Annual Review 2014 - Nissin Kogyo AR 2014.pdf · Annual Review 2014 01 Message from the President Thank you to all of our shareholders for your continuing encouragement and support

NISSIN KOGYO CO., LTD.

Annual Review 2014For the year ended March 31, 2014

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Financial Highlights Nissin Kogyo Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2013 and 2014

Contents

00 Financial Highlights

01 Message from the President

02 New Adoptions of Our Products

04 Corporate Governance

05 Environmental Policies

06 Financial Review

08 Consolidated Balance Sheets (Unaudited)

Consolidated Statements of Changes in Net Assets (Unaudited)

10 Consolidated Statements of Income (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

11 Consolidated Statements of Cash Flows (Unaudited)

12 Network

13 Corporate Data

Net Sales/Operating Income(¥ millions)

Total Assets/Net Assets(¥ millions)

Net Income(¥ millions)

Total Assets Net Assets

Net Sales (left scale) Operating Income (right scale)

Millions of yenThousands of

U.S. dollars

2013 2014 2014

For the year:

Net sales ¥174,252 ¥220,868 $2,146,016

Operating income 8,762 19,417 188,661

Income before income taxes and minority interests 10,205 21,845 212,252

Net income 4,924 12,200 118,539

At year-end:

Total assets ¥152,381 ¥177,540 $1,725,029

Net assets 110,991 129,591 1,259,143

Per share (yen and U.S. dollars):

Net income—primary ¥ 76.03 ¥ 188.14 $ 1,828.02

Cash dividends paid 36.00 40.00 388.65

Note: U.S. dollar amounts have been translated from yen for convenience only, at the rate of ¥102.92=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2014.

Annual Review 2014 01

Message from the President Thank you to all of our shareholders for your continuing encouragement and support.

The Nissin Kogyo Group is working to enhance our underlying competitiveness and establish a foundation for future growth by developing and providing products that are smaller, lighter and create cutting-edge value, and that offer environmental friendliness and safety.

Business Results for the YearOur business results in the fiscal year under review were as follows. In Japan, revenues increased compared to the previous fiscal year as improved consumer sentiment spurred a recovery in demand and new products were successfully launched for automobiles. Profits were affected by an increase in R&D expenditures, but rose overall year on year thanks to the increase in revenues, the effects of cost reductions and lower product warranty related expenses, among other factors. In North America, sales increased year on year owing in part to a brisk market for automobiles against the backdrop of a stronger economy as well as to the impact of currency rates. Profits however declined year on year despite the increased revenue and favorable currency rates due to higher costs and other factors. In Asia, revenues and profits rose thanks to solid demand growth in Indonesia for motorcycles, a recovery in sales and the effects of new models launched in China, a positive rebound from the flood-induced slump in Thailand, and currency rates, among other fac-tors. In South America and Europe, revenues and profits rose year on year due to the impact of currency rates and other factors, and despite a decline in sales of motorcycle products resulting from stagnation in the European motorcycle market.

As a result, in the fiscal year ended March 31, 2014 we achieved significant increases in revenues and profits. Net sales increased 26.8% to ¥220,868 million and operating income soared 121.6% to ¥19,417 million. Nissin Kogyo paid a full-year dividend of ¥40 per share, a year-on-year increase of ¥4.

Forecasts for the Fiscal Year Ending March 31, 2015Economic Conditions in Each AreaAs regards the outlook for the economy in the coming fiscal year, with the impact of fiscal restraint diminishing, the U.S. economy is expected to enjoy a gradual recovery against a backdrop of firm business confidence in the corporate sector and growth in consumer spending. In Europe, unpinned by the healthy German economy, real GDP is expected to return to positive growth for the first time in three years. In China, the economy is projected to gradually decelerate as investment growth slows, despite such positive factors as an export recovery and strong consumer spending. There is concern however that the financial environ-ment could deteriorate substantially as the shadow banking problem is exposed, which poses a downside risk to the economy. In the ASEAN region, real GDP growth is expected to slow in both Thailand and Indone-sia, due to slowing in large-scale infrastructure investment caused by political turmoil and deterioration in consumer sentiment depressing domestic demand in the former, and deceleration in domestic demand due to fiscal tightening in connection with currency depreciation and inflation in the latter. The Japanese economy, however, is expected to return to a growth trajectory starting in the July-September quarter, despite being unable to avoid negative growth in the April-June quarter due to a negative rebound from last-minute demand prior to the con-sumption tax hike. The economy should recover thanks to an increase in public investment and effective underpinning of domestic demand through lower corporate tax rates and household assistance measures—all part of the government’s economic policy—and to an increase in exports associated with yen depreciation and better economic conditions overseas.

Automobile MarketsAutomobile sales in the U.S. are expected to continue to be firm as the economy gradually improves, but replacement demand is also likely to slacken, so sales are projected to only increase slightly year on year. In the European market, economic conditions have bottomed out and there are growing signs of recovery, so automobile sales are expected to recover at a moderate pace. In China, while solid market growth is expected to continue, growth will slow year on year, and there are con-cerns about the impact of deceleration in the pace of economic expan-sion and restrictions on the purchase of new cars in large cities. Sales of Japanese brand vehicles may be impacted if anti-Japanese sentiment again gathers momentum and it will be necessary to continue paying close attention to market trends. In the ASEAN region, there is a growing sense that the economy is slowing, and in Thailand long-standing political instability and other factors are expected to depress consumer spending and send automobile sales down on a year-on-year basis. In Indonesia, there is a great deal of latent growth potential as the incomes of the purchasing class rise, so motorcycle sales are expected to remain strong.

Nissin Kogyo’s Measures for the Next Fiscal YearIn this operating environment, the Nissin Kogyo Group has formulated its twelfth medium-term management plan, which begins in the fiscal year ending March 31, 2015, and has crafted basic policies for its braking system business for motorcycles—“Establish a rock-solid foundation as a top manufacturer”—and its braking system business for automobiles—“Strengthen proposal and sales capabilities as a general systems manu-facturer.” On the basis of these policies we will work to expand the scope of local procurement and manufacturing, pivoting on growth markets, and develop and deliver products that are smaller, lighter and create cutting-edge value, underpinned by environmental performance and safety considerations.

Business Prospects for the Fiscal Year Ending March 31, 2015For the fiscal year ending March 31, 2015 Nissin Kogyo is projecting net sales of ¥233.0 billion, operating income of ¥20.0 billion, ordinary income of ¥21.0 billion and net income of ¥11.3 billion.

Regarding the currency exchange rates used for performance forecasts, we have assumed a rate of ¥102 to US$1. However, there is an increasing sense of uncertainty in the economic outlook given trends in financial markets and the real economy in Japan, where major financial easing continues, and the economic situations in other countries.

We plan to pay a dividend of ¥40 per share.

I would like to thank our sharehold-ers for your continuing support.

August 2014

Eiji OkawaraPresident

02 Nissin Kogyo Co., Ltd.

Honda’s hybrid car Vezel, which has started being sold in Japan, employs our regenerative cooperation brake and other Nissin Kogyo brake products and aluminum products.

Our regenerative cooperation brake efficiently stores brake-induced deceleration energy in a battery, thereby usefully improving the car’s fuel economy. In addition to normal deceleration, the energy is obtained from when the brake is first applied up until the car comes to a stop.

The Nissin Kogyo Group constantly strives to keep one step ahead of changes in the world by conducting research and development activities in order to create new product fami-lies that can contribute to safety and environmental performance, while meeting the needs of customers and society.

In Japan, Group efforts are cen-tered on basic brake and mechatron-ics automated control systems and aluminum products, primarily for

motorcycles and automobiles. In these areas, we aim to reduce weight, improve fuel efficiency, and develop products contributing to better safety and comfort, as well as develop mate-rials and manufacturing processes, all from a global perspective. We are also responding to needs related to achieving a low- carbon society by developing products, materials and manufacturing processes that can contribute to the reduction of CO2 emissions.

Research and Development Activities

Automobile Business

The regenerative cooperation brake

Pickup

The Vezel hybrid

New Adoptions of Our Products Through its aluminum weight reduction and braking system technologies, Nissin Kogyo makes significant contributions to motorized society in terms of both environmental performance and safety.


The UK company Triumph’s Thunderbird motorcycle has adopted our light and small Anti-lock Brake System (“ABS”) developed for motorcycles, and other Nissin Kogyo brake products.

R&D Expenditures/ Ratio to Net Sales(¥ millions/%)

R&D Expenditures (left scale)Ratio to Net Sales (right scale)

We are enhancing the research and development platform in order to advance these activities more quickly. Specifically, as a form of computer-ized assessment, we are working on development initiatives utilizing CAE analysis (strength, action confirma-tion, casting defects, brake screech-ing, etc.) and simulation technology (ABS using HILS, ESC program diagnostics).

In North America, we are develop-ing basic brake systems, mechatron-ics automated control systems and

aluminum products tailored to the needs of regional customers and society. In tandem, we are conduct-ing market surveys to identify needs and trends in this region.

Nissin Kogyo’s Development Divi-sion is the key driver of the Group’s research and development. R&D expenditures in the year under review were ¥8,041 million; by geographic segment, Japan accounted for ¥7,514 million and North America for ¥526 million, respectively, of the total.

Motorcycle Business

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Plunger-type brake master cylinder

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The Corporate Governance Structure(As of June 16, 2014)

Board of Directors

Compliance Committee Corporate Ethics Improvement Proposal OfficeBoard of Auditors

Management Committee

Business Management Division

Production and Purchasing Division

Development Division

Quality Assurance Oversight Quality Assurance Department

Development and Marketing Oversight

Marketing Division

Internal Auditing Office

LocalBases


Overview of Nissin Kogyo’s Organization and Development of Internal Control Systems

Nissin Kogyo’s Board of Directors comprises 10 Directors, and its role is to deliberate upon legal matters and major man-

agement issues. The Management Committee comprises 10 Directors and its role is to sufficiently deliberate upon impor-

tant matters of management, share management issues and decide upon measures to solve those issues. The

Management Committee also conducts prior deliberation of matters to be put forward to the Board of Directors.

Nissin Kogyo has a Board of Auditors in accordance with the Companies Act. The Board of Auditors comprises four

Auditors, two of which are Outside Auditors. Auditors attend meetings of the Board of Directors and the Management

Committee, and it is their job to audit the status of management’s execution of duties.

The Internal Auditing Office appoints five full-time auditors and concurrent auditors elected from the accounting field to

form an Independent Operation Auditing Department, and it is the job of this department to provide support in the execu-

tion of internal auditing and to respond to requests from Auditors. In internal auditing, the Internal Auditing Office executes

auditing of all domestic divisions on a twice-yearly basis, along with executing regular audits of overseas bases.

The system for execution of operations is modeled on a high standard of effectiveness and efficiency and utilizes the

cooperation of the four functional headquarters and overseas bases.

Basic PhilosophyThe Nissin Kogyo Group executes its corporate governance based on policies and regulations concerning conduct, placing

importance on its basic company philosophy of “warm-heartedness and contribution,” and its credo of “providing superior

products, technologies and ideas to meet the needs of customers and society one step ahead of the changes in the world.”

ClassificationTotal compensation paid

(Millions of yen)

Total compensation paid by type (Millions of yen) Number of recipients (Persons)Basic compensation Bonus

Directors 297 239 58 11

Corporate auditors (Excluding outside corporate auditors)

48 37 11 3

Outside director and corporate auditors 6 6 — 2

Details of Director and Auditor Remuneration

Corporate Governance


Environmental Policy of Nissin Kogyo

In June 1998, Nissin Kogyo formulated its Environmental Policy to promote environmental protection activities. Every

member of the Group is working together toward the formation of a recycling-oriented, sustainable society.

Environmental Protection Activities

Aiming to establish environmentally friendly plants that contribute to the reduction of CO2 emissions, Nissin Kogyo is promoting

the introduction of cogeneration facilities that use natural gas. This system generates electricity to be used by our plants from

natural gas. We also effectively utilize the hot water and heat produced by these systems.

The first of our factories to introduce a cogeneration facility was the Ueda Plant in July 2004. This was followed by the introduc-

tion of the same system at the Naoetsu Plant and the Tobu Plant.

In addition to using the electricity generated by these systems for plant operations, we also effectively utilize the hot water and

heat produced for the cooling and heating systems of our Corporate Headquarters and the Ueda Plant. At the Naoetsu Plant, the

electricity generated is used at the new plant for automobile parts, with the hot water and surplus heat utilized not only in alumite

treatment and surface treatment processes, but also to melt snow in the winter.

Environmental InitiativesNissin Kogyo treats environmental issues as among management’s most important challenges, and vigorously conducts envi-

ronmental protection activities. Beyond providing customers with resource- and energy-saving products, the Nissin Kogyo Group

concentrates wholeheartedly on the environment and safety, and is developing a framework for further environmental protection.

Cogeneration facility of the Tobu Plant

Environment-Friendly ProductsNissin Kogyo develops and manufactures a wide range of environ-

ment-friendly products. For instance, we have successfully completed

the following product development projects: 1) product modifications

to improve fuel efficiency through weight reduction, 2) reduction of

industrial waste through the use of recycled materials, 3) reduction of

environmentally hazardous substances, 4) fuel efficiency improvement

through new devices, and 5) reduction of energy used in manufacturing.

Aluminum Knuckle

Environmental Policies

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Business ResultsIn the fiscal year ended March 31, 2014, consolidated net sales

increased 26.8% to ¥220,868 million. Operating income increased

121.6% to ¥19,417 million, while ordinary income increased 105.4% to

¥21,703 million. Net income increased 147.8% to ¥12,200 million.

Net income per share increased from ¥76.03 in the previous year to

¥188.14. Nissin Kogyo paid a year-end dividend of ¥20 (full-year divi-

dend of ¥40) per share as planned.

Breakdown by Geographic SegmentJapan

In Japan, the launch of new automobile products had a positive effect

on sales. Consequently, net sales increased by 16.0% year on year to

¥51,619 million.

Operating income increased by 143.6% year on year to ¥5,359

million. The main contributing factors were the benefits of higher

revenue from the launch of new automobile products, the effects of

cost reductions, lower product warranty-related costs and positive

foreign exchange effects. These factors were partly offset by higher

R&D expenditures.

North America

Net sales increased by 27.8% year on year to ¥57,184 million, due to a

strong automobile market, positive foreign currency translation effects

and other factors.

Operating income decreased by 7.1% year on year to ¥718 million.

This result primarily reflected higher costs, despite the benefits of

increased revenue and positive foreign exchange effects.

Asia

Net sales increased 35.7% year on year to ¥96,388 million. The main

contributing factors were steady growth in Indonesia, a recovery in

sales and the positive effects of the roll-out of new types of automobiles

in China, an increase in demand in Thailand following a downturn

caused by the impact of the floods, and positive foreign currency

translation effects.

Operating income was ¥12,454 million, up 90.0% from the previous

fiscal year. This result mainly reflected the benefits of higher revenue and

positive foreign exchange effects.

South America and Europe

Net sales increased by 11.9% year on year to ¥15,676 million, mainly

due to positive foreign exchange effects, despite a slump in Europe’s

motorcycle market.

Net Income per Share (Primary)(¥)

Net Sales by Geographic Segment(¥ millions)

Capital Expenditures/Depreciation and Amortization(¥ millions)

Japan North America Asia South America and Europe

Capital Expenditures (left scale) Depreciation and Amortization (right scale)

Financial Review

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As a result of positive foreign exchange effects and other factors, the

Group recorded operating income of ¥598 million in this segment, up

¥694 million from the operating loss recorded in the previous fiscal year.

Capital ExpendituresThe Nissin Kogyo Group makes investments primarily to augment pro-

duction capacity, reform business structure, conduct R&D, and launch

new products in business segments from which longer-term growth is

anticipated. Capital expenditures in the year under review were ¥12,961

million. There were no disposals or sales, etc., of important facilities in

the year under review.

Financial PositionCurrent assets increased ¥15,093 million from the previous fiscal year-

end to ¥100,151 million, principally due to an increase in notes and

accounts receivable. Non-current assets increased ¥10,067 million from

the previous fiscal year-end to ¥77,389 million, reflecting increases in

property, plant and equipment, net and investment securities. As a

result, total assets at the fiscal year-end came to ¥177,540 million, up

¥25,159 million from the previous fiscal year-end.

Current liabilities rose ¥5,778 million from the previous fiscal year-

end to ¥39,997 million, primarily due to an increase in notes and

accounts payable. Long-term liabilities increased ¥781 million to ¥7,951

million. As a result, total liabilities were ¥47,948 million, an increase of

¥6,558 million from the previous fiscal year-end.

Net assets climbed ¥18,601 million from the previous fiscal year-

end to ¥129,591 million, principally due to increases in retained earnings

and foreign currency translation adjustments.

Cash FlowCash and cash equivalents (“cash”) as of March 31, 2014 stood at

¥30,251 million, up ¥3,920 million from the previous fiscal year-end,

reflecting an increase in cash from factors including income before

income taxes and minority interests, which was partly offset by a

decrease in cash from use for capital investment.

Net cash provided by operating activities was ¥22,401 million.

Principal items included income before income taxes and minority inter-

ests and depreciation and amortization.

Net cash used in investing activities was ¥16,940 million. Principal

items included capital investment.

Net cash used in financing activities was ¥2,225 million. This was

mainly due to dividends paid.

The Company will allocate internal reserves to capital needs for

product development essential for future growth and business

expansion.

Shareholders’ Equity Ratio

(%)

Return on Equity

(%)

Cash Flows

(¥ millions)

Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities



U.S. dollars

ASSETS 2013 2014 2014

Current assets: Cash and bank deposits ¥ 26,943 ¥ 31,129 $ 302,458 Marketable securities 4,182 6,000 58,298 Notes and accounts receivable 26,072 32,322 314,050 Inventories 21,521 24,117 234,328 Deferred income taxes 2,489 1,996 19,394 Prepaid expenses and other current assets 3,855 4,601 44,705 Allowance for doubtful accounts (3) (15) (146)Total current assets 85,058 100,151 973,096

Property, plant and equipment: Land 6,769 6,423 62,408 Buildings and structures 22,601 24,790 240,867 Machinery and equipment 89,616 102,370 994,656 Vehicles and fixtures 19,616 23,115 224,592 Lease assets 1,080 237 2,303 Construction in progress 4,506 5,421 52,672

144,188 162,356 1,577,497 Accumulated depreciation (95,468) (105,735) (1,027,351)Property, plant and equipment, net 48,721 56,620 550,136

Investments and other assets: Investment securities 15,690 17,100 166,148 Deferred income taxes 186 231 2,244 Other assets 1,205 1,734 16,848 Allowance for doubtful accounts (0) (0) (0)Total investments and other assets 17,081 19,066 185,251Total assets ¥152,381 ¥177,540 $1,725,029


Millions of yen

Shareholders’ equity Valuation and translation adjustments

Common stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’

equity

Net unrealized holding gain

on investment securities

Deferred gains or

losses on hedges

Foreign currency

translation adjustments

Net accumulative

adjustment to retirement

benefits

Total valuation,


and othersMinority interests

Total net assets

Balance as of March 31, 2013 ¥3,694 ¥3,419 ¥88,645 ¥(880) ¥ 94,878 ¥7,173 ¥ — ¥(8,852) ¥ — ¥(1,679) ¥17,792 ¥110,991 Changes in the period: Dividends (2,464) (2,464) (2,464) Net income 12,200 12,200 12,200 Cancellation of treasury stock (0) (0) (0) Increase (decrease) in treasury stock due to changes in equity among affiliates accounted for by the equity method 31 94 126 126 Net changes of items other than stockholders’ equity 324 11 5,341 421 6,097 2,642 8,739Total changes in the period — 31 9,736 94 9,862 324 11 5,341 421 6,097 2,642 18,601Balance as of March 31, 2014 ¥3,694 ¥3,451 ¥98,381 ¥(786) ¥104,740 ¥7,496 ¥11 ¥(3,511) ¥421 ¥ 4,417 ¥20,434 ¥129,591


Consolidated Balance Sheets (Unaudited)Nissin Kogyo Co., Ltd. and Consolidated Subsidiaries March 31, 2013 and 2014

Consolidated Statements of Changes in Net Assets (Unaudited)

Nissin Kogyo Co., Ltd. and Consolidated Subsidiaries March 31, 2013 and 2014



U.S. dollars

LIABILITIES AND NET ASSETS 2013 2014 2014

Current liabilities:Short-term borrowings ¥ 2,310 ¥ 4,826 $ 46,891Notes and accounts payable 23,968 28,015 272,202Accrued expenses 2,486 2,858 27,769Accrued income taxes 1,323 1,354 13,156Other current liabilities 4,132 2,944 28,605

Total current liabilities 34,219 39,997 388,622

Long-term liabilities:Deferred income taxes 4,182 5,560 54,023Accrued retirement benefits 1,287 — —Retirement benefits for directors and corporate auditors 118 142 1,380Other long-term liabilities 1,584 2,249 21,852

Total long-term liabilities 7,170 7,951 77,254

Net assetsShareholders’ equity:

Common stock:Authorized: 150,000,000 sharesIssued: 65,452,143 shares in 2013Issued: 65,452,143 shares in 2014 3,694 3,694 35,892

Capital surplus 3,419 3,451 33,531Retained earnings 88,645 98,381 955,898Treasury stock, at cost;466,900 shares in 2013 and 466,900 shares in 2014 (880) (786) (7,637)

Total shareholders’ equity 94,878 104,740 1,017,684Valuation, translation adjustments and others:

Net unrealized holding gain on investment securities 7,173 7,496 72,833Deferred gains or losses on hedges — 11 107Foreign currency translation adjustments (8,852) (3,511) (34,114)

Total valuation, translation adjustments and others (1,679) 4,417 42,917Minority interests 17,792 20,434 198,543Total net assets 110,991 129,591 1,259,143Total liabilities and shareholders’ equity ¥152,381 ¥177,540 $1,725,029

Thousands of U.S. dollars

Shareholders’ equity Valuation and translation adjustments

Common stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’

equity

Net unrealized holding gain

on investment securities

Deferred gains or

losses on hedges

Foreign currency


Net accumulative

adjustment to retirement

benefits

Total valuation,


and othersMinority interests

Total net assets

Balance as of March 31, 2013 $35,892 $33,220 $861,300 $(8,550) $ 921,862 $69,695 $ — $(86,009) $ — $(16,314) $172,872 $1,078,420 Changes in the period: Dividends (23,941) (23,941) (23,941) Net income 118,539 118,539 118,539 Cancellation of treasury stock (0) Increase (decrease) in treasury stock due to changes in equity among affiliates accounted for by the equity method 913 1,224 1,224 Net changes of items other than stockholders’ equity (0) (0) 3,148 107 51,895 4,091 59,240 25,670 84,911Total changes in the period — 301 94,598 913 95,832 3,148 107 51,895 4,091 59,240 25,670 180,733Balance as of March 31, 2014 $35,892 $33,531 $955,898 $(7,637) $1,017,684 $72,833 $107 $(34,114) $4,091 $ 42,917 $198,543 $1,259,143



U.S. dollars

2013 2014 2014

Net sales ¥174,251 ¥220,868 $2,146,016

Cost of sales 153,022 187,998 1,826,642

Gross profit 21,230 32,871 319,384

Selling, general and administrative expenses 12,468 13,454 130,723

Operating income 8,762 19,417 188,661

Other income (expenses):

Interest and dividend income 896 931 9,046

Interest expense (27) (55) (534)

Foreign exchange gain (loss), net 870 1,012 9,833

Gain on sale of securities — 610 5,927

Loss on disposal of fixed assets (60) (130) (1,263)

Equity in earnings of affiliates 93 — —

Other, net (328) 60 583

Other income, net 1,444 2,428 23,591

Income before income taxes and minority interests 10,205 21,845 212,252

Income taxes

Current 3,207 4,173 40,546

Deferred (702) 1,311 12,738

Income before minority interests 7,701 16,360 158,958

Minority interests 2,777 4,160 40,420

Net income ¥ 4,924 ¥ 12,200 $ 118,539



U.S. dollars

2013 2014 2014

Income before minority interests ¥ 7,701 ¥16,360 $158,958

Other comprehensive income

Net unrealized holding gain on investment securities 1,136 324 3,148

Deferred gains or losses on hedges — 11 107

Foreign currency translation adjustments 5,293 5,685 55,237

Share of other comprehensive income of associates accounted for using equity method 293 53 515

Total other comprehensive income 6,722 6,073 59,007

Comprehensive income ¥14,422 ¥22,434 $217,975

(Comprehensive income attributable to)

Comprehensive income attributable to owners of the parent ¥10,130 ¥17,876 $173,688

Comprehensive income attributable to minority interests 4,292 4,558 44,287


Consolidated Statements of Income (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

Nissin Kogyo Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2013 and 2014




U.S. dollars

2013 2014 2014

Cash flows from operating activitiesIncome before income taxes and minority interests ¥ 10,205 ¥ 21,845 $ 212,252Depreciation and amortization 7,424 8,032 78,041Amortization of negative goodwill (1) (2) (10)Decrease in allowance for doubtful accounts (40) 11 107Increase (decrease) in allowance for directors’ bonuses 6 37 360Increase in allowance for product warranties 1,995 (1,129) (10,970)Increase in accrued retirement benefits (153) (1,287) (12,505)Increase in retirement benefits for directors and corporate auditors (2) 8 78Decrease (increase) in retirement benefit assets — (418) (4,061)Increase (decrease) in retirement benefit liabilities — 1,574 15,293Interest and dividend income (896) (931) (9,046)Interest expense 27 55 534Foreign exchange gain, net 9 (131) (1,273)Equity in earnings of affiliates (93) 106 1,030Loss on sales of property, plant and equipment (323) (39) (379)Loss on disposal of property, plant and equipment 60 130 1,263Loss (gain) on valuation of short-term and long-term investment securities 542 (610) (5,927)Increase in notes and accounts receivable—trade 1,198 (3,912) (38,010)Increase in inventories 123 752 7,307Increase in notes and accounts payable—trade (717) 1,269 12,330Increase in accounts payable (701) 1,002 9,736Other, net (418) (719) (6,986)

Subtotal 18,243 25,642 249,145Interest and dividends received 897 932 9,056Interest paid (27) (55) (534)Income taxes paid (2,980) (4,118) (40,012)

Net cash provided by operating activities 16,134 22,401 217,654Cash flows from investing activities

Decrease in time deposits (375) (58) (564)Decrease in marketable securities (1,000) (2,000) (19,433)Purchases of property and equipment (11,373) (13,172) (127,983)Proceeds from sale of property and equipment 981 197 1,914Purchase of intangible assets (541) (299) (2,905)Purchases of investment securities (2,172) (1,085) (10,542)Purchase of investments in subsidiaries 262 715 6,947Collection of loans receivable 37 — —Outgoings from lending (80) (1,133) (11,009)Other, net (25) (103) (1,001)

Net cash used in investing activities (14,285) (16,940) (164,594)Cash flows from financing activities

Decrease in short-term borrowings (186) 1,819 17,674Repayments of finance lease obligations (420) (221) (2,147)Dividends paid (1,942) (2,464) (23,941)Dividends paid to minority shareholders (1,843) (1,853) (18,004)Other, net 601 494 4,800

Net cash used in financing activities (3,790) (2,225) (21,619)Effect of exchange rate changes on cash and cash equivalents 870 684 6,646Net increase in cash and cash equivalents (1,072) 3,920 38,088Cash and cash equivalents at beginning of year 27,402 26,331 255,839Cash and cash equivalents at end of year ¥ 26,331 ¥ 30,251 $ 293,927


Consolidated Statements of Cash Flows (Unaudited)



Naoetsu Plant

Corporate Headquarters and Ueda PlantTobu PlantNagano R&D Center

Tochigi R&D Center

Nissin R&D Europe S.L.U.

Nissin Brake (Thailand) Co., Ltd.

Nissin Brake Vietnam Co., Ltd.

Nissin R&D Asia

Zhongshan Nissin Industry Co., Ltd.Nissin R&D China

Shandong Nissin Industry Co., Ltd.

Nissin Brake Philippines Corporation

P.T. Chemco Harapan NusantaraP.T. Alcar Chemco Indonesia

Nissin Brake Ohio Inc.

Nissin Brake de Mexico, S.A. de C.V.

Nissin R&D USA — East Liberty

Nissin Brake Georgia Inc.

Nissin Brake Do Brasil Ltda.(Manaus Plant)

[ Domestic ]Corporate Headquarters and Ueda Plant840 Kokubu, Ueda-city, Nagano 386-8505, Japan Tel: +81-268-24-3111 Fax: +81-268-21-2533

Tobu Plant801 Kazawa, Toumi-city, Nagano 389-0514, Japan Tel: +81-268-62-1191 Fax: +81-268-62-1194

Naoetsu Plant4370 Kamichihara, Jyoetsu-city, Niigata 942-0035, Japan Tel: +81-255-43-1431 Fax: +81-255-43-1365

Nagano R&D Center801 Kazawa, Toumi-city, Nagano 389-0514, Japan Tel: +81-268-62-5293 Fax: +81-268-62-5285

Tochigi R&D Center722-1 Fukuoka, Nasukarasuyama-city, Tochigi 321-0525, Japan Tel: +81-287-88-1215 Fax: +81-287-88-1217

[ Overseas ]SPAINNissin R&D Europe S.L.U.Ciencia, 33 08840 Viladecans (Barcelona), Spain Tel: +34-902-410-999 Fax: +34-936-593-900

UNITED STATESNissin Brake Ohio Inc.1901 Industrial Drive, Findlay, OH 45840, U.S.A. Tel: +1-419-425-6725 Fax: +1-419-425-6729

Nissin Brake Georgia Inc.216 Thacker Drive, Rock Spring, GA 30739, U.S.A. Tel: +1-706-764-1239 Fax: +1-706-764-1086

Nissin R&D USA25790 State Route 287, East Liberty, OH 43319-9500, U.S.A. Tel: +1-937-642-7556 Fax: +1-937-642-2845

THAILANDNissin Brake (Thailand) Co., Ltd.399 Mhutee 6 Chockchi-Ratchasrima Rd., Tambol Nongraveang, Amphur Muang Nakornratchasrima 30000, Thailand Tel: +66-4421-8375 Fax: +66-4421-8965

Nissin R&D AsiaShinawatra Tower 3, 8th Floor, 1010 Viphavadi Rangsit Rd., Chatuchak, Chatuchak, Bangkok 10900, Thailand Tel: +66-2-967-7605 Fax: +66-2-967-7617

INDONESIAP.T. Chemco Harapan NusantaraKawasan Industrial Jababeka Jl, Jababeka Raya Blok F No. 19-28 Cikarang 17530 Bekasi, Jawa Barat, Indonesia Tel: +62-21-8934253 Fax: +62-21-8934256

P.T. Alcar Chemco IndonesiaKawasan Industri Mitra Karawang Jl, Mitra Raya II Blok E7-12 Karawang 41361, Jawa Barat, Indonesia Tel: +62-267-8610088 Fax: +62-267-8610111

PHILIPPINESNissin Brake Philippines CorporationRBF L-2 Lot 30-B Phase 1B, First Philippines Industrial Park, Tanuan, Batangas, Philippines 4233 Tel: +63-49-576-5946 Fax: +63-43-405-6406

CHINAShandong Nissin Industry Co., Ltd.273 Century Avenue, Rushan City, Shandong Province, China Tel: +86-631-6681246 Fax: +86-631-6681325

Zhongshan Nissin Industry Co., Ltd.No. 34.37. Jian Ye Road Torch Hi-tech Industrial Development Zone, Zhongshan City, Guangdong Province, P.R. China Tel: +86-760-85338330 Fax: +86-760-85338331

Nissin R&D ChinaNo. 2102 Zhonglu Shangwu Daisha, 47 Qiaolin Street, Linhe Dong Road, Tianhe Guangzhou Province, China 510610 Tel: +86-20-38869630 Fax: +86-20-38863600

VIETNAMNissin Brake Vietnam Co., Ltd.Quat Luu Commune, Binh Xuyen District, Vinh Phuc Province, Vietnam Tel: +84-211-386-6400 Fax: +84-211-386-6401

BRAZILNissin Brake Do Brasil Ltda.(Manaus Plant)AV. Dos Oitis, No. 534-Distrito Industrial, Manaus-Am, Brazil Tel: +55-92-2121-4702 Fax: +55-92-3615-3979

Nissin Brake Do Brasil Ltda. (Sao Paulo Plant)Rodovia Santos Dumont (SP 75), Km 23.5 Bairro Itaim Mirim, ITU-SP, Brazil Tel: +55-11-3414-4001 Fax: +55-11-3414-4002

MEXICONissin Brake de Mexico, S.A. de C.V.Camino de acceso numero 652 Predio San Luis del Janamo lrapuato, Guanajuato C.P.36835 Tel: Fax: +52-462-626-0308

INDIANissin Brake India Pvt. Ltd.SP-1-33-35, New Industrial Area, Phase-III, Neemrana-301705, Distt-Alwar (Rajasthan), India Tel: +91-1494-246733 Fax: +91-1494-246736

Nissin Brake Do Brasil Ltda. (Sao Paulo Plant)

Nissin Brake India Pvt. Ltd.

Network


Name: Nissin Kogyo Co., Ltd.

Established: October 1953

Paid-in Capital: ¥3,694 million

Employees: 10,230

Directors and Auditors:(As of June 13, 2014)

PresidentEiji Okawara

Vice PresidentHideaki Yanagisawa

Senior Managing DirectorsKeiji HimoriNaotoshi Tamai

Executive Managing DirectorJunichi Beppu

DirectorsKenji TeradaJyunya TakeiKenji ShimizuKazuya SatoYuichi Ichikawa

Statutory AuditorsKiyoshi SakashitaYukio Takeuchi

AuditorsNorimasa OguchiHiroyuki Negishi

Shareholdings by Shareholder Type:

n Other Corporationsn Financial Institutionsn Individuals and Othersn Foreign Companiesn Securities Companies

Total Shares Issued and Outstanding: 65,452,143

Number of Shareholders: 15,803

Stock Listing: Tokyo Stock Exchange, First Section

Stock Code: 7230

Transfer Agent:Sumitomo Mitsui Trust Bank, Limited1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan

40.84

18.14

20.70

18.90

1.42

Principal Shareholders:

Name

Holdings (Thousands

of Shares)

Voting Rights

(%)

Honda Motor Co., Ltd. 22,682 34.65

Japan Trustee Services Bank, Ltd. (Trust Account) 3,412 5.21

Daishin Sangyo Co., Ltd. 3,398 5.19

The Master Trust Bank of Japan, Ltd. (Trust Account) 2,502 3.82

The Bank of New York, Mellon SA/NY 10 2,106 3.21

Naoya Miyashita 1,963 2.99

Northern Trust Co. (AVFC) Sub A/C Non-Treaty 841 1.28

Nissin Kogyo Employee Shareholding Association 749 1.14

The Chase Manhattan Bank, NA London SL Omnibus Account 564 0.86

Sumitomo Mitsui Banking Corporation 550 0.84

(%)

Corporate Data (As of March 31, 2014)

NISSIN KOGYO CO., LTD.840 Kokubu, Ueda-city, Nagano 386-8505, JapanTel: +81-268-24-3111 Fax: +81-268-21-2533http://www.nissinkogyo.co.jp

Documents

Annual Review 2014 - Nissin Kogyo AR 2014.pdf · Annual Review 2014 01 Message from the President Thank you to all of our shareholders for your continuing encouragement and support