2017
Kurimoto, Manufacturing the Future

ANNUAL REPORT
Year ended March 31, 2017

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 avital role in supplying basic industrial products, machines, and services
domestically and 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 Auditor’s Report
Corporate Information

10
18
19

Financial Highlights

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

2017

2016

2015

2014

2013

2017

Net sales¥ 101,647¥ 101,964¥ 98,394¥ 103,664¥ 98,175$ 906,029

4,103

2,194

1,598

3,747

2,898

36,57832,605

16,981

12,33728,347

21,928

291

5,000

4,000

4,000

4,000

4,000

45

129,212124,382

127,884

129,021

129,934

1,151,729¥ 55,599¥ 48,255¥ 49,144¥ 44,921¥ 45,586$ 495,581•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Profit (loss) attributable to owners of parent• • • • • •Per 100 shares of common stock
Profit (loss) attributable to owners of parent
Cash dividends
Total assets• • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Total shareholders’ equity•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Notes 1: The U.S. dollar amounts are calculated at the exchange rate of ¥112.19 to $1, the rate prevailing on March 31, 2017.
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

98,175

103,664

98,394

101,964

101,647

’15

’16

’17

80,0000’13’14Profit (loss) attributable to owners of parent (¥ million)
5,000

3,000

4,103

3,747

4,000

2,898
1,598

2,000

2,194

1,000
0

400
300

’13

’14

’15

’16

’17

Net Income per Share of Common Stock (¥)
326.05283.47219.28200

123.37169.81100
056,000

’13

’14

’15

’16

Shareholder’s Equity (¥ million)’17

55,59954,00052,00049,14450,00048,00046,00045,58644,921’13’14

48,25544,000
0

’15

1

’16

’17

Message from the President

We are aiming to become a strong
company that can respond rapidly tochanges in the market and make significant
progress.
Management policy for fiscal 2017 basedon last year’s results(1) Uncertainty in the global situation
Disarray in international affairs is certainlyon the rise. Last year, the world was taken
by surprise by such international
developments as Brexit and Donald
Trump’s shock election win. Pundits andthe mass media were proved wrong, once
again showing how difficult it is to predict
people’s behavior. I believe these eventsshow that the public is choosing
unpredictable change over sticking withthe same old status quo. Perhaps they had
made up their minds to change theircircumstances no matter what theconsequences. Although this international
unpredictability is likely to continue, wewill move forward with a focus on analyses
based on information only of real value,and strive to respond quickly to change.
(2) The best direction for Kurimoto
when we look at business in Japan
Nearly a decade has passed since theLehman Brothers bankruptcy and ensuingfinancial crisis of 2008, said to have been
the worst in 100 years. According to theJapan Exchange Group, the total of sales,
operating income, and net income forfiscal 2015 for all companies listed in Japan(first and second sections, Mothers,
JASDAQ, excluding financial institutions)
had recovered to fiscal 2007 (pre-Lehman)levels. This recovery began with the policyof Abenomics started in 2012 whichcaused a devaluation of the yen, in turnproducing highly favorable conditions andresults for Japan’s exporters. Except for acertain percentage of exporters, thesedevelopments can also be read as Japaneseindustry just managing to survive byshifting from sales expansion to making
qualitative improvements to secure profits.
Kurimoto aims to make a similar shift toan operating model based on steadily
accumulating profits that do not rely on
expanding sales.

In the current fiscal year (121st term)
our group had revised downwards forecasts
at the announcement of the third quarter
results, but in the end, our net sales were¥101.6 billion, with ¥3.4 billion in
operating income, ¥3 billion in current
earnings, and ¥4.1 billion in net income.
Looking back on fiscal 2016, after being
appointed president in April, I advocatedchange aimed at achieving earnings andbecoming a strong company able torespond rapidly to a changing businessclimate. I fully realize that my efforts andthe efforts of the company still have a long
way to go. In fiscal 2017, our basic
management policy of encouraging change
and promoting earnings remains the same,
but we are carrying out measures aimed atfurther improving efficiency in light ofincreased competition in the market. I plan
to review our business domains that havesustained Kurimoto over the long term,and encourage everyone through the
Kurimoto Group to work together to add
additional value to our products.

aim to fulfill corporate objectives while
ensuring proper organizational operation.
Dividends
Returning profits to our shareholders is
one of our top priorities, and it is our basic
policy to pay out dividends on a regularand stable basis. After reviewing ourbusiness performance in the fiscal year
ended March 31, 2017, and in light of theoverall business climate, we are paying a¥30 dividend per share for this term.
The Kurimoto Group is celebrating
108 years in business since our founding in
1909. I would like to thank all of our
stakeholders for the guidance andencouragement of our business activities
over part of this long time. We lookforward to your support as we continue tomove forward.

CSR Initiatives and Working Style
Reforms
For a company to survive and thrive, it
must have the trust of society. In our
Corporate Standards of Conduct, we havedesignated standards to be followed byevery employee in each section no matter
their position, relating to socially
responsible behavior in such areas asprotecting the global environment,
activities that contribute to society, andactivities that make an international
contribution.
The primary way in which we fulfill our
corporate social responsibility is bybuilding social infrastructure andcontributing to the advancement ofindustry through the provision of ourquality products and services. Improving
the quality of products and services willlead to the fulfillment of our CSR, so wewill continue to make such efforts. We
have also positioned this year as the year toinitiate working style reforms at Kurimoto.
It has become a growing trend to allow andencourage a variety of working styles, andmanagement will adopt such reforms and
2Moriyoshi Kushida
President

June 2017

Moriyoshi Kushida
President

Business Operations

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

Machinery system business19.4 %

Industrial materials business

121st
accounting period
101,647

Pipe system business58.2 %

22.4 %

Pipe system businessIndustrial materials business

Sales for the pipe system business was 59,173 million yen, which was an increaseof 789 million yen on the previous consolidated fiscal year. Sales for the Ductile
Iron Pipe Division increased due to the rise in sales of products for water supply
and sewerage, and despite a drop off in shipments of the company’s coreproducts, ductile iron pipes, especially medium and large diameter pipes.
Operating income for this business was 2,105 million yen, which was a decreaseof 77 million yen on the previous consolidated fiscal year. Despite efforts in cost
reduction in the Ductile Iron Pipe Division, it was affected by materials pricesthat remained at high levels and a decrease in the sales amount of medium andlarge diameter pipes.

Sales for the industrial materials business was 22,773 million yen, which was anincrease of 818 million yen on the previous consolidated fiscal year. While there
was a decrease in shipments of air-conditioning products and noise reduction
products for expressways in the Construction Materials Division, shipments in
the Plastic Products Division showed an increase.
Operating income for this business was 981 million yen, which was an increaseof 823 million yen on the previous consolidated fiscal year. This was mainly
achieved through an increase in profit for civil engineering products in theConstruction Materials Division, along with an increase in both income andprofit in the Plastic Products Division. In addition, there was a great deal ofeffort made to reduce production costs.

Machinery system business
Sales for the machinery system business was 19,699 million yen, which was adecrease of 1,925 million yen on the previous consolidated fiscal year. This wascaused by stagnancy in shipments of machines in the Machinery System
Division, despite the progress in construction of plants. In addition, a decrease insales as a backlash from the large-scale plant construction in the previous year
was evident in the Materials Division.
Operating income for this business was 545 million yen, which was a decrease of
474 million yen on the previous consolidated fiscal year. This was due to adecrease in income across the board for this business, except for the Materials
Division which showed an improvement in cast products sales.

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:¥100 million (US$891,345)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: December 1952 as a subsidiary of Kurimoto, Ltd.
Orders:¥18,665 million (US$166,374 thousand)(0.4% decrease)
Sales:¥18,901 million (US$168,475 thousand)(2.3% increase)

Operations: Manufacture and sales of forging machinery
Capital:¥300 million (US$2,674,035)
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:¥857 million (US$7,646 thousand)(25.0% decrease)
Sales:¥800 million (US$7,134 thousand)(55.1% decrease)

Kurimoto Logistics Corporation

Hokkaido Kanzai Co., Ltd.

Operations: Procurement and transportation of raw materials, ductile iron pipes
and others
Capital:¥90 million (US$802,210)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: March 1960 and became a subsidiary in 2001
Orders:¥2,316 million (US$20,644 thousand)(0.5% increase)
Sales:¥2,316 million (US$20,644 thousand)(0.5% increase)

Operations: Sales of cast iron pipes, valves, and synthetic resin products
Capital:¥30 million (US$267,403)
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:¥6,319 million (US$56,324 thousand)(8.6% increase)
Sales:¥6,319 million (US$56,324 thousand)(8.6% increase)

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$891,345)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: April 2000 as a subsidiary of Kurimoto, Ltd.
Orders:¥1,304 million (US$11,630 thousand)(12.6% decrease)
Sales:¥1,402 million (US$12,502 thousand)(1.1% decrease)

Operations: Manufacture and sales of chemical and pharmaceutical equipment
Capital:¥45 million (US$401,105)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: July 1958 and became a subsidiary in 2004
Orders:¥440 million (US$3,922 thousand)(6.4% increase)
Sales:¥376 million (US$3,358 thousand)(11.0% decrease)

Yamatogawa Co., Ltd.

Nihon Kaiser Co., Ltd.

Operations: Sales of cast iron pipes, valves, and synthetic resin products
Capital:¥60 million (US$534,807)
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:¥21,852 million (US$194,776 thousand)(1.3% increase)
Sales:¥23,000 million (US$205,016 thousand)(5.6% increase)

Operations: Manufacture and sales of half precast products
Capital:¥90 million (US$802,210)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: July 2013 and became a subsidiary in 2013
Orders:¥2,770 million (US$24,698 thousand)(5.8% decrease)
Sales:¥2,943 million (US$26,235 thousand)(18.4% increase)

Motoyama Eng. Works, Ltd.

Kurimoto Business Associates Co., Ltd.

Operations: Manufacture and sales of industrial valves
Capital:¥300 million (US$2,674,035)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: December 2006 and became a subsidiary in 2007
Orders:¥5,280 million (US$47,068 thousand)(11.5% increase)
Sales:¥4,790 million (US$42,702 thousand)(9.8% decrease)

Operations: Management and leasing of real estate, staffing service, travel agency,
insurance agency
Capital:¥100 million (US$891,345)
Stockholder: All stock is owned by Kurimoto, Ltd.
Established: September 1967 as a subsidiary of Kurimoto, Ltd.
Orders:¥1,013 million (US$9,037 thousand)(1.4% decrease)
Sales:¥1,013 million (US$9,037 thousand)(1.4% decrease)4

Financial Section

Consolidated Balance Sheets
March 31, 2017 and 2016

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

Assets

2016

2017

2017

Current assets¥ 18,280¥ 17,055

40,67539,887362,557

0

46

3

Merchandise and finished goods

9,741

10,48486,828Work in process

6,512

5,793

58,051

Raw materials and supplies

2,213

2,270

19,733

Deferred tax assets (Note 8)

923

991

8,235

1,146

1,084

10,222

(109)

(62)

(979)

79,38577,552

707,594

Buildings and structures

25,877

24,998230,660

Machinery, equipment and vehicles

52,06551,518464,087

Tools, furniture and fixtures

9,758

9,743

86,986

Land

13,42815,209119,691

Cash and deposits
Notes and accounts receivable-trade$162,941

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

Lease assets

375

388

3,347

Construction in progress

454

1,577

4,049

Accumulated depreciation(71,157)(70,191)(634,256)

Total property, plant and equipment

30,80333,243

274,566

12,158

10,423

108,371—— unconsolidated subsidiaries and affiliates

448

448

3,999

Long-term loans —— other

114

19

1,020

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

5

52

152

463

1,899

1,952

16,927

(218)

(321)

(1,949)3,790—

33,790

779

912

6,945

19,023

13,586

169,568¥ 129,212¥ 124,382$ 1,151,729

Financial Section

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

Liabilities and Shareholders’ Equity

2016

2017

2017

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¥ 26,754¥ 25,625

023,012
7,102
40
647
3,088
1,299
394
1,999
64,33923
21,759
3,061
52
576
2,934
1,404
440
2,755
58,634

3
205,12163,311
363
5,771
27,525
11,583
3,513
17,820573,491

7,813
18
51
−
178
131
551
8,744
73,084

8,426
7,385
85
352
−
137
610
16,99875,63369,647
164
459
−
1,586
1,168
4,917
77,943
651,434

31,186

31,186277,975

Total shareholders’ equity

6,942
17,815(1,771)
54,173

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

61,884
158,801(15,786)
482,875

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

3,192
1(1,768)
1,425

1,794
7
(4,823)(3,021)

28,453
13(15,760)
12,706

528

493

4,712

Total current liabilities
Long-term liabilities
Net defined benefit liability (Note 4)Long-term debt (Note 3)
Lease obligations
Deferred tax liabilities (Note 8)
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:$238,476

39,376,600 shares
133,984,908 shares in 2016
13,398,490 shares in 2017

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

56,12848,749500,294¥129,212¥ 124,382$ 1,151,729

Financial Section

Consolidated Statements of Income
Years ended March 31, 2017 and 2016

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
Impairment loss
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

2017

2016

2017

¥ 101,647
77,64024,006
20,5853,421¥ 101,964
79,13922,824
19,4943,330$ 906,029
692,047
213,981
183,487
30,494

320
(311)
31
−
(1,853)
(599)
1,008

283
(374)
737
(521)
0
(363)
3,091

2,855
(2,773)283−(16,519)(5,347)
8,993

694(3,827)(3,132)
4,141
38
4,103

576
278
854
2,236
42
2,194

6,186
(34,111)(27,925)
36,918339$ 36,578¥¥

U.S. dollars(Note 2)yen

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

2017

2016

¥ 32,605
32,6055,000¥ 16,981
16,9814,000

Consolidated Statements of Comprehensive Income
Years ended March 31, 2017 and 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

$

291
291
45

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

2017

2017

2016

2017

¥ 4,141¥ 2,236$ 36,918

1,398
(6)
3,055
4,447
8,589
8,550
39

(2,154)13(407)(2,549)
(312)
(354)
41

12,462(57)
27,23939,64476,562
76,215347

Financial Section

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2017 and 2016

Millions of yen

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
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Transfer to capital surplus fromretained earnings
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2017

Capitalstock

CapitalsurplusRetainedearnings

Valuationdifference on
Treasury
availablesharesfor-salesecurities¥ 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

—
—
—
—

—
—
—
(19)

(509)
4,103
—
—

—
—
(794)
117

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(509)
4,103
(794)
98

—

19

(19)

—

—

—

—

—

—

—

—

—

—

1,397

(6)

3,055

34

4,481

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

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, 2016
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Transfer to capital surplus fromretained earnings
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2017

$ 277,975

Capitalsurplus

ValuationdifferenceonTreasury
availablesharesfor-salesecurities

Retainedearnings

Deferred
gains orlosses onhedges$ 61,884 $ 126,938$ (9,748)$ 15,996$ 70$ (42,997)$ 4,402 $ 434,522

—
—
—
—

—
—
—
(170)

(4,544)36,578————(7,082)
1,044

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(4,544)36,578(7,082)
874

—

170

(170)

—

—

—

—

—

—

—

—

—

—

12,456(57)

27,237310

39,946$ 61,884 $ 158,801$ (15,786)$ 28,453$ 13$ (15,760)$ 277,975

8$ 4,712 $ 500,294

Financial Section

Consolidated Statements of Cash Flows
Years ended March 31, 2017 and 2016

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

2017

2016

2017

¥ 1,008
2,434
1,853
(744)
696
80
(320)
311
(22)
0
(5)
40
(55)
1,664
700

¥ 3,0912,463
0(1,678)
(800)
(609)
(283)
374
(737)
7
5
32
18
1,198
(88)

$

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

7,642
321
(310)
(769)
6,883

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

68,1182,867(2,769)(6,862)
61,352

Net cash provided by (used in) investing activities
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 loans receivableCollection of loans receivable
Other, net(1)223(2,402)
15
(100)
9
(72)

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

(17)
1,993
(21,412)
135
(893)
89
(645)

Net cash provided by (used in) investing activities(2,328)(767)(20,751)

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
Proceeds from sales of treasury shares
Net cash provided by (used in) financing activities

1,252
(53)
20
(3,345)
(509)
(4)
(794)
92
(3,341)(1,688)(64)
1,049(2,382)
(517)
(4)
(0)
—
(3,610)11,164(474)
178(29,819)(4,542)(37)(7,082)
828(29,786)

8
1,221
17,005¥ 18,226(17)(1,721)
18,726¥ 17,005

73
10,888151,576$ 162,464¥17,055(50)¥17,005$162,941(476)$162,464

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
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
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:¥18,280
Cash and deposits(53)
Time deposits due over three months¥18,226
Cash and cash equivalents

9

8,993
21,703
16,519(6,634)
6,206
715(2,855)
2,773
(196)
0
(51)
360
(495)
14,837
6,242

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

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 12,586,147 and 12,922,296 for the years ended
March 31, 2017 and 2016, respectively.
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 theaverage number of shares during a term is calculated on theassumption that the consolidation of shares was carried out on
April 1, 2015.

Note 2. U.S. Dollar Amounts

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.

The annual average interest rates applicable to short-term bankloans at March 31, 2017 and 2016 are 0.9% and 0.9%, respectively.
Short-term bank loans and long-term debt at March 31 wascomprised of the following:

Consolidated Taxation System
We have adopted a consolidated taxation system.

Loans from financial institution,due 2017 to 2021 withinterest rates between
0.63% and 3.85%
Sub-total
Less current portion of loans

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=¥112.19 as of March
31, 2017, has been used for the purpose of presenting the dollar
amounts in the accompanying consolidated financial statements.

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

Millions of yen

2017Marketable and Investments Securities
Other marketable securities as of March 31, 2017 are as follows.

•• • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • •Millions of yen

7,121
7,121
7,102
¥ 18

2016

10,446
10,446
3,061¥ 7,385

Thousandsof U.S. dollars

2017

63,47563,47563,311$ 164

2017

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

Marketvalue

Unrealized
gain (loss)¥ 7,382¥ 11,783¥ 4,401

The aggregate annual maturities of long-term financial debt at March
31, 2017 and 2016 respectively are as follows:
Millions of yen

Thousands of U.S. dollars

2017

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

Marketvalue

Unrealized
gain (loss)$ 65,802$ 105,031$ 39,229

2017
2018
2019
2020
2021
2022 and thereafter• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •(Changes in Accounting Policies)(Application of Practical Solution to the Change in Depreciation
Method Due to the Tax Reforms of 2016)
Along with the amendment to the Corporation Tax Law, certain
consolidated subsidiaries applied the “Practical Solution to the
Change in Depreciation Method Due to the Tax Reforms of 2016”(ASBJ PITF No. 32, June 17, 2016) from this consolidated fiscal
year, and changed the depreciation method for facilities belonging tobuildings and structures acquired on or after April 1, 2016 from thedeclining balance method to the straight-line method. The effect of
this change on the consolidated financial results for this consolidated
fiscal year is immaterial.

•• • • • • • • • • • • • • • • • • • • • • • • • • • • • •Thousandsof U.S. dollars

2017

2016

2017

—
7,102
4
4
4
5
¥ 7,121

3,061
7,362
12
11
—
—
¥ 10,446—
63,3114235
35
50$ 63,475

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.

(Additional information)(Application of Implementation Guidance on Recoverability ofDeferred Tax Assets)
We have applied the “Implementation Guidance on Recoverabilityof Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016)
from this consolidated fiscal year.

11Notes to Financial Statements

As of March 31, 2017, assets pledged as collateral for short-termbank loans, and long-term debt, including the current portion of
long-term debt, were as follows:

Deposit
Buildings and structures
Machinery, equipment
Land

Millions of yen

Thousandsof U.S. dollars

2017

2017

¥ 50
3,965
1,820
3,360
¥ 9,196$ 445
35,344
16,22629,954$ 81,970(4) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits including plan
applied simplified method

Note 4. Retirement Benefits
The following are matters concerning the defined benefit plan as ofMarch 31, 2017 and 2016, respectively.

Thousandsof U.S. dollars

Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Gain on abolishment of
retirement benefit plans
Balance at end of the year

2017

2016

¥ 11,541
674
16
(102)
(344)

¥ 12,581 $ 102,874
6,012
690
150
68
(912)
880
(3,071)(369)—¥ 11,785(2,310)¥ 11,541

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 year2017

¥ 3,661
93
858
—
(55)

¥ 6,29388(1,066)427(110)$ 32,639
835
7,652
—
(498)

—
¥ 4,558(1,970)¥ 3,661—$ 40,628

¥ 546
90
(38)
(12)
¥ 585

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

397

368

3,541

7,813

8,426

69,647

7,813
—

8,426
—

69,647—¥ 7,813¥ 8,426$ 69,647

2016

¥ 530
95
(58)
(21)
¥ 546

Thousandsof U.S. dollars

2016

2017

¥ 674
16
(93)
1,316

¥ 690
68
(88)
676

$ 6,012150(835)
11,735

90

95

802

¥ 2,004¥ 1,443$ 17,866

—

¥ 521

—

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

Millions of yen

2017
Actuarial loss (gain)
Total

2016

¥ 408
¥ 408

¥ (2,277)¥ (2,277)2017$ (20,300)$ (20,300)(7) Accumulated adjustments for retirement benefit(before tax effect deductions)Thousandsof U.S. dollars

Millions of yen

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

¥ 12,019 $ 109,427(43,320)(3,961)
66,1068,058

2017(3) Movements in net liability for retirement benefits based on thesimplified method
2017¥ 12,276(4,860)7,416Service 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

Thousandsof U.S. dollars

2016

Funded retirement benefit obligations
Plan assets

2017

Millions of yen—$ 105,053

2017

2016

(5) Retirement benefit costs

2017(2) Movements in plan assets except plan applied simplified method
Millions of yen

2017

Liability 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

Millions of yen

2017$ 4,875
802
(341)
(113)
$ 5,222

Unrecognized actuarial differences
Total

12

Thousandsof U.S. dollars

2017

2016

2017

¥ 2,546¥ 2,546¥ 4,824¥ 4,824$ 22,698$ 22,698

Notes to Financial Statements

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

2017

Equity securities
Cash and cash equivalents
Investment trust
Other
Total

73%
10%
11%
6%
100%

Research and development expenditures charged to income were¥1,548 million ($13,802 thousand) for the year ended March 31, 2017.

2016

67%
23%
—
10%
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 33.0% for the year ended
March 31, 2017 and 2016, 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, 2017 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, 2017 and 2016
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:
2017
Discount rateLong-term expected rate of return
Expected rate of salary increase

2016

0.0%~1.0% 0.0%~0.6%
3.3% 1.4%~1.9%
0.7%~4.7% 0.7%~4.6%

Defined contribution plans
The required contribution amount for consolidated subsidiaries forthe defined contribution plan was 162 million yen (1,451 thousand
US dollars) as of March 31, 2017.

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, 2017 and 2016, the company was contingently
liable as follows:
Thousandsof U.S. dollars

Millions of yen

2016

2017
As guarantor of indebtedness of
unconsolidated subsidiaries
and others
Discount of notes and bills
Transfer of notes and bills endorsed
for payment

2017

¥ 115
41

¥ 143
2,266

$ 1,033
368

—

¥0

—

Thousandsof U.S. dollars

Millions of yen

Note 6. Derivatives and Hedging Activities

2017

2016

2017

¥ 3,781511
57
26¥ 3,967443
91
12$ 33,703
4,557
514
234

180

180

1,605

110
543
557
12,04721859
18,697(12,725)¥ 5,971110543
2
12,871
7788
19,020(17,664)¥ 1,355

985
4,847
4,973
107,381
194
7,660
166,657(113,430)$ 53,227

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

2017

2016

2017

¥ (1,198)(47)(10)(1,256)¥ 4,714¥ (660)
(48)
(7)
(715)
¥ 639

$ (10,684)
(426)
(90)
(11,201)$ 42,025

Notes to Financial Statements(Adjustment to the Values of Deferred Tax Assets and Deferred
Tax Liabilities Due to the Change in the Corporate Tax Rate)“Act to Amend the Act for Partial Amendment of theConsumption Tax Act for the Drastic Reform of the Taxation
System for Ensuring Stable Financial Resources for Social Security”(No. 85, 2016) and “Act to Amend the Act for Partial Amendmentof the Local Tax Act and Local Allocation Tax Act for the Drastic
Reform of the Taxation System for Ensuring Stable Financial
Resources for Social Security” (No. 86, 2016) were passed by theDiet on November 18, 2016, and the raising of the consumption tax
to 10% was postponed from April 1, 2017 to October 1, 2019.
Accordingly, the abolition of the Special Local Corporation Tax,
the reemployment of the Corporate Enterprise Tax, the revision oftax rates of Local Corporation Tax, and the revision of tax rates of
the corporation levy in the Corporate Inhabitant Tax were also
postponed from the consolidated fiscal year starting on or after
April 1, 2017 to the consolidated fiscal year starting on or after
October 1, 2019.
There have not been any changes in the effective statutory tax rateused to calculate deferred tax assets and deferred tax liabilities.
However, deferred tax assets (deferred tax liabilities deducted)
decreased by 27 million yen (249 thousand US dollars) and deferredincome taxes increased by the same amount, due to therecombination of tax rates between national tax and local tax.

(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.
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.

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.

14

Notes to Financial Statements

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.

(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 2. Financial instruments whose fair values are not readily determinable

Millionsof yenUnlisted equity securities

Millions of yen¥ 823

Thousandsof U.S. dollars$ 7,3392017

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

¥ 18,280
40,675
11,78370,73926,75523,0127,102
18¥ 56,8881¥ 18,280
40,675
11,78370,73926,75523,012

¥—
—
—
—
—
—

7,125

4

¥ 56,892
1¥4—

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.

Unrecognizedgain (loss)

Note 10. Impairment Loss
In this consolidated fiscal year, our group recorded an impairment
loss on the following asset groups.

Millions of yen

Sell schedule land and building
Removal schedule building
Unused land
Total

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¥ 57,868
7

¥ 12
—

2017

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

$ 162,941
362,560
105,031630,533
238,479
205,12163,311
164$507,076
13$ 162,941
362,560
105,031630,533
238,479
205,121

$—
—
—
—
—
—

63,51135$507,112
13

$ 35
—

Thousandsof U.S. dollars

2017

2017

¥ 1,80251
0¥ 1,853$ 16,063455
0$ 16,519

In principle, our group conducts asset grouping according to the
managerial accounting classification of continual assessment interms of income and expense. With regard to idle assets, it conducts
grouping according to individual properties.
As a result of the assessment of impairment loss based on suchgrouping, the expected selling value of the office building (Sakai
Ward, Sakai City) was lower than the carrying value. Therefore, thecarrying value was reduced to the recoverable value, and this value
was recorded as impairment loss for extraordinary loss. With regard
to the plant office building (Suminoe Ward, Osaka City) which we
had decided to remove, and idle assets, due to a decline in therecoverable value caused by the change in area and method of use,the carrying value was reduced to the recoverable value, and thevalue was recorded as impairment loss for extraordinary loss.

Thousands of U. S. dollars
Carrying
amounts

Millionsof yenUnrecognizedgain (loss)

Calculation Method of Recoverable Values
Recoverable values are calculated based on the net selling price.
Therefore, the recoverable value was calculated based on the
expected selling value for the office building (Sakai Ward, Sakai
City) which we had planned to sell; the residual value for the plant
office building (Suminoe Ward, Osaka City) which we had already
decided to remove; the real-estate appraisal for important idle
assets; and usually the property tax assessment value for other idle
assets. For the previous consolidated fiscal year, 0 million yen wasrecorded as impairment loss for extraordinary loss for idle assets(land).

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

15

Notes to Financial Statements

Note 11. 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 2016 and 2017 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

2017
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1¥ 59,173
285
59,4592,105
51,969¥ 19,699
3
19,703545
16,884¥ 22,773
1,882
24,655981
21,489¥ 101,647
2,171
103,818
3,632
90,344

1,478

282

418

2,179

¥

904

¥

287

¥

476

¥

1,668

Consolidated*2—(2,171)(2,171)(211)
38,868¥ 101,647—
101,647
3,421
129,212

254

2,434

¥

¥

275

¥

1,944

1. The minus 211 million yen segment income adjustment includes: 34 million yen resulting from the elimination of intersegment transactions; minus 415 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as 169 million yen resulting from inventory asset adjustment.
The 38,868 million yen segment asset adjustment includes: minus 1,401 million yen resulting from the elimination of intersegment transactions; and 40,269 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 254 million yen depreciation adjustment and 275 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

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.

16

Notes to Financial Statements

Thousands of U.S. dollars

2017
Reportable segment
Machinery system
Industrial materials
businessbusiness

Pipe systembusiness

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

Total$ 527,443
2,547
529,991
18,766463,227$ 175,592
31
175,624
4,866
150,501$ 202,992
16,776
219,769
8,744
191,549$ 906,029
19,355925,384
32,377805,278

13,175

2,521

3,733
4,249

$

$

8,061

2,560

$

Consolidated*2

Adjustment*1$—(19,355)(19,355)(1,882)
346,451$ 906,029—
906,029
30,494
1,151,729

19,4302,272

21,703$ 14,871$ 2,458$ 17,330

1. The minus 1,882 thousand US dollar segment income adjustment includes: 306 thousand US dollars resulting from the elimination of intersegment transactions; minus 3,703 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 1,514 thousand US dollars resulting from inventory asset adjustment.
The 346,451 thousand US dollar segment asset adjustment includes: minus 12,488 thousand US dollars resulting from the elimination of intersegment transactions; and 358,940 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 2,272 thousand US dollar depreciation adjustment and 2,458 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 12. 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, 2017 were proposed by the Board of Directors and approvedby the shareholders at the annual general meeting held on June 29,
2017, 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)(6) Information about loss on impairment of fixed assets byreportable segments
Millions of yen

2017
Pipe system
Machinerybusiness system businessImpairment loss

¥ 1,789¥ 51

Industrial
materials
business

Eliminationand corporate

—

¥ 12

Total

¥ 1,853

Thousands of U.S. dollars

2017
Pipe system
Machinerybusiness system businessImpairment loss

$ 15,953$ 455

Industrial
materials
business

Eliminationand corporate

Total

—

$ 109

$ 16,519

17
16

¥ 377

Thousandsof U.S. dollars$ 3,361Independent Auditor’s Report

Independent Auditor’s Report
PKF Hibiki AUDIT CORPORATION
3-6, Kitahama 2-chome, 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, 2017,
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, 2017, 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 5, 201718

Corporate Information

Kurimoto, Ltd.

(as of June 29, 2017)

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*¥112,534 million*
1,352*

Tokyo Office16-2, Konan 2-chome, Minato-ku, Tokyo 108-0075, Japan
Telephone: (03) 3450-8611
Fax: (03) 3450-8504*as of March 31, 2017

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, 2017)

Chairman

Hideaki Fukui

President

Moriyoshi Kushida

Senior Managing Director

Motohito Sawai

Managing Director

Hirobumi Okada
Mikio Yaji

Director

Yoshiaki Shingu
Kazutaka Kikumoto

Outside Director

Shigehiro Shibakawa
Minoru Takahashi

Audit & Supervisory Board
MemberMinoru Murata
Kazuhiko Hakozaki
Maki Arita

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
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
Naofumi Saito
Shin Ikuta
Shinya Kojima
Takehisa Fukui
Hisato Sato
Yukitaka Fujimoto
Takayuki Miyazaki
Yasuharu Yoshinaga
Takao Ueda
Akitoshi Oda

Executive Officer

Stock

Europe Office
Address: Berliner Allee 40 40212 Dusseldorf, Germany
Telephone: +49-211-550-46411
Fax: +49-211-550-46420
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, 2017)

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

39,376,600
13,398,490
7,929

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, 2017)
Number ofshares held
(in thousands)

Ratio ofshareholding

Taiyo Life Insurance Company

1,209

9.6%

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

950

7.5%

678

5.3%

444

3.5%

362

2.8%

320

2.5%

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, 2017)

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.

Japan Castering Co., Ltd.

Operations: Production of valves

Operations: Manufacture and sales of castings
Note: Company name changed to Japan Castering Co., Ltd. from Sasebo Metal, Co., Ltd.
on April 1, 2017

Yamatogawa Co., Ltd.

Kurimoto USA, Inc.
Operations: Holding company

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

Readco Kurimoto, LLC

Motoyama Eng. Works, Ltd.

Kuritetsu (Shanghai) Trading Co., Ltd.

Operations: Manufacture and sales of industrial valves

Operations: Wholesale of machinery equipment, steel, andnonmetallic products

Ks-Tech Co., Ltd.
Operations: Manufacture, sales and construction of forging
machinery, forming machinery and related products
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: Manufacture and sales of industrial machinery

Kurimoto (Philippines) Corporation
Operations: Construction, installation works, electric works,
piping works, repairs and maintenance and staff
service of various kinds of plants