term investments Cash and cash equivalents receivables: Trade Total investments and other assets Total Total assets Total See accompanying notes to the consolidated financial statements. Investments and other assets: Property, plant and equipment, net Property, Property, plant and equipment, at cost (Notes 5 and 6): plant and equipment, at cost (Notes Property, Assets assets: Current March 31, 2009 and 2008 31, 2009 March Consolidated Balance Sheets Balance Consolidated Total current assets current Total

Financial Section NTN Annual Report 2009 34 Financial Section NTN Annual Report 2009 35

2,586 (7,411) (4,123) 2009 24,320 15,677 11,779 39,367 96,976 431,029 564,095 155,217 121,419 101,873 637,259 739,132 364,228 328,596 Thousands of (256,205) (260,328) 1,956,866 1,045,262 1,537,657 1,074,264 2,061,977 2,894,696 U.S. dollars (Note 1) $6,389,219 $1,643,011

– 742 (723) 7,057 1,379 2,311 6,727 (1,939) 70,347 27,668 42,340 55,411 36,857 13,265 94,235 42,813 11,049 (10,794) (12,733) 2008 216,401 112,754 125,049 222,077 107,500 300,309 ¥629,464 ¥105,670

Millions of yen 254 (405) (728) 1,540 1,157 3,867 9,526 2,389 2009 15,247 32,278 42,340 55,411 11,927 10,007 62,598 72,605 35,778 (25,167) (25,572) 192,223 102,676 151,044 105,525 202,548 284,346 ¥627,613 ¥161,393

...... 750,862 shares in 2009 and 750,862 shares in 2008 1,059,883 shares ......

Issued–470,463,527 shares in 2009 and 2008 Issued–470,463,527 shares Authorized–1,800,000,000 shares Treasury stock, at cost: Treasury Translation adjustments Translation Net unrealized holding loss on securities (Note 3) Net unrealized Capital surplus Retained earnings 20) (Note Common stock: Accounts Notes Total valuation and translation adjustments Total Minority interests Total shareholders’ equity shareholders’ Total Shareholders’ equity (Note 8): equity Shareholders’ Negative goodwill taxes (Note 16) income Deferred Other long-term liabilities Long-term debt (Note 6) benefits for employees (Note 7) Accrued retirement defect compensation Reserve for product Deferred income taxes (Note 16) income Deferred liabilities Other current Accrued income taxes (Note 16) Current portion of long-term debt (Note 6) portion of long-term debt (Note Current Short-term bank loans (Note 6) Short-term bank loans Valuation and translation adjustments: Valuation Trade payables: Trade Long-term liabilities: Total net assets Total liabilities and net assets Total Contingent liabilities (Note 9) Net assets: Total long-term liabilities Total Total current liabilities current Total Liabilities and net assets Liabilities and net assets liabilities: Current – 5,742 1,242 3,665 (3,085) (6,108) (5,070) 2009 16,063 32,993 96,498 10,781 12,613 (31,192) (47,470) (88,384) (54,057) (11,320) (14,477) 833,218 736,720 Thousands of (141,718) (199,359) (102,861) 4,532,760 U.S. dollars (Note 1) $5,365,978 $ (91,469)

– – – – (5) 989 (530) (762) (413) 4,210 4,073 1,523 (5,299) (5,761) (3,126) (1,700) 44,313 62,383 12,259 49,612 16,469 27,844 2008 421,990 111,995 ¥ 27,431 ¥533,985

– Millions of yen 360 564 122 (600) (498) (303) 1,578 3,241 9,479 1,059 1,239 2009 (1,112) (3,064) (4,663) (5,310) (1,422) (8,682) 81,847 72,368 (13,921) (19,583) (10,104) 445,253 ¥ (8,985) ¥527,100

...... Net (loss) income (Loss) income before minority interests (Loss) income before (Loss) income before income taxes and minority interests (Loss) income before Operating income (Note 19) Operating income (Note Gross profit Gross Current Deferred Loss on impairment of fixed assets (Note 5) Loss on impairment of fixed assets (Note net Other, Loss on liquidation of a subsidiary (Note 3) Loss on devaluation of investment securities Refund (payment) of prior year customs duties Refund (payment) of prior year customs (Note 14) defect compensation for product of reserve Provision Reorganization expenses (Note 15) Gain (loss) on sales of investment securities (Note 3) Gain (loss) on sales of investment securities Amortization of negative goodwill benefits trust retirement Gain on contribution of securities to employees’ Interest and dividend income and dividend Interest expense Interest Equity in earnings of affiliates Income taxes (Note 16): Other income (expenses): See accompanying notes to the consolidated financial statements. Net sales (Note 19) Years ended March 31, 2009 and 2008 31, 2009 ended March Years Consolidated Statements of Operations of Operations Statements Consolidated Minority interests

Selling, general and administrative expenses (Note 13) Selling, general and Cost of sales (Note 13) Cost of sales (Note

Financial Section NTN Annual Report 2009 36 Financial Section NTN Annual Report 2009 37 17 (36) 482 207 276 (171) (366) (281) 4,907 2,107 2,810 (8,450) (8,917) (8,985) (2,275) (4,649) (2,861) Total Total 27,431 (18,241) (47,329) (90,777) (91,469) (23,160) 216,401 net assets net assets ¥192,223 ¥215,815 $1,956,866 $2,203,004

– – – – – – – – – – – – – – – – – – – – 479 8,190 7,057 83,375 ¥15,247 ¥ 6,578 Minority interests $155,217 $ 71,842 Minority interests Minority

– – – – – – – – – – – – – – – – – – – – (8,919) (10,794) (14,373) ¥ (1,875) ¥(25,167) (146,320) Translation Translation Translation Translation adjustments adjustments $(109,885) $(256,205)

– – – – – – – – – – – – – – – – – – – – 1,534 (9,801) (1,939) ¥ (405) 15,616 ¥7,862 securities securities $(19,739) $ (4,123) Net unrealized Net unrealized Net unrealized Net unrealized holding loss on holding loss on

– – – – – – – – – – – – – – – – – 17 276 (171) (723) (281) ¥(569) ¥(728) 2,810 (2,861) $(7,360) stock, $(7,411) stock, at cost at cost Treasury Treasury Thousands of U.S. dollars (Note 1) Millions of yen

– – – – – – – – – (36) 482 207 (366) 4,907 2,107 (8,450) (8,917) (8,985) (2,275) 27,431 (90,777) (91,469) (23,160) 125,049 earnings earnings Retained Retained ¥105,525 ¥106,068 $1,074,264 $1,273,022

– – – – – – – – – – – – – – – – – – – – – – – 55,411 Capital Capital surplus surplus ¥55,411 ¥55,411 $564,095 $564,095

– – – – – – – – – – – – – – – – – – – – – – – 42,340 stock stock ¥42,340 ¥42,340 Common Common $431,029 $431,029

– – – – – – – – – – – – – – issue shares in shares Number of 470,463,527 470,463,527 470,463,527

...... overseas subsidiaries subsidiaries an unconsolidated subsidiary changes of fiscal year end of consolidated accounting policies applied to subsidiaries foreign an unconsolidated subsidiary overseas subsidiaries changes of fiscal year end of consolidated subsidiaries foreign subsidiaries foreign accounting policies applied to accounting policies applied Other changes 31, 2009 Balance at March Actuarial differences of Actuarial differences stock of treasury Purchases stock Sales of treasury Increase due to merger of Increase Net loss from resulting Effect Balance at March 31, 2008 Balance at March of changes in Effect Cash dividends paid Sales of treasury stock Sales of treasury Other changes 31, 2009 Balance at March Actuarial differences of Actuarial differences stock of treasury Purchases Increase due to merger of Increase Cash dividends paid Net loss from resulting Effect Sales of treasury stock Sales of treasury Other changes 31, 2008 Balance at March changes in of Effect Balance at March 31, 2007 Balance at March Cash dividends paid Net income stock of treasury Purchases Years ended March 31, 2009 and 2008 31, 2009 ended March Years Consolidated Statements of Changes in Net Assets in Net of Changes Statements Consolidated

– – – – 753 947 255 1,191 1,955 1,639 7,717 1,567 (2,046) (1,670) (5,742) (7,808) (6,200) (5,457) 2009 54,057 31,192 18,558 (23,455) (22,234) (10,781) (58,017) (86,938) (14,181) (17,826) (30,418) (90,777) (12,613) (47,888) (17,245) 465,835 141,718 460,705 343,999 217,602 461,081 463,657 453,538 331,223 Thousands of (145,963) (507,899) (552,510) (640,497) (125,613) (249,608) $(102,861) $ 315,545 U.S. dollars (Note 1) U.S. dollars (Note

– – – – – – – 0 (9) 73 (50) 131 678 916 197 452 (820) (659) (989) (967) (702) (450) 1,817 5,761 5,626 2,702 2,132 (1,523) (6,734) (1,833) (5,749) (5,993) (2,287) (4,073) (5,491) (8,450) 39,547 11,130 85,299 66,263 15,606 11,863 17,218 32,084 (15,104) (57,515) (24,254) (83,549) 2008 ¥44,313 ¥32,536

– – – – Millions of yen 74 25 93 117 192 161 758 154 (767) (609) (201) (164) (564) (536) 1,823 5,310 3,064 (5,699) (8,540) (1,393) (2,304) (1,751) (2,988) (1,239) (2,184) (1,059) (8,917) (4,704) (1,694) 2009 45,759 45,255 33,791 21,375 13,921 44,551 45,292 45,545 32,536 (14,338) (49,891) (54,273) (62,916) (12,339) (24,519) ¥(10,104) ¥ 30,996

...... Subtotal Increase in inventories Increase in trade payables increase (Decrease) Other Gain on contribution of securities to employees’ retirement benefits trust retirement Gain on contribution of securities to employees’ trust benefits Contribution to employees’ retirement in trade receivables Decrease Translation adjustments and foreign exchange loss (gain), net foreign adjustments and Translation Equity in earnings of affiliates Loss on impairment of fixed assets Loss on devaluation of investment securities Increase in reserve for product defect compensation product for in reserve Increase pension plans amendment of from long-term liabilities resulting and in other current Decrease income and dividend Interest expense Interest Decrease in allowance for doubtful accounts in allowance Decrease benefits for directors retirement in accrued Decrease benefits for employees accrued retirement in (decrease) Increase Depreciation and amortization Depreciation Amortization of goodwill goodwill Amortization of negative Adjustments for: See accompanying notes to the consolidated financial statements. Cash flows from operating activities: operating Cash flows from income taxes and minority interests (Loss) income before Years ended March 31, 2009 and 2008 31, 2009 ended March Years Consolidated Statements of Cash Flows of Cash Statements Consolidated Purchase of investments in subsidiaries resulting in change in scope of consolidation (Note 18) of investments in subsidiaries resulting Purchase Other Net cash used in investing activities Purchases of investment securities Purchases sales of investment securities from Proceeds in investments in affiliates accounted for by the equity method Increase of investments in subsidiaries Purchase Purchases of property, plant and equipment plant of property, Purchases of other assets Purchases plant and equipment sales of property, from Proceeds Net cash provided by operating activities Net cash provided investing activities: Cash flows from in short-term investments Increase Interest and dividend income received Interest paid Interest Income taxes paid Effect of exchange rate changes on cash and cash equivalents Effect in cash and cash equivalents increase Net (decrease) Cash and cash equivalents at beginning of the year Other by financing activities Net cash provided Repayment of long-term debt, including current portion Repayment of long-term debt, including current Redemption of convertible bonds with subscription rights to shares of consolidated subsidiaries issuance of common stock assigned to minority shareholders from Proceeds Cash dividends paid Cash flows from financing activities: Cash flows from in short-term bank loans, net Increase long-term debt from Proceeds Cash and cash equivalents at end of the year Increase due to merger of a non-consolidated subsidiary Increase

Financial Section NTN Annual Report 2009 38 Financial Section NTN Annual Report 2009 39 ols directly or ols directly e valued at fair 5 to 12 years

10 to 50 years Short-term investments and investment securities Short-term investments and investment Cash and cash equivalents Principles of consolidation Summary of Significant Accounting Policies Summary of Significant Basis of Preparation Buildings and structures Machinery, equipment and vehicles Machinery,

Property, plant and equipment are stated at cost. Depreciation is computed at rates based on the estimated useful lives of the respective assets by the the by assets respective the of lives useful estimated the on based rates at computed is Depreciation cost. at stated are equipment and applied. plant principally is method Property, straight-line the which to subsidiaries consolidated overseas of assets and buildings the for except method, declining-balance as follows: The principal estimated useful lives are costs and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate. The effect of the The effect if appropriate. cost may be used in place of the net selling value, selling expenses. The replacement costs and estimated direct 31, 2009. the year ended March for income taxes and minority interests was immaterial to operating income and loss before adoption of this standard plant and equipment (g) Property, Effective April 1, 2008, the Company and its domestic consolidated subsidiaries adopted the “Accounting Standard for Measurement of Inventories” for Measurement Standard April 1, 2008, the Company and its domestic consolidated subsidiaries adopted the “Accounting Effective the ordinary that inventories held for sale in requires of Japan Statement No. 9 issued on July 5, 2006). This standard Board (Accounting Standards price less additional estimated manufacturing at the lower of cost or net selling value, which is defined as the selling course of business be measured on the moving average method. (f) Inventories value. principally stated at lower of cost, determined by the average method, or net selling Inventories are The accounting standard for financial instruments requires that securities be classified into three categories: trading, held-to-maturity or other securities. be classified into three that securities requires for financial instruments The accounting standard amortized cost. Marketable securities classified as other carried at carried at fair value and held-to-maturity debt securities are securities are Trading in net assets. taxes, included directly holding gain or loss, net of the applicable income carried at fair value with any changes in unrealized securities are carried at cost based classified as other securities are Cost of securities sold is determined by the moving average method. Non-marketable securities The allowance for doubtful accounts is computed based on the actual historical percentage of bad debts and an estimate of uncollectible amounts of bad debts and an estimate of uncollectible amounts based on the actual historical percentage The allowance for doubtful accounts is computed receivables. determined after an analysis of specific individual (e) convertible to cash subject to an insignificant risk of any change in their value and which were purchased with an original maturity of three months or less. less. or months three of maturity original an with purchased were which and value their in change any of risk insignificant an to subject cash to convertible (d) Allowance for doubtful accounts “Minority interests” in the accompanying consolidated balance sheets and statements of changes in net assets. in the accompanying consolidated “Minority interests” readily are (c) which investments short-term and demand, on withdrawable banks with deposits hand, on cash of consist equivalents cash and Cash Revenues and expenses are translated at the rates of exchange prevailing when the transactions were made. when the transactions were exchange prevailing translated at the rates of Revenues and expenses are balance sheet dates, at the respective translated into yen at the exchange rates in effect subsidiaries are Assets and liabilities of overseas consolidated historical rates. Revenue and expenses are translated at the respective which are minority interests except for the components of net assets excluding adjustments” and in “Translation reflected translation are arising from years. Differences the respective translated at the average rates of exchange for (b) Foreign currency translation currency (b) Foreign at the balance sheet date. into yen at the rates of exchange in effect translated are currencies foreign Monetary assets and liabilities denominated in accompanying consolidated financial statements on an equity basis. The assets and liabilities of the initially consolidated subsidiaries ar accompanying consolidated financial statements dates of acquisition. value as of their respective on the basis of subsidiaries whose fiscal year end is December 31 have been included in consolidation The financial statements of certain consolidated purposes. 31 for consolidation a full fiscal year closing on March (a) companies which it contr of the Company and the significant financial statements include the accounts The accompanying consolidated included in the significant influence in terms of their operating and financial policies have been exercises Companies over which the Company indirectly. = U.S.$1.00, the exchange rate prevailing on March 31, 2009. This translation should not be construed as a representation that yen can be converted that yen can be converted not be construed as a representation 31, 2009. This translation should on March rate prevailing = U.S.$1.00, the exchange above or any other rate. into U.S. dollars at the 2. issued domestically in order to present them in a format which is more familiar to readers outside Japan. In addition, certain notes included herein are are In addition, certain notes included herein outside Japan. familiar to readers in a format which is more them to present issued domestically in order as additional information. presented generally accepted in Japan but are under accounting principles not required has been made at ¥98.23 outside Japan and solely for the convenience of readers into U.S. dollar amounts is included The translation of yen amounts of accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of requirements disclosure as to the application and respects in certain different are accepted in Japan, which principles generally of accounting by the required by the Company as prepared financial statements the consolidated compiled from and are International Reporting Standards, Financial Exchange Act of Japan. Financial Instruments and statements have been made to the consolidated financial reclassifications consolidated financial statements, certain the accompanying In preparing 1. basis on the prepared subsidiaries are “Company”) and consolidated NTN Corporation (the statements of consolidated financial The accompanying March 31, 2009 March Notes to Consolidated Financial Statements Financial Consolidated to Notes 1,782 4,469 $7,340 2009 U.S. dollars Thousands of 28 39 ¥694 2008

Millions of yen 175 439 ¥721 2009

...... and the corresponding balances for tax reporting purposes. balances for tax reporting and the corresponding Bond issuance costs are charged to income as incurred. charged to income as incurred. Bond issuance costs are income taxes (n) Deferred reporting purposes for financial between the balances of assets and liabilities reported for temporary differences provided income taxes are Deferred method over their respective estimated useful lives, generally a 5-year period. method over their respective (m) Bond issuance costs (l) Research and development costs and computer software (l) Research charged to income as incurred. and development costs are Research to is expected except if the software developed for internal charged to income when incurred, to computer software use are relating Expenditures by the straight-line amortized capitalized as assets and are are cost savings. Such expenditures contribute to the generation of income or to future (k) Goodwill and negative goodwill charged to income are amounts, however, amortized over a period of 3 years by the straight-line method. Immaterial Goodwill and negative goodwill are as incurred. The Company and its domestic consolidated subsidiaries continue to account for finance lease transactions not involving the transfer of ownership that The Company and its domestic consolidated subsidiaries continue to account for finance lease commenced prior to April 1, 2008 as operating leases. on March 30, 2007) and “Guidance on Accounting Standard for Lease Transactions” (Accounting Standards Board of Japan Guidance No. 16 originally Board (Accounting Standards Lease Transactions” for 30, 2007) and “Guidance on Accounting Standard on March revised on March Accountants on January 18, 1994 and issued by the Accounting System Committee of the Japanese Institute of Certified Public was nil to standards of the adoption of these transactions. The effect sale and purchase accounted for as ordinary 30, 2007). Such transactions are 31, 2009. for the year ended March income taxes and minority interests operating income and loss before Formerly, finance lease transactions not involving the transfer of ownership were accounted for as operating leases. However, effective the year ended effective accounted for as operating leases. However, not involving the transfer of ownership were finance lease transactions Formerly, (Accounting for Lease Transactions” subsidiaries have adopted “Accounting Standard 31, 2009, the Company and its domestic consolidated March the First Committee of the Business Accounting Council on June 17, 1993 and revised of Japan Statement No. 13 originally issued by Board Standards (j) Leases over their useful lives using the straight-line method with a depreciated of ownership, leased assets are For lease transactions not involving the transfer value of zero. residual straight-line method over the estimated average remaining years of service of the eligible employees (principally 15 years). remaining straight-line method over the estimated average defect compensation (i) Reserve for product to cover the anticipated compensation. amount in order at an estimated defect compensation is provided Reserve for product Prior service cost is amortized in the year in which the gain or loss is recognized primarily by the straight-line method over the estimated average primarily by the straight-line method over the estimated average the gain or loss is recognized Prior service cost is amortized in the year in which 15 years). years of service of the eligible employees (principally remaining primarily by the the year following the year in which the gain or loss was recognized actuarial gain or loss is amortized commencing Net unrecognized (h) Accrued retirement benefits for employees (h) Accrued retirement benefit obligation and the retirement at an amount calculated based on the principally benefits for employees have been provided Accrued retirement prior service cost. The estimated benefit actuarial gain or loss and unrecognized for net unrecognized fair value of the pension plan assets, as adjusted method over the estimated years of service of the eligible employees. is attributed to each period by the straight-line to their respective limits as prescribed in the Corporation Tax Law prior to the revision. Under this method, the residual book value of these assets is book value of these Under this method, the residual Law prior to the revision. in the Corporation Tax limits as prescribed to their respective operating income and income before of the adoption of this method was to decrease The effect in equal amounts over a five-year period. depreciated method. under the previous amounts which would have been recorded corresponding the from by ¥1,274 million income taxes and minority interests income and income before income taxes and minority interests by ¥811 million from the corresponding amounts which would have been recorded amounts which would have been recorded the corresponding by ¥811 million from taxes and minority interests income income and income before method. under the previous a method and its domestic consolidated subsidiaries adopted April 1, 2007, the Company effective Law, of the Corporation Tax Pursuant to the revision 31, 2007 that have been fully depreciated March on or before and equipment acquired plant book value of property, the residual which depreciates corresponding amounts which would have been recorded under the previous method. under the previous have been recorded amounts which would corresponding plant and equipment for property, adopted a method of depreciation and its domestic consolidated subsidiaries April 1, 2007, the Company Effective operating of this method was to decrease of the adoption The effect Law. Corporation Tax based on the revised on or after April 1, 2007 acquired Effective April 1, 2008, the Company and its domestic consolidated subsidiaries have changed the useful lives of machinery from 10 to 12 years to 10 from have changed the useful lives of machinery and its domestic consolidated subsidiaries April 1, 2008, the Company Effective operating income by ¥851 million change was to increase of this The effect Law. of the Corporation Tax under the revisions 9 to 12 years as allowed the 31, 2009 from amount for the year ended March by the same income taxes and minority interests loss before to decrease ($8,663 thousand) and Land Buildings and structures equipment and vehicles Machinery, the Corporation Tax Law of Japan. The property, plant and equipment accounts on the consolidated balance sheets at March 31, 2009 and 2008 were and 2008 were 31, 2009 sheets at March on the consolidated balance equipment accounts plant and Law of Japan. The property, Tax the Corporation amounts: by the following reduced Contributions granted by national and municipal governments are deducted directly from the acquisition costs of the related fixed assets as stipulated in fixed assets as stipulated the related acquisition costs of the from directly deducted and municipal governments granted by national Contributions are Notes to Consolidated Financial Statements Financial to Consolidated Notes

Financial Section NTN Annual Report 2009 40 Financial Section NTN Annual Report 2009 41 (16) 4,305 (7,520) (7,536) 25,613 2009 ¥(3,231) ¥ 4,305 $ 7,554 $33,167 gain (loss) Unrealized U.S. dollars Thousands of 26 6,847 21,294 21,320 value 2,516 2008 ¥ 6,847 ¥28,167 Carrying ¥ 542 ¥3,058 2008

42 Millions of yen 2,542 28,814 28,856 costs 2,516 ¥ 2,542 ¥31,398 ¥ 742 ¥3,258 2009 Acquisition

Millions of yen (19) (675) (193) 2,441 (3,097) (3,116) ¥2,441 ¥ 24,850 (31,528) (31,721) $24,850 $ (6,871) gain (loss) gain (loss) Unrealized Unrealized

23 234 4,601 13,762 13,785 46,839 value value 2009 2009 ¥ 4,601 ¥18,386 140,100 140,334 Carrying Carrying $ 46,839 $187,173 Thousands of U.S. dollars

42 427 2,160 16,901 21,989 16,859 costs costs 172,055 ¥19,061 171,628 ¥ 2,160 $194,044 $ 21,989 Acquisition Acquisition

...... Subtotal Total Subtotal Subtotal Total Subtotal Equity securities Other Equity securities Equity securities Other Equity securities Securities The carrying value of non-marketable securities classified as other securities at March 31, 2009 and 2008 is summarized as follows: 31, 2009 and The carrying value of non-marketable securities classified as other securities at March Information regarding marketable securities classified as other securities at March 31, 2009 and 2008 is summarized as follows: securities at March marketable securities classified as other Information regarding their acquisition costs: Unlisted equity securities bonds Unlisted foreign exceed their acquisition costs: exceed their acquisition costs: their acquisition costs:

Investment securities: a range of 30% or more, but less than 50% if the decline is deemed to be irrecoverable. No impairment losses were recognized for all investment recognized were No impairment losses but less than 50% if the decline is deemed to be irrecoverable. a range of 30% or more, determined to be recoverable. they were 31, 2009 because but less than 50% as of March securities whose fair values had declined by 30% or more, (b) The Company has recognized an impairment loss on devaluation of investment securities of ¥13,921 million ($141,718 thousand) for the year ended an impairment loss on devaluation of investment securities of ¥13,921 The Company has recognized declined within or for those which have for securities whose fair value has declined by 50% or more recorded 31, 2009. Impairment losses are March Securities whose carrying value does not Securities whose carrying value exceeds Securities whose carrying value does not Securities whose carrying value exceeds (a) immaterial for the year ended March 31, 2009. ended March immaterial for the year 3. (q) Accounting standard for overseas subsidiaries for (q) Accounting standard on Unification subsidiaries have adopted “Practical Solution the Company and its overseas consolidated 31, 2009, the year ended March Effective of Japan Practical Board Statements” (Accounting Standards Subsidiaries for the Consolidated Financial Applied to Foreign of Accounting Policies of this change was The effect in the consolidation process. 17, 2006) and have made necessary adjustments No. 18 issued on May Force Issues Task shareholders at a general meeting held subsequent to the close of the financial period. The accounts for the period do not reflect such distributions. (Refer (Refer distributions. such reflect not do period the for accounts The period. financial the of close the to subsequent held meeting general a at shareholders to Note 20.) swap had originally applied to the underlying debt. applied to the swap had originally earnings(p) Distribution of retained of the resolution by to a given financial period is made earnings with respect Law of Japan, the distribution of retained Under the Corporation All derivatives are stated at fair value with any changes in fair value included in net income for the period in which they arise, except for derivatives which they arise, except for for the period in which included in net income changes in fair value at fair value with any stated are All derivatives of net as a component is deferred applicable income taxes, gain or loss, net of the realized accounting under which for deferral hedge meet the criteria the corresponding translated at conditions are which meet certain exchange contracts foreign hedged by forward and payables assets. Receivables to the interest-rate rates applied for as if the interest conditions is accounted which meets certain swap rates. An interest-rate exchange contract foreign (o) Derivative financial instruments and hedging activities and hedging financial instruments (o) Derivative – – 234 224 3,593 1,242 5,304 4,703 $3,034 $6,861 $1,955 12,338 2009 2009 2009 419,271 232,750 101,802 203,604 101,802 $ 8,623 $31,192 (121,419) U.S. dollars U.S. dollars U.S. dollars U.S. dollars U.S. dollars 1,166,681 Thousands of Thousands of Thousands of Thousands of Thousands of $ 777,960 $1,429,981 $ 759,473 $1,045,262 2009 2009

– (5) 23 22 ¥73 353 847 521 462 ¥298 ¥674 1,212 31,990 20,359 10,000 10,000 20,000 24,519 ¥3,064 2008 ¥ 2008 2008 (36,857) 107,204 ¥ 57,621 ¥109,970 ¥ 42,685 ¥ 70,347 Millions of yen Millions of yen

– – Millions of yen Millions of yen Millions of yen 122 ¥192 41,185 22,863 10,000 20,000 10,000 2009 2009 2009 ...... (11,927) . 114,603 ¥ 76,419 ¥140,467 ¥ 74,603 ¥102,676

...... Hyogo Prefecture Hyogo Prefecture and others Hyogo Prefecture France India Hyogo Prefecture Location ...... Classification Buildings and structures Machinery Machinery Machinery Equipment and vehicles ...... Inventories Short-Term Bank Loans and Long-Term Debt Bank Loans and Long-Term Short-Term Impairment of Fixed Assets Sales of investments in securities for the years ended March 31, 2009 and 2008 are summarized as follows: summarized and 2008 are 31, 2009 the years ended March in securities for Sales of investments at an average annual interest rate of 2.5% at an average annual interest

Finished goods in process Work Raw materials and supplies Inventories at March 31, 2009 and 2008 consisted of the following: 31, 2009 and Inventories at March 4. (c) Land Buildings and structures equipment and vehicles Machinery, March 31, 2009 were as follows: 31, 2009 were March Less current portion Less current long-term bank loans of ¥10 million ($102 thousand) at Assets pledged as collateral for short-term bank loans of ¥628 million ($6,393 thousand) and 0.76% unsecured bonds due 2010 0.76% unsecured bonds due 2013 1.66% unsecured convertible bonds with stock acquisition rights due 2009 coupon unsecured Zero Loans from banks and other financial institutions, due through 2017, banks and other financial institutions, due through Loans from bonds due 2008 0.48% unsecured bonds due 2009 2.70% unsecured Long-term debt at March 31, 2009 and 2008 consisted of the following: 31, 2009 and 2008 consisted Long-term debt at March Short-term bank loans principally represent short-term notes with average annual interest rates of 1.57% and 2.80% at March 31, 2009 and 2008, respectively. 2008, and 2009 31, March at 2.80% and 1.57% of rates interest annual average 6. with notes short-term represent principally loans bank Short-term conducted by real estate appraisers or value in use. If a fixed asset cannot be sold or diverted to other usage, such asset is valued at nil. at valued is asset such usage, other to diverted or sold be cannot asset fixed a If use. in value or appraisers estate real by conducted Hyogo in Works TAKARAZUKA of close the from resulting loss the included has 2009 31, March ended year the for assets fixed of impairment on Loss thousand). ($10,516 million ¥1,033 of amount the in Prefecture The recoverable value of the fixed assets presented in the above table has been measured primarily at net realizable value based on appraisals appraisals on based value realizable net at primarily measured been has table above the in presented assets fixed the of value recoverable The building and structures Production ended March 31, 2009: 31, March ended Usage identifiable cash flows (e.g., a factory.) They also group fixed assets used at the head office or used for sales activities as shared assets. shared as activities sales for used or office head the at used assets fixed group also They factory.) a (e.g., flows cash identifiable recorded and value recoverable net respective their to assets following the down written have subsidiaries consolidated its and Company year the the for operations of Consequently, statement consolidated accompanying the in thousand) ($31,192 million ¥3,064 of assets fixed of impairment on loss related a The Company and its consolidated subsidiaries group fixed assets used for manufacturing by management segment into minimum units which generate generate which 5. units minimum into segment management by manufacturing for used assets fixed group subsidiaries consolidated its and Company The Aggregate gain (loss) gain (loss) Aggregate Sales Notes to Consolidated Financial Statements Financial to Consolidated Notes Production equipment Production Production equipment Production equipment Production and other Vehicles

Financial Section NTN Annual Report 2009 42 Financial Section NTN Annual Report 2009 43 234 8,205 (1,649) 751 57,233 31,844 13,102 86,735 13,957 2009 2009 (11,198) (18,498) $65,438 504,062 218,864 $32,434 240,202 164,013 540,355 1,059 (536,028) (328,362) U.S. dollars U.S. dollars U.S. dollars Thousands of Thousands of Thousands of $ 121,419 $1,166,681 $(1,040,090) $ (328,596) March 31, 2009 March 31, 2008 March 57

809 569 (117) 4,824 3,154 8,520 1,371 20 (1,300) (1,934) ¥5,633 ¥3,152 62,946 12,228 23,595 16,111 53,079 912 2008 2008 (27,611) (38,539) Decrease Decrease ¥ 11,927 ¥114,603 ¥ (27,668) ¥(101,485) Millions of yen

2009 2008

Thousands Thousands

23 Millions of yen Millions of yen 806 Number of shares (162) 5,622 3,128 1,287 169 604 (1,100) (1,817) ¥6,428 ¥3,186 49,514 21,499 2009 2009 Increase Increase (32,255) (52,654) ¥ (32,278) ¥(102,168)

910 1,059 March 31, 2008 March 31, 2007 March

...... Shareholders’ Equity Shareholders’ Accrued Retirement Benefits for Employees Benefits Accrued Retirement Movements in issued treasury stock during the years ended March 31, 2009 and 2008 are summarized as follows: 31, 2009 and 2008 are stock during the years ended March Movements in issued treasury The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (other (other surplus capital of distributions as disbursed be to amount the of 10% to equal amount an that provides “Law”) (the Japan of Law Corporation The Prior service cost Actuarial loss

Retirement benefit expenses Retirement plans Contributions to defined contribution pension benefit expenses Retirement Treasury stock  Treasury (b) stock Treasury earnings 31, 2009 and 2008. amounted to ¥8,639 million ($87,947 thousand) at March the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any time by resolution can be made at any time by resolution equals 25% of the capital stock account. Such distributions and the legal reserve the sum of the capital reserve met. if certain conditions are of Directors or by the Board of the shareholders, retained in included Company the of reserve legal The Law. the of provisions the with accordance in provided reserve legal earnings the Retained include 8. (a) until respectively, reserve, and the legal to the capital reserve earnings be transferred and retained (other than the legal reserve) than the capital reserve) The assumptions used in accounting for the defined benefit pension plans for the years ended March 31, 2009 and 2008 are a discount rate principally 31, 2009 and 2008 March The assumptions used in accounting for the defined benefit pension plans for the years ended of 2.6% and an expected rate of return on plan assets principally of 2.5%. Interest cost Interest Expected return on plan assets Amortization: Service cost Prepaid pension cost Prepaid benefits for employees Accrued retirement outlined as follows: 31, 2009 and 2008 are ended March benefit expenses for the years The components of retirement Unfunded retirement benefit obligation Unfunded retirement actuarial loss Unrecognized prior service cost Unrecognized benefit obligation Net retirement Retirement benefit obligation Retirement Plan assets at fair value The following table sets forth the funded and accrued status and the amounts recognized in the accompanying consolidated balance sheets at March balance sheets at March in the accompanying consolidated amounts recognized forth the funded and accrued status and the The following table sets benefit pension plans: and the consolidated subsidiaries’ defined the Company’s 31, 2009 and 2008 for The Company and certain domestic consolidated subsidiaries have defined benefit pension plans, i.e., corporate pension fund plans and lump-sum defined benefit pension plans, i.e., corporate domestic consolidated subsidiaries have The Company and certain by determined are or annuity payments, the amounts of which entitled to lump-sum substantially all employees who are payment plans, covering have defined contribution pension under which termination occurs. They also length of service, and the conditions to their basic rates of pay, reference plans. also have defined benefit pension plan. Certain overseas consolidated subsidiaries plans and advance payment 7. 2012 2013 2014 2015 and thereafter Year ending March 31, ending March Year 2010 2011 The aggregate annual maturities of long-term debt subsequent to March 31, 2009 are summarized as follows: 2009 are 31, March debt subsequent to maturities of long-term annual The aggregate

11 189 (255) ¥735 ¥935 $255 $ – 5,793 $1,649 $1,751 $7,544 value 2009 Net book U.S. dollars U.S. dollars U.S. dollars Thousands of Thousands of Thousands of 2009

23 190 (24) ¥ 1 ¥25 569 ¥162 ¥172 ¥741 ¥1,912 ¥2,125 2008 2008 depreciation Accumulated Millions of yen Millions of yen

34 379 Millions of yen (25) ¥25 ¥ – ¥2,647 ¥3,060 costs 2009 Acquisition

5 Millions of yen 51 121 ¥615 ¥741 1,232 $6,261 $7,544 value value Net book Net book

14 142 170 1,731 ¥2,032 ¥2,216 2009 2009 $20,686 $22,559 depreciation depreciation Accumulated Accumulated Thousands of U.S. dollars

19 291 193 2,963 ¥2,647 ¥2,957 costs costs $26,947 $30,103 Acquisition Acquisition

...... Net book value Lessors’ accounting Lessees’ accounting

Acquisition costs Accumulated depreciation Total Future minimum lease receipts subsequent to March 31, 2009 for finance leases accounted for as operating leases are nil. are 31, 2009 for finance leases accounted for as operating leases subsequent to March minimum lease receipts Future income is included in the above amounts. The imputed interest Lease income relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to ¥0 to finance leases accounted for as operating leases in the accompanying consolidated Lease income relating of the assets leased under finance leases Depreciation 31, 2009 and 2008, respectively. million ($0 thousand) and ¥1 million for the years ended March 31, 2009 and 2008. March accounted for as operating leases amounted to ¥0 million ($0 thousand) for the years ended Machinery, equipment and vehicles: Machinery, (b) to finance leases relating and net book value of the leased assets the acquisition costs, accumulated depreciation The following amounts represent 31, 2009 and 2008: accounted for as operating leases at March The acquisition costs and future minimum lease payments under finance leases presented in the above tables include the imputed interest expense. include the imputed interest in the above tables minimum lease payments under finance leases presented The acquisition costs and future 2008. 31, 2009 and No loss on impairment was allocated to any leased assets for the years ended March Year ending March 31, ending March Year 2010 2011 and thereafter 2009 and 2008, respectively. summarized as follows: for finance leases accounted for as operating leases are 31, 2009 minimum lease payments subsequent to March Future Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to ¥184 for as operating leases in the accompanying consolidated financial statements amounted to finance leases accounted Lease payments relating by of the leased assets computed Depreciation 31, 2009 and 2008, respectively. the years ended March million ($1,873 thousand) and ¥205 million for 31, amounted to ¥184 million ($1,873 thousand) and ¥205 million for the years ended March lease terms the straight-line method over the respective Buildings and structures equipment and vehicles Machinery, Other assets Other assets Buildings and structures equipment and vehicles Machinery, leases other than those which transfer the ownership of the leased property to the Company and its consolidated subsidiaries (which are currently currently (which are the Company and its consolidated subsidiaries to which transfer the ownership of the leased property leases other than those leases) had been capitalized: accounted for as operating 10. Finance Leases without Covenants Transferring Ownership of Properties to Lessees of Properties Ownership without Covenants Transferring 10. Finance Leases (a) leased to the Company and value of property and net book costs, accumulated depreciation the acquisition represent forma amounts The following pro sheets if finance in the accompanying consolidated balance been reflected 31, 2009 and 2008, which would have at March its consolidated subsidiaries Keep-well agreement with an affiliate Keep-well agreement Notes to Consolidated Financial Statements Financial to Consolidated Notes The contingent liabilities of the Company and its consolidated subsidiaries at March 31, 2009 were as follows: 2009 were 31, subsidiaries at March and its consolidated liabilities of the Company The contingent 9. Contingent Liabilities 9. Contingent

Financial Section NTN Annual Report 2009 44 Financial Section NTN Annual Report 2009 45 0.2 1.3 5.1 1.1 (5.7) (1.5) (1.4) (1.9) 37.2% 40.0% 2008 1,649 5,966 10,669 2009

$ 3,705 $11,320 $ 1,405 $12,074 U.S. dollars U.S. dollars Thousands of Thousands of – 282 ¥248 ¥530 1,048 ¥ 138 ¥1,186 2008 Millions of yen

Millions of yen 162 586 ¥ 364 ¥1,112 2009

...... Change in valuation allowance Other Elimination of dividend income Equity in earnings of affiliates and development costs for research credit Tax in overseas consolidated subsidiaries’ applicable tax rates Differences Permanent non-deductible expenses Permanent non-taxable income Total Other resulting 2009 have included certain losses of ¥925 million ($9,417 thousand) in the aggregate 31, Reorganization expenses for the year ended March Works. the close of TAKARAZUKA from Loss on disposal of fixed assets Relocation expenses of equipment Effective tax rates Effective Statutory tax rate consolidated subsidiaries recorded loss before income taxes and minority interests for the year. income taxes and minority interests loss before consolidated subsidiaries recorded the statutory tax rate for the following reasons: from 31, 2008 differs tax rate for the year ended March The effective aggregate, resulted in a statutory tax rate of 40.0% for the years ended March 31, 2009 and 2008. Overseas subsidiaries are subject to the income are 31, 2009 and 2008. Overseas subsidiaries in a statutory tax rate of 40.0% for the years ended March resulted aggregate, countries in which they operate. taxes of the respective and omitted because the Company 31, 2009 are tax rate as of March between the statutory tax rate and effective The details of the differences 16. Income Taxes tax, inhabitants’ taxes and enterprise tax which, in the Income taxes applicable to the Company and its domestic subsidiaries comprise corporate 15. Reorganization Expenses 2009 and 2008 consisted of the following: 31, March Reorganization expenses for the years ended 14. Provision of Reserve for Product Defect Compensation of Reserve for Product 14. Provision of ¥600 million ($6,108 thousand) a reserve and has provided products to certain issues related some quality-control The Company encountered as a component of other expenses in the presented which were and 2008, respectively, 31, 2009 and ¥1,700 million for the years ended March accompanying consolidated statements of operations. 13. Research and Development Costs 13. Research thousand) ($177,156 million ¥17,402 totaled expenses administrative and general selling, and sales of cost in included costs development and Research and 2008, respectively. 31, 2009 and ¥15,006 million for the years ended March Disclosure of fair value information on derivatives has been omitted because all open derivatives positions qualified for hedge accounting. of fair value information on derivatives has been Disclosure subsidiaries. The Company carries out mutual supervision and monitoring of the derivative transactions in accordance with management policies and its with management policies of the derivative transactions in accordance carries out mutual supervision and monitoring subsidiaries. The Company when entered responsible to the director of the Company is reported Each derivative transaction apply the same approach. consolidated subsidiaries also derivatives positions to the Company on a monthly basis and are the status of their open to report required into. The consolidated subsidiaries are exchange contracts. foreign transactions other than forward to consult with the Company when they enter into derivative required agreements. However, they do not anticipate nonperformance by any of the counter parties, all of which are financial institutions with high credit ratings. institutions with high credit financial by any of the counter parties, all of which are they do not anticipate nonperformance However, agreements. derivative obligations for reporting which include maximum upper limits and subsidiaries have established policies The Company and its consolidated Financial HQ. and certain consolidated into by the Company’s entered are fully with these guidelines. Derivative transactions transactions and comply 12. Derivative Financial Instruments 12. Derivative Financial principally to reduce swap agreements and interest-rate exchange contracts foreign consolidated subsidiaries utilize forward The Company and certain instruments do not hold or issue derivative financial risk. The Company and its consolidated subsidiaries rate exchange rate risk and interest foreign swap contracts and interest-rate exchange foreign forward their exposed to certain risk arising from purposes. They are for trading or speculative 2011 and thereafter Future minimum lease payments subsequent to March 31, 2009 for noncancelable operating leases were as follows: were operating leases 31, 2009 for noncancelable to March payments subsequent minimum lease Future 31, ending March Year 2010 11. Operating Leases 11. Operating – 0.13 (0.19) 6,271 2,698 $3.84 (4,072) (2,311) (6,220) (1,130) 41,841 11,423 21,551 25,848 29,136 47,693 2009 2009 (59,981) (82,907) (95,510) (86,654) (96,070) 328,972 323,272 137,911 107,075 388,953 (505,426) (132,913) $233,462 $540,762 $ 30,418 $148,681 U.S. dollars U.S. dollars U.S. dollars Thousands of Thousands of 2009

552 (408) (715) (177) (111) 2,538 3,517 3,741 2,441 2,574 1,300 54.59 19.00 58.43 4,110 1,122 (4,587) (5,887) (1,473) (8,512) (9,437) 27,791 29,264 13,547 31,755 2008 2008 (49,648) (13,056) ¥21,904 ¥12,601 ¥445.98 ¥ 2,988 ¥53,119 Millions of yen

yen

– Millions of yen 616 265 (400) (227) (611) 2,117 2,539 2,862 4,685 13.00 (8,144) (9,382) (5,892) (19.14) 32,315 10,518 38,207 2009 2009 ¥22,933 ¥14,605 ¥376.77

...... Total deferred tax liabilities tax deferred Total tax assets Net deferred Gross deferred tax assets deferred Gross Less: valuation allowance tax assets deferred Total Retained earnings subsidiaries of overseas consolidated Other Depreciation and amortization Depreciation earnings included in retained gain on property Reserve for deferred Basic Diluted Other Reserve for product defect compensation Reserve for product Accrued expenses holding loss on securities Unrealized a defined contribution pension plan Accrued expenses for Accrued retirement benefits for employees Accrued retirement Inventories loss carryforwards Tax Deferred tax liabilities: Deferred Acquisition cost of investments in subsidiaries during the year companies Cash and cash equivalents of the acquired Cost of investments in subsidiaries Negative goodwill Minority interests acquisition cost of investments in subsidiaries Total years’ acquisition cost of investments in subsidiaries Previous Current assets Current Fixed assets liabilities Current Long-term liabilities and the relationship between the acquisition costs and the net cash flow from such acquisition are summarized as follows: such acquisition are between the acquisition costs and the net cash flow from and the relationship 18. Supplementary Cash Flow Information 31, 2009) during the year ended March initially consolidated The assets and liabilities of S.N.R. ROULEMENTS and its eight subsidiaries (which were recorded a net loss. recorded years together with the as applicable to the respective of Directors by the Board the cash dividends proposed represent Cash dividends per share interim cash dividends paid. average number of shares of common stock outstanding during the year. Diluted net income per share is computed based on the net income is computed based on the net income Diluted net income per share during the year. of common stock outstanding average number of shares to of common stock outstanding during each year after giving effect number of shares and the weighted-average attributable to the shareholders of stock acquisition rights. issued upon the conversion of convertible bonds and the exercise of common stock to be the dilutive potential of shares subsidiaries consolidated and Company the because presented been not has 2009 31, March ended year the for share per income net diluted However, Amounts per share of net assets are computed based on the number of shares of common stock outstanding at the year end. of shares computed based on the number of net assets are Amounts per share of common stock and the weighted- on the net income or loss attributable to shareholders is computed based Basic net income or loss per share Net income (loss): Cash dividends Amounts per share at March 31, 2009 and 2008 and for the years then ended were as follows: then ended were 31, 2009 and 2008 and for the years at March Amounts per share Net assets 17. Amounts per Share Deferred tax assets: Deferred presented below: presented The tax effects of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at March 31, 2009 and 2008 are are 31, 2009 and 2008 at March tax assets and liabilities deferred portions of the which gave rise to significant differences of temporary The tax effects Notes to Consolidated Financial Statements Financial to Consolidated Notes

Financial Section NTN Annual Report 2009 46 Financial Section NTN Annual Report 2009 47 – – – 533,985 484,373 527,100 517,621 ¥533,985 ¥ 49,612 ¥629,464 ¥527,100 ¥ 9,479 ¥627,613 5,365,978 5,269,480 Consolidated Consolidated Consolidated $5,365,978 $ 96,498 $6,389,219

(136,622) (136,622) (140,302) (112,125) (112,125) (115,473) corporate corporate corporate ¥ – ¥ 3,348 ¥ (97,984) ¥ – ¥ (81,747) ¥ 3,680 (1,141,453) (1,141,453) (1,175,537) Eliminations or Eliminations or Eliminations or $ – $ 34,084 $ (997,496)

   Total Total Total 136,622 670,607 624,675 112,125 639,225 633,094 ¥533,985 ¥ 45,932 ¥711,211 ¥527,100 ¥ 6,131 ¥725,597 1,141,453 6,507,431 6,445,017 $5,365,978 $ 62,414 $7,386,715

9,837 6,221 81,222 74,090 63,331 70,598 65,239 ¥71,385 ¥ 7,132 ¥74,904 718,701 664,145 ¥ 5,359 ¥65,848 ¥64,377 Asia and Asia and Asia and 2009 2009 2008 $ 54,556 $670,345 $655,370 other areas other areas other areas Millions of yen Millions of yen

Thousands of U.S. dollars 420 2,608 94,601 87,727 26,550 Europe Europe Europe ¥94,181 ¥ 6,874 ¥66,279 151,823 149,246 ¥ 2,577 ¥120,580 ¥149,215 1,545,587 1,519,353 $ 26,234 $1,227,527 $1,519,037

937 1,678 17,082 132,440 126,640 104,920 105,068 America America America ¥131,503 ¥ 5,800 ¥113,150 ¥ (148) ¥109,123 ¥103,242 1,068,105 1,069,612 $ (1,507) $1,110,893 $1,051,023

Japan Japan Japan 125,428 362,344 336,218 101,618 311,884 313,541 ¥236,916 ¥ 26,126 ¥456,878 ¥210,266 ¥ (1,657) ¥430,046 1,034,490 3,175,038 3,191,907 $2,140,548 $ (16,869) $4,377,950

...... Geographic segment information Geographic segment

Total assets Total Intersegment sales Net sales Operating expenses Operating (loss) income Operating (loss) income assets Total Intersegment sales Net sales Operating expenses from 10 to 12 years to 9 to 12 years as allowed under the revisions of the Corporation Tax Law. of the Corporation Tax 10 to 12 years to 9 to 12 years as allowed under the revisions from income operating increase to and thousand) ($8,663 million ¥851 by segment “Japan” the in expenses operating decrease to was change method. this of previous the effect The under recorded been have would which amounts corresponding the from 2009 31, March ended year the for amount same the by million and to decrease operating income by the same amount accordingly from the corresponding amounts which would have been recorded under been recorded amounts which would have the corresponding from operating income by the same amount accordingly million and to decrease method. the previous have changed the useful lives of machinery April 1, 2008, the Company and its domestic consolidated subsidiaries As described in Note 2 (g), effective have been fully depreciated to their respective limits as prescribed in the Corporation Tax Law prior to the revision. Under this method, the residual book Under this method, the residual Law prior to the revision. in the Corporation Tax limits as prescribed to their respective have been fully depreciated in equal amounts over a five-year period. value of these assets is depreciated 31, 2008 by ¥1,274 year ended March operating expenses in the “Japan” segment for the of the adoption of this method was to increase The effect the previous method. the previous April 1, 2007, the Company and its domestic consolidated effective Law, of the Corporation Tax As described in Note 2 (g), pursuant to the revision 31, 2007 that March on or before acquired plant and equipment book value of property, the residual subsidiaries adopted a method which depreciates property, plant and equipment acquired on or after April 1, 2007 based on the revised Corporation Tax Law. Corporation Tax April 1, 2007 based on the revised on or after plant and equipment acquired property, 31, 2008 by ¥811 year ended March operating expenses in the “Japan” segment for the of the adoption of this method was to increase The effect under been recorded amounts which would have the corresponding from operating income by the same amount accordingly million and to decrease As described in Note 2 (g), effective April 1, 2007, the Company and its domestic consolidated subsidiaries adopted a method of depreciation for Company and its domestic consolidated subsidiaries adopted a method of depreciation April 1, 2007, the As described in Note 2 (g), effective External sales Operating income assets Total Intersegment sales Net sales Operating expenses External sales External sales (1) is summarized as follows: 31, 2009 and 2008 for the years ended March geographic area Segment information by The Company and its consolidated subsidiaries are primarily engaged in the manufacture and sale of bearings, constant-velocity joints and precision joints and precision of bearings, constant-velocity and sale in the manufacture primarily engaged subsidiaries are and its consolidated The Company made and more and 2008 were 31, 2009 years ended March operating income for the net sales and than 90% of the consolidated As more equipment. segment information of business segment, the disclosure and equipment parts held in the machinery assets were the consolidated total than 90% of has been omitted. 19. Segment Information 19. Segment    58.7% 63.0% Total Total Total 533,985 527,100 $19,129 ¥313,851 ¥332,252 U.S. dollars 5,365,978 Thousands of $3,382,388

15.8% 15.4% ¥1,879 ¥84,419 ¥81,289 Asia and Asia and Asia and $827,537 other areas other areas other areas Millions of yen

2009 2008 2009 Millions of yen Millions of yen 17.5% 26.9% Europe Europe Europe ¥93,624 Thousands of U.S. dollars ¥141,674 $1,442,268

25.4% 20.7% America America America ¥135,808 ¥109,289 $1,112,583

...... Overseas sales Overseas

Year-end cash dividends (¥4.0 (U.S.$0.04) per share) cash dividends (¥4.0 Year-end 20. Subsequent Event financial statements for in the accompanying consolidated which has not been reflected earnings of the Company, The following distribution of retained held on June 25, 2009: meeting of the shareholders at the annual general 31, 2009, was approved the year ended March  Overseas sales Consolidated net sales Consolidated net sales of consolidated net sales Overseas sales as a percentage  Overseas sales Consolidated net sales of consolidated net sales Overseas sales as a percentage  Overseas sales Overseas sales, which include export sales of the Company and its domestic consolidated subsidiaries and sales (other than exports to Japan) of the exports to Japan) of the and sales (other than subsidiaries and its domestic consolidated sales of the Company which include export Overseas sales, as follows: summarized 2009 and 2008 are 31, for the years ended March subsidiaries, overseas consolidated (2) Notes to Consolidated Financial Statements Financial to Consolidated Notes

Financial Section NTN Annual Report 2009 48 Financial Section NTN Annual Report 2009 49 Report of Independent Auditors Report of Independent June 26, 2009 Osaka, Japan The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended with The U.S. dollar amounts in the accompanying consolidated financial statements included the translation of yen amounts solely for convenience. Our audit also presented 31, 2009 are March the basis described in Note 1. into U.S. dollar amounts and, in our opinion, such translation has been made on In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated in all material fairly, present to above referred In our opinion, the financial statements 2008, and the 31, 2009 and consolidated subsidiaries at March financial position of NTN Corporation and with of their operations and their cash flows for the years then ended in conformity consolidated results in Japan. accounting principles generally accepted We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards generally accepted in Japan. Those standards with auditing standards our audits in accordance conducted We assurance about whether the financial that we plan and perform the audit to obtain reasonable require examining, on a test basis, evidence supporting of material misstatement. An audit includes free statements are the accounting in the financial statements. An audit also includes assessing the amounts and disclosures made by management, as well as evaluating the overall financial principles used and significant estimates for our opinion. basis a reasonable believe that our audits provide We statement presentation. subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of operations, changes 31, 2009 and 2008, and the related subsidiaries as of March are statements in yen. These financial then ended, all expressed in net assets, and cash flows for the years an opinion on these financial is to express Our responsibility management. of the Company’s the responsibility statements based on our audits. The Board of Directors of Directors The Board NTN Corporation consolidated audited the accompanying consolidated balance sheets of NTN Corporation and have We Report of Independent Auditors Independent of Report (0.969) (0.04) (0.006) (0.001) (0.01) (6.67) (60) (99.999) (99.999) (41.61) (12) (28.2) (40) [30] (60) (100) (100) (100) (100) (100) (100) 80 40 25 60 99.999 51 99.999 60 86.49 95 60 60 27.35 36.25 40 30 28.2 49 40 97.4 60 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Holding as percentage (%) percentage Holding as EURO50,000 US.$700,000 A.$5,000,000 ¥725,000,000 ¥480,000,000 ¥100,000,000 ¥450,000,000 ¥400,000,000 ¥450,000,000 ¥450,000,000 ¥266,000,000 ¥350,000,000 S.$36,000,000 US.$6,000,000 US.$2,000,000 US.$7,100,000 US.$6,000,000 US.$6,600,000 HK.$2,500,000 M.$10,000,000 Paid-in Capital ¥1,000,000,000 ¥3,000,000,000 ¥1,500,000,000 EURO2,537,000 EURO1,500,000 EURO3,700,000 US.$21,000,000 US.$12,500,000 US.$24,700,000 US.$54,580,000 US.$24,330,000 US.$67,000,000 US.$16,000,000 US.$10,000,000 INR925,250,000 US.$40,000,000 US.$67,900,000 US.$28,440,000 STG.£2,600,000 NT.$160,000,000 BAHT80,000,000 EURO71,727,792 EURO14,500,000 EURO18,500,000 EURO10,065,000 US.$118,220,000 CAN.$20,100,000 WON500,000,000 BAHT600,000,000 NT.$1,257,232,620 BAHT1,311,000,000

...... of holdings owned by parties having close ties with NTN, and are not included in the total holdings. of holdings owned by parties having close ties with NTN, and are INVESTMENT CORPORATION, and SHANGHAI NTN CORP. are specified subsidiaries. are and SHANGHAI NTN CORP. INVESTMENT CORPORATION, Consolidated Subsidiaries Consolidated ASAHI FORGE OF AMERICA CORP. ASAHI FORGE OF AMERICA CORP. G.m.b.H. IFA-Antriebstechnik Seohen-NTN Drivesheft USA CORP. Nanjing Puzhen NTN Railway Bearing Co., Ltd. UNIDRIVE PTY. LTD. LTD. UNIDRIVE PTY. BEIJING NTN-SEOHAN DRIVESHAFT CO., LTD. CORP. CHANGZHOU NTN-GUANGYANG Affiliated Companies Accounted for by the Equity Method TUNG PEI INDUSTRIAL CO., LTD. LTD. TAIWAY NTN-NIDEC (ZHEJIANG) CORP. NTN-NIDEC (ZHEJIANG) CORP. GUANGZHOU NTN-YULON DRIVETRAIN CO., LTD. CORP. CHANGZHOU NTN-GUANGYANG NTN BEARING-MALAYSIA SDN. BHD NTN BEARING-MALAYSIA NTN KOREA CO., LTD. NTN (CHINA) INVESTMENT CORPORATION SHANGHAI NTN CORP. NTN BEARING-THAILAND CO., LTD. NTN BEARING-THAILAND CO., LTD. CO., LTD. (THAILAND) NTN MANUFACTURING NTN-NIDEC (THAILAND) CO., LTD. NTN Manufacturing India Private Limited S.N.R. ROULEMENTS NTN BEARING-SINGAPORE (PTE) LTD. NTN CHINA LTD. NTN BEARINGS (UK) LTD. NTN BEARINGS (UK) LTD. NTN FRANCE S.A. NTN TRANSMISSIONS EUROPE NTN TRANSMISSINONS EUROPE CREZANCY NTN WÄLZLAGER (EUROPA) G.m.b.H. G.m.b.H. NTN WÄLZLAGER (EUROPA) G.m.b.H. (DEUTSCHLAND) NTN KUGELLAGERFABRIK G.m.b.H. NTE Gardelegen NTN-BCA CORP. NTN-BCA CORP. NTK PRECISION AXLE CORP. LTD. OF CANADA NTN BEARING CORP. NTN SUDAMERICANA, S.A. NTN DRIVESHAFT, INC. NTN DRIVESHAFT, AMERICAN NTN BEARING MFG. CORP. NTN-BOWER CORP. NTN FUKUROI CORP. NTN FUKUROI CORP. CORP. NTN HOUDATSUSHIMIZU NTN USA CORP. OF AMERICA NTN BEARING CORP. NTN MIE CORP. NTN MIE CORP. NTN OMAEZAKI CORP. NTN KAMIINA CORP. NTN POWDER METAL CORP. CORP. NTN POWDER METAL LTD. NTN MIKUMO COMPANY NTN CASTING CORP. NTN KINAN CORP. NTN BEARING SERVICE CO., LTD. SERVICENTN BEARING CO., LTD. NTN KONGO CORP. PLASTICS CORP. NTN ENGINEERING Consolidated Subsidiaries Consolidated 1. Of the above consolidated subsidiaries, NTN USA CORP., NTN DRIVESHAFT, INC., NTN-BOWER CORP., NTN TRANSMISSIONS EUROPE, NTN MANUFACTURING (THAILAND) CO., LTD., NTN (CHINA) (CHINA) NTN LTD., CO., (THAILAND) MANUFACTURING NTN EUROPE, TRANSMISSIONS NTN CORP., NTN-BOWER INC., DRIVESHAFT, NTN CORP., USA NTN subsidiaries, consolidated above the Of 1. brackets indicate the percentage in square included in the total holding. Figures owned holdings, and are of indirectly indicate the percentage in curved brackets under “Holding as percentage” 2. Figures Year ended March 31, 2009 ended March Year NTN Group Investment Holdings Investment Group NTN

Corporate Information NTN Annual Report 2009 50 Corporate Information NTN Annual Report 2009 51 THE AMERICAS Elgin Plant Holding Company NTN USA CORP. Box 7604, 1600 E. Bishop Court, P.O. IL 60056-7604, U.S.A. Mount Prospect, Phone: +1-847-298-7500 Sales OF AMERICA NTN BEARING CORP. Box 7604, 1600 E. Bishop Court, P.O. IL 60056-7604, U.S.A. Mount Prospect, Phone: +1-847-298-7500 OF CANADA LTD. NTN BEARING CORP. Phone: +1-812-342-7000 NTN-BCA CORP. 17543-7020, Lititz, PA Lincoln Avenue 401 West U.S.A. Phone: +1-717-627-3623 NTK PRECISION AXLE CORP. Frankfort 741 South County Rd 200 West IN 46041, U.S.A. Phone: +1-765-656-1000 Calle 22 No. 2465, Esq. Calle 3, Zona Industrial, Jalisco, Mexico 44940 Guadalajara, C.P. Phone: +52-33-3145-1490 NTN DO BRASIL LTDA. 92a94 CEP Moema, 94-9° Andar-conj, Av. -Brasil 04077-020-Indianópolis-São Paulo-SP, Phone: +55-11-5051-0600 Manufacturing AMERICAN NTN BEARING MFG. CORP. 1500 Holmes Road, Elgin, IL 60123, U.S.A. Phone: +1-847-741-4545 Schiller Park Plant 9515 Winona Schiller Park, IL 60176, Avenue, U.S.A. Phone: +1-847-671-5450 NTN-BOWER CORP. Macomb Plant 711 North Bower Road, Macomb, IL 61455-2511 U.S.A. Phone: +1-309-833-4541 Hamilton Plant South, Hamilton, AL 35570, 2086 Military Street U.S.A Phone: +1-205-921-2173 INC. NTN DRIVESHAFT, 8251 South International Drive Columbus, IN 47201 U.S.A. 305 Courtneypark Drive West, Mississauga, West, 305 Courtneypark Drive Ontario, L5W 1Y4, Canada Phone: +1-905-564-2700 NTN-SUDAMERICANA, S.A. Calle 53 Este, Center Panama Trade World Urbanización Marbella Piso NO. 16, Oficina 1601 Apartado Postal 832-0487, Panamá, Rep. de Panamá Phone: +507-269-4777 NTN DE MEXICO, S.A. 1-1 Futakuti, Houdatsushimizu-cho, Hakui-gun, Ishikawa Phone: +81-767-22-5111 NTN BIZEN CORP. Akaiwa-shi, Okayama 2139-2 Yamaguchi, 701-2225, Japan Phone: +81-869-57-3101 CORP. NTN TADO Kuwana-shi, Mie 511-0101, Tado-cho, 1077 Yui, Japan Phone: +81-594-48-2383 1959 Midori, Fukuroi-shi, 1959 Midori, Fukuroi-shi, Shizuoka 437-0005, Japan Phone: +81-538-30-1800 NTN HAKUI CORP. 32 Mitsuya-machi, Hakui-shi, Ishikawa 925-0024 Phone: +81-767-22-8910 CORP. NTN HOUDATSUSHIMIZU NTN KAMIINA CORP. 522-2 Oaza-Nakasone, Minowa-machi, Kamiina-gun, Nagano 399-4605, Japan Phone: +81-265-79-7877 NTN FUKUROI CORP. Wakayama 649-2103, Japan Wakayama Phone: +81-739-47-1801 CO., LTD. HIKARI SEIKI INDUSTRY 8 Motohigashikata, Sanmaiden-cho, Tenri, Nara 632-0046, Japan Phone: +81-743-66-0285 NTN MIE CORP. Kuwana, Mie 3601-25 Mizono, Tado-cho, 511-0118, Japan Phone: +81-594-48-6711 NTN OMAEZAKI CORP. 4681-3, Sakura, Omaezaki, Shizuoka 437-1604, Japan Phone: +81-537-86-2480 NTN POWDER METAL CORP. METAL NTN POWDER Kanie-cho, Ama-gun, 101 Katsutaba, Aichi 497-8541, Japan Phone: +81-567-95-3913 LTD. NTN MIKUMO COMPANY Mie 515-2109, Japan 750-1 Onoe, Matsusaka, Phone: +81-598-56-3311 NTN CASTING CORP. Shimane 691-0003, 475-1, Nadabun-cho, Hirata, Japan Phone: +81-853-63-3108 NTN KINAN CORP. Nishimuro-gun, 2504-1 Ikuma, Kamitonda-cho, JAPAN Phone: +81-594-76-7221 NTN ENGINEERING PLASTICS CORP. Inabe-gun, 970 Oaza Ano, Toin-cho, Mie 511-0243, Japan NTN KONGO CORP. 3-13, 1-chome, Kidonishi-cho, Kawachinagano, Osaka 586-0009, Japan Phone: +81-721-53-1317 Fluid Dynamic Bearing Unit Plant 101 Katsutaba, Kanieshinden, Kanie-cho, Ama-gun, Aichi 497-8541, Japan Phone: +81-567-95-5005 14017-11 Oaza-Nakaminowa, Minowa-machi, Kamiina-gun, Nagano 399-4601, Japan Phone: +81-265-79-8888 Japan Phone: +81-869-66-6701 Nagano Works Shizuoka 438-8510, Japan Phone: +81-538-37-8000 Okayama Works 500-1 Hatakeda, Bizen, Okayama 705-8510, Phone: +81-594-24-1811 Iwata Works 1578 Higashi-Kaizuka, Iwata, Manufacturing Kuwana Works Oaza-Higashikata, 2454 Aza-Tsuchijima, Kuwana, Mie 511-8678, Japan 1-13, 3-chome, Shibakoen, Minato-ku, Japan 108-0074, Tokyo Phone: +81-3-5776-6001 101 Katsutaba, Kanie-cho, Ama-gun, Aichi 497-8541, Japan Phone: +81-567-95-5005 CO., LTD. NTN BEARING SERVICE Ama-gun, Aichi 497-8541, Japan Ama-gun, Aichi 497-8541, Phone: +81-567-95-5005 Fluid Dynamic Bearing Division Phone: +81-3-5487-2826 Equipment Division Precision Kanie-cho, 101 Katsutaba, Kanieshinden, Sales Automotive Sales Headquarters 6th Floor, Industrial Sales Headquarters 7-chome, TOC Bldg., 22-17 Nishi-Gotanda 141-0031, Japan Shinagawa-ku, Tokyo 1-3-17 Kyomachibori, Nishi-ku, 1-3-17 Kyomachibori, Osaka 550-0003, Japan Phone: +81-6-6443-5001 Head Office NTN’s Global Network Global NTN’s CHINA 5 Longhu Alley, Puzhen Town, Nanjing, China Puzhen Town, 5 Longhu Alley, Phone: +86-25-8584-7197 No. 200 Chuangxin Road (ELECTRONIC Changzhou, China 213031 INDUSTRRIAL PARK), Phone: +86-519-8302-8880 BEIJING NTN-SEOHAN DRIVESHAFT CO., LTD. Industrial No. 3 Zhengfu Road Opto-mechatronics Park, Beijing, China 101111 Phone: +86-10-69507324 SHANGHAI TUNG PEI ENTERPRISE CO., LTD. No. 601, Rongle RD.(E), Songjiang Industrial Zone,Shanghai, China 201613 Phone: +86-21-57744698 CORP. CHANGZHOU NTN-GUANGYANG 52 Hanjiang Road, New District, Changzhou, Jiangsu, China 213022 Phone: +86-519-5158888 BEARING NANJING PUZHEN NTN RAILWAY CO., LTD. SHANGHAI NTN CORP. No. 666, Nanle Road, Songjiang Industrial Zone, Songjiang, Shanghai, China Phone: +86-21-5774-8666 GUANGZHOU NTN-YULON DRIVETRAIN CO., LTD. No. 11 Jun Da Road, East District of Guangzhou Development Zone, Economic and Technological China 510530 Guangzhou, Guangdong Province, Phone: +86-20-8226-6458 NTN-RAB (CHANGZHOU) CORP. Sales INVESTMENT CORP. NTN (CHINA) Shanghai Head Office Road, 8 Xing Yi Centre, Rm 2201, Shanghai Maxdo 200336, China Changning District, Shanghai Phone: +86-21-5208-1005 Beijing Branch Tower, LG Twin Tower, West Unit 08, EF Floor, Chaoyang District, Beijing, Yi, 12 Jian Guo Men Wai China Phone: +86-10-6568-3069 Guangzhou Branch Rm 7306, 233 Tianhe North Road, China Province, Guangdong Guangzhou City, Phone: +86-20-3877-2943 NTN China Ltd. Hong Kong Office Centre, Room 1914-15, Park-In Commercial Hong Kong Mongkok, Kowloon, 56 Dundas Street, Phone: +852-2385-5097 Manufacturing ASIA AND OTHER AREAS ASIA AND 14, Kwang Fu Road, Hukou 303, Hsianchu, R.O.C. Taiwan, Phone: +886-3-598-3601 LTD. UNIDRIVE PTY. 45-49 McNaughton Road, Clayton, Victoria 3168 Australia Phone: +61-3-9542-4100 LTD. INDIA PVT. NTN NEI MANUFACTURING Centre, HSIIDC Growth Plot No. 131, Sector-7, Bawal Dist. Rewari, Haryana 123501 INDIA Phone: +91-1284-264124 TUNG PEI INDUSTRIAL CO., LTD. 10th Floor No.142, Chung Hsiao E. Rd., Sec. 4, Taiwan. Taipei, Phone: +886-2-2741-7321 PLANT TAOYUAN 600 Sec. 1, Chieh-Shou Road, Pa-te City, R.O.C. Hsien, Taiwan, Taoyuan Phone: +886-3-361-3151 CHUNGLI PLANT 7 Sung-Chiang N. Road, Chung-Li Ind. Zone, R.O.C. Taiwan, Chung-Li City, Phone: +886-3-452-6801 LTD. TAIWAY NTN KOREA CO., LTD. 25, Taepyeong-Ro Center, Press 10th Floor, 1-GA, Jung-Gu, Seoul 100-745, Korea Phone: +82-2-720-3665 LTD. NTN-CBC (AUSTRALIA) PTY. NSW 2208, Kingsgrove, 3, The Crescent, 1480. NSW LOCKED BAG 1800, Kingsgrove Australia Phone: +61-2-99479200 Manufacturing (THAILAND) CO., LTD. NTN MANUFACTURING Pluakdaeng, Amphur 111/2 Moo 4,Tambol Pluakdaeng, Rayong 21140, Thailand Phone: +66-38-955-185 Sales LTD. (PTE) NTN BEARING-SINGAPORE 129812 No. 9 Clementi Loop, Singapore Phone: +65-6469-8066 CO., LTD. NTN BEARING THAILAND 127/15 Tower, Panjathani 12th Floor, Yannawa, Nonsee Road, Chongnonsee Bangkok 10120, Thailand Phone: +66-2-681-0401 SDN. BHD. NTN BEARING-MALAYSIA No. 2, Jalan Arkitek U 1/22, Industrial Park, Section U1, Hicom Glenmarie Darul Ehsan, Malaysia 40150 Shah Alam, Selangor Phone: +60-3-55696088 6 28035 Madrid, Espana ゜ EUROPE THE AMERICAS Buschstückenstr. 6 39638 Gardelegen, Germany 6 39638 Gardelegen, Buschstückenstr. Phone: +49-3907-777-0 NTN TRANSMISSIONS EUROPE CRÉZANCY France Route de Paris, 02650 Crézancy, Phone: +33-3-23-71-50-00 GMBH IFA-ANTRIEBSTECHNIK Z.A. Les Trémelières Communauté Urbaine du Z.A. Les Trémelières Mans 72704 Allonnes Cedex, France Phone: +33-2-43-83-90-00 NTN Strasse 1-3, 40822 Mettmann, F.R. Germany NTN Strasse 1-3, 40822 Mettmann, F.R. Phone: +49-2104-1409-0 NTN TRANSMISSIONS EUROPE Phone: +34-91-671-89-13 Manufacturing (DEUTSCHLAND) NTN KUGELLAGERFABRIK G.m.b.H Phone: +39-02-47-99-86-1 SNR RODAMIENTOS IBERICA S.A. Calle Barberan N Phone: +49-211-6-58-06-0 SNR ITALIA 19/4 20153 Milano, Italia Lombardi, Via Ricardo Phone: +33-4-50-65-30-00 SNR WÄLZLAGER GmbH 6 40437 40472 Düsseldorf Wahlerstrasse Düsseldorf Postflach 33 04 10 SNR ROULEMENTS 1, rue des Usines BP2017 74010 Annecy Cedex, France NTN FRANCE Sur Moder BP 338 Schweighouse Z.I.Sabliére 67507 Haguenau Cedex, France Phone: +33-3-88-53-22-22 Wellington Crescent, Fradley Park, Lichfield, Crescent, Wellington WS13 8RZ, U.K. Staffordshire, Phone: +44-1543-445000 Max-Planck-Strasse 23, 40699 Erkrath, F.R. Max-Planck-Strasse 23, 40699 Erkrath, F.R. Germany Phone: +49-211-2508-0 NTN BEARINGS (UK) LTD. Sales G.m.b.H NTN WÄLZLAGER (EUROPA) Phone: +1-905-826-5500 NTN BEARING MFG. CANADA OF CORP. OF NTN BEARING (A DIV. CANADA LTD.) Ontario, L5N 6740 Kitimat Road, Mississauga, 1M6, Canada 5030 Corporate Way Richmond, Kentucky 40475 Richmond, Kentucky Way 5030 Corporate U.S.A. Phone: +1-859-626-4100 ASAHI FORGE OF AMERICA CORP. ASAHI FORGE NTN’s Global Networak NTN’s

Corporate Information NTN Annual Report 2009 52 Corporate Information NTN Annual Report 2009 53 5,000 s 30,000 25,000 20,000 15,000 10,000 3 3 09 09 12 1 2 12 1 2 e 11 11 Nikkei Stock Average (Yen) Financial Institution 54.12% Nikkei stock averag

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Closing Opening High Low 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 07 07 Financial Instruments Firms 1.53% Financial Instruments Foreign Owners 12.09% Individuals 15.72% Other Corporations 16.54% 0 0 40 20 80 60 100 750 500 250 1,000 Stock Price (Yen) 1,250 Monthly Volume Traded Monthly Volume Shareholders by Category Shareholders Stock Price Range Tokyo 470,463,527 shares (As of March 31, 2008) (As of March 1,800,000,000 shares (As of March 31, 2008) (As of March ¥816 ¥203 High: Low: The General Meeting of Shareholders was The General Meeting of Shareholders held on June 26, 2009 in Osaka Ernst & Young ShinNihon Ernst & Young First Section of Tokyo Stock Exchange (#6472) First Section of Tokyo Mitsubishi UFJ Trust Banking Corporation Mitsubishi UFJ Trust 4-5, 1-chome, Marunouchi, Chiyoda-ku, 100-8212, Japan Tokyo 27,344 Authorized NTN’s Website offers a variety of corporate offers Website NTN’s information, including the latest and product results. and financial annual report http://www.ntn.co.jp Issued and outstanding Phone: +81-6-6449-3528 Fax: +81-6-6443-3226 E-mail: [email protected] NTN Corporation Kyomachibori, Nishi-ku, 3-17, 1-chome, Osaka, 550-0003 Japan First Section of Osaka Securities Exchange (#6472)

Stock Price Range in Fiscal 2008 General Meeting of Shareholders Independent Accountants

Stock Exchange Listings Transfer Agent for Common Stock Transfer Number of Shareholders Number of Shareholders

Common Stock

NTN on the Internet Investor Relations Head Office As of March 31, 2009 31, As of March Investor Information Investor NTN Corporation Head Office 3-17, 1-chome, Kyomachibori, Nishi-ku, Osaka, 550-0003 Japan This report was printed with a waterless printing method using soy inks. Soy inks have excellent biodegradability, and printed matter printed with soy inks is easy to recycle. http://www.ntn.co.jp FSC-certified paper was used for this report. Printed in Japan