2018
Kurimoto, Manufacturing the Future

ANNUAL REPORT
Year ended March 31, 2018

KURIMOTO, LTD.
In 1909 Kurimoto, Ltd. began operations as manufacturer of cast ironpipes for water and gas mains. With determination and foresight, thecompany soon began to diversify into other fields, serving the industrial
sector in a multitude of ways.
The major divisions of Kurimoto now provide ductile iron pipes, plant
equipment and engineering services, valves, and construction materials.
Involvement with and commitment to large-scale projects has enabled
Kurimoto to expand its areas of expertise, be it in land development,
industrial modernization, or urban renewal and construction. 12
factories located throughout Japan comprise the company’s industrial
base which, together with 19 subsidiary companies, make up the
Kurimoto group employing about 2,200 people. Today, Kurimoto plays avital role in supplying basic industrial products, machines, and services
domestically and abroad.

Contents
Financial Highlights
Message from the President
Business Operations

1
2
3

Financial Section

4

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

Notes to Financial Statements
Independent Auditor’s Report
Corporate Information

9
17
18

Financial Highlights

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

2018

2017

2016

2015

2014

2018

Net sales¥ 107,122¥ 101,647¥ 101,964¥ 98,394¥ 103,664$ 1,008,310

2,400

4,103

2,194

1,598

3,747

22,594

19,16732,605

16,981

12,33728,347

180

6,000

5,000

4,000

4,000

4,000

56

135,122

129,212124,382

127,884

129,021

1,271,865¥ 58,351¥ 55,599¥ 48,255¥ 49,144¥ 44,921$ 549,238•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •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 ¥106.24 to $1, the rate prevailing on March 31, 2018.
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

103,664

100,000

98,394

101,964

101,647

’15

’16

’17

107,12280,0000’14’18Profit (loss) attributable to owners of parent (¥ million)
5,000
4,000

4,103

3,747

3,000
2,000

2,400

2,194

1,598

1,000
0

400
300

’14

’15

’16

’17

’18

Net Income per Share of Common Stock (¥)
326.05283.47200

123.37

191.67169.81100
060,000

’14

’15

’16

’17

Shareholder’s Equity (¥ million)’18

58,35158,00055,59956,00054,00052,00049,14450,00048,25548,00046,00044,92144,000
0

’14

’15

’16

1

’17

’18

Message from the President

We will maintain our strength inexisting businesses while overcoming
boundaries between segments to achievesustainable growth.
Thank you for your ongoing supportof Kurimoto’s business activities.
Our business performance in fiscal
2017—the final year of the previous
medium-term three-year
plan—generally achieved the initiallyplanned targets. However, operations
did not grow; rather, we maintained
steady performance through thethree-year period. This relatively flat
performance can be attributed tosignificant changes taking place in themarket environment since the plan was
created. I cannot deny that these results
are far from the expectations ofinvestors.
Considering the severity of theenvironment surrounding the group’sbusiness, we have formulated a new
medium-term three-year management
plan starting in fiscal 2018 with theurgent task of developing a steady,sustainable path for growth.
The basis for the new three-year plan
is to maintain the dependability that has
earned the trust of customers in over
100 years of doing business since thecompany’s founding in 1909 while
resolutely changing what needs to bechanged.

One thing that we must change is thefirmness of the boundaries between ourbusinesses. Because we have separatebusiness divisions for each segment of
the group’s business, a level ofcomplacency has set in within eachdivision, and efforts to bring change
have been postponed. Naturally, we needto stick with our strengths in existing
business areas, but I am convinced thatin certain areas we can reach further andstill continue to earn our customers’
trust.
To overcome the boundaries between
our businesses we need everyone to work
together and have confidence rather
than fear change, we can initiate positivechange. To share this understanding andapproach with all of our employees, wehave updated our corporate philosophy.
We will thus become open to change
while consistently providing optimal
systems for customers (combining
materials and products, infrastructure,know-how, services, etc.). Thisorientation will serve us well as we work
to create a better future for people andsociety and evolve as a business group.
We look forward to your continued
support for the activities of Kurimoto.

2

Moriyoshi Kushida
President

June 2018

Moriyoshi Kushida
President

Business Operations

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

Industrial materials business22.8 %

Machinery system business

122nd
accounting period
107,122

Pipe system business51.6 %

25.6 %

Pipe system businessIndustrial materials business

Sales of the pipe system business were 55,272 million yen, a decrease of 3,901
million yen over the previous consolidated fiscal year. The decrease was mainly
attributable to a drop off in shipments of small diameter pipes and otherproducts recorded by the Ductile Iron Pipe Division amid continuing severemarket environment, including the trend of order receipt from local
government. Operating income of this business was 1,295 million yen, a decreaseof 809 million yen over the previous consolidated fiscal year. This was caused bya decline in income registered by the Ductile Iron Pipe Division due primarily tothe decrease in sales, high material prices and a negative impact of production
decrease following the decrease in shipment volume, coupled with a smaller
number of large overseas projects than the previous fiscal year recorded by the
Valve Division.

Sales of the industrial materials business were 24,468 million yen, an increase of
1,695 million yen over the previous consolidated fiscal year. Despite that
decreases in sales were recorded by the Plastic Products Division as a backlashfrom sales of large-scale overseas project posted in the previous year and by theConstruction Materials Division due to a decrease in shipments of noise
reduction products for expressways, increased number of consolidated
subsidiaries since 1Q and other factors pushed up sales.
Operating income of this business was 427 million yen, a decrease of 553 million
yen over the previous consolidated fiscal year. While the Construction Materials
Division enjoyed an increase in profit for air-conditioning products, the Plastic
Products Division was affected by the aforementioned decrease in sales as well as
rising material prices on the whole.

Machinery system business
Sales of the machinery system business were 27,381 million yen, an increase of
7,681 million yen over the previous consolidated fiscal year. The increase wasmainly attributable to overseas shipment of large-scale powder equipment
registered by the Machinery System Division, as well as recognition of sales oflarge-scale plant construction.
Operating income of this business was 1,790 million yen, an increase of 1,244
million yen over the previous consolidated fiscal year. The increase in sales of theMachinery System Division was the major driver behind the growth in operating
income.

3

Financial Section

Consolidated Balance Sheets
March 31, 2018 and 2017

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

Assets

2017

2018

2018

Current assets$

218,274¥ 23,189¥ 18,280

41,401

40,675

389,698

13

0

122

Merchandise and finished goods

10,841

9,741

102,043

Work in process

5,858

6,512

55,147

Raw materials and supplies

2,720

2,213

25,604

Deferred tax assets (Note 8)

1,108

923

10,431

Prepaid expenses and other current assets

1,473

1,146

13,870

(121)

(109)

(1,139)86,48579,385814,053

Buildings and structures

25,99925,877244,719

Machinery, equipment and vehicles

53,32852,065501,963

Tools, furniture and fixtures

9,834

9,758

92,569Land

13,72913,428129,233

Lease assets

385

375

3,625

Construction in progress

387

454

3,644

Accumulated depreciation(72,871)(71,157)(685,917)

Total property, plant and equipment

30,79230,803289,838

12,06012,158113,523—— unconsolidated subsidiaries and affiliates

190

448

1,794

Long-term loans —— other

111

114

1,047

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

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

Investments and other assets
Investment securities —— other
Investment securities

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

4

41

52

391

1,833

1,899

17,257

(203)

(218)

(1,913)

2,956

3,790

27,827

854

779

8,044

17,84519,023

167,973¥ 135,122¥ 129,212$ 1,271,865

Financial Section

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

Liabilities and Shareholders’ Equity

2018

2017

2018

¥ 31,227¥ 26,754$ 293,930

16
21,306
2,112
39
437
3,195
1,048
404
1,965
61,756

0
23,012
7,102
40
647
3,088
1,299
394
1,999
64,339157
200,553
19,884375
4,122
30,081
9,871
3,811
18,501
581,289

8,256
4,962
52
145
335
514
14,26676,022

7,813
18
51
178
131
551
8,744
73,08477,71546,705
493
1,367
3,161
4,844
134,287
715,576

31,186

31,186

293,543

Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

6,880
19,830(1,761)
56,136

6,942
17,815(1,771)
54,17364,764
186,660(16,577)
528,391

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans

3,348
−
18
(1,151)3,192
1−(1,768)31,515−169(10,837)

Total accumulated other comprehensive income

2,214

1,425

20,847

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

Net assets
Shareholders’ equity
Capital stock
Authorized:
Issued:39,376,600 shares
13,398,490 shares in 201713,398,490 shares in 2018

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

5

748

528

7,049

59,10056,128556,288¥ 135,122¥ 129,212$ 1,271,865

Financial Section

Consolidated Statements of Income
Years ended March 31, 2018 and 2017

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

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income and (expenses)
Interest and dividend income
Interest expense
Gain on sales of investment securities
Impairment loss
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

2018

2017

2018

¥ 107,122
82,472
24,65021,2403,409¥ 101,647
77,64024,006
20,5853,421$ 1,008,310
776,285
232,024
199,930
32,094

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

320
(311)
31
(1,853)
(599)
1,008

3,096
(2,424)
4,137(1,267)(3,598)32,038

532
430
963
2,440
40
2,400

694
(3,827)(3,132)
4,141
38¥ 4,103

5,013
4,052
9,065
22,972378
22,594¥

U.S. dollars(Note 2)yen

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

2018

2017

¥ 19,167
19,1676,000¥ 32,605
32,6055,000

Consolidated Statements of Comprehensive Income
Years ended March 31, 2018 and 2017

2018

2017

¥

¥

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

6

2018
$

180
180
56

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

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

$

4,141
1,398
(6)
−
3,055
4,447
8,589
8,550
39

2018
$

22,972
1,432
(14)
309
5,802
7,530
30,50230,163338

Financial Section

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2018 and 2017

Millions of yen

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

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

Valuationdifference on Deferredgains oravailable- losses on
for-salesecurities hedges

ForeignNoncurrency Remeasurementsof defined controllingtranslation benefit
plans interests
adjustment

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotal net
assets¥ 31,186¥ 6,942 ¥ 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

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

—
—
—
—
—

(691)
2,400
—
—
305

—
—
(1)
10
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(691)
2,400
(1)
10
305

—

(58)

—

—

—

—

—

—

—

(58)

—

(3)

—

—

—

—

—

—

—

(3)

—

—

—

—

156

(1)

18

616

220

1,009

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

ForeignNoncurrency Remeasurementsof defined controllingtranslation benefit
plans interests
adjustment

Total net
assets¥ 31,186

Thousands of U.S. dollars (Note 2)

Capitalstock
Balance as of March 31, 2017

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

CapitalsurplusRetainedearnings

Treasuryshares$ 293,543 $ 65,350 $ 167,695 $ (16,670)

Valuationdifference on Deferredgains oravailable- losses on
for-salesecurities hedges$ 30,046$ 14$ — $ (16,643)$ 4,976 $ 528,313

—
—
—
—
—

—
—
—
—
—

(6,508)22,594
—
—
2,879

—
—
(10)
103
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(6,508)22,594
(10)
103
2,879

—

(552)

—

—

—

—

—

—

—

(552)

—

(33)

—

—

—

—

—

—

—

(33)

—

—

—

—

1,468

(14)

169

5,805

2,073

9,502

$ 293,543 $ 64,764 $ 186,660 $ (16,577)$ 31,515$ —$169 $ (10,837)

7$ 7,049 $ 556,288

Financial Section

Consolidated Statements of Cash Flows
Years ended March 31, 2018 and 2017

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

2017

2018
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

2018¥ 3,403
2,468
134
(184)
4,050
(142)
(329)
257
(441)
0
(28)
24
(5)
1,330
(271)

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

$ 32,038
23,234
1,267(1,738)38,123(1,345)(3,096)2,424(4,157)
0
(266)
230
(51)
12,522(2,552)Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

10,266
305
(264)
(783)
9,522

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

96,631
2,872(2,492)(7,379)89,633

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

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

—
—
(1)
223
(2,402)
15
—
(100)
9
(72)

209
88
(1,010)8,620(19,602)
4,122
(324)
(1)
129
751

(745)

(2,328)(7,016)(3,125)(51)
7,556(8,031)
(690)
(6)
(1)
—

1,252
(53)
20
(3,345)
(509)
(4)
(794)
92

(29,415)(485)
71,121(75,593)(6,503)
(57)
(10)
—

(4,349)(3,341)(40,944)

(22)

8

(212)

4,404
18,226

1,221
17,00541,459171,563

461

—

4,348

40
¥ 23,134—¥ 18,226384$ 217,756

Note: Relation between the year-end balance of cash and cash equivalents and the items on the consolidated balance sheet:¥23,189
Cash and deposits(55)
Time deposits due over three months¥23,134
Cash and cash equivalents¥18,280(53)¥18,226$218,274(518)$217,756

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

8

Notes to Financial Statements

Note 1. Significant Accounting Policies

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

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

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

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

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

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

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

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

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

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

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

Per Share Information
The computation of basic net income per share is based on theweighted average number of shares of common stock outstanding
during each period. The average number of shares used in thecomputation was 12,523,815 and 12,586,147 for the years ended
March 31, 2018 and 2017, 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.

The annual average interest rates applicable to short-term bankloans at March 31, 2018 and 2017 are 0.4% and 0.9%, respectively.
Short-term bank loans and long-term debt at March 31 wascomprised of the following:

Loans from financial institution,due 2018 to 2022 withinterest rates between
0.167% and 3.85%
Sub-total
Less current portion of loans

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.

•• • • • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • •

2018
2019
2020
2021
2022
2023 and thereafter• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Millions of yen• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •2018• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Carrying
amounts

Marketvalue

Unrealized
gain (loss)¥ 7,049¥ 11,688¥ 4,638• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Thousands of U.S. dollars•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2018

7,074
7,074
2,112
¥ 4,962

7,121
7,121
7,102
¥ 18

66,58966,58919,884$ 46,705

Thousandsof U.S. dollars

Carrying
amounts

Marketvalue

Unrealized
gain (loss)$ 66,357$ 110,018$ 43,661•• • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2018

2017

2018

—
2,112
2,104
2,302
35
520
¥ 7,074

7,102
4
4
4
5
—
¥ 7,121—
19,88419,806
21,669331
4,899$ 66,589

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.

2018

Other securities

2017

Millions of yen

Marketable and Investments Securities
Other marketable securities as of March 31, 2018 are as follows.

•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •2018

The aggregate annual maturities of long-term financial debt at March
31, 2018 and 2017 respectively are as follows:

Consolidated Taxation System
We have adopted a consolidated taxation system.

Other securities

Thousandsof U.S. dollars

Millions of yen

Note 2. U.S. Dollar Amounts
The dollar amounts are included solely for convenience: they should
not be construed as exact translations of current yen figures, nor are
they the dollar amounts into which yen amounts have been or could
be converted.
The approximate exchange rate of US$1=¥106.24 as of March
31, 2018, has been used for the purpose of presenting the dollar
amounts in the accompanying consolidated financial statements.

10Notes to Financial Statements

As of March 31, 2018, assets pledged as collateral for short-termbank loans, and long-term debt, including the current portion of
long-term debt, were as follows:
Millions of yen

Thousandsof U.S. dollars

2018

2018

¥

$

50
3,027
1,088
831
24
¥ 5,022

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

470
28,497
10,2467,828
228$ 47,272

Note 4. Retirement Benefits(1) Movements in retirement benefit obligations except plan applied
simplified method
Thousandsof U.S. dollars

2017

2018
Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at end of the year

¥ 11,785
660
26
145
(308)
¥ 12,310

¥

4,558
103
25
(46)
4,640

2017

¥

¥

¥

585
114
(82)
(31)
586

2017

¥

¥

$ 120,395(46,629)
73,766

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

419

397

3,949

8,256

7,813

77,715

8,256
—

7,813
—

77,715—¥ 8,256¥ 7,813$ 77,715

Thousandsof U.S. dollars

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

2018

2017

¥

¥

660
26
(103)
1,008

2018

674
16
(93)
1,316

$

6,220
246
(975)
9,487

114

90

1,075

¥ 1,705¥ 2,004$ 16,054

42,904
975
239
(440)
43,679(6) Remeasurements of defined benefit plans(before tax effect deductions)
Millions of yen

2018
Actuarial loss (gain)
Total

¥
¥

(887)
(887)

Thousandsof U.S. dollars

2017

2018

¥ (2,277)¥ (2,277)$ (8,354)$ (8,354)

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

¥ 12,276(4,860)7,416Millions of yen(3) Movements in net liability for retirement benefits based on thesimplified method
2018¥ 12,790(4,953)
7,836

2018

3,661 $
93858
(55)4,558 $¥

Funded retirement benefit obligations
Plan assets

Thousandsof U.S. dollars

Millions of yen

¥

2018

(5) Retirement benefit costs(2) Movements in plan assets except plan applied simplified method

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

2017

2018

¥ 11,541 $ 110,937
6,220
674
246
16
1,373
(102)
(2,901)(344)¥ 11,785 $ 115,875

2018

2018

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, 2018 and 2017, respectively.

Millions of yen

Thousandsof U.S. dollars

Millions of yen

546 $
90
(38)
(12)
585 $

2018

(7) Accumulated adjustments for retirement benefit(before tax effect deductions)

5,515
1,075
(773)
(297)
5,520

Millions of yen

Unrecognized actuarial differences
Total

11

Thousandsof U.S. dollars

2018

2017

2018

¥ 1,658¥ 1,658¥ 2,546¥ 2,546$ 15,615$ 15,615

Notes to Financial Statements

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

Research and development expenditures charged to income were
¥1,516 million ($14,278 thousand) for the year ended March 31, 2018.

2017

2018

Equity securities
Cash and cash equivalents
Investment trust
Other
Total

68%
5%
22%
5%
100%

73%
10%
11%
6%
100%

Note 8. Income Taxes
The Company and its domestic subsidiaries are subject to several
taxes based on income, which in the aggregate resulted in statutory
tax rates of approximately 30.8% and 30.8% for the year ended
March 31, 2018 and 2017, 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, 2018 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, 2018 and 2017
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

2018
Discount rateLong-term expected rate of return
Expected rate of salary increase

0.0%~0.9% 0.0%~1.0%
2.4%
3.3%
0.7%~4.7% 0.7%~4.7%

Defined contribution plans
The required contribution amount for consolidated subsidiaries forthe defined contribution plan was 184 million yen (1,736 thousand
US dollars) as of March 31, 2018.

Deferred tax assets
Net defined benefit liability
Accrued bonus indemnities
Allowance for doubtful accounts
Allowance for loss on construction work
Loss on valuation of investment
securities
Loss on valuation of investments incapital of subsidiaries and associates
Amalgamated received property
Impairment loss
Operating loss carry-forwards
Elimination of inter-company profits
Other
Total gross deferred tax assets
Less valuation allowance
Net deferred tax assets

Note 5. Contingent Liabilities
As of March 31, 2018 and 2017, the company was contingently
liable as follows:
Thousandsof U.S. dollars

Millions of yen

2018
As guarantor of indebtedness of
unconsolidated subsidiaries
and others
Discount of notes and bills
Transfer of notes and bills endorsed
for payment

2017

2018

¥ 90
—

¥ 115
41

$ 850
—

¥ 32

—

$ 309

Thousandsof U.S. dollars

Millions of yen

Note 6. Derivatives and Hedging Activities

2018

2017

2018

¥ 3,864484
60
60¥ 3,781511
57
26$ 36,379
4,565
567
572

175

180

1,653

110
543
18
11,79715
1,023
18,156(12,710)¥ 5,446

110
543
557
12,04721859
18,697(12,725)¥ 5,971

1,041
5,118
175
111,046
148
9,633
170,903(119,635)$ 51,268

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

12

Thousandsof U.S. dollars

2018

2017

¥ (1,290)(54)(37)(1,382)¥ 4,064¥ (1,198) $ (12,145)
(511)
(47)
(353)
(10)
(13,009)(1,256)¥ 4,714 $ 38,258

2018

Notes to Financial Statements

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.
(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.

13

Notes to Financial Statements(4) Fair Values of Financial Instruments
With regard to the fair value of financial instruments, in addition tobasing fair value on market value, the fair value of financial
instruments that have no available market value is determined byusing a rational method of calculation. However, as variables are
inherent in these value calculations, the resulting values may differ if
different assumptions are used.

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

Millionsof yenUnlisted equity securities

Millions of yen¥ 562

Thousandsof U.S. dollars$ 5,2992018

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

Carrying
amounts

Fair
value

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

¥—
—
—
—
—
—

7,074

0

¥ 59,625¥0Unlisted equity securities
These instruments are not included in investment securities as they
have no market value and their fair values are not readily
determinable.

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

Millions of yen

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

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—

Goodwill
Business-use buildings, structures, machineryand equipment, etc.
Unused land
Total

Unrecognizedgain (loss)

2018

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

Fair
value

$ 218,274
389,821110,018
718,115
294,088
200,553
19,88446,705$ 561,231$ 218,274
389,821110,018
718,115
294,088
200,553

$—
—
—
—
—
—

66,5900$ 561,232$0

Thousandsof U.S. dollars

2018

2018

¥ 82

$ 776

52
0
¥ 134

491
0
$ 1,267

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, a change has been made to the business plan which was
examined at the time of acquisition of business-use assets.
Therefore, the book value was reduced to the recoverable value, andthis value was recorded as impairment loss for extraordinary loss.
With regard to the idle assets, due to changes in area and method ofuse, the carrying value was written down to the recoverable value,
and this value was recorded as impairment loss for extraordinaryloss.

Thousands of U. S. dollars
Carrying
amounts

Millionsof yenUnrecognizedgain (loss)<Calculation Method of Recoverable Values>
Recoverable values of business-use assets are calculated based on thevalue in use. This time, as a change has been made to the businessplan which was examined at the time of acquisition of assets,
calculation was made with the value in use as zero. Important idle
assets are assessed based on the real estate appraisal and otherindices. Other assets are calculated based mainly on the property tax
assessment value.

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.

14

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 2017 and 2018 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

2018
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

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

1,416

357

440

2,214

¥ 1,122

¥

283

¥

408

¥

1,814

Consolidated*2

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

254

2,468

¥

¥

135

¥

1,950

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

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

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

254

2,434

¥

¥

Consolidated*2

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
and land, 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,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

15
16

Notes to Financial Statements

Thousands of U.S. dollars

2018
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

—
(4,548)(4,548)(977)
372,442$ 1,008,310—
1,008,310
32,094
1,271,865

20,843

2,391

23,23417,081$ 1,272$ 520,262
2,797
523,060
12,197505,762$ 257,731
8
257,739
16,852
168,894$ 230,316
1,742
232,059
4,022
224,765$ 1,008,310
4,548
1,012,858
33,071
899,422

13,329

3,363

4,150

$

$ 10,567

2,667

$

3,846

$

Consolidated*2

Adjustment*1$$

18,354

1. The minus 977 thousand US dollar segment income adjustment includes: 189 thousand US dollars resulting from the elimination of intersegment transactions; minus 240 thousand US dollars resulting from allocationdifferences of selling & general administrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 926 thousand US dollars resulting from inventory asset adjustment.
The 372,442 thousand US dollar segment asset adjustment includes: minus 25,716 thousand US dollars resulting from the elimination of intersegment transactions; and 398,159 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 2,391 thousand US dollar depreciation adjustment and 1,272 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, 2018 were proposed by the Board of Directors and approvedby the shareholders at the annual general meeting held on June 28,
2018, as follows:(5) Sales to Foreign Customers
Foreign sales have been omitted, as they did not reach 10% ofconsolidated sales.

Millionsof yenCash dividends (¥35.0 per share)(6) Information about loss on impairment of fixed assets byreportable segments
Millions of yen

2018

Impairment loss

Pipe system
Machinerybusiness system businessIndustrial
materials
business

Eliminationand corporate

¥—

¥ 134

¥0

¥—

Total

¥ 134

Thousands of U.S. dollars

2018
Pipe system
Machinerybusiness system businessImpairment loss$—$—

Industrial
materials
business

Eliminationand corporate$ 1,267$0

Total$ 1,26716¥ 440

Thousandsof U.S. dollars$ 4,141

Independent Auditor’s Report

Independent Auditor’s Report
PKF Hibiki AUDIT CORPORATION
Kitahama-Yamamoto Building. 4F,
2-3-6, Kitahama, Chuo-ku, Osaka, JapanTo the Board of Directors of Kurimoto, Ltd.
We have audited the accompanying consolidated balance sheets of Kurimoto, Ltd. and consolidated subsidiaries as of March 31, 2018,
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, 2018, 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 7, 201817

Corporate Information

Kurimoto, Ltd.

(as of June 28, 2018)

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*¥117,119 million*
1,326*

Tokyo Office16-2, Konan 2-chome, Minato-ku, Tokyo 108-0075, Japan
Telephone: (03) 3450-8611
Fax: (03) 3450-8504*as of March 31, 2018

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 28, 2018)

President

Moriyoshi Kushida

Director and Senior Managing
Executive Officers

Motohito Sawai
Hirobumi Okada

Director andManaging Executive Officers

Mikio Yaji

Director andSenior Executive Officers

Yoshiaki Shingu
Kazutaka Kikumoto

Outside Director

Shigehiro Shibakawa
Minoru Takahashi

Full-Time Audit &Supervisory Board Member

Minoru Murata

Outside Audit &Supervisory Board Members

Kazuhiko Hakozaki
Maki Arita

Senior Executive Officers

Kazuharu Kondo
Shinya Kojima

Executive Officers

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

Stock

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

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

39,376,600
13,398,490
7,676

Principal Shareholders(as of March 31, 2018)

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

Banking References(as of March 31, 2018)

Number ofshares held
(in thousands)

Ratio ofshareholding

1,209

9.6%

854

6.7%

678

5.3%

444

3.5%

362

2.8%

320

2.5%

Head OfficeMizuho Bank, Ltd. (Osaka Branch)Resona Bank, Limited (Osaka Banking Department)
Sumitomo Mitsui Banking Corporation (Midosuji Branch)
MUFG Bank, Ltd. (Osaka Main Office)Tokyo OfficeMizuho Bank, Ltd. (Utisaiwai-cho Branch)
MUFG Bank, Ltd. (Shimbashi Branch)Resona Bank, Limited (Shimbashi Branch)
Sumitomo Mitsui Banking Corporation (Hibiya Branch)18

Corporate Information

Kurimoto Group(as of June 28, 2018)

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

Kurimoto Business Associates Co., Ltd.

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

Operations:

Kurimoto Logistics Corporation

Kurimoto USA, Inc.

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

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

Holding company

Readco Kurimoto, LLC
Japan Castering Co., Ltd.

Operations:

Manufacture and sales of industrial machineryOperations: Manufacture and sales of castings
Kurimoto Polymers Co., Ltd.
Yamatogawa Co., Ltd.

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

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

Zentec Co., Ltd.
Motoyama Eng. Works, Ltd.

Operations:Operations: Manufacture and sales of industrial valves
Ks-Tech Co., Ltd.

Riko, Ltd.

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

Operations:

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

Production of valves

Kuritetsu (Shanghai) Trading Co., Ltd.
Hokkaido Kanzai Co., Ltd.

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

Wholesale of machinery equipment, steel, andnonmetallic products

Kurimoto (Philippines) Corporation
Yashima Chemical Engineering Co., Ltd.
Operations: Design, manufacture, sales, and maintenance ofchemical and pharmaceutical equipment
Nihon Kaiser Co., Ltd.
Operations: Manufacture and sales of half precast products

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