Clarion Co., Ltd.

Clarion Report 2013 is composed of four parts as above. Our editorial policy is to inform Clarion’s “corporate power” and our efforts in fulfilling corporate social responsibility (CSR) in a manner easy to understand.

● Sites Covered by the ReportClarion and its domestic and overseas consolidated affiliated companies

● Report PeriodFiscal 2012 results (from April 1, 2012 to March 31, 2013), with part of Fiscal 2013 included

Year 2014● Next Publication

● Editorial Policy

Akiko UeharaAya IshidaAyako YoshidaEriko Akamatsu

Inquiries

■ for Company Profile and Financial Report: Management Strategy Office

■ for CSR Report and Environmental Report: CSR Promotion Office

(in alphabetical orders)

Phone: (81) 48-601-3700

Editorial Staff (Clarion Report Editorial Committee)

Clarion Co., Ltd. HeadquartersFumie NakaharaKenji MotegiKiyoshi MaruyamaLiang Lihua

Meilan LianMika SakuraNobutoshi NonamiQinglong Xu

Rie YoshimotoTeruhisa FujiedaShudong YangYuka Doude

Clarion Report 2013

“Company Profile”, “CSR Report”, “Environmental Report” and “Financial Report”. ● Contents

The CO2 emission amount of 1,095.92 Kg from printing/bookbinding of 13,500 copies of this report is given carbon offset through Carbon Free Consulting Corporation against CO2 credit (domestic) created by an enterprise in Kooriyama-shi, Fukushima Prefecture, and contribute to prevention of global warming.Certificate No. 1306272104493

Printed on paper made with wood from forest thinning. “Morino Chonai-Kai”( Fo re s t N e i g h b o r h o o d Association)—Supporting sound forest management.

This report is available on the internet. http://www.clarion.com/jp/en/company/effort/index.html

http://www.clarion.com/

Clarion Co., Ltd. Registered Head Office · Technology Center 7-2 Shintoshin, Chuo-ku, Saitama-shi, Saitama 330-0081, Japan TEL: (81) 48-601-3700

Clarion Report 2013

Expansion From In-Vehicle Equipment Manufacturer To In-Vehicle Information System Provider

The market environment surrounding Clarion is in upheaval. Clarion will face this rapidly changing market while promptly adapting and evolving its business model. As such, our domain is being shifted from the previous car navigation and audio as an in-vehicle equipment manufacturer, to new business domains of “Automotive Cloud Information Network Service” including soft-ware and service, as well as “Vision System” business in the realm of safety and security.

Realizing value-added products and services that “connect” by letting people access the various information and service they need, in their daily lives, any time they want, in an optimized for-mat, so they can feel more fully a sense of safety, security and comfort.

Managing the information required for vehicles, people and the environment, in a cohesive manner, to provide each of our cus-tomers with maximum value through safety and comfort. These are the things that Clarion will provide by simultaneously develop-ing a comprehensive information management system and opti-mized user interface, and linking them together to provide unique-ly attractive customer value. Moreover, Clarion will pursue the lim-itless potential of future innovation, such as contributing to social infrastructure through energy management aimed at lessening the burden on the environment.

Clarion divides its global operations into five regions, namely Japan, the Americas (North/Central/South America), Europe, China, and ASEAN/India. Each region maintains its own control function regarding the region, including the functions of marketing, development, production, and sales. We will continue to provide each and every region with the ideal products and services, by organically combining various functions based on geographical region, customers, and products. Instead of controlling everything from the headquarters in Japan, all regions will have the rights and responsibilities that come with autonomy, and by swiftly coor-dinating with other regions, a highly global management organiza-tion is realized.

Global warming is one of the most critical environmental issues facing our planet, and its effects appear in ways that cross national boundaries, at an increasingly alarming pace. As the earth experi-ences abrupt environmental changes, the importance of environ-mental measures as a corporate responsibility also rises, as we attempt to realize a sustainable, recycle-based society.

At Clarion, we have positioned these environmental issues as business challenges, and are implementing the Clarion Environmental Management Plan on a global scale including our overseas business activities. In keeping with our aspirations to be a “company that is truly needed by society”, global environmental considerations and activities such as these will be mission-critical to our enterprise.

To Our Stakeholders

Activities of a Truly Global Corporation

To our customers, I wish to state that as society and technolo-gy continue to evolve, we will go on finding out user needs as quickly as possible, to provide unique products and services that incorporate the latest innovations. We will not rest as we continue to create products and services that offer true satisfaction, com-fort and joy to our customers.

To our shareholders, I wish to report our intention to trans-form into a more robust corporate structure. We will continue to face lofty challenges to meet our new objectives.

To our suppliers and business partners, I would like to state that the entire Clarion Group is establishing “Automotive Cloud Information Network Service” as a new keystone for our business in addition to in-vehicle information equipment. As changes in the market environment, globalization, and technologi-cal advances all contribute to the accelerated pace of change in the world we live in, we will move as swiftly as possible to accom-modate new challenges through an optimized corporate structure. Clarion promises to always be a clear thinker that is quick to action.

To our employees, let me say that the only way for Clarion to thrive is by sharing the values of each and every one of you and working diligently together. To help make this possible, we will be endeavoring to create a corporate environment where you can feel “I’m so glad to be a part of Clarion”.

Contributing to the Creation of a Sustainable Society

(Brand Promise logo) Expresses the value that the Clarion brand can provide, namely that “By keeping you connected to sound, information, convenience and safty...Clarion moves you”.

The link between sound and information communication in the mobile environment of the car will evolve into new domains based on our unique ideas and advanced technologies. Through this, we will provide safety, security, comfort and excitement to our customers all over the world. We at Clarion shall remain at the forefront of the industry, to precisely understand market needs and achieve long term growth.

Clarion strives to improve society by seeking to develop the relationship between sound, information, and human interaction, and by creating products to meet those needs.

● Providing customer satisfaction and happiness with superior products and services. ● Creating new value with original ideas and technology. ● Respecting the individuality and ability of each employee, and establishing a corporate culture of generosity. ● Maintaining a strong awareness of our place in nature and a commitment to the environment.● Fulfilling our responsibility, as a corporate citizen, for better society. ● Pursuing corporate profitability and sustained growth.

Corporate Commitment

Action Commitment

CorporatePhilosophy

Corporate Vision

Management Commitment

● “AMBITION” -We seek to continually improve ourselves through self innovation and courage.● “CREATIVITY” -We foster creativity and work to produce new value and to turn dreams into reality. ● “SINCERITY” -We work diligently in good faith to prove ourselves worthy of people’s trust.

Generating Synergy by Harnessing the Comprehensive Strengths of Hitachi GroupAs a member of the Hitachi group, Clarion generates synergy in a variety of situations. We cooperate closely with Hitachi’s Information &

Telecommunication Systems Company, and pool together their abundant experience and technological know-how in IT platforms, to provide the Cloud Service for Vehicle “Smart Access”.

We are also working closely with Hitachi Automotive Systems, Ltd., who holds a large market share in drive control systems. We are exploring new values by combination of vehicle information and Clarion’s in-car device so that our customers can be provided with a safer and more secure driving experience.

Hitachi, Ltd. owns and operates top-notch R&D facilities. By incorporating Hitachi’s high quality study results into Clarion’s products, including image-recognition technology to be used in Vision System products (camera compatible products), we at Clarion will be better able to introduce winning products into a fiercely competitive market.

Tatsuhiko IZUMI President Clarion Co., Ltd.

Pursuing Progress for People, Society and the Environment in Times of Change.

The market environment for Clarion’s business, as well as the origins of the added value our products offer, are changing on a global scale. We believe this is because the market itself is undergoing a structural change. And we also feel it neces-sary for the Clarion group to regard this change as an enor-mous opportunity.

Currently we are in the process of revamping our structure to enable simultaneous “strengthening our business base” and “laying the foundation for growth”. Activities are being implemented in order to cultivate new product domains and to become a truly global company with eyes set on upcoming high-growth markets.

Fully understanding the characteristics of each market, we shall also endeavor to develop new technologies in order to offer more innovative products and services. Our primary strength is in being able to offer the resulting products and services to customers in a timely fashion.

We shall always remain true to the spirit of “We are Clarion”, all of us always united in our march forward, meeting our responsibilities to society as part of the Hitachi Group, in order to grow as a company that is truly needed by society.

0201 Company Profi le 2013Company Profi le 2013

Yasuhiko HONDA Director, ChairmanTatsuhiko IZUMI Representative Director, PresidentToru KANEKO Executive DirectorHidetoshi KAWAMOTO Executive DirectorSatoshi KAWAMOTO DirectorTadashi WADA DirectorKunihiko SHINBO DirectorHideo OMACHI DirectorAtsushi KAWABATA DirectorSeishi KASAI Full-time Audit & Supervisory

Board MemberKazumichi FUJIMURA Audit & Supervisory

Board MemberYasuhiro SASAI Audit & Supervisory

Board MemberKazuo KURIHARA Audit & Supervisory

Board Member

Company Profile

■ CONTENTS● Clarion Overview /

Financial Highlights … P04● Global Network … P05● Business Outline … P07● Advanced Technology … P09● Quality Control … P13● History of Clarion … P15● Communication … P17● We are Clarion … P19

Clarion Overview

Tetsuro YOSHIMINENobuyuki OYACHIYoshihisa MATSUOKAKouichi MURAKAMIHideyuki TAMURATakehiro TANAKAAtsuo HORIKouji HOSOKAWATakashi YAMADAPaul LachnerJoaquin Loose

Company NameRegistered Head Office · Technology Center Headquarters

EstablishedPaid-in CapitalShares IssuedNet Sales

Employees

Main Products

Clarion Co., Ltd.7-2 Shintoshin, Chuo-ku, Saitama-shi, Saitama330-0081, JapanTEL: (81) 48-601-370011-2 Shintoshin, Chuo-ku, Saitama-shi, Saitama 330-6030, JapanTEL: (81) 48-601-3700December 18, 1940¥ 26,100 million282,744 thousand shares Consolidated: ¥ 177,288 million (term ended March 2013)Non-consolidated: ¥ 131,725 million (term ended March 2013)Consolidated: 9,978 personsNon-consolidated: 1,564 persons (excl. personnel on temporary assignments) Cloud Service for Vehicle,Car Navigation System, Car Audio, Vehicle Camera System, Visual Equipment, Bus Equipment, Communication Equipment

Corporate Outline (As of March 31, 2013) Directors and Auditors (As of June 21, 2013) Corporate Advisor (As of June 21, 2013)

∗ Directors, Yasuhiko HONDA and Atsushi KAWABATA are outside directors.

∗ Auditors, Yasuhiro SASAI and Kazuo KURIHARA are outside auditors.

Main Banks and Financial InstitutionsResona Bank, Ltd.Mizuho Bank, Ltd.Sumitomo Mitsui Banking CorporationThe Bank of Tokyo-Mitsubishi UFJ, Ltd.

Membership OrganizationsJapan Auto-Body Industries Association Inc.

Clarion Co., Ltd. and its Consolidated SubsidiariesYears ended March 31 Millions of Yen Thousands of U.S. Dollars

2012 2013 2013

For the Year: Net sales ··································································· ¥186,711 ¥177,288 $1,885,048 Operating income ······················································ 7,873 3,210 34,141 Net income ································································ 7,532 1,358 14,445

At Year-end: Total assets ································································ 122,821 117,398 1,248,258 Total net assets ·························································· 16,579 22,002 233,948 Interest-bearing debt ················································· 41,927 41,921 445,733

Yen U.S. Dollars

2012 2013 2013

Per Share:Net income ·································································· ¥26.71 ¥4.82 $0.05Cash dividends ···························································· — — —

Note: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of US$1 = ¥94.05, the approximate exchange rate on March 31, 2012.

Financial Highlights

Clarion strives to improve society by seeking to develop the relationship between sound, information, and human interaction, and by creating products to meet those needs.(Corporate Philosophy “Corporate Commitment”)

Company Profi le 2013Company Profi le 2013 0403

CCA (Ohio Office)

ELE CLA (Mexico City Office)

CCA (Texas Office)

CCA (Silicon Valley Research Center)

CCA (Tennessee Office)

CTCSM

CT( Hamamatsu Sales Office)

CT( Nagoya Sales Office)

CT(Osaka Sales Office)CT(Hiroshima Sales Office)

DCOE(Changchun Office)

DCOE(Beijin Office)

CTC

CHI(HongKong Office)

CGB

DCOE (Shanghai Office)

CXEE (Manufacturing Plant)CXEE (R & D Office)

CAP

CEF (Nancy Office)

CCA (Michigan Office) CCI

CCA (Kentucky Office)

ELECLA (San Juan Del Rio Office)

CEF (Paris Office)

CED

CCA (Cypress Office)

CMS

CHE

CAT DCOE(Dongguan Office)

CM/CPM

CIL

CBL

European Region

● Clarion Europe S.A.S. (CEF)● Clarion Europa GmbH (CED)● Clarion (G.B.) Ltd. (CGB)● Clarion Hungary Electronics Kft.

(CHE)

Japan

● Clarion Co., Ltd. (CT)● Clarion Sales and Marketing Co., Ltd. (CSM)● Clarion Manufacturing and Service Co., Ltd. (CMS)

Asia/Oceania Region

● Clarion (H.K.) Industries Co., Ltd. (CHI)● Dongguan Clarion Orient Electronics Co., Ltd. (DCOE)● Xiamen Clarion Electrical Enterprise Co., Ltd. (CXEE)● Clarion India Private Limited (CIL)● Clarion (Malaysia) Sdn. Bhd. (CM)● Crystal Precision (Malaysia) Sdn. Bhd. (CPM)● Clarion Asia (Thailand) Co., Ltd. (CAT) ● Clarion (Taiwan) Manufacturing Co., Ltd. (CTC)● Clarion Australia Pty. Ltd. (CAP)

American Region

● Clarion Corporation of America (CCA)● Clarion Canada Inc. (CCI)● Electronica Clarion, S.A. de C.V. (ELECLA)● Clarion do Brasil Ltda. (CBL)● Ultra Industrial S.A. de C.V. (ULTRA)

Global Network

Clarion’s Unique Global Network: Worldwide Coverage, Localized Emphasis.As rapid advances are made in the telecommunications infrastructure such

as cloud computing, we at Clarion are implementing a unique global strategy to change our company expansion from in-vehicle equipment manufacture to in-vehicle information solution provider. While each region maintains overall ad-ministrative functions, our advanced supply chain, by effectively linking to re-gion, customers and products, allows us to cover worldwide markets and deliver optimal products and services to our worldwide clientele in a timely manner. Through proactive organizational restructuring and continued innovations, we will spread the Clarion brand not only on a global scale, but also ensure that it gains a foothold in each local market. Clarion Head Office & Technology Center (CT) Head Office (CT · CSM)

Sales CompaniesManufacturing CompaniesDevelopment CompaniesClarion Head Office FacilitiesAffiliated CompaniesDistributors / Importers

Company Profi le 2013Company Profi le 2013 0605

Business Outline

In June 2012, Clarion launched “Smart Access”, a new cloud service for vehicle, based on the idea of “smartphone conectivity” which enables the massive number of smartphone applications to be used in in-car environments. Our latest AV Navigation System supports “Smart Access”. Apps for Internet radio reception, for news, and for SNS, are all available optimized for in-car use. Clarion will be providing new value to users all over the world by expanding “Smart Access” service on a global scale, and continuously releasing in-vehicle terminals that support it.

IVI (In-Vehicle Infotainment) System / Cloud Service for Vehicle

Over the years, Clarion has persistently polished its audio and acoustic technologies, and sought to create the ideal sound environment within the car. In addition to seamless con-nectivity with portable audio players and smartphones, our unique audio technologies are also a major advantage of Clarion audio systems as they allow creation of an ideal sound field in the car interior, an environment that suffers from much unwanted reflection and ab-sorption of sound. Furthermore, the “Full-Digital Speaker” which balances eco-friendliness with premium sound was a world’s first development for the automotive field, and was launched in the Japanese market starting December 2012. Through this technology, we will be promoting the commercialization of car audio systems that are ideal for next-generation eco cars.

In-Vehicle Audio Systems

Recent years have seen a rise in demand for car cameras that provide drivers with a sense of safety and security. In addition to conventional rear-vision cameras, Clarion is de-veloping and marketing the Overhead View Monitor that provides a 360-degree view around the vehicle, as well as sensing systems to alert the driver of approaching pedestrians and cars, and various other applications. Clarion will continue to actively develop cutting-edge technologies and support safe driving by promoting the Vision System.

Safe Driving Support System (Vision System)

Clarion holds top market share for bus equipment. Our digital signage system uses an in-bus monitor to display not only bus stops along the route but also video and still image-based commercial messages, as well as news and weather information utilizing Hitachi’s digital signage solution “SignChannel”. We believe that in-bus signage offers higher promo-tional efficiency compared to conventional digital signage seen on the street, and will con-tinue to formulate and introduce services with high user demand.

In-Vehicle Systems for Commercial Use

With its superb technology and flexible production systems, Clarion is highly appreciated by the global market, and in OEM∗ market, in particular, it has built up secure and long lasting rela-tionship of trust with major car manufacturers with deliveries of genuine parts programs. Our business in the OEM market start-ed already in 1951, when we delivered our first genuine parts radios to Hino-Renault. Currently, we deliver various in-vehicle devices to customers all over the world. This segment can be stated as the back bone of our business. In the coming years, the advanced market will require more evolution in vehicle mounted devices as EVs (Electric Vehicles) and HVs (Hybrid Vehicles) become more popular. On the other hand, in the emerging markets, products matching to the diverse needs of each market are required. Clarion strives to expand its OEM business in a global scale with its long cherished vehicle adap-tation technologies and ability to propose products to meet cus-tomer needs one step ahead of the times.

OEM Business with Excellent Achievements in the Global Market

“Leaf”, EVs (Electric Vehicles) from Nissan released in 2010 in the US, Europe and Japan are equipped with Clarion’s car navigation systems. These first in the world navigation systems specifically developed and dedicated for EVs, feature multiple special functions in addition to those in conventional systems, to let drivers feel comfortable in driving an EV, such as estimated reachable distance calculated from the battery conditions, warning for expedited charging of the battery, easy search of charging stations, display of electricity consumption status and others. Clarion also delivers telematics units of own develop-ment to enable data communication with the data center and signal processing for the functions of remote control of air-con-ditioner and checking of battery status from outside the vehicle as well as transmission of probe information, by making use of telematics.∗

Support to EVs with Car Navigation Systems and Telematics Units

Next Generation Products Leading the Future Automotive Field.

Recent breathtaking advances in information technology and the incredible spread of smartphones have strongly affected the automotive industry. Users are now able to “connect to the out-side world” and access a large volume and wide range of infor-mation and services while remaining in the confines of the car. In such a market environment, Clarion has selected “Expansion from in-vehicle information equipment manufacturer to In-Vehi-cle Information Solution Provider” as the medium-term slogan,

aiming to be a company that delivers new values to our custom-ers as only we can, by collectively managing Internet informa-tion, camera image information, sensor information, and vehicle control information. As part of the corporate change into an “In-Vehicle Information Solution Provider”, Clarion is implementing “moves you∙connects you” on a global basis. This represents the strong wish that “By keeping you connected to sound, infor-mation, convenience, and safety, Clarion moves you”.

OEM 72%

∗ OEM:Original Equipment Manufacturing/Manufacturer

■ Sales by market segmentsFiscal 2012 (ending March 2013)

Aftermarket 28%

Aftermarket= Retail Products + Car Dealer Options

Main OEM Customers

Display of Estimated Reachable Distance

Search for Charging Stations

∗ Telematics units are delivered only in Japan.

Dedicated Navigation System for EVs

Display of Electricity Consumption Status

Timer for Charging

Telematics Unit

From Hino Motors Excellent Performance in Cost Improvement Award, Production Cooperation Special Award, Excellent Performance in Quality Management Award (Fiscal 2012)

From Honda Motor Co., Ltd. Excellent Performance in Delivery Award (Fiscal 2012)

From Nissan North America Inc. Zero Defects Award(Fiscal 2012)

ATTT Award Excellent Performance Award in Product & Hardware Division (Fiscal 2012)

From City of Saitama Certification of Saitama City Technical Brand Enterprise (Fiscal 2012)

From Mobile Electronics News(U.K) The ICE Gold Award for "Best Single DIN AV Head Unit" for 2012-2013 (Fiscal 2012)

From Honda Access Europe N.V. “Excellent Performance2011” Award

From Subaru of America, Inc. (SOA), “Silver Award” (Comprehensive assessment of Proposal/Development/Quality)

From Suzuki Motor Corporation VE/VA Proposal Award, Best Partner Award (Fiscal 2012)

From Nissan Motor Company Innovation Award (Fiscal 2012)

From Honda Access Corporation Appreciation of Excellent Performance Award (Fiscal 2012)

Company Profi le 2013Company Profi le 2013 0807

Full-scale Introduction of Smartphone Interoperable Functions making use of Smart Access

● Vocal Image Control

● Comparison with Conventional Systems

● In-vehicle Full-Digital Speaker System Z8/Z17F and Z17R

● Portable Full-Digital Speaker ZP1

● Embedded-type Full-Digital Speaker ZF160

● Sound Restorer

● Smartphone Sound Processing apps(Under development)

● Virtual Bass

● Volume Smoother

■ Conventional

■ New Development (full-digital)

Vocal image

Controls the vocal image to move it right in front of the listener

Generated high-range supplementation signals improve sound of compressed audio

Smartphone app allows easy adjustment of car audio’s acoustic parameters and automatic sound space compensation

Adding harmonics for a feeling of stronger bass sound

Automatic adjustment of volume differences in various sources alleviates troublesome volume adjustments by sources.

Advanced Technology

Clarion has developed and launched the world’s first full-digital speakers, which balance eco-friendliness with premium sound.

Our “01DRIVE” Series full-digital speaker system combines digital signal processing technology, “Dnote”*¹, and Clarion’s long nurtured in-vehicle audio technologies. This enables to re-produce digital sound quality without deterioration in high quality by “Digital to Digital” full-digital transmission from digital audio source to speaker units. What’s more, drastic saving in electric power is achieved with driving voltage of less than half, and power consumption about 1/8*², compared to conventional speakers.

In December 2012, Clarion launched the full-digital speaker systems Z8/Z17F and Z1R for in-car use, and the portable full-digital speaker ZP1, making them the world’s first full-digital speakers in their respective categories. This was followed by in-troduction of the home-use embedded type full-digital speaker ZF160 in April 2013.

In the future we intend to further develop exclusive ICs and speaker units to provide higher sound quality and higher out-put, thereby accelerating the creation of next-generation audio systems.

Launch of World’s First Full-Digital Speaker System “01DRIVE”

In order to achieve ideal sound quality in the acoustically harsh environment of the car interior, we have vigorously pursued the development of Clarion’s original sound processing technology “Intelligent Tune”. To date, our product offerings have included “Vocal Image Control”, “Virtual Bass” and “Volume Smoother” functions based on this technology.

Currently, in addition to creating new acoustic functions, we are also developing new smartphone apps that work in conjunction with in-vehicle audio systems to enable users to easily customize the in-car soundscape according to their personal preference.

Development of Original Sound Processing Technology “Intelligent Tune”

By integrating with IT-related technologies, the role of the in-vehicle system becomes more crucial as a means for conveying vast amounts of information to the driver. Clarion thereby is ad-vancing comprehensive system “Smart Cockpit” which inte-grates with the vehicle’s control system in addition to car navi-gation and car audio systems.

“Smart Cockpit” unifies the capabilities of in-vehicle informa-tion devices, cameras and sensors, as well as Smart Access, which are all Clarion’s business strengths. As a result, it gener-ates a wide variety of customer value in situations where the car interior links with the outside world, and provides a unified sys-tem through which the driver can experience a sense of safety, security, and comfort.

Proposing “Smart Cockpit” Comprehensive System as an In-VehicleSystem Provider

Clarion has started to introduce the function of smartphone app linkage to our center units as one of the Smart Access ser-vices. (Smart Access is the cloud network service for automo-tive by Clarion.)

There are 2 approaches (2 Steps) for smartphone linkage.The first step is to help users to use smartphone app easily

and more comfortable. Our center unit has a big display com-pared with smartphone and good sound system. So, the users can enjoy smartphone app more with these merits, especially movie, music and so on.

The 2nd step is that Clarion makes unique apps for automo-tive environment and provides them through smartphones, such as CRM or VRM service apps.

Clarion starts the 1st step in Japan, US and Euro markets in this year. We will adopt new smartphone apps more and more based on Android™ smartphone apps mainly. In addition, the 2nd step also will be launched in near future.

This smartphone linkage function is just beginning of Smart Access services.

Clarion will continuously introduce more new value to the market, such as big data, AI, interactive cloud voice recognition and so on.

Superb Technology Creating a New Style of Automobile Society.

As a result of the worldwide evolution of the Internet and the widespread popularization of the smartphone, the car is increas-ingly becoming a venue into which people wish to bring new comforts and functionality through Internet connection on a sus-tained basis. Keenly aware of the future of the global market-place, Clarion has created the “Smart Access” cloud service for

vehicle, to offer people the added value of connectivity and thereby boost the attraction of in-car information systems. As a “In-Vehicle Information Solution Provider”, we will roll-out an en-tirely new lineup as OEM and aftermarket products.

∗1 Dnote: Registered trade mark of Trigence Semiconductor. This is a technology to reproduce voices by feeding modulated audio signals directly into multiple speaker units or voice coils.

∗2 Power consumption about 1/8: comparison with our products

Hiroyuki Tobiyama Haruki TomitaSystem Planning Dept. Advanced Development Dept. 1

I’m belong to System planning dept. Group 1 and the team task is Smart Access service planning. Now I’m taking care of Smartphone linkage func-tion as one of Smart Access services.Automotive environment with Cloud network is totally new field and I should keep challenging attitude when I consider about this field.

I am a member of Clarion’s Advanced Develop-ment Dept.1. I intend to think beyond the scope of my usual work and be involved in all phases of Full-Digital Speaker development, from creating an exclusive IC to the product’s final touches. Our team is undertaking every effort to make the Full-Digital Speaker, which has unprecedented po-tential for high quality sound, into products that will be loved by the world.

Remote Control

UnitSpeaker Unit

Drive Unit

Clarion Report 2013Clarion Report 2013 1009

● Detection of vehicles/pedestrians using image recognition function of rear view cameras

● Lane detection using image recognition function of rear view cameras

● Overhead View Monitor

Detection of approaching pedestrians with ultra-wide angle lenses

● Applications

“Smart Access” App: In-car top menu

Calendar4car application software for Android™Display screen of vehicle mounted device∗The image is an image.

Display screen of smartphone

Weather4car application software for Android™ Display screen of vehicle mounted device∗The image is an image.

Display screen of smartphone

● Development of application software of Smart Access for Android™

● Save-energy Route Search

Our Overhead View Monitor uses a wide-angle lens, enabling display of a broader perspective than conventional rear cameras. Incorporated image recognition technology enables detection of obstacles approaching from right or left to effectively support driving when backing up.

The iPhone® integration supported apps available through “Smart Access” are based on the safe and comfortable UI know-how (e.g. button size, character size, high contrast color scheme, intuitive hierarchy) we have gained through development of in-vehicle equipment.

Application software for Android™ was developed to make it available to more customers, following interoperability software with smartphones last year. The concepts of the UI (user interface) designing of the software were to make the customers feel familiar with the design as well as to assure customers ease of use.

The rear camera isn’t limited to driving in reverse. Its image recognition technology detects traffic lanes, and warns the driver when the vehicle veers out of its lane.

Our latest Overhead View Monitor goes beyond augmenting the driver’s field of view around the vehicle. Combined with image recognition technology, it is able to detect obstacles approaching from any direction and send a warning to the driver.

Advanced Technology

Clarion has been promoting “Green Navigation” concept with technologies and product designs to assist more eco-friendly driving. We have introduced features such as “Save-energy Route Search” to find the route that uses the least fuel. These features bring about reduction in CO2 emissions and fuel bills, and are friendlier to both the planet and drivers. It is foreseen that more HVs and EVs will come into use. We intend to con-tinue developing eco-drive technologies that are a perfect match for these next-generation cars with ecological consideration in the future.

Eco Driving with the Global Environment in Mind

Our abundant know-how in the in-vehicle equipment field, coupled with a fresh perspective that can see beyond conven-tional wisdom, allowed us to create a totally new connection between person and machine. Evolution of the next-generation in-vehicle information system continues to accelerate with this revolutionary new UI, worthy of becoming the gateway to a new world.

Innovative UI (User Interface) Revolutionizes In-Vehicle Equipment

Superb Technology Creating a New Style of Automobile Society

Noriaki AoyamaDesign Dept.

For example…Expressway: Can reach destination fast but is long way around and is sometimes congested.Mountain road: Shortest travel distance but lots of ups/downs require frequent acceleration/deceleration.Surface street: Slightly longer distance but flat, with less congestion to reach destination faster.

Searches for most fuel-efficient route based on various criteria● Ups and downs requiring frequent acceleration?●How congested?● Distance to reach destination? etc.

Having been thrown out into the vast arena of UI (user interface) development for iOSR and An-droid™ from narrow and limited field of develop-ment of integrated devices, I started to be involved in the development work of applications without knowing well which way to go. The speed of evolu-tion in this field is much faster than the in the field I was involved before. And therefore, I’m pursuing the development so as not to be left behind, study-ing together with staffs in concerned departments. I’m doing my best so that as many users will be able to experience Smart Access’s interoperable application software and give us their feedbacks.

I am in charge of Overhead View Monitor develop-ment at Camera System Development Dept. We try to ensure high quality in development through ana-lyzing customer requirements from engineering and process perspectives and performing software de-velopment in orderly and efficient manners. We were requested to obtain AutomotiveSPICE Level 3∗ in the course of developing a product for an overseas OEM customer, and we had tough time as we had to per-form product development and process improve-ment simultaneously. When we achieved this, I felt very confident about my growing up as a develop-ment engineer. I will always tackle the challenges with aspiration.∗ AutomotiveSPICE:A industry standard process model prescribing development pro-cesses framework of vehicle mounted software.

Takashi Taniguchi

Camera System Development Dept.

Display Example of Semi-transparent Side View (Left side door(Sidewalk/Pavement side door) is shown as semi-transparent image)

Display Example of Overhead View Monitor (images of Overhead View Monitor and front view camera)

Faster but longer distance

Shorter but many ups and downs

Longer distance but flat

With the goal of achieving a safer and securer automotive so-ciety, we are striving to develop “Vision System” of applied image processing and image recognition technologies to assist in the parking and driving of cars. The system includes as core tech-nologies “Overhead View Monitor ” and sensor functions. While Overhead View Monitor displays information around the car, sensor technologies enable detecting of approaching pedestri-

Increasingly Advanced Camera Systems for Cars (Camera Application Products)

ans and vehicles. We, moreover, put efforts in enhancement of cam-era products, which are the hearts of the “Vision System”. We strive to improve reliability of “Vision System” by feeding it more accurate and profound information with technologies of ultra-wide angle lens-es for expanded field of vision, logic development and application of sensor elements to provide more natural images in severe light envi-ronment such as at night and/or with strong backlights.

Company Profi le 2013Company Profi le 2013 1211

Temperature & Humidity Chamber with Vibration Test Equipment

Repetitional Endurance Testing Machine

Drop Table Type Shock Test Equipment

Thermal Shock Chamber

Warter Proof Test Equipment

Dust Endurance Test EquipmentOptic Analysis (illumination of operation buttons)

Component Strength Analysis (plastic components)

Quality Control

Clarion in-vehicle products need to deliver stable and reliable performance in a wide variety of climates and environments around the world, from the tropics to the polar regions, and from the desert to the rain forest. Clarion, as a best partner of the customers, maintains a stringent system of quality control, so that it can continue to deliver assured quality in own brand after-market products and in those for OEM customers.

In the processes of designing using 3-dimensional CAD, vari-

Quality Evaluation System Built to Deliver Reliability in Severe Automotive Environments

Clarion has actively introduced high-definition cameras and X-ray equipment to check the status of mounting on highly dense circuitry and miniaturized parts. Standardized check op-erations have been adopted at all production lines from domes-tic to overseas, ensuring that the same high quality standards are enforced at any Clarion manufacturing facility around the world.

Establishing a Quality Administration System Highly Appreciated in the Global Market

Clarion has established a quality administration system that meets the needs of our worldwide OEM clientele. As part of this, all Clarion group manufacturing units including the one in Thailand which started its operation in April 2012, have acquired certification for ISO/TS16949, an international quality standard specific to the automobile industry. Furthermore, we are building up quality assurance processes in the area of New Category Products (such as Smart Access, etc), and are striving to further improve quality assurance system which ensure global addressing of customer support in an aim to “ensure satisfaction and trust of customers”.

Quality Administration System ranging from Automobile Industry to New Business Domains to meet the World Standards

ous analyses of optics for the illumination, heat within the device, strength of components and tolerance assure perfect designing quality. Simulation tools are employed for ease of assembly in order to further improve the product quality.

Clarion products reach the hands of our customers only after gru-eling tests and uncompromising quality evaluations have been re-peatedly applied.

Q u a l i t y E v a l u a t i o n S y s t e m

D e s i g n S i m u l a t i o n

Radio Anechoic Chamber

Vibration Testing Equipment (for rattle noise check system)

Listening Room

Sound Analysis Laboratry

Shield Room for Vehicle

Unrelenting Quest for Quality to Build a Solid Foundation of Trust.

Enhancement of R&D Functions in China: Establishment of a Global R&D Center

We are in the process of large scale enhancement of R&D functions of CXEE (Xiamen, in Fujian Province) aiming to expand business in China where we see most remarkable growth in the emerging countries, as well as to ensure cost competitiveness to meet demands from the global market.

Expansion of CXEE R&D Center started in 2010 and number of personnel increased about 3 times from 190 in December 2010 to 592 in March 2013.

In the future, further expansions are planned so that CXEE will be responsible in addition to current duties of product development to Chinese domestic market, to those for the global markets. At the same time, we shall make efforts to further improve engineering capability and quality assurance system to meet requirements of global customers. CXEE R&D Center (Xiamen, in Fujian Province)

Hello everyone, this is Okabe working in Production Engineering Department. After working in circuitry de-signing, now I am in Mass-production Engineering Group of Production Engineering Department and in charge of works from proto-type evaluation to follow-up after the products are in mass-production. Making active use of my personal experience, and with coop-eration from others, I work daily for maintaining and improving the product quality.

I perform various quality assurance tests on proto-types at Reliability Assurance Department. We make tests considering the environments of various custom-ers throughout the world and verify appropriateness of the product quality. I strive further so I can be a part of system of delivering reliable, safe and secure products to our customers.

Yutaka Okabe Kazuhiro SarutaProduction Engineering Dept. Reliability Assurance Dept.

Production line (mounting)

Pallet inspection line

P r o d u c t i o n S y s t e m

Topics

Heat Conductivity Analysis

Heat Analysis(analysis of air-flow)

Company Profi le 2013Company Profi le 2013 1413

Clarion’s history is closely tied to the history of the automobile industry itself. As a worldwide front-runner who created Japan’s first car radio and Japan’s first car stereo, Clarion has always led the field in any era. We give top priority to understanding driver needs and supporting them through sure technology, as well as steadfastly proposing unique new products based upon our advanced creativity. Having evolved from car radio and audio visual devices to car navigation sys-tems and beyond, the field of automotive information equipment is entering a new period of change, filled with amazing potential. We at Clarion will likewise be evolving “Expansion From In-Vehicle Equipment Man-ufacture To In-vehicle Information Solution Provider”.

1940

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1990

1970December, 1940 / Established as Hakusan Wireless Electric Company, began manufacturing of battery-operated household radios. / Capital of 180,000 yenNovember, 1943 / Merged with Takizawa Wireless Electric Industries Co., Ltd., renamed as Teikoku Dempa Co., Ltd..

February, 1951 / Produced Japan’s first car radio.

June, 1958 / Exported car radios to U.S., creating the base for Japanese car audio exports. May, 1959 / Car radio receives genuine parts specification from Nissan Motor. August, 1962 / Teikoku Dempa listed on 2nd section of Tokyo Stock Exchange.

2003

2004

Our History as a Front-Runner in In-Vehicle Equipment Means We will Continue to Visualize the Future.

1948 Japan’s FirstCar radio and PA system for busesdeveloped and released

1951 Japan’s FirstClarion’s first original radio HinoRenault “Le Parisien” released

October, 1963 / Developed Japan’s first car stereo, began marketing August of following year. September, 1967 / Saitama office opened in Toda-shi, Saitama, Japan. March, 1968 / Marketed Japan’s first cassette car stereo.

August, 1969 / Teikoku Dempa is listed on 2nd section of Osaka Stock Exchange.

1963 Japan’s FirstCar stereo developed,and released the next year

1968 Japan’s FirstCassette car stereo released

February, 1970 / Teikoku Dempa upgraded from 2nd to 1st section of Tokyo and Osaka stock exchanges. April, 1970 / Opened head office atDogenzaka, Shibuya-ku, Tokyo, Japan. December, 1970 / Corporate name changed to Clarion Co., Ltd. / First over-seas factory (CM) established as joint venture in Malaysia.June, 1975 / Started Clarion Girl campaign, with Agnes Lum becoming first grand prix winner. August, 1976 / Business-use karaoke “Karaoke 8” and cassette editing deck“Dubbing X” are marketed. October, 1978 / Tohoku office opened inKoriyama-shi, Fukushima, Japan.November, 1980 / Head office moved to Shibuya-ku, Tokyo, Japan.

1981Car stereo “City Connection” released

July, 1983 / Factory established in France (CEF). November, 1983 / Gumma office established in Oura-gun, Gumma-ken. / Manufacturing company established in Mexico (ELECLA). July, 1987 / CD5000 car CD player marketed. October, 1989 / Manufacturing company established in the Philippines (CMCP).February, 1992 / Voice-guidance carnavigation system NAC-200 is marketed.

1992 Japan’s FirstVoice guidance navigation system(Map narration system)NAC-200 released

1993 Japan’s FirstHybrid navigation systemNAX-700 released

April, 1993 / Clarion’s SS wireless modem clears for the first time the technical standards set by Japanese government, and is marketed.January, 1995 / Clarion Orient Co. (CHI) established in Hong Kong. March, 1995 / ISO 9001 certification obtained for all Clarion establishments in Japan. April, 1995 / Factory completed in China (DCOE).

1995 Aftermarket’s FirstDouble-DIN unit in the industryADX8155 released

May, 1996 / VICS-compatible car navigation system marketed.

1996Single-DIN type CD/DSP control,TV/AM/FM tuner-equipped5-inch LCD amp VRX8250 released

1996High-performance high-quality CD center unit DRX9255 released

April, 1997 / Hamamatsu Sales office opened. October, 1997 / Manufacturing company established in Hungary (CHE). January, 1998 / “AutoPC” jointly developed with Microsoft Corp. December, 1998 / “Clarion AutoPC” marketed in U.S.

1998 World’s FirstClarion AutoPC in-vehicle computerdeveloped in collaboration with Microsoft world’s first “Clarion AutoPC” released in U.S.

August, 1999 / ETC terminal jointly developed with Hitachi, Ltd.. December, 1999 / OEM supply of “AutoPC” to French automaker Citroën begins.

March, 2000 / Clarion Sales Co., Ltd. founded. April, 2000 / Five Clarion offices in Japan obtain ISO 14001 certification. December, 2000 / HCX Corporation established as joint venture between Hitachi, Clarion, and Xanavi Infomatics. May, 2001 / Head office relocated to Hakusan, Bunkyo-ku, Japan. August, 2001 / Clarion scholarship “MEDAMA” campaign started. October, 2001 / In-vehicle terminal for ETC system marketed. November, 2001 / “AutoPC CADIAS” exhibited at Tokyo Motor Show. March, 2002 / Satellite radio receiver on sale in North America. September, 2002 / Head office functions moved to Toda City, Saitama. October, 2002 / Clarion Tohoku Seizo Co., Ltd. merged with the Automotive Products Production Department of Clarion Co., Ltd. and Clarion Logistics Co., Ltd. and renamed Clarion M&L Co., Ltd.. December, 2002 / Launched “AutoPC CADIAS”, first in-vehicle PC in Japan.

2002 Japan’s First“AutoPC CADIAS” in-vehicle computer released. Adopted Windows CE for Automotive as the OS, and “AccessNAVI” communication type navigation system

February, 2003 / World’s first “bird’s-eye view” camera for rear-view system supplied to Nissan Motor. June, 2003 / HDD (Hard Disk Drive) equipped AV car navigation system marketed. August, 2003 / Started delivering Car Audio to Shanghai General Motors, China. October, 2003 / HDD (Hard Disk Drive)equipped AV car navigation system, compatible with “CARWINGS” of Nissan Motor Information Service. February, 2004 / the world’s first Linux, Java J2ME CDC equipped in-vehicle information terminal for commercial vehicles marketed.

June, 2004 / the industry’s first 2DIN commercial sized, 7-inch monitor equipped HDD AV car navigation system marketed. July, 2004 / First-in-the-industry bus FM teletext tuner for use in community bus stop name display marketed. January, 2005 / First-in-the-industry AV center unit with iPod control via virtual on- screen iPod marketed in U.S..

2004 World’s FirstIn-vehicle Information Terminal for commercial vehicles with Linux and Java J2ME CDC released

2005 First in IndustryiPod full control function-equippedSingle-DIN AV center unit VRX755VD released

March, 2005 / HDD AV-Navi System developed for all models for Porsche Japan.May, 2005 / First iPod compatible integrated AV-HDD Navigation unit developed for the Japanese market. June, 2006 / Car navigation introduced for first time in China and N. American markets.July, 2006 / Launched “Movieum”, Japan’s largest-scale travel and driving information website with video clips showing travel destinations. December, 2006 / Became a Hitachi group company. January, 2007 / Xanavi Informatics Corporation became 100% subsidiary. January, 2007 / Supplied car audio to Toyota Motor for the first time (contracted by Daihatsu Motor). April, 2007 / Bus location ASP service started. April, 2007 / Name change of Clarion M & L Co., Ltd. to Clarion Manufacturing “Protech” Co., Ltd., as production control and production engineering functions transferred from Clarion Co., Ltd.July, 2007 / Car navigation system for use in commercial vehicles “Solid Navi” (CQ-8000) developed and introduced into the market.

August, 2007 / Relocated our Headquarters to Saitama, Shintoshin. New facility named “Corporate Headquarters & Technology Center”. December, 2007 / Clarion’s 7-inch DVD Multimedia Station VRX935VD and 6-disc DVD Changer VCZ625 (both American market models) selected by NASA installation and the International Space Station (ISS). June, 2008 / High class navigation system, “CRASVIA” series and Memory type SDD navigation system “Smoonavi” series released.

2007 World’s FirstCommercial use SDD navigation system “Solid Navi” released

2008“CRASVIA” (NX808) Terrestrial digital TV tuner and Bluetooth equipped 7-inch wide VGA Double-DIN DVD/HDD AV-Navi System released

2008Mobile communication terminal “ClarionMiND” released in North America

April, 2009 / Xanavi Informatics Corp. (100% owned subsidiary) absorbed and mergedApril, 2009 / Company name of Clarion Sales Co., Ltd. changed to Clarion Sales and Marketing Co., Ltd..July, 2009 / SDD navigation system delivered for the first time to Mitsubishi Motors’ electric car, “i-MiEV”.October, 2009 / Good Design Awards given to 5 of 2009 models.January, 2010 / Car audio delivered to “nano” of Tata Motors, India.April, 2010 / Clarion Manufacturing “Protech” Co., Ltd., and Clarion Service Co., Ltd.. merged with new name Clarion Manufacturing and Service Co., Ltd..May, 2010 / “Smoonavi” 2010 series with Eco-Drive Advice and Save-energy Route Search functions released.October, 2010 / Head office registration transferred to Saitama Shintoshin; name of Headquarters / Technology Center changed to “Registered Head Office / Technology Center ” March, 2011 / First in the world full digital speakers for cars developedApril, 2011 / Hakusan and Zama Offices moved to Saitama Shintoshin; Headquarters-Annex Office opened.June, 2012 / “Smart Access” cloud-based information network service for vehicles is launched in North America.June, 2012 / “Smart Access” cloud-based information network service compatible car navigation system released.

December 2012 / “First-in-the-world, Full digital speaker system “01DRIVE” series released.

2012[Second of the series] Portable full digital speaker “ZP1” released

2013[Third of the series] Full digital speaker built-in buried in ceiling “ZF160” released

History of Clarion

20127-inch wide VGA Double-DIN digital terrestrial TV/DVD/SDAV-Navigation system “SD AV Navigation” (NX712) released

2012 World’s First[First of the series] Vehicle mounted full digital AV navigation/speaker system “Z8/Z17F” released

2013

Company Profi le 2013Company Profi le 2013 1615

2013 Simultaneous Exhibition at 2013 International CES (Consumer Electronics Show) ( U.S.A.)

2013 Exhibition at CEATEC

JAPAN 2012 (Tokyo,Japan)

2012 Exhibition at Istanbul Autoshow 2012 (Turkey)

2012 Exhibition at Bologna Motor Show (Italy)

2012 Exhibition at AMICOM 2012

(Germany) 2012 Select Citywalk(India)

2013 Exhibition at Auto Shanghai 2013

(China)

2013 Exhibition at Tokyo Auto Salon 2013 (Tokyo,Japan)

2012 Exhibition at DLF Promenade(India)

2012 Tech Show (Technical Exhibition)(Saitama,Japan/Head Office&Technical Center)

2012 Exhibition at Bus-Operators Convention (Tokyo,Japan)

Communication

Numerous countries and regions, various cultures and market trends... As Clarion’s scope of activities becomes ever more global, the importance of communication with our customers be-comes increasingly important. Towards our stakeholders all over the world, Clarion is engaged in a broad range of activities to convey our corporate philosophy, achieve wider brand recogni-tion, provide product information, publicize new technologies, promote sales through advertising and other means, as well as upgrading our portal site. By effectively merging in a well-bal-anced manner our global strategy centered on the “Clarion” brand, with localized strategies that emphasize regional needs, we are able to aggressively implement communication activities to forge an excellent relationship with society.

Global Communication and Strategic Activities Link People, Businesses and Society.

2013 Exhibition at

Bangkok International Motorshow 2013

(Thailand)

Company Profi le 2013 18Company Profi le 201317

An outstanding company is created by the coming together of human re-sources who share the same lofty ambitions. Clarion, which has built up a powerful global network, has employees in countries around the world who are the faces representing the Clarion brand. All of them are working hard every day with pride in their work and a sense of responsibility in order to build better relationships with our customers in countries around the world. It is the presence of each and every one of these employees which further increases the value of Clarion and builds a solid foundation for our future growth.

I work at the circuit board assembly line.

Back when I first joined I knew nothing about product

manufacturing, but nowadays I work as a helper at all stages

of the circuit board assembly line to assist the staffs in any way possi-

ble. I hope to continue helping to make better and better products.

Clarion Japan (CMS)Risa Gotoh

I am involved in pro-duction management at

CMS. This is my 4th year at the company, and every day is a

reminder that on-site management is a tough job. I appreciate the advice,

encouragement and “tough love” offered by colleagues and superiors as they help me

to grow. Count on me to work hard the gain the satisfaction of my customers.

Clarion Japan (CMS)Manabu Okura

This year marks

my 8th anniver-sary at the company,

and I am currently in charge of electrical parts

procurement. In the rapidly changing environment of China’s

parts procurement and production planning, I do my best to get the required number of nec-

essary parts delivered where they’re needed when they’re needed. The job can be hec-

tic, but I get to know other companies too so I really enjoy it.

Clarion China (DCOE)Zhang Yu

My name is Chun-

shan Chen. I started at the DCOE Pingqian

factory in 2010, and currently am in charge of die and mold

tooling technology there. Our plas-tics business is up to a great start thanks to

everybody’s support. Hopes are high for this new business, and we will strive to contrib-

ute to the group above and beyond those expectations.

Clarion China (DCOE) Chen Chunshan

I’m Mina Oka-be, in charge of over-

seas OEM sales. After 4 years experience in over-

seas aftermarket sales, I am now liaising with overseas car manufactur-

ers to coordinate everything from order taking to sales and delivery. Being inexperienced,

each day is still a challenge for me, but hopefully will be able to link with local subsidiaries and

related divisions to effectively handle the products in my care.

Clarion Japan (CT) Mina Okabe

I joined the com-pany in November 2010.

I work as a supplier quality assurance manager for Eu-

rope. It gives me the opportunity to deal with several Clarion’s compa-

nies and to learn many things from their members. My target is to establish a good

communication inside and outside Clarion in order to guarantee our customers satis-

faction.

Clarion France (CEF)Julien Signorino-Gelo

Hello ! My name is Ed (Edo) Root, I am an

OEM Director of Sales at CCA. My office is located

in the city of Dublin, a sub-urb of Columbus, Ohio. My

office is in charge of OEM busi-ness to Honda and Subaru in

North America. I have been a proud member of Clarion Corpora-

tion of America for 10 years and in the automotive industry for over 35 years.

Clarion is an exceptional brand recognized for indus-try-leading quality but it is also the people that help

make Clarion products and services superior to our competitors. We are Clarion!

Clarion America (CCA)Ed Root

Hello, I’m Yanli Zhou of

CXEE Software Develop-ment Dept. I’ve been involved

in audio product development ever since joining the company in

August 2004. From the first aftermarket model to the latest OEM model, I hope to

make innovative developments while main-taining quality. Here I work with a motivated

team, and it’s a joy even if things get really hectic. I’ll continue to work hard to ramp up

my own capabilities too.

Clarion China (CXEE)Zhou Yanli

Hello, I’m Tracee Alvarenga, Sales Re-

porting Manager for CCA in Cypress Ca. I have been

with Clarion for 25 years, I re-port on CCA Retail sales and Inven-

tory and I handle sales order duties for our East Coast dealers and Amazon.com.

Clarion has enabled me to move up and learn many new things in my 25 years

here.

Clarion America (CCA)Tracee Alvarenga My Name is Norman

Hiller and I joined Clarion Team in 2007. I am in charge

of CED product management and marketing. Looking to Eu-

ropean business , in my eyes German market is one of the

toughest. Day by day I am fighting to improve our products and extend

our market share in Europe. This year we will do some big B2B events to show the Clar-

ion strategy to our customer, because I be-live in our maxim “We are Clarion!”

Clarion Germany (CED)Norman Hiller

I am in charge of promoting

vehicular management systems that integrate with

navigation systems for com-mercial vehicles, as well as safe

drive supporting devices, at Clar-ion’s Corporate Sales Dept. As we

evolve into an in-vehicle information system provider, I hope to upgrade my

own skills to address the diversifying needs of corporate customers.

Clarion Japan (CSM) Minori Kobayashi

Hello Everybody! My name is Anikó. I’m a shipping

controller in Clarion Hungary. I have joined to the company in 2004.

My work is the arrangement of ex-port shippings and preparation of the

related necessary documents. I’m in daily contact with several transportation

companies, and I also have good relation with some other foreign Clarion’s members.

Clarion Hungary (CHE)Kovács Szűcs Anikó

As the OEM sales-person in charge of Japa-

nese car manufacturers, my job includes proposing and

order taking and following up of existing accounts in the product

ranges of navigation, audio and camera. I’m forging ahead while ex-

periencing the wonder of this job which includes developing my interpersonal skills.

Clarion Japan (CT) Arata Watanabe

I am currently in charge

of aftermarket sales taking care of mass retail-

ers and car dealers in the Tokyo area including the

Saitama Shintoshin area where Clarion headquarters is

located. I hope to contribute to boosting the Clarion brand image

as my duties as the “face” of Clarion that is closest to the end user will allow.

Clarion Japan (CSM)Kenji Iwasaki

Sawadee kha! My name is Wimonrat Srila-

bangpeng (Ple), I have joined Clarion since 2011. When I

joined Clarion Thailand it was a small factory. Now, the new factory

has higher production capacity. The new operation has created a good opportunity for

me to growth in my career. Currently, my main tasks are handling banking affairs including the supervision

of bank transfers and communication with bank representa-tives to prepare cash flow reports. Also, follow up the ac-

count receivable for local and Overseas. I enjoy my work and wish that I could contribute to the company on my

roles. I also hope that Clarion as whole will “moves you, connects you” with our customers and create brand value to Clarion with our effort and commitment.

Clarion Thailand (CAT)Wimonrat Srilabangpeng

I am Qiulin Lin, working on produc-

tion engineering at CXEE. After joining in No-

vember 1998, I am now at the factory’s Production Engi-

neering Dept. in charge of main-taining production facilities, prepar-

ing production documentation, and improving production sites. I am very proud

to be a part of Clarion, and hope to con-tinue working with my colleagues here.

Xiamen is a wonderful city, and I hope you’ll be able to visit some day.

Clarion China (CXEE)Lin Qiulin

We are Clarion

Clarion Staff Around the World Filled with Pride in and Enthusiasm for Our Brand.

Company Profi le 2013Company Profi le 2013 2019

“Providing customer satisfaction and happiness with superior products and services.”“Creating new value with original ideas and technology.”“Respecting the individuality and ability of each employee, and establishing a corporate culture of generosity.”“Maintaining a strong awareness of our place in nature and a commitment to the environment.”“Fulfilling our responsibilities as a corporate citizen for a better society.”“Pursuing corporate profitability and sustained growth.” (Quoted from Clarion’s “Management Commitment”)

Clarion places importance on corporate governance and has developed a system that embodies that awareness. Further, through our efforts to develop a risk management system and redevelop internal con-trols, Clarion is striving to ensure management trans-parency at all times.

Corporate Governance System

CSR Report

C O N T E N T S

■ Corporate Governance System ● Corporate Governance System … P22 ● Addressing Internal Control Structures … P22

■ CSR and Compliance Management System ● CSR Management Efforts … P23 ● Promotion of Compliance Management … P23 ● Clarion Group Code of Conduct … P23 ● Compliance Management Efforts … P24 ● Compliance Consultation and Reporting Desk … P24 ● Compliance Risk Assessment Table … P24 ● Education and Training on Compliance … P25 ● Compliance Audits and Awareness Surveys … P25 ● Compliance Management Throughout the World … P25 ● Risk Management System … P25

■ Together with Shareholders and Investors ● Increasing Values to Shareholders … P26

■ Together with Our Customers ● Maintaining and Enhancing Customer Satisfaction and Trust … P27 ● For Improvement of Customer Satisfaction … P28 ● Responsibility Toward Product and Information Security … P29

■ Together with Society ● Social Contribution Activities … P30

■ Together with Our Partners ● Proper Transactions … P31

■ Together with Our Employees ● Recruiting … P32 ● Human Resources Administration System … P33 ● Human Resource Development … P33 ● Work-Life Balance … P34 ● Safety In the Working Environment … P34

● Corporate Governance System

Corporate Governance SystemClarion implements an auditor system with 9 Directors of the

Board (2 outside directors) and 4 Auditors (2 outside auditors). The Board of Directors is responsible for deciding basic management policies for the whole Group as well as for supervising its business administration. Each member of Board of Auditors objectively moni-tors and scrutinizes Board of Directors in the execution of its duties. The Company has introduced a “Corporate Officer System” and “Corporate Management Meetings”, composed of both members of Board of Directors and Corporate Advisory Board, serve to assist Board of Directors.

Internal Audit department conducts regular internal audits of all individual departments of the Company and Group companies to verify effectiveness, legal compliance and observance of internal regulations. It reports the audit results directly to the Representative Director.

In this way, Clarion seeks to enhance its Corporate Governance System and to ensure transparent and sound management.

Addressing Internal Control StructuresClarion endeavors to redevelop internal controls as enhancement

of corporate governance since 2006. As the Corporate Law came into effect in fiscal 2006, we have

been rebuilding internal control structure across the company and implementing management assessment every year based on “Basic Policies for Internal Control System” laid out upon resolution of Board of Directors. Since Fiscal 2007, as a member of the Hitachi Group, we are rebuilding internal control structure with respect to financial reporting which subjects all domestic and overseas Group compa-nies and are reporting its status assessment to Hitachi, Ltd.

Since Fiscal 2008, we implemented internal control and assess-ment based on the Japanese Financial Instruments Exchange Act (J-SOX Act) as the Group and the reports are made to the Financial Services Agency.

There has been no case of material deficiencies discovered in an-nual assessments subject to disclosures with respect to internal con-trol regulations. Through prompt corrective actions for deficiencies found during assessments, qualitative improvement of internal con-trol system has been achieved. We continue further to improve man-agement quality of the Group through efforts extending from internal control required by laws and regulations.

● Qualitative Improvement of Internal Control

(As of June 21, 2013)

CSR Report 2013CSR Report 2013 2221

I have been working exclusively in the do-mestic retail field till I was assigned with new duties at CSR Promotion Office in April 2013. Extending from the predecessors activities since 2003, I intend to perform my duties of furthering Clarion’s corporate ethics to take deeper roots. I wish to contribute to forming “group of corporate professionals” which can announce Clarion’s name with pride in unique-ness of Clarion.

Since Fiscal 2003, Clarion has been stating in its Mid-term Plans that: “Clarion shall fi rmly establish corpo-rate ethics anchored in a Compliance Program, having our Corporate Philosophy as its core concept.” Clarion is expanding its compliance program to the entire Clarion Group both domestically and overseas, aiming thereby to further strengthen our compliance manage-ment system and attain integrity and transparency.

CSR and Compliance Management System

Chapter 1 Sincere and Fair Business Activities Chapter 2 Environmental Protection Chapter 3 Relation with Society Chapter 4 Respect for Human Rights Chapter 5 Management Foundations Chapter 6 Complete Observance of Code of Conduct Chapter 7 Responsibilities of the Management Chapter 8 Supplementary Provision

Clarion Group Code of Conduct

Compliance Committee Chairperson: President

General Coordinator

Committee Members

Secretariat

Clarion, as the whole Group of domestic and overseas affiliates, have been actively engaged in compliance management, environ-mental protection and social contribution as society requires compa-nies more and more efforts in these areas. As a result, activities have taken a deeper root in domestic and overseas affiliates, and aware-ness for needs of compliance to laws and rules as required by soci-ety has become much higher.

To comply with laws and regulations has already become a mini-mum requirement, and a company is not regarded as such that ful-fills corporate social responsibilities by merely “operating the busi-ness activities in compliance with the laws and rules” alone. The level expected by the society to an enterprise in this regard has risen much higher now.

A “More Valuable Enterprise” as the society looks forward to now, is such that understands society’s requirements and expectations

well, integrate such in the business activities and pursue its respon-sibilities fully. To such an enterprise the society will render its trust and raison d’être. We consider it is a part of our social responsibilities to clearly define our direction and communicate it with the society. With this in mind, we shall make efforts, in addition to compliance and environmental management as up to now, enhancing our activi-ties to fulfill our corporate social responsibilities (CSR), understand-ing social requirements and expectations precisely.

We have been contributing to local communities and society through supports and assistance towards future generations and people stricken by disasters. We shall further promote such specific activities, considering what is required by the society, to contribute to society and fulfill our responsibilities as we aim more firmly to estab-lish and further enhance qualitatively our CSR management.

Clarion established In July 2003, the Compliance Committee chaired by the President. The committee meets regularly to exchange opinions and ideas on various issues for forming up com-pliance awareness. Since 2013, domestic affiliates are added to the members of the committee and we promote the unified activities in these regards. As far as the overseas affiliates are con-cerned, we work together with those who are responsible in these companies in order to activate the activities as well as to share information.

Clarion Group Code of ConductThe “Guiding Principles of Conducts and Behaviors” which had

been in place since 2003 was progressively replaced by the “Clarion Group Code of Conduct” at the end of fiscal 2010 and the latter was extended to all group companies. With this revision, it is clearly stat-ed that we are a part of Hitachi Group.

This Code, in the same manner as the “Guiding Principles of Con-ducts and Behaviors”, is made available to all employees on our Intranet and, to public on our website.

Promotion of Compliance Management

CSR Management Efforts

Clarion Group efforts extended from compliance to CSR

Clarion’s CSR Management

Clarion’s CSR Management for achieving each of triple bottom lines of social, economic and environmental aspects.

● Clarion’s Compliance Programs

The Social Aspect

Compliance Management / Internal Controls / Quality Control / Personal Information Administration / Information Security / Social Contribution / Employment / Human Resource Development / Health and Safety

The Economic Aspect

Financial Performance / Distribution of Profits to Shareholders / Proper and Fair Transactions

Environmental Management / Eco-Friendly Products /Environmental Protection Activities / Environmental Education

The Environmental Aspect

CSR Management

● Clarion Group Code of Conduct● Compliance Promotion Organization● Risk Assessment● Education and Training

● Consultation and Reporting System● Compliance Audits● Affiliate and Subsidiary Development Support● Awareness Survey

Corporate Philosophy

Compliance Program

Kiyoshi MaruyamaCSR Promotion Office

CORPORATE SOCIAL RESPONSIBILITY REPORT

Compliance Management Efforts

∗ The “PDCA cycle method” is a repetitive process for operational Improvements: first making plans (to “Plan”), carrying out the plans (to “Do”), evaluating the results (to “Check”) and carrying out further actions for Improvements (to “Act”)

Compliance management has developed since Fiscal 2003 with the “Guiding Principles of Conducts and Behaviors” and establishing efforts of promotion systems throughout the world. Each department has promoted with PDCA cycle method∗ activities to mitigate com-pliance risks as its primary objectives. We perform regular meetings to exchange opinions with departments, awareness surveys and

audits on compliance efforts. We will continue these efforts with a view to further reducing risks and taking our global activities to a new and higher level.

● History of Compliance Management Efforts

Compliance Consultation and Reporting Desk regarding this subject. As shown in the graph below there have been 201 consultations and reports (average 1.9 per month) since the set-ting up of the desk until Fiscal 2012. The fact that there were more consultations than reports in the beginning stage shows that this pro-cess served well rather as an in-house communication tool.

Compliance Consultation and Reporting Desk was set up in November 2003 with the objectives of preventing compliance viola-tions and creating a corporate culture that precludes such violations through encouraging employees such consultation and reporting. In order further to facilitate consultation and reporting, we set up an outside desk for telephone and/or fax consultation and reporting in November 2004. In April 2006, in connection with enforcement of the Whistleblower Protection Act, we laid out the “Regulations for Con-sultation and Reporting” which provides procedures and schemes

● Status of Consultations and Reporting

Compliance Risk Assessment TableOne of Clarion’s priority issues in its compliance program is the

identification of risks. Each department identifies the laws, regula-tions, ordinances and compliance risks related to its actual opera-tions, performs analyses of the degree posed by risks and the antici-pated degree of their impacts on Clarion, and manages them in a “Compliance Risk Assessment Table”, which also includes mea-sures for responding to and preventing the risks. The group compa-nies also formulate and implement risk reduction plans every year.

CSR Report 2013CSR Report 2013 2423

Clarion believes it is important for us to disclose man-agement information, such as the state of our busi-ness activities and the details of our fi nancial position, and communicate our management philosophy and policy to all of our shareholders and investors ac-curately and in a timely manner. We will continue our information disclosure eff orts through our home page and the Shareholders Bulletin booklet (only Japanese version available ).

Together with Shareholders and Investors

Education and Training on Compliance Compliance education and training are carried out constantly

throughout the company for each level of employees. We provide general program of compliance management for new employees and, for managerial staffs, group sessions with specific issues. Fis-cal 2012 managerial program had primary topics, among others, of environment related regulations and activities, risk management and import/export control. In addition to these, we make active use of casebooks and video materials in an effort to further increase in awareness on compliance issues.

Compliance Audits and Awareness Surveys Since Fiscal 2004, we perform “Compliance Audits” in order to

verify efforts of each department regarding compliance issues, sta-tus of observation of laws and regulations, information security as well as progress of risk mitigating plans. If found necessary, due cor-rective guidance is given. Further, as a part of monitoring, regular “Compliance Awareness Surveys” are conducted, and the results are announced.

● Compliance Awareness Survey (Conducted in September 2012, covering all employees. Response rate was 86.4%)

Managerial Staff Training Sessions

Compliance Management Throughout the WorldClarion extends its compliance program throughout the world. At

moment 2 domestic and 16 overseas affiliates have introduced the similar program. Each has formulated compliance guidelines materi-ally same as that of headquarters “Code of Conducts”, which are laid out in 8 languages including English, Chinese and Malay. Risk as-sessment and responding plans, which are the core of the compli-ance programs, are carried out in a similar manner as in the Head-quarters.

● Clarion Group’s “Code of Conducts” in various languages

Risk Management SystemWe have the “Regulations for Risk Management” in place in order

properly to manage various risks and to maintain and improve our corporate value. The system is structured with Risk Management Committee, which addresses overall management risks, and subor-dinate subcommittees for crisis management, compliance manage-ment, disclosure, information security, export security, environment and quality, which address issues in each of specific areas. The In-ternal Audit Office audits these efforts and we ensure continuous improvements.

We hold regular liaison meetings with domestic affiliates to verify their activity plans and state of implementation, and share informa-tion on various issues. With overseas affiliates, we induce more acti-vated efforts in this area with interviews of, and regular reports from, each of the affiliates and consequent follow-up actions.

■ Communication

■ Establishment of Crisis-Management SystemWe have the “Crisis-Management Manual” in place in order

promptly to respond to fires, earthquakes, other natural disasters and/or other risks. Furthermore, we have established a “Crisis Man-agement Committee” which meets regularly to discuss risk counter-measures and makes its decisions known throughout the Company.

● Shares and Shareholders (as of March 31, 2013)Number of Authorized Shares: 450,000,000Number of Shares Outstanding: 282,744,185Number of Shareholders: 17,047Average Shareholding/person: 16,586

Increasing Values to ShareholdersIn the 7th year of joining the Hitachi Group, we continue to strive

for transformation of ourselves to be a “More Valuable Enterprise” through integrating operations in sales, engineering and purchasing. We shall make efforts in further advancing research and develop-ment with an aim to bring forth further evolution to increase our value to shareholders. In addition, we have established a Disclosure Policy for the purpose of communicating corporate visions and business strategies to our shareholders and investors. It also states clearly our

● Types of Shareholders (as of March 31, 2013)

● Shareholding by Numbers (as of March 31, 2013)

Clarion distributes the “Shareholders Bulletin” to shareholders twice a year, in June and in December. The Shareholders Bulletin presents our efforts and achievements for the respective half-years. Furthermore, we have created the IR Library on our web site for our shareholders and investors. It contains our financial statements data at closing and other company information. It is updated regularly. We try our best to respond quickly whenever there is an inquiry from any of our shareholders or investors. In addition we publish the Annual Report once a year.

■ Timely Information Disclosure

(note) 1. Other than above, the Company holds treasury stock of 810,521shares. 2. Percentage of shares is calculated after deduction of the treasury stock. 3. Numbers of shares held by trust and banking companies include shares owned by them in connection with their respective trust businesses.

● Major 10 Shareholders (As of March 31, 2013)

sincere and honest approach to the issue from viewpoints of our shareholders and investors, to make prompt, accurate and fair dis-closures, also in compliance with all laws, regulations and stock ex-change rules. The Disclosure Committee further ensures fair and timely disclosures in accordance with the Policy.

Shareholders Bulletin IR Presentation

Shoko UmetsuFinance Dept.

In order to reflect management status of group companies on consolidated financial statements, it is essential to comprehend and understand accounting standards and prac-tices of each of the countries where our local affiliates operate. Further, I will try to perform my daily assign-ments looking at operations in Japan and overseas to be prepared for the introduction of IFRS (International Financial Reporting Standards) .

(Unit: Thousand Shares)

(Unit: Thousand Shares)

CORPORATE SOCIAL RESPONSIBILITY REPORT

CSR Report 2013CSR Report 2013 2625

NX613Smart Access Ready

Clarion is strengthening its quality control system and lines of communication with its customers. This is be-cause we consider the views of our customers to be the starting point of activities to achieve CS (Customer Satisfaction). We consider the views of our custom-ers to be crucial information, to be inputted to, and utilized within the company. It is Clarion’s goal to walk together with our customers and thereby to earn their trust and satisfaction.

Together with Our Customers

■ Quality Assurance System

Clarion’s Corporate Vision states; “The link between sound and information communication in the mobile environment of the car will evolve into new domains based on our unique ideas and advanced technologies. Through this, we will provide safety, security, comfort and excitement to our customers all over the world. We at Clarion shall remain at the forefront of the industry, to precisely understand market needs and achieve long term growth”. In order to materialize this vision, it is necessary to make everyone within the organization be aware of the importance of meeting customer needs, and then to implement activities that actually meet those needs. Thus, Clarion has declared that its basic policy for quality is to “gain customers’ confidence, trust and satisfaction.” Through promoting activities based on this policy, we aim to increase the value of our presence in society. Losing such hard achieved confidence and trust is easy and happens so very quickly. We strive with pride to building up custom-ers’ satisfaction in each of our products and their confidence and trust in us so they would say “Clarion, again”. For this reason, Clarion has positioned quality assurance as the utmost priority manage-ment issue.

■ Quality Policy

Maintaining and Enhancing Customer Satisfaction and Trust

Clarion has established and retains a reliable quality assurance system not only for products of its own brand but also for those with OEM brands, which responds to requirements of end users and OEM partners. As a part of the efforts, all Clarion manufacturing

Minoru Shimada

Customer Quality Information Dept.

This is my 23rd year of work with Clarion. I re-turned to Japan in April after staying in DCOE, China. Our department assures quality of all Clarion products. The duties range from check-ing with customers and analyzing various de-livery and market claims to customer reports. We are a group of supermen and superwomen dealing with all such diverse works. We work hard every day to ensure No. 1 quality in the industry and No. 1 customer satisfaction. “Jiayou”! (Hang on!)

■ Enhancement of Quality Assurance Processes in the New Category Products (Network Services Business and Vision Systems)

“Smart Access” started its operation from summer 2012. We are building up a new dimension of quality assurance processes for these services, which enable interoperation of diverse applications of rapidly expanding smartphones and vehicle mounted devices and provide customers diverse information, different from those center-ing on hardware required for conventional products.

CORPORATE SOCIAL RESPONSIBILITY REPORT

units, including Thai factory which started operation in April 2012, have acquired certification of ISO/TS16949 which is a standard spe-cifically required by automotive industry for quality management sys-tem, based on the international standard of ISO9001. At the same time, we are in the process of building up organizations responding to ISO26262, which is a safety standard for vehicles. We are thus striving to improve our quality assurance system to “ensure custom-ers’ satisfaction and trust” for our technologies that can promise them safety, security and comfort.

Clarion endeavors, on top of efforts on technology development and improved product quality, to “improve products and services” for better customer satisfaction (CS) through enhancement of “lines of communication between customer and the company” and “feedback system within the company” of the assessed market needs.

For Improvement of Customer Satisfaction

The core of the communication lines with customer is customer support. Customer Service Office deals with customers’ inquiries requests and complaints, on nation-wide free-dial (Number of calls in fiscal 2012 was about 53,000.). Outside of free-dial hours, inquir-ies per e-mails through our website are possible. The frequently asked questions are categorized and uploaded on the “Product-re-lated FAQs (Frequently Asked Questions)” on our website (Number of access to FAQ in fiscal 2012 was over 11 million.). The product category for which largest number of inquiries came was car-naviga-tion systems (over 80%).

In the future, Customer Service Office will further enhance its sup-porting system and organization responding to new requirements from expanded business in “Smart Access”, products for CV (Com-mercial Vehicles) and Camera products.

■ Communication Lines with Customers

■ Assessment of Customer Needs and System for Feedback within the Company

We seek to accurately understand and respond to customers’ re-quests. We issue monthly “Customer Reports” summarizing custom-ers’ views, and hold monthly “CS (Customer Satisfaction) Confer-ences in order to improve product function and sales/repair/servicing systems and to implement such improvements.

With regard to car navigation systems, many of the inquiries are on facility information (‘POI, or point of interest information) and guid-ance routes to destinations based on the installed maps and/or modification of such. Such inquiries are fed back to map data provid-ers, and to be diligently checked for reflection on succeeding models.

After fiscal 2006, customer voices and the way how we address them are shared among our group companies through our Intranet.

Some examples of implemented product improvements based on the customers’ voices are, optional shutting off of HDD navigation screen, enlarged clock display, on/off of operation tones, posting on website of new streets and merging of municipalities to facilitate map updating and connection method of terrestrial digital TV tuners mod-el by model, description of window personnel at returning customer voice slip, as well as improvements on descriptions on catalogs and operation manuals.

● Types of Consultations/Inquiries

● Input/Feedback System

For brighter and richer society

Topics

What are products and services that can truly satisfy and please customers?In search for creation of future global markets and new business domains, for drawing up road maps where our company should be going, we engage ourselves in lively discussions with colleagues over various generations, bearing in mind our missions to develop the relationship between sound, information and human interaction.

Homepage screen Map shown on the homepage Contents of updated database

Navigation Screen Data Larger clock display on HDD Navigation Device

CSR Report 2013CSR Report 2013 2827

■ Widely Extending Volunteer Activities of Clarion Hungary (CHE) at Rehabilitation Facilities and Schools

In September and October 2012, CHE personnel engaged them-selves in fence repairs and painting, flowerbed arranging, garden cleaning and other activities at an aid facility for fitting artificial limbs and at an elemen-tary school attached a church as CHE’s official activities.

■ Three-year Old Tree Planting Activities by Clarion Mexico (ELECLA) in Vaquerias Area

In one year of 2012, they planted 3,300 trees. After planting, they take regular care of watering and other cares every month.

■ Arakawa River Clean-Aid Initiative

We took part in “Arakawa River Clean-Aid Initiative” organized by Boy Scouts Tokyo Federation on June 24, 2012. The initiative aims to recover natural life along the river, thinking about issues on water quality and recovery of nature while picking up wastes left on the river beds and.

■ Participation in Koriyama Uneme-Matsuri Festival, “Odori-Nagashi” (Dancing Parade)

Uneme-Matsuri, aiming at revitalization of local community, was held in August 2012 in the park in front of the Koriyama Station (Fukushima Pref.). As members of Koriyama Hitachi Group Associa-tion, 50 Clarion members, mainly from Clarion Manufacturing and Service (CMS) took part in an event of “Odori-Nagashi”.

Domestic

Overseas■ Participation in Saitama City Marathon as Volunteers

Saitama City Marathon was held on March 25, 2013, organized by the City of Saitama. Clarion supported the event as a part of activities to contribute to the community as well as to improve the brand value. On the day before the event, about 120 Clarion employees and families as volun-teer staffs helped to organize the event.

In our department, we receive inquiries from various customers every day. We have intro-duced a system which can make immediate searches of diverse product information (CTI). With this and other efforts, we strive to build up systems which render us accurate and prompt responses in order to contribute to improved CS (Customer Satisfaction).I effort to manage CTI system and other one and at the same time, effort to improve them.

Clarion recognizes the nature of the products we sell and pay ut-most attention in this respect of safety, complying with laws and safety standards (Product Liability Act, Consumer Product Safety Act, Safety Regulations for Road Vehicles, etc.). We make efforts to provide products that customers can use with feeling of safety through assessment of safety features of products and mainte-nance/enhancement of their quality.

Because of recent drastic increase of thefts of navigation devices, there are increasing numbers of inquiries from police authorities. In response to such situation, we launched an “Automatic Theft Identifi-cation System” in 2006. This system automatically cross-references the information contained in the reports of stolen products seized by police and that of our navigation device user registration, repair and map upgrading history and it contributes in quicker and more accu-rate identification. There were more than 50 cases of cooperation with police authorities per year, including tracking/analysis of routes recorded on the navigation devices installed in the cars in-volved in crimes.

■ Responsibility Toward Products

Responsibility Toward Product and Information Security

● Automatic Theft Identification System

Customer information of purchasers is used in after-sales service and product development. For this purpose, we have a “Policies of Personal Information Protection”, which is accessible by public on our homepage. The Policy is appropriately managed in accordance with the “Administration Standards for Personal Information”.

Specifically, each department appoints a responsible staff who reports to Personal Information Protection General Manager, per-forms secure handling of such information through regular audits and interviews. Regular education and training are provided for em-ployees in order to disseminate and raise their awareness of the need for compliance with the Personal Information Protection Law and other laws and regulations.

■ Administration of Personal Information

Clarion has formulated an information security policy to avoid risks around information assets and their protection. The risks include, among others, information leakages, loss of corporate credibility through unauthorized use of software and computer system failures caused by illegitimate accesses. We have such specific measures as physical control for access to restricted areas of server rooms among others as well as measures of surveillance of introduced software. With regard to access to information assets, we have technical measures for protection through authorization processes with pass-words and encryption of data.

■ Information Security

Tarou KounoCustomer Service Dept.

Social Contribution ActivitiesThe whole of the Clarion Group has developed wide range of so-

cial contribution activities in each country with initiatives of each of-fice, prioritizing support for areas suffering from natural disasters as well as establishment of friendly relationship with local communities.

Clarion Group aims to be a good corporate citizen. To this end, we engage in activities in support of local communities throughout the world. We have developed a wide range of activities in each country, including support for future generations, activities to contribute to local communities, and support (donations) for ar-eas afflicted by natural disasters. Through activities such as these we are actively contributing to the well-being of local communities.

Together with Society

CORPORATE SOCIAL RESPONSIBILITY REPORT

CSR Report 2013CSR Report 2013 3029

Purchasing Policy♦ Building up of Systems for Purchase at the most Optimal Locations♦ Enhancement of Functions for Purchasing Engineering♦ Improvement of Procurement Systems♦ Expansion of Scope of Procurement for Intermediate Materials

Objectives♦ More contribution towards consolidated management through promotion of global purchasing and procurement activities

Measures1. Promotion of Global Purchasing Policy2. Promotion of Green Purchasing3. Total Cost Reduction from the Development Phase4. Quality Improvement Activities5. Promotion of CSR6. Promotion of Procurement Security Measures

I’m engaged in the work of selecting new components to be used in our products. It is our duty to select most suitable components from the view point of QCD, based on the required specifications laid out by designing departments. I pursue my duties in order to provide products which customers can feel satisfied, always bearing in mind the partner-ship with component suppliers.

Yohei ShibataPurchasing Engineering Dept.

Gao YangChoi Jung oProduction Planning Dept.Production Planning Dept.

<Mentor: Che>I remember the expression in Ms. Gao’s face when she first noticed her assignment to Production Planning, which was an unknown field. Now, however, she has changed and shows her activeness and cheerful character and is absorbing steadily necessary knowledge and skill regarding production. I expect her to exert the knowledge and skill, adding to them global perspective, which is an advantage for an employee with foreign nationality, and cope with the job actively.

<Mentee: Gao>My mentor, Mr. Che, another foreign citizen, has solved my concerns and worries, not only about work but also others since my as-signment in this department. I will follow my mentor and try my best to develop various fields of work as a global personnel.

CORPORATE SOCIAL RESPONSIBILITY REPORT

Clarion, together with our business partners, enhance our teamwork in strategies in business, R&D and mar-keting. We believe that open and fair transactions will contribute to create products with better competitive-ness and to establish a genuine WIN-WIN relationship with our partners. In addition, we have established the “Green Purchasing Guidelines” in cooperation with our business partners to promote more eco-friendly purchasing activities.

Together with Our Partners

Proper Transactions

Clarion aims to conduct open and fair transactions with its suppli-ers at all times sensibly and with sincerity. We seek new business partners both domestically and overseas as we expand our global purchasing/procurement activities in 7 Group manufacturing compa-nies in 6 countries around the world. In the process of selection, we put importance on their approach to the environment and CSR in addition to their quality and R&D capabilities.

We value communication with our business partners, and aim to establish relationships by which both parties can share their strate-gies and improve each other’s competitiveness.

■ Purchasing Policy

We hold annually a meeting to give briefings and explanations on our purchasing policy and requests in cooperation with our efforts in CSR and more eco-friendly activities. In a briefing meetings held in March, 2013, in Japan and China, total 308 partners (Japanese 163

■ Briefing Meeting on Purchasing

We have a system in place for awarding our business partners annually to encourage their improvement activities and suggestions related to dealing with products with higher added value. The awards are presented to those partners whose performance with respect to Q (Quality), C (Costs), D (Delivery Time) and VEC* activities were particularly outstanding in that year. In fiscal 2012, the awards were given to 7 such companies in Japan and 5 in China.

■ Annual Awards to Business Partners

and Chinese 145) attended. In the course of purchasing activities, we are promoting activities, with more consideration on environmen-tal protection, laying out of the “Green Purchasing Guidelines”as an example. Further, as we joined the Hitachi Group, we are also com-municating the “Hitachi Group CSR Activity Policy” to our business partners. We also have regular meetings with Hitachi’s CSR depart-ments to share information.

∗ VEC (Value Engineering for Customers) activities: VE activities were devel-oped by the Hitachi Group. VE is a technique for analyzing various factors related to costs and features in order to develop and offer products equipped with features customers want at minimal cost.

Business partners commended at the Briefing Session of Purchasing Policy (Japan)

■ Education on Fair Trade with Our Business PartnersResponsible personnel in purchasing attend regular outside sem-

inars in connection with Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (Subcontract Act) in order to en-sure law compliance and fair trade transactions. In fiscal 2012, two staffs participated in the outside seminars. We are also making ef-forts for higher CSR awareness through regular divisional educa-tional lectures. We will continue to improve knowledge and compe-tence of individual staffs through active use of outside seminars and e-learning on laws and regulations, and as well as on professional skills in purchasing operations.

* Followings are systems in place at Clarion Co., Ltd.

Clarion values independent individuals in its recruit-ment, putting the emphasis on people by themselves. Furthermore, we operate a Human Resources Admin-istration System which enables each individual em-ployee to pursue his or her work with passion. We de-velop human resources capable of global thinking and a positive approach to breakthroughs, and foster the individuality and challenging spirit of our employees.

Together with Our Employees

● Openness to Any Person with No Discrimination● People as Themselves● Transparent Processes

Fusion of Various Values

Basic Policies

Recruiting

Clarion prohibits discrimination based on nationality, gender, reli-gion, race, etc. and aims to recruit and train people with a wide range of personal values. Furthermore, as stated in“Clarion Group Code of Conduct”, we respect the human rights and individuality of each employee.

■ Basic Policies on Recruiting

■ The Kind of People We Want, Respect for Diverse Personal ValuesClarion is looking for “independent personnel, defined as people

who can independently think, positively work on anything, and learn with curiosity”. When recruiting personnel, we select people valuing their personal merits, irrespective of their academic background, gender, religion or nationality. Through the selection procedures, Clarion evaluates personalities based on interviews with all appli-cants, and assessments are made based on their ability of good communication and unique ideas. We make efforts to ensure a trans-parent selection process by giving all candidates having passed pre-liminary screening, feedback of the full content of their assessment.

Clarion aims to expand its hiring of people with disabilities. The rate of employees with disabilities at the headquarters was 2.1% in Fiscal 2013, and we achieved the legal requirement of 2.0%.

■ Employment of People with Disabilities

■ Equal Opportunity and Treatment in EmploymentWe are making reforming efforts so that human resources with

divers characters and senses of value as well as inspiration can work lively. The above efforts include awareness raising through seminars on issues around applied laws and regulations, such as sexual harassment matter in Equal Employment Opportunity Law as well as promotions of diversity recruiting.

Female employees with experience of bearing child can achieve their work-life balance taking advantage of Child Care Leave and Short Working Hours System, and are working with feeling of achievement.

The proportion of female employees at the Headquarters is low at 12%, but ratio of female in the new graduate recruitment in 2013 was 27.3%. We do not have any discrimination in recruitment by gender pursuant to the Basic Policies.

Female employees are finding a wider range of opportunities of work in our R&D, purchasing and sales departments.

● Male and Female New Graduate Recruitment Ratios

CSR Report 2013CSR Report 2013 3231

Employees taking a mental health training course

CORPORATE SOCIAL RESPONSIBILITY REPORT

Number of Person Registered (net)

Education Course Total Registration

Total Number of Persons /Year (Aggregated)

Per Person Total Number of Courses/Year

Per Person Total Hours of Education

1,527 persons 821 courses 11,218 persons 7.5 courses 16 hours

Objectives Curriculum (example)

Business Skill

Education/Training

Management Skill Education/

Training

Education/Training to obtain knowledge and skill for job roles

Management Education/Training for each segment of employees

Human Skill Education/

Training

Education/Training to obtain

communication skill based on roles

Education/Training for leadership, coaching, facilitation

and presentation

General Knowledge Education/Training

Education/Training for general skill common

to every employee not related to roles

Education/Training for regulations/procedure manuals and compliance, system-tools,

cost/customer priority, safety and health in workplace, CSR

Core Skill Education/Training

Education/Training for skill of prioritized enhancement by the

companyGlobal Education/Training

Professional Skill Education/Training

Education/Training for enhancement

of professional skill necessary to each job

type

Education/Training for new technologies and new business

▶ Expected Employee Role Models ◀Expected role models of an employee is:▶ Ready to face challenges▶ To have strong sense of teamwork ▶ To have high level of individual professional skill ▶ To pay respect to customers and social contribution▶ To have global perspectives and sensibilities▶ To have eagerness to grow up through work

● Establishing Self-realization● Establishing Corporate Culture of Generosity● Discovering and Fostering of “Independent Personnel”

Appraisal linked to performance of roles and contribution

Basic Policies

Human Resource Development

Besides collective training/education organized by the company, Clarion has an information system for registration and administra-tion of individual self education, and it is utilized in supporting career development.

Clarion has adopted “Mentor System” through which new recruits are given special attention and development support.

■ Career Development Support System

● Status of Education Administration System (Apr. 2012~ Mar. 2013)

∗ Global Human Resources: Personnel who have such competence in communication as to be able to exe-cute duties in international operations and who have leadership, and actual experience and skill in opera-tions such as negotiation skill cross-culture understanding.

● Mentor SystemThis is a system whereby each new employee (a mentee) is allocated with a senior staff member from the same department as his/her mentor. This encourages each new recruit to become independent and to build up internal network within the company at an earlier stage of employment.

Clarion provides its employees with following system to embody their expected employee role models.

■ Education and Training System

Clarion’s target is upbringing of group of professionals who can cope with rapid changes in the business environments. With defin-ing “global human resources” (∗), we continue our efforts to recruit and bring up personnel who have potential of working in the global arena, and to let individuals and organizations exert their maximum potentials.

■ Basic Policy on H.R. DevelopmentHuman Resources Administration System■ Basic Policy on Human Resources Administration

Clarion states in its corporate philosophy; “Respecting the individu-ality and ability of each employee, and establishing a corporate cul-ture of generosity”. Based on this philosophy, our H.R. administration system ensures that each employee is able to engage oneself to work with sense of independence and high motivation, and performance is duly appraised according to role, responsibility and contribution.

◆ Qualification SystemRanks based on expected role, responsibility and contribution are

in place. Rank promotions are examined once a year when an em-ployee qualifies requirements of each rank.

◆ Salary SystemSalary is based on a range system according to qualification

ranks, which considers the level dominant in the market.

◆ Appraisal SystemPerformance of each employee is appraised based on the level of

achievement within semi-annual target control, and annual appraisal is made based on appropriateness in performed competence. Semi-annual appraisal is reflected on the bonus and annual apprais-al on salary and rank promotion.

◆ In-House Recruitment System and FA SystemTo encourage independent career formation, Clarion has adopt-

ed a new in-house recruitment system featuring workplace reas-signment procedures whereby an employee may be reassigned on their wishes, as an opportunity. We also introduced the FA (Free Agent) system to encourage flexible movement of personnel within the company.

■ H.R. Administration

Fiscal 2010 Fiscal 2011 Fiscal 2012Achievements of the In-House Recruitment System 5 2 8

Achievements of the FA System 2 3 11

Development Administration Dept.

After my one year and half Child Care Leave, I returned to my workplace taking advantage of Short Working Hours System. Though short, my daily working hours are packed full with administration of R&D schedules, lecturing at language classes and other interesting jobs. Sometimes, I have to take an unexpected leave due to my child’s illness, but my work colleagues and superiors give me good sup-port so I can devote myself to both child care and work.

Childcare Leave System

Childcare leave may be taken once for each child, with the leave period lasting until the child is one year and six months old.

Nursing Leave System

Leave during necessary period up to one year for causes of nursing necessity.

Vacation Deposit System

Vacation deposit of maximum 4 days of the uncon-sumed annual paid holidays lapsing after 2 years from the date of grant, maximum accumulated deposit to be less than 40 days.

Family Care Leave System

Family Care leave may be taken 5 days for the purpose of caring the family. In case of pre-school child in the family, if there more than 1, total 10days may be taken.

Temporary Leave System during Spouse’ Assignment Abroad.

Maximum 3 years temporary leave given for joining the spouse with assignment abroad.

Childcare Support Optional short working hours system of 2 hours/day up to child’s graduation from elementary school

Maternity ProtectionEmployees in pregnancy or within one year after child birth may apply for absence from work due to hospital visits, shorter working hours and/or fl exible working hours.

unit : person

Fiscal 2010 Fiscal 2011 Fiscal 2012Results for Childcare Leave Taken 9 16

(Therein 3 males) 9

Results for Nursing care Leave Taken 0 0 1

Clarion works to create systems to facilitate full consumption of paid holidays. Clarion has introduced planned consumption of two consecutive holidays, and “Anniversary Holidays”(3 days).

■ For Full Consumption of Paid Holidays

Work-Life Balance

Clarion has set up a “Childcare Leave System”, a “Nursing Leave System”, a “Vacation Deposit System” and a “Temporary Leave Sys-tem during Spouse’ Assignment Abroad” in order to ensure environ-ments and working conditions for employees needing to take care small children and/or older family members to balance their roles at work and at home.

Furthermore, in response to the Law for Measures to Develop-ment of the Next Generation, we laid out action plans and promote awareness raising at education and training sessions for each seg-ment. We are proceeding with further improvement of the system in view of diversification.

■ Supports to Child Caring and Nursing

Basic Policies

● To maintain safety and health has the utmost priority of all

Safety in the Working EnvironmentClarion has established the Health and Safety Committee, which

is working to develop healthier and safer workplace environments, and to comply with laws, regulations and ordinances related to health and safety in the workplace.

We see rising risk of lifestyle related disease recently. We consider employees who are healthy both physically and mentally can give power to the company.1. Physical Health

All employees over 35 years of age, when higher risk for disease starts, can now go through one-day visit regular health check, which gives more accurate diagnosis. The results are verified by the indus-trial physicians and the work health professionals and necessary guidance are given to those with remarks.

2. Mental HealthFor better mental health, Clarion has “telephone consultation” and

“personal consultation” systems. Within the latter system, the indus-trial physicians and the work health professionals. Designated psy-chiatrist doctors and industry mental health coordinators give per-sonal care to those in need. Additionally, we provided mental health lectures every year. The attendees in fiscal 2012 were 390 and they learned about importance of linecare and self-care as well as neces-sary knowledge and the way of dealing with the issue of mental health.

■ Mental and Physical Health

Clarion holds a meeting of the Health and Safety Committee once a month to discuss relevant topics.

In order to ensure safety of employees as utmost priority and to fulfill corporate social responsibilities, Clarion promotes various measures with the target of zero industrial accidents. In Fiscal 2012 also, there was no serious incident.

■ Health and Safety Committee

■ Prevention of Industrial Accidents

unit : person

Cao Yuming

CSR Report 2013CSR Report 2013 3433

Environmentalcommittee members

Clarion Manufacturing and Service Co.,Ltd.

(Headquarters)

Education/training for Internal environment auditors by an outside education institution

Environmental PolicyWe, Clarion Group Companies, acknowledge that preservation of the environment is one of the most impor-tant issues in the management of an enterprise. We shall act in our business activities of designing, producing and selling of products mainly of vehicle mounted information systems, promoting global “monozukuri” (product making) aiming at less burden on the environment, and make efforts to realizing the sustainable society with following measures.

We shall evaluate environmental effects through our products and services, set up environmental objectives and targets, which shall be reviewed every year for continuous improvement for less burden on environment.We shall promote efforts to offer more environment-friendly products and services with reduction of hazardous substances, requiring less natural resources and energy consumption.We shall promote saving energy in our activities and make efforts for mitigating global warming.We shall take measures for less waste output and promotion of recycling and aim to bring about recycling based society.We shall make efforts for greening by tree planting and improving appearances, at the same time to preserve the natural environment and mitigation of influence to ecology.We shall take preventive measures against possible environmental pollution from wastewater and leakage of oil or hazardous substances from offices and factories.We shall comply with all laws and regulations, other requirements acknowledged by the Group and other self-designated standards concerning the environmental preservation.We shall let all employees be aware of the Environmental Policy and shall improve their knowledge regarding envi-ronmental preservation.This Environmental Policy shall be made publicly known, and we shall actively promote information disclosures and other communication with outside the Company.

Revised March 11, 2008

1)

2)

3)

4)

5)

6)

7)

8)

9)

C O N T E N T S

● Environmental Management ● Environmental Policy … P36 ● Promotional Framework for the Environment … P36 ● Education and Training … P36 ● Status of Compliance with Environment-Related

Laws and Regulations … P36

● Environment Protection Activities ● Preservation of ecological system … P37 ● Preventing Global Warming … P37 ● Effective Use of Resources … P38 ● Chemical Substance Management Activities … P38

● Eco-Friendly Products ● Efforts for Eco-Friendly Products … P39

● Target and Achievements ● Efforts and Achievement … P40

● Business Activities and Environmental Impact ● Material Flow … P41

● Environmental Accounting ● Numerical Data for Fiscal 2012 … P42

Clarion places importance on corporate governance and has developed a system that embodies that awareness. Further, through our efforts to develop a risk management system and redevelop internal con-trols, Clarion is striving to ensure management trans-parency at all times.

Corporate Governance System

Environmental PolicyIn order to further enhance our efforts in environmental issues,

Clarion revised its Environmental Policy in March 2008. Pursuant to this policy, we will continue our group-wide activities promoting envi-ronmental preservation and offering products and services which contribute to building up of sustainable society.

Promotional Framework for the EnvironmentClarion acquired ISO14001 certification for its domestic compa-

nies in 2000. By the end of March 2008, 7 overseas affiliates com-pleted their acquisition of the same. We have built up promotional framework and continue to enhance environmental management system. Specifically, the activities are promoted by “Standing Com-mittee on the Environment” which plays active roles. At all of our domestic sites, we conduct external inspections once a year, and internal environmental audits twice a year, to assess the state of implementation and maintaining of environmental management system.

Education and TrainingClarion provides systematic education to all employees to in-

crease their awareness of environmental protection.

■ General Environmental EducationThe department in charge of Environmental Management pro-

vides education and training to department managers. The depart-ment managers in turn take the lead in conducting an education program for all employees at least once per year. In addition, in 2007 e-learning was introduced to further develop eco-awareness. In fis-cal 2012, 99% of the relevant employees received the program.

■ Level-Specific EducationH.R. Dept. and CSR Dept. organize environmental management

system education for each level of managerial staffs to new recruits.

■ Training for Internal Environmental AuditorsThis program consists of training for internal environmental audi-

tors by an external training institution and by Clarion’s qualified inter-nal auditors.

■ Professional Training for Workers Engaged in Designated Tasks

Personnel qualified for certain designated jobs under laws and regulations and employees engaged in tasks that have a profound impact on the environment are categorized as “workers engaged in designated tasks”, and are provided with professional training in ac-cordance with their duties. Furthermore, we perform simulated drills regularly to ensure that they can respond quickly and appropriately in a possible emergency situation.

Status of Compliance with Environment-Related Laws and Regulations

Clarion shares a company-wide database covering major environ-ment related laws and regulations as well as customer requirements. Furthermore, the departments responsible for promotion of environ-mental activities identify deviation from the reference values set by laws and regulations, as well as environment-related accidents, com-plaints and risks, and set up and strictly follow self-imposed standards.

External audit of ISO14001 in 2012 fiscal year

Environmental Report

CSR Report 2013CSR Report 2013 3635

● CO2 Emissions (Total Energy)

Cleaning-up actions on Funatsuhama Beach on Inawashiro Lake

Tree Planting Activities in Mexico

Changing air conditioning from cool/hot water generator with kerosene fuel to heat pump multiple air conditioning

Activities of Plant-ing of Mangrove-trees in Thailand

Installation of LED lightings

Collection actions of drifted waterweeds on Tenjinhama Beach on Inawashiro Lake

Clarion is working to reduce the environmental im-pact of its business activities and fulfi ll its respon-sibility as a member of society. These activities range widely from waste reduction, preservation of ecological system, prevention of global warming and other environment protection.

Environment Protection Activities

Preservation of ecological system

A part of Fukushima site premise was turned to a biotope, “Clarion ECO Garden”, to contribute to meas-ures for preservation of biodiversity.

Clarion promoted “Operation Green Curtain”again in the fiscal year 2012.

Environment Group of CSR Promotion Office distributed seeds of Goya (kind of bitter melon) and morning glories to employees who wanted to grow them at home in an effort to save electricity with their effects of “green curtains”.

Further, in order to raise awareness of “electricity saving”, Clarion’s liquid crystal thermometers were widely used.

The Hitachi Group is striving to achieve an energy use reduction target: 15% per unit of production (against fiscal 2005). The total en-ergy consumed by the Clarion Group in fiscal 2012 in terms of CO2 emission was 8,021t- CO2 . This increase was due to higher index of power consumption vs. CO2 emission influenced by the stoppage of nuclear power plants. With the index for 2011, the figure would have been 5,788t- CO2 .

Clarion actively pro-motes tree planting as a part of preservation of ecological systems.

CEF staffs are undertaking honeybee raising with an aim to mak-ing importance of preservation of ecological systems known better. The population of honeybees is getting smaller due to extensive use of agricultural chemicals. In order to understand better such situa-tion and to protect honeybees, 8 volunteers installed a beehive. They could harvest honey the other day. As the group mem-ber grew larege by 32 this year, they plan to install 4 more bee-hives.

■ Preservation of ecological system Clarion ECO Garden

■ Operation Green Curtain

■ CO2 Emission Reduction Activities

■ Tree Planting Activities by Overseas Affiliates

■ Protection Activities of Honeybees at Clarion France (CEF)

■ Participation in Volunteer Clean-up Activity of Inawashiro Lake (Fukushima Pref.)

As a part of environmental joint activities of Eco-Factory Subcom-mittee, we took part in Clean-up Actions of Funatsuhama Beach on Saturday, June 23, 2012, and Collection Actions of Drifted Water-weeds on Tenjin Beach on Saturday, October 13 both on Inawashiro Lake in Fukushima to collect and remove waterweeds and wastes which cause deterioration of water quality. Clarion actively promotes activities for improvement of water quality and preservation of eco-logical systems of Inawashiro Lake.

Preventing Global WarmingClarion’s measures to prevent global warming include cutting

down the use of electricity and fuel in order to lower CO2 emissions. Moreover, we are actively working on efficient and environment-con-scious transportation. We are also striving to contribute to the pre-vention of global warming by making efforts to reduce CO2 emis-sions through products.

Clarion started new approach for more consideration to the envi-ronment through deployment of international air transport services with CO2 credit. As we use international air transport services, we procure CO2 credit, following the Kyoto Mechanism, and transfer it to redemption account of the Japanese government. The procurement of CO2 credit, at the same time, contributes to social infrastructure of the State of Karnataka, India, where the project is located from which we procure the credit.

At the occasion of anti-earthquake reinforcement works of the of-fice buildings of CMS, they installed various energy-saving equip-ment such as heat-pump multiple air conditioners and LED lightings. Up to then, air conditioning was done with absorption cool/hot water generator using kerosene as fuel. The CO2 emission of this system was larger and the environmental impacts was heavier. With the in-stallation of the new system, Clarion expects to reduce CO2 emis-sion by 64 tons per year, which will contribute to mitigating of envi-ronmental impacts.

DCOE achieved energy-saving through supplying hot water in the employee dormitory using heat generated by the compressor used in the production processes. With this improvement, they could reduce con-sumption of electricity by 120MWh, and of light oil by 44 KL (each per year) which con-tributed to reduction of CO2 emission by 205 ton/year.

■ Active Use of CO2 Credit (Emission Trading)

■ Installation of Energy-saving Equipment at Clarion Manufacturing and Service (CMS)

■ CO2 Emission Reduction Activities in Clarion China (DCOE)

∗ ECO2AWB of Nippon Express is used for procurement of CO2 credit and for transfer to redemption account of the Japanese Government

∗ With last year’s index of power consumption vs. CO2 emission

Mechanism of Emission Trading

Effective Use of ResourcesClarion endeavors to reduce the total amount of waste generated

by its business activities and further promote recycling activities. Clarion defines “zero waste output” as “reducing the amount of final disposal at the sites to be less than 0.5%, by recycling more than 99.5%” and we are working to achieve this goal. At the same time, we promote material recycling through improvement of production pro-cesses and disassembling of waste.

Through efforts of waste separation patrol and promotion of edu-cation/training, we recycled 99.9% of output in fiscal 2012. We shall address this issue of further reduction of environmental impact through promotion of higher level recycling and technology for re-in-put of waste in product resource.

Type: Kyoto Mechanism Credit/CERProject: Wind Power Project, Karnakata, India[NSL27.65MW]Wind Power Project in Karnataka,INDIA Registration No. 0998, UN CDM Board

ENVIRONMENTAL REPORT

■ Complying with the Pollutant Release and Transfer Registers (PRTR) Law Clarion runs a system that tracks the amounts of chemicalsubstances used and their waste output, even if they are used only in smaller amounts below the levels subject to report under the PRTR. In fiscal 2012, although as a whole Clarion domestic operations handled 703kg of chemical substances, the amount itself was below that required to be reported under the PRTR Law. We are also striving to reduce the amount of usage and waste output of chemical substances that are not subject to the PRTR Law.

Chemical Substance Management ActivitiesClarion conducts thorough chemical substance management

through ongoing awareness education and training activities. Moreo-ver, we strive to reduce the output of chemical substances used in production by switching these to ones with lower environmental im-pact. Currently we work primarily to reduce solder, waste oil and Volatile Organic Compounds (VOC) of which we have higher usage, eventually, waste output.

● Amount of Disposal • Amount of Recycling

CSR Report 2013CSR Report 2013 3837

AV Navigation NX712 Full Digital Speakers AV Navigation System Z8/Z17F

Full digital speaker systems, vehicle mounted Z17F and portable ZP1.

(∗1) Release of Full Digital Speaker Systems “01DRIVE”

(∗3) Volunteer activities of honeybee raising at CEF

(∗4) Volunteer activities at Inawashiro Lake in Fukushima Prefecture

(∗2) Recycle ratio: We maintained recycle ratio of 99.5% and more with implementation of patrolling waste separation on sites

ENVIRONMENTAL REPORT

● Environmental Impact Assessments over the Entire Life Cycle

Clarion promotes green purchasing activities. In order to further enhance purchase of goods with less environmental impact, we re-vised “Green Procurement Guideline” in 2010. We will continue our efforts in offering products that comply with various laws, regulations and industry standards in cooperation with our suppliers.

■ Promotion of Green Purchasing

Assessment A: Targets achieved, continuation of good status B: Partial achievement and/or continued efforts C: Target unachieved and existence of problem(s)Efforts and Achivements

* Targets are to be unified to those of Hitachi Group Environmental Action Plans from fiscal 2013

Clarion China (CXEE) organized volunteers from various departments and cleaned up Fan Tian Si Temple in the outskirts of Amoy on July 23, 2012, as a part of its Clarion brand activities. Volunteers gathered and sorted the trash promoting actively the Clarion Group environmental activities. CXEE is exerting its full efforts for contribution to the local community.

Cleaning-up Activities at Fan Tian Si Temple

Topics

∗ JAMA Sheet: Data sheet for ingredient analysis survey standardized by JAMA (Japan Automo bile Manufacturers Association, Inc.) and JAPIA (Japan Auto Parts Industries Association)

The REACH (Registration, Evaluation and Authorization of Chem-icals) Regulations aim to put obligation of safety assessment of prac-tically all chemicals in distribution within Europe and registration and evaluation of them. The regulations came into force in June 2007.

They expect to minimize the impacts from chemical substances to the environment and human and to more clearly identify responsibil-ity of enterprises with respect to administration of these substances through compliance with them. Clarion promotes activities of identi-fying the chemical contents with use of JAMA sheets∗.

Furthermore, Clarion promptly laid out voluntary standard to ban content in components of phthalate ester 4 which is listed in REACH Regulations Annex XIV in an effort to reduce substances with envi-ronmental impacts.

■ Compliance with REACH Regulations

● Examples of products with the “Clarion Eco-Mark”

To develop and offer eco-friendly products, Clarion conducts the environmental impact assessment, which is comprised of the follow-ing 8 criteria; lighter weight, longer lifespan, better recyclability, easi-er disassembly, more eco-friendliness, better energy efficiency, bet-ter providing of information, and better packaging material. For the products which meet our own criteria the “Clarion Eco-Marks” are displayed on them.

Clarion launched the world-first full digital speaker systems, 01DRIVE. As the system reproduce full digital sources with high ef-ficiency, it can be driven with driving voltage less than half and power consumption below 1/8, both compared to conventional systems. With this technology, Clarion offers car audio systems with optimum high audio quality not only to conventional gasoline engine vehicles but also, or more to hybrid and electric vehicles with which saving of electricity is more critical.

Furthermore, portable full digital speaker systems, ZP1 are equipped with solar panels on the back for solar power generation, enabling use in emergency situations when power supply is unavail-able.

■ Display of the Clarion Eco-Mark ■ Release of Energy-saving Speaker Systems

■ Development of Eco-Friendly ProductsEfforts for Eco-Friendly Products

Clarion implements self-imposed environmental assessments from the development stage using standards for 8 assessment criteria. We aim to develop products with less environmental impact (Eco-Friendly Products) through LCA (life cycle assessment) approach whereby to-tal environmental impact is assessed throughout the entire life cycle.

We also address the issues necessary to comply with the RoHS Directive of the EU and other domestic and overseas laws and regula-tions, as well as requirements of car manufacturers. Together with these efforts and promotion of Green Purchasing, among others, we eliminate prohibited substances and promote use of eco-friendly ma-terials and components from the development stage.

Eco-Friendly ProductsClarion strives to expand its range of eco-friendly prod-ucts for the purpose of environmental conservation. We voluntarily implement environmental assessments at the development stage covering all the stages of our products’ life cycle. The results of successful assess-ment are displayed in the form of “Clarion Eco-Mark”.

Targets and AchievementsClarion recognizes that our business activities are deeply related with society and environment and con-tinues to promote such measures to be more friendly to society and environment.

CSR Report 2013CSR Report 2013 4039

Category Indicators for Environmental Conservation Benefits (unit)

Japan

Environmental Impact Environmental Conservation BenefitsFiscal 2010 Fiscal 2011 Fiscal 2012

Effects generated by costs within business areas

Effects related to resources used in business activities

Amount of electricity used (MWh) 14,734 13,071 13,445 (374)

Amount of fuel oil used (crude oil equivalent kl) 439 425 400 25

Amount of Supply for Heat (GJ) − 723 618 105

Effects related to environmental impact and waste produced by business activities

Amount of CO2 emissions (t-CO2) 6,693 5,720 8,021 (2,301)

Amount of waste final disposal (tons) 2 4 1 3

Effects generated by upstream/down-stream costs

Effects related to goods and services produced by business activities

Amount of waste recycled (tons) 835 840 874 (34)

Recycling rate (%) 99.8 99.5 99.9 −

Environmental Impact including 4 Overseas Sites

Fiscal 2012

38,623

900

618

24,551

1,665

−

−

● Environmental Conservation Costs (Japan)

● Environmental Conservation Benefits

Collection boxes for recycling items

(Unit: Millions of yen) ● Economic Benefits (Japan) (Unit: Millions of yen)

Item Description Fiscal 2010

Fiscal 2011

Fiscal 2012

Effects of environmental pro-tection related to resources utilized in business activities

Utilities cost, pur-chasing cost of copy and EDP paper, etc.

(35) (4) (8)

Environmental impact and waste resulting from business activities

Cost of general and industrial waste dis-posal, etc.

2 0 (1)

Benefits related to goods and services produced by busi-ness activities

Benefits of producing lightweight products 40 42 38

Conservation effects mainly related to transportation

Gasoline and light oil usage fees, etc. (1) (9) 0

Sales of valuablesSales of valuables and wastes for recycling

20 23 (26)

Total 26 52 3

Item Description Fiscal 2010

Fiscal 2011

Fiscal 2012

Costs within business areas 70 76 58

Upstream/Down-stream Costs

Green-Purchasing-related costs, Recycling costs for Containers/Packaging 11 35 20

Administration Costs Certification-related costs, education costs, etc. 15 18 18

R&D Costs Costs for reduction of environmental impacts, weight reduction, etc., for products and processes 7 21 21

Social Activity Costs Costs for nature conservation, afforestation, beautifi-cation, etc. 10 10 10

Environment Recovery Costs Costs for soil pollution countermeasures 0 0 0

Total Costs 113 160 127

Total Investment 0 0 0

Material Flow

Numerical Data for Fiscal 2012

• Relevant Period: April 1, 2012 ~ March 31, 2013• Sites Covered by Data : Clarion and its domestic and overseas affiliates and subsidiaries (2 domestic sites and 4 major overseas production sites)

Clarion Mexico (ELECLA) organized “Environment Campaign” for the employees and their families for the purpose of raising awareness for recycling. By bringing vegetable oil, batteries, home electric appliances into the company which were then forwarded to the recycling facility in one lot, the campaign aimed to raise the awareness for recycling. During this campaign, 539 L of vegetable oil, 106 kg of batteries and 4.6 tons of home electric appliances were collected. ELECLA will continue activities for the employees and their families aiming at increasing environmental awareness.

ENVIRONMENTAL REPORT

Clarion monitors the environmental impact of its activities, including those of the domestic group companies, and pro-motes environmental protection activities throughout the entire Clarion Group. Furthermore, we have introduced en-vironmental accounting in order to keep track of total costs and investments related to our activities and utilize the data as a tool for environmental management assessment.

Business Activities and Environmental Impact

Material FlowClarion monitors and analyzes the environmental impact of its

business activities and actively promotes environment preservation activities. This material flow chart shows input and output data relat-ed to Clarion’s environmental impact at each of its sites. The input data include consumption of energy, while the output data show CO2 emissions and others. We continue our efforts to reduce our environ-mental impact through on-going collection and analysis of data.

INPUTWater Energy Mterials

Tap water(1,000t) 34 Electricity(MWh) 13,445 Chemical Substance(tons) 1,756Industrial water(1,000t) 0 City Gas(1,000m3) 0 Solder(tons) 23Recycled water(1,000t) 11 Gasoline(kl) 50 Metal Components

LPG(m3) 2,088 Electric Componentskerosene(kl) 353 Plastic ComponentsDiesel Oil(kl) 15 Packaging MaterialsCrude Oil(kl) 0Supply for Heat(GJ) 618

Planning / Design Purchasing Production Distribution / Sale Customer Use Recycling / Disposal

Discharge WasteCO2 emission(t-CO2) 8,021 Waste Output(tons) 875

Discharged Water(1,000t) 26 incl.Chemicals(tons) 6

incl.Solder(tons) 23

Recycling Volume(tons) 874

Final Disposal(tons) 1

Recycling Rate(%) 99.9

OUTPUT

< Covered Sites >● Japanese Domestic sites are following 2 sites:

< Relevant Period >● The relevant period is as follows:

■ Saitama Site (Saitama-shi, Saitama)● Clarion Co., Ltd. Head Office and Technology Center● Headquarters-Annex Office ● Clarion Sales and Marketing Co., Ltd.

■ Fukushima Site (Koriyama-shi, Fukushima)● Clarion Co., Ltd., Tohoku Office● Clarion Manufacturing and Service Co., Ltd.

From April 1, 2012 to March 31, 2013

Topics Fifty representatives of Clarion Thailand (CAT) participated for the first time in mangrove tree planting as a part of promotion of environmental preservation. Even in Thailand, mangrove forests are decreasing year by year and preservation of biodiversity is getting more difficult. Needs for enhancing regenerative power of global environment as well as promotion of environmental preservation are widely appealed there. The experience of planting, struggling with mud and getting so dirty, made the participants realize the difficulty of mangrove tree planting. At the same time, though, they all felt sense of satisfaction and achievements. We also learned that the changes in the environment are deteriorating the valuable forest environment, although Thailand has been boasting summery climate all the year around and evergreen country. CAT plans to continue these environmental activities (including those for contributing the local community) at a rate of twice every year.

Topics

Environmental AccountingClarion introduced environmental accounting in Fiscal 2002 to more effectively promote its environmental activities in a sustainable manner. We compile and dis-close the fi gures in accordance with our own environ-mental accounting guidelines following the guidelines

of the Ministry of Environment. The coverage was extended to overseas sites in Fiscal 2005. By disclosing such infor-mation, we endeavor to let our activities of environmental preservation better known to those who are interested.

CSR Report 2013CSR Report 2013 4241

Financial Report

Basic Management Policies

Review of Operations

Targeted Management Indicators

Issues to Be Addressed

Management Policiesand Medium-term Management Goals

Financial Review

As stated in our corporate commitment, “Clarion strives to improve society by seeking to develop the relationship between sound, infor-mation and human interaction, and by creating products to meet those needs” and carries out activities accordingly.

During the previous fiscal year, Clarion was adversely affected by the significant impact of a shift from luxury cars to smaller sized cars (“kei” category cars) and compact cars in the automobile industry as well as by plunging sales prices due to excess supply in the aftermar-ket and slumping sales.

Amid these drastic changes in the business environment sur-rounding the Clarion Group, we are striving to build a solid founda-tion for future growth by making sure to take advantage of these fast-evolving shifts in the market structure and business environment as well as by cultivating new regions and product domains from the three-dimensional (3D) perspectives of “products”, “geographical regions” and “customers”.

In the automobile industry during the fiscal year ended March 31, 2013, sales in Japan exceeded the level recorded in the previous fiscal year due to the positive effects of an incentive to buy eco-cars in the first half of the year and an increase in sales of smaller sized cars (“kei” category cars). Sales were also favorable in the Americas and Asia.

Within this market environment, the Clarion Group strived to re-duce costs in a thoroughgoing manner by undertaking production in optimal locations from a global perspective and promoting the over-seas transfer of procurement and mass-production development functions. At the same time, we made group-wide efforts to curb fixed costs in order to build a profitable corporate structure.

In fiscal 2012, the Clarion Group recorded consolidated net sales of ¥177,288 million, down 5.0% from the previous fiscal year. De-spite sales growth centering on original equipment manufacturer (OEM) markets in Japan and the emerging nations of Southeast Asia, net sales were affected by sales declines in European and U.S. markets.

With regard to income, consolidated operating income decreased 59.2% year-on-year to ¥3,210 million due to a decline in the installa-tion rate of high-end products and a rise in development expenses. Additionally, based on considerations of recoverability in view of re-cent business results, Clarion wrote off a portion of deferred tax as-sets. As a result, net income declined 82.0% from the previous fiscal year to ¥1,358 million.

Results by geographic segment (excluding intra-Group transac-tions) are as follows.

The Clarion Group emphasizes consolidated operations in order to enhance corporate value, and accordingly, promotes greater con-solidated earnings power and consolidated cash flow management. The Group aims to achieve its goals of consolidated net sales of ¥230,000 million and a consolidated operating income margin of 5% or higher in the fiscal year ending March 31, 2016.

The automobile industry has witnessed dramatic changes in the business environment, most notably the emergence of smart-phones, the entry of participants from the IT industry and a transition in emphasis from hardware to software. In addition, changes in mar-ket structure have also become increasingly evident. Amid this mar-ket environment, Clarion aims for quantitative sales of its traditional commoditized products and for an expansion of new product do-mains that lead to increases in earnings. Additionally, we will con-sider what types of products to provide to which customers in which regions based on the 3D perspectives of “products”, “geographical regions” and “customers”. Accordingly, we will further promote our 3D strategy for allocating resources.

In the fiscal year ending March 31, 2014, we expect that the shift toward smaller sized cars by our major customers will accelerate and that sales conditions will become increasingly severe not only in the original equipment manufacturer (OEM) market but also in aftermar-kets. Under these circumstances, Clarion has initiated emergency projects to curb fixed costs through enhanced development efficien-cy while at the same time making continuous efforts to reduce mate-rial costs and other variable costs aimed at securing earnings.

As our business environment un-dergoes marked changes with each passing year, we will fulfill our corpo-rate social responsibilities as a mem-ber of the Hitachi Group and aim to achieve growth as a company that is truly needed by society.

Although domestic new car sales volume increased 10% from the previous fiscal year, sales of high-end products declined.

Segment sales amounted to ¥96,406 million, down 0.5% year-on-year. Segment income stood at ¥1,963 million, a decrease of 69.0%, due to the aforementioned change in product composition and a rise in development expenses.

New car sales in the United States rebounded to pre-financial cri-sis levels, reflecting such factors as signs of economic recovery and easier financing that accompanied an improvement in the employ-ment situation. Nevertheless, sales declined due mainly to the im-pact of such factors as the termination of sales of high-end products in the first half of the fiscal year arising from a switchover in car mod-el years by major customers. Other negative factors included the standardization of accounting periods in the previous fiscal year of companies that had used the calendar year for account settlement.

Segment sales amounted to ¥54,288 million, down 12.5% year-on-year. Segment income decreased 42.8% to ¥761 million due to the decline in sales.

While a lull in the ongoing European sovereign-debt and financial crisis continued, the severe employment situation persisted. Seg-ment sales decreased 10.2% year-on-year to ¥9,733 million due mainly to sluggish sales in the OEM market and the impact of the weakening of the euro compared with the previous fiscal year.

Segment loss amounted to ¥0 million (compared with segment income of ¥2 million in the previous fiscal year) as a result of a de-cline in sales despite efforts to reduce selling, general and adminis-trative expenses.

Favorable sales were recorded in Southeast Asian OEM markets in line with the start of operations at the new Thai Factory. However, segment sales declined 0.4 % year-on-year to ¥16,861 million pri-marily as a result of sluggish sales of Japanese vehicles in China as well as the standardization of accounting periods in the previous fis-cal year of companies that had used the calendar year for account settlement.

Segment income decreased 19.1% to ¥323 million due mainly to a decrease in sales.

Segment income/loss refers to operating income/loss.

■ Japan

■ Americas

■ Europe

■ Asia and Australia

Forward-Looking StatementsThe figures contained in this report with respect to Clarion’s plans and strategies and other statements that are not historical facts are forward-looking statements about the future performance of Clarion. Such statements are based on management’s assump-tions and beliefs in light of the information currently available to it and involve risks and uncertainties. Actual results may differ from those in the forward-looking statements as a result of various factors. Potential risks and uncertainties include, without limitation, gen-eral economic conditions in Clarion’s market.

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Financial Position

FINANCIAL REPORT

Net cash provided by operating activities was ¥5,488 million. This was mainly because a decrease in notes and accounts payable was offset by the recording of income before income taxes and minority interests and depreciation and amortization as well as a decrease in notes and accounts receivable. Net cash provided by operating ac-tivities in the previous fiscal year was ¥16,304 million.

Net cash used in investing activities was ¥11,350 million. This was due mainly to payment for purchases of property, plant and equip-ment as well as payment for purchases of intangible assets. Net cash used in investing activities in the previous fiscal year was ¥11,587 million.

As a result, Clarion posted an outflow of free cash flow in the amount of ¥5,861 million compared with an inflow of free cash flow in the amount of ¥4,717 million in the previous fiscal year.

Net cash used in financing activities was ¥564 million. Net cash used in financing activities in the previous fiscal year was ¥751mil-lion.

As a result of these factors, cash and cash equivalents at the end of the year amounted to ¥5,564 million compared with ¥11,610 mil-lion at the previous fiscal year-end.

Cash Flows

Current assets at fiscal year-end decreased ¥10,436 million, or 13.6%, compared with the previous fiscal year-end to ¥66,395 mil-lion. This result was due to a ¥6,046 million decrease in cash on hand and in banks, a ¥3,773 million decrease in trade notes and accounts receivable and a ¥2,185 million decrease in inventories.

Property, plant and equipment, net, increased ¥2,657 million, or 11.5%, from the previous fiscal year-end to ¥25,767 million. This was attributable to an increase in machinery and equipment in line with the start of operations at the new Thai Factory. Intangible assets in-creased ¥1,656 million, or 9.5%, from the previous fiscal year-end to ¥19,001 million due mainly to the development of software. Invest-ments and other assets increased ¥701 million, or 12.7%, from the previous fiscal year-end to ¥6,233 million. As a result, total assets at year-end decreased ¥5,422 million, or 4.4%, compared with the pre-vious fiscal year-end to ¥117,398 million.

Total liabilities decreased ¥10,846 million, or 10.2%, from the pre-vious fiscal year-end to ¥95,395 million. This was primarily the result of a decrease in trade notes and accounts payable of ¥8,750 million. Total net assets increased ¥5,423 million, or 32.7%, from the previ-ous fiscal year-end to ¥22,002 million. This was attributable mainly to the recording of ¥1,358 million in net income and a ¥3,432 million increase in foreign currency translation adjustments due to the im-pact of the weakening yen. As a result, the net assets ratio was 18.6%, an improvement of 5.3 percentage points from the previous fiscal year-end.

■ Net Income (Loss) per Share ■ Total Assets, Net Assets and Net Assets Ratio ■ Depreciation and Amortization

■ Capital Investment ■ Cash Flows ■ ROE and ROA

■ Net Sales, Overseas Sales and Overseas Sales Ratio ■ Operating Income (Loss) and Operating Income (Loss) Ratio ■ Net Income (Loss) and Return on Sales

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