Annual Report 2004

Profile
Since its establishment in 1949, Kurita Water Industries Ltd. has provided integrated solutions to meetits clients’ water treatment needs. Kurita’s cutting-edge technologies have gained the Company
recognition as a global leader in water treatment chemicals and facilities. In addition, through its facilities maintenance, operation, and consulting businesses, Kurita provides a range of services that anticipate its customers’ needs in the areas of quality control, safety, and the reduction of operating costs.
Along with the evolution of our society, the environmental protection needs of our clients have continued to grow at an accelerating rate. We at Kurita see it as our job to use the wide range of technologies and know-how we have developed and mastered through our experience in the field of water
treatment to satisfy these needs in an expanding range of environmental fields, such as in our soil andgroundwater remediation business. Our corporate vision of becoming an advanced water and environmental management company reflects our drive to establish an organization that provides highvalue-added management services and that demonstrates overwhelming superiority in its chosenbusiness fields. Through the integrated management of water and other environmental resources, ouraims are to achieve a high level of customer satisfaction and to benefit society.

Contents

Financial Highlights (Consolidated).................................................. 1
Message from the President .............................................................. 2
Kurita at a Glance .............................................................................. 4
Medium-Term Business Plan ............................................................. 5
Increasing Profitability .................................................................... 6
Kurita’s Global Development Gathers Pace ................................. 10
Our Technological Strengths ........................................................ 12
Corporate Governance /Board of Directors and Corporate Auditors .................................. 14
Selected Financial Data ................................................................... 15
Management Discussion and Analysis (Consolidated) ................... 16
Consolidated Financial Statements and Notes ................................ 21
Report of Independent Certified Public Accountants .................... 36
Non-Consolidated Summary ........................................................... 37
Corporate Data / Subsidiaries ......................................................... 38
Investor Information ....................................................................... 39

Note on Projections for Future Results

Names of companies, products andtechnologies appearing in this report
are the trademarks or registered trademarks of each company.

Projections for future results contained in this annual report accord with Kurita’splans, prospects and strategies as decided by the management on the basis of
information available at the time.
Since projections for future results lack the substance of fact and may bebased on data from other sources, the accuracy and reliability of which we areunable to guarantee, you are requested not to rely on such projections alone.
Moreover, many factors affecting business results are subject to uncertainty
and are therefore a source of risk. These factors include, but are not limited to, thefollowing: macroeconomic changes, such as changes in capital markets and largescale shifts in demand, especially insofar as these influence the markets andindustries directly related to our main businesses.

Financial Highlights (Consolidated)
Millions of yen

Years ended March 31
2004
For the year:
Net sales .......................................................................... ¥ 146,819
Operating income ...........................................................
13,490
Income before income taxes ..........................................
14,918Net income .....................................................................
8,444

Thousands of U.S. dollars

2003

2004

¥

141,628
12,307
10,263
5,476$ 1,389,147
127,637
141,148
79,894

At year end:
Total assets ....................................................................... ¥ 183,620
Total Shareholders’ equity ...............................................
128,676¥

173,689
120,969$ 1,737,345
1,217,485

Per share of common stock (Yen and U.S. dollars):
Net income ..................................................................... ¥Cash dividends applicable to the year (parent company) .......

¥

40.7
16.0

64.6
16.0

$

0.61
0.15

Note: The U.S. dollar amounts are given solely for convenience at the rate of ¥105.69 to US$1.00, the approximate exchange rate prevailing on March 31, 2004.

Net Sales(Millions of Yen)

Operating Income(Millions of Yen)

15,817

153,435
142,678

141,628

146,819
13,490130,998

12,307
11,203

2000

2001

2002

Net Income

2003

2004

(Millions of Yen)

2000

10,7902001

2002

Total Assets

5,670

5,476

2002

2003

8,444

165,297

2004

2000

2004

(Millions of Yen)

183,175
8,366

2003

172,145

173,689

2002

2003

183,620

4,648

2000

2001

2001

2004

1

Message from the President

Hiroshi Fujino
President

The reporting term was the first year under our new
three-year medium-term management plan Powerful
Advance 2005, known as PA-5 for short, which went
into action in April 2003. Kurita aimed during thereporting term to lay the groundwork for its development into an outstanding presence in the fields ofwater and environmental management.
Despite stiff competition, which forced sales
prices down, the Company’s Water Treatment
Chemicals Business posted growth in both orders andsales thanks to the expansion of customized services
and incinerator chemicals. Meanwhile, the Water
Treatment Facilities Business recorded sharp increases
in orders and sales, led by growth in the domestic electronics industry. As a result, orders received during theterm rose 16.6% year-on-year, to ¥149,735 million on aconsolidated basis, while sales were up 3.7%, at¥146,819 million.
At the profit level, the launch on the market ofnew, high-valued-added products by the Water
Treatment Chemicals Business helped improve profitability, as did the expansion of the scope for readymade facility modules in the product lineup offered by
the Water Treatment Facilities Business, by helping to
reduce production costs. Thanks to these efforts, operating income posted a year-on-year gain of 9.6%, to2¥13,490 million, while net income soared 54.2% to¥8,444 million. Earnings per share rose steeply to ¥64.60
from ¥40.67 for the previous term.

Customer-focused management strategies bear fruit
Great changes having been taking place in the
demands that our customers make on us. Their requirements have expanded from facilities and chemicals
that simply fulfill narrow product function specifications
to those that help them solve a wide range of the
problems they face, including reducing production
costs, improving overall productivity, and lowering theenvironmental burden of their business activities.
To answer these needs, in April 2003 Kurita carried out a structural reorganization with the aim of realizing greater synergy among the operations of theCompany’s divisions and enabling us to gain a morecomprehensive and more accurate grasp of our customers’ diversifying needs, thereby making possible theproposal of carefully tailored solutions.
Firstly, we amalgamated the Chemicals Groupand the Maintenance Group to facilitate the offering ofservices more precisely tailored to each customer’sneeds through the sharing of customer information
between these two formerly separate groups. At thesame time, we established a new organization – the
Eco-Solution Group. The purpose of this group is to
optimally leverage a balanced portfolio of businesses
incorporating chemicals, facilities, and maintenanceservices so as to offer customers ideal solutions covering both their hardware and software needs. During thereporting period, many of our customers were highly
impressed by the problem-solving capabilities of the
Eco-Solution Group, leading to the receipt of a large
number of orders from new customers.
Customers are increasingly seeking to outsource
water treatment processes, and Kurita’s ultrapure watersupply business is benefiting from this trend. The
Company installs ultrapure water production systems
on customers’ premises, and is responsible for all operations and management as well as maintenance.
Following the start of an ultrapure water supply business in Singapore in the term ended March 2003, in thereporting term we commenced such services for two
customers in Japan. This new business model is steadily establishing itself as a solid earnings generator.

Aggressive business expansion programat home and overseas
During the term under review, the management ofKurita also occupied themselves with active measures
to lay the basis for future business growth.
Overseas, as part of our plan for business expansion, in July 2003 we acquired via our subsidiary Kurita
Europe GmbH the oil process treatment chemicals
business of Pitco NV, a Belgian manufacturer of chemicals. With this move, we have strengthened our ability to operate our chemicals business in Europe and the
Middle East.
In East Asia, we took the decision to establish a
production base in China, and to open a sales office in

Taiwan, so as to give us footholds in the rapidly growing East Asian market.
In Japan, we successively transformed our sales
agents for water treatment chemicals into subsidiaries,
in a strategic move to assure greater control over themarket in the future.
Regarding new business lines we are preparing
to enter, we are participating in two governmentsponsored projects – for hydrogen fueling stations forvehicles, and for the testing of fuel cells for household
use, and we will press ahead with these projects in thehope of commercializing them in the near future.

Future prospects
The current term, ending March 2005, will be a challenging one for Kurita, in light of industrial reorganization on a global scale, downward pressure on prices
due to severe competition, and uncertainty about thecapital investment trend that our target industries will
follow. The situation will probably remain difficult forsome time to come.
Amid these circumstances, we hope to kick-start
our business performance by drawing on our achievements to date to further speed up our response tochanging user needs. We plan to strengthen our capability to provide solutions through the establishment of
new business models, and to expand our marketing
channels. We will also reinforce our dominant positionin the domestic and overseas markets alike through thelaunching of new products and the fostering of new
businesses. We plan to aggressively invest both financial and human resources into the achievement ofthese goals.
I look forward to the continued support of ourshareholders and other stakeholders in our continuingendeavors.

July 2004

Hiroshi Fujino
President

3

Kurita at a Glance
Business Domains
The Kurita Group offers a diverse lineup of water and environmental management products, technologies and services, as well as total solutions that incorporate outsourcing and consulting services.
The business of the Kurita Group can be divided into two main segment – Water Treatment
Chemicals and Water Treatment Facilities.

Water Treatment Chemicals
We at Kurita began our foray into thewater treatment chemicals business by
selling boiler water treatment chemicals,
later going on to develop numerous
chemical products, such as cooling water
treatment chemicals, wastewater treatment chemicals and process treatment
chemicals, thereby expanding and developing our target market as we grew. We
are highly regarded by our customers
not only for the fundamental efficiency
exhibited by our water treatment chemicals, which facilitate the stable and efficient operation of factories and the like,but also for our ability to develop technology that accurately caters to market
needs. We also help customers to resolve

the issues they face through the realization of optimal water treatment applications, made possible through our
nationwide sales network and attentive,
customer-focused service.

Orders and Sales
50(Billions of Yen)

45.2 45.5

46.6 45.7

47.0 46.3

2000

2001

2002

46.5 47.1

47.5 47.4

2003

2004

40

30

PRINCIPAL PRODUCTS and SERVICES
Boiler water treatment chemicals
Cooling water treatment chemicals
Flocculants and sludge dehydration agents
Process treatment chemicals
Chemical injection and dosing systems
Maintenance services
Customized services
Steam supply service
Contract-based maintenance service
Wastewater treatment service etc.

20

10

0

Orders by Segment

Sales by Segment

Water Treatment Facilities
From the production of ultrapure waterthat is virtually impurity-free to the treatment of industrial wastewater anddomestic sewage, Kurita develops essential water treatment facilities for a wide
variety of applications and continues tocontribute to the development of industry and reduction of pollution. Applying
the water treatment technology we havecultivated to date, today we at Kurita
have extended the scope of our businessto include soil and groundwater remediation. We have also established a nationwide maintenance service network toensure that the systems we deliver operate stably at all times. We make sure that
our customers’ systems and facilities continue to operate at peak efficiency, notonly by responding immediately to
problems that occur, but also by putting
forward active suggestions for improvements and upgrades. We have also leveraged the know-how we have built up

4through our involvement in the maintenance business to establish a businessmodel that also encompasses outsourcing and consulting operations, which we
use to help customers reduce the environmental impact of their operations andachieve productivity improvements.

Orders and Sales(Billions of Yen)

120
108.4 107.7
102.2

100

93.5 96.4

91.8
85.5

94.5

99.4

82.0

80

60

40

PRINCIPAL PRODUCTS and SERVICESElectronics Industries
Ultrapure water production systems
Water reclaim system
Wastewater treatment facilities
Tool cleaning
Maintenance and operations services
Ultrapure water supply business
General Industries
Pure water production systems
Wastewater treatment facilities
Soil and groundwater remediation
Chemical cleaning
Maintenance services

20

0
2000

2001

2002

Orders by Segment

2003

2004

Sales by Segment

Public-Sector
Sewage treatment facilities
Sludge (human waste and other) recycling facilities
Landfill leachate treatment facilities
Operation and maintenance services

Steps for achieving our medium-term business plan:
Powerful Advance 2005
Kurita is applying its vast accumulation of technology and know-how regarding chemicals,
facilities, and maintenance to the solution of the water treatment and other environmental
problems facing its customers and the general public. Taking full advantage of our expertise in this field, we offer a wide range of services, including consulting services – whereby we make proposals for comprehensive solutions on environmental issues – andoutsourcing services that allow customers to concentrate management resources on theircore areas. Furthermore, we are expanding the network that directly links us with ourclients, which helps us to extend these services without delay.
Kurita seeks not only to fully utilize existing management resources, but also to
expand the range of solutions it provides through the development of new technologies andnew products. We offer the results of these efforts as our contribution to our customers andthe general public.

Domestic
Increase our market share

Overseas
Expand our business domain

Environmental management-related businesses
An energy-related businessHelping customers cut costs,
reduce environmental impact and raise productivity

New business
New products
New technologies

Customer-focused Group network
Establishment of a sales network covering
the whole of Japan

Solutions & Outsourcing

Operational synergies
Water treatment
chemicals

Maintenance

Water treatment facilities

5Powerful Advance 2005

Increasing Profitability
Hereunder, we describe the measures taken by Kurita to improve its profitability. We are focusing
on the development and deployment of new business models, the reinforcement of our customer
support services, and steps to achieve cost-cutting and greater efficiency in facilities production andoperation as well as distribution.

Development and Deployment of New
Business Models
Meeting outsourcing needs through build, own
and operate (BOO) projects

Ultrapure Water Supply Business
The Conventional Business Model
Customer’s factory

Supply of facilities (or systems) and chemicals

Ultrapure Water Supply Business
Makers of semiconductors and liquid crystal displays (LCDs) are
increasingly looking to reduce initial investment and runningcosts for water treatment facility, and simultaneously raise production efficiency through the outsourcing of water-treatment
services.
To supply such semiconductor and LCD makers with theultrapure water they require, Kurita erects the water treatment
facilities on their factory site. Under the BOO (build, own andoperate) system employed, Kurita remains the owner of the
facilities, and conducts all maintenance and operation itself.
This arrangement is perfect for meeting our customers’ needs.
The customers pay only for the amount of ultrapure water theyuse, and there are no initial start-up costs. Moreover, the BOO
contract method saves on the time and expense that would otherwise be involved in training staff to operate the facility.
Thanks to the advantages offered by our BOO contract
services, the last two periods saw us conclude three contracts(one overseas and two in Japan) with semiconductor and LCD
manufacturers. In the current term, too, we expect further contracts and a concomitant growth in revenue.
Steam Supply Service
Making full use of the operational and management know-how
we have built up over our many years in the business, we provide
steam supply services under which we guarantee a stable supplyof steam at a specified quality. These services are operated under
BOO contracts, whereby we install, own and operate the boilers.
The user pays a fee based on the amount of steam used, and thisbusiness model has the advantage from the customer’s side of
reducing costs.

6

Production lines
for semiconductors
and LCDs, etc.

Ultrapure waterproduction systems

KuritaPayment for sales received

Customer owns facilities; operates and maintains it

The New Business Model
Customer’s factory

Ultrapure water
Ultrapure waterproduction systems
Production lines
for semiconductors
Kuritaand LCDs, etc.
Payment of fee for ultrapure water used

Kurita retains ownership of the facilities, and operates and maintains them

Offering total solutions to customers’ water treatment needs
Many of Kurita’s customers are facing severe competition both athome and abroad, and these days, what they frequently seek
from Kurita is not simply this or that product with particularfunctions or benefits: they have come to require the services of
the Company as a specialist in all aspects of water treatment
who can provide solutions to their needs in this field on a comprehensive basis. We are being asked to design optimal solutions to customers’ needs in respect of cost reduction, achieving
higher production efficiency, and lowering the environmental
impact of their business activities. And these solutions must fully
take into account the particular features of each customer’s
operations.
Our Eco-Solution Group, established in April 2003, boasts
a high-level problem-solving capability that adapts well to ourcustomers’ changing needs. The Eco-Solution Group offers
ideal solutions for the reduction of the environmental impact ofcustomers’ business operations, encompassing energy saving
and reduced use of natural resources, as well as a smaller volume of industrial waste discharged. The Eco-Solution Group isable to optimally utilize the expertise of all Kurita’s groupcompanies in the areas of chemicals, facilities, and maintenance.
Taken together, these various benefits allow the achievement ofconsiderable cost reductions.
This new, integrated approach to water treatment solutions has won high praise from corporate customers who have
hitherto not done business with Kurita, and we have alreadysucceeded in winning a number of orders.
Kurita’s Water Treatment Chemicals Business, too, is going
beyond the simple provision of chemicals and equipment tooffer solution-type services including operation andmaintenance.
One example of the special services we offer is a remotemonitoring system for water treatment operations. Via atelecommunications network, our control center staff monitor

the water quality and concentration of chemicals in the boilers,cooling water, and discharged wastewater at the customer’s
premises. This system allows us to immediately pinpoint problems and forestall trouble. We also offer various customized services to meet users’ needs for energy conservation, reduction inwater use, and lowering the discharge volume of sludge forfinal disposal, utilizing dehydration methods. We plan to makemaximal use of the overall capabilities of the Kurita Group tocontinue expanding and refining our menu of solutions
services.

Comprehensive Wastewater Treatment Contract Scheme
Principal markets:
・Food
・Petrochemical
・Pulp and paper

Assessment of problem
Measurement of wastewater volume and wastewater treatment cost
Measurement of volume of chemicals currently used
Assessment of operating condition of existing wastewater treatment facilities

Proposal of solution
Wastewater

Revise volume and type of chemical used
Renovate facilities / Improve operating method

Discharge

Results:
・Lower costs
・Energy conservation
・Less industrial waste
・Improved water quality

7Powerful Advance 2005

Ideal solutions for soil contamination problems
In the early 1990s, Kurita became the first Japanese company toseriously address the growing social problem posed by soil contamination. We have now amassed considerable expertise inassessment of land for soil and groundwater contamination andapplying remediation techniques, with Kurita-led assessments
numbering 1,600, and 600 soil and groundwater remediation
projects successfully completed. In particular, we are theworld’s leading company in terms of our track record in theapplication of remediation methods, in which we possess proprietary technology. Kurita aims to use its extensive lineup oftechnologies – particularly its in-situ (on-site) soil and groundwater bioremediation techniques – to meet customers’ needs forsoil and groundwater remediation at factories without halting
production operations.
Land Solution Inc., a subsidiary established in 2001,
provides a soil contamination risk assessment and hedging
service – utilizing liability insurance – for landowners andfinancial institutions engaging in real estate transactions. In thisway, we are doing our part in meeting the needs of society forenhanced liquidity in real estate transactions.
Soil and groundwater remediation scheme for land utilization
proposed by Land Solution Inc.

Study undertaken (on entire area of site) on risk posed by soil contamination

Drafting and decision on plan for effective utilization of land

Assessment of soil contamination as stipulated by the law

Soil and groundwater remediation process undertaken

Sell-off, use for rent, and subdivision for partial sale or rent

8

Built a new organization to provide
finely customized services
Customers have pressing needs for even more comprehensive
and timely support services, available on request, to realize
trouble-free efficient operation for high productivity, allowing
them to concentrate their management resources on their corebusinesses.
To meet with these exacting needs, Kurita in April 2003
has merged its former Water Treatment Chemicals Division with
the Maintenance Service Division. The newly integrated organization operates under the name of the Chemicals andMaintenance Services Division. This reorganization has facilitated the sharing of information relating to a larger number ofcustomers, enabling us to provide more precisely tailored services to meet with each customer’s complicated and exacting
requirements. Moreover, the integration of chemicals and maintenance into one division gives our staff a more accurate graspof changes in the customer’s production processes and theirimpact on water supply and effluent discharge. A deep understanding of operating conditions at users’ plants enables us toprovide more efficient on-site expert services, thereby raisingcustomer satisfaction.
To offer the regionally-based services conducted by our
on-site experts with a close understanding of their customers’
needs, we have been restructuring our sales network by acquiring majority shareholdings in companies that have hitherto
acted as our sales agents. In the future, our domestic sales inJapan will be operated mainly on a direct operation basis
through the network, in combination with our own offices andthose of other Group companies.
We are confident that the measures we have taken willlead to the generation of greater user satisfaction, and toincreasing the number of loyal customers through our finely
customized high-quality services.

Working to cut costs through improved
manufacturing and distribution

Fully standardized ultrapure water production systems
Conventional system
Order received

Pursuing modularization

Detailed design

With the aim of manufacturing even higher-quality water treatment facilities at a lower cost, Kurita has pursued the path ofstandardization in manufacturing. Standardization is classified
into two stages: the first stage consists of modularization, andthe second stage covers work from the design stage.
Modularization refers to a manufacturing system under which
design work and manufacturing are carried out on a modulebasis, which is applied in our factories from the production
stage through to the test operation stage. This system has various advantages, including saving space, shortening the time todelivery, improving product quality, and reducing outsourcing
expenses in line with the reduced amount of on-site work.
A representative example of this first-stage standardization
comes from our pure water production systems for the pharmaceutical industry, which are strictly regulated by law (seeNote). Currently, almost all our water-purification facilities forpharmaceuticals makers in Japan is made from standardized
modules.
Our KuriAqua ultrapure water production systems for theelectronics industry represents, which means standardizationfrom the design stage. The KuriAqua system enables customers
to automatically select the system most appropriate to theirneeds, and to combine systems, simply by specifying theirwater quality and volume requirements. Currently, over 70% of
our ultrapure water production systems for the Japanese electronics industry consists of modules made by an advanced standardized manufacturing system.
We intend to widen the scope of application of modularization to contribute to cost-cutting.
(Note)In the pharmaceutical industry, validation is required that both product quality andthe performance of the facilities meet the standards stipulated by law.

KuriAqua
An example of Kurita’s product standardization, right from the design stage,
the KuriAqua supplies ultrapure water of extremely high quality to manufacturing plants in the electronics industry. It offers the advantages of a short delivery time, quick start-up from installation, compactness, and low cost.

Delivery of separate, individual components of facilities to site
Installation at site of piping, electrical wiring, etc.
Trial operation

The customer’s requirements
Low-cost
Compact
Short time from order to delivery
Improved facilities performance

Fully standardized facilities
Features
Standardized production system (from design stage)
Manufacture at our plants
Trial operation also conducted at our plants
Design of extensive product lineup through combination of standard modules
to meet all customer requirements
System makes it possible to satisfy the needs of the most demanding customer

Achieving greater efficiency in production anddistribution through system restructuring
We are tackling the reduction of production costs by cutting thenumber of components through the standardization processdescribed above.
For water treatment chemicals, we are also seeking out
optimal materials procurement sources in Japan and overseas,
looking for a better balance between in-house production andoutsourcing, and reapportioning the ratios of production volumes among our plants to cut distribution costs. We are also taking various steps to reduce the cost of outsourced distribution.
In addition, we are taking another close look at the rolesof our manufacturing plants and distribution depots within thecontext of the needs of each region, to enable us to redesign thesystem for greater efficiency.

9Powerful Advance 2005

Kurita’s Global Development Gathers Pace
Kurita is also seeking to expand its operational scope and market share in overseas markets, principally in Europe and East Asia, by carefully assessing user needs and building up a business support
infrastructure that will enable the proposal and provision of optimal solutions for each customer.

Expanding operational scope in Europe
In July 2003, Kurita Europe GmbH, a German-based subsidiary
which manufactures water treatment chemicals for sale inEurope and the Middle East, acquired the oil process treatment
chemicals business of Pitco NV, a Belgian manufacturer ofchemicals. Pitco has proprietary technologies that not only
enable productivity improvements in oil refining and petrochemical plant production processes, but also help to reducethe discharge of toxic substances. Through the purchase of
these operations from Pitco by Kurita Europe, we will be able
to integrate the compatible and synergistic elements of ourwater treatment technology with the newly acquired petrochemical production process chemicals technology. This willallow us to offer total solutions to customers in Europe and the
Middle East for their needs relating to production processes andwater treatment.

reputation for reliability throughout the semiconductor industry. In addition to the strong brand image of our existing products and services, we have also been successful in helping
customers cut back on the volume of water used, through ourreclaim systems for water employed in the cleansing process.
The need for water conservation has become particularly acutein recent years as a result of the increasing size of the glass substrates. Moreover, we have carved out an established place forourselves in the East Asian market for ultrapure water production systems for LCD manufacturers.
Production of large-screen FPDs is projected to expand
further in the foreseeable future, and we aim to expand ourbusiness operations across the East Asian region by offeringsolutions that precisely meet our customers’ needs for largevolume ultrapure water supply to match the growing scale oftheir manufacturing equipment, as well as their water conservation requirements.

Response to Growth in East Asian Market for
FPDs
Demand for flat-panel display (FPD) television models, both of
the LCD screen and plasma display panel type, is growing at afast pace all over the world, and the average screen size is also
increasing rapidly. East Asia, particularly Japan, Taiwan, andSouth Korea, account for almost all global FPD production, andmanufacturers are maintaining high levels of investment on FPD
production facilities. In pursuit of greater production efficiency,“mother glass” substrates (the thin sheets of glass from which
LCD screens are cut) are becoming larger, in line with which
demand for ultrapure water for the cleansing process is growing year by year.
Kurita has an extensive record of deliveries of ultrapure
water production systems for large-scale semiconductor manufacturing plants in Japan. Our systems, capable of supplying
ultrapure water in very large volumes, have an excellent

10

Global Demand Projections for FPD-TV(Thousands)

35,00031,60030,00025,00023,80020,00017,30015,00012,00010,000

7,900

5,000

3,776
734

1,633

0
2001

2002

2003

2004

2005

2006

2007

2008

Source:Japan Electronics and Information Technology Association(JEITA)Constructing a comprehensive operational system in China
Kurita is now stepping up the pace of its operational expansion
in China, where fast market growth in the water treatment business is anticipated. Recently, non-Chinese companies – not only
Japanese and other East Asian companies, but also Europeanand American companies – have been setting up production
ventures in a wide variety of industrial sectors. In line with thesedevelopments, demand for water treatment chemicals andfacilities is growing strongly. At Kurita, we have worked hardover the past few years to build a production and delivery system capable of exploiting this demand, and we expect ourefforts to bear fruit over the coming years.
In May 1995 we established Kurita Water Industries(Dalian) Co., Ltd. as our local subsidiary in northeast China forthe production and sale of water treatment chemicals. This wasfollowed in December 2001 by the founding in Shanghai of
Kuritec (Shanghai) Co., Ltd., which conducts maintenance services on water treatment facilities. Through these two subsidiaries, we have been catering to the water-related needs ofcustomers in various industries, including paper manufacturing,
petrochemicals, steelmaking, vehicles, and electronics. Ourlatest such development in China was the establishment, in May
of this year, of Kurita Water Industries (Suzhou) Ltd. This subsidiary is a manufacturer of water treatment facilities, and ischarged with the role of improving the Kurita Group’s supplyof high-quality water treatment facilities in China in terms ofdelivery speed and cost-competitiveness. Thus, the Group now
has a comprehensive system in place in China encompassing
the production of water treatment chemicals, the manufactureof water treatment facilities, and maintenance services.
Kurita plans to fully leverage its comprehensive capabilities to provide a wide range of users in China with optimal solutions to their water treatment needs, offering unbeatablesatisfaction to maintain solid customer loyalty.

Kurita’s business development in China
1974

Received order for water treatment facilities for Wuhan Iron and Steel

1978

Established China Section to deal with large-scale projects

1979

Dispatched mission to China to exchange technical expertise
Installed wastewater treatment facilities at Wuhan Iron and Steel
Received orders for pure water production facilities from five industrial complexes(in Beijing, Shanghai, Nanjing, and Shengli)

1980

Received order for water production/waste water treatment facilities from Baoshan
Iron & Steel in Shanghai

1985

Received order for water treatment chemicals from Baoshan Iron & SteelFirst blast furnace of Baoshan Iron & Steel started up, together with our water treatment facilities

1995

Established Kurita Water Industries (Dalian) Co., Ltd.

2001

Established Kuritec (Shanghai) Co., Ltd.

2004

Established Kurita Water Industries (Suzhou) Ltd.

11

Powerful Advance 2005

Our Technological Strengths
The Kurita Group has been engaged in the development of water treatment technologies since its
establishment. We also focus on environmental protection technologies, and are making efforts tomeet a variety of needs that have arisen as a result of changes in industry and society.

Our R&D system, and details of research anddevelopment
Research and development activities at the Kurita Group are
conducted principally by the parent company’s Research andDevelopment Division, as well as by the technical development
departments of each operating division. Approximately 200
employees are involved in R&D, accounting for about 6% of
total Group staff.
In the field of water treatment chemicals, we are continuing to develop chemicals that meet customer needs for energy and resource conservation, as well as cost-cutting. We also
put effort into developing new environment-friendly materials
and non-chemical methods of water treatment, all with the aimof reducing the environmental impact of water treatment. We
also develop technologies that facilitate the maintenance ofwater treatment facilities to provide comprehensive water treatment management services on a contract basis.
During the business term ended March 2004, we recorded the following main achievements in the field of water treatment chemicals.
• We developed a chemical for boiler water that is highly
effective in lowering the oxygen content of the water in boilers: it is also safer than products already in use.
• We developed a long-lasting chemical that prevents therelease of odors from sludge or slurry, including dehydrated
sludge (cake), as well as a control system for the applicationof the chemical.
• We developed a chemical that is highly effective in breaking
down and rendering non-toxic the dioxins contained in incinerator fly ash.
In the water treatment facilities field, we continued todevelop technologies that anticipate environmental regulations
by addressing issues relating to environmental preservation. At
the same time, we developed technologies that respond to thegrowing need for the infrastructure of a sustainable society,such as methods of reclaiming and reusing wastewater, and of

12

reducing sludge volume for final disposal.
The following achievements were recorded in the term
ended March 2004 in R&D in the water treatment facilities field.
• We developed a new denitrification system utilizing microorganisms, which enables major reductions in initial investment
and operating costs compared with conventional methods.
• We developed a special “functional water” production system
for use by the electronics industry in the cleansing process.
The system both reduces costs and lowers the environmental impact, and allows centralized control of operations at multiple locations in one factory.
• We developed an on-site groundwater remediation methodthat lowers the concentration of heavy metals in groundwater to below the limits set under environmental regulations.

R&D Expenses / Ratio of R&D Expenses to Sales(Millions of yen / %)
5

6,000
5,164

5,071
4,743

4,800

4,484
3.9

4
4,290

3.6
3,600

3

3.2

3.1

2.9

2,400

2

1,200

1

0

0
2000

2001

2002

2003

2004

Business and Technology Development CenterIn addition to ultrapure water production and control
technology, the staff of the Center pursue the further
development of technologies in the fields of industrial waste
detoxification, waste volume reduction, and recycling / reuse,with the aim of creating commercially viable new businesses.

Analytical technology
The density of system LSIs continues to increase in response to
demand from makers of digital electronic consumer appliances, which is constantly becoming more sophisticated. In linewith this, LSI manufacturers require ever-higher levels of purity in the water-treatment systems they employ, to ensure stable
operation and higher productivity. Kurita is being forced torespond to increasingly precise technical specifications. We areapplying our proprietary advanced technology for fast andaccurate analysis of ultrapure water quality to meet customers’
needs. We also possess technological know-how in the analysis of silicon wafers and LCD substrates. This comprehensive
array of technologies allows us to offer diagnoses of ultrapure
water production systems that can pinpoint problems in thecleansing process for wafers and substrates, leading to more
rapid completion of ultrapure water production system solutions that fully satisfy our customer’s requirements.

filling stations have sufficient space to install hydrogen production and compression facilities.) The production of hydrogen is accomplished by the alkaline electrolysis method, using
only ordinary tap water and electricity. This is the first case inwhich a truck-mounted hydrogen production and fueling station has been combined with an existing commercial LPG filling station. The practical commercialization of this process
would open the way to the installation of hydrogen fueling stations all across the country, utilizing existing LPG filling stations.
Its development is therefore a significant step forward in realizing a full-scale network of hydrogen fueling stations.

Moving into new businesses: Kurita begins operation of JHFC hydrogen fueling station
Kurita is the only company engaging in water electrolysis toparticipate in the Japan Hydrogen & Fuel Cell Demonstration
Project (JHFC) sponsored by the Ministry of Economy, Tradeand Industry, which started in the reporting term. In May 2004,
at Sagamihara in Kanagawa Prefecture, adjacent to Tokyo, in ajoint project with Sinanen Co., Ltd. and Itochu Enex Co., Ltd.,
we constructed a hydrogen fueling station at an existing LPG
filling station.
This hydrogen fueling station consists of a hydrogen production facilities, in addition to storage facilities and dispensing
equipment. Its distinguishing feature is that the hydrogen production and compression facilities are mounted on a truck,
which can make the rounds of a number of fueling stations,eliminating the need to install them at each location. (Few LPG

The JHFC station at Sagamihara, near Tokyo, is theworld’s first hydrogen fueling station utilizing mobile(truck-mounted) hydrogen production and compression
facilities on the same site as an existing commercial LPG
filling station.

The hydrogen production and compression
facilities are mounted on a truck

13

Corporate Governance
Kurita Water Industries Ltd. seeks to build an organization capable of rapid and precise decision-making that
embodies our corporate philosophy of “study the properties of water, master them, and we will create anenvironment in which nature and man are in harmony,” and that will continuously increase its enterprise value.
To improve transparency for society, the Company also actively discloses corporate information in a timely manner.
At the 2001 general shareholders’ meeting, the Company reduced the number of directors from 21 to
15 currently, with an eye to speeding up its decision-making process. One of these directors is an outside
director as prescribed by Article 188, Paragraph 2-7-2 of the Commercial Code.
To improve its auditing system, in addition to adopting an auditor system and taking steps to ensure
appropriate audits, the Company increased the number of auditors to four following the 1994 general shareholders’ meeting, in order to further expand and enhance audits. Two of the auditors are outside auditors
as stipulated by Article 18, Paragraph 1 of the Law Concerning Special Exceptions to the Commercial Code
Concerning Audits of Incorporated Companies, and one is also an attorney.
The Company also has positioned actions related to achieving compliance management as an important management issue. In addition to past activities by the Compliance Committee, since September 2003,
Kurita Water Industries Ltd. has been working to expand the activities of the Group Compliance Committee
and achieve compliance management for the group as a whole. The Kurita Group does not regard compliance as merely respect for the law, but practices compliance activities as wide-ranging, fundamental ethicalbehavior based on the five objectives of fairness, transparency, sincerity, safety and a harmonious relationship with society, in accordance with the Ethical Standard drawn up in the term ended March 2003.
In the years ahead, the Company will seek to harmonize its business activities with nature and society,and continue its efforts to build an appropriate corporate governance organization.

Board of Directors and Corporate Auditors (As of June29, 2004)
President

Directors

Corporate Auditors

Hiroshi Fujino

Toshiyuki Hisamatsu

Tohru Ishizaka

Kazuyoshi Yoshitomi

Chiaki Kuzuu

Tohru Kawachi

Masahiko Kurita

Toshiaki Deguchi

Kazuma Yura

Executive Senior Managing Director

Toyoaki Inoue

Kazufumi Moriuchi
Yoshinobu Watanabe
Managing Directors

Sumio Miyake
Takuo Ishida
Hiroshi Nakamura
Hiroshi Saitou

14

Mitsuru Ogawa
Norio Takahashi
Toru Matsushima

Selected Financial Data
Kurita Water Industries Ltd. and Consolidated Subsidiaries
Years ended March 31

Millions of yen

2004

2003

2002

2001

2000

1999

For the year:
Net sales............................................................... ¥146,819 ¥141,628 ¥142,678 ¥153,435 ¥130,998 ¥146,754
Cost of sales ......................................................... 101,433
97,84699,039 105,587
88,174 101,366
Selling, general and administrative expenses ......
31,89531,47432,84832,03031,61930,179Operating income ................................................
13,49012,307
10,79015,817
11,203
15,209
Income before income taxes ...............................
14,918
10,2639,121
14,727
8,615
15,580Net income ..........................................................
8,444
5,476
5,670
8,366
4,648
7,567
Capital expenditures* ..........................................
8,330
5,593
3,268
2,714
1,968
6,642
R&D expenses .....................................................
4,290
4,484
5,071
4,743
5,164
5,178
Depreciation ........................................................
3,295
3,030
3,132
2,946
3,167
3,055
At year-end:
Current assets ......................................................
Current liabilities .................................................
Total shareholders’ equity ...................................
Total assets ..........................................................

118,923
42,954
128,676
183,620

107,180
38,643
120,969
173,689

103,490
36,585
122,590
172,145

115,263
51,625
119,209
183,175

111,017
41,633
113,383
165,297

112,576
49,340108,051
165,775

Amounts per share of common stock (Yen):
Net income per share ..........................................
Shareholders’ equity per share ............................
Dividends per share (parent company) ...............

64.6
999.7
16.0

40.7
939.8
16.0

42.9
926.5
16.0

63.2
900.8
16.0

35.1
856.8
17.0

57.1
816.5
16.0

Ratios:Return on assets (%) ............................................
Return on sales (%) ..............................................
Total assets turnover (times) ...............................
Shareholders’ equity ratio (%)..............................
Return on equity (%)............................................

4.7
5.8
0.8
70.1
6.8

3.2
3.9
0.8
69.6
4.5

3.2
4.0
0.8
71.2
4.7

4.8
5.5
0.9
65.1
7.2

2.8
3.5
0.8
68.6
4.2

4.6
5.2
0.9
65.2
7.2

*Excluding intangibles

15Management Discussion and Analysis (Consolidated)
Operating Environment

increase of ¥4,311 million. The main factor behind thisincrease was a rise of ¥2,627 million in notes and accounts
payable, trade, which resulted from a jump in purchasing
prompted by the increase in production. The net result of
these developments was that the current ratio remained
above 270%, as it had been in the previous year, a levelindicating a favorable situation in terms of asset liquidity
and safety.
Among non-current assets and liabilities, on the asset
side, noteworthy movements were a ¥3,361 million increase inproperty, plant and equipment and a decline of ¥5,860 million
in investments and long-term receivables. The main reason for
the increase in machinery and equipment was investment inassets for use in the ultrapure water supply business. Thisbusiness entails the installation of water treatment facilities oncustomers’ factory site to supply them with ultrapure water, andthis increase in machinery and equipment arose because theconstruction funds for the water treatment facilities are provided by Kurita. The fall in investments and long-term receivables
was mainly attributable to a decline of ¥4,069 million in investments in securities. Some of them were sold off in line with ourpolicy of reducing cross-shareholdings with banks, and others
were reclassified under marketable securities. In addition, withan increase in the unrealized gains on other securities, deferred
tax assets fell by ¥1,930 million. As a result of these movements,
non-current assets declined by ¥1,811 million from the previous
year-end, to ¥64,697 million. Long-term liabilities fell by ¥2,162
million, to ¥10,958 million, primarily because of a decrease inallowances for retirement benefits.
Shareholders’ equity increased by ¥7,707 million fromthe end of the previous year, to ¥128,676 million. This resulted
from a profit increase that led to a rise of ¥6,543 million inretained earnings and an increase of ¥1,733 million in

The market environment for the Kurita Group was marked byan increase in demand for semiconductors and flat panel displays (FPDs) from manufacturers in the electronics sector.
Accordingly, this was accompanied by brisk demand in the fieldof water treatment, owing to the overall robust pace of capital
investment on both the domestic and overseas markets – primarily Korea, Taiwan, and China. Demand in the field of water
treatment, however, was lackluster from customers in otherindustries such as food, pharmaceuticals, vehicles, steel, andelectric power. The situation as a whole thus remained difficult.
Public-sector demand also remained sluggish, as the tight situation in public finances constrained investment by both by thecentral and local governments in Japan.

Liquidity and Capital Resources
Financial Position
Total assets at March 31, 2004, stood at ¥183,620 million,
representing an increase of ¥9,931 million, or 5.7%, fromthe previous year-end. With respect to current assets andliabilities, the component of current assets that showed themost noteworthy rise was notes and accounts receivable,
trade, which increased by ¥6,984 million. The principal reason for this was that the posting of the sales of the water
treatment facilities business was concentrated at the fiscal
year-end. The increase of ¥3,674 million in cash resulted
from the inflow of proceeds from the sale of investment
securities. Current assets totaled ¥118,923 million, up by¥11,743 million from the previous year-end, while current
liabilities stood at ¥42,954 million, representing a year-on-year

Current Ratio

Shareholders’ Equity Ratio

Total Assets Turnover

%
300
282.9

266.7

240

277.4

%

Times

100

1.0

80

0.8

276.9

0.90
0.84
0.79

228.2

71.2

68.6

69.6

60

120

40

0.4

60

20

0.2

1999

2000

2001

2002

2003

2004

0

65.2

1999

2001

0.82

0.82

2002

2003

2004

0.6

65.1

2000

0.80

70.1

180

0

16

223.3

2002

2003

2004

0

1999

2000

2001

equivalents at the end of the fiscal year stood at ¥35,137 million,
representing an increase of ¥3,630 million from the previous fiscal year-end.
Free cash flow (net cash provided by operating activities
minus net cash used in investing activities) increased by ¥2,025
million year-on-year, to ¥5,428 million.

unrealized gains on other securities as a result of the recovery
in share prices. Among factors causing declines, the most significant was the expansion of the foreign currency translation
adjustment resulting from the appreciation of the yen up to theend of the fiscal year. In consequence, the shareholders’ equity ratio rose from 69.6% to 70.1%, while the total assets turnoverratio remained at around its year-earlier level, at 0.82 times.
Both return on assets and return on equity recorded improvements, the former up by 1.5 points to 4.7%, and the latter risingby 2.3 points, to 6.8%.
Cash FlowsNet cash provided by operating activities decreased by ¥4,828
million from the ¥10,402 million provided in the previous fiscal
year, to ¥5,574 million. The principal components of this wereincome before income taxes of ¥14,918 million, depreciation
and amortization charges totaling ¥3,872 million, and anincrease of ¥2,995 million in trade payables. Other major components were an increase in trade receivables of ¥6,793 million
resulting from the increase in sales at the year-end, and payments of income taxes of ¥5,829 million.
Net cash used in investing activities decreased by ¥6,853
million from the ¥6,999 million used in the previous year,
leaving a net outflow of ¥146 million. The principal factors inthis were the payment of ¥8,364 million for the purchase ofproperty, plant and equipment, and income (income fromsales, etc., net of purchase expenditure) of ¥8,275 million fromsales, primarily of securities and investment securities.
Net cash used in financing activities declined from ¥6,270
million in the previous year, to ¥1,720 million. This was attributable principally to a decrease of ¥4,054 million in the net amount
expended for the purchase of the Company’s own shares.
As a net result of the above, the balance of cash and cash

Return on Assets / Return on Equity

Cash Flows%10

Cash and Cash Equivalents at Term-End¥ Million¥ Million
40,00012,00010,40235,1378,713
832,0008,000

31,03533,24031,56932,98031,507

5,574
6

4

7.2

7.2

4.6

4.8

3.2

2.8

2

4.7

4.2

4.5

6.8

4,000

4.7

0

3.2

24,00016,000(146)
8,000(5,334)

0

1999

2000

(1,720)(2,169)-4,0002001

Return on Assets

2002

2003

Return on Equity

2004-8,0002002(6,270)(6,999)

2003

0

2004

1999

2000

2001

2002

2003

2004

Net Cash Provided by Operating Activities
Net Cash Used in Investing Activities
Net Cash Used in Financing Activities

17

recycling centers. As a result, sales rose by 5.1% from the previous year, reaching ¥99,377 million, and orders rose by a substantial 24.7%, to ¥102,218 million.

Results of Operations
Net Sales and Orders Received
Net sales in the fiscal year ended March 31, 2004, rose by 3.7%
from the previous year, to ¥146,819 million, and orders received
jumped by 16.6%, to ¥149,735 million. The prime cause of thissales growth was the increase in the water treatment facilities
business catering to the domestic electronics industries.
By segment, in the water treatment chemicals business
Kurita placed emphasis on such areas as enhancing its productdevelopment capabilities and marketing more closely attuned
to the characteristics of customers and of local regions, and also
on proactive marketing that enabled it to assist customers toresolve issues that were confronting them.
Sales of mainstay products such as boiler and coolingwater treatment chemicals faltered as a result of unfavorable
seasonal factors in the form of cool summer weather and mild
winter weather. In contrast, there was favorable growth insales of process treatment chemicals for the pulp and paperindustry, chemicals for incinerators, and in revenues from theblanket contracts for water treatment management services. As
a result, sales grew by 0.7% year-on-year, to ¥47,442 million,
and orders were up by 2.3%, to ¥47,516 million.
In the water treatment facilities business there were
declines in sales of facilities for the food, pharmaceuticals,
basic materials, and automotive industry, but there was anincrease in sales of ultrapure water production systems to theelectronics industry, buoyed by growth in demand for FPDs andsemiconductors. Sales to the public sector declined as a resultof the reduction of spending on public works resulting from thecutting of budgets by both the national government and local
governments. Nevertheless, the order volume increased
because the Company was successful in securing orders forlarge-scale renewals and new projects in the market for sludge

Ratio of Operating Income to Sales

Earnings
Accompanying the sales growth, gross profit increased by 3.7%
from the previous year, to ¥45,386 million. The gross profit ratio
was 30.9%, which was the same level as in the previous year.
This was achieved because Kurita was able to cut costs sufficiently to offset a fall in the unit sales price, which resulted fromfactors such as stepped-up efforts by customers to cut costs andincreasingly fierce competition. The cost-cutting was achievedin the water treatment chemicals business primarily in thesphere of procurement and through a more efficient distribution
system, and in the water treatment facilities business it wasachieved primarily by standardization at the manufacturing
stage.
Operating income rose by 9.6% year-on-year, to ¥13,490
million. This was attributable principally to both the growth insales and the reduction in personnel costs. In the latter case,although the number of personnel on a consolidated basis
increased, leading to higher payments for salaries andallowances, in the area of retirement benefit costs, there was a
decline in the amount of charge-offs of actuarial differences
accompanying an increase in the valuation gain on the market
value of pension assets. The ratio of selling, general and administrative expenses to sales fell by 0.5 of a point from a year earlier, to 21.7%, mainly because of the decline in personnel
costs, and the operating income ratio rose by 0.5 of a point, to
9.2%.
On a segment basis the operating income ratio in thewater treatment chemicals business rose by 0.2 of a point yearon-year, to 14.0%, remaining the core factor underpinning theCompany’s earnings. In the water treatment facilities business,

Earnings per Share

Return on Sales
%

%
10

100

12

8

80

6

60

9

10.4

10.3
8.7

8.6

9.2

6

40

4
4.0

3.5
3

0

2000

2001

2002

2003

2004

0

42.9

40.7

2002

2003

35.1

3.9
20

2

1999

64.6

63.2

57.1

5.8

5.5

5.2

7.6

18

¥

15

0

1999

2000

2001

2002

2003

2004

1999

2000

2001

2004

meanwhile, the ratio improved from 6.0% to 6.9%, and theamount of operating income exceeded that from the water
treatment chemicals business.
Net other income came to ¥1,428 million, compared with
net other expenses of ¥2,043 million for the previous year.
Income before income taxes increased ¥4,655 million to ¥14,918
million, and net income rose ¥2,968 million to ¥8,444 million.
This was attributable primarily to the fact that although income
taxes (under tax-effect accounting) increased by ¥1,672 million,
Kurita posted a gain on the sale of investment securities. The
non-repetition of a ¥1,162 million amortization of the unrecognized effect of the change in accounting standards for
employees’ retirement benefits in the previous year also contributed to the increase in income. As a result of these factors,
net income for the year rose 54.2% over the previous year. The
return on sales (ratio of net income to sales) was 5.8%, andearnings per share came to ¥64.57.

OutlookThe market environment for the Kurita Group will continue togive little cause for optimism. Nevertheless, the Group will continue to expand its range of activities and boost earnings by further enhancing its cost competitiveness and by utilizing a new
business model that encompasses outsourcing business and aproactive approach that offers solutions for customer issues.
In the water treatment chemicals business, Japanese companies are expected to continue investing in China in suchindustries as automotive, steel, and paper and pulp, but it islikely that customers’ plants will maintain their downward
pressure on costs and that fierce competition will persist.
Against this backdrop, in the domestic market the Kurita Groupwill implement measures to strengthen its sales network and to
adopt a proactive approach to offering solutions through collaboration with the maintenance division of the water treatment
facilities business. In China, it will aim to expand its scope ofbusiness and market share by developing full-fledged operations. In Europe it will make full use of the expertise in oilprocess treatment chemicals newly acquired by its subsidiary
Kurita Europe GmbH to expand its scope of business.
In the water treatment facilities business, in the private sector the electronics industries are expected to continue robust
capital investment within Japan in such fields as semiconductors and FPDs. Overseas, forecasts indicate that investment in
the expansion of liquid crystal display (LCD) plant will be maintained, particularly in Korea and Taiwan, and that there will be
an increase in investment in the fields of semiconductors andelectronic components in China. Given these circumstances,
Kurita will devote efforts to securing orders through a proactive
marketing approach proposing products and services in which
the Kurita Group has demonstrable superiority, such as in theultrapure water supply business.

In the fields of food, pharmaceuticals, basic materials,
automotives, and electric power, the market environment is
expected to remain generally severe, but Kurita will devote itself
to securing orders and generating earnings through a range ofmeasures. These will include the cultivation of attractive markets by such means as proactive steps by the Eco-Solution
Group to assist customers in cutting costs and reducing theiradverse impact on the environment, and the enhancement ofcost competitiveness through product standardization. In thefield of soil and groundwater remediation, through joint operations with a subsidiary, the Company will provide a new service addressing soil pollution risk, while other approaches will
include the development of highly competitive soil and groundwater remediation technologies.
In the public sector, market conditions are forecast to
remain severe, characterized by the ongoing reduction of public investment. Kurita will devote efforts to winning business bysuch means as securing orders for the rebuilding of humanwaste treatment facilities, drinking water purification using
membrane technology, and the sale of sludge reduction facilities employing ozone.
In the field of maintenance services, the Company’s
approach to expanding orders will focus on continuing promotion of contract services such as facility operation and management services and annual-based blanket contracts.
For the current fiscal year, ending March 31, 2005, theCompany is projecting consolidated net sales of ¥161,800 million, orders totaling ¥168,000 million, and net income of ¥10,000
million.

19

The water treatment facilities business is oriented towards
meeting the needs of customers when they engage in capital
investment for the new construction of plants or the expansion
or renewal of production capacity. In view of this, this businessis very sensitive to macroeconomic developments and trends incapital investment among major customers in such fields aselectronics, food, pharmaceuticals, basic materials, and automotives. In addition, public-sector demand for this business isprincipally for public works by local governments, and therefore demand fluctuates in accordance with the state of thefinances and the budgetary practices of those local
governments.

Risk Factors
Risks stemming from the basic nature of the business of theKurita Group- The Kurita Group’s business performance is closely linked
with the operating ratios at customers’ plants.
The Group’s principal business is the provision of products, technologies, and maintenance services relating to water
treatment. Since these are linked very closely with the operating ratios at its customers’ plants, which are principally in the
manufacturing sector, a characteristic of the Group’s business isthat its performance is significantly affected by the state ofoperations and earnings of its customers.

-Net sales and income will be weighted towards the second halfof the fiscal year.
Net sales and operating income will be weighted disproportionately towards the second half of the fiscal year. This willreflect revenue accounting based on work-in-progress standards
and the completion of large-scale projects, centered on public
sector demand in the Group’s water treatment facilities business, which are concentrated near the end of the fiscal year
(March).
Operating results, on a consolidated basis, for the last four
fiscal years, are shown in the table below.

- In water treatment chemicals business, demand fluctuates inaccordance with plant operating ratios.
In the water treatment chemicals business, the supply of
consumable supplies is fundamental, and demand fluctuates inaccordance with the operating ratios at the plants of the Group’s
major customers in such industries as steel, oil, and paper &pulp. However, given a certain level of operations by customers, this business can generate relatively stable earnings.
- The water treatment facilities business is affected by economic
trends and trends in capital investment among major
customers.

From April 1, 2000
To March 31, 2001
First
Second
half
half
Total

Million yen
From April 1, 2001
From April 1, 2002
To March 31, 2002
To March 31, 2003
First
SecondFirst
Second
half
half
Total
half
half
Total

From April 1, 2003
To March 31, 2004
First
Second
half
half
Total

Water treatment chemicals ..........

22,67423,03545,70923,696

22,581

46,277

23,21423,902

47,116

23,64523,797

Percentage of full year (%)......

49.6

50.4

100.0

51.2

48.8

100.0

49.3

50.7

100.0

49.8

50.2

100.0

Water treatment facilities .............

47,69660,029107,725

45,821

50,58096,401

38,52055,992

94,51240,93658,441

99,377

Consolidated net sales
47,442

Percentage of full year (%)......

44.3

55.7

100.0

47.5

52.5

100.0

40.8

59.2

100.0

41.2

58.8

100.0

Total..............................................

70,371

83,064

153,435

69,517

73,161

142,678

61,734

79,894

141,628

64,581

82,238146,819

Percentage of full year (%)......

45.9

54.1

100.0

48.7

51.3

100.0

43.6

56.4

100.0

44.0

56.0

100.0

Water treatment chemicals ..........

3,543

3,080

6,623

3,673

2,571

6,244

3,609

2,884

6,493

3,273

3,367

6,640

Percentage of full year (%)......

53.5

46.5

100.0

58.8

41.2

100.0

55.6

44.4

100.0

49.3

50.7

100.0

Water treatment facilities .............

3,476

5,719

9,195

2,312

2,225

4,537

721

5,009

5,730

843

6,002

6,845

Percentage of full year (%)......

37.8

62.2

100.0

51.0

49.0

100.0

12.6

87.4

100.0

12.3

87.7

100.0

Consolidated operating income

20

Eliminations and corporate .........

(12)

10

(2)

3

5

8

8

74

82

106

(101)

5

Total..............................................

7,008

8,809

15,817

5,989

4,801

10,790

4,339

7,968

12,307

4,223

9,267

13,490100.0

Percentage of full year (%)......

44.3

55.7

100.0

55.5

44.5

100.0

35.3

64.7

100.0

31.3

68.7

Consolidated net income.........

3,752

4,614

8,366

2,832

2,838

5,670

2,173

3,303

5,476

2,414

6,030

8,444

Percentage of full year (%)......

44.8

55.2

100.0

49.9

50.1

100.0

39.7

60.3

100.0

28.6

71.4

100.0

Consolidated Statements of Income
Kurita Water Industries Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2004, 2003 and 2002
Thousands of
U.S. dollars(Note 1)Millions of yen

2004
Net sales................................................................................... ¥146,819
Cost of sales ............................................................................ 101,433
Gross profit.........................................................................
45,386
Selling, general and administrative expenses (Note 6) ..........
31,895
Operating income ..............................................................
13,490
Other income (expenses):
Interest and dividend income...............................................
409
Interest expenses...................................................................
(27)
Gain on sale of investments in securities ............................
1,414
Gain on sale of an affiliated company’s stock ...................
—
Equity in earnings of unconsolidated subsidiaries
and affiliates ........................................................................
208
Loss on write-down of investment in securities ..................
—
Loss on write-down of properties ........................................
(499)
Amortization of unrecognized effect of change inaccounting for employees’ retirement benefits .................
—
Foreign exchange (losses) gains ..........................................
(151)
Other, net...............................................................................
74
1,428
Income before income taxes ...............................................
Income taxes (Note 11):
Current ...................................................................................
Deferred .................................................................................
Minority interests in earningsof consolidated subsidiaries..............................................
Net income .............................................................................. ¥2003¥141,628
97,84643,781
31,474
12,307

2002¥142,678
99,03943,63932,848
10,7902004$1,389,147
959,721429,425
301,778
127,637

416
(17)
—
—

453
(35)
—
932

3,869
(255)
13,378
—

143
(822)
—

198
(1,986)—

1,968—(4,721)(1,162)(214)(385)(2,043)(1,162)
107(177)(1,670)—(1,428)700
13,511

14,918

10,263

9,121

141,148

6,089
257
6,347

4,957
(283)
4,674

4,630
(1,229)3,401

57,611
2,431
60,052

126
8,444

112
5,476

49
5,670

1,192
79,894¥¥

U.S. dollars(Note 1)Yen

Per share of common stock:
Net income ............................................................................
Cash dividends applicable to the year ................................

$

2004

2003

2002

2004

¥64.5716.00¥40.6716.00¥42.85
16.00

$0.61
0.15

The accompanying notes are an integral part of these statements.

21

Consolidated Balance Sheets
Kurita Water Industries Ltd. and Consolidated Subsidiaries
At March 31, 2004 and 2003

Millions of yen

Assets2004
Current assets:
Cash (Note 7) .............................................................................................. ¥ 35,512
Notes and accounts receivable, trade ........................................................
66,681
Allowance for doubtful accounts ...............................................................
(140)
Marketable securities (Note 8)....................................................................
6,720
Inventories (Note 9) ....................................................................................
6,713
Deferred tax assets (Note 11) .....................................................................
2,070
Other current assets ....................................................................................
1,365
Total current assets . ................................................................................ 118,923

2003

2004

¥ 31,838
59,697
(169)
6,615
6,301
1,806
1,090
107,180$ 336,001
630,911(1,324)63,582
63,515
19,585
12,915
1,125,205

Investments and long-term receivables:
Investments in securities (Note 8)..............................................................
Investments in unconsolidated subsidiaries and affiliates .......................
Deferred tax assets (Note 11) ....................................................................
Deferred tax assets on revaluation of land................................................
Long-term loans .........................................................................................
Other investments .......................................................................................
Allowance for doubtful accounts ..............................................................
Total investments and long-term receivables ........................................

13,253
2,025
2,121
176
—
2,242
(141)
19,67817,322
1,902
4,051
—
116
2,186
(40)
25,538125,395
19,15920,068
1,665—
21,212(1,334)
186,186

Property, plant and equipment, at cost:
Land (Note 5) ..............................................................................................
Buildings and structures ............................................................................
Machinery and equipment .........................................................................
Construction in progress ............................................................................

14,34630,37215,011539

15,024
28,772
10,4701,604

135,736
287,368
142,028
5,099

Other facilities ............................................................................................
Total ............................................................................................................
Accumulated depreciation .........................................................................
Property, plant and equipment, net ......................................................

10,14370,411(28,741)
41,671

11,124
66,994(28,684)
38,31095,969666,203(271,936)
394,275

Other assets ..................................................................................................
3,347
Total assets ....................................................................................... ¥183,620

2,659¥173,689

31,668$1,737,345

The accompanying notes are an integral part of these statements.

22

Thousands of
U.S. dollars(Note 1)

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and shareholders’ equity
2004
Current liabilities:
Current portion of long-term borrowings (Note 10) .................................. ¥48
Notes and accounts payable, trade ............................................................. 26,888
Income taxes payable ..................................................................................
3,593
Advances received ......................................................................................
1,373
Accrued employees’ bonuses .....................................................................
2,173
Allowance for product warranty ................................................................
1,028
Other current liabilities ...............................................................................
7,847
Total current liabilities ............................................................................. 42,954
Long-term liabilities:
Long-term borrowings (Note 10) ...............................................................
Accrued employees’ retirement benefits (Note 12) ...................................
Accrued retirement benefits for directors and corporate auditors ............
Deferred tax liabilities on revaluation of land............................................
Other long-term liabilities ............................................................................
Total long-term liabilities..........................................................................
Total liabilities.....................................................................................

2003
¥

7
24,261
3,335
966
2,154
848
7,067
38,643

2004$

454
254,404
33,995
12,99020,5609,726
74,245
406,414

349
9,149
658
—
800
10,95853,91240
11,469813
13
783
13,12051,763

3,302
86,564
6,225
—
7,569
103,680
510,095

Minority interests in consolidated subsidiaries .....................................
1,031
Contingent liabilities (Note 15)
Shareholders’ equity:
Common stock, 2004 and 2003
Authorized: 531,000,000 shares
Issued: 2004—132,800,256 shares
2003—132,800,256 shares ............................................................ 13,450
Additional paid-in capital............................................................................. 11,398
Retained earnings (Notes 4 and 16) ............................................................ 108,180
Unrealized losses (gains) on revaluation of land (Note 5) ........................
(257)
Unrealized holding gains (losses) on other securities ...............................
1,625

956

9,754

13,450
11,398
101,63720(108)

127,258
107,843
1,023,559(2,431)
15,375(829)
133,567(543)
125,854(7,843)
1,263,761

Treasury stock, at cost:
2004—4,217,542 shares, 2003—4,213,867 shares....................................
(4,890)Total shareholders’ equity ........................................................................ 128,676
Total liabilities and shareholders’ equity........................................... ¥183,620(4,885)
120,969¥173,689(46,267)
1,217,485$1,737,345

Foreign currency translation adjustment.....................................................

23

Consolidated Statements of Shareholders’ Equity
Kurita Water Industries Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2004, 2003 and 2002
Thousands of
U.S. dollars(Note 1)Millions of yen

2004

2003

2002

2004

Common stock:
Beginning of the year ......................................................... ¥ 13,450
End of the year .....................................................................
13,450¥ 13,450
13,450¥13,450
13,450$ 127,258
127,258

Additional paid-in capital:
Beginning of the year .......................................................... ¥ 11,398
End of the year ......................................................................
11,398¥ 11,398
11,398¥11,398
11,398$ 107,843
107,843¥ 98,804
5,476¥95,4445,670$ 961,652
79,894—(2,117)(120)—(2,117)
(164)

2,630
(19,472)(1,116)(336)(69)¥101,637—(27)¥98,804—(28)$1,023,559

Retained earnings:
Beginning of the year............................................................ ¥101,637
Net income for the year ........................................................
8,444
Increase due to reversal of unrealized gains onrevaluation of land (Note 5)...............................................
278
Cash dividends paid ..............................................................
(2,058)Bonuses to directors and corporate auditors.......................
(118)
Decrease due to change in scope of consolidation (net ofinclusion and exclusion of consolidated subsidiaries) .....
—
Other ......................................................................................
(3)
End of the year ...................................................................... ¥108,180
The accompanying notes are an integral part of these statements.

24Consolidated Statements of Cash Flows
Kurita Water Industries Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2004, 2003 and 2002
Thousands of
U.S. dollars(Note 1)Millions of yen

2004

2003

2002

2004

¥14,918
3,872(2,317)(1,414)
(208)
(409)
27
(118)

¥10,263
3,208
592
824
(143)
(417)
17
(120)

¥ 9,121
3,409
828
1,053
(198)
(454)
35
(165)

$141,148
36,635(21,922)(13,378)(1,968)(3,869)255(1,116)

510

(222)

(252)

4,825

Interest and dividends received ...........................................
Interest paid...........................................................................
Income taxes paid .................................................................
Others, net ............................................................................
Net cash provided by operating activities ........................

(6,793)
(442)
2,995
308
10,927482(27)(5,829)20
5,574(4,784)
1,369
1,771
(327)
12,028609(17)(2,058)(160)
10,402

10,8802,537(8,854)(270)
17,669506(35)(9,490)64
8,713(64,272)(4,182)28,337
2,914
103,387
4,560(255)(55,151)
189
52,739II. Cash flows from investing activities:(Increase) decrease in time deposits, net ............................
Payments for purchase of property, plant and equipment......
Proceeds from sales of property, plant and equipment......
Payments for purchase of marketable securities and investment in securities .....
Proceeds from sales of marketable securities and investment in securities .....
Long-term loans to unconsolidated subsidiaries .................
Others, net .............................................................................
Net cash used in investing activities .................................

(76)(8,364)1,183(2,412)
10,687—(1,166)(146)

78(4,895)251(9,360)
7,073
(66)
(81)
(6,999)(507)(2,747)93(6,218)7,648(2,461)(1,142)(5,334)(719)(79,137)
11,193(22,821)
101,116—(11,032)(1,381)

III. Cash flows from financing activities:(Decrease) increase in short-term debt, net ........................
Increase (decrease) in long-term debt, net..........................
Cash dividends paid ..............................................................
Cash dividends paid to minority interests in consolidated subsidiaries.....
Payments for purchase of treasury stock, net......................
Other ......................................................................................
Net cash used in financing activities.................................

—
346(2,057)(32)(4)
28(1,720)(57)(11)(2,116)(28)(4,058)—(6,270)58(44)(2,117)(40)(25)—(2,169)—3,273(19,462)
(302)
(38)
264
(16,274)

(127)
3,580
31,507(59)(2,927)32,980145
1,354
31,569(1,201)33,872
298,10750¥35,137

1,454¥31,50756¥32,980473$332,453

I. Cash flows from operating activities:
Income before income taxes ................................................
Depreciation and amortization .............................................
(Decrease) increase in allowance for employees’ retirement benefits ...
(Gain) loss on sales and write-down of investment in securities ....
Equity in earnings of unconsolidated subsidiaries and affiliates ....
Interest and dividends income .............................................
Interest expenses...................................................................
Payments of bonuses to directors and corporate auditors ......
Increase (decrease) in other allowances,accrual and noncash items, net..........................................
Change in assets and liabilities:(Increase) decrease in trade receivables...........................
(Increase) decrease in inventories ....................................
Increase (decrease) in trade payables...............................
Others, net..........................................................................

IV. Effect of exchange rate changes on cash and cash equivalents.....
V. Net increase (decrease) in cash and cash equivalents ......
VI. Cash and cash equivalents at beginning of year (Note 7).......
VII. Cash and cash equivalents of newly consolidated subsidiaries,
net of excluded subsidiaries from consolidation .....................
VIII. Cash and cash equivalents at end of year (Note 7).................
The accompanying notes are an integral part of these statements.

25

Notes to Consolidated Financial Statements
Kurita Water Industries Ltd. and Consolidated Subsidiaries

1. Basis of presenting consolidated financial statements
Kurita Water Industries Ltd. (the “Company”) and its
subsidiaries in Japan maintain their books of accountand prepare their financial statements in accordancewith accounting principles and practices generally
accepted in Japan, while its foreign subsidiaries
maintain their books of account and prepare theirfinancial statements in conformity with those of thecountries of their domicile. Certain accounting
principles and practices generally accepted in Japanare different from International Accounting Standards
and standards in other countries in certain respects as
to application and disclosure requirements.
Accordingly, the accompanying consolidated financial
statements are intended for use by those who are
informed about Japanese accounting principles andpractices.
The accompanying consolidated financial statements,
prepared in accordance with accounting principles andpractices generally accepted in Japan, were filed with
the Japanese Ministry of Treasury and the Tokyo Stock
Exchange as required by the Securities and Exchange
Law of Japan.
Certain reclassifications of accounts andmodifications have been made in the accompanying
financial statements to facilitate understanding byreaders outside Japan. These reclassifications andmodifications have no effect on net income orshareholders’ equity.
All figures in the financial statements and notes arestated in millions of yen by discarding fractionalamounts of less than ¥1 million. As a result, the totals
shown in the financial statements and notes in yen do
not necessarily agree with the sum of the individual
amounts.
The translation of yen amounts into U.S. dollar
amounts is included solely for the convenience ofreaders and has been made for 2004, as a matter ofarithmetical computation only, at the rate of ¥105.69 to
US$1, the prevailing rate on the Tokyo foreign exchange
market on March 31, 2004. The translation should not
be construed as a representation that yen have been,
could have been, or could in the future be converted
into U.S. dollars at the above or any other rate.
2. Consolidation policies(1) Scope of consolidation
The consolidated financial statements include theaccounts of the Company and its significant
subsidiaries. All significant intercompany transactions
and balances have been eliminated in consolidation.
Number of consolidated subsidiaries: 30 (28 for 2003)
Name of principal consolidated subsidiaries: Kurita
26

Engineering Co., Ltd., Kuritaz Co., Ltd. and Kuritec
Service Co. Ltd.
Name of principal non-consolidated subsidiary: Kurita Sogo
Service Co., Ltd.
All the non-consolidated subsidiaries are thosesubsidiaries whose combined assets, net sales, net
income, and retained earnings in the aggregate are notsignificant in terms of the consolidated financial
statements.
(2) Revaluation of assets and liabilities of the consolidated
subsidiaries in consolidation process
In the elimination of investments in subsidiaries, theassets and liabilities of the subsidiaries, including the
portion attributable to the minority shareholders, areevaluated using the fair value at the time the Company
acquired control of the respective subsidiaries.
(3) Application of equity method
Number of companies to which the equity method is applied: 5
Affiliates to which equity method has not been
applied had no material effect on consolidated net
income and consolidated retained earnings in theaggregate.
(4) Fiscal year of consolidated subsidiaries
The fiscal year of Kurita (Singapore) Pte. Ltd. and 12
other overseas consolidated subsidiaries ends
December 31. The accompanying consolidated
financial statements include the accounts of thesesubsidiaries as of December 31 and for the year thenended.
3. Significant accounting policies(1) Valuation basis and method
Held-to-maturity debt securities
Amortized cost (straight-line amortization)
Available-for-sale securities
Items that have market price: Evaluated at fair value
at the balance sheet date, with resulting unrealized
holding gains and losses reported as a separate
component of shareholders’ equity (cost of soldsecurities is computed by the moving averagemethod) Items that have no market price: Cost
computed by the moving average method
Inventories
Principally cost computed by the moving averagemethod (except for work in process whose costs are
determined by the specific identification method)(2) Depreciation method of property, plant and equipment
Declining-balance method for the Company and its
domestic consolidated subsidiaries (except forbuildings, not including auxiliary facilities, acquired on
and after April 1, 1998, for which the straight-line
method is applied) and straight-line method foroverseas consolidated subsidiaries

(3) Allowances and accruals
Accrued employees’ bonuses:
The Company and its domestic consolidated
subsidiaries provide for an amount equivalent to theanticipated bonus payments to employees.
Accrued employees’ retirement benefits:
Accrued employees’ retirement benefits are recorded
based on the estimated projected benefit obligationand fair value of the pension assets at the balance
sheet date.
(4) Leases
Finance leases other than those that are deemed totransfer the ownership of the leased assets to lessees
are accounted for by the same method as that ofoperating leases.
(5) Income per share
Earnings per share are computed using the weightedaverage number of common shares and dilutive
potential common shares outstanding.
(6) Consumption tax
Consumption taxes are accounted for separately fromtransaction prices and not reflected in the consolidated
statements of income.
(7) Derivatives transactions
When necessary, the Company enters forward
currency contracts to hedge the risk of future foreignexchange rate fluctuations related to monetary
obligations denominated in foreign currencies. These
are basically conducted within the range of ordinary
business transactions denominated in foreign
currencies. The Company believes that the risk ofcounterparty default is negligible because its forward
currency contracts are conducted with highly
creditworthy Japanese banks. In addition, transactions
in forward currency contracts are executed andmanaged by the finance and accounting department
on a contract-by-contract basis after they have been
approved by prescribed internal procedures.
(8) Cash and cash equivalents
Cash and cash equivalents in the consolidated
statements of cash flows are composed of cash on
hand, bank deposits withdrawable on demand andshort-term investments with an original maturity of
three months or less and subject to a minor risk offluctuations in value.

5. Unrealized gains on revaluation of land
The Company carried out a revaluation of land forbusiness use in accordance with the Land Revaluation
Law (enacted on March 31, 1998). The revaluationdifference is stated as “unrealized (losses) gains onrevaluation of land” in the shareholders’ equity
account, after deduction of tax equivalent from the net
amount of revaluation gain and loss. The tax
equivalent is stated as deferred tax assets or liabilities
in long-term liabilities.
When any revalued land is sold, the related
unrealized gain or loss on revaluation of land istransferred to retained earnings.
Revaluation method:
The revaluation of land was computed in accordancewith Article Two, Item One of the Land Revaluation
Law Enforcement Order.
Revaluation date: March 31, 2002
Difference between fair market value of the land at the
fiscal year-end and the carrying value after land
revaluation: ¥(1,339) million (US$(12,669)) thousand
6. Research and development expenses
Research and development expenses included inselling, general and administrative expenses are as
follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

¥4,289¥4,484¥5,071$40,580

4. Appropriation of retained earnings
The accompanying consolidated statements ofshareholders’ equity reflect the appropriations ofretained earnings of the Company in the year in which
the annual shareholders meet and approve theappropriations.

27

7. Reconciliation between cash and cash equivalents
Reconciliation between the cash and cash equivalents in the consolidated statement of cash flows and theconsolidated balance sheet items is as follows:
Thousands of
U.S. dollars

Millions of yen

Cash...........................................................................................
Time deposits having original maturity ofmore than three months ........................................................
Cash and cash equivalents .......................................................

2004¥35,512

2003¥31,838

2002¥33,4082004$336,001(374)¥35,137(330)¥31,507(428)¥32,980(3,538)$332,453

8. Marketable securities and investment securities(1) Available-for-sale securities with fair value at March 31, 2004 and 2003 are summarized as follows:
Millions of yen

At March 31, 2004

Book value exceeding acquisition cost:
Stock ...........................................................................................................
Bonds:
National and local government bonds ..................................................
Corporate bonds .....................................................................................
Sub-total ...............................................................................................
Book value not exceeding acquisition cost:
Stock ...........................................................................................................
Bonds:
National and local government bonds ..................................................
Corporate bonds .....................................................................................
Other...........................................................................................................
Sub-total ...............................................................................................
Total .....................................................................................................

Acquisition cost

Book value

Difference¥ 5,158¥ 7,956¥2,798

4,401
2,011
11,571

4,401
2,021
14,380

0
10
2,808

841

770

(70)

400
1,349
—
2,591
¥14,162

400
1,347
—
2,518
¥16,898

0
(2)
—
(73)
¥2,735

Millions of yen

At March 31, 2003

Book value exceeding acquisition cost:
Stock ...........................................................................................................
Bonds:
National and local government bonds ..................................................
Corporate bonds .....................................................................................
Other...........................................................................................................
Sub-total ...............................................................................................
Book value not exceeding acquisition cost:
Stock ...........................................................................................................
Bonds:
National and local government bonds ..................................................
Corporate bonds .....................................................................................
Other...........................................................................................................
Sub-total ...............................................................................................
Total .....................................................................................................
28

Acquisition cost

Book value

Difference¥ 1,308¥ 1,968

¥ 659

800
7,837
—
9,946

800
7,876
—
10,646

0
39
—
699

3,688

2,863

(824)

4,004
2,891
499
11,083¥21,030

4,003
2,835
499
10,202¥20,848

(1)
(55)
0
(881)
¥(182)

Thousands of U.S. dollars

At March 31, 2004

Book value exceeding acquisition cost:
Stock ...........................................................................................................
Bonds:
National and local government bonds ..................................................
Corporate bonds .....................................................................................
Sub-total ...............................................................................................
Book value not exceeding acquisition cost:
Stock ...........................................................................................................
Bonds:
National and local government bonds ..................................................
Corporate bonds .....................................................................................
Other...........................................................................................................
Sub-total ...............................................................................................
Total .....................................................................................................

Acquisition cost

Book value

Difference$ 48,803$ 75,276$26,473

41,64019,027
109,480

41,64019,121
136,058

0
94
26,568

7,957

7,285

(662)

3,784
12,763—24,515$133,995

3,784
12,744—23,824$159,882

0
(18)
—
(690)
$25,877

During the fiscal year ended March 2003, the Company has written down ¥822 million in available-for-salesecurities.
The Company writes down all securities whose market value as of the end of the fiscal year have declined morethan 50% from their acquisition cost. Securities whose market value have declined 30% to 50% from theiracquisition cost are written down to appropriate amounts, if necessary, after considering their recoverability.
(2) Available-for-sale securities sold during the years ended March 31, 2004, 2003 and 2002 are summarized asfollows:
Thousands of
U.S. dollars

Millions of yen

Sales amount.............................................................................
Total gains on sales ..................................................................
Total losses on sales .................................................................

2004¥2,222
1,414
—

2003
¥2
—
1

2002
¥4
—
—

2004
$21,023
13,378—(3) The schedule of redemption for available-for-sale securities with maturity at March 31, 2004 and 2003 issummarized as follows:
Millions of yen
March 31, 2004
March 31, 2003
Within 1 year 1 to 5 years
Within 1 year 1 to 5 years

Bonds:
National and local government bonds .... ¥4,801
Corporate bonds..................................... 1,918
Other ..........................................................
—
Total ........................................................ ¥6,720

¥
—
1,450
—
¥1,450

¥

—
6,015
499
¥6,515

¥

—
9,500
—
¥9,500Thousands of U.S. dollars
March 31, 2004
Within 1 year 1 to 5 years$45,425
18,147—$63,582$—
13,719—$13,71929

9. Inventories
Inventories at March 31, 2004 and 2003 are consisted of the followings:
Millions of yen

Finished products ...........................................................................................
Raw materials..................................................................................................
Work in process .............................................................................................
Total..........................................................................................................

2004¥1,2191,051
4,443¥6,7132003¥1,1191,296
3,884¥6,301Thousands of
U.S. dollars

2004$11,533
9,944
42,038$63,515

10. Long-term borrowings
Long-term borrowings at March 2004 and 2003 is summarized as follows:
Millions of yen

Loan from banks at interest rates from 4.30% to 4.40% ...............................
Less current portion........................................................................................
Total..........................................................................................................

2004
¥397
(48)
¥349

2003
¥47
(7)
¥40

Thousands of
U.S. dollars

2004$3,756(454)$3,302

11. Income taxes
For the years ended March 31, 2003 and 2002, the breakdown of the principal items causing a difference between
the Japanese statutory tax rate and the Company’s effective tax rate was as follows (the breakdown for 2004 wasomitted due to insignificance of difference):
2003
2002
Statutory tax rate..................................................................................................................
42.0%
42.0%
(adjustments)
Entertainment expenses and other expenses not deductible ...........................................
1.6
2.1
Dividends received not taxable ..........................................................................................
(0.7)
(0.9)
Per capita equalization and inhabitants’ taxes ...................................................................
0.9
1.0
Amortization of consolidated differences...........................................................................
—
0.4
Deduction of deferred tax assets at the fiscal year-end due tochange in tax rate .............................................................................................................
0.8—
Other .................................................................................................................................
0.9
0.8
Effective tax rate after application of tax effect accounting..............................................
45.5%
37.3%
Note: Change in statutory effective tax rate for application of tax effect accounting.
Due to change in local tax law (enacted on March 31, 2003), the Company changed the effective tax rate used in the calculation ofdeferred tax assets and liabilities from the fiscal year ended March 31, 2003 (only for fixed assets and long-term liabilities). As a result,deferred tax assets, net of deferred tax liabilities, decreased by ¥82 million at March 31, 2003, and provision for deferred income taxes andunrealized holding losses on other securities decreased by ¥80 million and by ¥2 million, respectively, for the year ended March 31, 2003.

30

Significant components of the deferred tax assets and liabilities are as follows:
Thousands of
U.S. dollars

Millions of yen

Deferred tax assets:
Excess provision for accrued employees’ retirement benefits..................
Excess provision for accrued bonuses to employees ...............................
Accrued enterprise taxes not deductible ...................................................
Accrued retirement benefits for directors and corporate auditors ...........
Excess provision of allowance for product warranty................................
Loss from write-down of marketable securities ........................................
Excess portion of design expenses ............................................................
Unrealized gain on sales of property, plant and equipment....................
Excess depreciation of property, plant and equipment............................
Devaluation loss on property, plant and equipment ................................
Excess provision of amortization for intangible assets .............................
Unrealized gain on sales of an affiliated company’s stock.......................
Loss on write-down of golf club membership ..........................................
Other............................................................................................................
Subtotal.....................................................................................................
Provision to valuation reserve.................................................................
Total deferred tax assets..........................................................................
Deferred tax liabilities:
Capital gain on properties deferred for tax purposes...............................
Gain on valuation of available-for-sale securities .....................................
Estimated income taxes pertaining to retained earningsof overseas consolidated subsidiaries......................................................
Other............................................................................................................
Total deferred tax liabilities.....................................................................
Deferred tax assets, net ...........................................................................

2004

2003

2004

¥2,942
876
333
264
413
—
165
421
282
208
—
—
142
623
6,671
(202)
6,469

¥3,428
735
282
343
288
297
185
237
—
—
171
150
146
680
6,947
—
6,947

$27,836
8,288
3,150
2,497
3,907
—
1,561
3,983
2,668
1,968
—
—
1,343
5,895
63,119(1,911)
61,207(876)(1,110)(887)—(8,288)(10,502)

(272)
(17)
(2,277)¥4,191(203)—(1,090)¥5,857(2,573)(160)(21,544)$39,65331

12. Retirement benefits and pension plans
1. The Company and 16 domestic consolidated subsidiaries provide lump-sum retirement benefits or qualified
pension plans as defined benefit pension plans; moreover, the Company and 3 domestic consolidated
subsidiaries have both plans, and 6 domestic consolidated subsidiaries have only qualified pension plans.
2. Benefit obligation:
Millions of yen

2004
Retirement benefit obligation ..................................................................... ¥(22,697)
Fair value of pension plan assets ...............................................................
13,624
Unfunded retirement benefit obligation ....................................................
(9,073)
Unrecognized actuarial (gain) loss.............................................................
(76)
Accrued employees’ retirement benefits.................................................... ¥ (9,149)

2003¥(22,987)
11,337(11,650)
180¥(11,469)

Thousands of
U.S. dollars

2004$(214,750)
128,905(85,845)(719)$ (86,564)

3. Benefit cost:Thousands of
U.S. dollars

Millions of yen

Service cost ............................................................................
Interest cost............................................................................
Expected return on plan assets ............................................
Amortization of obligation at transition arisingfrom new accounting standards.........................................
Actuarial (gain) loss...............................................................
Prior service cost ...................................................................
Additional retirement payments ...........................................
Net periodic benefit cost ...................................................

2004¥1,239540—

2003¥1,246531—

2002¥1,175
577
(65)

2004
$11,722
5,109
—

—
(679)
—
35
¥1,136

1,162
984
—
164
¥4,090

1,162
1,331
137
31
¥4,349—(6,424)—
331$10,748

4. Assumptions to determine above obligation and cost:
Periodic allocation of projected benefit obligation .............
Discount rate .........................................................................
Expected return rate on plan assets .....................................
Amortization period of net obligation at transition .............
Amortizations period of actuarial loss..................................

32

2004
2003
Equal amount over each period Equal amount over each period
2.5%
2.5%
0.0%
0.0%
—
three years
one–two years
one–two years13. Leases
1. The following pro forma amounts concern the finance leases which would have been reflected in the financial
statements if finance lease accounting had been applied to the finance lease transactions currently accounted for
as operating lease:1) Leased assets (lessee)
Thousands of
U.S. dollars

Millions of yen

Acquisition costs....................................................................
Accumulated depreciation ....................................................
Net book value...................................................................

2004¥1,705(1,024)¥ 681

2003¥1,995(1,169)¥ 826

2002¥2,615(1,525)¥1,0892004$16,132(9,688)$ 6,443

2) Lease obligations (net book value)
Thousands of
U.S. dollars

Millions of yen

Due within one year or less .................................................
Due within more than one year ...........................................
Total ....................................................................................

2004
¥287
394
¥681

2003
¥306
519
¥826

2002
¥ 402
686
¥1,0892004$2,715
3,727$6,4433) Lease payments relating to finance lease transactions accounted for as operating lease
Thousands of
U.S. dollars

Millions of yen

Lease payments .....................................................................
Depreciation ..........................................................................

2004
¥340
340

2003
¥403
403

2002
¥592
592

2004
$3,216
3,216

Depreciation of the leased assets is computed by the straight-line method over the lease terms (with zero residual
value).
2. Accrued lease payments relating to operating lease transactions
Thousands of
U.S. dollars

Millions of yen

Due within one year or less .................................................
Due within more than one year ...........................................
Total ....................................................................................

2004
¥120
124
¥245

2003
¥ 61
82
¥144

2002
¥ 61
75
¥136

2004
$1,135
1,173$2,31833

14. Segment information
The business segment information of the Company and its consolidated subsidiaries for the years ended March 31,
2004, 2003 and 2002 is outlined as follows:
Millions of yen

Year ended March 31, 2004

Chemicals
division

Facilities
division

Total

Eliminationor corporate

Consolidated

I. Sales and operating income
Sales1) Sales to outside customers ..................................... ¥47,442
2) Intersegment sales ..................................................
161
Total....................................................................... 47,604
Operating costs and expenses.................................... 40,964
Operating income........................................................ ¥ 6,640
II. Assets, depreciation and capital expenditures
Assets ........................................................................... ¥39,391
Depreciation and amortization ...................................
1,548
Capital expenditures ...................................................
1,895¥99,377
298
99,67592,830¥ 6,845¥146,819460
147,280
133,794¥ 13,485

¥

—
(460)
(460)
(466)
¥
5

¥146,819—
146,819
133,328¥ 13,490¥94,402
2,323
7,822

¥133,794
3,872
9,718

¥49,825——¥183,620
3,872
9,718

Chemicals
division

Facilities
division

Total

Eliminationor corporate

Consolidated¥94,512204
94,71688,985¥ 5,730¥141,628
583
142,211
129,986¥ 12,224

¥

—
(583)
(583)
(665)
¥
82

¥141,628—
141,628
129,321¥ 12,307¥82,607
2,196
5,031

¥119,958
3,307
6,198

¥53,730——¥173,689
3,307
6,198

Eliminationor corporate

Consolidated

Millions of yen

Year ended March 31, 2003

I. Sales and operating income
Sales1) Sales to outside customers ..................................... ¥47,116
2) Intersegment sales ..................................................
378
Total....................................................................... 47,494
Operating costs and expenses.................................... 41,000
Operating income........................................................ ¥ 6,493
II. Assets, depreciation and capital expenditures
Assets ........................................................................... ¥37,351
Depreciation and amortization ...................................
1,110
Capital expenditures ...................................................
1,167

Millions of yen

Year ended March 31, 2002

Chemicals
division

I. Sales and operating income
Sales1) Sales to outside customers ..................................... ¥46,277
2) Intersegment sales ..................................................
351
Total....................................................................... 46,628
Operating costs and expenses.................................... 40,384
Operating income........................................................ ¥ 6,244
II. Assets, depreciation and capital expenditures
Assets ........................................................................... ¥38,793
Depreciation and amortization ...................................
1,169
Capital expenditures ...................................................
1,882
34

Facilities
division

Total¥96,401
337
96,73992,201¥ 4,537¥142,678
689
143,368
132,585¥ 10,782

¥

—
(689)
(689)
(697)
¥
8

¥142,678—
142,678
131,887¥ 10,790¥79,158
2,318
2,877

¥117,951
3,487
4,760

¥54,193——¥172,145
3,487
4,760

Chemicals
division

Year ended March 31, 2004

Facilities
division

Thousands of U.S. dollars
Elimination
Total
or corporate

Consolidated

I. Sales and operating income
Sales1) Sales to outside customers.................................... $448,878 $940,268 $1,389,147 $— $1,389,147
2) Intersegment sales.................................................
1,523
2,819
4,352
(4,352)—
Total ..................................................................... 450,411 943,088 1,393,509(4,352) 1,389,417
Operating costs and expenses .................................. 387,586 878,323 1,265,909(4,409) (1,261,500)
Operating income ...................................................... $ 62,825 $ 64,764 $ 127,590 $47 $ 127,637
II. Assets, depreciation and capital expenditures
Assets.......................................................................... $372,703 $893,197 $1,265,909 $471,425 $1,737,345
Depreciation and amortization .................................
14,646
21,97936,635—36,635
Capital expenditures..................................................
17,92974,00891,948—91,948Overseas net sales:
Thousands of
U.S. dollars

Millions of yen

For the year ended March 31, 2004

North
America

Europe

Other

Total

Total

¥535
—

¥888
—

¥1,316—¥ 15,996
146,819$ 151,348
1,389,147

0.4%

0.6%

0.9%

10.9%

10.9%

¥15,837
—

¥731
—

¥620
—

¥1,237—¥ 18,427
141,628

11.2%

0.5%

0.4%

0.9%

13.0%

Asia

Overseas net sales ..................................... ¥13,256
Consolidated net sales...............................
—
Percentage of overseas net sales toconsolidated net sales.............................
9.0%
For the year ended March 31, 2003

Overseas net sales .....................................
Consolidated net sales...............................
Percentage of overseas net sales toconsolidated net sales.............................

Notes: 1. Countries and regions are classified into segments according to geography and proximity.
2. The major countries or regions classified in each geographic segment are as follows.
Asia:
South Korea, China, Taiwan, Singapore, Indonesia, Thailand
North America: United States of America
Europe:Germany
Other:
Brazil3. Overseas sales refer to sales outside Japan generated by the Company and its consolidated subsidiaries.
4. Overseas sales accounted for less than 10% of consolidated sales in the fiscal year ended March 2002 and therefore have been omitted
from presentation in the financial statements.

15. Contingent liabilities
Guarantees for employees’ indebtedness from bankhousing loans at March 31, 2004 and 2003 are as
follows:
Millions of yen

2004
¥39

2003
¥78

Thousands of
U.S. dollars

2004
$369

16. Subsequent event
Appropriation of unappropriated retained earnings
The following appropriations of unappropriatedretained earnings for the year ended March 31, 2004,
were approved at the general meeting of shareholdersof the Company held on June 29, 2004:
Cash dividends ............................
Bonuses to directors andcorporate auditors ......................

Millions of yen

Thousands of
U.S. dollars¥1,028$9,72675709
35

Report of Independent Certified Public Accountants

T A I Y OTAIYO AUDIT CORPORATIONAKASAKA OJI Bldg.8F
8-1-22 AKASAKA MINATO-KU TOKYO 107-0052 JAPAN
Tel: 03-5474-0111 Fax: 03-5474-0112

To the Board of Directors ofKurita Water Industries Ltd.

We have audited the accompanying consolidated balance sheets of Kurita Water Industries Ltd. and subsidiaries
as of March 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity and cash
flows for each of the three years in the period ended March 31, 2004, expressed in Japanese yen. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Kurita Water Industries Ltd. and subsidiaries as of March 31, 2004 and 2003, andthe consolidated results of their operations and their cash flows for each of the three years in the period ended
March 31, 2004, in conformity with accounting principles generally accepted in Japan as described in Note 1 to theconsolidated statements.
The consolidated financial statements as of and for the year ended March 31, 2004 have been translated into
United States dollars solely for the convenience of the reader. We have recomputed the translation and, in our
opinion, the consolidated financial statements expressed in Japanese yen have been translated into United States
dollars on the basis set forth in Note 1 to the consolidated financial statements.

Tokyo, Japan
June 29, 200436

Non-Consolidated Summary
Non-Consolidated Balance Sheets, at March 31, 2004 and 2003
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

AssetsCurrent assets .............................................................................................. ¥103,061
Property, plant and equipment ..................................................................
33,902Intangible assets ..........................................................................................
2,593
Investments and other assets......................................................................
25,698¥165,256¥ 94,641
31,1102,413
29,722¥157,888$ 975,125
320,768
24,534
243,145$1,563,591

Liabilities
Current liabilities ......................................................................................... ¥ 39,567¥ 36,121$ 374,368

8,702
48,269

11,13147,25282,335456,703

13,450
11,39895,670(257)
1,616(4,890)116,987
Total liabilities and shareholders’ equity....................................................... ¥165,256

13,450
11,39890,75320(100)(4,885)
110,636¥157,888

127,258
107,843905,194(2,431)
15,289(46,267)
1,106,888$1,563,591

Long-term liabilities.....................................................................................
Shareholders’ equity
Common stock ............................................................................................
Additional paid-in capital ...........................................................................
Retained earnings........................................................................................
Unrealized gains on revaluation of land....................................................
Unrealized holding (losses) gains on other securities ..............................
Treasury stock, at cost ................................................................................

Non-Consolidated Statements of Income, for the Years Ended March 31, 2004, 2003 and 2002
Thousands of
U.S. dollars

Millions of yen

2004
Net sales................................................................................... ¥112,206
Cost of sales ............................................................................
79,761Gross profit.........................................................................
32,444

2003¥114,115
81,83932,276

2002¥117,518
84,73132,7872004$1,061,652
754,669
306,973

Selling, general and administrative expenses ........................
Operating income ...........................................................

23,3909,053

23,741
8,535

25,532
7,255

221,30785,656

Other income ............................................................................
Other expenses.........................................................................
Income before income taxes .......................................

3,438
974
11,517

2,630
2,327
8,838

3,181
4,005
6,431

32,5299,215
108,969

Income taxes ............................................................................
Net income ...................................................................... ¥

4,748
6,768

¥

3,388
5,450

¥

2,089
4,341

$

44,92364,03637

Corporate Data (As of March 31, 2004)
Company Name
Kurita Water Industries Ltd.
Address
4-7, Nishi-Shinjuku 3-chome,
Shinjuku-ku, Tokyo 160-8383, JapanDOMESTIC OFFICESOVERSEAS OFFICES

Head Office:4-7, Nishi-Shinjuku 3-chome,
Shinjuku-ku, Tokyo 160-8383
Telephone: 81 (3) 3347-3111

Singapore Branch:
30 Joo Koon Rd., Singapore 628984
Telephone: 65 (6861) 2622

Osaka Office:2-22, Kitahama 2-chome, Chuo-ku,
Osaka 541-0041
Telephone: 81 (6) 6228-4800

Paid in Capital¥13,450,751,434
Date of Establishment
July 13, 1949

Taiwan Representative Office:14th Fl., Section 1, Kuang-Fu Rd.,
Hsinchu, Taiwan
Telephone: 886 (3) 573-6251

Corporate Research & Development Center:
7-1, Wakamiya Morinosato, Atsugi,
Kanagawa 243-0124
Telephone: 81 (46) 270-2111

Number of Employees
1,655 (Parent company)
3,383 (On a consolidated basis)

Business & Technology Development Center:
1-1, Gochoyama, Kawada, Nogi-machi,
Shimotsuga-gun, Tochigi 329-0105
Telephone: 81 (280) 54-1511
Branches:
Sapporo, Tohoku, Nagoya, Hiroshima,
Shikoku, Kyushu

Subsidiaries
Major Consolidated Subsidiaries and Affiliates
Company Name

Paid-in
Capital (Millions)

EquityOwnership (%)

North America･South America
Kurita do Brasil Ltda.
Kurita America Inc.
Kurita de Mexico S.A. de C.V.

R$8.9
US$3.0
M.N. PESO8.1

100.0
100.0
45.0

Manufacture and sales of water treatment chemicals
Facility operation
Manufacture and sales of water treatment chemicals

EUR2.301
EUR0.959

80.0
100.0

Manufacture and sales of water treatment chemicals
Facility operation

S$4.0

100.0

S$1.49
M$0.6
¥550
¥30
¥100
NT$20
US$2.0
BAHT56
W2,500
W400

100.0
83.3
80.0
100.0
100.0
95.0
90.0
60.0
33.2
59.4

Manufacture and sales of water treatment chemicals
and water treatment facilities
Urtrapure water supply for specified customers
Sales of water treatment chemicals and water treatment facilities
Manufacture and sales of water treatment chemicals
Maintenance services and sales of small water treatment facilities
Manufacture and sales of water treatment facilities
Manufacture and sales of water treatment chemicals
Manufacture and sales of water treatment chemicals
Manufacture and sales of water treatment chemicals
Manufacture and sales of water treatment chemicals
Sales of water treatment facilities

Kurita Engineering Co., Ltd.
Kurita Creation Co., Ltd.
Kuritaz Co., Ltd.

¥160
¥160
¥220

100.0
100.0
100.0

Land Solution Inc.

¥450

51.0

Kuritec Service Co. Ltd.

¥50

100.0

Main Business

OVERSEAS

EuropeKurita Europe GmbH
Kuritec Europe GmbH
Asia
Kurita (Singapore) Pte. Ltd.
Kuritec Singapore Pte. Ltd.
Kurita Water (Malaysia) Sdn. Bhd.
Kurita Water Industries (Dalian) Co., Ltd.
Kuritec (Shanghai) Co., Ltd.
Kurita Water Industries (Suzhou) Ltd.
Kurita (Taiwan) Co., Ltd.
P.T. Kurita Indonesia
Kurita-GK Chemical Co., Ltd.
Hansu Ltd.
Hansu Technical Service Ltd.
DOMESTIC CONSOLIDATED SUBSIDIARIES

38

Chemical cleaning
Manufacture and sales of household and industrial water purifiers
Operation and maintenance of water treatment facilities; soil and groundwater assessment and remediation
Soil and groundwater contamination assessment and consulting; contamination risk-hedging support and post-remediation land usage support
Tool cleaningInvestor Information (As of March 31, 2004)
Stock Exchange Listings

Number of Shareholders

Transfer AgentTokyo, Osaka

14,870Common Stock

Independent Auditor

Authorized: 531,000,000 shares
Issued: 132,800,256 shares

Taiyo Audit Corporation
8F, Akasaka Oji Bldg., 1-22, Akasaka
8-chome, Minato-ku,
Tokyo 107-0052, JapanThe Chuo Mitsui Trust andBanking Co., Ltd.
33-1, Shiba 3-chome, Minato-ku,
Tokyo 105-8574, Japan(Stock trading unit changed from 1,000
shares to 100 shares, effective
July 1, 2002)
Main Shareholders

Itochu Corporation
Japan Trustee Services Bank, Ltd. (Trust Account)Northern Trust Company (AVFC) Sub-account American Client
Nippon Life Insurance Company
The Master Trust Bank of Japan, Ltd. (Trust Account)
The Tokio Marine and Fire Insurance Company, Ltd.
Kurita Water Industries Ltd.
UFJ Bank Ltd.
The Chase Manhattan Bank N.A. London
Resona Bank, Ltd.

Shareholdings(Sharee)

Percentage of
total shares issued (%)

10,268,000
9,393,300
8,111,800
7,365,083
5,426,600
4,461,526
4,217,542
3,536,131
2,983,303
2,834,623

7.73
7.07
6.10
5.54
4.08
3.35
3.17
2.66
2.24
2.13

Stock Price Range
Stock price(Yen)

Kurita stock prices

TOPIX(Points)

Tokyo stock price indexes and average (TOPIX)

2,500

2,500

2,000

2,000

1,500

1,500

1,000

1,000

500

500

0

0

Trading volumes(Hundreds of shares)
100,000

50,0000

Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June
’01
’02
’03
’04

Kurita trading volumes

Distribution of Shares

Individuals
18,058,229 Shares(13.6%)PBR (Consolidated)

PER (Consolidated)

Treasury Stock4,217,542 Shares (3.2%)

Times
Financial Institutions
47,720,021 Shares(35.9%)

2.5

80

2.0

60

Foreign Investors
43,121,550 Shares(32.5%)

Securities
Companies
1,927,254 Shares(1.4%)

Domestic Corporations
17,755,660 Shares (13.4%)
Total 132,800,256 Shares (100%)

Times

100

2.32

1.5

1.65

1.57
1.38

56.7
40

1.0
33.9

20
0

25.2

23.5

2000

2001

2002

2003

1.09

0.5
21.3

2004

0

2000

2001

2002

2003

2004

39

Kurita Water Industries Ltd.
4 - 7, Nishi-Shinjuku 3-chome, Shinjuku-ku, Tokyo 160-8383, Japan
TEL : 81(3)3347-3111
URL : http://www.kurita.co.jp

To make more people aware of our corporate visionof becoming an advanced water and environmental
management company, we have adopted a service
logo. This logo reflects our commitment to and confidence in contributing to society through continued
progress in our water and environmental technologies.

Printed on recycled paper in Japan