1. Basis of Presenting Consolidated Financial StatementsThe accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accountingprinciples generally accepted in Japan, which are different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.The consolidated financial statements are stated in Japanese yen, the currency of the country in which Akebono BrakeIndustry Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollars areincluded solely for the convenience of readers outside Japan and have been made at the rate of ?94 to $1 (rounded down tothe nearest $1,000; or rounded down to the nearest cent per share), the approximate rate of exchange at March 31, 2013.Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollarsat that or any other rate.2. Summary of Significant Accounting PoliciesThe Scope of ConsolidationThe consolidated financial statements as of March 31, 2013 include the accounts of the Company and its 23 significant (29 in the fiscalyear ended March 31, 2012) subsidiaries (together, the “Group”). Under the controlling company accounting method, companiesin which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companiesover which the Group has the ability to exercise significant influence are accounted for by the equity method. During fiscal 2011,seven consolidated subsidiaries of Akebono Brake Industry Co., Ltd. were eliminated through mergers with Akebono BrakeCorporation (formerly Akebono Corporation (North America)), including Ambrake Manufacturing, Ltd., Ambrake Corporation, AmakBrake L.L.C., and AMTEC Brake, LLC. Meanwhile, Akebono Brake Mexico S.A. de C.V. was newly established and included in the scopeof consolidation.An investment in one associated company (one in the fiscal year ended March 31, 2012) is accounted for by the equity method.Investments in the remaining two associated companies (two in the fiscal year ended March 31, 2012) are stated at cost, and theirimpact on the consolidated financial statements is insignificant. The differences between the cost and the underlying net equity (atfair value) of investments in consolidated subsidiaries and associated companies accounted for by the equity method have beenamortized over a period of five years. All significant intercompany balances and transactions have been eliminated in consolidation. Allmaterial unrealized profit included in assets resulting from transactions within the Group is eliminated.Changes in Accounting Policies■Change in the Depreciation MethodFrom fiscal 2012, Akebono Brake Industry Co., Ltd. and its subsidiaries inside Japan have changed the depreciation method for tangibleassets purchased on April 1, 2012 and thereafter, to the method based on the revised Corporation Tax Act. Compared to calculationsunder the previous method, operating income, ordinary income, and net income before tax and adjustments each increased by?177 million for fiscal 2012.■Change in the Inventory Valuation MethodFrom fiscal 2012, Akebono Brake Industry Co., Ltd. and its subsidiaries inside Japan have changed the method of inventory valuationfrom the last purchase price method to the periodic average method. The change, which entails the stricter management of raw materialand stock flows, was made in line with the change of our core management system and was intended for the early finalization ofinventory calculation and streamlining of cost accounting. As the impact of this change on the consolidated financial statements isinsignificant, no retrospective application is required.3. Per Share InformationYenU.S. Dollars2013 2012 2013Per share of common stock:Net assets ?350.52 ?326.39 $3.73Basic net income (loss) 3.90 (24.25) 0.04Diluted net income 3.88 ? 0.04Cash dividends applicable to the year 10.00 10.00 0.11In the fiscal year ended March 31, 2012, the Company had dilutive common stock outstanding, however, it posted diluted net loss per share. Accordingly, the information has notbeen disclosed.Notes to Consolidated Financial StatementsAkebono Brake Industry Co., Ltd. and Consolidated Subsidiaries Years Ended March 31, 2013 and 2012