Financial Overview

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	91,976	83,700	9.9	-
Operating income	5,500	4,340	26.7	-
Ordinary income	7,062	5,372	31.5	-
Net income	4,587	2,807	63.4	-
Stamping/resin product business
Sales	64,529	59,614	8.2	-Even though production levels at customers in Japan were nearly the same as they were the previous year, they were higher in the U.S.A. and China. In addition, favorable currency translation due to the weak yen contributed to higher sales.
Operating income	1,334	1,449	(7.9)	-Even though the Company improved its material resources and reduced the costs of goods, it incurred higher expenses in connection with launching operations in China.
Valve product business
Sales	27,087	23,747	14.1	-Sales of valves and TPMS products were strong, sales of compressor products significantly increased in Korea, favorable currency translation due to the weak yen.
Operating income	4,177	2,928	42.7	-Improvement in material resources, lower costs of goods, and favorable currency translation due to the weak yen.

Expanding business in the TPMS (Tire Pressure Monitoring Systems)

-Factory-installed tire pressure monitoring systems are already mandatory in North America, Europe, and Korea. With safety regulations already being enacted in North America and fuel-efficiency regulations being enacted in Europe and other regions, TPMSs are being introduced. In addition, Taiwan and Russian are planning to enact regulations. Considering that there is a possibility that Japan and China will enact regulations, the Company is expanding its production volumes in the U.S.A. and China.

-In January 2014, the Company produced its 100 millionth unit.

-As of May 2014, the Company has a 22% market share of TPMSs in North America.

-Production operations of TPMSs are as follows:

Production facilities (Location)		Annual production capacity as of 2016 (Planned)	Sales Regions
Kita Ogaki Plant (Gifu Pref., Japan)		16 million units	Worldwide
Pacific Auto Parts Technology (Changshu) Co., Ltd. (Jiangsu, China)		3 million units	China, etc.
Pacific Manufacturing Ohio, Inc. (Ohio, USA)		3 million units	North America, Europe

Medium-term management plan OCEAN-15

OCEAN-15 numerical targets		FY2015 (Planned)
Sales		JPY 95 billion
Ordinary income		In the 6% range
Percentage of revenue generated overseas		Over 40%
Total asset turnover		1.05

 
-Initiatives to achieve the objectives outlined in the mid-term management plan.
<Strategy for products and technology>
1. TPMS: Localize production in China
-TPMSs, which contribute to automotive safety and fuel efficiency, are becoming mandatory in various countries worldwide. Under the assumption that China will also enact regulations, the Company established a subsidiary in Changshu, called Pacific Auto Parts Technology (Changshu) Co., Ltd., in July 2014. Commercial operations are scheduled to start in April 2016. All of the JPY 3,000 million in capital investment for the subsidiary was invested by the Company.

2. Reducing weight based on ultra-high-tensile processing technology
-The Company will establish new production lines to manufacture structural components that have the strength of 1.2–1.5 GPa by fiscal year 2015. The Company plans to introduce large stamping machines of 2,500-3,000 tons at its three Japanese plants in Gifu Prefecture, the Kyushu region and the Tohoku region. It also plans to install these machines at facilities in the USA and China. This will allow the Company to manufacture products using ultra-high-tensile steel plates. In addition, Pacific Industrial will produce hot stamped parts at another plant in Gifu Prefecture. This will be the Company's first entry into the manufacture of hot stamped parts. Total investment in the new equipment is estimated to be JPY 2.4 billion. Through these projects, the Company is poised to meet the needs of automakers that are developing lightweight vehicles with high collision performance. (From an article in the Nikkan Jidosha Shimbun on November 20, 2013)

3. Strengthening high-precision-stamping capabilities
-Due to the net shape of high-precision parts for engines and transmissions, they can be produced through stamping. The Company is aiming to increase its sales by 50% by the end of the fiscal year that ends in March 2019 by strengthening production, developing new technology, and winning more customers.

4. Expanding business by manufacturing aluminum die-cast products

Outlook for FY ending Mar. 31, 2015

(in million JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	93,000	91,976	1.1
Operating income	6,500	5,500	18.2
Ordinary income	7,400	7,062	4.8
Net income	5,000	4,587	9.0

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Expenses

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	735	647	603
-Stamping/resin products business	176	133	122
-Valve products business	479	447	344
-In Common	71	58	133

 

R&D Structure

-The R&D organization consists of the technology and production technology functions at each business, and the technology planning function.
-Advancing collaboration among concerned departments company wide, the Company conducts R&D activities based on joint industry-academia-public collaboration such as with specialized manufacturers, universities, and research institutes, in order to create new materials and new production methods for new products, enhance its competitive strengths, and speed up R&D activities.
-The Company's subsidiary, PI Systems, conducts R&D activities on software.

R&D Activities

Business segment	Departments	Major activities
Stamping/resin products business	-R&D department of the Technology Planning Center; Stamping Technology and Plastics Technology Departments of the plastics business	-Stamped products: development of cold stamping technology to strengthen ultra-tensile materials; and new production methods for hot stamping -Plastic products: development of forming technology in order to reduce weight, soundproof, and heat proof; creation of plastic interior of double-tank oil pans that reduced weight, and not only lowered fuel consumption but also improved it.
Valve products business	-R&D and Production Technology Departments of the valve business, R&D Department of the TPMS business	-Tire valves: development of valve caps that have thin, metal skins with plastic surfaces -Automotive air-conditioner valves: development of pressure control valve for electric compressors -TPMS: development of automatic locator that can automatically detect the position on the tire where TPMS are attached -High-precision stamped products: expanding uses for parts by mass-producing sensor plates, etc.
Common	-Technology Planning Center	-R&D activities on compound materials -R&D activities on metal-plasticity processing -The Company is developing products designed for its TPMSs. -The Company is working to develop environmentally friendly products that require less materials and reduce environmental impact.

Product Development

Ultra-light-weight, foam engine cover
-The Company developed an ultra-light-weight foam engine cover, for which it was presented the Award for Best Automotive Part in the 2013 Environmental Technology Awards, sponsored by the Monozukuri Nippon Conference and the Nikkan Kogyou Shinbun (Daily Industrial Newspaper).

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Stamping/resin products	8,100	4,209	4,688
-In Japan	4,356	2,012	3,322
-Outside Japan	3,744	2,197	1,366
Valve products	3,013	3,610	2,139
-In Japan	1,406	987	-
-Outside Japan	1,606	2,623	-
Others	103	30	-
Elimination	(49)	(29)	-
Total	11,168	7,820	6,855

 
<Stamping/resin products>
-In Japan: installed stamping machines at plants in Higashiogaki, Kyushu, and Kurihara in order to boost production capacity; invested to increase production capacity and manufacture to new products such as dies for new vehicle models.

-Outside Japan: installed stamping machines to expand stamping operations at Tianjin, China; set up new facilities and installed stamping machines at production plant in Changsha, China; invested in North American stamping business to manufacture new products.

<Valves>
-In Japan, the Company mainly invested to upgrade assembly lines for TPMSs and increase production of valves.
-Outside Japan, the Company invested to increase production of compressors in Korea.

-The Company plans to invest JPY 16,090 million as capital expenditure during FY ending Mar. 2015.

Investment in Japan

Production optimization in Tohoku region
-The Company announced that it will expand its Kurihara Plant in Miyagi Prefecture by the fall of 2014. The Kurihara Plant produces plastic automotive components and performs welding and surface-finishing processes for stamped vehicle components. The Company plans to construct an additional plant and install press machines to create an integrated production structure for stamped body components. New operations are expected to start in November 2014. The expansion will allow the Company to localize production of stamped body products for its customers in the Tohoku (northeast) region by transferring the operations from its main plant in central Japan. At the same time, the Kurihara Plant's molding and painting lines for plastic products will be transferred to the nearby Wakayanagi Plant. The Company intends to invest approximately JPY 2.3 billion in this project to optimize its production structure in northeast Japan. (From an article in the Nikkan Jidosha Shimbun on November 5, 2013)

Investment Outside Japan

<Thailand>
-The Company announced that its Thai subsidiary, Pacific Industries (Thailand) Co., Ltd., has finished the construction of a second plant, which manufactures resin products such as wheel caps as well as tire valves. Mass production of wheel caps is scheduled to start at the beginning of 2014. (From a press release on July 13, 2013)

Planned Capital Investments

(As of Mar. 31, 2014)

Facility (Location)	Business segment	Purpose	Planned total investment (in million JPY)	Start	Planned completion	Production capacity growth after completion
The Company Nishi Ogaki Plant (Gifu Pref., Japan)	Stamped and resin	New products, etc.	4,011	Oct. 2013	Mar. 2016	-
The Company Higashi Ogaki Plant (Gifu Pref., Japan)	Stamped and resin	New products, etc.	1,902	Aug. 2012	Aug. 2015	10% production capacity increase of stamped and plastic products
The Company Yoro Plant (Gifu Pref., Japan)	Stamped and resin, Valve	Production expansion, etc.	1,297	Oct. 2011	Mar. 2017	50% production capacity increase of high-precision, stamped products
The Company Kurihara Plant (Miyagi Pref., Japan)	Stamped and resin	Production expansion, etc.	2,795	Mar. 2013	Jun. 2015	Expand product-plant building; install stamping facilities
The Company Kyushu Plant (Fukuoka Pref., Japan)	Stamped and resin	New products	202	May. 2013	Aug. 2015	-
The Company Kita Ogaki Plant (Gifu Pref., Japan)	Valve	New products, etc.	1,700	Mar. 2012	Jun. 2016	-
The Company Mino Plant (Gifu Pref., Japan)	Valve	Production expansion, streamlining　etc.	302	Dec. 2013	Feb. 2016	-
The Company Headquarters (Gifu Pref., Japan)	Common	R&D, etc.	389	Mar. 2013	Apr. 2015	-
Pacific Manufacturing Ohio, Inc. (Ohio, USA)	Stamped and resin, Valve	New products, etc.	426	Apr. 2014	Mar. 2015	-
Pacific Manufacturing Tennessee, Inc. (Tennessee, USA)	Stamped and resin	New products, etc.	1,800	Jun. 2014	Jul. 2015	Construct plant building; install new stamping machines
Pacific Valve Industrial Co., Ltd. (Yangsan, Korea)	Valve	Maintenance and retooling, etc.	196	Jan. 2014	Dec. 2014	-
Pacific Air Controles Co., Ltd. (Asan, Korea)	Valve	Production expansion, etc.	1,915	Jan. 2014	Dec. 2014	40% production capacity increase for compressor products
Pacific Industries (Thailand) Co., Ltd. (Chachoengsao, Thailand)	Stamped and resin	Maintenance and retooling, etc.	136	Apr. 2014	Mar. 2015	-
	Valve	New products, etc.	215	Apr. 2014	Mar. 2015	-
Tianjin Pacific Auto Parts Co., Ltd. (Tianjin, China)	Stamped and resin	New products, etc.	1,876	Jan. 2013	Dec. 2014	Expand stamping processes
Changsha Pacific Hanya Auto Parts Co., Ltd. (Changsha, China)	Stamped and resin	New products, etc.	2,537	Jan. 2013	Dec. 2014	Construct plant building; install new stamping machines
Pacific Auto Parts Technology (Changshu) Co., Ltd. (Changshu, China)	Valve	New products, etc.	3,000	Jul. 2014	Mar. 2016	New facilities to produce TPMS products