New Medium-term Business Plan -- “Growth through Creativity and Achievements21”

1.Summary results of “Rapid Advance 21”

2.“Growth through Creativity and Achievements 21”

3.Achieving long-term vision

April 6, 2007

NTN corporation (NTN) has set “Growth through Creativity and Achievements 21” as the new medium-term business plan (following “Rapid Advance 21”, the prior business plan ended March 31, 2007). The new medium-term business plan covers 3 fiscal years, from April 1, 2007 to March 31, 2010.

(1)	Goals of “Rapid Advance 21” · “Rapid Advance 21” followed an aggressive growth strategy to enhance corporate value. It took advantage of the corporate structure strengthened by the “NEW Plan 21”, a two-year business structural reform started in April 2002.
(2)	Major activities of “Rapid Advance 21” · Foreseeing an increase in demand, increased production capacity, for the products in the industrial machinery sector. · Expanded production capacity of constant velocity joints (CVJ) and axle bearings used by automobiles. · Formed strategic alliances with European partners to increase NTN’s presence in Europe. · Developed new products based on new concepts, such as a fluid dynamic bearing business.
(3)	Major achievements of “Rapid Advance 21” · Market share increase in CVJs. · Market share increase in axle bearings. · Growth in the fluid dynamic bearing business.
(4)	Challenges to be continued after “Rapid Advance 21” · Early return on production capacity investments. · Improvement in asset efficiency (inventories and tangible fixed assets). · Early realization of synergistic effects from European alliances.

(1)		What is “Growth through Creativity and Achievements 21”
	·	It is the medium-term business plan covering 3 fiscal years from April 2007 to March 2010.
	·	“Growth through Creativity and Achievements 21” means to create new corporate value through continued growth and realizing significant achievements. NTN’s challenge is to go back to the starting point; begin at zero, not with past experiences.
	·	“Growth through Creativity and Achievements 21” places a greater emphasis on maintaining a good balance between offense and defense.

	♦			Enhance corporate value by improving asset efficiency.
	♦			Strengthen competitiveness by increasing capital expenditure for further growth.
	♦			Have every employee “explore their own ideas, create something new, bring forth fruit, and develop themselves as well.”

(2)

Goals in “Growth through Creativity and Achievements 21”

·	Enhance corporate value by improving NTN’s brand value.
	1)	Raise consciousness of NTN’s improving safety and quality.
	2)	Increase reliability of the products.
	3)	Strengthen and expand intellectual property rights.
	4)	Pass down the technology and skills the baby boomers hold.
	5)	Differentiate NTN products by enhancing competitiveness of products, services and technologies.

·	Enhance stakeholder value by increasing customer value, employee value, social value and shareholder value.
	♦Social value
		◊	As a good corporate citizen, contribute to the development of local and international communities by taking actions to conserve the environment, maintain mutually beneficial relations with clients and develop harmonious relations with local communities.
	♦Employee value(through HITOZUKURI*)
		◊	Pass down technologies and skills by systematic educational arrangement. Revise the existing employment system attract more female and retired employees to active service.
	♦Customer value(through MONOZUKURI**)
		◊	Raise quality to a level no competitor can match. Strengthen product development capabilities utilizing NTN’s proprietary technology and expand intellectual property rights. Place greater emphasis on preserving the environment.
	♦Shareholder value
		◊	Ensure long-term returns on investments. Returns to the shareholders will be made in the form of dividends and increased stock price.

*	HITOZUKURI is NTN’s concept for a system of continuously developing personnel that have essential technical skills and can work internationally. By discovering the skills of each individual and passing down various engineering and technical skills, NTN plans to increase on-site capabilities and achieve world-class quality and low-cost operations while shortening production leadtime.
**	MONOZUKURI is a comprehensive concept of creating value at NTN as a manufacturing company, continuously adding value throughout the entire business process, including marketing, R&D, engineering, manufacturing and distribution. MONOZUKURI ensures an ever-higher level of customer satisfaction promised by NTN’s competitive advantages in quality, cost, delivery, development and service.

(3)

Financial targets for “Growth through Creativity and Achievements 21”

	Sales	700 billion yen
	Operating income	75 billion yen
	Operating margin	10.7%

(4)

Strategy by business segment

· Sales Targets for fiscal year ending March 2010
	Bearings	480 billion yen
	CVJs	178 billion yen
	Precision equipment, etc.	42 billion yen

· Major products sold to automobile sector

· Major products sold to industrial machinery sector

♦Large bearings for construction machinery
	◊	Respond proactively to mining equipment opportunities.
	◊	Expand sales of new products and broaden the product range at oversea plants.
	◊	Pursue synergies from the alliance with SNR.
♦Precison bearings for Machine tools
	◊	Contribute to high rotation, which improves the working environment.
	◊	Participate in major manufacturers’ projects developing new models of machines.
	◊	Expand sales of precision bearings in overseas markets(Europe and Asia).
♦Large bearings for wind turbines
	◊	Acquire the top share in bearings for newly installed wind turbines (domestic).
	◊	Enhance product competitiveness and evaluation technology.
	◊	Expand sales to major European manufacturers.
	◊	Expand sales of value added products.
	◊	Give additional effort to the Chinese and Indian markets.
♦Large bearings for rolling stock
	◊	Expand into overseas markets using technologies developed in Japan.
	◊	Transfer evaluation technology to areas where the demand exists.
	◊	Expand sales of value-added products for use in high-speed vehicles.
	◊	Establish global supply systems.

(5)

Strategy by geographic segment

· Increase sales in Europe.

	♦	Make a full-scale entry to European markets through synergistic effects from the alliance with SNR.
	♦	Expand CVJ sales to new customers through the alliance with IFA-AT.

· Expand into emerging markets.

	♦	Increase product lineup at the plants in China, increase local procurement and expand market share.
	♦	Expand sales of automotive products by starting operation at the plant in India.
	♦	Create synergistic effects from the alliance with SNR and strengthen response to expanding automobile demand in Brazil.
	♦	Accelerate the expansion into East Europe and Russia by utilizing the SNR plant in Romania.

· Increase NTN’s market share for CVJ and axle bearings in North America.

· Increase the share of business at automobile manufactures with which NTN currently has a low share. Provide technological leadership from Japan for global projects.

Since 1963, the year CVJ production started, cumulative production has reached 400 million units during fiscal 2007, with expectations to reach 500 million units by the end of fiscal 2010.

NTN aims to become the No. 1 CVJ manufacturer in the world, making use of synergistic effects from the alliance with IFA-AT, which has CVJ business with Germany’s Volkswagen Group.

♦Axle Bearings

Sales of axle bearings in the fiscal year ending March 2010 is expected to reach 100 billion yen, 2.5 times that of fiscal 2007.

NTN aims to become the No. 1 bearing manufacturer in the world, utilizing the synergistic effects from the alliance with SNR, a French bearing manufacturer, which has a very strong brand in Europe.

· Establish a firm position in the global market by achieving the sales target in fiscal 2015 -- “over 1 trillion yen.”