2016
Kurimoto, Manufacturing the Future

ANNUAL REPORT
Year ended March 31, 2016

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 17 subsidiary companies, make up the Kurimoto group
employing about 2,000 people. Today, Kurimoto plays a vital role insupplying basic industrial products, machines, and services domesticallyand abroad.

Contents
Financial Highlights
Message from the President
Business Operations
Consolidated Subsidiaries
Financial Section

1
2
3
4
5

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 Auditors’ Report
Corporate Information

10
18
19

Financial Highlights

Millions of yen (thousands of U.S. dollars) except per 1,000 share information
Years ended March 31

2016

2015

2014

2013

2012

2016

Net sales¥ 101,964¥ 98,394¥ 103,664¥ 98,175¥ 97,075$ 904,906

2,194

1,598

3,747

2,898

2,206

19,474

16,981

12,33728,347

21,928

16,686

150

4,000

4,000

4,000

4,000

2,000

35

124,382

127,884

129,021

129,934

129,052

1,103,854¥ 48,255¥ 49,144¥ 44,921¥ 45,586¥ 41,842$ 428,249•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Profit (loss) attributable to owners of parent• • • • • •Per 1,000 shares of common stock
Profit (loss) attributable to owners of parent
Cash dividends
Total assets• • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Total shareholders’ equity•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Notes: The U.S. dollar amounts are calculated at the exchange rate of ¥112.68 to $1, the rate prevailing on March 31, 2016.

160,000

Net Sales (¥ million)

140,000
120,000
100,000

97,07598,175’12’13

103,664

98,394

101,964’15’16

80,00004,000Profit (loss) attributable to owners of parent (¥ million)

3,500

3,747

2,898

3,000
2,500

’14

2,206

2,194

2,000

1,598

1,500
0

40

’12

’14

’15

’16

Net Income per Share of Common Stock (¥)
28.35

30
20

’13

16.69

21.93
12.34

16.98

10
0

52,000

’12

’13

’14

49,14448,00045,58646,00042,000’16

Shareholder’s Equity (¥ million)

50,00044,000’15

48,25544,921

41,84240,000
0

’12

’13

’14

1

’15

’16

Message from the President

I would like to outline here ourbusiness activities in the 120th term.
In this consolidated fiscal year, thanks
to deliberate economic and monetary
policy measures taken by the national
government and Bank of Japan, theJapanese economy has been on a path ofgradual recovery. Improvements have been
made in corporate earnings, employment
and income, and capital investment.
However, with risk factors materializing
such as the slowing of the Chinese
economy, a drop in the price of oil andother resources, the appreciation of theyen, and a trend toward weakening stock
prices, conditions will remain uncertain
going forward.
In these circumstances, our net sales
were ¥101.9 billion, with ¥3.3 billion in
operating income, results that did not live
up to forecasts from the start of the year.
Nonetheless, the market conditions for ourgroup are by no means bad. In the market
for social infrastructure, we expect there to
be a growing need for improving
infrastructure in Japan as stronger calls are
made for disaster prevention and reduction.
We also see growing opportunity forcreating solutions in more fields, such as
stock management, in light of the expected
population decline in Japan. Also, demandfor construction is expected to be strong in
the coming few years in the Tokyo
metropolitan district and capital area as
the Tokyo Olympics approaches. And inindustrial infrastructure we have a growing
number of opportunities to carry out
preventive maintenance, regular upkeep,
and other forms of follow-up service forour group’s existing products and establish
an even more solid reputation.
Our current three-year medium-termplan has laid out where the KurimotoGroup needs to be in 10 years, and sets thebenchmark for both protecting ourexisting business base and generating new
avenues of business.
Based on our fiscal 2015 performance,
as well as the recent upheavals in thebusiness climate and forecasts for comingchange, we have revised our financial
targets. What the group needs to do has
not changed, however. In fact, I believe it
has become even clearer. The KurimotoGroup as a whole will continue with ourefforts toward sustainable growth.

2Moriyoshi Kushida
President

June 2016

Moriyoshi Kushida
President

Business Operations

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

Machinery system business21.2 %

Industrial materials business120th
accounting period
101,964

Pipe system business57.3 %

21.5 %

Pipe system businessIndustrial materials business

Sales for the pipe system business was 58,383 million yen, which was an increaseof 1,632 million yen on the previous consolidated fiscal year. Sales in the Ductile
Iron Pipe Division increased due to a rise in shipments of large diameter pipes,
despite a drop-off in shipments of small diameter pipes. In addition, shipmentsin the Valve Division also remained steady.
Operating income for this business was 2,182 million yen, which was an increaseof 166 million yen on the previous consolidated fiscal year. Although there was adecrease in profit in the Ductile Iron Pipe Division, due to a drop in income forsmall diameter pipes, favorable results were nevertheless achieved, and there wasan improvement in cost reduction in the Valve Division.

Sales for the industrial materials business was 21,955 million yen, which was adecrease of 1,172 million yen on the previous consolidated fiscal year. Despite
the increase in shipments of noise reduction products for expressways in theConstruction Materials Division, shipments of civil engineering andconstruction products were stagnant due to certain factors, such as changes indelivery dates. In addition, in the Plastic Products Division, shipments ofproducts, mainly agricultural and sewerage pipes, showed a decrease.
Operating income for this business was 157 million yen, which was a decrease of
484 million yen on the previous consolidated fiscal year. The Plastic Products
Division saw drops in both income and profit, as did the Construction Materials
Division, with regard to civil engineering and construction products.

Machinery system business
Sales for the machinery system business was 21,625 million yen, which was anincrease of 3,109 million yen on the previous consolidated fiscal year. There wasan increase in shipments of larger-sized forging presses in the Machinery
Division, and also a stable performance for shipments in the Materials Division.
Operating income for this business was 1,020 million yen, which was an increaseof 530 million yen on the previous consolidated fiscal year. This was due toincreases in both income and profit mainly in the Machinery and Materials
divisions, and an improvement in income in the Plant System Engineering
Division.

3

Consolidated Subsidiaries

Kurimoto, Ltd. produces and sells various kinds of products, such as iron pipes, valves, machinery, steel structures, light steel
pipes, and stage pressure machines. Kurimoto’s business affiliates are run as an enterprise group and the related companies
are described below.
Kurimoto Trading Co., Ltd.

Ks-Tech Co., Ltd.

Operations: Sales of cast iron pipes, valves, and synthetic resin products
Capital:¥200 million (US$1,774,937)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: December 1952 as a subsidiary of Kurimoto, Ltd.
Orders:¥18,748 million (US$166,388 thousand)(7.8% increase)
Sales:¥18,482 million (US$164,029 thousand)(6.6% increase)

Operations: Manufacture and sales of forging machinery
Capital:¥300 million (US$2,662,406)
Stockholder: 67% of stock is owned by Kurimoto, Ltd. and
33% by Sato Tekko Co., Ltd.
Established: April 2007 and became a subsidiary in 2007
Orders:¥1,144 million (US$10,156 thousand)(31.1% decrease)
Sales:¥1,783 million (US$15,832 thousand)(28.4% increase)

Kurimoto Logistics Corporation

Hokkaido Kanzai Co., Ltd.

Operations: Procurement and transportation of raw materials, ductile iron pipes
and others
Capital:¥90 million (US$798,722)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: March 1960 and became a subsidiary in 2001
Orders:¥2,303 million (US$20,442 thousand)(14.0% increase)
Sales:¥2,303 million (US$20,442 thousand)(14.0% increase)

Operations: Sales of cast iron pipes, valves, and synthetic resin products
Capital:¥30 million (US$266,240)
Stockholder: 80% of stock is owned by Yamatogawa Co., Ltd. and
20% by Kuwazawa Trading Co., Ltd.
Established: April 1992 and became a subsidiary in 2007
Orders:¥5,818 million (US$51,636 thousand)(19.0% decrease)
Sales:¥5,818 million (US$51,636 thousand)(19.0% decrease)

Sasebo Metal, Co., Ltd.

Yashima Chemical Engineering Co., Ltd.

Operations: Production and sales of cast iron, cast iron products, and other castmetal products
Capital:¥100 million (US$887,468)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: April 2000 as a subsidiary of Kurimoto, Ltd.
Orders:¥1,492 million (US$13,247 thousand)(9.7% increase)
Sales:¥1,418 million (US$12,586 thousand)(7.5% increase)

Operations: Manufacture and sales of chemical and pharmaceutical equipment
Capital:¥45 million (US$399,361)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: July 1958 and became a subsidiary in 2004
Orders:¥413 million (US$3,671 thousand)(23.6% decrease)
Sales:¥423 million (US$3,759 thousand)(16.2% decrease)

Yamatogawa Co., Ltd.

Nihon Kaiser Co., Ltd.

Operations: Sales of cast iron pipes, valves, and synthetic resin products
Capital:¥60 million (US$532,481)
Stockholder: 95% of stock is owned by Kurimoto, Ltd. and
5% by Marubeni-Itochu Steel Inc.
Established: December 1972 and became a subsidiary in 2004
Orders:¥21,574 million (US$191,462 thousand)(1.8% increase)
Sales:¥21,775 million (US$193,253 thousand)(15.3% increase)

Operations: Manufacture and sales of half precast products
Capital:¥90 million (US$798,722)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: July 2013 and became a subsidiary in 2013
Orders:¥2,942 million (US$26,116 thousand)(5.3% decrease)
Sales:¥2,485 million (US$22,054 thousand)(19.3% decrease)

Motoyama Eng. Works, Ltd.

Kurimoto Business Associates Co., Ltd.

Operations: Manufacture and sales of industrial valves
Capital:¥300 million (US$2,662,406)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: December 2006 and became a subsidiary in 2007
Orders:¥4,735 million (US$42,021 thousand)(12.5% decrease)
Sales:¥5,308 million (US$47,112 thousand)(5.1% increase)

Operations: Management and leasing of real estate, staffing service, travel agency,
insurance agency
Capital:¥100 million (US$887,468)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: September 1967 as a subsidiary of Kurimoto, Ltd.
Orders:¥1,028 million (US$9,126 thousand)(14.9% increase)
Sales:¥1,028 million (US$9,126 thousand)(14.9% increase)4

Financial Section

Consolidated Balance Sheets
March 31, 2016 and 2015

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

Assets

2015

2016

2016

Current assets$

151,361¥ 17,055¥ 18,776

39,88738,489353,992

46

22

414

Merchandise and finished goods

10,484

10,52593,042Work in process

5,793

4,933

51,419Raw materials and supplies

2,270

2,480

20,147

Deferred tax assets (Note 8)

991

1,222

8,802

1,084

919

9,628

(62)

(47)

(552)

77,552

77,320688,256

Buildings and structures

24,99825,228221,857

Machinery, equipment and vehicles

51,51850,119457,206

Tools, furniture and fixtures

9,743

9,606

86,468Land

15,20915,230134,975

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

Prepaid expenses and other current assets
Allowance for doubtful accounts
Total current assets
Property, plant and equipment

388

433

3,443

Construction in progress

1,577

1,072

14,002

Accumulated depreciation(70,191)(68,629)(622,930)

Total property, plant and equipment

33,24333,061

295,023

10,423

14,45892,505—— unconsolidated subsidiaries and affiliates

448

448

3,982

Long-term loans —— other

19

18

169

Lease assets

Investments and other assets
Investment securities —— other
Investment securities

Long-term loans—— unconsolidated subsidiaries and affiliates
Other investments
Allowance for doubtful accounts
Long-term prepaid expenses and otherTotal investments and other assets
Total assets

5

152

100

1,348

1,952

1,934

17,324

(321)

(318)

(2,856)

912

859

8,099

13,586

17,502

120,573¥ 124,382¥ 127,884$ 1,103,854

Financial Section

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

Liabilities and Shareholders’ Equity

2015

2016

2016

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¥ 25,625¥ 26,529

23
21,759
3,061
52
576
2,934
1,404
440
2,755
58,634

5
23,448
2,336
63
218
3,200
1,698
425
1,939
59,867

210
193,112
27,167466
5,114
26,041
12,462
3,911
24,457
520,362

8,426
7,385
85
352
137
610
16,99875,633¥ 6,826
9,443
132
1,245
137
648
18,43378,30074,78365,544
759
3,125
1,222
5,421
150,858
671,221

31,186

31,186

276,766

Total shareholders’ equity

6,942
14,241(1,093)
51,276

6,959
12,563(1,092)
49,616

61,615
126,386(9,705)455,062

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans
Total accumulated other comprehensive income

1,794
7(4,823)(3,021)3,949(5)(4,416)(472)

15,92770(42,810)(26,813)

493

439

4,383

48,74949,584

432,633¥ 124,382¥ 127,884$ 1,103,854

Total current liabilities
Long-term liabilities
Net defined benefit liability (Note 4)Long-term debt (Note 3)
Lease obligations
Deferred tax liabilities (Note 8)
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities

Net assets
Shareholders’ equity
Capital stock
Authorized:
Issued:$227,419393,766,000 shares
133,984,908 shares in 2015
133,984,908 shares in 2016

Capital surplus
Retained earnings
Treasury stock

Non-controlling interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

6

Financial Section

Consolidated Statements of Income
Years ended March 31, 2016 and 2015

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
Loss on revision of retirement benefit plan
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

2016

2015

2016

¥ 101,964
79,13922,824
19,494
3,330¥ 98,394
76,21922,175
19,2502,925$ 904,906
702,342
202,564
173,008
29,556

283
(374)
737
(521)
(363)
3,091

335
(405)
—
—
(275)
2,579

2,515
(3,324)6,540(4,625)(3,227)27,434

576
278
854
2,236
42
2,194

285
641
927
1,652
54
¥ 1,598

5,112
2,473
7,585
19,849374$ 19,474¥

U.S. dollars(Note 2)yen

Net income per 1,000 shares:
Basic
DilutedCash dividends per 1,000 shares

2016

2015

2016

¥ 16,981
16,9814,000¥ 12,337
12,3374,000$

Consolidated Statements of Comprehensive Income
Years ended March 31, 2016 and 2015

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

2016
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
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

7

150
150
35

2015

2016

¥ 2,236¥ 1,652$ 19,849(2,154)13(407)(2,549)
(312)
(354)
41

1,320
(5)
795
2,110
3,762
3,708
54

(19,123)
117(3,619)(22,624)(2,775)(3,148)372

Financial Section

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2016 and 2015

Millions of yen

Balance as of March 31, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Change of scope of consolidation
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2015
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Change in treasury shares of parent
arising from transactions with
non-controlling shareholders
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2016

Capitalstock

CapitalsurplusRetainedearnings

Valuationdifference on
Treasury
availablesharesfor-salesecurities¥ 31,186¥ 6,959¥ 9,749¥ (392)¥ 2,630—¥ (5,211)¥ 386¥ 45,307—
31,186
—
—
—
—

—
6,959
—
—
—
—

1,700
11,449
(522)
1,598
—
38

—
(392)
—
—
(700)
—

—
2,630
—
—
—
—

—
—
—
—
—
—

—
(5,211)
—
—
—
—

—
386
—
—
—
—

1,700
47,008
(522)
1,598
(700)
38

—

—

—

—

1,319

(5)

795

53

2,162

¥ 31,186¥ 6,959¥ 12,563¥ (1,092)¥ 3,949¥ (5)¥ (4,416)¥ 439¥ 49,584

—
—
—

—
—
—

(516)
2,194
—

—
—
(0)

—
—
—

—
—
—

—
—
—

—
—
—

(516)
2,194
(0)

—

(16)

—

—

—

—

—

—

(16)

—

—

—

—

(2,154)

13

(407)

54

(2,495)¥ 31,186¥ 6,942¥ 14,241¥ (1,093)¥ 1,794¥ 7¥ (4,823)¥ 493¥ 48,749

Remeasurements
Nonof defined benefit controllingplansinterests

Total net
assetsDeferred
gains orlosses onhedgesRemeasurements
Nonof defined benefit controllingplansinterests

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

Capitalstock

Balance as of March 31, 2015
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Change in treasury shares of parent
arising from transactions with
non-controlling shareholders
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2016

$ 276,766

Capitalsurplus

ValuationdifferenceonTreasury
availablesharesfor-salesecurities

Retainedearnings$ 61,765 $ 111,498$ (9,697)$ 35,049

Deferred
gains orlosses onhedges$ (47) $ (39,192)$ 3,904 $ 440,048

—
—
—

—
—
—

(4,587)
19,474
—

—
—
(8)

—
—
—

—
—
—

—
—
—

—
—
—

(4,587)
19,474
(8)

—

(150)

—

—

—

—

—

—

(150)

—

—

—

—

(19,121)117(3,618)479(22,143)$ 61,615 $ 126,386$ (9,705)$ 15,927$ 70$ (42,810)$ 276,766

8$ 4,383 $ 432,633

Financial Section

Consolidated Statements of Cash Flows
Years ended March 31, 2016 and 2015

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

2016

2015

2016

¥ 3,091
2,463(1,678)
(800)
(609)
(283)
374
(737)
7
5
32
18
1,198
(88)

¥ 2,579
2,355
(734)
1,753
(2,059)
(335)
405
—
0
(26)
43
(216)
629
(609)

$ 27,434
21,861(14,900)(7,102)(5,411)(2,515)
3,324(6,540)
62
52
292
161
10,634(786)

Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

2,993
298
(361)
(255)
2,675

3,784
325
(416)
(255)
3,438

26,566
2,648(3,207)(2,266)23,741

Net cash provided by (used in) investing activities
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
Payments of sales of property, plant and equipment
Payments of loans receivableCollection of loans receivable
Other, net

—
(246)
1,909
(2,241)
16
—
(181)
19
(44)

(50)
(19)
1
(4,201)
38
(648)
(7)
1
183

—
(2,184)
16,946(19,888)
144—(1,607)
172
(397)

(767)

(4,701)(6,815)

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 stock(1,688)(64)
1,049(2,382)
(517)
(4)
(0)

(1,490)(75)
11,300(13,342)
(523)
(1)
(700)

(14,984)
(575)
9,309
(21,145)(4,594)(43)(8)

Net cash provided by (used in) financing activities(3,610)(4,834)(32,042)(17)(1,721)
18,726—¥ 17,005

72(6,025)24,577175¥ 18,726(159)(15,276)
166,193—$ 150,917¥18,776(50)¥18,726$151,361(443)$150,917

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
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
Other, net

Net cash provided by (used in) investing activities

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
Cash and Cash Equivalents at End of Year

Note: Relation between the year-end balance of cash and cash equivalents and the items on the consolidated balance sheet:¥17,055
Cash and deposits(50)
Time deposits due over three months¥17,005
Cash and cash equivalents

9Notes to Financial Statements

Note 1. Significant Accounting Policies

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 business term. For the cases in which the virtual valueof those other securities without market value fell markedly, therelevant securities have been depreciated down to the virtual 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.
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.

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 obliterated
on a consolidation basis.

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 resulting conversion
profit or loss has been appropriated as their profit or loss in thecurrent business term.

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 under
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 thosesecurities 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.

10Notes to Financial Statements

Standard for Consolidated Financial Statements, and Paragraph 57-4
(4) of the Accounting Standard for Business Divestitures.
We have also employed a different recording method forconsolidated cash flow statements for this consolidated fiscal year.
Cash flows from the purchase or sale of investments in subsidiaries
with no change in scope of consolidation were recorded in the “Net
cash provided by financing activities”; and cash flows fromacquisition related costs of subsidiaries with a change in scope of
consolidation, and cash flows from costs related to purchase or saleof investments in subsidiaries with no change in scope of
consolidation, were recorded in the “Net cash provided byoperating activities.”
The effect these changes may have on consolidated financial
statements and information provided per share will be minimal
with regard to this consolidated fiscal year.

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 129,222 thousand and 129,562 thousand for theyears ended March 31, 2016 and 2015, respectively.
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.
Consolidated Taxation System
We have adopted a consolidated taxation system.

Note 2. U.S. Dollar Amounts

Marketable and Investments Securities
Other marketable securities as of March 31, 2016 are as follows.

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=¥112.68 as of March
31, 2016, has been used for the purpose of presenting the dollar
amounts in the accompanying consolidated financial statements.

Millions of yen

2016

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Carrying
amounts

Marketvalue

Unrealized
gain (loss)¥ 7,582¥ 10,049¥ 2,467

Thousands of U.S. dollars

2016

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Carrying
amounts

Marketvalue

Unrealized
gain (loss)$ 67,288$ 89,183$ 21,895

Note 3. Short-term Bank Loans and Long-term Debt
The annual average interest rates applicable to short-term bankloans at March 31, 2016 and 2015 are 0.9% and 1.0%, respectively.
Short-term bank loans and long-term debt at March 31 wascomprised of the following:Thousands(Changes in Accounting Policies)(Application of the Accounting Standard for Business Combinations)
We have applied the “Accounting Standard for Business
Combinations (Accounting Standards Board of Japan (ASBJ)
Statement No. 21, September 13, 2013),” the “Accounting Standard
for Consolidated Financial Statements (Accounting Standards
Board of Japan (ASBJ) Statement No. 22, September 13, 2013),” the“Accounting Standard for Business Divestitures (AccountingStandards Board of Japan (ASBJ) Statement No. 7, September 13,2013),” and other standards from this consolidated fiscal year.
Accordingly, accounting methods have been revised to record thedifference arising from changes in equity in subsidiaries which we
continue to control as capital surplus, and to record
acquisition-related costs as expenses for the consolidated fiscal year.
In addition, regarding business combinations occurring on or after
the first day of the consolidated fiscal year, the accounting method
has been revised to retroactively reflect adjustments to the amountallocated to acquisition costs arising from the finalization of theprovisional accounting treatment, in the consolidated financial
statements of the fiscal year in which the business combination
occurs. Furthermore, indication of net income and others has beenrevised, and the indication of minority interests has been revised to
non-controlling interests. In order to reflect the changes inindication of financial statements, reclassification of consolidated
financial statements was made accordingly in the previous
consolidated financial statements.
The Accounting Standard for Business Combinations and otherstandards have been and will be applied since the first day of thisconsolidated fiscal year, in accordance with the transitional treatment
set forth in Paragraph 58-2 (4) of the Accounting Standard forBusiness Combinations, Paragraph 44-5(4) of the Accounting

Millions of yen

2016
Loans from financial institution,due 2016 to 2020 withinterest rates between
0.50% and 3.85%
Sub-total
Less current portion of loans•• • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • •of U.S. dollars

2015

11,78011,7802,336¥9,443

10,446
10,446
3,061¥ 7,385

2016

92,712
92,712
27,167$ 65,544

The aggregate annual maturities of long-term financial debt at March
31, 2016 and 2015 respectively are as follows:
Millions of yen

2016
2017
2018
2019
2020 and thereafter• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • •Thousandsof U.S. dollars

2016

2015

2016

—
3,061
7,362
12
11
¥ 10,446

2,336
2,273
7,123
23
22
¥ 11,780—
27,16765,335108
101$ 92,712

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.

11

Notes to Financial Statements

As of March 31, 2016, assets pledged as collateral for short-termbank loans, and long-term debt, including the current portion of
long-term debt, were as follows:

Deposit
Notes receivable
Buildings and structures
Machinery, equipment
Land

Millions of yen

Thousandsof U.S. dollars

2016

2016

¥ 50
1,460
4,215
1,936
3,608
¥ 11,270$ 443
12,95737,40917,18532,024$ 100,020(4) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits including plan
applied simplified method
Thousandsof U.S. dollars

Millions of yen

2016

2015

Funded retirement benefit obligations
Plan assets¥ 12,019(3,961)
8,058¥ 13,054 $ 106,666(35,152)(6,585)71,513
6,468

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

368

350

3,270

8,426

6,819

74,783

8,426
—

6,819
—

74,783—¥ 8,426¥ 6,819$ 74,783

2016

Note 4. Retirement Benefits
Liability for retirement benefits
Asset for retirement benefits
Total net liability (asset) for retirement
benefits at end of the year

The following are matters concerning the defined benefit plan as ofMarch 31, 2016 and 2015, respectively.
(1) Movements in retirement benefit obligations except plan applied
simplified method
Thousandsof U.S. dollars

Millions of yen

Balance at beginning of the year
Cumulative effects of changes
in accounting policies
Restated balance
Net increase from newly
consolidated subsidiaries
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Gain on abolishment of
retirement benefit plans
Balance at end of the year

2016

2015

2016

¥ 12,581¥13,313$ 111,661—
12,581(1,700)11,613—
111,661

—
690
68
880
(369)

20
684
103
525
(365)

—
6,128
607
7,811
(3,277)(2,310)¥ 11,541—¥12,581(20,504)$ 102,427(5) Retirement benefit costs

Balance at beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Contributions paid by the employer
Benefits paid
Gain on abolishment of
retirement benefit plans
Balance at end of the year

2015

2016

¥ 6,29388(1,066)427(110)¥ 5,192
69
604
560
(132)

$ 55,849
786(9,466)
3,791
(977)

(1,970)¥ 3,661—¥ 6,293(17,486)$ 32,497

2016
Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Balance at end of the year

¥ 530
95
(58)
(21)
¥ 546

¥ 541
77
(73)
(14)
¥ 530

95

77

851

¥ 1,443¥ 1,510$ 12,807¥ 521—$ 4,625

2016
Actuarial loss (gain)
Total

Thousandsof U.S. dollars

¥ 408
¥ 408

2015

2016

¥ (794)¥ (794)$ 3,628$ 3,628(7) Accumulated adjustments for retirement benefit(before tax effect deductions)Thousandsof U.S. dollars

Millions of yen

Unrecognized actuarial differences
Total

Thousandsof U.S. dollars

2015

¥ 690
68
(88)
676

$ 6,128
607
(786)
6,006

Millions of yen(3) Movements in net liability for retirement benefits based on thesimplified method
Millions of yen

2016

¥ 682
103
(69)
716

(6) Remeasurements of defined benefit plans(before tax effect deductions)Thousandsof U.S. dollars

2016

2015

2016
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
Loss on revision of retirement
benefit plan(2) Movements in plan assets except plan applied simplified method
Millions of yen

Thousandsof U.S. dollars

Millions of yen

2016$ 4,709
851
(519)
(187)
$ 4,853

12

2016

2015

2016

¥ 4,824¥ 4,824¥4,415¥4,415$ 42,812$ 42,812

Notes to Financial Statements

Note 7. Research and Development Expenses(8) Accumulated adjustments for retirement benefit①Plan assets comprise:

2016

Bonds
Equity securities
Cash and cash equivalents
General account
Other
Total

—
67%
23%
—
10%
100%

Research and development expenditures charged to income were
¥1,474 million ($13,085 thousand) for the year ended March 31, 2016.

2015
6%
64%
13%
14%
3%
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 33.0% and 35.6% for the year ended
March 31, 2016 and 2015, 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, 2016 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, 2016 and 2015
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:
2016
Discount rateLong-term expected rate of return
Expected rate of salary increase

2015

0.0%~0.6% 0.0%~1.5%
1.4%~1.9% 1.4%~1.9%
0.7%~4.6% 0.7%~4.4%

Defined contribution plans
The required contribution amount for consolidated subsidiaries forthe defined contribution plan was 64 million yen (574 thousand US
dollars) as of March 31, 2016.

Deferred tax assets
Net defined benefit liability
Accrued bonus indemnities
Allowance for doubtful accounts
Allowance for loss on construction work
Loss on revaluation 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
Less valuation allowance
Net deferred tax assets

Note 5. Contingent Liabilities
As of March 31, 2016 and 2015, the company was contingently
liable as follows:
Thousandsof U.S. dollars

Millions of yen

2016
As guarantor of indebtedness of
unconsolidated subsidiaries
and others
Discount of notes and bills
Transfer of notes and bills endorsed
for payment

2015

2016

¥ 143
2,266

¥ 166
2,474

$ 1,277
20,112¥0¥1$5Thousandsof U.S. dollars

Millions of yen

Note 6. Derivatives and Hedging Activities

2016

2015

2016

¥ 3,967443
91
12¥ 3,657480
85
28$ 35,212
3,933
813
113

180

187

1,597

110
543
2
12,871
7788
19,020(17,664)¥ 1,355116
572
2
14,44810799
20,390(18,746)¥ 1,644

981
4,826
23
114,233
62
6,999
168,798(156,768)$ 12,029

Millions of yen

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.

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

13

Thousandsof U.S. dollars

2016

2015

2016

¥ (660)
(48)
(7)
(715)
¥ 639

¥ (1,607)(56)(3)(1,667)¥ (23)$ (5,860)
(426)
(66)
(6,353)$ 5,676

Notes to Financial Statements

Note 9. Financial Instruments and Related Disclosures

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.

(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.
(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.

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.

(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
instruments are highly reliable Japanese financial institutions, credit
risk is judged to be immaterial.
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.
14

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.

Note 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.
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.

Millions of yen

2016

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
Derivative financial instruments

Carrying
amounts

Fair
value

Unrecognizedgain (loss)¥ 17,055
39,934
10,04967,03925,64921,7593,061
7,385¥ 57,8567¥ 17,055
39,934
10,04967,03925,64921,759

¥—
—
—
—
—
—

10,45812¥ 57,8687¥ 12—Note 2. Financial instruments whose fair values are not readily determinable

Millionsof yenUnlisted equity securities

2015

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
Derivative financial instruments

Fair
value

¥ 18,776
38,511
14,07971,367
26,53523,4482,336
9,443¥ 61,764(5)¥ 18,776
38,511
14,07971,367
26,53523,448

¥—
—
—
—
—
—

11,80019¥ 61,784
(5)

¥ 19
—

Unrecognizedgain (loss)

Note 10. Segment Information(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.
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.

Thousands of U. S. dollars

2016

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
Derivative financial instruments

Carrying
amounts

Fair
value

$ 151,361
354,406
89,183594,951
227,629
193,112
27,16765,544$ 513,454
70$ 151,361
354,406
89,183594,951
227,629
193,112

$—
—
—
—
—
—

92,818106$ 513,561
70

$ 106
—

$ 7,304

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

Millions of yen
Carrying
amounts¥ 823

Thousandsof U.S. dollars

Unrecognizedgain (loss)(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.

15

Notes to Financial Statements(3) Information on sales, profits/losses, assets, liabilities and other items for each reportable segment
Segment information for the fiscal years ended March 2015 and 2016 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

2016
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1¥ 58,383
309
58,6932,182
56,542¥ 21,625
021,625
1,020
17,452¥ 21,955
568
22,524157
20,012¥ 101,964
878
102,843
3,360
94,007

1,555

278

460

¥

¥ 1,147

¥

307

275

¥

Consolidated*2

—
(878)
(878)
(30)
30,375¥ 101,964—
101,964
3,330
124,382

2,294

169

2,463

1,729

¥ 1,214

¥

¥

2,944

1. The minus 30 million yen segment income adjustment includes: 37 million yen resulting from the elimination of intersegment transactions; minus 3 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 64 million yen resulting from inventory asset adjustment.
The 30,375 million yen segment asset adjustment includes: minus 1,931 million yen resulting from the elimination of intersegment transactions; and 32,306 million yen due to a working capital surplus, investment securities andland, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 169 million yen depreciation adjustment and 1,214 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, andassets 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

2015
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1

Consolidated*2¥ 56,751
278
57,0292,016
57,601¥ 18,515—
18,515490
15,095¥ 23,127
826
23,954642
21,312¥ 98,394
1,104
99,4983,148
94,009¥ —(1,104)(1,104)(223)
33,875¥ 98,394—
98,394
2,925
127,884

1,466

278

468

2,213

142

2,355

241

¥ 2,276¥ 145¥ 2,421¥ 1,864¥¥170

1. The minus 223 million yen segment income adjustment includes: 35 million yen resulting from the elimination of intersegment transactions; minus 148 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 110 million yen resulting from inventory asset adjustment.
The 33,875 million yen segment asset adjustment includes: minus 1,929 million yen resulting from the elimination of intersegment transactions; and 35,804 million yen due to a working capital surplus, investment securities andland, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 142 million yen depreciation adjustment and 145 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, andassets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

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

2016
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total$ 518,139
2,743
520,882
19,372501,798$ 191,916
6
191,923
9,058
154,882$ 194,850
5,046
199,897
1,396
177,603$ 904,906
7,796
912,70329,827834,285

13,804

2,473

4,082
2,442

$ 10,183

$

2,727

$

Adjustment*1

Consolidated*2—(7,796)(7,796)(271)
269,569$ 904,906—
904,906
29,556
1,103,854

20,3601,501

21,861$ 15,352$ 10,779$ 26,132$

1. The minus 271 thousand US dollar segment income adjustment includes: 333 thousand US dollars resulting from the elimination of intersegment transactions; minus 28 thousand US dollars resulting from allocation differencesof selling & general administrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 576 thousand US dollars resulting from inventory asset adjustment.
The 269,569 thousand US dollar segment asset adjustment includes: minus 17,137 thousand US dollars resulting from the elimination of intersegment transactions; and 286,706 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 1,501 thousand US dollar depreciation adjustment and 10,779 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.

16

Notes to Financial Statements

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, 2016 were proposed by the Board of Directors and approvedby the shareholders at the annual general meeting held on June 29,
2016, as follows:(5) Sales to Foreign Customers
Foreign sales have been omitted, as they did not reach 10% ofconsolidated sales.

Millionsof yenCash dividends (¥2.0 per share)

17

¥ 258

Thousandsof U.S. dollars$ 2,293Independent Auditors’ Report

Independent Auditors’ Report

18

Corporate Information

Kurimoto, Ltd.

(as of June 29, 2016)

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*¥107,665 million*
1,364*

Tokyo Office16-2, Konan 2-chome, Minato-ku, Tokyo 108-0075, Japan
Telephone: (03) 3450-8611
Fax: (03) 3450-8504*as of March 31, 2016

Board of Directors

Hokkaido Office3, Nishi 3-chome, Kitaichijo, Chuo-ku, Sapporo 060-0001, Japan
Telephone: (011) 281-3301
Fax: (011) 281-3369(as of June 29, 2016)

Chairman

Hideaki Fukui

President

Moriyoshi Kushida

Senior Managing Director

Motohito Sawai

Managing Director

Hirobumi Okada

Director

Yoshiaki Shingu
Mikio Yaji

Outside Director

Shigehiro Shibakawa
Minoru Takahashi

Audit & Supervisory Board
MemberToshitsugu Emura
Minoru Murata
Hideyo Akamatsu
Tomonori Kobayashi

Tohoku Office12-30, 1-chome Honcho, Aoba-ku, Sendai 980-0014, Japan
Fax: (022) 227-8417
Telephone: (022) 227-1872
Nagoya Office27-2, Meiekiminami, 1-chome, Nakamura-ku, Nagoya
450-0003, Japan
Telephone: (052) 551-6930
Fax: (052) 551-6940
Chugoku Office
7-19, Hondori, Naka-ku, Hiroshima 730-0035, Japan
Telephone: (082) 247-4132
Fax: (082) 247-4004
Kyushu Office
3-11, Hakataeki-minami 1-chome, Hakata-ku, Fukuoka
812-0016, Japan
Telephone: (092) 451-6622
Fax: (092) 471-7696

Managing Executive Officer Mitsuo Amagaya

Europe Office
Address: Berliner Allee 40 40212 Dusseldorf, Germany
Telephone: +49-211-550-46411
Fax: +49-211-550-46420

Naofumi Saito
Kazutaka Kikumoto
Shinya Kojima
Shin Ikuta
Takehisa Fukui
Hisato Sato
Yukitaka Fujimoto
Takayuki Miyazaki

Executive Officer

Stock

Jakarta Office
Address: Wisma Nugra Santana, 14th Floor. Jl. Jend. Sudirman Kav. 7-8,
Jakarta 10220, Indonesia
Telephone: +62-21-570-0800
Fax: +62-21-570-0088(as of March 31, 2016)

Common Stock
Number of authorized shares
Number of issued shares
Number of shareholders•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Banking References

393,766,000
133,984,908
9,541

Head OfficeMizuho Bank, Ltd. (Osaka Branch)Resona Bank, Limited (Osaka Banking Department)
Sumitomo Mitsui Banking Corporation (Midosuji Branch)
The Bank of Tokyo–Mitsubishi UFJ, Ltd. (Osaka Main Office)•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Principal Shareholders(as of March 31, 2016)
Number ofshares held
(in thousands)

Ratio ofshareholding

Taiyo Life Insurance Company

12,090

9.3%

Japan Trustee Services Bank, Ltd.
Nippon Life Insurance Company
Resona Bank, Limited
Mizuho Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.

9,514

7.3%

6,786

5.2%

4,440

3.4%

3,623

2.8%

3,200

2.4%

Tokyo OfficeMizuho Bank, Ltd. (Utisaiwai-cho Branch)
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Shimbashi Branch)Resona Bank, Limited (Shimbashi Branch)
Sumitomo Mitsui Banking Corporation (Hibiya Branch)

19

Corporate Information

Kurimoto Group(as of June 29, 2016)

Kurimoto Group consists of Kurimoto, Ltd. and 17 subsidiaries, including the following.
Kurimoto Trading Co., Ltd.

Nihon Kaiser Co., Ltd.

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

Operations: Manufacture and sales of half precast products
Kurimoto Business Associates Co., Ltd.

Kurimoto Logistics Corporation
Operations: Procurement and transport of raw materials, cast ironpipes, etc.

Operations: Management and leasing of real estate, staffing
service, travel agency, insurance agency
Riko, Ltd.

Sasebo Metal, Co., Ltd.

Operations: Production of valves

Operations: Manufacture and sales of castings
Kurimoto USA, Inc.
Yamatogawa Co., Ltd.

Operations: Holding company

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

Readco Kurimoto, LLC

Motoyama Eng. Works, Ltd.

Operations: Manufacture and sales of industrial machineryOperations: Manufacture and sales of industrial valves

Kuritetsu (Shanghai) Trading Co., Ltd.

Ks-Tech Co., Ltd.

Operations: Wholesale of machinery equipment, steel, andnonmetallic products

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

Kurimoto (Philippines) Corporation

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

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