Kurita Water Industries Ltd.

URL:http://www.kurita.co.jp/english/

ANNUAL REPORT 2010

What areKurita’s Strengths?

4-7, Nishi-Shinjuku 3-chome, Shinjuku-ku, Tokyo 160-8383, Japan
Tel: 81 (3) 3347-3111

This annual report is printed using soy ink.
Printed in Japan

ANNUAL REPORT 2010
For the year ended March 31, 2010

CONTENTS
01
02
04
09

PROFILE
WHAT ARE KURITA’S STRENGTHS?
AN INTERVIEW WITH THE PRESIDENTOVERVIEW OF THE MEDIUM-TERM
MANAGEMENT PLAN

12

REVIEW OF OPERATIONS
Water Treatment Chemicals
Water Treatment Facilities

15

RESEARCH AND DEVELOPMENT

16ENVIRONMENTAL INITIATIVESCORPORATE GOVERNANCE
BOARD OF DIRECTORS ANDCORPORATE AUDITORS

10
10

18
20
21
53
54

FINANCIAL SECTION
CORPORATE DATAINVESTOR INFORMATION

Water Treatment Chemicals
PRINCIPAL PRODUCTS and SERVICES• Boiler water treatment chemicals• Cooling water treatment chemicals• Wastewater treatment chemicals• Process treatment chemicals• Incinerator chemicals• Equipment and systems for water treatment chemicals• Packaged water treatment management contracts

Water Treatment Facilities (Hardware)
PRINCIPAL PRODUCTS• Ultrapure water production systems• Wastewater treatment systems• Wastewater reclamation systems• Deionized water production systems

Water Treatment Facilities (Service)
PRINCIPAL SERVICES• Maintenance services• Ultrapure water supply business• Tool cleaning services• Soil remediation services• Chemical cleaning services• Operation and maintenance services

KURITA ANNUAL REPORT 2010

Profile01

ProﬁleKurita Water Industries Ltd. has been a leader in the ﬁeld ofwater treatment since its establishment in 1949, providing abroad range of water management products and services forover half a century.
In accordance with its corporate philosophy, “Study theproperties of water, master them, and we will create anenvironment in which nature and man are in harmony,”
Kurita has expanded the scope of its activities from water
management to water and environmental management,
capitalizing on its unique technology and know-how and thecomprehensive strengths of the Kurita Group as a whole.
Kurita not only supplies products, such as water treatment
chemicals and facilities, but also provides maintenance,outsourcing services, and other high-value-added solutions
to help customers solve their water and environmental
challenges.
The 21st century has been called the “century of theenvironment.” Kurita will also endeavor to develop new
functionality for water to contribute to solving energy, foodand water problems and realizing a sustainable society.

Cautionary Statement with Respect to Forward-Looking Statements
This annual report contains forward-looking statements regarding forecasts, plans, strategies and business performance in the future. These forward-looking statements represent judgments made by the Company based on
information currently available to it and involve a variety of risks and uncertainties.
Actual results may be materially different from these forward-looking statements. Such risks and uncertainties
include (but are not limited to) changes in the economic environment, business conditions, market, demand andcurrency exchange rates.

Breakdown of Net Sales
Net Sales ¥178.5 billion

Breakdown of Orders
Orders ¥175.2 billion

Water Treatment
Chemicals

Water Treatment
Chemicals

Water Treatment
Chemicals

Breakdown of Operating Income
Operating Income ¥26.4 billion

30.1%

30.5%

31.0%
69.9%

69.5%

Water Treatment
Facilities

69.0%

Water Treatment
Facilities

Water Treatment
Facilities(Fiscal year ended March 31, 2010)

02

KURITA ANNUAL REPORT 2010

What are Kurita’s strengths?

What are Kurita’s strengths?
Kurita satisﬁes customers’ needs in the ﬁelds of water andenvironmental management by providing total solutions.
1. Cutting-Edge Technological Capabilities
Kurita’s core technologies cover the wide-ranging
ﬁelds of water and environmental management,
including membrane separation, microbe control,
anticorrosion and dispersion, analysis and monitoring.

Core technologies

Separation

Microbecontrol

Anticorrosion/
Dispersion

Analysis/
Monitoring

2. Unique Business Mix
Chemicals

Kurita is one of the few companies in the world thatappropriately balances the three business pillars of water
treatment chemicals, water treatment facilities andmaintenance services.
This enables Kurita to offer a broad lineup of water
treatment-related products and services.

KURITA
Maintenance

Facilities

3. Strong and Diverse Customer Base
Kurita possesses a strong customer base extending across adiverse range of customer industries, including electronics, oil
reﬁning and petrochemicals, pulp and paper, steel, food andbeverages and pharmaceuticals.
Kurita boasts the number-one market share for water
treatment chemicals and facilities in Japan and high market
shares in Asia and Brazil.

Pulp & Paper

Steel

Semiconductors

LCDs

Oil Refining &Petrochemicals

Pharmaceuticals

Food & Beverages

Real Estate

KURITA ANNUAL REPORT 2010

What are Kurita’s strengths?

4. Solution-Providing Capabilities
Utilizing its advanced technological capabilities,
accumulated know-how, balanced business mix
and its sales network, Kurita consistently proposesa range of high-value-added solutions to meet thechallenges of increasing productivity, reducing
environmental burdens and conserving energy.
Kurita maintains well-staffed operating bases,
located near customer sites, that respond swiftlyand meticulously to meet customers’ real needs.

Maintenanceservices

ProposesolutionsChemicals

Facilities

Identify
issuesCustomers

Developnew
technologies

Emergency
responses
Sales
NetworkDaily
diagnostic
checks
Accumulated
know-how

5. Direct Contributions toEnvironmental Burden Reduction
Kurita’s unique business structure leads directly to the
reduction of the customers’ environmental burdens.
Through its business operations, Kurita contributes to its
customers’ water management, resulting in water andenergy conservation and the reduction of CO2 emissions.

03

Technologicalcapabilities

04

KURITA ANNUAL REPORT 2010

An Interview with the President

An Interview with the President
As the environment facing
our customers and societychanges with increasing speed,
we will continue to evolve theKurita Group’s services andconstantly deliver new value.

Hiroshi Saito, President

1 The fiscal year ended March 2010, was your inaugural year aspresident. Looking back, how do you assess the year?

A1: During this fiscal year, the Kurita Group demonstrated

point in both the Chemicals and Facilities segments,

its capacity to weather an economic downturn in anreaching 14.8% overall and approaching its

adverse market environment. Although the worst of thehighest level ever.

recession was behind us, uncertainty about the future was

We were able to maintain high profitability despite apervasive, and capital expenditure fell sharply in Japan andsharp decline in demand for two reasons. First, weabroad. Customers’ capacity utilization increased throughrigorously reduced total costs on a group-wide basis.

the fiscal second half but failed to improve substantially.

We achieved a more robust cost structure by reducing

As a result, consolidated order bookings decreased

selling, general and administrative expenses by ¥1.0 billion

10.2% from the previous fiscal year to ¥175,162 million, andfrom the previous fiscal year and improving our cost of sales

net sales declined 10.6% to ¥178,520 million. However,ratio by 2.3 percentage points. Second, we changed our

profits were down only slightly despite this revenue decline.

business mix by expanding the highly profitable service

Operating income fell 5.6% to ¥26,358 million. The

businesses. I attribute this success to the years of effort we

operating income margin improved by 0.8 of a percentage

have devoted to bolstering our service businesses.

KURITA ANNUAL REPORT 2010

An Interview with the President

205This year is the second year of Make Progress 2011 (MP-11),
the medium-term management plan Kurita launched in April
2009. What are you doing to expand and evolve the service
businesses, one of the plan’s key strategies?

A2: The starting point for Kurita’s services is a desire to

virtue of sales to a domestic large complex for LCD

contribute to enhancing productivity for customers andmanufacturing. As a result, the contribution of service

society and improving the environment. When I reconsider

businesses to total sales rose to 85%, and we are gradually

the nature of business services, it strikes me that the salient

building a business model that is resistant to fluctuations incharacteristics of services are that they are intangible, theycustomers’ capital expenditure and capable of generating

finish instantaneously, and they cease to be services whenstable earnings.

new alternative services appear. As the environment facing

In the Water Treatment Chemicals segment, by adopting

our customers and society at large changes with increasing

methods of visualizing all issues related to utilitiy facilities at

speed, we will continue to evolve the Kurita Group’s

customer plants, we are working together with customers toservices and constantly deliver new value.

implement solutions to those issues. We also developed

Although revenue from maintenance services declined

chemicals for reverse osmosis (RO) membranes to expand

due to low capacity utilization rates in the fiscal year ended

and enhance our product line, targeting the Chinese

March 31, 2010, we were able to dramatically increase sales

wastewater reclamation market and the Middle Easternof the ultrapure water supply business’s sales, mainly by

seawater desalination market.

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

Millions of yen

Percentage
ChangeThousands of
U.S. dollars (Note 1)

2010

2009

2010/20092010

For the year:¥178,520¥199,706–10.6%$1,918,753

Operating income

26,35827,935–5.6

283,300

Income before income taxes and minority interests

28,178

26,103+7.9

302,863

Net income

17,28816,299+6.1

185,815

Total assets

251,620

245,406+2.5

2,704,434

Equity (Note 2)

192,589

177,291+8.6

2,069,959

Net sales

At year-end:

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

Yen

U.S. dollars¥134.88¥126.69			

$1.44

36.00

34.00			0.38Notes: 1. The U.S. dollar amounts are given solely for convenience at the rate of ¥93.04 to US$1, the prevailing rate on the Tokyo Foreign Exchange Market on March 31, 2010.
2. Equity represents net assets less minority interests.

06

KURITA ANNUAL REPORT 2010

An Interview with the President

3

What measures have you taken to expand global operations,another of MP-11’s key strategies, and what results havethey yielded?

A3: The Kurita Group branched into overseas operations

However, overcoming fierce cost competition in China isearly on, establishing operating subsidiaries in Brazil andcrucial. Maintaining profitability will require production

Singapore in the 1970s, so we already have a structural

innovations that overturn conventional thinking. To that end,

foundation in place. With an eye to accelerating economic

our Water and Resource Reclamation Engineering

growth, we intend to reexamine the functions of each of our

Department, which was established in April 2010, will carrysites and localize in the true sense of the word by structuring

out local production and local procurement in China. In

operations to optimally suit each region’s characteristics.

addition, we plan to expand the business domain of Kurita

In the fiscal year ended March 31, 2010, we obtained

Water Industries (Suzhou) and fully integrate our production

several major orders, including orders for ultrapure waterand maintenance operations. We will seek out collaborative

production systems for LCD-panel production in China. We

ventures with customers and local companies also. As wewill continue to pursue orders with the aim of acquiring thehave done in Japan, we will harness our comprehensive

leading share of the Chinese water treatment facilities

strengths, built on a balanced portfolio of facilities,

market for electronics market.

chemicals, and maintenance businesses, in pursuit of a truly

An unfortunate consequence of China’s striking
economic growth is emerging environmental problems, andunique presence for Kurita in China’s industrial water
treatment market.

we expect significant demand for wastewater treatment andreclamation to arise. Without fail, we intend to takeComprehensive service provision in China

advantage of this once-in-a-lifetime opportunity. We have
newly established a Water and Resource Reclamation

Kurita Water Industries (Dalian) Co., Ltd.

Project Department in April 2010 and will work with

Manufacture and saleof water treatment
chemicals

unprecedented urgency to capture this demand. One of thetarget markets of the Water and Resource Reclamation
Project Department is general industries in China. Untapped

Beijing

DalianTianjindemand in China is enormous among Japanese companies
operating there. We will concentrate on capturing demand

QingdaoJinan

for industrial wastewater reclamation and recycling from thefood, automotive, plating, pharmaceutical, and other generalindustries.

Nantong
Wuxi

Baoshan

Hefei
Wuhan

SuzhouShanghaiNingboGuangzhou
Shenzhen

Water Treatment Chemicals

Kuritec (Shanghai)Co., Ltd.
Sale and maintenanceof water treatment
facilities

Kurita Water Industries (Suzhou) Ltd.
Manufacture and saleof water treatment
facilities

Water Treatment Facilities

KURITA ANNUAL REPORT 2010

An Interview with the President

407

Please tell us about Kurita’s new product and technology
development efforts.

A4: For many years, Kurita has engaged in wide-ranging

In the fiscal year ended March 31, 2010, our efforts in

R&D activities relevant to water and the environment, fromthe electronics industry began to yield results. For instance,

research into basic technologies to new business creation.

we developed an electrolyzed sulfuric acid generator that

I intend to ensure that Kurita prevails amid severe

contributes to productivity and environmental mitigation incompetition. To accomplish this will require superb

the resist removal process in semiconductor manufacturing.

technological capabilities. With Kurita’s uniquely brilliant

We also applied our proprietary clathrate compoundtechnologies as our core competence, I believe that we

technology to develop an electrolyte blowout prevention

must win customer trust by persevering until we reachmaterial for aluminum electrolytic capacitors that contributes

successful outcomes even when customers present us withto electronic component safety.

difficult problems.

5

What role should Kurita play in addressing the energy, foodand water problems that plague humanity on a global scale?

A5: The Kurita Group aims to create new value by solving

also accumulated abundant experience and expertisecustomers’ problems through various forms of water

through maintenance and operation services, and ismanagement, with an emphasis on the industrial watercapable of building systems that meet diverse needs.

sector. “Water regeneration” to enable wastewater

We will take advantage of such comprehensive

reclamation and recycling not only contributes to customer

capabilities to provide our customers with new value

productivity and environmental mitigation but also leads tothrough sophisticated water regeneration. Additionally, we

the creation of new water resources in the sense of creating

will engage in in-depth exploration of new functions of water

usable water. The Kurita Group has cultivated technologicalin relation to food and energy problems as a medium- tocapabilities in a wide range of fields, including water

long-term priority. In this way, we hope to contribute to thetreatment chemicals and water treatment facilities. It hasrealization of a sustainable society.

08

KURITA ANNUAL REPORT 2010

An Interview with the President

6

What are your thoughts with regard to the use of cash?

A6: First of all, we intend to allocate cash to investment in

the previous year. We will continue to seize investment

growth sectors. To ensure that we are able to respond

opportunities and actively make capital expenditures while

swiftly to business opportunities, we are setting aside cash

at the same time responding to shareholder trust andfor potential new projects in the ultrapure water supply

expectations by rewarding shareholders in various ways.

business, a capital-intensive business, and so on. We will
also explore the potential for alliances or M&A.
Regarding shareholder returns, our basic policy is to

I would like to sincerely thank you—our shareholders,investors, and other stakeholders—for your longstanding
support of Kurita. We hope to earn your continued support.

continue paying stable dividends. On that basis, we aim to
distribute profits through dividend increases while allowing
for business investment and appropriate response to trends
in our operating performance. In the fiscal year ended
March 31, 2010, we paid annual dividends of ¥36 per sharein accordance with this basic policy, an increase of ¥2 from

Hiroshi Saito, President

KURITA ANNUAL REPORT 2010

Overview of the Medium-Term Management Plan

09

Overview of the Medium-Term Management Plan

Make Progress 2011(MP-11)“Evolution and Progress”
Basic concepts and direction

Expand andevolve service
businesses

In April 2009, the Kurita Group launched MP-11(Make Progress 2011), a three-year management
plan with the basic aim of constantly advancing
toward earning customer trust and carving out
new business domains. The plan’s basic theme is“evolution and progress.”
The MP-11 medium-term management plan is
250
aimed at enhancing Kurita’s competitiveness and224.0 224.0
generating further
growth based on three key
strategies:
expandingand evolving services
200
195.0 195.0
businesses;
expanding
63.0 63.0 global operations; and178.5 178.5
developing
new products and markets, deriving
57.3 57.3
150
53.7
new53.7
value from water,
and creating new function
179.0 179.0
Service weServiceof water. Additionally,
will pursue further gains
161.2 161.2Business Business
Revenues
Revenues
116.0
116.0
in
corporate
value
by
also
continuing to develop
100 152.1 152.1
our expertise and manufacturing skills and98.4 98.4103.8 103.8
rigorously managing risks.

Expand global
operations250

New valueandnew functionof water

200

150

Bolster operating baseDevelop our expertise andmanufacturing skills

Risk management

100

50

50

26.4

0

0

26.433.8

33.845.045.0Service Business Expansion

2012 201220102011 Expansion
2011
Global2010
Business(plan) (plan)(plan) (plan)

Years ended March 31 (Billions of yen)

Water Treatment
Water Chemicals
Treatment
Years ended March
31 (Billionsof yen) Chemicals
Water Treatment Facilities (Service)

Water Treatment Facilities (Service)
Water Treatment(Hardware)
Water Facilities
Treatment
Facilities (Hardware)

250

OverseasOverseas
Sales bySales
Regionby Region

35

224.0
200

195.0

178.5
53.7

179.0
161.2
152.1

100

98.4

30

30

25

25

63.0

57.3
150

35

116.0

19.0
20
2.6
1.415
1.6

20

ServiceBusiness
Revenues

15

103.8
10

10

50

13.4

5
0

26.4

33.8

45.0

2010

2011
(plan)

2012(plan)

0

5

29.6

32.0

Asia

35

29.6

25.3
22.3

13.4

0

Overseas Sales by Business Segment

Overseas Sales by Region

32.0
29.6 2.6
2.8 1.7
1.6 2.4
3.0

35

32.0
2.6
30
1.7
2.4
25

35
30

29.6

32.0
29.6

32.0

10.9

12.5
10.9

12.5

18.7

19.5
18.7

19.5

25

20

19.0
20

15
25.3

9.4

10

10

5

9.65

0

0

15

19.0
9.4

9.6

2012 20122012 2012 2010 20102011 20112010 20102011 2011
(plan) (plan)(plan) (plan)(plan) (plan)(plan) (plan)

Water Treatment Chemicals
Water Treatment Facilities (Service)
Water Treatment Facilities (Hardware)

35

29.6
2.8
1.6
3.0
19.0
2.6
1.4
1.6
22.3

OverseasOverseas
Sales bySales
Business
SegmentSegment
by Business

32.0

North
America
Asia
North Europe
America Other
EuropeOther

Water Treatment
Chemicals Chemicals
Water Treatment
Water Treatment
Facilities Facilities
Water Treatment

10

KURITA ANNUAL REPORT 2010

Review of Operations: Water Treatment Chemicals

OrdersYears ended March 31 (Millions of yen)

60,00053,90356,56059,029 58,470

Sales

Years ended March 31 (Millions of yen)
60,00053,37050,00050,00040,00040,00030,00030,00020,00020,00010,00010,00054,54956,66758,646 58,331

Operating Income
Years ended March 31 (Millions of yen)

9,525

10,0008,806

53,743
8,000

8,417

7,961

8,177

6,000

4,000

0

0

2006

2007

2008

2009

2010

2,000

2006

2007

2008

2009

2010

0

2006

2007

2008

2009

2010

KURITA ANNUAL REPORT 2010

Review of Operations: Water Treatment Chemicals

11

Review of Operations

Water Treatment Chemicals

Operating Results
In the fiscal year ended March 31, 2010, the Kurita Groupendeavored to propose solutions that help boost
productivity and alleviate environmental burdens in
response to customer needs. The Group also engaged inefforts, including new product development, aimed atincreasing future orders. Nevertheless, water treatment
chemical sales declined 7.9% from the fiscal year ended
March 31, 2009, reflecting a slow recovery in customer
capacity utilization.
Domestic sales were down 6.3%, as sales of all
products declined from the previous fiscal year, including
such major products as boiler water treatment chemicals,cooling water treatment chemicals, and wastewater
treatment chemicals. However, demand increased
moderately toward the second half of the fiscal year.
Overseas sales decreased 14.4% from the previous
fiscal year, reflecting a decline in sales through the third
quarter. Demand recovered markedly from the final quarter,
however, primarily in Asia.
Operating income in this segment declined by only 2.8%
from the previous fiscal year. We held the decline to aminimum primarily by virtue of group-wide cost-cutting
initiatives that lowered selling, general and administrative(SG&A) expenses and an improved cost-to-sales ratio
reflecting our shift toward higher value-added products andlower raw material prices. As a result, the segment’s
operating margin improved by 0.8 of a percentage pointfrom the previous fiscal year, to 15.2%.

Initiatives for the Fiscal Year ending
March 31, 2011
The Kurita Group expects overseas demand to continue
recovering, primarily in Asia, and recovery in domestic
demand to remain moderate.
In such an environment, the Group aims to further
strengthen intragroup cooperation to provide customerrelevant solutions. Additionally, it seeks to expand businessby developing new products and increasing sales, while
continuing to pursue cost-cutting initiatives to shore
up profitability.
Customers in many industries are shifting production
facilities to Asia and other regions at an increasing pace.
The entire Kurita Group will work in concert to assist
customers’ overseas expansion. The Group has over 30
years of experience in overseas markets, where it has ninecompanies (eight overseas subsidiaries and one affiliate)
engaged in the manufacture and sales of water treatment
chemicals. Overseas, as in the domestic market, we arefocused on building and retaining customer trust throughon-site customer visits and conscientious application of our
Problem-Solving Cycle.

Problem-Solving Cycle
Kurita Water Industries and its sales subsidiaries and sales
agents work together to provide customer-relevant solutions.
ProposeEach of these Kurita Group entities has a deﬁned role. Kurita
Accumulated
solutions
Water Industries makes projections of societal and customer
know-howneeds and develops cutting-edge water treatment chemicals
KuritaWater
Sales
Customers
Identify
Industries technology in response. Sales subsidiaries oversee theirsubsidiaries
Developissuesand sales agentsnew technologies
respective areas and customize Kurita Water Industries’
Daily diagnostic
cutting-edge technology to suit customer needs. Particularly
checksthrough the customer visits conducted by sales agent staff overmany years, Kurita has accumulated a vast pool of customer
information that is an invaluable resource for creating
enhanced-value propositions and developing new technology.

12

KURITA ANNUAL REPORT 2010

Review of Operations: Water Treatment Facilities

OrdersYears ended March 31 (Millions of yen)

150,000

130,007

149,659
136,595
135,969

Years ended March 31 (Millions of yen)

140,479

150,000

121,791

120,000

Sales

120,000

146,228

Operating Income
Years ended March 31 (Millions of yen)
25,000141,374

20,939124,777

119,133

19,51720,00018,181
15,47190,00090,00015,00060,00060,00010,00030,00030,000

5,000

0

0

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

0

9,349

2006

2007

2008

2009

2010

KURITA ANNUAL REPORT 2010

Review of Operations: Water Treatment Facilities

13

Review of Operations

Water Treatment Facilities

Operating Results
Overview
In the fiscal year ended March 31, 2010, the Kurita Group’s
Water Treatment Facilities segment focused on increasing
the profits from its services business while pursuing neworders by intensifying consultative sales to key customers inboth domestic and overseas markets. The Group also
focused on developing and expanding sales of new
products. Nevertheless, the Water Treatment Facilities
segment’s orders and sales declined 10.8% and 11.7%
respectively year on year as a result of customers’ sharp
capital expenditure cutbacks. Although the sales decline
affected operating income somewhat, we held the decline
to a minimum (6.8%) by improving our sales mix, reducing
sales costs, and cutting back on SG&A expenses. The
segment’s operating margin was 14.6%, an improvement of
0.8 of a percentage point over the previous fiscal year.
Electronics Industry
In the ultrapure water supply business, although the Group
received one contract cancellation, capacity utilization was
mostly high at other sites, and new facilities for an LCD
production complex, which represented a major capital
investment during the previous fiscal year, went into fulloperation. Business expanded substantially overall
as a result.
In the ultrapure water production systems, domesticorders dropped amid subdued semiconductor- and LCD-

related capital expenditure. However, overseas orders
increased sharply as the Group received large LCD-relatedorders in China and South Korea.
Maintenance service orders declined sharply as
customers deferred replacement of membranes, ionexchange resins, and other consumables, but demand
exhibited signs of bottoming out through the second half ofthe fiscal year under review.
In the tool cleaning services, an outsourcing service thatcleans semiconductor and LCD production equipment’s jigs
and parts, revenues declined as a result of pricing pressure
and customers’ reduced capacity utilization, along withplant consolidations and closures.
We continued to explore new products and newtechnology. The Group developed an electrolyzed sulfuric
acid generator, named Green Sulfaceed KD™, for resist
removal in semiconductor manufacturing. The Group has
already received initial and follow-on orders from a leading
U.S. semiconductor manufacturer. We also applied Kurita’s
proprietary clathrate compound technology to develop
Epsiguard™ KC, an electrolyte blowout prevention material
for aluminum electrolytic capacitors.
To maintain our technological competitive advantage, in
April 2009 we constructed a high-performance resin (ionexchange polisher) and membrane (UF membrane module)
refining facility at our Shizuoka Plant in response to
demands from semiconductor and wafer manufacturers forultrapure water of higher purity and more consistent quality.

Electrolyzed Sulfuric Acid Generator
Traditional resist removal processes used in semiconductor
manufacturing employ a mixed solution of sulfuric acid and hydrogen
peroxide (a sulfuric/peroxide mix, or SPM). A means of reducing theuse of these chemicals has long been sought after to mitigate theenvironmental impact and reduce costs. By employing diamondelectrodes for electrolysis, this generator enables semiconductor
manufacturers to signiﬁcantly reduce processing chemical
consumption while achieving resist removal efﬁciency that outperforms
conventional SPM methods. The Group will work with leading domestic
and overseas semiconductor manufacturers to assess the generator’s
performance with a view to increasing uptake.

14

KURITA ANNUAL REPORT 2010

Review of Operations: Water Treatment Facilities

General Industries
With regard to pure water production systems andwastewater treatment systems, sales to electric powercompanies held steady on the back of large orders, butboth orders and revenues from general industries declined
as customers curtailed capital expenditure.
In the maintenance services, both orders and sales
decreased substantially as a result of maintenance deferrals
by customers.
In the chemical cleaning services, which cleans boilers
and heat exchangers at thermal power plants and large
industrial plants, sales declined due to customers’ reduced
capacity utilization and capital expenditure cutbacks.
The soil remediation services encountered sluggish
demand for both assessment and remediation services in
the wake of the domestic real estate market downturn.

Initiatives for the Fiscal Year ending
March 31, 2011
Domestic customers’ capital expenditure is likely to remain
subdued. Overseas, however, capital expenditure in theelectronics industry and general industries looks set to
expand in Asia, and particularly in China. Amid such anenvironment, this fiscal year the Kurita Group will continue
working to obtain new orders in pursuit of the leading
market share for water treatment systems in the Chinese
electronics industry. In April 2010, the Group established
the Water and Resource Reclamation Project Department
to promote the efficient use of water resources throughreclamation and recycling of industrial wastewater, primarily

Overview of the Ultrapure Water Supply Business
Overview of the ultrapure water supply business
Customer’s factory

Ultrapure water supply

Manufacturing
process

Payment of fixed
and usage-based fee

Kurita in customer’s factory
Ownership

Operation

MaintenanceUltrapure water production systems and other water treatment facilities

targeting Japanese companies operating in China and otheroverseas markets in the food, automotive, plating,pharmaceutical and other industries.
The Group aims to profit by expanding service
businesses that are less susceptible to fluctuations incustomers’ capital expenditure and by continuously
improving quality and productivity and reducing costs. In
response to rising cost competition overseas, particularly in
China, the Group will endeavor to reduce costs by stepping
up local production and procurement.
In terms of new technology, the Group developed awastewater treatment system that enables coal-fired power
plants to efficiently remove selenium, a regulated
substance, from wastewater while simultaneously reducing
the amount of sludge produced. The Group aims to expand
deliveries of the system to Japanese electric utilities.

High-Performance Resin and MembraneReﬁning Plant
Progressive semiconductor miniaturization and capacity increases inrecent years are driving increased demand for ultrapure water ofhigher purity and more consistent quality. In particular, cutting-edge
manufacturing techniques for 32-nm Class or later semiconductor
devices require ultrapure water with a metallic ion concentration
stabilized at 0.1 ppt or less. With the reﬁning plant’s completion,
Kurita became the ﬁrst company in the world to guarantee a metallic
ion concentration of 0.1 ppt or less at time of shipment with respect toion-exchange polishers and UF membrane modules, meeting thenext-generation standard for ultrapure water.

KURITA ANNUAL REPORT 2010

Research & Development

15

Research & Development
The Kurita Group is conducting research and development
in a wide range of fields encompassing basic technologies(e.g., analytical technologies, IT controls, technologies formonitoring water treatment effectiveness) and technologies
to create new businesses in addition to those related to its
core businesses: boiler and cooling water treatment,ultrapure water production, industrial water and wastewater
treatment, wastewater reclamation, and soil andgroundwater remediation. R&D is conducted mainly by our
Research and Development Division. The Kurita Group has a
combined R&D staff of approximately 140 personnel,
equivalent to 3.1% of the Group’s total workforce. In thefiscal year ended March 31, 2010, R&D expenses totaled¥3,990 million (2.2% of net sales).

1) Water Treatment Chemicals
In the Water Treatment Chemicals segment, Kurita isdeveloping chemicals that contribute to energy efficiency,
environmental mitigation, and productivity enhancement at
customer sites and systems that monitor water treatment
effectiveness.
Major R&D accomplishments during the fiscal year
ended March 31, 2010, include the following.
• Kurita has developed chemicals to treat effluent of cleaning
pure water discharged from the plants of major electronic
industrial firms to reuse it as makeup water of cooling towers
for air conditioning, thereby contributing to saving andeffectively using water resources. Kurita has also developed aprocess for managing and controlling use of the chemicals.
• Kurita has developed a treatment technology to reduce
corrosion of the cooling tower heat exchanger caused by
low-hardness industrial water produced by reverse
osmosis, such as that used in Southeast Asia (Singapore).
• Kurita has developed chemicals and their application
technology to help paper mills to reduce use of bleach(hydrogen peroxide) while maintaining whiteness whenbleaching recycled pulp.
• Kurita has developed chemicals to prevent heat loss causedby accumulation of incinerator ash inside heat exchangers,
thus reducing periodic cleaning frequency for power 		plants which use sludge and wood waste biomass as fuel.
The Water Treatment Chemicals segment’s R&D
expenses totaled ¥1,114 million.

2) Water Treatment Facilities
In the Water Treatment Facilities segment, Kurita is
endeavoring to further improve ultrapure water quality toenhance productivity in the electronics and other industries
and developing wastewater treatment and soil remediation
technologies in anticipation of future environmental
regulations. Kurita is also developing technologies
conducive to a closed-loop economy, including those forwastewater reclamation and reuse and sludge
volume reduction.
Major R&D accomplishments during the fiscal year
ended March 31, 2010, include the following.
• Kurita has developed equipment to recover calcium fluoride(CaF2 ), from which hydrofluoric acid is produced, fromhydrofluoric acid wastewater yielded from semiconductor
manufacturing processes.
• Kurita has developed equipment to substantially reduce thetotal quantity of hazardous chemicals used in the 		
photoresist removal process, one of the main processes
in semiconductor manufacturing.
• Kurita has developed equipment to dewater sludge cake, abyproduct of activated sludge treatment processes. The
dewatered sludge cake has low moisture content and canbe converted to a fuel to help customers to reduce CO2
emissions.
• Kurita has developed a technology to remediate groundwatercontaminated by chlorinated ethylenes and benzenes byrapidly oxidizing and degrading those compounds.
The Water Treatment Facilities segment’s R&D expenses
totaled ¥2,875 million.

16

KURITA ANNUAL REPORT 2010

Environmental Initiatives

Environmental Initiatives
The Kurita Group’s environmental improvement
activities are based on its Basic Environmental
Improvement Policy and Action Guidelines. Every
Kurita Group employee is striving to solve waterand environmental challenges and contribute to asustainable society.

Environmental Management Policy

Corporate Philosophy
Study the propertiesof water, master them,and we will create
an environment in which natureand man are in harmony.

Basic Environmental Improvement Policy
The Kurita Group will conduct business activities
based on its corporate philosophy and will endeavor tosolve water and environmental issues with the aimof making broad contributions to society

Action Guidelines
1. We will contribute to the realization of a resource-recycling society by developing
new products and technologies conducive to environmental improvement.
2. We will work with customers to improve the environment by providing products,
technologies, and services that improve productivity, reduce environmental impact,and offer innovative energy solutions.
3. In conducting business activities, we will reduce environmental impact by daily practicing
the three Rs (Reduce, Reuse, Recycle) through operational improvement and innovation.

Environmental Improvement
Activity Regime
Kurita maintains an Environmental Improvement Promotion
Committee chaired by Kurita’s director responsible forenvironmental improvement activities, which deliberates onpolicy and other matters relevant to the Kurita Group’s
environmental activities. In accordance with policies
formulated, Kurita’s administrative and business divisions’individual Environmental Improvement Promotion Committee,
its offices, and its Group subsidiaries formulate and pursue
their own targets, policies, and measures. Individual offices
and subsidiaries convene an Environmental Improvement
Activity Promotion Meeting to ascertain the progress ofactivities and attainment of targets, policies, and measuresand to assess the activities’ adequacy and effectiveness.
Kurita also regularly conducts on-site surveys to ascertain

the status and progress of its environmental improvement
activities on the ground. In addition, Kurita conducts
compliance-based monitoring, with particular emphasis on
the management of chemical and waste substances, and it
engages in continuous improvement through corrective
actions as necessary.

Characteristics of Kurita’s Environmental
Improvement Activities
Following its corporate philosophy, the Kurita Group
continuously endeavors to provide solutions to water andenvironmental challenges and the challenges of corporate
growth through environmental improvement activities basedon a three-pronged approach of responding to societal
needs, meeting customer needs, and pursuing internalchange. Close links between business activities andenvironmental improvement activities are a salient
characteristic of Kurita’s environmental
improvement activities.
To respond to societal needs in accordance with its Action
Guidelines, the Group develops new products, technologies,
and services that have the potential to lead to decisive
solutions to environmental issues confronting society. The
Group measures its performance with respect to the societal
needs component of its activities based on the number ofdevelopment projects and a customer environmental benefit
indicator that measures the impact of new products. The
number of development projects is calculated as the total
number of themes for which research and development
projects were completed during the fiscal year.
To meet customers’ needs in accordance with its Action
Guidelines, the Group works with customers based on theshared recognition of their challenges related to productivity,
environmental mitigation, and energy innovation. The Grouppursues environmental improvements at customer sites andoffices by formulating and providing solutions that accurately
meet the customer’s needs. The Group calculates customer
environmental benefit indicators that measure reductions in
the customer’s environmental burden resulting from theadoption of the Group’s improvement proposals. These
indicators are used to gauge performance with respect to thecustomer needs component of its activities. The customer
environmental benefit indicators are not calculated on an

KURITA ANNUAL REPORT 2010

Environmental Initiatives

actual operating basis. Instead, they are essentially an
estimate (i.e., deemed effect) of the annual difference
between the customer’s environmental burden before andafter adoption of a Kurita Group proposal, based on
environmental burden reductions given in specifications andproposals submitted to customers.
With regard to internal change in accordance with its
Action Guidelines, the Group sets three categories oftargets: reduction of CO2 emissions, reduction of waste
disposal volume, and rigorous chemicals management. To
achieve these targets, all Group employees strive to mitigate
environmental burdens arising from the Group’s operations
as part of their daily routine.
CO2 emissions and waste volume are monitored on amonthly basis through the Kurita Group’s group-wide
environmental information gathering system.

Results of Environmental Activities in theYear Ended March 31, 2010
With respect to the societal needs component of its
activities, the Group completed 16 research anddevelopment projects that contributed to environmental
improvement in the year ended March 31, 2010.
With respect to the customer needs component of its
activities, the Group reduced CO2 emissions by 209,384
tons and waste disposal volume by 81,235 tons.
With respect to the internal change component of its
activities, the Group did not meet its target for intragroupenvironmental improvement activities for CO2 emissions perunit sale, which were up by 16.9% for the year ended March
31, 2010, against a targeted 1.0% reduction compared to theyear ended March 31, 2009. Emissions increased 1,022 tons
to 23,563 tons in absolute terms compared with 22,541 tons

Environmental Improvement Activity Regime
President

Environmental Improvement
Activity Promotion Meeting
Environmental
Improvement
Promotion Committee(within operating divisions)for the year ended March 31, 2009. The Group reduced its
waste output by 947 tons to 26,186 tons, thereby achieving its
target of not increasing waste output in absolute terms from its
value of 27,133 tons for the fiscal year ended March 31, 2009.
Kurita will report in detail on its environmental improvement
activities’ results in its annual Environmental Report, which isscheduled to be published in September 2010.

Initiatives for the Fiscal Year Ending
March 31, 2011
For the year ending March 31, 2011, the Kurita Group will
pursue environmental improvement activities based on twotargets: enhance customer benefits from environmental
improvement activities and reduce the Kurita Group’s
environmental burden through intra-group environmental
improvement activities.
With respect to environmental improvement activities forcustomers, four subsidiaries have newly launched relevant
initiatives and almost all domestic subsidiaries have now set
targets, putting the Kurita Group in an ideal position to
reduce CO2 emissions and waste through its activities.
The Group gauged the performance of its intra-groupenvironmental improvement activities by evaluating andanalyzing the type and volume of industrial wastes
generated at Kurita construction sites in the fiscal year
ended March 31, 2010. The Group will continue working to
reduce industrial wastes at its construction sites, including
those of its subsidiaries. To reduce the amount of waste it
ultimately disposes of, the Group will endeavor to boost
recycling rates by recycling valuable resources extracted
from wastes that are currently disposed of in landfills.

The Three Aspects of Kurita’s Environmental
Improvement Activities
Customers’ environmental
improvement activities

Environmental Improvement
Promotion Committee

Business sites(Environmental
improvement
activity facilitators)

Group companies(Environmental
improvement
activity facilitators)

17

Kurita’s own
environmental
improvement
activities

Aspect 1:
Societal needs

Aspect 2:
Customer needs

Aspect 3:
Internal change

Realizing a resourcerecycling society
through the developmentof new products andtechnologies that
contribute to environmental
improvement

Products, technologies andservices that will enable
customers to improvethe environments

Reducing environmental
impact by putting the
3Rs into practicethrough operational
improvement andinnovation

18

KURITA ANNUAL REPORT 2010

Corporate GovernanceCorporate Governance
Basic Policy
Kurita and Kurita Group companies aim to contributebroadly to society and meet the expectations of theirstakeholders, including shareholders and investors, throughcorporate activities in the fields of water and environment inaccordance with the Kurita corporate philosophy. To realize
these aims, the Group has adopted a basic corporate
governance policy with two main components. The first isestablishing management systems that improve
management transparency and efficiency and sustainably
increase corporate value. The second is rigorous oversightof management and operational execution.

Board of Directors, Decision-Making andExecution Framework, Outside Director
Kurita’s Board of Directors currently comprises 13 directors,
including one outside director. Board of Directors’ meetings
are chaired by the president and held monthly on a regularlyscheduled basis and whenever else necessary on an ad
hoc basis. The Board of Directors sets management policy,
makes management decisions, and oversees directors’
execution of their duties. Kurita’s Executive Committee,
composed of directors with a rank of managing director orabove (currently six directors), meets twice monthly as a
general rule to deliberate on important management
matters and assist the Board of Directors’ decision-making.
To complement its decision-making, the Board of Directors
has also established an authorization protocol based on
authorization and review regulations.
In terms of operational execution, Kurita has employed
an executive officer system since 2005 with the aim ofstrengthening officers capabilities. Kurita currently has six
executive officers, who were selected by the president(representative director). Through these frameworks, Kurita
endeavors to achieve agile, appropriate management
decision-making and execution.
An important aspect of the outside director’s role is toensure management objectivity by voicing opinions asnecessary at Board of Directors’ meetings.

Corporate Auditors, Oversight and Auditing
Systems, and Outside Corporate Auditors
Kurita employs a corporate auditor system. Its Board of
Corporate Auditors comprises three corporate auditors,
including two outside auditors. Corporate auditors audit
directors’ execution of their duties, with a primary focus on
their monitoring and oversight duties, in accordance withaudit policies and schedules set by the Board of Corporate
Auditors. Corporate auditors attend Board of Directors’
meetings and other important company meetings andoversee and monitor the Board of Directors’ execution ofduties and fulfillment of its oversight responsibilities.
Corporate Auditors’ other responsibilities include
conducting asset status surveys of the entire group,
including subsidiaries, checking the status and functionalityof internal control systems implemented by the Board of
Directors, overseeing accounting auditors’ independence
and job performance, and verifying the results ofaccounting audits. The corporate auditors also endeavor to
improve audit effectiveness and efficiency by working with
the Internal Auditing Department, which reports directly tothe president and whose function is to enhance andstrengthen internal control. The corporate auditors and theInternal Auditing Department discuss the department’s
audit plan for each fiscal year and exchange opinions
regarding the status and results of operational audits(conducted by the Internal Auditing Department),
assessment of internal control over financial reporting, andassessment of risk management.
Kurita has appointed Grant Thornton Taiyo ASG as its
accounting auditor. Grant Thornton Taiyo ASG audits
Kurita’s accounts and internal controls. The corporate
auditors and the Board of Corporate Auditors augment
these audits by conferring with the accounting auditor on
both a periodic and as-needed basis.
The two outside corporate auditors endeavor to ensure
monitoring objectivity and fairness through their participationin the Board of Directors’ meetings and the Board of
Corporate Auditors meetings, where they provide opinionsfrom both broad and specialized perspectives. This spring,
Kurita registered the outside director and the two outside
corporate auditors as independent officers in accord with theTokyo Stock Exchange’s listing regulations, as amended.

KURITA ANNUAL REPORT 2010

Corporate GovernanceInternal Control Systems, including
Compliance and Risk Management
Systems
Kurita recognizes that building and operating solid internal
control systems enhances the effectiveness of corporate
governance and helps to improve a company’s credibility.
Based on this recognition, Kurita is steadily implementing
internal control systems.
As a major step in this direction, the Board of Directors
prescribed the Fundamental Policy Regarding theEstablishment of Internal Control Systems in May 2006 in
accordance with the requirements of Japan’s Companies
Act and subsequently has augmented it with several
revisions whenever necessary on an ad hoc basis. Kurita’scurrent internal control systems are described below.
Compliance is one of Kurita’s top management
priorities. Kurita has established a Compliance Committee
and Group Compliance Committee both chaired by an
executive senior managing director (representative director)
to conduct and improve group-wide compliance activities.
Kurita’s organizational units and group companies do not
merely regard compliance as abiding to the law. They
regard it as a broad ethical practice aimed at realizing fivevalues: fairness, transparency, integrity, safety, andcoexistence. Kurita set forth these values in its Code of
Ethical Conduct, which it prescribed in 2000. Additionally,
Kurita has instituted whistleblower protection regulations
and established an internal consultation desk and a liaison
for external consultations and reporting.
In terms of risk management, the general manager of the
Corporate Planning Division is the designated officer incharge of group-wide risk oversight and risk management.
Under the officer’s leadership, risk analyses andassessments are conducted on a regularly scheduled basis,
and initiatives to mitigate serious risks are implemented.
With regard to internal control over financial reporting,
Kurita allocated responsibility for monitoring the status ofinternal controls and recommending and supporting internal
control improvements to its aforementioned Internal
Auditing Department ahead of the introduction of theinternal controls reporting system mandated by Japan’s
Financial Instruments and Exchange Act from the fiscal year
ended March 31, 2009.

19

The president evaluated the aforementioned internal
controls over financial reporting, verified that they areproperly implemented and operational as of the fiscal years
ended March 2009 and 2010, and submitted an internal
control report, which is included in Kurita’s annual securities
report (annual statutory disclosure document), to the
Financial Services Agency after the report had been auditedby the accounting auditor.

Information Disclosure and Investor
RelationsWith the aim of gaining societal trust and building fair andtransparent relationships with stakeholders, Kurita endeavors
to adequately disclose information on a timely basis incompliance with the Companies Act and the Financial
Instruments and Exchange Act, other applicable laws, andthe Tokyo Stock Exchange’s timely disclosure regulations
and other requirements. To achieve greater transparency,
Kurita also strives to ensure timely and fair disclosure even of
information outside the purview of these disclosure laws andregulations. It does this by various means, including
conferences, explanatory meetings, and publication on thecompany website. Kurita also conducts investor relations
activities, such as ad hoc and regularly scheduled investor
and analyst meetings. Kurita views such meetings not merely
as a means of disclosure but also as opportunities for twoway communication with investors, based on which it
endeavors to improve company management.

Organization
General Meetingof Shareholders

Board ofDirectors

Board ofCorporate Auditors
Corporate
Auditors

Executive
Committee
PresidentInternal Auditing
Department
Operating
Divisions

20

KURITA ANNUAL REPORT 2010

Board of Directors and Corporate Auditors

Board of Directors and Corporate Auditors

ChairmanPresident*

Hiroshi Fujino

Hiroshi Saito

Executive Senior
Managing Director*

Managing Director

Kazufumi Moriuchi

Toshiaki Deguchi

Managing Director

Managing Director

Tetsuo Saeki

Kaoru Kajii

General Manager ofFacilities Division

General Manager ofChemicals Division

General Manager ofFacilities Production Division

General Manager ofCorporate Planning Division

Directors

Tetsuo Kai

General Manager of Sales DivisionⅡ,
Facilities DivisionCorporate Auditors

Heiju Maeda

General Manager of 2nd Group,
Chemicals Division

Shigeaki Takeda

Motoyuki Yoda

Kouichi Iioka

Kiyoshi Itou

General Manager of 1st Group,
Chemicals Division
General Manager of Facilities for
General Industry Group, Sales DivisionⅠ,
Facilities Division

Tohru Ishizaka
Chiaki Kuzuu (External Corporate Auditor)
Tamio Uda (External Corporate Auditor)

General Manager ofResearch and Development Division
General Manager of Administrative Division

Noriyuki Hayata (External Director)*Representative Director

KURITA ANNUAL REPORT 2010

Financial Section

21

Financial Section
Six-Year Financial Summary
Kurita Water Industries Ltd. and Consolidated Subsidiaries
Years ended March 31
Millions of yen

2010

2009

2008

2007

2006

2005

For the year:
Net sales¥178,520 ¥199,706 ¥204,875 ¥197,146 ¥173,683 ¥160,896
Water Treatment Chemicals
53,74358,33158,646
56,66754,54950,637
Water Treatment Facilities
124,777 141,374 146,228 140,479 119,133 110,259
Cost of sales
117,221 135,874 138,549 137,819 122,630 112,077
Selling, general and administrative expenses
34,94135,89635,85735,05033,741
32,867
Operating income
26,35827,93530,46824,276
17,311
15,951
Income before income taxes and minority interests
28,178
26,10331,27924,591
18,20016,376
Net income
17,28816,29918,297
14,207
10,519
9,383
Capital expenditures
8,083
56,32224,097
19,563
16,537
6,706
Research and development (R&D) expenses
3,990
4,363
4,551
4,421
4,213
4,228
Depreciation and amortization
15,523
11,716
9,425
6,512
4,906
4,361
At year-end:
Total current assets
109,297
98,689 121,562 137,004 125,231 116,400
Total current liabilities
38,59247,93549,08065,49654,87744,465Equity192,589 177,291 169,402 156,772 145,366 136,366
Total assets
251,620 245,406 231,498 235,137 212,774 192,428
Number of shares issued outstanding (thousands) 132,800 132,800 132,800 132,800 132,800 132,800
Number of employees (persons)
4,445
4,404
4,249
3,992
3,668
3,382
Amounts per share of common stock (yen):
Net income
134.4
126.7
142.2
110.4
81.8
71.8
Equity1,497.0
1,378.0
1,316.7
1,218.4
1,129.7
1,058.9
Cash dividends applicable to the year
36.0
34.0
32.0
28.0
22.0
18.0
Ratios:Total assets turnover (times)
0.72
0.84
0.88
0.88
0.86
0.86
Equity ratio (%)
76.5
72.2
73.2
66.7
68.3
70.9
Return on sales (%)
9.7
8.2
8.9
7.2
6.1
5.8
Return on assets (ROA) (%)
7.0
6.8
7.8
6.3
5.2
5.0
Return on equity (ROE) (%)
9.3
9.4
11.2
9.4
7.5
7.1
Notes: Equity represents net assets less minority interests.
Return on Assets = Net Income ÷ Total Assets (Average) × 100

Contents
Management’s Discussion and Analysis 22
Consolidated Balance Sheets 30
Consolidated Statements of Income 32
Consolidated Statements of Changes in Net Assets 33
Consolidated Statements of Cash Flows 34
Notes to Consolidated Financial Statements 35
Report of Independent Certified Public Accountants 52

22

KURITA ANNUAL REPORT 2010

Financial Section

Management’s Discussion and Analysis
Business Overview

Years ended March 31 (Millions of yen)Orders by Segment
200,000

192,529
183,910
135,969
130,007

208,689
149,659 195,065
136,595 175,162
121,791

150,000

100,000

50,000059,02953,90356,560

2006

2007

2008

58,47053,3702009

2010

Water Treatment Facilities
Water Treatment Chemicals

Years ended March 31 (Millions of yen)

Sales by Segment
200,000

150,000

197,146 204,875 199,706
146,228 141,374
178,520
173,683 140,479
124,777
119,133

100,000

50,000054,54956,66758,64658,331

53,743

2006

2007

2008

2009

2010

Water Treatment Facilities
Water Treatment Chemicals

In the fiscal year ended March 31, 2010, markets in which the Kurita Group
operates were extremely challenging overall. Although the economy emerged
from the worst depths of recession, economic prospects remained highly
uncertain and the recovery lacked vigor. Capital expenditure remained subdued
in the electronics industry and general industries in Japan, as in the previous
fiscal year, while showing signs of recovering in the electronics industry in Asia.
Customers’ capacity utilization increased through the fiscal second half but did
not improve significantly.
The fiscal year ended March 31, 2010, was the inaugural year of MP-11, ourthree-year management plan. Following the basic theme of “evolution andprogress,” Kurita actively endeavored to further expand its service businesses
and global operations and branch into new products and markets as priority
measures.
Consolidated operating income declined in tandem with a decline in net
sales, but Kurita minimized the decline by stepping up cost-cutting efforts. Net
income increased owing to a decrease of loss on valuation of investment
securities and gains on liquidation due to termination of contracts.

Operating Resultsa) OrdersIn the Water Treatment Chemicals segment, Kurita bolstered sales efforts bystrengthening alliances with its domestic and overseas sales subsidiaries andpursued order bookings through a consultative sales approach to help
customers successfully meet challenges such as environmental mitigation andproductivity enhancement.
In the Water Treatment Facilities segment, Kurita worked to secure orders byfocusing on service businesses, including the ultrapure water supply business,and stepping up consultative sales efforts aimed at key customers, including
those undertaking overseas projects.
In both segments, the Group also worked to increase future orders by
Water Treatment Facilities
Treatmentexpanding
Chemicals
developingWaterandsales of new products.
Total consolidated orders for the Kurita Group in the fiscal year ended March
31, 2010, were down 10.2% versus the previous fiscal year to ¥175,162 million
yen. Orders declined from the previous fiscal year in both the Water Treatment
200000Chemicals and Water Treatment Facilities segments.
160000120000
80000
40000
0

23

KURITA ANNUAL REPORT 2010

Financial Sectionb) Net Sales
In the Water Treatment Chemicals segment, net sales declined 6.3% in Japanand 14.4% overseas, resulting in a 7.9% decline for the entire segment. In thefiscal second half, signs of recovery emerged mainly in overseas markets.
In the Water Treatment Facilities segment, the ultrapure water supply
business’s net sales increased markedly, but sales of hardware declined ascustomers curbed capital expenditure, while sales of maintenance services also
declined owing to a decline in maintenance frequency. Overall, the segment’s
net sales declined 11.7%.
Overall, the Kurita Group’s net sales declined 10.6% versus the previous
fiscal year to ¥178,520 million.
c) Cost of Sales and Gross Profit
Cost of sales was down 13.7 % to ¥117,221 million from ¥135,874 million in thefiscal year ended March 31, 2009, reflecting more intense cost cutting as well asa decline in net sales.
As a percentage of sales, cost of sales declined to 65.7% in the year ended
March 31, 2010, an improvement of 2.3 percentage points from 68.0% in theprevious fiscal year.
In the Water Treatment Chemicals segment, the main factors behind thecost-of-sales ratio’s decrease were lower raw materials prices and a positive
shift in the sales mix toward relatively more profitable high-value-added
products. In the Water Treatment Facilities segment, the cost-of-sales ratio’s
decrease was chiefly attributable to an improvement in the sales mix and costcutting efforts.

Years ended March 31 (Millions of yen)

Gross Profit
80,00066,32560,00059,326

63,831

61,2992009

2010

51,05240,00020,000

0

2006

2007

2008

Years ended March 31 (Millions of yen)

SG&A Expenses
40,00033,74135,05035,85735,89634,941

2006

2007

2008

2009

2010

30,00020,00010,000d) Selling, General and Administrative (SG&A) Expenses
SG&A expenses were ¥34,941 million, down 2.7% or ¥955 million from ¥35,896
in the fiscal year ended March 31, 2009. The decrease in SG&A expenses was
attributable to group-wide efforts to reduce expenditures. As a percentage ofsales, SG&A expenses increased to 19.6%, up 1.6 percentage points from
18.0% in the previous fiscal year.
e) Operating Income
Operating income decreased to ¥26,358 million in the year ended March 31,
2010, down 5.6% from ¥27,935 million in the fiscal year ended March 31, 2009.
The operating margin increased to 14.8% from 14.0% in the previous fiscal year.

0

Years ended March 31 (Millions of yen)

Operating Income by Segment
30,46820,93930,00024,276
15,471
20,00026,35818,181

17,311
9,349

10,000027,935
19,517

7,961

8,806

9,525

2006

2007

2008

8,417

8,177

2009

2010

Water Treatment Facilities
Water Treatment Chemicals
Note: Total operating income includes corporate items
and eliminations

24

KURITA ANNUAL REPORT 2010

Financial Sectionf) Segment Information
Water Treatment Chemicals
Orders and Sales
In Japan, overall orders fell versus the previous fiscal year, including those for theGroup’s mainstay boiler water treatment chemicals, cooling water treatment
chemicals, and wastewater treatment chemicals, as the recovery in customers’
capacity utilization lacked vigor.
Despite signs of a pick-up in some Asian industries, overseas orders also
decreased amid the global economic slowdown.
Years ended March 31 (%)

Operating Income Margin by Segment
16

14.6

7

4

16.2
14.9

14.4

14.3

13.8 14.0

2008

2009

12.3

13

10

15.5

15.2
14.8
14.6

11.0
10.0
7.8

2006

2007

Water Treatment Chemicals
Total
Water Treatment Facilities

Fiscal year ended March 31, 2010

Breakdown of Net Sales

Overseas Domestic
10.6% 89.4%¥178,520

2010

Operating Income
In the fiscal year ended March 31, 2010, Kurita endeavored to reduce SG&A
expenses and reduce sales costs by switching to high-value-added products.
By virtue of these efforts, and assisted by lower raw materials prices, Kurita held
the decline in operating income to a minimum.
Overall, the Water Treatment Chemicals segment booked orders of ¥ 53,370
million (down 8.7 % versus the previous fiscal year) and earned operating
income of ¥8,177 million (down 2.9%) on sales of ¥ 53,743 million (down 7.9%).
Water Treatment Facilities
OrdersIn the electronics industry, domestic orders for the ultrapure water supply
business were up markedly versus the previous fiscal year as a new facility went
into operation, despite domestic orders for ultrapure water production systems
16
falling sharply as customers drastically curtailed capital expenditures. Overseas,orders were up substantiallyas the Group received large LCD-related orders in
13
China and South Korea.
10
Orders for water
treatment facilities and maintenance services for generalindustries dropped considerably versus the previous fiscal year, primarily due to7
a fall in capital expendituremirroring that in the electronics industry.
4

Sales
The ultrapure water supply business’s sales to the electronics industry increased
substantially as new facilities went into operation, but sales of hardware,
maintenance services, and tool cleaning services declined.
Sales of hardware, maintenance services, and soil remediation services togeneral industries also declined.
Operating Income
Despite efforts to improve its sales mix and cut costs, the Water Treatment
Facilities segment’s operating income declined in tandem with the decline insales.

KURITA ANNUAL REPORT 2010

Financial Section

25

Overall, the Water Treatment Facilities segment booked orders of ¥121,791
million (down 10.8% versus the previous fiscal year) and earned operating
income of ¥18,181 million (down 6.8%) on sales of ¥124,777 million (down
11.7%).
g) Overseas Sales
Overseas sales fell 26.8% to ¥19,011 million in the year ended March 31, 2010.
Overseas sales’ share of consolidated net sales decreased to 10.6% from
13.0% in the fiscal year ended March 31, 2009.
Sales by region• Asia: Down 33.2% to ¥13,404 million, equivalent to 70.5% of total
overseas sales• North America: Up 18.6% to ¥1,626 million, 8.6% of total overseas sales• Europe: Down 11.2% to ¥1,399 million, 7.4% of total overseas sales• Rest of the world: Down 12.1% to ¥2,581 million, 13.6% of total overseas
salesh) Other Income and Expenses
Other income and expenses netted out to income of ¥1,819 million in a reversal
from the previous fiscal year’s ¥1,831 million loss. This reversal was mainly
attributable to two factors. First, in the fiscal year ended March 31, 2009, theGroup recorded ¥2,018 million in valuation losses on investment securities,
which did not recur this fiscal year. Second, the Group recorded a liquidation
gain of ¥1,507 million associated with a contract termination.
i) Income before Income Taxes and Minority Interests
Income before income taxes and minority interests increased 7.9% to ¥28,178
million from ¥26,103 million in the fiscal year ended March 31, 2009. Pretax
profit margin consequently increased to 15.8% from 13.1% in the previous fiscal
year.
j) Net Income
After deducting income taxes and income from minority interests, Kurita earned
net income of ¥17,288 million, a 6.1% increase from ¥16,299 million in the fiscal
year ended March 31, 2009. Net income per share rose to ¥134.38 from¥126.69 in the previous fiscal year. Net margin increased to 9.7% from 8.2% in
the previous fiscal year.
Return on equity decreased to 9.3% from 9.4% in the previous fiscal year.

Fiscal year ended March 31, 2010

Overseas Sales by Region
Europe
7.4%

Other
13.6%

¥19,011

Asia
70.5%

North America
8.6%

Years ended March 31 (Yen)Net Income per Share150

142.21
126.6912090134.38110.42
81.76

60
30
0

2006

2007

2008

2009

2010

150

Years ended March 31 (%)

Return on Equity

120

16

90
60

13

11.2

7

4

9.4

9.4

10

9.3

30
0

7.5

16

2006

2007

2008

2009

2010

13

Note: Equity represents net assets less minority interests.

10

7

4

26

KURITA ANNUAL REPORT 2010

Financial Section

Years ended March 31 (Yen)Dividends per Share
40

36.0

34.0

32.0
28.0

30

22.0
20

10

0

30
25

2006

2007

2008

2010

2009

Years ended March 31 (Millions of yen)

Capital Expenditures andDepreciation and Amortization
60,00056,32250,00040,00030,00020,000 16,537
10,0000k) Dividend Policy
Kurita’s basic policy is to pay stable dividends on an ongoing basis. Kurita
strives to increase its dividends, taking into consideration earnings performanceand investment in its businesses.
In light of future business prospects and to reward shareholders for theirsupport, Kurita paid annual dividends of ¥36 per share (of which, ¥17 per share
was an interim
dividend), ¥2 per share increase versus the previous fiscal year’s
40
35¥34 per share(of which, ¥17 per share was an interim dividend).

19,563

4,906
2006

24,097

6,512
2007

9,425
2008

15,523
11,716
8,083
2009

2010

Capital Expenditures
Depreciation and Amortization

Capital 20
Expenditures

The Kurita15 Group is committed to making necessary investments in
10
technologicalinnovation, expansion of production capacity, and competitiveness5enhancement in response to intensification of sales competition. In the year
0
ended March
31, 2010, investment totaled ¥8,083 million, an 85.6% year-onyear decrease.
The Water Treatment Chemicals segment reduced its investment in tangible
60000
capital assets 22.7% year on year to ¥908 million, most of which was for
50000
replacementof chemical production equipment.
40000
The Water Treatment Facilities segment invested a total of ¥6,616 million in
30000
tangible
capital assets, primarily to newly install and expand ultrapure watersupplyand tool cleaning facilities. This was a substantial 87.9% decline from the20000
previous
10000fiscal year when the Group made large investments in the ultrapure
water supply
business.
0
Depreciation and amortization increased 32.5% year on year to ¥15,523
million in the year ended March 31, 2010, reflecting an increase in depreciation
on facilities for the ultrapure water supply business.

Research and Development
Years ended March 31 (Millions of yen)

R&D Expenses
5,000
4,000

4,213

4,421

4,551

4,363

3,990

3,000
2,000
1,000
0

2006

2007

2008

2009

2010

Kurita conducts R&D through its Research and Development Division. In theyear ended March 31, 2010, total R&D expenses decreased 8.5% to ¥3,990
million, equivalent to 2.2% of net sales. The Kurita Group employs approximately
140 R&D personnel, equivalent to 3.1% of its total workforce (4,445 personnel
on a consolidated basis).
The Water Treatment Chemicals segment’s R&D activities predominantly
involved developing chemicals that help customers improve energy efficiency,
reduce their environmental footprint, and boost productivity and developing
technologies for systems that monitor water treatment effectiveness. Its R&D
expenditures totaled ¥1,114 million, a 9.7% decrease versus the fiscal year
ended March 31, 2009.

KURITA ANNUAL REPORT 2010

Financial Section

27

In the Water Treatment Facilities segment, Kurita endeavored to further
improve ultrapure water quality to enhance productivity in the electronics
industry and develop wastewater treatment and soil remediation technologies in
anticipation of future environmental regulations. Kurita also endeavored todevelop technologies conducive to a closed-loop economy, such as wastewater
reclamation for reuse and sludge volume reduction. Its R&D expenditures totaled¥2,875 million, an 8.1% decrease versus the previous fiscal year.

Financial Positiona) Total Assets
At March 31, 2010, Kurita had total assets of ¥251,620 million, an increase of¥6,214 million from ¥245,406 million at March 31, 2009.

As of March 31 (Millions of yen)

Total Assets
250,000

212,774

Current Assets
Current assets at March 31, 2010, totaled ¥109,297 million, an increase of¥10,608 million from ¥98,689 million at March 31, 2009.
This was mainly due to a ¥27,467 million increase in marketable securities,
partly offset by a ¥9,698 million decline in cash and deposits and a ¥5,029
million decline in trade notes and trade accounts receivable. The decline in tradenotes and trade accounts resulted from collection of accounts receivable
coupled with decreased sales. The increase in marketable securities was due toincreased investment in certificates of deposit, resulting in a net increase of¥17,769 million in the combined total of marketable securities and cash anddeposits.
Fixed Assets (Property, Plant and Equipment, Intangible Assets, and­Investments and Long-term Receivables)
At March 31, 2010, property, plant and equipment totaled ¥116,500 million, adecrease of ¥9,563 million from ¥126,063 million at March 31, 2009. Thisoccurred because depreciation on property, plant and equipment exceeded
capital expenditure (owing to large capital expenditures being made in theprevious fiscal year).
Investments and long-term receivables ended March 31, 2010, at ¥23,649
million, an increase of ¥5,281 million from ¥18,368 million a year earlier. The
increase was mainly attributable to an increase in investment securities
holdings.
b) Liabilities
At March 31, 2010, liabilities totaled ¥57,680 million, a decrease of ¥9,099
million from ¥66,779 million at March 31, 2009.

235,137 231,498

245,406 251,620

200,000
150,000
100,000
50,000
0

2006

2007

2008

2009

2010

As of March 31 (Millions of yen)

Property, Plant and Equipment (net)150

150,000

126,063
120,000
90,000116,500

120

90

81,98467,28860,00060

53,99130

30,000
0

2006

2007

2008

2009

2010

28

KURITA ANNUAL REPORT 2010

Financial Section

Current liabilities
Current liabilities at March 31, 2010, were ¥38,592 million, a decrease of ¥9,343
million from ¥47,935 million at March 31, 2009. The decrease was mainly due toa ¥9,804 million decline in other accounts payable and despite a ¥3,649 million
increase in income tax payable. The decline in other accounts payable wasmainly due to payments for facilities for the ultrapure water supply businessacquired in the previous fiscal year.
Long-term Liabilities
Long-term liabilities at March 31, 2010, were ¥19,088 million, a small increase of¥244 million from ¥18,844 million at March 31, 2009.
As of March 31 (Millions of yen)

Equity200,000

150,000

145,366

156,772

169,402177,291

192,589

100,000

50,000

0

2006

2007

2008

2009

2010

Note: Equity represents net assets less minority interests.

c) Net Assets
At March 31, 2010, net assets totaled ¥193,939 million, a ¥15,313 million
increase from ¥178,626 million at March 31, 2009. This increase was mainly due
to two factors, which offset dividend payments of ¥4,374 million out of retained
earnings. First, net income of ¥17,288 million resulted in a net increase inretained earnings of ¥12,925 million. Second, valuation and translation
adjustments increased by ¥2,381 million due to an increase in market values ofinvestment securities and an increase in the yen-value of overseas subsidiaries
and affiliates’ net assets due to the yen’s depreciation.
At March 31, 2010, Kurita had an equity ratio of 76.5%, up 4.3 percentage
points from 72.2% a year earlier. Equity per share at March 31, 2010, was¥1,496.98, an increase of ¥118.94 from ¥1,378.04 a year earlier.
*Equity is defined as net assets less minority interests.

Cash Flows
Years ended March 31 (Millions of yen)

Cash Flows fromOperating Activities
50,00043,64440,00033,65830,00020,00027,07020,380013,856

10,0000Cash Flows from Operating
Activities
200000Operating activities provided net cash of ¥43,644 million in the fiscal year ended
March 31, 2010, an increaseof ¥9,986 million versus the previous fiscal year
150000(ended March 31, 2009). This primarily reflects a net inflow comprising income
100000before income taxes, a decreasein depreciation and amortization, and adecrease in trade notes and accounts receivable, which was partially offset by50000
the payment of income taxes.

2006

2007

2008

2009

2010

Cash Flows from Investing Activities
Investingactivities used net cash of ¥44,350 million, an increase of ¥11,428
50000
million versus the previous fiscal year. This primarily reflects a net outflow from
40000
purchases and redemptions of marketable securities and outflows for the30000
acquisitionof property, plant and equipment, mainly for the ultrapure watersupplybusiness.
20000
10000
0

KURITA ANNUAL REPORT 2010

Financial Section

Cash Flows from Financing Activities
Financing activities used net cash of ¥4,859 million, a decrease of ¥146 million
versus the previous fiscal year. The main use of cash was dividend payments.
Cash and Cash Equivalents’ Ending Balance (on a consolidated basis)
At March 31, 2010, Kurita had cash and cash equivalents totaling ¥20,590
million, a decrease of ¥4,672 million versus March 31, 2009.

29

As of March 31 (Millions of yen)

Cash and Cash Equivalents at
End of Year
40,00030,00037,44230,36029,871

25,262
20,59020,00010,000Business Risks
Major risk factors that could affect the Kurita Group’s future performance include
domestic and overseas economic trends, customers’ level of capital expenditure
related to water treatment and capacity utilization rates, and movements inprices of crude oil and raw materials. Risks facing the Group, some of which are
unpredictable, are not limited to those specified herein.
(1) Factors That May Affect Operating Performance
Water Treatment Chemicals
Operating performance is affected by fluctuations in demand depending onchanges in capacity utilization rates in industries that are the major source ofdemand for the Water Treatment Chemicals segment’s products and services,
including the steel, oil refining and petrochemical, and pulp and paper industries.
Changes in prices of key raw materials in response to movements in crude oiland other commodity prices also affect operating performance.
Water Treatment Facilities
Operating performance is affected by fluctuations in demand due to capital
expenditure trends in electronics and other industries that are the main sourcesof demand for the Water Treatment Facilities segment’s products and services.
Changes in hardware production costs due to changes in construction material
prices and outsourcing costs also affect operating performance.
(2) Currency Risk
The Kurita Group considers its earnings’ sensitivity to exchange rate movements
to be minor because foreign currency-denominated transactions account for
only a small share of the Group’s total sales and purchases.

0

2006

2007

2008

2009

2010

30

KURITA ANNUAL REPORT 2010

Financial Section

Consolidated Balance Sheets
Kurita Water Industries Ltd. and Consolidated Subsidiaries
		
As of March 31, 2010 and 2009
Millions of yen

AssetsThousands of
U.S. dollars (Note 1)

2010

2009

2010

¥ 16,363
55,369(132)
28,500
5,121
2,463
1,611
109,297¥ 26,061
60,397
(104)
1,033
7,149
2,635
1,552
98,689$  175,875
595,117(1,424)306,31955,04626,482
17,317
1,174,735

Investments and long-term receivables:
Investment securities (Notes 4 and 5)
Investments in non-consolidated subsidiaries and affiliates
Deferred tax assets (Note 8)
Other investments
Allowance for doubtful accounts
Total investments and long-term receivables

14,443
1,299
6,184
1,926
(205)
23,649

9,612
1,175
5,677
2,053
(152)
18,368155,244
13,96966,471
20,702(2,205)
254,182

Property, plant and equipment, at cost:
Land (Note 11)
Buildings and structures
Machinery and equipment
Construction in progress
Other facilities
Leased assets
Total
Accumulated depreciation
Property, plant and equipment, net

13,98164,10180,472
5,273
11,042
7,599
182,471(65,971)
116,500

13,89563,872
72,813
11,448
11,234
7,370
180,636(54,572)
126,063150,272
688,970864,924
56,678
118,686
81,683
1,961,215(709,065)
1,252,149

Intangible assets
Total assets

2,173¥251,620

2,285¥245,406

23,366$2,704,434

Current assets:
Cash and time deposits (Notes 3 and 4)
Notes and accounts receivable, trade (Note 4)
Allowance for doubtful accounts
Marketable securities (Notes 4 and 5)
Inventories (Note 6)
Deferred tax assets (Note 8)
Other current assets
Total current assets

The accompanying notes are an integral part of these statements.

KURITA ANNUAL REPORT 2010

Financial Section		Millions of yen

Liabilities and Net Assets

31

Thousands of
U.S. dollars (Note 1)

2010

2009

2010

Current liabilities:
Short-term borrowings and current portion of long-term liabilities (Note 7)
Notes and accounts payable, trade (Note 4)
Accounts payable, other
Income taxes payable
Advances received
Accrued employees’ bonuses
Provision for product warranties
Other current liabilities
Total current liabilities¥    520
16,830
7,089
7,430
1,955
2,377
546
1,841
38,592¥    420
18,83016,893
3,781
2,766
2,372
937
1,932
47,935$    5,597
180,896
76,19579,86821,02025,553
5,877
19,787414,796

Long-term liabilities:
Lease obligation (Note 7)
Accrued employees’ retirement benefits (Note 8)
Accrued retirement benefits for directors and corporate auditors
Deferred tax liabilities on revaluation of land (Note 11)
Other long-term liabilities (Note 7)
Total long-term liabilities
Total liabilities

6,925
9,465
449
1,509
737
19,08857,680

7,183
8,644
738
1,519
759
18,844
66,77974,437
101,738
4,832
16,227
7,925
205,161
619,957

13,45011,426
172,717

13,45011,426
159,792

144,569
122,815
1,856,375(4,855)
192,738(4,847)
179,821(52,192)
2,071,568

1,989
(764)
(1,374)(149)
1,350
193,939¥251,620

170(750)(1,950)(2,530)
1,335
178,626¥245,406

21,379(8,219)(14,770)(1,609)14,5172,084,476$2,704,434

Net assets:
Shareholders’ equity (Note 10):
Common stock, 2010 and 2009		 Authorized: 531,000,000 shares
		 Issued:12010–132,800,256 shares					 1 2009–132,800,256 shares
		 Capital surplus
		 Retained earnings
		 Treasury stock, at cost				 2010–4,148,311 shares				 2009–4,145,419 shares
		 Total shareholders’ equity
Evaluation and translation adjustments
Unrealized gains on available-for-sale securities
Unrealized losses on revaluation of land (Note 11)
Foreign currency translation adjustments
		 Total valuation and translation adjustments
Minority interests
		 Total net assets
		 Liabilities and net assets
The accompanying notes are an integral part of these statements.

32

KURITA ANNUAL REPORT 2010

Financial Section

Consolidated Statements of Income
Kurita Water Industries Ltd. and Consolidated Subsidiaries		
For years ended March 31, 2010, 2009 and 2008
Millions of yen			Thousands of
U.S. dollars (Note 1)

2010

2009

2008

2010

Net sales (Note 13)¥178,520¥199,706¥204,875$1,918,753

Cost of sales

117,221

135,874

138,549

1,259,904

		 Gross profit

61,29963,831

66,325

658,849

Selling, general and administrative expenses (Note 12)34,94135,89635,857375,549

		 Operating income (Note 13)

26,35827,93530,468283,300

Interest and dividend income

331

573

652

3,560

Interest expense

Other income (expenses):
(26)

(36)

(45)

(284)

Gain on sale of properties

9

21

204

106

Gain on sale of investment securities

—

—

97

—

Equity in earnings of non-consolidated subsidiaries and affiliates

270

269

115

2,910

Gain on liquidation due to termination of contracts

1,507

—

—

16,207

Loss on disposal of properties

(253)

(100)

(162)

(2,722)

Loss on sale and disposal of inventories

—

—

(108)

—

Loss on valuation of investment securities—(2,018)

(103)

—

(19)

(540)

161

(214)

			

1,820

(1,832)811(19,563)

Income before income taxes and minority interests

28,178

26,10331,279302,863

Current

12,197

10,68913,113131,098

Deferred(1,379)

1,160

(469)

14,83010,817

9,529

12,644116,268

72

(273)

337

779

¥ 17,288¥ 16,299¥ 18,297$  185,815

Other, net

Income taxes (Note 8):			
Minority interests in earnings of consolidated subsidiaries
Net income

U.S. dollars(Note 1)

Yen

			

2010

2009

2008

2010

¥134.38¥126.69¥142.21

$1.44

36.00

34.00

32.00

0.38

Per share of common stock:
Net income
Cash dividends applicable to the year
The accompanying notes are an integral part of these statements.

KURITA ANNUAL REPORT 2010

Financial Section

33

Consolidated Statements of Changes in Net Assets
Kurita Water Industries Ltd. and Consolidated Subsidiaries
For years ended March 31, 2010, 2009 and 2008
Shareholders’ equity (Note 10)
Commonstock

Capitalsurplus

Balance as of March 31, 2007
¥13,450 ¥11,426
Changes during the year
Cash dividends paid
Bonuses to directors and corporate auditors
Reversal of unrealized gains (losses) onrevaluation of land
Contribution to employees’ incentive and welfare fundNet income for the year
Acquisition of treasury stock
Net changes of net assets other thanshareholders’ equity
Total changes during the year——
Balance as of March 31, 2008
¥13,450 ¥11,426
Changes during the year
Cash dividends paid
Bonuses to directors and corporate auditors
Contribution to employees’ incentive and welfare fundNet income for the year
Acquisition of treasury stock
Net changes of net assets other thanshareholders’ equity
Total changes during the year——
Balance as of March 31, 2009
¥13,450 ¥11,426
Changes during the year
Cash dividends paid
Bonuses to directors and corporate auditors
Reversal of unrealized gains (losses) onrevaluation of land
Other
Net income for the year
Acquisition of treasury stock
Net changes of net assets other thanshareholders’ equity
Total changes during the year——
Balance as of March 31, 2010
¥13,450 ¥11,426

Retainedearnings

Millions of yen
Evaluation and translation adjustments
Unrealized Unrealized
Total
Foreign
Total
gains on gains (losses) currency
evaluation Minority
Treasury shareholders’interests
availableon
revaluation
and
stock
translation translation
equityfor-saleof landadjustment
securities(Note 11)adjustments¥133,446 ¥(4,803) ¥153,519¥ 3,662¥(740)¥ 330¥ 3,252 ¥1,427

Total net
assets¥158,200(3,859)(9)(3,859)(9)(3,859)
(9)

10
(10)
18,29710(10)
18,297
(24)

10
(10)
18,297(24)(24)

14,428(24)
14,404¥147,874 ¥(4,827) ¥167,924(4,374)(6)(1)
16,299(19)(1,889)(1,889)¥ 1,773(10)(10)¥(750)

124
124
¥ 455

(1,774)230(1,774)230¥ 1,478 ¥1,658(4,374)(6)(1)
16,299(19)

11,917(19)
11,897¥159,792 ¥(4,847) ¥179,821(1,543)
12,860¥171,061(4,374)(6)(1)
16,299(19)(1,603)(1,603)¥ 170——¥(750)(2,405)(2,405)¥(1,950)(4,008) (323)(4,331)(4,008) (323)
7,565¥(2,530) ¥1,335 ¥178,626(4,374)(4,374)(4,374)

13

13

13

(2)
17,288(2)
17,288(8)(2)
17,288(8)(8)

12,925(8)
12,916¥171,717 ¥(4,855) ¥192,738

1,818
1,818
¥ 1,989(13)(13)¥(764)

575
575¥(1,374)

2,380
15
2,380
15
¥ (149) ¥1,350

Thousands of U.S. dollars (Note 1)
Evaluation and translation adjustments
Unrealized Unrealized
Total
Foreign
Total
gains on gains (losses) currency
evaluation Minority
Treasury shareholders’interests
availableon
revaluation
and
stock
translation translation
equityfor-saleof landadjustment
securities(Note 11)adjustments

2,395
15,312¥193,939

Shareholders’ equity (Note 10)
Commonstock

CapitalsurplusRetainedearnings

Balance as of March 31, 2009
$144,569 $122,815 $1,717,455 $(52,104) $1,932,736
Changes during the year
Cash dividends paid
(47,014)(47,014)
Bonuses to directors and corporate auditors
Reversal of unrealized gains (losses) on
147
147
revaluation of land
Other
(29)
(29)
Net income for the year
185,815
185,815
Acquisition of treasury stock
(87)
(87)
Net changes of net assets other thanshareholders’ equity
Total changes during the year—
— 138,919(87) 138,831
Balance as of March 31, 2010
$144,569 $122,815 $1,856,375 $(52,192) $2,071,568
The accompanying notes are an integral part of these statements.

$ 1,835

Total net
assets$(8,071) $(20,959) $(27,195) $14,352 $1,919,893(47,014)147(29)
185,815(87)

19,544
19,544$21,379(147)
6,189 25,585
165
25,751(147)
6,189 25,585
165 164,582$(8,219) $(14,770) $ (1,609) $14,517 $2,084,476

34

KURITA ANNUAL REPORT 2010

Financial Section

Consolidated Statements of Cash Flows
Kurita Water Industries Ltd. and Consolidated Subsidiaries		
For years ended March 31, 2010, 2009 and 2008
Millions of yen

			I. Cash flows from operating activities:
		 Income before income taxes and minority interests
		 Depreciation and amortization (Note 13)
		 Increase (decrease) in accrued employees’ retirement benefits
		 Gain on sale of investment securities
		 Equity in earnings of non-consolidated subsidiaries and affiliates
		 Interest and dividend income
		 Interest expense
		 Payments of bonuses to directors and corporate auditors(Decrease) Increase in accrued employees’ bonuses
		 (Decrease) Increase in other allowances, accrual and non-cash items, net
		 Changes in assets and liabilities:			  Decrease in trade receivables
		  Decrease in inventories
		  Decrease in trade payables
		  Others, net					1
		 Interest and dividends received
		 Interest paid
		 Income taxes paid		 Others, net
		  1 Net cash provided by operating activities
II. Cash flows from investing activities:
		 Decrease (increase) in time deposits, net
		 Payments for purchase of property, plant and equipment
		 Proceeds from sale of property, plant and equipment
		 Payments for purchase of marketable securities
		 and investment securities
		 Proceeds from sale and redemption of marketable		 securities and investment securities
		 Others, net			  1 Net cash used in investing activities
III. Cash flows from financing activities:
		 Increase (decrease) in short-term borrowings, net
		 Decrease in long-term borrowings, net
		 Cash dividends paid
		 Cash dividends paid to minority shareholders of		 consolidated subsidiaries
		 Payments for lease obligations
		 Payments for purchase of treasury stock, net
		  1 Net cash used in financing activities
IV. 1 Effect of exchange rate changes on cash and cash equivalents
V.		1 Net decrease in cash and cash equivalents
VI.1 Cash and cash equivalents at beginning of year
VII.1Cash and cash equivalents of newly consolidated					1 subsidiaries, net of excluded subsidiaries from consolidation
VIII.1Cash and cash equivalents at end of year (Note 3)
The accompanying notes are an integral part of these statements.

Thousands of
U.S. dollars (Note 1)

2010

2009

2008

2010

¥ 28,178
15,523
799
—
(270)
(331)
26
—
(7)
(1,884)¥ 26,103
11,716
332
12
(269)
(573)
36
(11)
(23)
2,546

¥ 31,279
9,425
(42)
—
(115)
(652)
45
(14)
59
(329)

$ 302,863
166,843
8,589—(2,910)(3,560)284—(75)(20,249)

3,473
2,194
(1,936)
1,820
47,586685(38)(8,209)3,621
43,644

10,778
3,086(4,110)(1,250)48,374
1,094(32)(15,249)(528)
33,6583,648
1,073(11,203)(1,216)
31,957747(45)(12,475)
196
20,38037,32923,591(20,811)
19,563
511,458
7,370(413)(88,236)
38,919469,098770(19,278)
56

1,230(38,291)47(34)(26,101)
350

8,276(207,206)
610(30,108)(5,145)(12,043)(323,613)

4,870
(661)
(44,350)

9,959
(722)
(32,922)

15,213(539)(23,156)

52,353(7,106)(476,685)

67—(4,369)0(92)(4,370)

(235)
(139)
(3,857)725—(46,967)

(96)
(451)
(8)
(4,859)832(4,732)25,262

(98)
(131)
(19)
(4,713)(1,119)(5,097)30,360

(108)
—
(24)
(4,365)(18)(7,160)37,442(1,042)(4,852)(87)(52,225)
8,946(50,865)
271,52660¥ 20,590

0¥ 25,26278¥ 30,360

648$ 221,309

KURITA ANNUAL REPORT 2010

Financial Section

35

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

1. B asis of presenting consolidated financial statements
Kurita Water Industries Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account and prepare
their financial statements in accordance with accounting principles and practices generally accepted in Japan, while its
foreign subsidiaries maintain their books of account and prepare their financial statements in conformity with those of thecountries of their domicile. Certain accounting principles and practices generally accepted in Japan are different fromInternational Financial Reporting Standards and standards in other countries in certain respects as to application anddisclosure requirements. Accordingly, the accompanying consolidated financial statements are intended for use by those
who are informed about Japanese accounting principles and practices.
The Company’s consolidated financial statements, prepared in accordance with accounting principles and practices
generally accepted in Japan, were originally filed with the Japanese Ministry of Finance and the Tokyo Stock Exchange as
required by the Financial Instruments and Exchange Law of Japan.
Certain reclassifications of accounts and modifications have been made in the accompanying consolidated financial
statements to facilitate understanding by readers outside Japan. These reclassifications and modifications have no effecton net income or shareholders’ equity.
All figures in the consolidated financial statements and notes are stated in millions of Japanese yen by discarding
fractional amounts of less than ¥1 million. As a result, the totals shown in the consolidated financial statements and notesin yen do not necessarily agree with the sum of the individual amounts.
The translation of yen amounts as of or for the year ended March 31, 2010 into U.S. dollars is included solely for theconvenience of readers and has been made, as a matter of arithmetical computation only, at the rate of ¥93.04 to US$1,
the prevailing rate on the Tokyo Foreign Exchange Market on March 31, 2010. The translation should not be construed asa representation that yen amounts have been, could have been or could in the future be converted into U.S. dollars at theabove or any other rate.

2. Significant accounting policies(1) Consolidation
Scope of consolidation
The consolidated financial statements included the accounts of the Company and its significant subsidiaries. For theyears ended March 31, 2010 and 2009, 37 and 38 subsidiaries were consolidated, respectively. All significant intercompany transactions and balances have been eliminated in consolidation.
Names of principal consolidated subsidiaries: Kuritaz Co., Ltd., Kurita Engineering Co., Ltd., Kuritec Service
Co. Ltd. and Kurita Chemical Manufacturing Co., Ltd.
In the year ended March 31, 2010, Kurita Chemical Manufacturing Co., Ltd., which was newly incorporated, andKurita Chemical Kumamoto Co., Ltd., which increased its materiality, were newly consolidated.
In addition, Kurita Chemical Kanagawa Co., Ltd. merged with Kurita Chemical Kanto Co., Ltd. (formerly, Kurita
Chemical Tokyo Co., Ltd.) and Kurita Chemical Hyogo Co., Ltd. merged with Kurita Chemical Kansai Co., Ltd. and one
foreign subsidiary was liquidated. Accordingly, these companies were excluded from consolidation.
Combined assets, net sales, net income (the proportion of the Company’s interest) and retained earnings (theproportion of the Company’s interest) of all the non-consolidated subsidiaries in the aggregate are not significant interms of the consolidated financial statements.
Revaluation of assets and liabilities of the consolidated subsidiaries in the consolidation process
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portions
attributable to the minority shareholders, are evaluated using the fair value at the time the Company acquired control of
the respective subsidiaries.

36

KURITA ANNUAL REPORT 2010

Financial Section

Fiscal year of consolidated subsidiaries
The fiscal years of Kurita (Singapore) Pte. Ltd. and 13 other consolidated subsidiaries (14 in 2009) end on December
31. For these consolidated subsidiaries, the financial statements as of December 31 were used for consolidation
purposes. However, material transactions that have occurred during the three-month period from January 1 to March
31 of the following year have been adjusted as necessary for consolidation.
Amortization of goodwill
The goodwill and negative goodwill are amortized using the straight-line method, over practically estimated effective
years where applicable or, otherwise, three years, except for minor amounts that are charged to income in the periodof acquisition.
(2) Equity method
Scope of equity method application
Significant investments in non-consolidated subsidiaries and affiliated companies over which the Company has theability to exercise significant influence with regard to the operating and financial policies of the investees, are accounted
for by the equity method. For the years ended March 31, 2010, and 2009, 3 companies were accounted for by theequity method.
Name of principal company applying the equity method: Kurita Sogo Service Co., Ltd.
Kurita Chemical Hokuriku Co., Ltd. and other non-consolidated subsidiaries which are not accounted for by theequity method were excluded from the scope of equity method application, because such exclusion has minimal
impact to net income (the proportion of the Company’s interest) and retained earnings (the proportion of theCompany’s interest) of the consolidated financial statements and is considered immaterial as a whole.
Fiscal years of companies accounted for by the equity method
Adjustments were made to the financial statements of the companies accounted for by the equity method whose fiscal
year-ends were not identical to the Company.
(3) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash on hand, readily
available bank deposits and short-term investments with an original maturity of three months or less and subject to aminor risk of fluctuations in value.
(4) Available-for-sale securities
Available-for-sale securities that have available fair values are stated at fair value at the balance sheet date, withresulting unrealized holding gains and losses reported as a separate component of net assets. Available-for-salesecurities with no available fair values are stated at cost computed by the moving-average method. The cost of soldsecurities is computed by the moving-average method.
(5) Inventories
Inventories held for sale in the ordinary course of business are stated at the lower of cost determined by the moving
average method, except for work in process determined by the specific-identification method, or net selling value.
(6) Derivatives transactions
Derivative transactions utilized by the Company and its subsidiaries are composed of only forward currency contracts

KURITA ANNUAL REPORT 2010

Financial Section

37

entered into when necessary to hedge the risk, as the Company maintains the policy not to engage in speculativetransactions. The Company believes that the risk of counterparty default is negligible because its forward currency
contracts are entered into only with banks with high credit ratings. In addition, transactions in forward currency
contracts are executed and managed by the finance and accounting department on a contract-by-contract basis after
they have been approval by prescribed internal procedures.
(7) Depreciation of property, plant and equipment
Property, plant and equipment is depreciated by the declining-balance method for the Company and its domestic
consolidated subsidiaries, except for buildings (other than building equipment) acquired on and after April 1, 1998, andultrapure water supply equipment located at the clients’ sites, for which the straight-line method is applied. The
straight-line method is applied by foreign consolidated subsidiaries.
The estimated useful lives of these assets are as follows:		
Buildings and structures 2–65 years
		
Machinery and equipment 4–10 years
Leased assets other than those that are deemed to transfer ownership of the leased assets are depreciated overrespective lease period by the straight-line method without salvage value(8) Impairment of long-lived assets
The Company reviews its long-lived assets for impairment in accordance with the accounting standards for impairmentof fixed assets whenever events or changes in circumstances indicate the carrying amount of an asset or asset group
may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.
(9) Accrued employees’ bonuses
The Company and its domestic subsidiaries accrue the amount of employees’ bonuses based on the anticipatedbonus payments to employees.
(10) Accrued employees’ retirement benefits
Accrued employees’ retirement benefits are recorded based on the estimated amount of projected benefit obligation at
the balance sheet date by the Company, certain of its domestic subsidiaries and certain consolidated foreignsubsidiaries and, based on the estimated amounts of projected benefit obligation and pension plan assets, at thebalance sheet date by other domestic subsidiaries. Actuarial differences are subject to amortization over a period of
1–2 years from the year when they are incurred. On July 31, 2008, the Accounting Standards Board of Japan issued
ASBJ Statement No. 19 “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3),” which requires
the companies to use the discount rate determined by reference to market yields at the end of the fiscal year on highquality bonds such as long-term Japanese government bonds, government agency bonds and high quality corporate
bonds. Effective from the year ended March 31, 2010, the Company adopted this amendment. Differences resulting
from retirement benefit obligation amounted to ¥876 million (US$9,416 thousand) and accordingly, operating income
and income before income taxes and minority interests decreased by the same amount. Unrecognized difference ofretirement benefit obligation resulting from adoption of this amendment is ¥62 million ($672 thousand). The effect on
segment information is described in Note 13.

38

KURITA ANNUAL REPORT 2010

Financial Section(11) Leases
Finance leases which do not transfer ownership are capitalized to recognize leased assets and lease obligations in the
consolidated balance sheets. Leased assets are depreciated using the straight-line method over the respective lease
periods without residual value.
(12) Consumption taxes
Consumption taxes are accounted for separately from transaction prices and are not reflected in the consolidated
statements of income.
(13) Foreign currency translation
Monetary receivables and payables denominated in foreign currency are translated using the spot exchange rate
prevailing at the balance sheet date, and the differences are charged to income as foreign exchange gains or losses.
Foreign subsidiaries’ assets and liabilities are translated using the spot exchange rate at their balance sheet date
and their income and expenses are translated using the average exchange rate during the year. The translationdifferences are recorded in “Foreign currency translation adjustments” and “Minority interests” in net assets.
(14) Appropriation of retained earnings
The accompanying consolidated statements of changes in net assets reflect the appropriations of retained earnings of
the Company in the fiscal year in which the appropriations are approved at the general shareholders’ meeting.
(15) Earnings per share
Earnings per share are computed using the weighted-average number of common shares outstanding.
(16) Reclassifications
Certain prior year amounts have been reclassified to conform to the presentation for the year ended March 31, 2010.
These changes had no impact on previously reported results of operations.
(17) Changes during the year ended March 31, 2010
Construction contracts
Prior to April 1, 2009, the Company accounted for construction contracts whose total contract amounts are more than
¥1,500 million (US$16,122 thousand) and construction period exceeds one year under the percentage-of-completion
method and for other contracts under the completed-contract method. On December 27, 2007, the ASBJ issued
Statement No.15, “Accounting Standard for Construction Contracts” and Guidance No.18, “Guidance on AccountingStandard for Construction Contracts.” Effective from the year ended March 31, 2010, the Company and certain
consolidated subsidiaries adopted the new accounting standard for the construction contracts which started in theyear ended March 31, 2010 and the percentage-of-completion method has been applied to the contracts if theoutcome of the construction activity is deemed certain for the percentage of performance of the contractor’s obligation
at the end of the balance sheet date and otherwise, the completed-contract method is applied. The percentage ofcompletion is determined using the cost incurred to the estimated total cost.
As a result of this change, net sales increased by ¥6,265 million (U$67,338 thousand) and operating income andincome before income taxes increased by ¥1,244 million (U$13,374 thousand), respectively. The effect on segment
information is described in Note 13.

KURITA ANNUAL REPORT 2010

Financial Section

39

3. Reconciliation between cash and cash equivalents
The reconciliation between the fiscal year-end cash and cash equivalents (See Note 2. (3)) in the consolidated
statements of cash flows and cash and time deposits in the consolidated balance sheet items is as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2009

2008

2010

¥16,363¥26,061¥10,316$175,875

Time deposits with original maturity of more than three months(272)(1,032)(343)(2,932)

Certificates of deposits included in marketable securities,
excluding deposits maturing over three months

4,500

234

20,38648,366¥20,590¥25,262¥30,360$221,309

Cash and time deposits

Cash and cash equivalents

4. Financial instruments and related disclosures
On March 10, 2008, the ASBJ revised ASBJ Statement No.10 “Accounting Standard for Financial Instruments” andissued ASBJ Guidance No.19 “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.”
The Company applied the revised accounting standard and the new guidance effective March 31, 2010.
(1) Policy for financial instruments
The Group invests its fund in low risk financial assets (deposits, etc.) in principle. The Group finances its working fundand capital investment fund internally and does not need external fund, but may raise necessary fund from external
resources in case of special demand for significant capital investment, if any. In such cases, financing from external
resources would be possible without any problem thanks to our sound financial position. With respect to derivatives,
only forward foreign currency contracts are used if necessary to avoid foreign exchange risk, and not for speculative
purposes at all.
(2) Nature of financial instruments and their related risks
Trade receivables such as notes and accounts are exposed to customer credit risk. Certain trade receivables
denominated in foreign currencies arising from overseas operations are exposed to the market risk of fluctuation inforeign currency exchange rates.
Marketable securities and investment securities are exposed to the risk of market price fluctuations and businessrisk of the investees.
Payment terms of trade payables such as notes and accounts are mostly less than one year. Lease obligations
under finance lease transactions are mainly related to ultrapure water supply business and its payment term is 19 years
later at maximum.
(3) Risk management system for financial instruments
Credit risk management (customers’ default risk):
The Company manages its credit risk involved in trade receivables based on the Credit Control Policy and Manual. The
Control Division of each business unit and the Legal Department are collecting credit information on a regular basis andcontrol the payment terms and outstanding balances by customer, and the Company is making efforts to avoid
damages and to improve the soundness of the transactions by monitoring the default risk of customers due to thedeterioration of their financial position at an early stage. The consolidated subsidiaries are also making efforts to reduce
credit risk by controlling the payment terms and outstanding balances of the customer. Counterparties of forward
foreign currency contracts to be used to avoid foreign exchange risk when necessary are limited to financial institutions

40

KURITA ANNUAL REPORT 2010

Financial Section

with a high credit rating and accordingly, we believe there is very little credit risk.
Market risk management (foreign exchange risk and interest rate risk):
The Company and certain consolidated subsidiaries utilize forward foreign currency contracts to hedge the market riskof fluctuations in foreign currency exchange rates involved in trade receivables and payables by currency and bymonth. Forward foreign currency contracts are executed and controlled by the Finance Department after the individual
contract is approved in accordance with the predetermined rule.
Liquidity risk management (risk that the Company may not be able to settle on the payment due date):
The Finance Departments of the Company and its consolidated subsidiaries prepare and update the fundmanagement plan every month based on the reports from each business unit and hold sufficient amount of liquidity inhand and manages the liquidity risk.
Carrying amounts, fair values and unrealized gain (loss) of financial instruments at March 31, 2010 are as follows:(Financial instruments whose fair values cannot be reliably determined are not included in the following table.)
Millions of yen
At March 31, 2010

Carrying amount

Fair value

a. Cash and time deposits
b. Notes and accounts receivablec. Marketable securities and investment securities
Available-for-sale securities
Total assets
d. Notes and accounts payable
Total liabilities¥ 16,363
55,369¥ 16,363
55,369¥ ——42,603
114,337
16,830¥ 16,830

42,603
114,337
16,830¥ 16,830

—
—
—
¥ —

Unrealized gain/loss

Notes:
1. Computation method of fair values
Cash and time deposits and notes and accounts receivable:
Fair values approximate carrying amounts because of their short maturities.
Marketable securities and investment securities:
	Fair values approximate carrying amounts because of their short maturities since marketable securities consist of certificates ofdeposit. Fair values of investment securities are determined based on the quoted market price of the stock exchange.
Notes payable and accounts:
Fair values approximate carrying amounts because of short maturities.
2. Financial instruments whose fair values cannot be reliably determined are as follows:
Millions of yen

Thousands of U.S. dollars¥1,299340¥1,639$13,9693,654$17,623

Nonconsolidated subsidiaries and affiliates securities
Unlisted equity securities
Total

	These securities are not included in “Marketable securities and investment securities” above since their fair values cannot be
reliably determined.
3. Maturities of monetary receivables and securities after the balance sheet dateMillions of yen
Due in one year or
less

Due after one year
through five years

Due after five years
through ten years

Due after ten years

Deposits
Notes and accounts receivable
Marketable securities and investment securities
Available-for-sale securities with maturities(Certificates of deposits)¥ 16,320
55,369

—
—

—
—

—
—

28,500

—

—

—

Total

¥100,189———

KURITA ANNUAL REPORT 2010

Financial Section

41

Thousands of U.S. dollars
Due after one year
Due in one year or lessthrough five years

Deposits
Notes and accounts receivable
Marketable securities and investment securities
Available-for-sale securities with maturities(Certificates of deposits)
Total

Due after five years
through ten years

Due after ten years$ 175,410
595,117

—
—

—
—

—
—

306,319———$1,076,846

—

—

—

5. Marketable securities and investment in securities(1)Available-for-sale securities with fair value at March 31, 2010 and 2009 are summarized as follows:
Millions of yen
At March 31, 2010

Carrying amount exceeding acquisition cost:
StocksBonds:
Corporate bonds
Other
Subtotal
Carrying amount not exceeding acquisition cost:
StocksBonds:
Corporate bonds
Other
Subtotal
Total

Carrying amount

Acquisition cost

Difference¥10,839¥ 7,413¥3,425——
10,839

—
—
7,413

—
—
3,425

3,264

3,657

(392)

—
—
3,264
¥14,103——
3,657¥11,071——(392)¥3,032Carrying amount

Acquisition cost

Difference¥ 4,590¥3,478¥1,111

300
—
4,890

300
—
3,778

0
—
1,111

4,678

5,538

(859)

499
—
5,177
¥10,068

500
—
6,038
¥9,816

(0)
—
(860)
¥ 251

Millions of yen
At March 31, 2009

Carrying amount exceeding acquisition cost:
StocksBonds:
Corporate bonds
Other
Subtotal
Carrying amount not exceeding acquisition cost:
StocksBonds:
Corporate bonds
Other
Subtotal
Total

42

KURITA ANNUAL REPORT 2010

Financial Section

Thousands of U.S. dollars
At March 31, 2010

Carrying amount exceeding acquisition cost:
StocksBonds:
Corporate bonds
Other
Subtotal
Carrying amount not exceeding acquisition cost:
StocksBonds:
Corporate bonds
Other
Subtotal
Total

Carrying amount

Acquisition cost

Difference$116,503$79,685$36,818——
116,503——
79,685——36,81835,08639,310(4,223)——35,086$151,590——
39,310$118,995——(4,223)$32,594(2) Available-for-sale securities sold during the years ended March 31, 2010, 2009 and 2008 are summarized asfollows:
Thousands of
U.S. dollars

Millions of yen

2010

2009

2010

2008

Sales amount

¥70

¥110

¥578

$762

Total gains on sales

16

—

61

180

Total losses on sales

0

12

0

7

(3) Available-for-sale securities with no available fair value at March 31, 2010 and 2009 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2009

2010

Available-for-sale securities:
Certificates of deposit (See Note 3)
    Unlisted stocks
Total¥28,500¥234$306,319

340

343

3,654

¥28,840¥577$309,974

6. Inventories
Inventories at March 31, 2010 and 2009 consist of the following:Thousands of
U.S. dollars

Millions of yen

2010

2009

2010

Finished products¥1,334¥ 1,414$14,341

Raw materials

1,186

1,440

12,753Work in process

2,600

4,293

27,952¥5,120¥7,149$55,046

Total

KURITA ANNUAL REPORT 2010

Financial Section

43

7. Short-term borrowings and lease obligations(1) Short-term borrowings and current portion of lease obligations
The short-term borrowings and current portion of lease obligations at March 31, 2010 and 2009 consist of thefollowing:Thousands of
U.S. dollars

Millions of yen

2010

2009

2010

Short-term borrowings

¥ 67

¥   0

$ 724

Current portion of lease obligations

453

420

4,872

¥520

¥420

$5,597Total

The weighted-average annual interest rate of short-term borrowings for the year ended March 31, 2010 is 4.37%.
(2) Lease obligations
Lease obligations at March 31, 2010 and 2009 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2009

2010

¥6,925¥7,183$74,437

453

420

4,872

¥7,378¥7,603$79,309

Millions of yen

Thousands of
U.S. dollars

2011

¥ 453

$ 4,872

2012

457

4,916

2013

432

4,645

2014

401

4,312

2015 and thereafter

5,635

60,563

Total¥7,378$79,309

Lease: Obligations with maturing dates coming in 2012 and thereafter
Lease: Current portion
Total

Annual maturities of lease obligations at March 31, 2010 are as follows:

Years Ending March 31, 2010

(3) Other long-term liabilities
Other than the short-term borrowings and lease obligations described above, ¥717 million (US$7,715 thousands) and¥728 million of interest-bearing long-term deposits received were included in other long-term liabilities as of March 31,
2010 and 2009, respectively. The weighted-average annual interest rates for such deposits received for the years
ended March 31, 2010 and 2009 were 0.36% and 0.37%, respectively.

44

KURITA ANNUAL REPORT 2010

Financial Section

8. Income taxes
Significant components of the deferred tax assets and liabilities as of March 31, 2010 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2009

2010

¥ 3,834¥ 2,731$ 41,212

3,796

3,462

40,807

Excess provision for accrued bonuses to employees

945

949

10,161

Accrued enterprise taxes not deductible

565

374

6,072

Impairment loss

309

319

3,329

Loss on revaluation of investment securities

277

277

2,987

Unrealized gain on sale of property, plant and equipment

240

—

2,585

Excess provision of allowance for product warranty

213

362

2,298

Excess portion of design expenses

203

565

2,188

Accrued retirement benefits for directors and corporate auditors

181

293

1,951

Loss on revaluation of golf membership

—

125

—

Other

994

920

10,684

11,562

10,381

124,279

(687)

(660)

(7,389)10,875

9,721

116,890(1,049)(116)(11,276)

Estimated income taxes pertaining to retained earnings of overseas consolidated subsidiaries

(443)

(554)

(4,762)

Capital gain on properties deferred for tax purposes

(734)

(736)

(7,896)

Total deferred tax liabilities(2,227)(1,408)(23,936)

Deferred tax assets, net¥ 8,648¥ 8,312$92,954

Deferred tax assets:
Excess depreciation of property, plant and equipment
Excess provision for accrued employees’ retirement benefits

Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gain on available-for-sale securities

A reconciliation between the normal effective statutory tax rate and the effective income tax rate as a percentage ofincome before income taxes and minority interests for the year ended March 31, 2010 and 2009 was as follows:
2010

2009

Normal effective statutory tax rate

40.6%

40.6%

Expenses not deductible for income tax purposes

0.4

0.6

Dividend income not taxable for income tax purposes

(0.2)

(1.6)

Reversal of deferred tax liabilities on retained earnings of foreign consolidated subsidiaries

(0.4)

(1.8)

R&D expense tax credit

(0.7)

(0.9)

		 —

0.9

Other

(1.3)

(1.3)

Actual effective tax rate

38.4%

36.5%

Loss on revaluation of investment securities

KURITA ANNUAL REPORT 2010

Financial Section

45

9. Retirement benefits and pension plans
The Company provides a lump-sum retirement benefit plan and a defined contribution pension plan. Of theconsolidated subsidiaries, 22 companies (17 domestic and 5 overseas companies) provide lump-sum retirement
benefit plans, qualified pension plans or defined contribution plans, 2 domestic companies provide both lump-sum
benefit and defined contribution pension plans, 2 domestic companies have only qualified pension plans and 1
overseas consolidated subsidiary has only defined contribution pension plan.
(1) Benefit obligations
Thousands of
U.S. dollars

Millions of yen

2010

2009

2010

¥(19,570)¥(18,796)$(210,343)

Fair value of plan assets

9,985

10,153

107,328

Unfunded retirement benefit obligations(9,584)(8,643)(103,014)

118

(0)

1,275

¥ (9,465)¥ (8,644)$(101,738)

Retirement benefit obligation

Unrecognized actuarial gain
Accrued employees’ retirement benefits(2) Net periodic benefit costs
Thousands of
U.S. dollars

Millions of yen

2010

2009

2008

2010

Service cost¥  877¥  923¥  968$ 9,430

Interest cost

191

242

258

2,053

Expected return on plan assets

—

—

—

—

Amortization of actuarial differences

663

57

(34)

7,126

Additional retirement payments

4

4

7

48

Loss (profit) at transition to defined contribution pension plan

1

215

(17)

13

639

482

471

6,870

¥2,376¥1,924¥1,654$25,542

Other
Net periodic benefit cost

In the above table, benefit cost incurred for the domestic consolidated subsidiaries which use the simplified method forcomputing benefit obligations is included in “Service cost,” and “Other” represents contribution to the defined
contribution pension plan.
(3) Assumptions to determine above obligation and cost:
2010

Periodic allocation of projected benefit obligation

2009

Equal amount over each period Equal amount over each period

Discount rate

1.7–1.8%

2.5%

Expected rate of return on plan assets

0.5–0.7%

0.0–0.8%

Amortization period of actuarial differences

1–2 years

1–2 years

46

KURITA ANNUAL REPORT 2010

Financial Section

10. Shareholders’ equity
The Japanese companies are subject to the Corporate Law. The summary of the Corporate Law that affect financial
statements and accounting matters are as follows:(1) Distribution to the shareholders
Under the Corporate Law, if companies meet certain criteria, dividends can be paid at any time during the fiscal year in
addition to the year-end dividend upon resolution at the shareholders’ meeting. Semiannual interim dividends may also
be paid once a year upon resolution by the Board of Directors’ meeting if the articles of incorporation of the company
so stipulate.
The Corporate Law provides certain limitations on the amounts available for dividends and/or the purchase oftreasury stock. The limitation is defined as the amount available for distribution to the shareholders, and it is calculated
mainly based on capital surplus other than paid-in capital, retained earnings and treasury stock, but the amount of net
assets after dividends must be maintained at no less than ¥3 million.
(2) Increases/decreases and transfer of common stock, reserve and surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal (a componentof retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity accountcharged upon the payment of such dividends. However, such appropriation may not be made if the aggregate amountof legal reserve and additional paid-in capital exceeds 25% of the common stock. Under Corporate Law, these legal
reserve and additional paid-in capital may be reversed without limitation.
The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, other capital surplus
and retained earnings can be transferred among the accounts, under certain conditions upon resolution of theshareholders.
(3) Treasury stock
The Corporate Law provides that companies may purchase, hold or dispose of such treasury stock by resolution of theBoard of Directors’ meetings. The amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders which is determined by specific formula.

11. Unrealized gains on revaluation of land
The Company implemented a revaluation of land for business use in accordance with the Land Revaluation Law(enacted on March 31, 1998). The revaluation difference, net of taxes is stated as “Unrealized gains (losses) onrevaluation of land” in the valuation and translation account in net assets. The tax equivalent is stated as deferred tax
assets or liabilities in long-term liabilities.
When any revaluated land is sold, the related unrealized gain or loss on revaluation of land is transferred to retained
earnings.
Revaluation method: The revaluation of land was computed in accordance with Article Two, Item One of the Land
Revaluation Law Enforcement Order.
Revaluation date: March 31, 2002

12. Selling, general and administrative expenses
Selling, general and administrative expenses for the years ended March 31, 2010, 2009 and 2008 consist of thefollowing:

KURITA ANNUAL REPORT 2010

Financial Section

47

Thousands of
U.S. dollars

Millions of yen

2010

2009

2008

2010

¥13,127¥12,999¥12,804$141,093

Provision for employees’ bonuses

1,492

1,561

1,648

16,046Retirement benefit expenses

1,415

861

825

15,212

Travel expenses

2,379

2,542

2,642

25,574

Research and development expenses

3,990

4,363

4,551

42,885

Other

12,535

13,567

13,384

134,737¥34,941¥35,896¥35,857$375,549

Salaries and allowances

Total

13. Segment information(1) Business segment information
The business segment information of the Company and its consolidated subsidiaries for the years ended March 31,
2010, 2009, and 2008, is outlined as follows:
Millions of yen

Year ended March 31, 2010

Water Treatment
Chemicals

Water Treatment
Facilities

Total

Elimination or
corporate

Consolidated¥53,743¥124,777¥ 178,520¥—¥ 178,520

455

78

534

(534)

—

54,199124,855

179,055(534)

178,520

I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total
Operating costs and expenses

46,022

106,674

152,697

Operating income¥ 8,177¥ 18,181¥ 26,358¥(534)

152,162—¥ 26,358¥35,194¥168,119¥203,314¥48,306¥251,620

Depreciation

1,662

13,86015,523—

15,523

Capital expenditures

1,151

6,932

8,083

—

8,083

Elimination or
corporate

Consolidated¥—¥ 199,706

II. Assets, depreciation and capital expenditures
AssetsMillions of yen
Water Treatment
Chemicals

Water Treatment
Facilities

Total¥58,331¥141,374¥ 199,706

353

102

455

(455)

—

58,685

141,476

200,162(455)

199,706

Operating costs and expenses

50,267

121,959

172,226(455)

171,771

Operating income¥ 8,417¥ 19,517¥ 27,935¥0¥ 27,935¥34,476¥180,626¥ 215,102¥30,304¥ 245,406

Depreciation

1,745

9,970

11,716—

11,716

Capital expenditures

1,432

54,88956,322—56,322

Year ended March 31, 2009

I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total

II. Assets, depreciation and capital expenditures
Assets

48

KURITA ANNUAL REPORT 2010

Financial Section

Millions of yen
Water Treatment
Chemicals

Water Treatment
Facilities

Total

Elimination or
corporate

Consolidated¥58,646¥ 146,228¥204,875¥—¥204,875

310

87

397

(397)

—

58,957

146,315205,272(397)

204,875

Operating costs and expenses

49,431

125,375

174,807(400)

174,407

Operating income¥ 9,525¥ 20,939¥ 30,465¥

2¥ 30,468¥37,791¥ 150,225¥ 188,017¥43,481¥231,498

Depreciation

1,732

7,692

9,425

—

9,425

Capital expenditures

1,617

22,48024,097—24,097

Elimination or
corporate

Consolidated

Year ended March 31, 2008

I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total

II. Assets, depreciation and capital expenditures
AssetsThousands of U.S, dollars
Water Treatment
Chemicals

Water Treatment
Facilities

Total$577,639$1,341,114$1,918,753

4,900

844

582,540

Operating costs and expenses
Operating income

Year ended March 31, 2010

I. Sales and operating income
Sales—$1,918,753

5,745(5,745)—

1,341,958

1,924,499(5,745)

1,918,753

494,653

1,146,544

1,641,198(5,755)

1,635,453$87,887$195,413$283,301—$283,300$378,272$1,806,964$2,185,236$519,197$2,704,434

Depreciation

17,873

148,969

166,843—

166,843

Capital expenditures

12,37574,50886,884—86,884

1) Sales to outside customers
2) Intersegment sales
Total

$

$

II. Assets, depreciation and capital expenditures
Assets$

Notes:
1. Principal products and services of each segment are as follows:
Water Treatment Chemicals
	Boiler water treatment chemicals, cooling water treatment chemicals, wastewater treatment chemicals, process treatment
chemicals used in oil refining and pulp and paper incinerator chemicals, equipment and systems for water treatment chemicals,
and customized services, including a steam supply contract and blanket contracts for factories
Water Treatment Facilities
For the electronics industry:
Ultrapure water production systems, wastewater reclamation systems, wastewater treatment systems, tool cleaning, operationand maintenance services, and Ultrapure Water Supply BusinessFor general industries:
Pure water production systems, wastewater treatment systems, soil remediation, chemical cleaning, and maintenance services
For the public sector:	Sewage treatment facilities, human waste treatment facilities, landfill leachate treatment facilities, and operation and maintenanceservices

KURITA ANNUAL REPORT 2010

Financial Section

49

2.	There were no costs and expenses included in “Elimination or corporate” that cannot be allocated to business segments for theyears ended March 31, 2010 and 2009.
3.	Total assets under “Elimination or corporate” include corporate assets, consisting primarily of deposits with banks, marketableportfolio securities and long-term investment funds (deposits, marketable securities and investment securities). Such corporate
assets as of March 31, 2010 and 2009 amounted to ¥48,369 million (US$519,875 thousand) and ¥30,353 million, respectively.
4.	As discussed in note 2. (10), the Company adopted ASBJ Statement No.19 “Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3)” effective from the year ended March 31, 2010. Accordingly, operating income of “Water Treatment
Chemicals” and “Water Treatment Facilities” decreased by ¥290 million (US$3,121 thousand) and ¥585 million (US$6,295
thousand), respectively.
5.	As discussed in note 2. (17), the Company and certain consolidated subsidiaries adopted ASBJ Statement No. 15 “AccountingStandard for Construction Contracts” and Guidance No.18 “Guidance on Accounting Standard for Construction Contracts”.
Accordingly, net sales and operating income of “Water Treatment Facilities” increased by ¥6,265 million (US$67,338 thousand)and ¥1,244 million (US$13,374 thousand), respectively.

(2) Geographic segment information
Geographical segment information for the years ended March 31, 2010, 2009 and 2008 is as follows:
Millions of yen

Year ended March 31, 2010

Elimination or
corporate

Consolidated¥—¥178,520

1,799(1,799)—15,063

180,320(1,799)178,520

140,733

13,544

154,278(2,115)

152,162¥ 24,523¥ 1,518¥ 26,042¥315¥ 26,358¥185,816¥ 8,116¥193,932¥57,687¥251,620

Elimination or
corporate

Consolidated¥—¥ 199,706

Japan

Other regions

Total¥163,696¥14,824¥178,520

1,561

238

165,257

Operating costs and expenses
Operating income

I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total

II. Assets

Millions of yen

Year ended March 31, 2009

Japan

Other regions

Total¥ 179,726¥19,980¥ 199,706

2,057

433

2,490

(2,490)—181,783

20,413202,197(2,490)199,706

Operating costs and expenses

155,950

18,679174,629(2,858)

171,771

Operating income¥ 25,833¥ 1,734¥ 27,567¥

367¥ 27,935¥ 198,465¥ 8,683¥ 207,148¥38,258¥ 245,406

I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total

II. Assets

50

KURITA ANNUAL REPORT 2010

Financial Section

Millions of yen

Year ended March 31, 2008

Elimination or
corporate

Consolidated¥—¥204,875

3,075(3,075)—

21,810207,950(3,075)

204,875

158,222

19,600177,822(3,415)

174,407¥ 27,917¥ 2,210¥ 30,127¥340¥ 30,468¥ 178,960¥ 10,028¥ 188,989¥ 42,509¥231,498

Elimination or
corporate

Consolidated$—$1,918,753

Japan

Other regions

Total¥ 183,867¥ 21,007¥204,875

2,272

802

186,139

Operating costs and expenses
Operating income

I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total

II. Assets

Thousands of U.S, dollars

Year ended March 31, 2010

Japan

Other regions

Total$1,759,419$159,334$1,918,753

16,7782,565

19,344(19,344)—

1,776,198

161,899

1,938,098(19,344)

1,918,753

Operating costs and expenses

1,512,617

145,575

1,658,193(22,739)

1,635,453

Operating income$ 263,580$ 16,323$ 279,904

$

3,395

$ 283,300$1,997,167$ 87,234$2,084,402$620,032$2,704,434

I. Sales and operating income
Sales1) Sales to outside customers
2) Intersegment sales
Total

II. Assets

Notes:
1. Countries and regions are classified into segments according to geography and proximity.
2. “Other regions” are composed primarily of Asia.
3. There were no costs and expenses under “Elimination or corporate” that cannot be allocated to geographical segments.
4.	Assets under “Elimination or corporate” include corporate assets, the amount and components of which are the same as those
provided in Note 3. to the above (1) Business segment information.
5.	As discussed in note 2. (10), the Company adopted ASBJ Statement No.19 “Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3)” effective from the year ended March 31, 2010. Accordingly, operating income of “Japan” decreasedby ¥876 million (US$9,416 thousand).
6.	As discussed in note 2. (17), the Company and certain consolidated subsidiaries adopted ASBJ Statement No. 15 “AccountingStandard for Construction Contracts” and Guidance No.18 “Guidance on Accounting Standard for Construction Contracts.”
Accordingly, net sales and operating income of “Japan” increased by ¥6,265 million (US$67,338 thousand) and ¥1,244 million(US$13,374 thousand), respectively.

(3) Overseas sales
Thousands of
U.S. dollars

Millions of yen

For the year ended March 31, 2010

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

Asia

North America

Europe

Other

Total

Total

¥13,404¥1,626¥1,399¥2,581————

178,520

1,918,753

7.5%

0.9%

0.8%

1.4%

10.6%

13.0%

¥19,011 $ 204,336

51

KURITA ANNUAL REPORT 2010

Financial Section

Millions of yen

For the year ended March 31, 2009

Asia

North America

Europe

Other

Total

¥20,070¥1,371¥1,576¥2,936¥ 25,955

—

—

—

—

199,706

Percentage of overseas net sales toconsolidated net sales

10.0%

0.7%

0.8%

1.5%

13.0%

For the year ended March 31, 2008

Asia

North America

Europe

Other

Total

¥23,723¥2,759¥1,736¥3,107¥ 31,327

—

—

—

—

204,875

11.6%

1.3%

0.9%

1.5%

15.3%

Overseas net sales
Consolidated net sales

Millions of yen

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

Notes:
1. Countries and regions are classified according to geography and proximity.
2.	The major countries or regions included in respective categories are as follows:Asia: South Korea, China, Taiwan, Singapore, Indonesia, Thailand; North America: United States of America; Europe: Germany;
Other: Brazil
3. Overseas net sales refers to sales outside Japan generated by the Company and its consolidated subsidiaries.
4. As discussed in note 2. (17), the Company and certain consolidated subsidiaries adopted ASBJ Statement No. 15 “AccountingStandard for Construction Contracts” and Guidance No.18 “Guidance on Accounting Standard for Construction Contracts.”
Accordingly, overseas net sales of “Asia” increased by ¥1,794 million (US$19,287 thousand).

14. Subsequent events
Appropriation of retained earnings
The following appropriation of retained earnings for the year ended March 31, 2010 was approved at the ordinary
general meeting of shareholders of the Company held on June 29, 2010.

Cash dividends (year-end dividends)

Millions of yen

Thousands of
U.S. dollars¥2,444$26,272

15. Per share information
Yen

Net assets per share
Net income per share (EPS)

U.S. dollars

2010

2009

2008

2010

¥1,496.98¥1,378.04¥1,316.65$16.08134.38126.69142.21

1.44

Basis of calculation for EPS is as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2009

2008

2010

Net income¥17,288¥16,299¥18,297$185,815

Net income attributable to common stock

17,28816,29918,297

185,815

128,653,126

128,658,142

128,664,115

Average number of shares outstanding(The Company has no dilutive shares.)

52

KURITA ANNUAL REPORT 2010

Report of Independent Certified Public Accountants

Report of Independent Certified Public Accountants

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, 2010 and 2009 and the related consolidated statements of income, changes in net assets and cash
flows for each of the three years in period ended March 31, 2010, expressed in Japanese yen. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express 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 arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the over all 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, 2010 and 2009, and theconsolidated results of their operations and their cash flows for each of the three years in the period ended March 31,
2010, in conformity with accounting principles generally accepted in Japan as described in Note 1 to the consolidated
statements.
As described in Note 2(17) to the consolidated financial statements, effective the year ended March 31, 2010, theCompany and its domestic subsidiaries have adapted the ASBJ Statement No.15, “Accounting Standard forConstruction Contracts” and Guidance No.18, “Guidance on Accounting Standard for Construction Contracts”.
The consolidated financial statements as of and for the year ended March 31, 2010 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, 2010

KURITA ANNUAL REPORT 2010

Corporate Data

53

Corporate Data
As of March 31, 2010

Company Name

Kurita Global Technology Center:
1-1, Gochoyama, Kawada,
Nogi-machi, Shimotsuga-gun,Tochigi 329-0105
Tel.: 81 (280) 54-1511
Offices:
Tohoku, Nagoya,
Hiroshima and Kyushu

Kurita Water Industries Ltd.

Address
4-7, Nishi-Shinjuku 3-chome,	Shinjuku-ku, Tokyo 160-8383,
Japan
Paid-in Capital¥13,450,751,434

Date of Establishment July 13, 1949
Number of Employees 4,445 (on a consolidated basis)

Overseas Offices

Domestic Offices
Head Office: 4-7, Nishi-Shinjuku
	3-chome, Shinjuku-ku, Tokyo
160-8383
Tel.: 81 (3) 3347-3111
Osaka Branch: 2-22, Kitahama	2-chome, Chuo-ku, Osaka
541-0041
Tel.: 81 (6) 6228-4800

Taiwan Branch:
5F-3, No. 295, Section 2,
Kuang-Fu Road,(Empire Commercial Bldg.)
Shinchu, Taiwan, R.O.C.
Tel.: 886 (3) 575-1157

Major Consolidated Subsidiaries and Affiliated Company
		Company Name

Paid-in
EquityCapital (Millions) Ownership (%)

OVERSEAS■ North America & South America
Kurita America Inc.
US$3.0100.0				Kurita do Brasil LTDA.
R$6.986
100.0■ Europe
Kurita Europe GmbH
EUR2.301
95.0■ AsiaKurita Water Industries (Dalian) Co., Ltd. ¥550
90.1
Kuritec (Shanghai) Co., Ltd.
¥30
100.0
Kurita Water Industries (Suzhou) Ltd.
¥100
100.0
Kurita (Taiwan) Co., Ltd.
NT$20
95.0
Hansu Ltd.
W2,50033.2
Hansu Technical Service Ltd.
W400
59.4
Kurita-GK Chemical Co., Ltd.
BAHT9285.0
Kurita (Singapore) Pte. Ltd.
S$4.0
100.0

Main Business

Manufacture & sale of water treatment facilities, operation &maintenance of systems and facilities
Manufacture & sale of water treatment chemicals
Manufacture & sale of water treatment chemicals

Kuritec Singapore Pte. Ltd.
Kurita Water (Malaysia) Sdn. Bhd.

S$1.49
RM$0.6

100.0
83.3

P.T. Kurita Indonesia

US$2.092.5

Manufacture & sale of water treatment chemicals
Sale & maintenance of water treatment facilities
Manufacture & sale of water treatment facilities
Manufacture & sale of water treatment chemicals
Manufacture & sale of water treatment chemicals
Manufacture & sale of water treatment facilities
Manufacture & sale of water treatment chemicals
Manufacture & sale of water treatment chemicals and water
treatment facilities
Ultrapure water supply for specified customer
Sale of water treatment chemicals and water treatment
facilities
Manufacture & sale of water treatment chemicals  

¥160
¥50
¥220
¥160
¥450
¥50

100.0
100.0
100.0
100.0
51.0
100.0

Manufacture & sale of water purifiers
Tool cleaning
Operation & maintenance of water treatment facilities
Chemical cleaning
Soil remediation
Manufacture of water treatment chemicals

DOMESTIC
Kurita Creation Co., Ltd.
Kuritec Service Co. Ltd.
Kuritaz Co., Ltd.
Kurita Engineering Co., Ltd.
Land Solution Inc.
Kurita Chemical Manufacturing Ltd.

54

KURITA ANNUAL REPORT 2010

Investor Information

Investor Information
As of March 31, 2010

Stock Exchange Listings First Section of the Tokyo Stock ExchangeFirst Section of the Osaka Securities Exchange
Common Stock

Authorized: 531,000,000 shares
Issued: 132,800,256 shares(Stock trading unit: 100 shares)

Number of Shareholders 35,435
Independent Auditor

Grant Thornton Taiyo ASG
Akasaka DS Bldg. 9F, 8-5-26, Akasaka, Minato-ku, Tokyo 107-0052, Japan

Transfer Agent

The Chuo Mitsui Trust and Banking Co., Ltd.
33-1, Shiba 3-chome, Minato-ku, Tokyo 105-8574, Japan
Distribution of Shares

Main Shareholders

Shareholdings(Thousands of Shares)

Percentage of
total shares issued (%)

Itochu Corporation

7,448

5.60

Nippon Life Insurance Company

7,284

5.48

Japan Trustee Services Bank, Ltd. (Trust Account)

6,156

4.63

Tokio Marine & Nichido Fire Insurance Co., Ltd.

4,311

3.24

Kurita Water Industries Ltd.

4,148

3.12

Pictet & Cie (Europe) S.A.

3,517

2.64

The Master Trust Bank of Japan, Ltd. (Trust Account)

3,190

2.40

The Bank of Tokyo Mitsubishi UFJ, Ltd.

2,936

2.21

Mizuho Trust & Banking Co., Ltd. Retirement Benefit
Trust Itochu Corporation Account Retrustee Trust &Custody Services Banking Co.,Ltd.

2,820

2.12

RBC DEXIA Investor Service Bank Account Luxemburg
Non-resident Domestic Rate

2,191

1.65

Treasury Stock
4,148,311
3.1%

Individuals
17,060,744
12.8%

Financial Institutions
44,592,820
33.6%
Foreigners
48,378,330
36.4%

Securities Firms
1,679,927
1.3%
Other Domestic Firms
16,938,124
12.8%

Stock price (Yen)

TOPIX (Points)

5,000

5,000

Stock Price Range (Tokyo Stock Exchange)
4,000

4,000

3,000

3,000

2,000

2,000

1,000

1,000
TOPIX

0
Jan. ’08

June ’08

Jan. ’09

June ’09

Jan. ’100June ’10

Jan. ’09

June ’09

Jan. ’10

June ’10

Trading volume (Hundreds of shares)

600,000
500,000

Trading Volume (Tokyo Stock Exchange)

400,000
300,000
200,000
100,000
0

Jan. ’08

June ’08

CONTENTS
01
02
04
09

PROFILE
WHAT ARE KURITA’S STRENGTHS?
AN INTERVIEW WITH THE PRESIDENTOVERVIEW OF THE MEDIUM-TERM
MANAGEMENT PLAN

12

REVIEW OF OPERATIONS
Water Treatment Chemicals
Water Treatment Facilities

15

RESEARCH AND DEVELOPMENT

16ENVIRONMENTAL INITIATIVESCORPORATE GOVERNANCE
BOARD OF DIRECTORS ANDCORPORATE AUDITORS

10
10

18
20
21
53
54

FINANCIAL SECTION
CORPORATE DATAINVESTOR INFORMATION

Water Treatment Chemicals
PRINCIPAL PRODUCTS and SERVICES• Boiler water treatment chemicals• Cooling water treatment chemicals• Wastewater treatment chemicals• Process treatment chemicals• Incinerator chemicals• Equipment and systems for water treatment chemicals• Packaged water treatment management contracts

Water Treatment Facilities (Hardware)
PRINCIPAL PRODUCTS• Ultrapure water production systems• Wastewater treatment systems• Wastewater reclamation systems• Deionized water production systems

Water Treatment Facilities (Service)
PRINCIPAL SERVICES• Maintenance services• Ultrapure water supply business• Tool cleaning services• Soil remediation services• Chemical cleaning services• Operation and maintenance services

Kurita Water Industries Ltd.

URL:http://www.kurita.co.jp/english/

ANNUAL REPORT 2010

What areKurita’s Strengths?

4-7, Nishi-Shinjuku 3-chome, Shinjuku-ku, Tokyo 160-8383, Japan
Tel: 81 (3) 3347-3111

This annual report is printed using soy ink.
Printed in Japan

ANNUAL REPORT 2010
For the year ended March 31, 2010