2019
Kurimoto, Manufacturing the Future

ANNUAL REPORT
Year ended March 31, 2019

KURIMOTO, LTD.
In 1909 Kurimoto, Ltd. began operations as manufacturer of cast ironpipes for water and gas mains. With determination and foresight, thecompany soon began to diversify into other fields, serving the industrial
sector in a multitude of ways.
The major divisions of Kurimoto now provide ductile iron pipes, plant
equipment and engineering services, valves, and construction materials.
Involvement with and commitment to large-scale projects has enabled
Kurimoto to expand its areas of expertise, be it in land development,
industrial modernization, or urban renewal and construction. 12
factories located throughout Japan comprise the company’s industrial
base which, together with 19 subsidiary companies, make up the
Kurimoto group employing about 2,100 people. Today, Kurimoto plays avital role in supplying basic industrial products, machines, and services
domestically and abroad.

Contents
Financial Highlights
Message from the President
Business Operations

1
2
3

Financial Section

4

Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows

Notes to Financial Statements
Independent Auditor’s Report
Corporate Information

9
17
18

Financial Highlights

Millions of yen (thousands of U.S. dollars) except per 100 share information
Years ended March 31

2019

2018

2017

2016

2015

2019

Net sales¥ 108,786¥ 107,122¥ 101,647¥ 101,964¥ 98,394$ 980,150

2,075

2,400

4,103

2,194

1,598

18,701

Profit (loss) attributable to owners of parent

16,565

19,16732,605

16,981

12,337

149

Cash dividends

6,000

6,000

5,000

4,000

4,000

54

Total assets

136,469

135,122

129,212124,382

127,884

1,229,569

Total shareholders’ equity(including Accumulated other comprehensive income)¥ 58,070¥ 58,351¥ 55,599¥ 48,255¥ 49,144$ 523,201

Profit (loss) attributable to owners of parent
Per 100 shares of common stock

Notes 1: The U.S. dollar amounts are calculated at the exchange rate of ¥110.99 to $1, the rate prevailing on March 31, 2019.
Notes 2: We have been carrying out consolidation of shares at a rate of one share per 10 shares of common stock since October 1, 2016, and have also revised the figures before 2016 for net
income per 100 shares and dividend per 100 shares.
Notes 3: Along with the change in the unit of investment from 1,000 to 100 shares on October 1, 2016, net income and dividend, which used to be indicated per 1,000 shares, have beenchanged to be indicated per 100 shares.

160,000

Net Sales (¥ million)

140,000
120,000
100,000

98,394

101,964

101,647

’15

’16

’17

107,122

108,786’18’19

80,0000Profit (loss) attributable to owners of parent (¥ million)
5,000

4,103

4,000
3,000
2,000

1,598

2,400

2,194

2,075

1,000
0

400

’15

’16

’17

’18

’19

Net Income per Share of Common Stock (¥)
326.05300
200

123.37

191.67169.81165.65100
060,000

’15

’16

’17

Shareholder’s Equity (¥ million)

58,000’18’1958,351

58,070’18’1955,59956,00054,00052,00050,00049,14448,00048,25546,00044,000
0

’15

’16

’17

1

Message from the President“We will maintain our strength inexisting businesses while overcoming
boundaries between segments to achievesustainable growth.”Thank you for your ongoing supportof Kurimoto’s business activities.
Kurimoto was founded in February1909 to manufacture cast-iron pipe forwater supply based on our iron foundryexpertise. For over 100 years now wehave been committed to bringing people
a higher quality of living by improvingsocial infrastructure, lifeline systems,
and industrial machinery. Thanks goesto all of the stakeholders of this groupfor your ongoing support.
Looking at the business climate
today, I would have to say that things are
becoming increasingly turbulent.
Internationally, the trade war between
the U.S. and China does not look like itwill end any time soon, and there is a
palpable fear that a no-deal Brexit fromthe EU might happen in the UK. I see
continuing uncertainty on so many
fronts. Within Japan, preparations areproceeding apace for the Tokyo
Olympics in 2020 with little time tospare, and Osaka has won the bid to hostExpo 2025. The other side of that waveof high emotion is the fear of animpending economic slowdown
approaching on the heels of the planned
October 2019 consumption tax
bump-up from eight to ten percent.
Under these circumstances, we are
fortunate that business results for fiscal
2018, the first year of our current
three-year mid-term business plan,
exceeded initial forecasts for the period
in both sales and profits. Nevertheless,conditions still remain uncertain andwhile revenues rose, profits declined
from the previous fiscal year, and somesegments had extremely poor
performance.

In our three-year business plan, we
identify some things that must be
maintained and others that must bechanged. The trust of our customers,
built up for over a century by ourpredecessors, must naturally bemaintained, and to do so, we must
generate the resolve to take action andmake those changes that are imperative.
One area that requires change is in
the boundaries between our businesses.
Every segment and business in our groupis a separate domain, and we have settled
into complacency over time with theseboundaries. I regret that we have put off
efforts to change this system. Of course
we need to maintain strength in our
existing business domains, but in someareas I believe that the only way tomaintain the trust of our customers is tobreak down barriers and reach acrossexisting boundaries.

We will continue to evolve as agroup, aiming to create a better future
for people and society as we have been
doing all along, and resolve to facechange without hesitation.
Kurimoto celebrated its 110th
anniversary in February 2019. The factthat we have been able to run ourbusiness successfully for such a long timeis due in no small part to the guidanceand encouragement of our stakeholders.
I am extremely grateful and hope you
will continue to lend us your warm
support.

Again, the only way to be able toreach across our businesses is throughthe will of our employees—with the helpof every single person in the group. We
need to hold the shared vision thatchange is something to make happen,
not something to fear.
This fiscal year we celebrate our110th anniversary, and in April 2019 we
unveiled a new group logo for theoccasion. We have also begun apromotion campaign to build the
Kurimoto brand over five and ten years,
with new transit advertising and othermeasures.
In June of this year, the Kurimoto
Composite Center went into operation
as a new demonstration plant in the
CFRP business. It will surely sow theseeds for sustainable growth in the
future.

Moriyoshi Kushida
President

June 2019

Moriyoshi Kushida
President2

Business Operations

Corporate group sales by business area (in millions of yen)

Machinery system business23.8 %

Industrial materials business

123th
accounting period
108,786

Pipe system business51.7 %

24.5 %

Pipe system businessIndustrial materials business

Sales of the pipe system business were 56,228 million yen, an increase of
955 million yen over the previous consolidated fiscal year. The increase wasmainly attributable to increases in shipment of medium and large diameter pipes
recorded by the Ductile Iron Pipe Division, as well as shipment of products forchemical plant recorded by the Valve Division.
Operating income of this business was 891 million yen, a decrease of 404 million
yen over the previous consolidated fiscal year. While the sales growth pushed up
profits, the decline was caused by intensifying price competition that the Ductile
Iron Pipe Division is still faced with, material prices hovering at high levels,
decreased production volume at some of our typhoon-afflicted plants and otherfactors.

Sales of the industrial materials business were 26,636 million yen, an increase of
2,167 million yen over the previous consolidated fiscal year. The growth isattributable to increases mainly in construction and civil engineering products
posted by the Construction Materials Division, as well as an increase in thenumber of our consolidated subsidiaries during the current consolidated fiscal
year under review.
Although raw material prices were on an increasing trend, sales growth in theConstruction Materials Division and addition of new consolidated subsidiaries
pushed up operating income of this business to 738 million yen, an increase of
311 million yen over the previous consolidated fiscal year.

Machinery system business
Sales of the machinery system business were 25,922 million yen, an decrease of
1,459 million yen over the previous consolidated fiscal year. While the Materials
and Machinery Division saw an increase in shipment, shipment of large-scalepowder equipment decreased from a year earlier in the Machinery System
Division.
Operating income of this business fell to 1,598 million yen, a decrease of
191 million yen over the previous consolidated fiscal year, due primarily to thedecline in sales registered by the Machinery System Division.

3

Financial Section

Consolidated Balance Sheets
March 31, 2019 and 2018

Thousandsof U.S. dollars(Note 2)Millions of yen

Assets

2018

2019

2019

Current assets¥ 21,564¥ 23,189$ 194,294

46,316

41,401

417,299

28

13

258

Merchandise and finished goods

9,346

10,841

84,212Work in process

6,682

5,858

60,205

Raw materials and supplies

2,625

2,720

23,657

Prepaid expenses and other current assets

1,347

1,473

12,139

(137)

(121)

(1,237)

87,77485,376

790,828

Buildings and structures

26,14525,999235,563

Machinery, equipment and vehicles

53,91053,328

485,721

Tools, furniture and fixtures

9,896

9,834

89,168Land

13,773

13,729124,092

Cash and deposits
Notes and accounts receivable-trade
Notes and accounts receivable-trade— unconsolidated subsidiaries and affiliates

Allowance for doubtful accounts
Total current assets

Property, plant and equipment

391

385

3,528

Construction in progress

1,151

387

10,373

Accumulated depreciation(74,146)(72,871)(668,043)

Total property, plant and equipment

31,12130,792

280,402

10,172

12,06091,652—— unconsolidated subsidiaries and affiliates

156

190

1,406

Long-term loans —— other

13

111

124

Lease assets

Investments and other assets
Investment securities —— other
Investment securities

Long-term loans—— unconsolidated subsidiaries and affiliates
Other investments
Allowance for doubtful accounts
Deferred tax assets (Note 8)Long-term prepaid expenses and otherTotal investments and other assets
Total assets

4

31

41

281

1,657

1,833

14,938

(178)

(203)

(1,610)

4,923

4,064

44,356

798

854

7,190

17,573

18,953

158,338¥ 136,469¥135,122$ 1,229,569

Financial Section

Thousandsof U.S. dollars(Note 2)Millions of yen

Liabilities and Shareholders’ Equity

2019

2018

2019

¥ 32,886¥ 31,227$ 296,302

31
20,255
2,111
28
510
3,479
2,377
399
2,248
64,32816
21,306
2,112
39
437
3,195
1,048
404
1,965
61,756282
182,495
19,023254
4,600
31,34821,4193,595
20,260579,583

9,482
2,881
31
110
318
449
13,27477,602

8,256
4,962
52
145
335
514
14,26676,02285,43525,959
284
997
2,868
4,052
119,597
699,181

31,186

31,186

280,981

Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

6,880
21,178(1,750)57,4936,880
19,830(1,761)
56,136

61,992
190,810(15,774)
518,009

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income

2,013
5(1,442)

3,348
18(1,151)

18,13845(12,992)

576

2,214

5,191

Current liabilities
Notes and accounts payable-trade
Notes and accounts payable-trade—— unconsolidated subsidiaries and affiliates
Short-term loans payable (Note 3)
Current portion of long-term debt (Note 3)
Lease obligations
Income taxes payable
Accrued liabilities
Advances received
Employees’ savings deposits
Other current liabilities
Total current liabilities
Long-term liabilities
Net defined benefit liability (Note 4)Long-term debt (Note 3)
Lease obligations
Provision for environmental measures
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities

Net assets
Shareholders’ equity
Capital stock
Authorized:
Issued:39,376,600 shares
13,398,490 shares in 201813,398,490 shares in 2019Non-controlling interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

5

797

748

7,187

58,867

59,100530,388¥ 136,469¥ 135,122$ 1,229,569

Financial Section

Consolidated Statements of Income
Years ended March 31, 2019 and 2018

Thousandsof U.S. dollars(Note 2)Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income and (expenses)
Interest and dividend income
Interest expense
Gain on sales of investment securities
Impairment loss
Restructuring loss
Insurance income
Loss on valuation of inventories
Loss on disaster
Others, net
Income before income taxes
Income taxes (Note 8)
Current
Deferred
Total
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

2019

2018

2019

¥ 108,786
84,147
24,63921,636
3,003¥ 107,122
82,472
24,65021,2403,409$ 980,150
758,151
221,999
194,941
27,057

343
(170)
195
(0)
(287)
310
(310)
(515)
19
2,587

329
(257)
439
(134)
−
−
−
−
(382)
3,403

3,098
(1,540)1,759(0)(2,592)
2,796(2,797)(4,644)
178
23,316

610
(155)
454
2,133
58
2,075

532
430
963
2,440
40
2,400

5,497
(1,404)
4,092
19,223522
18,701¥¥

U.S. dollars(Note 2)yen

Net income per 100 shares:
Basic
DilutedCash dividends per 100 shares

2019

2018

¥ 16,565
16,5656,000¥ 19,167
19,1676,000

Consolidated Statements of Comprehensive Income
Years ended March 31, 2019 and 2018

2019

2018

¥

¥

2,133
(1,335)
−
(12)
(290)
(1,638)
494
437
57

6

2019
$

149
149
54

Thousandsof U.S. dollars(Note 2)Millions of yen

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of the parent
Profit (loss) attributable to non-controlling interests

$

2,440
152
(1)
32
616
800
3,240
3,204
36

2019
$

19,223(12,029)−(116)(2,618)(14,765)
4,458
3,937
521

Financial Section

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2019 and 2018

Millions of yen

Balance as of March 31, 2017

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Change of scope of consolidation
Merger of consolidated subsidiaries— non-controlling interests
Purchase of treasury stock ofconsolidated subsidiaries
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2018

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Change of scope of consolidation
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2019

Valuationdifference on Deferredgains oravailable- losses on
for-salesecurities hedges

ForeignNoncurrency Remeasurementsof defined controllingtranslation benefit
plans interests
adjustment

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotal net
assets¥ 31,186¥ 6,942 ¥ 17,815¥ (1,771)¥ 3,192¥ 1¥—¥ (1,768)¥ 528¥ 56,128

—
—
—
—
—

—
—
—
—
—

(691)
2,400
—
—
305

—
—
(1)
10
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(691)
2,400
(1)
10
305

—

(58)

—

—

—

—

—

—

—

(58)

—

(3)

—

—

—

—

—

—

—

(3)

—

—

—

—

156

(1)

18

616

220

1,009

¥ 6,880 ¥ 19,830¥ (1,761)¥ 3,348¥—¥ 18¥ (1,151)¥ 748¥ 59,100¥ 31,186
—
—
—
—
—

—
—
—
—
—

(817)
2,075
—
—
88

—
—
(0)
10
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(817)
2,075
(0)
10
88

—

—

—

—

(1,335)

—

(12)

(290)

48

(1,589)¥ 31,186¥ 6,880¥21,178¥ (1,750)¥ 2,013¥—¥5¥ (1,442)¥ 797¥ 58,867

ForeignNoncurrency Remeasurementsofdefinedcontrollingtranslation
adjustment benefit plans interests

Total net
assetsThousands of U.S. dollars (Note 2)

Capitalstock
Balance as of March 31, 2018

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Change of scope of consolidation
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2019

CapitalsurplusRetainedearnings

TreasurysharesValuationdifference on Deferredgains oravailable- losses on
for-salesecurities hedges$ 280,981 $ 61,992 $ 178,671 $ (15,868) $ 30,167—$162 $ (10,374)$ 6,748 $ 532,481

—
—
—
—
—

—
—
—
—
—

(7,362)
18,701
—
—
799

—
—
(4)
97
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(7,362)
18,701
(4)
97
799

—

—

—

—

(12,028)—(116)(2,618)438(14,325)$ 280,981 $ 61,992 $ 190,810 $ (15,774) $ 18,138$ —7$ 45 $ (12,992)$ 7,187 $ 530,388

Financial Section

Consolidated Statements of Cash Flows
Years ended March 31, 2019 and 2018

Thousandsof U.S. dollars(Note 2)Millions of yen

2019

2018

2019

¥ 2,5872,409
0(3,188)
865
321
(343)
170
(195)
—
(14)
(23)
(8)
803
287
310
338

¥ 3,403
2,468
134
(184)
4,050
(142)
(329)
257
(441)
0
(28)
24
(5)
1,330
—
—
(271)

$ 23,316
21,706
0(28,730)
7,795
2,895
(3,098)1,540(1,759)
—
(131)
(214)
(73)
7,239
2,592
2,797
3,053

Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid

4,320
352
(170)
(361)

10,266
305
(264)
(783)

38,9303,171(1,531)(3,253)

Net cash provided by (used in) operating activities

4,141

9,522

37,316

Net cash provided by (used in) investing activities
Proceeds for transfer of business
Decrease (increase) in time deposits
Purchase of short-term and long-term investment securities
Proceeds from sales of short-term and long-term investment securities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Purchase of stocks of subsidiaries and affiliates
Payments of loans receivableCollection of loans receivable
Other, net

—
—
(204)
376
(2,473)
110
—
(5)
113
164

22
9
(107)
915
(2,082)
437
(34)
(0)
13
79

—
—
(1,840)3,394(22,289)
995
—
(45)
1,019
1,482

Net cash provided by (used in) investing activities(1,918)(745)(17,283)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Dividends paid to non-controlling interests
Purchase of treasury shares(1,259)(43)
36(2,117)
(816)
(9)
(0)

(3,125)(51)
7,556(8,031)
(690)
(6)
(1)

(11,346)(394)
324(19,081)(7,360)(82)(4)

Net cash provided by (used in) financing activities(4,211)(4,349)(37,945)

11

(22)

101

(1,976)23,134350

4,404
18,226461(17,810)
208,436
3,156

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in notes and accounts payable-trade
Decrease (increase) in inventories
Interest and dividends income
Interest expenses
Loss (gain) on sales of short-term and long-term investment securities
Loss (gain) on valuation of short-term and long-term investment securities
Loss (gain) on sales of property, plant and equipment and intangible assets
Loss on retirement of property, plant and equipment and intangible assets
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for retirement benefits
Loss on business restructuring
Loss on valuation of inventories
Other, net

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Increase in cash and cash equivalents from newly consolidated subsidiary
Increase (decrease) in cash and cash equivalents resulting frommerger of subsidiaries

—

40

—

¥ 21,507¥ 23,134$ 193,782

Note: Relation between the year-end balance of cash and cash equivalents and the items on the consolidated balance sheet:
Cash and deposits¥21,564(56)
Time deposits due over three months¥21,507
Cash and cash equivalents¥23,189(55)¥23,134$194,294(511)$193,782

Cash and Cash Equivalents at End of Year

8

Notes to Financial Statements

Note 1. Significant Accounting Policies

securities into securities for buying & selling, stocks of their affiliates,and other securities.
Securities for buying & selling have been evaluated at market
value.
The stocks of their affiliates have been evaluated at book value.
Those other securities that have market value have been
evaluated at market value, and the unrealized profit or loss has beenreported as an independent item in Part of Capital after taxation.
Those other securities that do not have market value have been
evaluated at book value.
For the cases in which the value of those other securities withmarket value fell sharply, the relevant securities have been placed in
the balance sheet according to their market value, and the difference
between the book value and the market value has been recognized asa loss for the fiscal year. For the cases in which the net asset value of
those other securities without market value fell markedly, therelevant securities have been written down to the net asset value,
and the corresponding difference has been recognized as a loss.
Profit or loss in selling securities has been calculated based upon
the selling price by the moving average method, and included in
profit or loss.

Basis of Presenting Consolidated Financial Statements
Kurimoto, Ltd. (hereinafter referred to as “This Company”) and its
consolidated subsidiaries have presented their official accounting
records in the currency of yen and in accordance with theCommercial Code and the regulations of Securities & Exchange
Law, and in conformity with the generally accepted accounting
principles & practices of Japan (hereinafter called “Japan
Accounting Standard”).
Some part of the Japan Accounting Standard, in its method of
application and disclosure requirements, is different from theInternational Accounting Standard and some other countries’
accounting standards. Accordingly, the consolidated financial
statements attached hereto are prepared for readers who are wellacquainted with the Japan Accounting Standard.
The consolidated financial statements attached hereto have been
prepared in accordance with the Japan Accounting Standard
pursuant to the Securities & Exchange Law. Such consolidated
financial statements of This Company as were submitted to our
district’s Local Finance Bureau of the Ministry of Finance havebeen re-edited and translated into English.

Inventories
Inventories are principally stated at the cost determined by theaverage method or the specific cost method.

Consolidation Policies
These consolidated financial statements include the accounting
records of This Company and the companies over which This
Company either holds majority voting power or for which certain
other conditions verify This Company’s control over them. The
investment account of This Company in non-consolidated
subsidiaries or affiliates which are largely influenced by This
Company in their operational and financial policies have been
computed on the basis of equity-method investment balance.
The important credit & liability, trade, and unrealized profit
between and among consolidated companies have been eliminatedon a consolidation basis.

Fixed Assets (excluding lease assets)
Fixed assets are indicated by book value. Method of depreciation ismainly the straight-line method by estimated useful life. Main
estimated useful lives are as follows.
Building and construction: 2 to 60 years.
Machinery and automotive equipment: 2 to 22 years.
The cost of repair or small amount reformation is charged in bookat their occurrences, but any large scale repair or reformation isclassified as assets.
Liability for Retirement Benefits
1. The Period Attribution Method for Projected Retirement
Benefits
As for the calculation of retirement benefits, the benefit formulabasis is applied for the attribution of projected retirement benefits
to the period up to the end of the fiscal year under review.
2. Mathematical Calculation for the Amortization of Actuarial
Differences
Actuarial differences are amortized by the straight-line method overa period within the average remaining service years for employees(mainly 10 years) at the time of recognition, and allocatedproportionately from the fiscal year following the respective fiscal
year of recognition.

Translation of Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies
have been translated into Japanese yen at the rate as of the date ofeach balance sheet presentation, and their exchange profit or loss
has been appropriated as their profit or loss in the current period.
The balance sheets of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rates except forshareholders’ equity accounts, which are translated at historicalrates. Income statements of consolidated overseas subsidiaries aretranslated at the average rates during the year. Translation
adjustments resulting from translating financial statements whose
accounts are denominated in foreign currencies are not included in
the determination of net income but are reported as “Foreign
currency translation adjustments” in a component of net assets andnon-controlling interests.

Research and Development and Computer Software
Research & development expenses have been dealt with as expenses
upon their accrual.
Software expenses have been included mainly in long-term
prepaid expenses and other expenses, and depreciated by astraight-line method chiefly for five-year service life.

A Range of Funds in a Statement of Consolidated Cash Flow
A fund in a statement of consolidated cash flow (cash and its
equivalent) consists of cash in hand, ordinary deposits, andshort-term investments which have a term of redemption within
three months, carry low risk for value fluctuation and can bewithdrawn easily.

Income Taxes
As to the temporary difference in the book value of assets andliabilities for the purpose of financial accounting and taxation, thenet worth method has been used to figure deferred tax assets andliabilities.

Marketable and Investment Securities
This Company & its consolidated subsidiaries have specified the
purposes of their respective securities holdings, and classified those9Notes to Financial Statements

Note 3. Short-term Bank Loans and Long-term Debt

Per Share Information
The computation of basic net income per share is based on theweighted average number of shares of common stock outstanding
during each period. The average number of shares used in thecomputation was 12,530,084 and 12,523,815 for the years ended
March 31, 2019 and 2018, respectively.

The annual average interest rates applicable to short-term bankloans at March 31, 2019 and 2018 are 0.4% and 0.4%, respectively.
Short-term bank loans and long-term debt at March 31 wascomprised of the following:

Recognition of earning cost
For construction work that was initiated this consolidated
accounting period, we will still use the percentage-of-completion
method for those ongoing projects with assured revenue by the endof the period (the cost-to-cost method will be used to estimate theprogress rate of construction), and the complete job method toother projects.

Loans from financial institution,due 2019 to 2023 withinterest rates between
0.167% and 1.25%
Sub-total
Less current portion of loans•• • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Consolidated Taxation System
We have adopted a consolidated taxation system.

• • • • • • • • • • • • • • •Marketable and Investments Securities
Other marketable securities as of March 31, 2019 are as follows.

Carrying
amounts

Marketvalue

Unrealized
gain (loss)¥ 7,069¥ 9,797¥ 2,727

2019
2020
2021
2022
2023
2024 and thereafter• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Thousands of U.S. dollars• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •2019

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2018

2019

4,992
4,992
2,111
¥ 2,881

7,074
7,074
2,112
¥ 4,962

44,982
44,982
19,023$ 25,959

Thousandsof U.S. dollars

Millions of yen

2019•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •2019

The aggregate annual maturities of long-term financial debt at March
31, 2019 and 2018 respectively are as follows:

Millions of yen

Other securities

Thousandsof U.S. dollars

Millions of yen• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Carrying
amounts

Marketvalue

Unrealized
gain (loss)$ 63,697$ 88,272$ 24,574•• • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2019

2018

2019

—
2,111
2,309
42
527
1
¥ 4,992

2,112
2,104
2,302
35
520
—
¥ 7,074—
19,02320,806381
4,754
16$ 44,982

As is customary in Japan, short-term and long-term bank loans are
made under general agreements which provide that security andguarantees for future and present indebtedness will be given uponrequest of the bank, and that the bank shall have the right, as theobligations become due, or in the event of their default, to offset cash
deposits against such obligations due to the bank.

Note 2. U.S. Dollar Amounts
The dollar amounts are included solely for convenience: they should
not be construed as exact translations of current yen figures, nor are
they the dollar amounts into which yen amounts have been or could
be converted.
The approximate exchange rate of US$1=¥110.99 as of March
31, 2019, has been used for the purpose of presenting the dollar
amounts in the accompanying consolidated financial statements.

10Notes to Financial Statements

As of March 31, 2019, assets pledged as collateral for short-termbank loans, and long-term debt, including the current portion of
long-term debt, were as follows:
Millions of yen

Thousandsof U.S. dollars

2019

2019

¥

$

50
2,894
1,014
771
¥ 4,730

Deposit
Buildings and structures
Machinery, equipment
Land(4) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits including plan
applied simplified method

450
26,0789,141
6,955$ 42,625

Note 4. Retirement Benefits
The following are matters concerning the defined benefit plan as ofMarch 31, 2019 and 2018, respectively.

Thousandsof U.S. dollars

2018

2019
Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at end of the year

¥ 12,310
662
19
285
(401)
¥ 12,877

Balance at beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Benefits paid
Balance at end of the year

¥

¥

4,640
111
(698)
(61)
3,992

¥

41,810
1,004(6,294)(552)
35,968

Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Balance at end of the year

¥

¥

586
122
(102)
(9)
597

¥

¥

$ 120,583(38,831)81,751

Unfunded retirement benefit obligations
Total net liability (asset) for
retirement benefits at March 31

408

419

3,684

9,482

8,256

85,435

9,482
—

8,256
—

85,435—¥ 9,482¥ 8,256$ 85,435

Thousandsof U.S. dollars

2019

2018

¥

¥

662
19
(111)
567

660
26
(103)
1,008

2019

$

5,966
178
(1,004)
5,109

122

114

1,107

¥ 1,260¥ 1,705$ 11,358

Millions of yen

Actuarial loss (gain)
Total

Thousandsof U.S. dollars

2018

2019

¥ 12,790(4,953)
7,836(6) Remeasurements of defined benefit plans(before tax effect deductions)(3) Movements in net liability for retirement benefits based on thesimplified method
Millions of yen¥ 13,383(4,309)
9,073

2019

4,558 $
10325
(46)
4,640 $¥

Funded retirement benefit obligations
Plan assets

Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Retirement benefit costs calculatedby the simplified method
Total retirement benefit costs forthe fiscal year

Thousandsof U.S. dollars

2018

2019

Millions of yen(2) Movements in plan assets except plan applied simplified method
2019

2018

(5) Retirement benefit costs

2019¥ 11,785 $ 110,916
5,966
660
178
26
2,574
145
(3,616)(308)¥ 12,310 $ 116,020

Millions of yen

2019Liability for retirement benefits
Asset for retirement benefits
Total net liability (asset) for retirement
benefits at end of the year

(1) Movements in retirement benefit obligations except plan applied
simplified method
Millions of yen

Thousandsof U.S. dollars

Millions of yen

585 $
114
(82)
(31)
586 $

Thousandsof U.S. dollars

2019

2018

2019

¥
¥

¥ (887)¥ (887)$ 3,759$ 3,759417417(7) Accumulated adjustments for retirement benefit(before tax effect deductions)

2019

5,284
1,107
(924)
(83)
5,383

Millions of yen

Unrecognized actuarial differences
Total

11

Thousandsof U.S. dollars

2019

2018

2019

¥ 2,076¥ 2,076¥ 1,658¥ 1,658$ 18,707$ 18,707

Notes to Financial Statements(8) Accumulated adjustments for retirement benefit①Plan assets comprise:

2019

Equity securities
Cash and cash equivalents
Investment trust
Other
Total

62%
3%
30%
5%
100%

Note 7. Research and Development Expenses
Research and development expenditures charged to income were¥1,417 million ($12,771 thousand) for the year ended March 31, 2019.

2018

68%
5%
22%
5%
100%

Note 8. Income Taxes
The Company and its domestic subsidiaries are subject to several
taxes based on income, which in the aggregate resulted in statutory
tax rates of approximately 30.8% and 30.8% for the year ended
March 31, 2019 and 2018, respectively.
The effective rates of income taxes reflected in the consolidated
statements of income differed from the statutory tax rates referred
to above for the year ended March 31, 2019 due principally to
expenses not deductible for income tax purposes, and temporary
differences between the tax basis of assets and liabilities and theirreported amounts in the financial statements.
The difference between the burden rate of corporate tax after
application of tax effect accounting and the statutory tax rate is notlisted as it was recorded as a net loss for the period under review
before adjustments for taxes, etc.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets as of March 31, 2019 and 2018
are presented below:②Long-term expected rate of return
Current and target asset allocations, historical and expected returns
on various categories of plan assets have been considered.
(9) Accumulated adjustments for retirement benefit
The principal actuarial assumption (expressed as weighted averages)
are as follows:
2019
Discount rateLong-term expected rate of return
Expected rate of salary increase2018

0.0%~0.6% 0.0%~0.9%
2.5%
2.4%
0.6%~5.1% 0.7%~4.7%(Changes associated with the application of “Partial Amendments to Accounting Standard for Tax EffectAccounting”)
We have applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28 issued on February 16, 2018) since the beginning of the current consolidated fiscal year
under review. Accordingly, Deferred tax assets are included in “Investments and other assets” andDeferred tax liabilities are included in “Long-term liabilities.”
As a result, in the consolidated balance sheet of the previous consolidated fiscal year, 1,108 million yen ofDeferred tax assets under Current assets are included in 4,064 million yen of Deferred tax assets under“Investments and other assets.”

Defined contribution plans
The required contribution amount for consolidated subsidiaries forthe defined contribution plan was 175 million yen (1,582 thousand
US dollars) as of March 31, 2019.

Note 5. Contingent Liabilities
As of March 31, 2019 and 2018, the company was contingently
liable as follows:
2018

2019
As guarantor of indebtedness of
unconsolidated subsidiaries
and others
Transfer of notes and bills endorsed
for payment

Deferred tax assets
Net defined benefit liability
Accrued bonus indemnities
Allowance for doubtful accounts
Allowance for loss on construction work
Loss on valuation of investment
securities
Loss on valuation of investments incapital of subsidiaries and associates
Amalgamated received property
Impairment loss
Operating loss carry-forwards
Elimination of inter-company profits
Other
Total gross deferred tax assets
Valuation allowance related to tax
loss carryforward
Valuation allowance related to total
deductible temporary differences
Subtotal of valuation allowance (Note 1)
Net deferred tax assets

Thousandsof U.S. dollars

Millions of yen

Thousandsof U.S. dollars

Millions of yen

2019

¥ 63

¥ 90

$ 571

0

¥ 32

1

Note 6. Derivatives and Hedging Activities
Some consolidated subsidiaries utilize derivatives of forward
exchange contract and interest-rate swap in order to hedge
exchange-rate fluctuation risk concerning foreign currency assets
and liabilities and hedge against interest-rate fluctuation risk
regarding securities and debts.
As they trade these with major financial institutions, we assume thatthe credit risks of these derivatives are low. The Accounting
Department implements and controls these forward exchange
contracts for our own company by way of in-house consultation anddecision.
As to the derivative trades by our consolidated subsidiaries, theirBusiness Management Department or General Affairs Department
implement and control them after their internal consultation anddecision and also notification to our company.

2019

2018

2019

¥4,242510
5335¥ 3,864484
60
60$38,228
4,601
483
316

175

175

1,583

—
543
1
478
21
1,138
7,201

110
543
18
11,79715
1,023
18,156

—
4,899
9
4,312
190
10,25664,882(137)—(1,236)(1,355)(1,492)¥5,708—(12,710)¥5,446(12,210)(13,447)$51,435(Note 1)
Valuation allowance decreased by 11,217 million yen (101,067 thousand US dollars) from the previous
consolidated fiscal year. The primary factor of the decrease is that 11,065 million yen (99,698 thousand
US dollars) of valuation allowance related to tax loss carryforward, which was recognized in the previous
consolidated fiscal year, is not recognized anymore due to expiration.

12

Notes to Financial Statements

Millions of yen

2019
Deferred tax liabilities
Evaluated difference of othersecurities
Dividends receivable
Other
Total deferred tax liabilities
Net deferred tax assets

¥

(714)
(52)
(18)
(785)
¥ 4,9232018¥ (1,290)(54)(37)(1,382)¥ 4,064

Thousandsof U.S. dollars

instruments are highly reliable Japanese financial institutions, credit
risk is judged to be immaterial.

2019

Market Risk Management
This company has entered into an exchange forward contract tohedge part of the risks arising from exchange-rate fluctuations for
operating receivables/payables denominated in foreign currencies.
With regard to floating rate debt, we closely monitor economic andinterest-rate outlooks and conduct fund raising suited to eachsituation, and employ interest-rate swap transaction in order tocontrol fluctuation risks in the interest rate for part of the debt.
As for marketable and investment securities, This Company
periodically seizes the trend of fair value and financial position of
the issuers (business partners) to continuously review the possession
situation, taking into account the market conditions and its
relationship with the business partners.
Derivative financial transactions are executed and managed bydepartments handling such transactions with approval of
authorized personnel, in accordance with the regulations specifying
transaction authority and transaction limit.
Similar management is conducted with its consolidated subsidiaries
pursuant to the regulations of This Company.

$ (6,437)
(472)
(169)
(7,078)$ 44,356

Note 9. Financial Instruments and Related Disclosures(1) Policy for Financial Instruments
This Group raises funds needed to implement financial and capital
investment plans (mainly through loans from banks). Its temporary
surpluses are mainly invested in highly liquid financial assets, while
short-term working capital is financed by loans from banks. This Group
employs derivative financial instruments for the purpose of avoiding
risks described later, and does not undertake speculative transactions.

Management of Liquidity Risk Related to Financing
Based on reports from each department, the financial department ofThis Company formulates and updates the financial plan in a timely
manner, and manages liquidity risk by way of maintaining
short-term liquidity. Financial plans of its consolidated subsidiaries
are reported to the financial department of This Company every
month in a timely manner, thereby controlling liquidity risk acrossThis Group.

(2) Nature and Extent of Risks Arising from Financial Instruments
Operating receivables, such as notes and accounts receivable-trade,
involve credit risk on the part of customers.
Foreign-currency-denominated operating receivables generated byoverseas operations, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
Marketable and investment securities, which are mainly equity
securities of affiliates, involve market fluctuation risk.
Operating payables, such as notes and accounts payable-trade, aregenerally due within five months. Part of them, denominated inforeign currencies, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
The primary purpose of loans is raising funds for capital investment
and business structure reform. Of these, syndicate loans and manyother loans involve interest-rate fluctuation risk. In addition, inorder to avoid interest-rate fluctuation risk for part of the long-term
debt, we employ derivative transactions (interest-rate swap
transaction) for hedging.
Derivative transactions are exchange forward contracts aimed at
hedging exchange-rate fluctuation risk related to operatingreceivables/payables denominated in foreign currencies, andinterestrate swaps aimed at hedging interest-rate fluctuation risk
related to debt.
(3) Risk Management for Financial Instruments

Credit Risk Management
For operating receivables and long-term debt, the operations
department of respective business segment of This Company employs
credit management regulations in order to periodically monitor the
status of its major business partners, manage due dates and balances ofeach business partner, and furthermore, identify business partners
with doubtful collectability and mitigate risks arising from theirdeteriorated financial position at an early date. Similar credit
management is conducted with its consolidated subsidiaries pursuant
to the credit management regulations of This Company.
As This Company’s transaction partners on derivative financial
13Notes to Financial Statements(4) Fair Values of Financial Instruments
With regard to the fair value of financial instruments, in addition tobasing fair value on market value, the fair value of financial
instruments that have no available market value is determined byusing a rational method of calculation. However, as variables are
inherent in these value calculations, the resulting values may differ if
different assumptions are used.

Derivative financial instruments
The fair value of derivatives are based on quoted price offered by counterparty financial institutions.
However, interest-rate swaps that are accounted for under the special method are combined with thelong-term debts that are hedged by these swaps. As a result, the fair value of these interest-rate swaps isincluded in the fair value of the corresponding long-term debts.
Note 2. Financial instruments whose fair values are not readily determinable

Millionsof yenUnlisted equity securities

Millions of yen¥ 531

Thousandsof U.S. dollars$ 4,786

2019

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Carrying
amounts

Fair
value

Unrecognizedgain (loss)¥ 21,564
46,344
9,797
77,70632,917
20,2552,111
2,881¥ 58,165¥ 21,564
46,344
9,797
77,70632,917
20,255

¥—
—
—
—
—
—

4,993

1

¥ 58,167¥1

Unlisted equity securities
These instruments are not included in investment securities as they
have no market value and their fair values are extremely difficult tomeasure.

Millions of yen

2018

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Carrying
amounts

Fair
value

Unrecognizedgain (loss)¥ 23,189
41,414
11,68876,292
31,243
21,306
2,112
4,962¥ 59,625¥ 23,189
41,414
11,68876,292
31,243
21,306

¥—
—
—
—
—
—

7,074

0

¥ 59,625¥0Thousands of U. S. dollars

2019

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Carrying
amounts

Fair
value

Unrecognizedgain (loss)$ 194,294
417,557
88,272
700,124
296,585
182,495
19,02325,959$ 524,063$ 194,294
417,557
88,272
700,124
296,585
182,495

$—
—
—
—
—
—

44,99310$ 524,074$ 10Note 1. Method of calculating the fair value of financial instruments and matters related to marketablesecurities and derivatives
AssetsCash and deposits, and notes and accounts receivable-trade
As these instruments are settled in the short term and their fair values and book values are nearly
identical, their book values are taken to be their fair values.
Investment securities
The fair values of investment securities are determined by their prices on stock exchanges.
Liabilities
Notes and accounts payable-trade, and short-term loans payable
As these instruments are settled in the short term and their fair values and book values are nearly
identical, their book values are taken to be their fair values.
Long-term debt and current portion of long-term debt
The fair value of long-term debt is determined by discounting the total amount of principal and interest
with the assumed interest rate on new loans of the same type. With respect to part of long-term debts
with floating-rate interest, special treatment of the interest-rate swap is adopted. The value of that
long-term debt is calculated from principal and interests, which is handled together with the interest-rate
swap, with interest rates reasonably estimated to be applied to similar debts.

14

Notes to Financial Statements

Note 10. Segment Information

The Machinery System Consolidated Division specializes in the
manufacture of industrial equipment (various types of powder
processing equipment and press machines, etc.), steel casting andspecial steel casting, other incidental works and various types ofplant engineering.
The Industrial Materials Consolidated Division specializes in the
manufacture of ducts, polycon FRP pipes, various types of synthetic
resin products, and other incidental works.

(1) Outline of Reportable Segments
The Company’s reportable segments are the components of ourbusiness (separate financial information for which is available), on
which periodical review is made for allocation of management
resources and appraisal of achievements by the board of directors.
Each product-based division at our headquarters compiles
comprehensive product strategies for domestic and overseas
business operations.
In other words, the Company consists of division-based reportablesegments; the Pipe System Consolidated Division, the Machinery
System Consolidated Division and the Industrial Materials
Consolidated Division.
The Pipe System Consolidated Division specializes in the
manufacture of ductile iron pipes and accessories, various types ofadjusting valves, and other incidental works.

(2) Calculation method of: sales, profits/losses, assets, liabilities
and other items for each reportable segment
The accounting procedures of the reportable segments are basicallythe same as the description in the “Important Items Concerning the
Presentation of Consolidated Financial Statements,” and any
intersegment internal revenue/transfers etc., are represented basedon actual market prices.

(3) Information on sales, profits/losses, assets, liabilities and other items for each reportable segment
Segment information for the fiscal years ended March 2018 and 2019 is as follows:
Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2019
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1¥ 56,228289
56,517891
55,346¥ 25,922
8
25,9301,598
21,090¥ 26,636
71
26,707738
24,512¥ 108,786
369
109,156
3,228
100,949

1,342

370

447

2,160

791

¥ 1,081

¥

¥

559

¥

2,433

Consolidated*2

—
(369)
(369)
(225)
35,520¥ 108,786—
108,786
3,003
136,469

248

2,409

¥

¥

482

¥

2,915

1. The minus 225 million yen segment income adjustment includes: 5 million yen resulting from the elimination of intersegment transactions; minus 211 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 19 million yen resulting from inventory asset adjustment.
The 35,520 million yen segment asset adjustment includes: minus 4,394 million yen resulting from the elimination of intersegment transactions; and 39,914 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 248 million yen depreciation adjustment and 482 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2018
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1¥ 55,272
297
55,5691,295
53,732¥ 27,381
027,382
1,790
17,943¥ 24,468
185
24,654427
23,879¥ 107,122
483
107,606
3,513
95,554

1,416

357

440

2,214

¥ 1,122

¥

283

¥

408

¥

1,814

—
(483)
(483)
(103)
39,568¥ 107,122—
107,122
3,409
135,122

254

2,468

¥

¥

Consolidated*2

135

¥

1,950

1. The minus 103 million yen segment income adjustment includes: 20 million yen resulting from the elimination of intersegment transactions; minus 25 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 98 million yen resulting from inventory asset adjustment.
The 39,568 million yen segment asset adjustment includes: minus 2,732 million yen resulting from the elimination of intersegment transactions; and 42,300 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 254 million yen depreciation adjustment and 135 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

15
16

Notes to Financial Statements

Thousands of U.S. dollars

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2019
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Consolidated*2

Adjustment*1$$ 233,554
72
233,627
14,403
190,021$ 239,986
647
240,634
6,654
220,855$ 980,150
3,326
983,477
29,087
909,539

12,095

3,339

4,028

19,463

2,243

21,922$ 4,342

$

7,135

$

9,742

$

5,044

$

$

—
(3,326)(3,326)(2,029)320,030$ 506,609
2,606
509,216
8,029
498,662

980,150—
980,150
27,057
1,229,569
21,706$

26,264

1. The minus 2,029 thousand US dollar segment income adjustment includes: 48 thousand US dollars resulting from the elimination of intersegment transactions; minus 1,902 thousand US dollars resulting from allocationdifferences of selling & general administrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 175 thousand US dollars resulting from inventory asset adjustment.
The 320,030 thousand US dollar segment asset adjustment includes: minus 39,589 thousand US dollars resulting from the elimination of intersegment transactions; and 359,619 thousand US dollars due to a working capitalsurplus, investment securities and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 2,243 thousand US dollar depreciation adjustment and 4,342 thousand US dollar adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specificreportable segment, and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

Note 11. Subsequent Events(4) Geographic Segments
Geographic segment information has been omitted, as thepercentage of “national” exceeded 90% in both sales and assets in all
segments.

Cash Dividends
Cash dividends of the Company’s retained earnings for the year ended
March 31, 2019 were proposed by the Board of Directors and approvedby the shareholders at the annual general meeting held on June 26,
2019, as follows:(5) Sales to Foreign Customers
Foreign sales have been omitted, as they did not reach 10% ofconsolidated sales.

Millionsof yenCash dividends (¥30.0 per share)

16

¥ 377

Thousandsof U.S. dollars$ 3,398

Independent Auditor’s Report

Independent Auditor’s Report
PKF Hibiki AUDIT CORPORATION
Kitahama-Yamamoto Building. 4F,
2-3-6, Kitahama, Chuo-ku, Osaka, JapanTo the Board of Directors of Kurimoto, Ltd.
We have audited the accompanying consolidated balance sheets of Kurimoto, Ltd. and consolidated subsidiaries as of March 31, 2019,
and the related consolidated statements of income, comprehensive income, changes in net assets, and cash flows for the year thenended, and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit inconformity with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatementof the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Kurimoto, Ltd. and consolidated subsidiaries as of March 31, 2019, and the consolidated results of their operations andtheir cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.
Convenience Translation
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and in our opinion, such translation
has been made in conformity with the basis stated in Note 2. Such U.S. dollar amounts are presented solely for the convenience ofreaders outside Japan.
September 12, 201917

Corporate Information

Kurimoto, Ltd.

(as of June 26, 2019)

OutlineFoundedIncorporated
Common stock
Total assets
Employees

OfficesHead Office12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Telephone: (06) 6538-7603
Fax: (06) 6538-7758

1909
1934
¥31,186 million*¥118,019 million*
1,336*

Tokyo Office16-2, Konan 2-chome, Minato-ku, Tokyo 108-0075, Japan
Telephone: (03) 3450-8611
Fax: (03) 3450-8504*as of March 31, 2019

Board of Directors
President
Director and Senior Managing
Executive Officers
Director andManaging Executive Officers
Director andSenior Executive Officers
Outside Director
Full-Time Audit &Supervisory Board Member
Outside Audit &Supervisory Board Members
Senior Executive Officers

Executive Officers

Hokkaido Office3, Nishi 3-chome, Kitaichijo, Chuo-ku, Sapporo 060-0001, Japan
Telephone: (011) 281-3301
Fax: (011) 281-3369(as of June 26, 2019)

Moriyoshi Kushida
Motohito Sawai
Hirobumi Okada
Mikio Yaji

Tohoku Office12-30, 1-chome Honcho, Aoba-ku, Sendai 980-0014, Japan
Telephone: (022) 227-1872
Fax: (022) 227-8417
Nagoya Office27-2, Meiekiminami, 1-chome, Nakamura-ku, Nagoya
450-0003, Japan
Telephone: (052) 551-6930
Fax: (052) 551-6940

Yoshiaki Shingu
Kazutaka Kikumoto
Nobuhiro Otsuki
Keiko Kondo
Minoru Murata

Chugoku Office
7-19, Hondori, Naka-ku, Hiroshima 730-0035, Japan
Telephone: (082) 247-4132
Fax: (082) 247-4004

Kazuhiko Hakozaki
Maki Arita
Kazuharu Kondo
Shinya Kojima
Hisato Sato
Akitoshi Oda
Naofumi Saito
Shin Ikuta
Takehisa Fukui
Takayuki Miyazaki
Yasuharu Yoshinaga
Takao Ueda
Yasuji Noguchi
Yoshihiro Uraji

Stock

Taiyo Life Insurance Company
Japan Trustee Services Bank, Ltd.
Nippon Life Insurance Company
Resona Bank, Limited
The Master Trust Bank of Japan, Ltd.
Mizuho Bank, Ltd.

Europe Office
Address: Berliner Allee 40 40212 Dusseldorf, Germany
Telephone: +49-211-550-46411
Fax: +49-211-550-46420
Jakarta Office
Address: Sahid Sudirman Center, 56th Floor Jl. Jend. Sudirman Kav. 86,
Jakarta 10220, Indonesia
Telephone: +62-21-8063-1861
Fax: +62-21-8063-1999

Banking References(as of March 31, 2019)

Common Stock
Number of authorized shares
Number of issued shares
Number of shareholders

Principal Shareholders

Kyushu Office
3-11, Hakataeki-minami 1-chome, Hakata-ku, Fukuoka
812-0016, Japan
Telephone: (092) 451-6622
Fax: (092) 471-7696

Head OfficeMizuho Bank, Ltd. (Osaka Branch)Resona Bank, Limited (Osaka Banking Department)
Sumitomo Mitsui Banking Corporation (Midosuji Branch)
MUFG Bank, Ltd. (Osaka Main Office)39,376,600
13,398,490
7,585(as of March 31, 2019)
Number ofshares held
(in thousands)

Ratio ofshareholding

1,209
797
678
444
423
362

9.6%
6.3%
5.3%
3.5%
3.3%
2.8%

Tokyo OfficeMizuho Bank, Ltd. (Utisaiwai-cho Branch)
MUFG Bank, Ltd. (Shimbashi Branch)Resona Bank, Limited (Shimbashi Branch)
Sumitomo Mitsui Banking Corporation (Hibiya Branch)18

Corporate Information

Kurimoto Group(as of June 26, 2019)

Kurimoto Group consists of Kurimoto, Ltd. and 19 subsidiaries, including the following.
Kurimoto Trading Co., Ltd.

Kurimoto USA, Inc.

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Operations:

Holding company

Readco Kurimoto, LLC
Kurimoto Logistics Corporation

Operations:Operations: Procurement and transport of raw materials, castiron pipes, etc.

Kurimoto Polymers Co., Ltd.

Japan Castering Co., Ltd.

Operations:

Manufacture and sales of industrial machinery

Manufacture and sales of rigid PVC pipes,
polyethylene pipes and profile extrusion products

Operations: Manufacture and sales of castings
Zentec Co., Ltd.
Yamatogawa Co., Ltd.

Operations:Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Maintenance and repair work of bridges and roads
Repair and reinforcement work of concrete structures

Kurimoto Pipe Engineering Co., Ltd.
Motoyama Eng. Works, Ltd.

Operations:Operations: Manufacture and sales of industrial valves

Design, construction and management of pipelines,
operation and maintenance of pipelines

Riko, Ltd.
Ks-Tech Co., Ltd.

Operations:Operations: Manufacture, sales and construction of forging
machinery, forming machinery and related products

Kuritetsu (Shanghai) Trading Co., Ltd.

Hokkaido Kanzai Co., Ltd.
Operations: Sales of ductile iron pipes, valves, and synthetic resin
products
Yashima Chemical Engineering Co., Ltd.
Operations: Design, manufacture, sales, and maintenance ofchemical and pharmaceutical equipment
Nihon Kaiser Co., Ltd.
Operations: Manufacture and sales of half precast products
Kurimoto Business Associates Co., Ltd.
Operations:Management and leasing of real estate, staffing
service, travel agency, insurance agency

12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Telephone (06)6538-7603
Facsimile (06)6538-7758
URL http://www.kurimoto.co.jp/english/

Operations:

Production of valves

Wholesale of machinery equipment, steel, andnonmetallic products

Kurimoto (Philippines) Corporation
Operations:

Construction, installation works, electric works,
piping works, repairs and maintenance and staff
service of various kinds of plants