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＜Our main business＞
・We sell stamping, molding, valve, and TPMS products.
・In the tire valve market, our corporation’s founding enterprise, we are a
specialized manufacturer with the world’s top market share.

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＜Group Companies Profiles＞
Our history
・In 1930 Started business in valve core nationalization
・In 1962 Listed in the Second Section of the Tokyo Stock Exchange.
・In 1970 Listed in the First Section of the Tokyo Stock Exchange.
Division Structure：”Stamping and Molding”, ”Valves”, ”Other”
Stamping and Molding
Accounts for about 70% of total sales
Primarily working with Toyota group, but also Mitsubishi, Honda, andSuzuki.
Based in Taiwan, the US, China, and Thailand
We established “Pacific Auto Parts(Thailand) Co., Ltd’, our second base in
Thailand, in order to meet the localization needs of of stamping andmolding products for automobiles in the ASEAN region.
Valves business・
Accounts for about 30% of total sales
Based in Taiwan, the US, China, South Korea, Thailand, and Belgium

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＜Corporate Governance＞
We will conduct company management based on stockholders’perspective and try to construct and maintain a clear corporate
governance system.

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＜Consolidated Financial Results ＞
・The number of automobile production steadily remained strong.
in Japan and China. Decreased in the US.
Sales
Sales expansion contributed to the consolidated sales of ¥ 117.7;
an increase of 13.6% from previous term. （It was a record highfor the first time in 2 terms.）
IncomeDue to an increase in variable expenses, costs related to businessacquisition, production preparation cost for the new products, anddepreciation cost:
Operating Income・・・ ¥ 8 billion, 6.9% decrease from the previous
term
Ordinary Income・・・ ¥ 9.4 billion, 4.7% decrease from theprevious term
Current Net Income・・・¥ 7.3 billion, 1.7% decrease from theprevious term7

＜Causes of Fluctuation in the Consolidated Sales & Income＞
Sales in FY 2017 ・・・The main causes of the increase and decrease are
the following.
Negative Factor
Decrease of selling price ▲¥ 1.1 billion
Positive Factor
Increase of Selling quantity ¥ 11.6 billion, increase due to official
quotation of material ¥2 billion.
Impact of exchange conversion of overseas sales ¥1.4 billion（Exchange¥109→¥111）
Exchange gain ¥0.2 billion
Operating Income in FY2017・・・The main causes of the increase anddecrease are the following.
Negative Factor
Increase of cost ▲¥1.9 billion（including acquisition cost ▲¥0.4 billion）
Increase of labor cost ▲¥1.4 billion, decrease of selling price ▲¥1billion
Increase of depreciation cost▲¥1 billion

Positive Factor
Increase of selling quantity
Exchange gain

¥2.8 billion, cost improvement¥0.2 billion, Increase of material price¥1.6 billion¥0.2 billion etc.

8＜Consolidated Financial Forecast ＞
Assumed Exchange Rate: ¥105/$1
Consolidated Sales
Forecasted ¥125 billion, increase in income of 6.1% from theprevious term due to the increase of selling quantity by extending
business in Japan and the US.
IncomeCurrent Net Income is ¥7.2 billion; 2.6% decrease in profit
Corporation tax etc. decreased approximately ¥300 million in
FY2017 due to the impact of tax reform in the US.
Current net income increased to the same amount and it resulted
in decrease in profit.
ＲＯＥ・ＲＯＡ
Due to decrease in income and increase in net asset by aggressive
capital investment,
・ROE 8.5→ 7.7% ・ROA 5.4→ 5.4%
The acquisition’s financial impact on sales and income will be
included in financial results and the financial forecast for the 2 ndquarter once the acquisition is realized.

9＜Causes of Fluctuation in Consolidated Sales & Income（Forecast）＞

FY2018 Sales・・・The main causes of variance are the following:
Negative Factors
The impact on exchange conversion for overseas sales ▲¥2.4 billion,
decrease in selling price ▲¥1 billion
Exchange loss▲¥0.6 billion, Official quotation of material ▲¥0.2 billion

Positive Factors
Increase in sales quantity ¥11.4 billion
FY 2018 Operating Income・・・The main causes of change are thefollowing:
Negative Factors
Increase in depreciation ¥ 1.1 billion, decrease in sale price ¥1 billion
Increase in expenses ¥ 0.9 billion, exchange loss ¥0.6 billion
Increase in labor cost ¥0.5 billion, Increase in material price ¥0.2 billion
Positive Factors
Increase in selling quantity ¥3.4 billion, cost improvement ¥1.6 billion※Exchange sensitivity ¥0.1 billion per year10

＜Returns for Stockholders＞
We are on track to declare continuous and stable dividends that reflect
our business performance.
Total Dividends
FY2016 ¥1.6billion
FY2017 ¥1.6.9billion
FY2018 ¥1.7billion forecasted
Convertible Bonds
Of the ¥6 billion convertible bonds issued in March 2014, ¥5.953 billion
will be converted by the end of March 2018, resulting in a remaining
convertible bond balance of ¥47 million.
Time of maturity is March 19, 2019.
The capital was ¥7.2 billion; increased by ¥0.4 billion from the end of
the last term.
The total number of issued shares was 61,268,000 shares.

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＜Consolidated Total Assets ＞
Total assets at the end of FY2017
It was ¥159.6 billion; increased by ¥18.7 billion from the previous
term.
Main Increase Factors“Tangible and intangible fixed assets” was increased by ¥10.8
billion due to aggressive capital investment“Investments and other assets” was increased by ¥4.7 billion due
to rising stock price in the Japanese market and other factors.

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＜FY2017 Sales Results by Segment＞
Business Divisions
Stamping & Molding:¥83.2 billion; 70% of the total.

Valve Business:¥34.2 billion; 30% of the total.

By RegionJapan¥63 billion; 50% of the total

North America ¥29 billion; 20% of the total
Asia¥25.7 billion; 20% of the total

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＜Business Segment：Stamping & Molding Business Result&Forecast＞
Sales
・FY2017 Results
New products increased in Japan, Asia, and North America. It
contributed to the increase in income by 17.4% from the previous term.
・FY2018 Forecast
Sales is forecasted to be flat in Asia but will increase in Japan and North
America by extending business.
6.9% increase in income is forecasted from the previous term.
・FY2017 Results
19.5% decrease in income due to the increased cost of launching new
products and increased depreciation, even though selling quantity wasincreased and cost was improved.
・FY2018 Forecast
Operating Income is forecasted to increase by 61.2% due to the increaseof selling quantity and cost improvement even though due to increased
capital investment and depreciation, increased labor cost and expenses
due to the increase of production quantity.

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＜Business Segment：Valve business Results & Forecast＞
Sales
・FY2017 Results
Sales increased by 5.1% from the previous term due to increased selling
quantity of control devices products and forging products, in addition to
the impact of foreign currency conversion by depreciation of the yen.
・FY2018 Forecast
4.1% increase from the previous term is forecasted due to the increaseof TPMS products and aluminum die cast in South Korea, even thoughsales will decrease due to an impact on exchange conversion.
Operating Income
・FY2017 Results
Operating Income was decreased by 2.9% due to decreased selling price,soaring material unit price, increased depreciation and expenses, eventhough selling quantity increased, and there were exchange gain andcost improvement.
・FY2018 Forecast
8.3% decrease from the previous term due to the impact on exchange
loss, decreased material price, and increase of depreciation.

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＜Regional Segment：Japan Results & Forecast＞
Sales
・FY2017 Results
Sales were increased by 9.2% from the previous term; because domestic
production of automobiles for our main customers steadily changed anddue to expansion of new products.
・FY2018 Forecast
5.5% increase from the previous term is forecasted due to the expansionof business even though production of automobiles for our main
customers will be at the level of the previous term.
Operating Income
・FY2017 Results
Operating income was increased by 3.6% from the previous term due toincreased selling quantity and cost improvement, even though there wereincreased labor cost and expenses, and increased depreciation forstrategic capital investment.
・FY2018 Forecast
6.6% decrease from the previous term is forecasted due to the decrease
in selling price, exchange loss, and increase in depreciation.

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＜Regional Segment：Europe and North America Results & Forecast＞

Sales
・FY2017 Results
Sales were increased in 22.0% from the previous term due to theincreased operation in Tennessee plant, the 2nd base in the US, in
addition to increased selling price for the newly launched car
・FY2018 Forecast
12.8% increase from the previous term is forecasted due to the increase
in selling quantity, even though sales will be decreased due to the impact
on exchange conversion.
Operating Income
・FY2017 Results
Operating Income was decreased by 22.4% from the previous term due
to increased cost of launching new models and depreciation for theinvestment to enhance productivity.
・FY2018 Forecast
32.2% increase from the previous term is forecasted due to the increase
in selling quantity and cost improvement, even though there will be theincrease of depreciation and labor cost and expenses due to the increasein production.
※The new subsidiary in Belgium will be included in consolidation in FY2018.

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＜Regional Segment：Asia Results & Forecast＞
Sales
・FY2017 Results
Sales were increased by 16.0% from the previous term due to increased
molding business in Thailand and aluminum die cast business in South
Korea, in addition to increased stamping and TPMS business in China.
・FY2018 Forecast
Sales are forecasted to be at the level of the previous term due to theincrease in TPMS and aluminum die cast products in China and South
Korea, even though sales will decrease due to the impact on exchange
conversion.
Operating Income
・FY2017 Results
Operating Income was decreased by 44.1% from the previous term due
to increased cost of launching the new models and increased
depreciation, even though selling quantity increased
・FY2018 Forecast
79.1% increase from the previous term is forecasted due to the increase
in selling quantity and cost improvement.

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＜FY2018 Sales Forecast by Segment ＞
Business Divisions
Sales of Stamping and Molding ¥89 billion;
Sales of Valve business

70% of the total¥35.7 billion; 30% of the total

Regional SegmentJapan¥66.5 billion; 50% of the total

Europe and North America ¥32.7 billion; 30% of the total
Asia¥25.8 billion; 20% of the total

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＜Consolidated Cash Flow ＞
FY2017
Sales activity gained ¥17.9 billion in cash. Capital investment resulted in
expense of ¥22.2 billion and minus of ¥4.2 billion in free cash flow.
Financial activity gained ¥5.2 billion. Cash flow at the end of March 2018
resulted in ¥13.1 billion; increased by ¥0.8 billion from the previous
term.
Interest-bearing debt is ¥30.5 billion, including convertible bond.
FY2018 Forecast
In forecast, sales activity will gain ¥18.5 billion in cash, capital
investment will be ¥22.1 billion, acquisition of business will cost ¥19
billion, and the total expense will be ¥41.9 billion.
As a result, free cash flow will be ¥23.3 billion minus.
In forecast, financing activity will gain ¥27 billion, cash at the end of theperiod will be ¥16.8 billion, and interest-bearing debt will be ¥59.3
billion.

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＜Capital Investment and Depreciation＞
Capital Investment
FY2017 Results¥20.8 billion

In Stamping and molding business, we constructed ultra high tensile
stamping processing line.
In Valve business, we invested in aluminum die cast business, forging
products, and expansion of TPMS business in China.
FY2018 Forecast¥19.4 billion

In Stamping and molding business, we will continue to add new ultrahigh tensile stamping processing lines in Japan, North America, andChina etc.
For Valves, we will expand our processing lines in North America andChina due to expanding TPMS regulations.
Depreciation
Due to high level capital investment:
FY2017 Results¥9.9 billion （+17.9% from the previous term）

FY2018 Forecast ¥12.1billion （+22.4% from the previous term）

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＜Reference: Individual Financial Result＞
Sales
・FY2017 Results
Sales were ¥71.7 billion; 8.4% increase from the previous term due to gaining
new sales.
・FY2018 Forecast
Forecast shows that sales will gain ¥78 billion; 8.8% increase from the previous
term due to the expansion of ultra high tensile stamping products, despite thatfact that there will be decreases in selling price and exchange loss.
Income・FY2017 Results
Operating income and net income increased due to the increase in selling
quantity and cost improvement, even though there were decreases in selling
price, increases in labor cost and expenses due to the increase in production
quantity, and increased depreciation due to aggressive capital investment.
※Current net income was decreased because of extraordinary income in
the previous term.
・FY2018 Forecast
Decrease in income is forecasted due to decrease in selling price and increase indepreciation.

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＜PACIFIC GLOCAL VISION 2020＞
With the turning point of the 80th anniversary of our founding, and as amilestone toward our 100th anniversary, we established long-term vision plan
named “PACIFIC GLOCAL VISION 2020”.
In our long-term vision, “CSR” is positioned as the most important management
assignment. We aim to evolve business structure through “ 5 SHINKA” and to
become a top class GLOCAL manufacturer of technology components byenhancing corporate value through “fused management ”.

＜Medium-Term Management Plan”OCEAN-20”＞
Consolidated sales target: ¥140 billion; 35% increase from FY2016 results.
Stamping &molding business: ¥96.5 billion; 36% increase from FY2016
results.
Valve/TPMS business: ¥43 billion; 32% increase from FY2016 results
On the profit side, we use the consolidated operating income margin directly
representing the profitability of our core business as an indicator and we will
adhere to the present margin of 8% range as a target.
As for the efficiency of assets, we aim for a target of 7% by using ROA basedon operating income as an indicator.
Revision of the medium-term management plan concerning "acquisition of
Schrader valve business“ will be disclosed when we announce the second
quarter financial results.

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＜The environment surrounding our company＞
In the automobile industry, we are in the midst of a major revolution that
occurs only once every 100 years due to evolving globalization andvarious paradigm shift, such as the expansion of emerging market,
acceleration of overseas production transfer, transition to next generation
cars, and entry from connected, IoT, AI, and different industries.
Safety and environmental regulations, among others, demand further
improvement of safety performance, environmental performance, andcomfort performance. Interconnectivity between people and cars will
progress with electricization /intelligence / informationization.
Furthermore, demand for weight reduction, which is quickly becoming acore requirement for good car production, continues to accelerate.
We will work on “OCEAN-20” in order to meet our customers’ needs andthese industry trends.

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＜Technological development focused on weight reduction＞
Our stamping products have deepened our technology to meet the needfor lightweight body shells for improving fuel economy and crash safety
needs
As for cold stamping, we established ultra high tensile material
processing technology and are currently in mass production. We willfurther advance our R&D initiatives to expand our range of processable
materials.
We are acquiring hot stamping technology, which heats the steel prior toforming it, and we are advancing equipment installation in order to meet
our customers’ needs.
We are also developing fusion technologies for aluminum.
Our Friction Stir Welding (FSW) technology has received great praise.

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＜Ultra High Tensile Global Production System ＞
Domestically, we established tripolar system in Chubu, Tohoku, andKyushu along with our main customers’ production system.
Overseas, we have established two bases in the US, two bases in China,
and one base in Taiwan. We have launched a new stamping site in
Thailand and are proceeding to deploy equipment there.
In Thailand, we already had existing business operations for tire valvesand plastic automobile components. We have now launched establishedthe new subsidiary, Pacific Auto Parts (Thailand) Co., Ltd. in order tomeet the localization needs for stamping products for automobiles. Plant
construction was completed last September.
Operation will start in June 2018 after preparing production equipment.
We will deploy large-class stamping machines and aim to increase orders
in the expanding ASEAN market.

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＜Expansion of Forging Stamping /Plastic Molding Business＞
Forging Stamping BusinessWe offer thin and lightweight products that were impossible byconventional methods such as sintering and forging, using plate forming
technology combining sheet metal forming productivity and highprecision of cold forging.
Plastic Molding BusinessAs a result of anti-vibration urethane foaming technology, we developed
an all-urethane engine cover which has improved weight saving, space
efficiency, and further improved soundproofing performance.
From now on, we will promote material development and production
technology development of urethane foam, further enhancesoundproofing and vibration isolation performance, and realize worldclass performance.
The demand for comfort of the vehicle is increasing more and more.
We believe that the need for quietness continues to be high, including thesound isolation of motor sound even as EV conversion progresses, andwe will continue to propose products that utilize this technology.

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＜Evolution and Expansion of TPMS Products＞
We are expecting further market expansion for TPMS (Tire Pressure
Monitoring System). But first, some background explanation is in order.
We have been mass producing TPMS transmitters since 1999. Since
then, we have met our customers’ needs and developed more reliable
products. As an exclusive TPMS transmitter manufacturer, in addition to
our convention clamp-in type, we also offer easily attachable snap-in
models.
One of our strengths as the only manufacturer of transmitters in Japan is
our ability to offer high quality products in an integrated production
system which spans from design and R&D to full production.
We have recently developed the E-type transmitter, which is small andlight-weight TPMS, and have begun mass production.
In order to achieve further functional improvement and design variations,
we will continue to advance weight reduction and size minimization for
future model generations.
In production and sales, we will establish a global system to comply withthe flow of legal regulation in various countries around the world.
In China, legislation mandating TPMS installation on vehicles has officiallypassed. We are planning to increase our production capacity along with
the increased demand.

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＜Our Technology Adopted on New Camry＞
In Japan and the US, our various products and technology have been
adopted on the new Camry launched last July, which was based on
TNGA.
Our technology will gradually continue to be adopted by other car models
throughout the globe.
Stamping Products
Ultra high tensile material of 1180Mpa level parts with cold stamping
technology utilization, battery cases with battery cooling structure andinsulation measures, and aluminum products with friction stir welding(FSW) are all products of ours which have been selected for adoption.
Plastic Products
All urethane engine cover has been adopted; its weight reduction, space
efficiency and sound proofing was improved as a result ofsound/vibration-proof urethane foaming technology.
TPMS Products
All are adopted standard on all cars for Japan, not only for North
America.
Forging Pressure Products
They are adopted on 8th speed AT for gasoline-powered vehicle.

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＜Schrader Valve Business Acquisition Outline＞
We are acquiring all the shares of the three Schrader Group, which has
valve manufacturing and sales operations (excluding TPMS business) for
automobiles and industrial machinery from Sensata Technologies Holding
PLC based in the UK. We announced this decision on May 22, after
signing the agreement through the resolution of our Board of Directors.
Subject Subsidiary
Schrader-Bridgeport International, Inc. in North America
August France Holding Company SAS in France
Schrader SAS（Subsidiary of August France Holding Company SAS）
Acquisition price was $ 173 million; Converted into Japanese currency, it
is about ¥19.2 billion.
It is to be appropriated by bank borrowing.
Total stock acquisition completion date is estimated in July 2018,
assuming that necessary regulatory procedures, including FTC (USFederal Trade Commission) review in the US and explanation to theWorks Council for employees of the French business as stipulated by law
and regulation are completed without delay.

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＜Acquisition Target Company Profile （United States）＞
Schrader-Bridgeport International Inc. in the United States is a leader inthe valve business which is in Altavista, Virginia, celebrating its 100th
anniversary. It is engaged in the development, manufacture and sales ofautomotive tire valves, fuel valves, and valves for aircraft and industrial
equipment. Its sales are $100 million.

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＜Acquisition Target Company Profile （France）＞
Schrader SAS, under the control of August France Holding Company SAS
in France, is located in Pontarje, Burgundy region, and occupies theleading position of tire valves and valve cores.
Its sales are € 91 million.

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＜Business Acquisition Goals and Strategic Significance＞
The automobile industry is now faced with a revolutionary period which
occurs only once in 100 years, so strengthening our business foundation
is an urgent issue.
We are implementing our action plan; the mid-term management plan
“OCEAN-20”, under our long-term vision “PACIFIC GLOCAL VISION
2020”.
In order to secure growth potential and cost competitiveness, including in
our initial valve enterprise and its related TPMS business, it is imperativethat we not only continue our own in-company response activities, butalso speed up integration of new business thorough business acquisition.
By doing this, the new SCHRADER brand will be added to our PACIFIC
brand, and we will gain a leading position in the industry.
This also makes it possible to optimally utilize our operations in all four
markets in Japan, North America, Europe and Asia.
We are sure that this will help to take a step to be “a Top-Class GLOCAL
Manufacturer of Technology Components” and this will lead to enhance
our corporate value and strengthen business bases.

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＜Strategic Significance＞
Integration of both brands enables our Valve business of tire valves,
valve cores, and valves for car air conditioners to gain a strong position
in production and sales.
As for TPMS also, it can enforce complementary relationship with valve
business.

For fuel system valves, valves for aircraft and valves for industrial
machinery, we can take the advanced SCHRADER business, and bycombining these 2 brands, we can become a leading generalmanufacturer of valves.

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＜Strategic Significance＞
PACIFIC brand, which is superior in Japan, the US, Belgium, China, South
Korea, and Thailand.
SCHRADER brand, which is superior in the US and France.
Once these 2 brands are merged, we will gain customers and markets infour leading market regions,and prepare to develop and produce locally.
By this acquisition, we are expected to have overseas subsidiaries at 15
locations in 7 countries.

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＜Strategic Significance＞
When we see this FY2017 results simply totaled, sales increased by 13%.
Percentage of valve business in the entire company will be 38%.
Overseas ratio will be 53%.
This will enable us to attain significant progress to becoming the “topclass GLOCAL manufacturer of technology components” that we want tobe.
The impact of this action on our business as of the end of March 2019, as
well as on our mid-term management plan “OCEAN-20” will be included
in results for the 2nd quarter and business forecast after post-acquisition
investigation is completed.

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＜Aim for 100-year Corporation＞
In 2015, on the 85th anniversary of foundation, we established “PACIFICVALUES” as universal values of “Spirit of establishment”, “Corporate
philosophy”, pioneers’ hardship, and our history to look back over andshare these with Pacific group.
We, the group employees, will share “attitude” and “value” such as“dreams and challenges“ and “trust and respect”, work along with safety,
quality, environment, productivity etc., endeavor to create humanresources who have an improvement mindset and promote business
innovation.
Our company will celebrate 100 years of business in 2030. Our GLOCAL
employees will share “PACIFIC VALUES”, our common value, and offer
safety, quality, productivity, R&D, and production engineering.
We will also promote social contribution and activities with good
governance, and endeavor to enhance corporate value and strengthen
our company foundation.

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