KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2017

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2017

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Note 3) March 31, March 31, ASSET S Current Assets: Cash in hand and in banks (Notes 4 and 12) \ 2017 18,181 \ 2016 14,649 $ 2017 162,047 Notes and accounts receivable Trade (Note 12) 18,620 18,832 165,962 Other 875 482 7,801 Electronically recorded monetary claims-operating (Note 12) 7,272 6,657 64,817 Merchandise and finished goods 8,282 9,291 73,820 Work in process 4,692 4,532 41,820 Raw materials and supplies 6,963 7,088 62,065 Deferred income tax assets (Note 9) 1,223 1,074 10,907 Other current assets 1,928 959 17,190 Less: Allowance for doubtful accounts (68) (68) (614) Total current assets 67,972 63,501 605,817 Property, Plant and Equipment: Buildings and structures 24,894 38,885 221,876 Machinery and equipment (Note 6) 59,182 57,630 527,476 84,077 96,516 749,352 Less: Accumulated depreciation (60,232) (69,361) (536,828) 23,845 27,154 212,524 Land (Note 6) 9,812 11,063 87,458 Construction in progress 1,064 570 9,491 T otal property, plant and equipment 34,722 38,788 309,474 Intangible assets 6,881 5,545 61,332 Investments and Other Assets: Investments in securities (Notes 5 and 12) 6,108 8,505 54,442 Deferred income tax assets (Note 9) 127 101 1,136 Assets for retirement benefits (Note 10) 174 99 1,559 Other assets 3,163 2,884 28,198 Less: Allowance for doubtful accounts (3) (4) (31) T otal investments and other assets 9,571 11,586 85,305 Total assets \ 119,148 \ 119,422 $ 1,061,927 The accompanying notes are an integral part of these financial statements. 1

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET LIABILITIES AND NET ASSETS (Note 3) March 31, March 31, Current Liabilities: Accounts payable - Trade(Note 12) \ 6,138 \ 6,405 $ 54,711 Other. 2,171 1,915 19,356 Current portion of long-term debt (Notes 6 and 12) 3,357 3,587 29,922 Short-term borrowings (Note 6). 1,496 2,025 13,337 Income taxes payable. 1,459 864 13,009 Consumption tax payable 553 280 4,934 Accrued bonuses to employees.. 2,068 1,697 18,438 Accrued bonuses to directors 163 169 1,458 Other current liabilities 2,198 2,093 19,597 Total current liabilities 19,608 19,040 174,763 Long-term Liabilities: Long-term debt (Notes 6 and 12) 19,934 19,395 177,665 Liabilities for retirement benefits (Note 10) 413 344 3,684 Accrued retirement benefits to directors, corporate auditors and operating officers 352 282 3,138 Accrued stock-based benefits to directors and officers 36-324 Deferred income tax liabilities (Note 9) 1,164 1,477 10,379 Asset retirement obligations (Note 14) 441 424 3,935 Other long-term liabilities 2,305 2,360 20,548 Total long-term liabilities 24,647 24,284 219,674 Contingent Liabilities (Note 15) Net Assets (Note 17) Shareholders' Equity Common stock -.. 21,207 21,207 189,011 Authorized: 400,000,000 shares in 2017 and 2016 Issued: 110,396,511 shares in 2017 and in 2016 Capital surplus 5,743 5,743 51,186 Retained earnings 49,138 45,118 437,953 Less: Treasury stock -.. (5,042) (1,193) (44,941) (9,006,421 shares in 2017 and 3,181,222 shares in 2016) Total shareholders' equity 71,046 70,875 633,210 Accumulated other comprehensive income Net unrealized gains on other securities 1,972 2,745 17,583 Translation adjustments 567 1,220 5,054 Retirement benefits liability adjustments 204 228 1,824 Total accumulated other comprehensive income 2,744 4,194 24,460 Non-controlling interests 1,101 1,027 9,821 Total net assets.. 74,892 76,096 667,490 Total liabilities and net assets \ 119,148 \ 119,422 $ 1,061,927 2 The accompanying notes are an integral part of these financial statements.

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Note 3) Year ended Year ended March 31, March 31, Net Sales \ 114,101 \ 117,278 $ 1,016,950 Cost of Sales (Note 11) 82,405 87,356 734,449 Gross profit.. 31,696 29,922 282,501 Selling, General and Administrative Expenses (Notes 7 and 11). 22,767 22,676 202,919 Operating income. 8,929 7,245 79,582 Other Income (Expenses): Interest income. 97 39 866 Dividend income 211 179 1,886 Assurance income. 133 131 1,191 Interest expenses.. (234) (219) (2,086) Sales discounts (376) (386) (3,356) Foreign exchange gains (losses). (19) 82 (177) Losses on sales of notes receivable (23) (23) (210) Gains (losses) on sales or disposal of property, plant and equipment, net (127) (33) (1,139) Gains on sales of investments in securities.. 2,097 75 18,696 Gains on transfer of business.. - 170 - Impairment losses on fixed assets (Note 8) (3,756) - (33,477) Write-downs of investments in securities (0) - (2) Other, net 94 228 841 (1,903) 243 (16,967) Profit before income taxes.. 7,025 7,488 62,616 Income Taxes (Note 9): Current 2,370 2,198 21,124 Prior years' adjustments (622) - (5,546) Deferred (238) 284 (2,122) 1,509 2,483 13,456 Profit attributable to : 5,515 5,005 49,160 Non-controlling interests (115) (90) (1,029) Owners of parent \ 5,400 \ 4,915 $ 48,131 The accompanying notes are an integral part of these financial statements. 3

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Note 3) Year ended Year ended March 31, March 31, Profit \ 5,515 \ 5,005 $ 49,160 Other comprehensive income: Net unrealized losses on other securities (772) (576) (6,883) Translation adjustments (670) (1,639) (5,978) Retirement benefits liability adjustments (23) (77) (213) Total other comprehensive income (Note 16) (1,466) (2,293) (13,074) Comprehensive income \ 4,048 \ 2,712 $ 36,086 - Attributable to owners of parent.. \ 3,950 \ 2,670 $ 35,207 - Attributable to non-controlling interests.. \ 98 \ 41 $ 879 4 The accompanying notes are an integral part of these financial statements.

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS For the Year Ended March 31, 2017 Shareholders' equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Balance at April 1, 2016 21,207 5,743 45,118 ( 1,193) 70,875 Changes during the year Cash dividends paid (1,380) (1,380) Profit attributable to owners of parent for the period 5,400 5,400 Purchase of treasury stock (3,851) (3,851) Disposal of treasury stock 0 1 1 Net changes in items other than those in shareholders' equity Total changes during the year - 0 4,020 (3,849) 170 Balance as of March 31, 2017 21,207 5,743 49,138 ( 5,042) 71,046 Net unrealized gains on other securities Accumulated other comprehensive income Retirement benefits liability adjustments Total accumulated other comprehensiv e income Non - controlling interests Translation adjustments Total net assets Balance at April 1, 2016 2,745 1,220 228 4,194 1,027 76,096 Changes during the year Cash dividends paid (1,380) Profit attributable to owners of parent for the period 5,400 Purchase of treasury stock (3,851) Disposal of treasury stock 1 Net changes in items other than those in shareholders' equity (772) (653) (23) (1,450) 74 (1,375) Total changes during the year (772) (653) (23) (1,450) 74 (1,204) Balance as of March 31, 2017 1,972 567 204 2,744 1,101 74,892 The accompanying notes are an integral part of these financial statements. 5

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (Note 3) Shareholders' equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Balance at April 1, 2016 $189,011 $51,186 $402,121 ($10,633) $631,686 Changes during the year Cash dividends paid (12,300) (12,300) Profit attributable to owners of parent for the period 48,131 48,131 Purchase of treasury stock (34,323) (34,323) Disposal of treasury stock 0 15 15 Net changes in items other than those in shareholders' equity Total changes during the year - 0 35,832 (34,308) 1,524 Balance as of March 31, 2017 $189,011 $51,186 $437,953 ($44,941) $633,210 Net unrealized gains on other securities (Note 3) Accumulated other comprehensive income Retirement benefits liability adjustments Total accumulated other comprehensiv e income Non - controlling interests Translation adjustments Total net assets Balance at April 1, 2016 $24,466 $10,882 $2,037 $37,384 $9,155 $678,226 Changes during the year Cash dividends paid (12,300) Profit attributable to owners of parent for the period 48,131 Purchase of treasury stock (34,323) Disposal of treasury stock 15 Net changes in items other than those in shareholders' equity (6,883) (5,828) (213) (12,924) 665 (12,259) Total changes during the year (6,883) (5,828) (213) (12,924) 665 (10,735) Balance as of March 31, 2017 $17,583 $5,054 $1,824 $24,460 $9,821 $667,490 6 The accompanying notes are an integral part of these financial statements.

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS Shareholders' equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Balance at April 1, 2015 21,207 9,430 41,618 ( 4,407) 67,849 Changes during the year Cash dividends paid (1,406) (1,406) Profit attributable to owners of parent for the period 4,915 4,915 Purchase of treasury stock (510) (510) Disposal of treasury stock 0 0 0 Retirement of treasury stock (3,715) (9) 3,724 - Change in treasury shares of parent arising from transactions with non-controlling shareholders 27 27 Net changes in items other than those in shareholders' equity Total changes during the year - (3,687) 3,499 3,214 3,026 Balance as of March 31, 2016 21,207 5,743 45,118 ( 1,193) 70,875 Net unrealized gains on other securities Accumulated other comprehensive income Retirement benefits liability adjustments Total accumulated other comprehensiv e income Non - controlling interests Translation adjustments Total net assets Balance at April 1, 2015 3,321 2,811 306 6,439 1,204 75,493 Changes during the year Cash dividends paid (1,406) Profit attributable to owners of parent for the period 4,915 Purchase of treasury stock (510) Disposal of treasury stock 0 Retirement of treasury stock - Change in treasury shares of parent arising from transactions with non-controlling shareholders 27 Net changes in items other than those in shareholders' equity (576) (1,590) (77) (2,244) (177) (2,422) Total changes during the year (576) (1,590) (77) (2,244) (177) 603 Balance as of March 31, 2016 2,745 1,220 228 4,194 1,027 76,096 The accompanying notes are an integral part of these financial statements. 7

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Note 3) Year ended Year ended March 31, March 31, Cash Flows from Operating Activities: Profit before income taxes \ 7,025 \ 7,488 $ 62,616 Depreciation 4,148 4,019 36,972 Amortization of goodwill 438 327 3,907 Foreign exchange (gains) losses 37 79 332 Gross on sales of investments in securities. (2,082) (75) (18,561) Increase (decrease) in provision for allowance for doubtful accounts (4) 12 (39) Increase (decrease) in accrued bonuses to employees. 382 (66) 3,407 Increase (decrease) in liability for retirement benefits (62) (60) (557) Increase (decrease) in accrued retirement benefits to directors, corporate auditors and operating officers 30 (111) 272 Increase (decrease) in accured stock-based benefits to derectors and officers 36-324 Increase (decrease) in accrued bonuses to directors (1) 11 (16) Interest and dividend income (308) (219) (2,753) Interest expenses 234 219 2,086 (Gains) losses on sales or disposal of property, plant and equipment, net 127 33 1,139 Impairment losses on fixed assets 3,756-33,477 Proceeds from transfer of business - (170) - (Increase) decrease in notes and accounts receivable (673) 835 (6,001) (Increase) decrease in inventories.. 677 710 6,039 (Increase) decrease in other current assets 60 (28) 537 Increase (decrease) in accounts payable (61) (167) (547) Increase (decrease) in other current liabilities 843 (62) 7,517 Other, net (76) (72) (679) Sub-total.. 14,526 12,701 129,473 Interest and dividend income received 316 212 2,820 Interest expenses paid (211) (217) (1,882) Income taxes paid (1,938) (3,105) (17,278) Income taxes refunded 286-2,553 Net cash provided by operating activities 12,979 9,592 115,686 Cash Flows from Investing Activities: Payments for purchases of property, plant and equipment (4,476) (4,343) (39,896) Proceeds from sales of property, plant and equipment.. 1,119 222 9,979 Payments for purchases of intangible assets (1,956) (1,125) (17,440) Payments for purchases of investments in securities. (21) (470) (192) Proceeds from sales of investment securities 3,422 110 30,508 Purchases of investments in subsidiaries resulting in change in scope of consolidation.. (211) (3,732) (1,886) Proceeds from transfer of business - 170 - Other, net.. (17) (594) (158) Net cash used in investing activities (2,141) (9,763) (19,086) 8 The accompanying notes are an integral part of these financial statements.

KITZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Year ended Year ended March 31, March 31, Cash Flows from Financing Activities: Increase (decrease) in short-term borrowings, net (624) 418 (5,567) Proceeds from long-term debt.. 2,248 900 20,041 Repayments of long-term debt (2,887) (3,219) (25,735) Proceeds from issuance of bonds. 1,821 11,520 16,239 Payments for redemption of bonds (902) (6,630) (8,040) Proceeds from sales of treasury stock. 1 0 15 Payments for acquisition of treasury stock. (3,851) (510) (34,323) Cash dividends paid (1,380) (1,406) (12,300) Cash dividends paid to non - controlling shareholders (21) (22) (192) Payments for repurchase of treasury stock under Board Incentive Plan Trust (1,037) - (9,250) Other, net (206) (252) (1,842) Net cash provided by (used in) financing activities (6,838) 796 (60,953) Effect of exchange rate changes on cash and cash equivalents. (250) (149) (2,234) Net increase (decrease) in cash and cash equivalents.. 3,748 475 33,412 Cash and cash equivalents at the beginning of the year. 13,050 12,575 116,316 Cash and cash equivalents at the end of the year (Note 4) \ 16,799 \ 13,050 $ 149,728 The accompanying notes are an integral part of these financial statements. 9

KITZ CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1.Basis of Presenting the Consolidated Financial Statements: The accompanying consolidated financial statements of KITZ CORPORATION ( the Company ) and its subsidiaries (together, the Companies ) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan. Certain s in the prior years financial statements have been reclassified to conform to the current year s presentation. 2.Summary of Significant Accounting Policies: (1)Scope of Consolidation - Under Japanese accounting standards, a subsidiary and an affiliate are defined as follows: a subsidiary: a company in which the reporting entity directly or indirectly holds more than 50% of the voting rights thereof or which is deemed to be controlled directly or indirectly by the reporting entity; and, an affiliate: a company in which the reporting entity directly or indirectly hold 20% or more of the voting rights or in which the reporting entity is deemed to exercise significant influence, directly or indirectly, on its decision making. The Company had 33 subsidiaries as of March 31, 2017. All subsidiaries have been consolidated in the accompanying consolidated financial statements. Filcore Co., Ltd. is newly included in the scope of consolidation due to the acquisition of a majority of its shares by KITZ Micro Filter Co., Ltd. in November 2016. KITZ CORP. OF KOREA established in August 2016 is also included in the scope of consolidation. The major consolidated subsidiaries are listed below: Equity ownership percentage (*) Common stock Name of subsidiary (in millions) (*) KITZ Corporation of America.. 100% US$ 3 December Metalúrgica Golden Art s Ltda 100% BRL 64 December KITZ Corp. of Europe S.A. 100% Euro 0.4 December KITZ Europe GmbH 100% Euro 0.5 December Perrin GmbH 100% Euro 1.5 December KITZ Corp. of Asia Pacific PTE. LTD. 100% US$ 11 December KITZ (Thailand) Ltd... 92% T.Baht 500 December KITZ Corporation of Taiwan 100% NT$ 200 December KITZ Corporation of Kunshan. 100% CNY 62 December KITZ Corporation of Jiangsu Kunshan. 100% CNY 49 December KITZ Corporation of Lian Yun Gang.. 100% CNY 42 December KITZ SCT of Kunshan 100% CNY 22 December KITZ Corporation of Shanghai 100% CNY 10 December Toyo Valve Co., Ltd. 100% 100 March Shimizu Alloy MFG. Co., Ltd... 93% 90 March KITZ SCT Co., Ltd.. 100% 300 March Miyoshi Valve Co., Ltd... 100% 50 March KITZ Micro Filter Co., Ltd... 100% 90 March KITZ Metalworks Co., Ltd... 100% 490 March Hotel Beniya Co., Ltd. 100% 490 March (*) As of March 31, 2017 Year end (the last day of) 10

(2)Principles of Consolidation - All significant inter-company accounts and transactions and unrealized profits among the Companies, if any, have been eliminated on consolidation. The accounts of those subsidiaries who employ fiscal year-end dates other than March 31, have been consolidated with the Company based on the account balances at their respective year-ends (the difference is within 3 months) with appropriate adjustments for any material transactions taking place between the two year-end dates. (3)Cash and Cash Equivalents - Cash and cash equivalents in the accompanying consolidated statements of cash flows are composed of cash in hand, bank deposits readily convertible into cash, short-term investments with an original maturity of three months or less, which represent minor risks of fluctuation in value, and negative cash equivalents of overdrafts. (4)Financial Instruments - (Investments in debt and equity securities) Securities other than those relating to investments in subsidiaries and affiliates are classified into three categories; trading securities, held-to-maturity debt securities, and other securities. Trading securities held for the purpose of generating profits from changes in market values are recognized at their fair value and unrealized gains and losses are included in the determination of current income. Held-to-maturity debt securities are those expected to be held to maturity and these are recognized at their historical or amortized cost. Other securities, classified as other than trading securities, held-to-maturity debt securities, investments in subsidiaries and affiliates, are recognized at fair value and unrealized gains and losses on these other securities are reported as net unrealized gains on other securities in net assets after netting the tax effects thereon. Where the value of those securities is deemed impaired, the s deemed impaired are immediately charged to current income. With respect to investments with market value, the investments are written down to the market value if market value thereof is 50% or less of the book value at the year-end. For investments whose market value is more than 50% but is 70% or less than 70% of the book value at the year-end, the recoverability of the market value of such investments is considered at the judgment of impairment. (Derivative financial instruments) Gains or losses arising from changes in the fair value of derivatives designated as hedging instruments are deferred as an asset or liability and included in net profit or loss in the period in which the gains and losses on the hedged items or transactions are recognized in accordance with the Japanese accounting standard for financial instruments. The derivatives designated as hedging instruments are principally interest swaps, currency swaps and forward exchange contracts. The related hedged items are trade accounts receivable and payable, long-term bank loans, and debt securities. The Companies have a policy of utilizing the above hedging instruments in order to reduce the exposure to the risk of interest rate fluctuation. Thus, the purchases of the hedging instruments are limited to, at maximum, the s of the hedged items. The effectiveness of hedging activities is evaluated by reference to the accumulated gains or losses on except for the situation that the substantial terms and conditions of the hedge instruments and the hedged forecasted transactions on the same, the hedging instruments and the related hedged items from the commencement of the hedge transactions. 11

(5)Allowance for Doubtful Accounts - The allowance for doubtful accounts is calculated based on the aggregate of estimated credit losses for doubtful receivables in addition to the calculated using a default rate based on historical experience from certain prior years for trade accounts. (6)Inventories - Inventories are valued by a cost method, which evaluates the of the inventories shown on the balance sheet by writing them down based on any decrease in profitability. Cost is determined according to inventory classification as follows: Finished goods and work-in-process Mainly the average cost method Raw materials Mainly the moving average cost method Supplies Last-purchase price method (7)Property, Plant and Equipment (except Leased Assets) - Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment held by the Company and its domestic consolidated subsidiaries is computed primarily using the declining-balance method at rates based on the estimated useful lives of the assets. Certain consolidated subsidiaries have applied the straight-line method. With respect to buildings (except for building fixtures) acquired on or after April 1, 1998 and facilities attached to buildings and other non-building structures acquired on or after April 1, 2016 by the Company and its domestic consolidated subsidiaries, the straight-line method is applied. The estimated useful lives range from 2 to 60 years for buildings and structures and from 2 to 17 years for machinery and equipment. (8)Intangible Assets (except Leased Assets) - Amortization of intangible assets is computed using the straight-line method. The effective useful life of capitalized software for internal use is deemed as 5 years. (9)Leased Assets - Leased assets related to finance lease transactions without ownership transfer Depreciation or amortization of leased assets is computed using the straight-line method, with the lease periods used as their useful lives and no residual value. The previous accounting treatment for finance lease transactions without ownership transfer, commencing on or before March 31, 2008, continues to be applied, which is based on the method applied for ordinary operating lease transactions. (10)Impairment of Fixed Assets - Under Japanese accounting standards, fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying of an asset may not be recoverable. An impairment loss shall be recognized in the income statement by reducing the carrying of impaired assets or a group of assets to the recoverable, which is to be measured as the higher of net selling price and value in use. The accumulated s of impairment recognized are deducted from the carrying of the respective assets in accordance with relevant accounting standards. (11)Research and Development Expenses - Research and development expenses are charged to income as incurred. 12

(12)Deferred Charges - Bond issuance expenses are charged to income as incurred. (13)Income Taxes - Income taxes of the Company and its domestic subsidiaries and affiliates mainly consist of corporate income taxes, municipal inhabitants taxes and enterprise taxes. Income taxes are determined using the asset and liability approach, whereby deferred tax assets and liabilities are recognized in respect of temporary differences between the tax basis of assets and liabilities and those as reported in the financial statements as well as losses carried forward for the tax purposes. The Company files a consolidated tax return for corporate income taxes. All 100% owned domestic subsidiaries are included in the consolidated tax return and those subsidiaries other than 100% owned domestic subsidiaries file their tax returns separately. (14)Accrued Bonuses to Employees - Accrued bonuses to employees are provided for the attributable to each fiscal year calculated based on the estimated bonus payments. (15)Accrued Bonuses to Directors and Officers - Accrued bonuses to directors are provided for the estimated bonus payments based on operating results for fiscal year. (16)Accrued Retirement Benefits to Directors and Officers - In Japan, directors and corporate auditors are customarily paid a lump-sum upon their retirement which is subject to the prior approval of shareholders at the annual general meeting. For the proper calculation of the profit for the period, an accounting policy of recognizing such retirement benefits on an accrual basis has been employed as general practice in Japan provided that approved internal rules have been established. (17) Accrued Stock-based Benefits to Directors and Officers - Accrued stock-based benefits to directors and officers are provided at the estimated s in accordance with a performance-based stock remuneration plan and the Board Incentive Plan Trust. (18)Accounting Method of Retirement Benefits Accrued retirement and prepaid pension cost for employees have been recorded mainly at the calculated based on the retirement benefit obligation and the fair value of the pension plan assets as of the balance sheet date. The retirement benefit obligation for employees is attributed to each period by the benefit formula method over the estimated years of service of the eligible employees. Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognized primarily by the straight-line method over periods (5 years), which are shorter than the average remaining years of service of the employees. Certain foreign consolidated subsidiaries have adopted the corridor approach for the amortization of actuarial gain and loss. Prior service cost is being amortized as incurred by the straight-line method over periods (5 years), which are shorter than the average remaining years of service of the employees. Unrecognized actuarial differences and unrecognized prior service cost are recorded as retirement benefit liability adjustments in accumulated other comprehensive income within net assets after adjusting for tax effects. Certain consolidated subsidiaries have adopted the simplified method of calculating the retirement benefit obligation and costs. (19)Consumption Taxes - Transactions subject to consumption taxes are recorded at s excluding consumption taxes. 13

(20)Amortization of Goodwill - Goodwill is amortized on a straight-line basis over its estimated useful life. Amortization is calculated mainly over 10 years. (21)Other - (Changes in Accounting Policies) The Company and its domestic consolidated subsidiaries adopted Practical Solution on a change in depreciation method due to Tax Reform 2016 (Accounting Standards Board of Japan (ASBJ) PITF No. 32, June 17, 2016) as a result of revisions to the Corporate Tax Act of Japan. Accordingly, the depreciation method for both facilities attached to buildings and other non-building structures acquired on or after April 1, 2016 was changed from the declining-balance method to the straight-line method. The effect of this change on profit or loss for the fiscal year ended March 31, 2017 was immaterial. (Additional Information) (1) The Company and its consolidated subsidiaries adopted Revised Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No.26, March 28, 2016) (hereinafter, the Recoverability Implementation Guidance ) from the beginning of the fiscal year ended March 31, 2017 and partially revised the accounting method for assessing the recoverability of deferred tax assets. (2) Adoption of new performance-based stock remuneration plan and its trust, the Board Incentive Plan Trust ( BIP Trust ) Based on a resolution of the 102nd ordinary general meeting of shareholders held on June 29, 2016, the Company established a performance-based stock remuneration plan and its trust, the Board Incentive Plan Trust ( BIP Trust ) for the Company s directors and corporate officers, excluding outside directors and corporate officers, hereafter Directors and Officers. The Directors and Officers are granted points on the basis of his or her position and level of progress in accomplishing performance-related goals every fiscal year. Those points will be converted into shares in proportion to the number of points allocated and the remainder will be paid in cash through the BIP Trust to eligible Directors and Officers upon their retirements. The BIP Trust account (No. 75957) that is maintained by the trustee (The Master Trust Bank of Japan, Ltd.) received 347,500 shares during the year ended March 31, 2017. The outstanding number of shares and the corresponding carrying recognized as treasury stock under net assets as of March 31, 2017 were 344,557 shares and 193 million ($1,723 thousand) respectively. 14

3.U.S. Dollar Amounts: Amounts in are included solely for the convenience of readers outside Japan. The rate of 112.20= US$1, the approximate rate of exchange prevailing at March 31, 2017 has been used in translation. The inclusion of such s is not intended to imply that Japanese yen have been or could be readily converted, realized or settled in at this rate or any other rates. Japanese yen and s of less than 1 million and US$1 thousand in the consolidated financial statements and the accompanying notes are rounded off. 4.Cash and Cash Equivalents: (1) Reconciliation between Cash in hand and in banks and Cash and cash equivalents at March 31, 2017 and 2016 is as follows: March 31, March 31, Cash in hand and in banks 18,181 14,649 $162,047 Time deposits due over 3 months. (1,382) (1,599) (12,319) Cash and cash equivalents 16,799 13,050 $149,728 15

5.Investments in Securities: (1) Information regarding securities classified as other securities. March 31, 2017 Carrying Value Acquisition Cost Unrealized Gain (Loss) 5,893 3,135 2,758 Equity securities.. Debt securities. - - - Other.. - - - Total. 5,893 3,135 2,758 Carrying Value March 31, 2017 Acquisition Unrealized Cost Gain (Loss) Equity securities.. $52,528 $27,941 $24,587 Debt securities. - - - Other.. - - - Total. $52,528 $27,941 $24,587 Carrying Value March 31, 2016 Acquisition Cost Unrealized Gain (Loss) Equity securities.. 8,290 4,454 3,835 Debt securities. - - - Other.. - - - Total. 8,290 4,454 3,835 Investments in unlisted equity securities other than those traded in the OTC market for which fair value is extremely difficult to determine at March 31, 2017 and 2016 were 214 million ($1,914 thousand) and 214 million, respectively. They are not included in the above table. (2) Sales of securities classified as other securities and aggregate gain and loss The proceeds from sales, gain on sale and loss on sale of investments in securities ed to 3,422 million ($30,508 thousand), 2,097 million ($18,696 thousand) and 15 million ($135 thousand); and 110 million, 75 million and - million for the years ended March 31, 2017 and 2016, respectively. (3) Impairment of investments in securities Write-downs of other securities included in investments in securities ed to 0 million ($2 thousand) from listed securities 0 million ($ 2 thousand); and 0 million from listed securities and 0 million from unlisted securities for the years ended March 31, 2017 and 2016, respectively. 16

6.Short-term Borrowings and Long-term Debt: Short-term borrowings principally consist of overdrafts and notes bearing interest at average rates of 0.9% and 0.7% for the years ended March 31, 2017 and 2016, respectively. Long-term debt as of March 31, 2017 and 2016 consisted of the following: March 31, March 31, Long-term bank loans with interest at annual rates ranging from 0.35% to 4.50% due from 2009 to 2026 8,863 9,502 $78,996 0.55% yen notes due from 2011 to 2016.. - 100-1.125% yen notes due from 2012 to 2019 150 220 1,337 1.09% yen notes due from 2012 to 2022. 550 650 4,902 1.12% yen notes due from 2013 to 2020. 200 200 1,783 1.09% yen notes due from 2013 to 2018. 210 350 1,872 0.49% yen notes due from 2013 to 2018. 40 60 357 0.75% yen notes due from 2014 to 2019. 200 300 1,783 0.537% yen notes due from 2015 to 2022. 10,000 10,000 89,127 0.46% yen notes due from 2015 to 2019. 300 400 2,674 0.24% yen notes due from 2016 to 2023. 342 400 3,052 0.515% yen notes due from 2016 to 2023. 688 800 6,132 0.535% yen notes due from 2016 to 2026. 855-7,620 0.310% yen notes due from 2016 to 2026. 427-3,810 0.445% yen notes due from 2016 to 2023. 465-4,144 Sub-total 23,291 22,982 207,587 Less: Current portion of long-term debt.. (3,357) (3,587) (29,922) Total 19,934 19,395 $177,665 Annual maturities of long-term debt as of March 31, 2017 are as follows: Year ending March 31, 2018. 3,357 $29,922 2019. 4,206 37,492 2020. 2,119 18,891 2021. 1,120 9,986 2022 and thereafter. 12,487 111,296 Total. 23,291 $207,587 17

Assets pledged as collateral for long-term bank loans of 100 million ($894 thousand), and short-term borrowings of 19 million ($172 thousand)and 126 million as of March 31, 2017 and 2016, are summarized as follows: March 31, March 31, Machinery and equipment 13 - $120 Land 102 110 $916 The Company has arranged syndicated commitment line contracts with certain banks for handling financial demands. The unused loan balances based on these contracts as of March 31, 2017 and 2016 are as follows: March 31, March 31, Total of the loan commitment line (Short-term loan).. 4,000 4,000 $35,651 Loan executed - - - Unused loan balance 4,000 4,000 $35,651 7.Research and Development Expenses: Research and development expenses included in selling, general and administrative expenses totaled 2,025 million ($18,051 thousand) and 2,181 million for the years ended March 31, 2017 and 2016, respectively: Year ended Year ended March 31, March 31, Reportable Segment Valve manufacturing business. 1,967 2,122 $17,532 Brass bar manufacturing business 58 58 519 Total.. 2,025 2,181 $18,051 18

8.Impairment Losses on Fixed Assets: The Companies recorded impairment losses on certain asset groups totaling 3,756 million ($33,477 thousand) for the year ended March 31, 2017 and information on significant impaired assets is as follows: Location Use of assets Classification of assets Chiba city, Chiba Head office Buildings and structures, and land U.S. dollars March 31 2017 Property, Plant and Equipment Buildings and structures. 2,793 $24,897 Land.. 805 7,178 Total.. 3,598 $32,075 The head office real estate, which was determined to be set up and transferred as a trust beneficiary right, is stated at the lower of the recoverable or book value. The of the write-down is an extraordinary loss and recorded as impairment loss. The measurement of the recoverable is based on the net sales price. For the application of the accounting standard for impairment of fixed assets, the Companies recognize asset groups as a unit for which profit/loss performance can be monitored. 9.Income Taxes: Japanese income taxes applicable to the Company and its domestic subsidiaries for the years ended March 31, 2017 and 2016 consisted of corporate income tax, enterprise tax and municipal inhabitants taxes, which in the aggregate, indicate a statutory income tax rate of 30.3% and 32.4% for 2017 and 2016. The differences between the Companies statutory income tax rate and the effective income tax rate reflected in the consolidated statement of income for the year ended March 31, 2017 and 2016 were reconciled as follows: Years ended March 31, 2017 2016 (*) Statutory income tax rate.. 30.3% -% Reconciliation: Permanent differences 2.1 - Tax credit.. (2.2) - Allocated levy of municipal inhabitants taxes 0.8 - Decrease in valuation allowance. (0.6) - Prior years adjustments (8.9) - Other.. 0.0 - Effective income tax rate 21.5% -% (*)Information for the year ended March 31, 2016 was not provided because the difference between the statutory tax rate and the effective income tax rate was less than 5% of the statutory tax rate. 19

The significant components of deferred income tax assets and liabilities at March 31, 2017 and 2016 were as follows: March 31, March 31, Deferred income tax assets: Accrued bonuses to employees 570 457 $5,087 Liability for retirement benefits 354 395 3,158 Write-down of investments in securities 143 163 1,279 Impairment losses on fixed assets.. 1,412 1,417 12,590 Other.. 1,319 1,571 11,761 Total gross deferred income tax assets.. 3,800 4,005 33,875 Less valuation allowance.. (1,844) (2,239) (16,437) Net deferred income tax assets 1,956 1,766 17,439 Deferred income tax liabilities: Net unrealized gains on other securities.. (761) (1,067) (6,790) Valuation of equity in subsidiaries and affiliates on acquisition at fair value.. (966) (948) (8,618) Other.. (85) (127) (764) Total gross deferred income tax liabilities.. (1,814) (2,144) (16,172) Net deferred income tax assets. 142 ( 377) $1,267 20

10.Accrued Retirement Benefits to Employees: 1. Outline of Retirement Benefit Plans Adopted by the Companies The Company and certain consolidated subsidiaries (the Companies ) have defined contribution plans, such as defined contribution pension plans and prepaid retirement allowance plans in combination with defined benefit plans, such as corporate pension plans, lump-sum payment plans and Multi-employer Welfare Pension Fund plans. Since the portion of plan assets of the Multi-employer Welfare Pension Fund plans attributable to the Company could not be calculated reasonably, the required contribution is recognized as retirement benefit costs similar to defined contribution plans. In June 2014, the previous defined benefit plan held by the Company and its spin-off two subsidiaries was restructured into the defined contribution plan and the prepaid retirement allowance plan. In this connection, the of unfunded obligation at that time has been fixed and classified into other account in Long-term Liabilities in the accompanying consolidated balance sheet. Certain consolidated subsidiaries which have defined benefit plans or lump-sum payment plans adopt the simplified method for the calculation of retirement benefit obligations and costs. Furthermore, the Tokyo Metal Agency Welfare Pension Fund received dissolution authorization on March 22, 2017, and procedures are currently being carried out for its liquidation. There are no additional obligations expected for the liquidation. 2. Defined Benefit Plans (1)The changes in the retirement benefit obligation during the year ended March 31, 2017 and 2016 were as follows: Year ended Year ended March 31, March 31, Beginning balance of the retirement benefit obligation 6,135 6,082 $54,681 Service cost 228 225 2,034 Interest cost.. 30 29 269 Actuarial differences.. (44) 16 (396) Payment of retirement benefits.. (349) (330) (3,115) Retirement benefits calculated by simplified method 109 114 974 Other.. 53 (3) 476 Ending balance of the retirement benefit obligation 6,162 6,135 $54,923 (2)The changes in plan assets during the year ended March 31, 2017 and 2016 were as follows: Year ended Year ended March 31, March 31, Beginning balance of plan assets.. 5,890 5,886 $52,496 Expected return on plan assets 63 63 570 Actuarial differences 20 (15) 184 Employers contribution.. 250 246 2,232 Payment of retirement benefits.... (336) (298) (2,999) Other 35 7 314 Ending balance of plan assets... 5,923 5,890 $52,797 21

(3)The reconciliation between the funded status of the plans and the s recognized in the consolidated balance sheet at March 31, 2017 and 2016 were as follows: March 31, March 31, Funded retirement benefit obligation 5,781 5,790 $51,524 Plan assets (5,923) (5,890) (52,797) (142) (99) (1,273) Unfunded retirement benefit obligation. 381 344 3,398 Net liabilities (assets) on the consolidated balance sheet.. 238 245 2,125 Liability for retirement benefits... 413 344 3,684 Asset for retirement benefits. (174) (99) (1,559) Net liabilities (assets) on the consolidated balance sheet.. 238 245 $2,125 (4)The components of retirement benefit expense for the year ended March 31, 2017 and 2016 were as follows: March 31, March 31, Service cost... 228 225 $2,034 Interest cost 30 29 269 Expected return on plan assets. (63) (63) (570) Amortization of actuarial differences.. (111) (104) (991) Amortization of prior service cost. 11 15 102 Retirement benefits calculated by simplified method.. 109 114 974 Other 67 57 600 Retirement benefit expense of defined benefit plans.. 271 274 $2,418 (5)The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years ended March 31, 2017 and 2016 were as follows: March 31, March 31, Prior service cost... 11 15 $102 Actuarial gain and loss. (46) (136) (411) Total. ( 34) ( 121) ($309) 22

(6)Retirement benefit liability adjustments Retirement benefit liability adjustments for unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income (before tax effect) as of March 31, 2017 and 2016 were as follows: March 31, March 31, Unrecognized prior service cost. - ( 11) - Unrecognized actuarial difference. 292 338 2,608 Total. 292 327 $2,608 (7)Status of Plan Assets 1Components of plan assets The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2017 and 2016 were as follows: March 31, 2017 2016 General accounts..... 47.3% 53.8% Bonds and debentures. 29.6 26.1 Stocks.. 12.6 9.9 Others. 10.5 10.2 Total. 100.0% 100.0% 2Estimation of the long-term expected return ratio The expected return on plan assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns on assets held in each category. (8)Assumptions used in accounting for the above plans: March 31, 2017 2016 Discount rate.. 0.57% 0.57% Long-term expected rate of return on plan assets 1.20 1.20 23

3. Defined Contribution Plans The Company and its consolidated subsidiaries (the Participating Entities) recognized 833 million and 1,040 million of contributions for the years ended March 31, 2016 and 2015 to be paid for defined contribution plans including the Multi-employer Welfare Pension Fund; and recognized service cost in accordance with the accounting treatment for defined contribution plans. In addition, s in (1) and (3) below and the proportion of (2), for the fiscal year ended March 31 2017, have been omitted because the fund was in the process of dissolution, as mentioned previously. Latest financial information available for the Multi-employer Welfare Pension Fund (1)Funded status of the Multi-employer Welfare Pension Fund plans 2016 Funded status as of March 31, 2015 Plan assets 161,071 Benefit obligations under the plan 212,652 Difference ( 51,581) (2)The participating entities proportionate share of contributions paid to the plan Fund period ended March 31, 2015 6.0% (3)Supplementary information The reconciliation for the difference in (1) above is as follows: 2016 As of March 31, 2015 Capital fund (Deficit) ( 23,784) Valuation adjustment of plan assets - Unrecognized past service cost 27,797 Net Deficit ( 51,581) The participating entities proportionate share of contributions paid in (2) above does not correspond to the proportionate share of the benefit obligation incurred by the participating entities. 24

11.Lease Transactions - The lease expenses under finance lease contracts that do not transfer the ownership of the leased property to the lessee for the years ended March 31, 2017 and 2016 ed to 6million ($58 thousand) and 11 million, respectively. As of March 31, 2017 and 2016, summarized information showing estimated acquisition cost, accumulated depreciation and amortization and net book value, which include the portion of interest thereon, of the leased properties under finance leases contracts that do not transfer the ownership of the leased property to the lessee commencing on or before March 31, 2008 was as follows: March 31, March 31, Accumulated depreciation/ Net book value Accumulated depreciation/ Net book value Accumulated depreciation/ Net book value Cost amortization Cost amortization Cost amortization Machinery and equipment.. 105 105-105 98 6 $938 $938 - Total. 105 105-105 98 6 $938 $938 - The above s include the future interest expense and future lease payments. The scheduled maturities of future lease payments on these lease contracts as of March 31, 2017 and 2016 were as follows: March 31, March 31, Due within one year. - 6 - Due over one year. - - - Total. - 6 - The above s of future lease payments include the future interest expense. Future lease payments for non-cancelable operating leases at March 31, 2017 and 2016 were as follows: March 31, March 31, Due within one year. 164 71 $1,468 Due over one year. 1,171 49 10,437 Total. 1,335 120 $11,905 There are no impairment loss recognized in the lease assets. 25

26 12.Financial Instruments - 1. Status of financial instruments (1) Policy regarding financial instruments In light of plans for capital investment, the Companies raise funds mainly by bank borrowings and bond issuance. The Companies manage temporary fund surpluses through financial assets with high liquidity. Further, the Companies raise short-term working capital through bank borrowings. Regarding derivatives policy, the Companies make use of derivatives only to reduce risks as described below and do not enter into speculative transactions. (2) Details of financial instruments and associated risks Trade receivables - trade notes, accounts receivable and electronically recorded monetary claims - operating are exposed to credit risks of customers. Receivables denominated in foreign currencies in the course of business activities abroad are exposed to foreign currency exchange risks. The Companies employ foreign exchange forward contracts to hedge risks relating to foreign currency exchange fluctuations in accordance with internal rules. Investments in securities are primarily the shares of companies with business relationships with the Company and are exposed to market price fluctuation risks. Trade payables - accounts payable - are settled within almost 3 months. Some payables denominated in foreign currencies are exposed to foreign currency exchange risks. The Companies employs foreign exchange forward contracts to hedge risks relating to foreign currency exchange fluctuations in accordance with internal rules. Long-term debt (Corporate bonds) and long-term debt (Bank loans) are held primarily for fund raising purposes for capital investments. Certain long-term debt, with variable interest rates that is exposed to interest rate fluctuation risk, is hedged by derivative transactions (interest swap transactions). Raw materials in the brass bar manufacturing business is exposed to price fluctuation risk, is hedged by derivative transactions (commodities futures). Further information regarding the method of hedge accounting, hedging instruments and hedged items, hedging policy, and the assessment of the effectiveness of hedging activities are provided in Note 2 (4) Financial Instruments (Derivative financial instruments). (3) Systems for risk management of financial instruments 1Credit risk management (the risk that transactions partners may default ) In accordance with the internal regulations regarding credit exposures, the Accounting and Finance Department of the Company periodically monitors principal partners credit conditions to manage credit risks of partners by confirming due dates and outstanding account balances for each partner. The Department also actively works on gaining understandings of early stage concerns about recoverability of receivables because of financial difficulties of partner companies and may acquire assets pledged as collateral or credit insurance and so on. Consolidated subsidiaries conduct similar risk management in accordance with the internal regulations of the Company. There is almost no risks regarding derivative instruments realized by the Companies since the Companies arrange such transactions with highly rated financial institutions to minimize credit risks. 2Market risk management (the risks arising from fluctuations in exchange rates, interest rates, and other indicators) As for trade receivables and payables denominated in foreign currencies, the Companies hedge the foreign exchange risks by forward foreign exchange contracts in accordance with internal rules. Furthermore, the Company and some of the consolidated subsidiaries arrange the interest rate swap transactions to reduce fluctuation risks of interest payment regarding long-term debt. For investments in securities, the Companies periodically confirm the market value of such financial instruments and the financial position of the issuers (companies having business transactions with the Companies). As for derivative transactions, related departments of the Companies conduct and manage transactions with approvals, based on the internal rules and regulations which describe authorization and trade limitation.

3Liquidity risk management (the risk that the Companies are unable to settle its payment obligations on due dates) The Administration Department of the Companies appropriately creates and updates cash budget plans, based on the information from other departments and group companies, to control liquidity risks by maintaining sufficient liquid fund for daily operations. (4) Supplementary explanation of items relating to the market value of financial instruments The estimated fair value of financial instruments includes prices based on their quoted market prices, or includes prices reasonably estimated if there is no quoted market price. Since the estimations of these prices incorporate fluctuating factors, the prices might be fluctuated due to applying different assumptions. In addition, the contract (notional) of derivatives in Note 12 Derivative Transactions is not an indicator of actual risks involved in derivative transactions. 2. Estimated Fair Value and Other Matters Related to Financial Instruments Carrying value on the consolidated balance sheet, estimated fair value and the difference between them as of March 31, 2017 and 2016 are as follows. The following table does not include financial instruments for which it is extremely difficult to determine the fair value or immaterial items. Cash in hand and in Carrying value (*1) March 31, March 31, Estimated fair value (*1) Difference Carrying value (*1) Estimated fair value (*1) Difference Carrying value (*1) Estimated fair value (*1) Difference banks. 18,181 18,181-14,649 14,649 - $162,047 $162,047 - Notes and accounts receivable trade.. 18,620 18,620-18,832 18,832-165,962 165,962 - Electronically recorded monetary claims-operating... 7,272 7,272-6,657 6,657-64,817 64,817 - Investments in securities -Other securities 5,893 5,893-8,290 8,290-52,528 52,528 - Accounts payable-trade (6,138) (6,138) - (6,405) (6,405) - (54,711) (54,711) - Long-term debt (Corporate bonds). (14,427) (14,580) ( 152) (13,480) (13,703) ( 223) (128,591) (129,951) ($1,360) Long-term debt (Bank loan) (8,863) (8,968) (104) (9,502) (9,631) (128) (78,996) (79,930) (933) Derivative transactions (*2)... (0) (0) - 5 5 - (1) (1) - (*1) Liabilities are shown in parentheses. (*2) The assets or liabilities arising from derivatives are shown at net value. Note i : Methods for computing the estimated fair value of financial instruments and items related to securities and derivative transactions (Cash in hand and in banks, Notes and accounts receivable-trade, Electronically recorded monetary claims-operating, Accounts payable-trade) Since these accounts are settled in a short period of time and their estimated fair values are almost the same as the carrying values, the carrying values are used. (Investments in securities) The estimated fair values of these items are as follows: Stocks are measured at quoted market prices of exchange markets. Bonds are measured at trading prices. Classification of investments in securities is presented in Note 5. Investments in Securities. 27