FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Nine Months Ended December
31, 2016
Tokyo, Japan, January 31, 2017—Kurita Water Industries Ltd. (TSE Securities Code6370) announced net sales of 152,086 million yen and profit attributable to owners ofparent of 10,144 million yen, or 87.45 yen per share, for the nine months ended
December 31, 2016 (April 1, 2016 – December 31, 2016).
Results of Operations
Total consolidated orders for the Kurita Group (Kurita Water Industries Ltd. and its
consolidated subsidiaries and equity method affiliates) in the nine months ended
December 31, 2016 rose 1.8% from the level of the same period of the previous fiscal
year, to 162,115 million yen, and net sales increased 2.2%, to 152,086 million yen.
Operating income was 13,646 million yen, down 2.8% versus the same period of theprevious fiscal year, and ordinary income was 14,104 million yen, down 4.3%. Profit
attributable to owners of parent amounted to 10,144 million yen, up 8.9%.
Looking at the market environment surrounding the Kurita Group, in Japan,
production in the manufacturing industry recovered moderately mainly due to arecovery in demand and inventory adjustments, while the recovery of capital
expenditure slowed due to the effect of a decline in corporate earnings. Overseas, theU.S. and European economies continued to recover moderately. There were signs of arecovery in China and other emerging economies.
In this environment, the Kurita Group sought to develop and market competitive
products, technologies, and services and focused on proposing solutions to customers’
challenges, including the reduction of the environmental burden, energy saving, and theimprovement of productivity, using IT and sensing technologies.
Segment Information
The Group consists of two reportable segments in its segment information: Water
Treatment Chemicals and Water Treatment Facilities
Water Treatment Chemicals
Total Group orders for the Water Treatment Chemicals segment were 61,246 million
yen, down 1.4% versus the same period of the fiscal year ended March 31, 2016, whilesales fell 1.3%, to 61,276 million. Operating income was up 6.6% to 5,870 million yen,reflecting the elimination of temporary expenses in association with a revision of theinitial allocation of the cost of the acquisition of businesses in Europe in the previous
fiscal year.
In Japan, capacity utilization recovered at customers’ plants, and the Group worked
to gain new customers by proposing solutions using new products and services. As aresult, both orders and sales rose.
Despite the consolidation of the operating results of the business in Europe, which havebeen consolidated from the previous consolidated fiscal year, for a month longer than in
the previous fiscal year, both orders and sales overseas declined, as the strength of yen
offset the solid performance of orders and sales in local currency terms overseas.

1

Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 100,868 million
yen, up 3.9% versus the same period of the previous fiscal year. Sales rose 4.6%, to90,810 million yen. Despite increases in sales in the water treatment facilities businessand in maintenance services, operating income declined 8.8%, to 7,791 million yen, due
to a decline in sales in the ultrapure water supply business.
In Japan, in the electronics industry, orders in maintenance services declined partly
in reaction to the strong performance in the same period of the previous fiscal year, butorders in the water treatment facilities increased significantly, reflecting orders forlarge-scale projects. Sales in the water treatment facilities declined, while sales inmaintenance services increased on progress with construction in projects for which
orders were received in the previous fiscal year.
In general industries, orders in the water treatment facilities fell, but orders inmaintenance services rose both from private plants and from public offices. Orders forlarge-scale projects were received in water treatment facilities for thermal power plants
and soil remediation services. Sales of water treatment facilities for electric power
declined, but overall sales in general industries rose due to steady progress inconstruction associated with water treatment facilities for other uses and maintenanceservices.
Overseas, orders fell, reflecting orders for large-scale projects in China and Taiwan
in the same period of the previous fiscal year, but sales climbed due to progress inconstruction in large-scale projects in China and South Korea.
Combined sales in Japan and overseas in the ultrapure water supply businessdeclined, reflecting the effects of the expiration of contracts and revisions of contracts
with a certain customer, despite the posting of sales from new contracts.
Financial Condition
Assets, liabilities and net assets
Current assets totaled 151,241 million yen at the end of the third quarter (December 31,2016), an increase of 695 million yen versus the end of the previous fiscal year (March
31, 2016). This was mainly a result of increases of 5,249 million yen in funds in hand,consisting of cash and deposits and marketable securities, and 4,182 million yen in workin process, which outweighed a decrease of 8,226 million yen in trade accounts
receivable. The increase in funds in hand principally reflected progress in collecting
trade accounts receivable. The rise in work in process was chiefly the result of progressin construction in the water treatment facilities business.
Non-current assets totaled 136,550 million yen at the end of the third quarter(December 31, 2016), a decline of 11,011 million yen versus the end of the previous
fiscal year. The decline was principally attributable to decreases of 5,056 million yen inproperty, plant and equipment, 4,070 million yen in intangible fixed assets, and 1,884
million yen in investments and other assets. The decrease in property, plant andequipment was chiefly due to depreciation mainly on facilities for the ultrapure watersupply business in excess of capital expenditure. The decline in intangible fixed assets
was mainly attributable to the amortization of goodwill and technology-related assets
and a decrease in the value of assets after it was converted into yen because of thestronger yen against the euro. The decrease in investments and other assets wasprimarily due to a decrease in unrealized gains on investment securities due to falls in
the market prices of the shares held by Kurita and its affiliates.
2Current liabilities totaled 39,139 million yen at the end of the period, a decline of
5,268 million yen versus the end of the previous fiscal year. This was mainly a result of
declines of 2,141 million yen in trade accounts payable, 2,404 million yen in income
taxes payable, and 1,233 million yen in provision.
Non-current liabilities totaled 23,734 million yen at the end of the period, a decreaseof 1,001 million yen versus the end of the previous fiscal year, chiefly reflecting adecrease in “other” non-current liabilities.
Net assets totaled 224,918 million yen at the end of the period, a decrease of 4,046
million yen versus the end of the previous fiscal year primarily due to a fall of 7,712
million yen in accumulated other comprehensive income, which was partly offset by anincrease of 3,669 million yen in shareholders’ equity. The increase in shareholders’equity chiefly reflected an increase of 4,451 million yen in retained earnings as a resultof profit attributable to owners of parent of 10,144 million yen in the nine months underreview, which exceeded the total of year-end dividends of 2,788 million yen for theprevious fiscal year and interim dividends of 2,904 million yen for the fiscal year underreview, 5,693 million yen, and a rise of 782 million yen in treasury stock (a decrease in
net assets) due to the acquisition of treasury stock associated with the introduction of aperformance-based stock compensation system for directors and the purchase of sharesless than one unit.
The decrease in accumulated other comprehensive income resulted mainly from adecrease of 1,527 million yen in unrealized gains on available-for-sale securities inassociation with a decline in unrealized gains on investment securities and a fall of
6,545 million yen in foreign currency translation adjustments due to the strengtheningof the yen against foreign currencies.
Outlook for the Fiscal Year Ending March 31, 2017
The Group’s current outlook for the full year ending March 31, 2017 is consistent withthe revised forecast disclosed in the Earnings for the Six Months Ended September 30,
2016, which was announced on October 31, 2016.
Other Information(1) Important changes in subsidiaries during the nine months under review
There have been no changes in specified subsidiaries resulting in changes in the scopeof consolidation.
The Group included three new companies in the scope of consolidation from thisfiscal year, namely, Kurita Polska SP.z.o.o. and KURITAZ Hokuriku Co., Ltd. from thefirst half, and Kurita America Holdings Incorporated from the third quarter.
Kurita Europe GmbH, which was a consolidated subsidiary, was merged with Kurita
Europe APW GmbH, a consolidated subsidiary, and has been excluded from the scopeof consolidation from the first half of this fiscal year. Kurita Europe APW GmbH has
been renamed Kurita Europe GmbH.

3

(2) Accounting treatment specific to the preparation of quarterly consolidated financial
statements
Tax expense
The Company calculates tax expense by producing a reasonable estimate of theeffective tax rate after applying tax-effect accounting to income before income taxes forthe fiscal year and then multiplying quarterly income before income taxes by thisestimated effective tax rate.
(3) Changes in accounting principles and changes or restatement of accounting
estimates
Change in accounting principles
With the revision of the Corporation Tax Act, the Company and its domestic
consolidated subsidiaries applied the Practical Solution on a change in depreciation
method due to Tax Reform 2016 (PITF No. 32, June 17, 2016) in the first quarter andchanged the depreciation method for the facilities attached to buildings and structuresacquired from April 1, 2016 from the declining-balance method to the straight-line
method.
The effect of the change on earnings in the first three quarters of the fiscal year underreview is minor.
(4) Additional information
Application of the Revised Implementation Guidance on Recoverability of Deferred Tax
AssetsFrom the first quarter of this fiscal year, the Group is applying the Revised
Implementation Guidance on Recoverability of Deferred Tax Assets (Revised Guidance
No. 26, March 28, 2016).
Performance-based stock compensation system for directors
At the shareholders’ meeting held on June 29, 2016, the Company resolved to introduce
a performance-based stock compensation system for directors (excluding external
directors; the same shall apply hereinafter) to boost their motivation to contribute to thesustainable growth of the Group and increases in the Group’s enterprise value in themedium to long terms. The system has been introduced.
1) Outline of the system
This system is a performance-based stock compensation system where points will begiven to the directors in accordance with their positions and performance and shares in
the Company will be transferred to them when they retire. The number of shares to betransferred to each director will be in accordance with their cumulative points.
At the introduction of the system, the Company contributed funds to set up a trust to
deliver shares to officials (“the Trust”).
2) Shares in the Company remaining in the Trust
Shares in the Company remaining in the Trust are included in treasury stock in net
assets of the quarterly consolidated balance sheet. As of December 31, 2016, the bookvalue of shares in the Company held by the Trust was 779 million yen, and the numberof shares in the Company held by the Trust was 339,000.

4Financial Statements — Consolidated
Balance Sheet — Consolidated(Million yen)

AssetsCurrent assets
Cash and deposits
Notes receivable – trade
Accounts receivable – tradeMarketable securities
Finished products
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings (net)
Machinery and equipment (net)Other (net)Total property, plant and equipment
Intangible fixed assets
Goodwill
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

As ofMarch 31, 2016
Amount

As ofDecember 31, 2016
Amount58,374
7,463
63,552
7,566
3,130
3,690
2,433
4,518
(185)
150,546

70,705
7,571
55,326
484
2,862
7,872
2,078
4,501
(162)
151,241

15,09332,30430,99078,38813,45534,04625,83073,332

15,114
9,088
24,202

12,168
7,963
20,13237,0638,111(204)
44,970147,561
298,10734,3138,961(189)
43,086
136,550
287,792

5

(Million yen)

As ofMarch 31, 2016
Amount

As ofDecember 31, 2016
AmountLiabilities
Current liabilities
Notes payable – trade
Accounts payable – trade
Income taxes payable
Provision
Other
Total current liabilities
Non-current liabilities
Net defined benefit liability
Provision
Other
Total noncurrent liabilities
Total liabilities

1,719
21,0603,705
3,418
14,50344,407

2,121
18,9191,301
2,185
14,611
39,13915,46757
9,210
24,735
69,142

15,77725
7,930
23,73462,873

13,45010,993
196,788(8,695)
212,536

13,45010,993201,239(9,477)
216,205

16,061

14,534

398
(380)
(618)
(101)
15,3601,067
228,964
298,107683(380)(7,163)
(25)
7,648
1,064
224,918
287,792

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Deferred gains (losses) on hedges
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

6

Statements of Income and Comprehensive Income — Consolidated
Statement of Income(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of unconsolidated subsidiaries
and affiliates
Other
Total non-operating income
Non-operating expenses
Interest expense
Acquisition-related expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on liquidation of businessTotal extraordinary losses
Income before income taxes
Income taxes
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of parent

Nine months ended
December 31, 2015
Amount148,862
97,93950,92336,882
14,040Nine months ended
December 31, 2016
Amount152,086
102,076
50,00936,363
13,646

172
467

138
477

168

124

322
1,130

315
1,056

154
87
193
435
14,735

151
129
316
597
14,104

147
147

391
391

150
150
14,731
5,299
9,432
117
9,314

14,496
4,256
10,23994
10,144

7

Statement of Comprehensive Income(Million yen)

Net income
Other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Components:
Comprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests

Nine months ended
December 31, 2015
Amount9,432

Nine months ended
December 31, 2016
Amount10,2392,606(1,528)48(1,461)(6)284(6,515)
76

(125)

(156)

1,061
10,494(7,840)2,398

10,421

2,385

73

13

8

Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Nine months ended December 31, 2016 (April 1, 2016 – December 31, 2016)
Not applicable(Notes on Significant Changes in Shareholders’ Equity)
Nine months ended December 31, 2016 (April 1, 2016 – December 31, 2016)
Not applicable(Segment Information)
1. Sales and income by reportable segment
Nine months ended December 31, 2015 (April 1, 2015 – December 31, 2015)(Million yen)

Reportable Segments

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

Sales
Sales to outside customers
Inter-segment sales or transfers

62,060191

86,801
113

148,862
304

–
(304)

148,862–

Total

62,252

86,915

149,167(304)

148,862

Segment income

5,506

8,544

14,051(10)

14,040Notes:
1. Adjustments related to sales represent elimination of inter-segment sales. Resultant adjustment of segment
income is reflected in segment income adjustments.
2. Segment income is shown at the operating income level.

Nine months ended December 31, 2016 (April 1, 2016 – December 31, 2016)(Million yen)

Reportable Segment

Sales
Sales to outside customers
Inter-segment sales or transfers
Total
Segment income

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

61,276
185
61,462
5,870

90,810146
90,956
7,791

152,086332
152,418
13,661

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)
–
(332)
(332)
(15)

152,086–
152,086
13,646

Notes:
1. Adjustments related to sales represent elimination of inter-segment sales. Resultant adjustment of segment
income is reflected in segment income adjustments.
2. Segment income is shown at the operating income level.

9Significant Subsequent Events
Acquisition of equity interests by a consolidated subsidiary
On December 19, 2016, the Company concluded a contract to acquire all of the equity
interests of Fremont Industries, LLC (hereinafter, referred to as “Fremont”), a U.S.
water treatment chemicals manufacturing and sales company, through Kurita America
Holdings Incorporated, a wholly owned subsidiary of the Company established on
November 30, 2016. On January 3, 2017, the acquisition of all of the equity interests
was completed.
1. Name, address, representative, paid-in capital, and business of the company of which
equity interests are to be acquired(1) Name:
Fremont Industries, LLC(2) Address:
4400 Valley Ind. Blvd. N. Shakopee, Minnesota, U.S.A.
(3) Representative:
Mark L. Gruss, CEO(4) Paid-in capital:
10,000 US dollars(5) Business:
Manufacture and sale of water treatment chemicals
2. Purpose of acquisition
Fremont is a water treatment chemicals manufacturing and sales company
headquartered in Minnesota, U.S.A. The company provides water treatment chemicals
primarily in the biofuel and food industries, which are expected to grow, and in a
broad range of other fields, including hospitals and air conditioning for buildings.
Fremont has built local area-centric operating bases and systems in the Midwest. The
Company will take advantage of Fremont’s customer base and sales network to expand
sales of the Group’s products and technologies and tap new markets.
3. Date of acquisition
January 3, 2017
4. Acquisition price and shareholding after acquisition(1) Acquisition price:
4,623 million yen(2) Shareholding after acquisition: 100%10

Supplementary Information — Consolidated(1) Order Intake(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 31,
2015
2016
Amount%Amount62,13339.0
61,246%37.8

Water Treatment Facilities

97,09461.0

100,868

62.2

Total

159,228100.0

162,115100.0(2) Net Sales(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 31,
2015
2016
Amount%Amount62,06041.7
61,276%40.3

Water Treatment Facilities

86,801

58.3

90,810

59.7

Total

148,862100.0

152,086

100.0(3) Capital Expenditures (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 31,
2015
2016
Amount%Amount
1,238
9.0
1,290

%
20.7

Water Treatment Facilities

12,529

91.0

4,932

79.3

Total

13,768

100.0

6,222

100.0

(4) Depreciation (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 31,
2015
2016
Amount%Amount
1,186
11.8
1,192

%
11.9

Water Treatment Facilities

8,880

88.2

8,784

88.1

Total

10,066

100.0

9,976

100.0

11