##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 20-F



ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended March 31, 2005



Commission file number 2-58155



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KABUSHIKI KAISHA KUBOTA

(Exact name of registrant as specified in its charter)



KUBOTA CORPORATION

(Translation of
registrants name into English)



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JAPAN

(Jurisdiction of incorporation or organization)



2-47, SHIKITSUHIGASHI 1-CHOME, NANIWA-KU, OSAKA, JAPAN

(Address of principal executive offices)



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Securities registered or to be registered pursuant to

Section 12(b) of the
Act



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|Common Stock*       |  | New York Stock Exchange                  



|* | Not for trading, but only in connection with the listing of American Depositary Receipts pursuant to the requirement of the New York Stock Exchange.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | American Depositary Receipts evidence American Depositary Shares, each American Depositary Share representing five shares of the registrants common stock.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------



Securities registered or to be registered
pursuant to

Section 12(g) of the Act



None

(Title of Class)



Securities for which there is a reporting obligation
pursuant to

Section 15(d) of the Act.



None

(Title of Class)



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Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.



|                           |  |                             |  |                              
|-------------------------- |  | --------------------------- |  | -----------------------------
|                           |  | Outstanding as of          
|Title of Class             |  | March 31, 2005 (Tokyo Time) |  | March 31, 2005(New York Time)
|Common stock               |  | 1,340,808,978 shares        |  |                              
|American Depositary Shares |  |                             |  | 2,088,542 ADS                



Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No ̈



Indicate by check mark which
financial statement item the registrant has elected to follow. Item 17  x    Item 18 ̈



If it is an annual report,
indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ̈No  x



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##### Table of Contents

TABLE OF CONTENTS



|         |  |                                                         |  |     
|-------- |  | ------------------------------------------------------- |  | ----
|         |  |                                                         |  | page
|         |  | PART I                                                  |  |     
|         |  |                                                        
|Item 1.  |  | Identity of Directors, Senior Management and Advisers   |  | 1   
|         |  |                                                        
|Item 2.  |  | Offer Statistics and Expected Timetable                 |  | 1   
|         |  |                                                        
|Item 3.  |  | Key Information                                         |  | 1   
|3.A      |  | Selected Financial Data                                 |  | 1   
|3.B      |  | Capitalization and Indebtedness                         |  | 2   
|3.C      |  | Reasons for the Offer and Use of Proceeds               |  | 2   
|3.D      |  | Risk Factors                                            |  | 2   
|         |  |                                                        
|Item 4.  |  | Information on the Company                              |  | 6   
|4.A      |  | History and Development of the Company                  |  | 6   
|4.B      |  | Business Overview                                       |  | 7   
|4.C      |  | Organization Structure                                  |  | 10  
|4.D      |  | Property, Plant and Equipment                           |  | 11  
|         |  |                                                        
|Item 5.  |  | Operating and Financial Review and Prospects            |  | 13  
|5.A      |  | Operating Results                                       |  | 15  
|5.B      |  | Liquidity and Capital Resources                         |  | 22  
|5.C      |  | Research and Development, Patents and Licenses, etc     |  | 25  
|5.D      |  | Trend Information                                       |  | 26  
|5.E      |  | Off-balance Sheet Arrangements                          |  | 27  
|5.F      |  | Tabular Disclosure of Contractual Obligations           |  | 28  
|5.G      |  | Safe Harbor                                             |  | 29  
|         |  |                                                        
|Item 6.  |  | Directors, Senior Management and Employees              |  | 30  
|6.A      |  | Directors and Senior Management                         |  | 30  
|6.B      |  | Compensation                                            |  | 38  
|6.C      |  | Board Practices                                         |  | 38  
|6.D      |  | Employees                                               |  | 39  
|6.E      |  | Share Ownership                                         |  | 39  
|         |  |                                                        
|Item 7.  |  | Major Shareholders and Related Party Transactions       |  | 40  
|7.A      |  | Major Shareholders                                      |  | 40  
|7.B      |  | Related Party Transactions                              |  | 40  
|7.C      |  | Interests of Experts and Counsel                        |  | 40  
|         |  |                                                        
|Item 8.  |  | Financial Information                                   |  | 41  
|8.A      |  | Consolidated Statements and Other Financial Information |  | 41  
|8.B      |  | Significant Changes                                     |  | 41  
|         |  |                                                        
|Item 9.  |  | The Offer and Listing                                   |  | 42  
|9.A      |  | Offer and Listing Details                               |  | 42  
|9.B      |  | Plan of Distribution                                    |  | 43  
|9.C      |  | Markets                                                 |  | 43  
|9.D      |  | Selling Shareholders                                    |  | 43  
|9.E      |  | Dilution                                                |  | 43  
|9.F      |  | Expenses of the Issue                                   |  | 43  
|         |  |                                                        
|Item 10. |  | Additional Information                                  |  | 44  
|10.A     |  | Share Capital                                           |  | 44  
|10.B     |  | Memorandum and Articles of Association                  |  | 44  
|10.C     |  | Material Contracts                                      |  | 54  
|10.D     |  | Exchange Controls                                       |  | 54  
|10.E     |  | Taxation                                                |  | 55  
|10.F     |  | Dividends and Paying Agents                             |  | 58  
|10.G     |  | Statement by Experts                                    |  | 58  
|10.H     |  | Documents on Display                                    |  | 59  
|10.I     |  | Subsidiary Information                                  |  | 59  



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|          |  |                                                                              |  |   
|--------- |  | ---------------------------------------------------------------------------- |  | --
|          |  |                                                                             
|Item 11.  |  | Quantitative and Qualitative Disclosures about Market Risk                   |  | 60
|          |  |                                                                             
|Item 12.  |  | Description of Securities other than Equity Securities                       |  | 63
|          |  |                                                                             
|          |  | PART II                                                                      |  |   
|          |  |                                                                             
|Item 13.  |  | Defaults, Dividend Arrearages and Delinquencies                              |  | 63
|          |  |                                                                             
|Item 14.  |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 63
|          |  |                                                                             
|Item 15.  |  | Controls and Procedures                                                      |  | 63
|          |  |                                                                             
|Item 16.A |  | Audit Committee Financial Expert                                             |  | 63
|          |  |                                                                             
|Item 16.B |  | Code of Ethics                                                               |  | 63
|          |  |                                                                             
|Item 16.C |  | Principal Accountant Fees and Services                                       |  | 64
|          |  |                                                                             
|Item 16.D |  | Exemptions from the Listing Standards for Audit Committees                   |  | 65
|          |  |                                                                             
|Item 16.E |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       |  | 65
|          |  |                                                                             
|          |  | PART III                                                                     |  |   
|          |  |                                                                             
|Item 17.  |  | Financial Statements                                                         |  | 66
|          |  |                                                                             
|Item 18.  |  | Financial Statements                                                         |  | 66
|          |  |                                                                             
|Item 19.  |  | Exhibits                                                                     |  | 67



All information contained in this
Report is as of or for the 12 months ended March 31, 2005 unless otherwise specified.



Unless otherwise specified, Japanese yen amounts in this Report have been translated for convenience into United States dollars at the rate of ¥107= US$1, the approximate rate of exchange on March 31, 2005, the date of the most recent
balance sheet herein.



As used herein, Kubota and the
Company refer to Kubota Corporation and its subsidiaries unless the context otherwise indicates.



The noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York on September 9, 2005 was ¥109.69 = US$1.



<Cautionary Statements with Respect to Forward-Looking Statements>



Certain sections of this annual report on Form 20-F contain forward-looking statements that
are based on managements expectations, estimates, projections and assumptions. Words such as expects, anticipates, believes, scheduled, estimates, variations of these words and
similar expressions are intended to identify forward-looking statements which include but are not limited to projections of revenues, earnings, segment performance, cash flows and so forth. These statements are not guarantees of future performance
and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results may differ materially from what is forecast in forward-looking statements due to a variety of factors, including, without limitation:
general economic conditions in the Companys markets, particularly government agricultural policies, levels of capital expenditures, both in public and private sectors, foreign currency exchange rates, continued competitive pricing pressures in
the marketplace, as well as the Companys ability to continue to gain acceptance of its products.



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##### Table of Contents

PART I



|Item 1. | Identity of Directors, Senior Management and Advisers
|------- | -----------------------------------------------------



Not applicable



|Item 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------



Not applicable



|Item 3. | Key Information
|------- | ---------------



The information required by this item, except as stated below, appears on page 11 in the Financial Section of the Companys 2005 Annual Report to
Shareholders, which is incorporated herein by reference.



A. Selected Financial Data



|                                              |  |        |  |                                        |  |        |  |        |  |        |  |       
|--------------------------------------------- |  | ------ |  | -------------------------------------- |  | ------ |  | ------ |  | ------ |  | ------
|                                              |  |        |  | Years ended March 31 (millions of yen)
|                                              |  |        |  | 2001                                   |  | 2002   |  | 2003   |  | 2004   |  | 2005  
|Capital stock                                 |  |        |  | 78,156                                 |  | 78,156 |  | 78,156 |  | 78,156 |  | 78,156
|Capital expenditures                          |  |        |  | 37,170                                 |  | 36,342 |  | 35,845 |  | 21,396 |  | 26,097
|Depreciation and amortization                 |  |        |  | 43,926                                 |  | 40,535 |  | 38,804 |  | 27,755 |  | 25,808
|R & D expenses                                |  |        |  | 30,257                                 |  | 30,186 |  | 26,405 |  | 23,261 |  | 21,963
|                                              |  |       
|                                              |  |        |  | Years ended March 31                  
|                                              |  |        |  | 2001                                   |  | 2002   |  | 2003   |  | 2004   |  | 2005  
|Cash dividends declared per depositary share: |  |        |  |                                        |  |        |  |        |  |        |  |       
|Interim      (in yen)                         |  |        |  | 15                                     |  | 15     |  | 15     |  | 15     |  | 15    
|(in U.S. dollars)                             |  |        |  | 0.134                                  |  | 0.119  |  | 0.121  |  | 0.138  |  | 0.136 
|Year-end   (in yen)                           |  |        |  | 15                                     |  | 15     |  | 15     |  | 15     |  | 25    
|(in U.S. dollars)                             |  |        |  | 0.120                                  |  | 0.125  |  | 0.125  |  | 0.138  |  | 0.233 
|Exchange rates (yen amounts per U.S. dollar): |  |        |  |                                        |  |        |  |        |  |        |  |       
|Year-end                                      |  |        |  | 125.54                                 |  | 132.70 |  | 118.07 |  | 104.18 |  | 107.22
|Average                                       |  |        |  | 111.65                                 |  | 125.64 |  | 121.10 |  | 112.75 |  | 107.28
|High                                          |  |        |  | 125.54                                 |  | 134.77 |  | 133.40 |  | 120.55 |  | 114.30
|Low                                           |  |        |  | 104.19                                 |  | 115.89 |  | 115.71 |  | 104.18 |  | 102.26
|                                              |  |        |  |                                        |  |       
|2005                                          |  | Feb.   |  | Mar.                                   |  | Apr.   |  | May    |  | Jun.   |  | Jul.  
|High                                          |  | 105.84 |  | 107.49                                 |  | 108.67 |  | 108.17 |  | 110.91 |  | 113.42
|Low                                           |  | 103.70 |  | 103.87                                 |  | 104.64 |  | 104.41 |  | 106.64 |  | 110.47
|Period-end                                    |  | 104.25 |  | 107.22                                 |  | 104.64 |  | 107.97 |  | 110.91 |  | 112.25



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Notes to Selected Financial Data:



1. Cash dividends in U.S. dollars are computed based on the exchange rates, determined as described in the succeeding Note 2, at each
respective payment date.



2. Exchange rates are the noon buying rates for cable
transfers between the yen and the U.S. dollar in New York City as certified for customs purposes by the Federal Reserve Bank of New York. The rate on September 9, 2005 was ¥109.69 = US$1.



B. Capitalization and Indebtedness



Not applicable



C. Reasons for the Offer and Use of Proceeds



Not applicable



D. Risk Factors



Declines in economic
conditions in Kubotas major markets,including private-sector capital expenditure, construction investment,and domestic public investment, may adversely impact theresults of operations of the Company.



Industrial and capital goods make up a substantial portion of the
Companys products. Accordingly, sales of the Company may be sensitive to declines in general economic conditions, including private-sector capital expenditure, construction investment, and domestic public investment. In addition, governmental
agricultural policies, such as a reduction in rice acreage or change in agricultural basic law, may affect domestic sales of agriculture-related products. In overseas markets, especially those of North America and Europe, sales of the Companys
products, such as utility/compact tractors, may also be adversely affected by declines in general economic conditions, including private consumption and residential construction investment in those regions.



Fluctuations of foreign exchange rates, including a stronger yen,may reduce net
sales and adversely affect the results of operationsof the Company.



The Company has overseas sales and manufacturing subsidiaries. The financial results of each overseas subsidiary are consolidated into the results of the parent company after translation into Japanese yen. In
addition, the transactions between the parent company and overseas subsidiaries or customers are generally denominated in the local currencies. The payments received in local currencies on such transactions are converted to Japanese yen. As a
result, fluctuations in foreign exchange rates will affect the consolidated financial results.



Difficulties associated with operating internationally may adversely affect net sales and profitability.



In some businesses of the Company, substantial overseas operations are conducted. Accordingly, the Company is subject to a number of risks inherent in
doing business in those markets. Such risks may affect sales and profitability of the Company or they may hinder the growth of the Company in specific countries. The following risks are important concerns for the Company:



| |  |  | Unexpected changes in international, or each countrys, tax regulations
| | - |  | -----------------------------------------------------------------------



| |  |  | Unexpected legal or regulatory changes in each country
| | - |  | ------------------------------------------------------



| |  |  | Difficulties in retaining qualified personnel
| | - |  | ---------------------------------------------



| |  |  | Insufficient technological skills or instability between management and employee unions in developing countries
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | Political instability in those countries
| | - |  | ----------------------------------------



The major markets with the above risks are markets in the United States, the EU, and Asian countries.



Among the United States, the EU, and Asian countries, which are major markets
for the Company, risks in Asian countries seem to be relatively higher than those of other regions.



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The Company utilizes estimations on some accounts in the consolidatedfinancial statements, which may require
additional accrualsdue to unanticipated changes in the basis of assumptions.



The Company appropriately records its employee benefit obligations, valuation of inventories, valuation allowances for deferred tax assets, probability of collection of notes and accounts receivable, and impairment
losses on long-lived assets in the consolidated financial statements based on the information that it has available. However, these are based on various assumptions about future economic results. If actual results differ from any of these
assumptions, unanticipated additional accruals may be required.



Strategic
alliances, mergers, and acquisitions may not generatesuccessful results as planned.



The Company expects to use strategic alliances, mergers, and acquisitions to seek further growth. The success of these activities depends on such factors
as the Companys business environment, the ability of its business counterparts, and whether the Company and its counterparts share common goals. Therefore, if these activities are not successful and returns on related investments are lower
than expected, the Company may lose competitiveness in relevant markets. Consequently, the Companys profitability may deteriorate.



The Company may not be able to successfully create new businessesor businesses complementary to the current ones.



As part of its structural renovation, the Company is attempting to cultivate
new businesses or businesses that are complementary to the current ones. However, in those markets, there are numerous competitors, and competition will be very harsh. If the Company fails to develop such businesses which require investments in
personnel and assets to produce and market appropriate products, subsequent impairment charges may be taken, or there may be a negative impact on the Companys financial position.



Impairment losses on investments in marketable securitiesmay occur as a result of stock market fluctuations.



As of March 31, 2005, the Company owns securities with a fair value of
approximately ¥135.5 billion. Most of these securities are equity securities, and, accordingly, depending on stock market fluctuations, unrealized and realized losses may occur.



In each of its businesses, Kubota is subject to intensifyingcompetitive pressures. The Company must compete successfullyto maintain sales and profits.



The Company is exposed to
severe competition in each of its businesses. In the overseas market, the Company competes with very large, well-established companies. In the domestic market, some of the Companys operations are involved in mature industries, such as
agricultural machinery business and water pipes business, and therefore the Company faces severe competition in such area. Unless the Company surpasses other companies in such areas as terms of trade, R&D, and quality, sales and/or net income
may decrease in the future.



The Company may be required to incur
significant financial expenses if its products and services have serious defects.



If the Companys products and services have serious defects, the Company may have liability for considerable reparation payment. Such payment and other associated expenses may have a material effect on the
Companys consolidated results of operations and financial position. In case such problems occur, the Company may lose the trust of the public and suffer a reduction in its brand value, which may result in decreased sales and demand for its
products.



The Company is subject to various environmental laws and
regulations, and may be required to incur considerable expenses in order to comply with such laws and regulations.



The Company is subject to various environmental laws and regulations that apply to its products and activities. If these environmental laws and
regulations, such as those that impose carbon dioxide emission controls, emission controls and usage restrictions for certain materials which are used in the Companys products, are strengthened or newly established in jurisdictions in which
the Company conducts its businesses, the Company may be required to incur considerable expenses in order to comply with such laws and regulations. Such expenses may have a material effect on the Companys consolidated results of operations and
financial position. To the extent that the Company determines that it is not economical to continue to comply with such laws and regulations, the Company may have to curtail or discontinue its activities in the affected business areas.



The Company may be required to incur significant financial expenses in connection with
environmental damage it may cause in its activities.



The
Company may cause environmental pollution while conducting its activities, such as the release of hazardous materials, and causing air pollution, water pollution and ground pollution. In such an event, the Company may have to implement corrective
actions to resolve any problem associated with such hazardous materials or pollution with substantial expense and may face litigation regarding these issues. These factors may have a material effect on the Companys consolidated results of
operations and financial position.



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##### Table of Contents

The Company may be required to incur significant expenses relevant to asbestos-related issues.



The Company previously manufactured asbestos-containing products from
1954 to 2001. The Company may be required to incur various expenses including expenditures for environmental remediation payments or consolation payments to the individual concerned or face lawsuits related to the asbestos-related health hazards of
employees (including former employees) who engaged in the manufacturing of asbestos-containing products, and residents who lived near the Companys factory at which asbestos-containing products were produced. If such expenses become significant
or any lawsuits result in judgments unfavorable to the Company, there may be a material adverse effect on the Companys consolidated results of operations and financial position.



Damage by Natural Disasters



Japan is a country with frequent earthquakes. In case of a strong earthquake or related tidal wave, the Company may be affected in the operation of
manufacturing products, logistics, sales activities, and may lose sales and profits depending on the severity of the earthquake or tidal wave. Japan also is hit by typhoons very frequently. In case major plants are struck by a large and powerful
typhoon, the Companys operations may suffer losses.



In each business
segment mentionedbelow, Kubota is subject to risks inherent to those businesses and markets.



Internal Combustion Engine and Machinery Segment



The domestic business condition for Farm Equipment and Machinery remains as harsh as ever. In the business of farm equipment, many factors, such as
agricultural policies on reductions in rice fields and decreases in the price of rice, and the unstable economy in Japan, may lead farmers to refrain from purchasing new equipment.



Under such conditions, in order to compete with other companies, the Company must maintain marketing channels, develop new
products that reflect consumers exact demands, and intensify appropriate after-sales services. To accomplish these, substantial personnel and financing resources are required.



At the same time, the Company is also subject to severe competition in the United States. The pressures of reducing prices
or shortening lead times are making business conditions more difficult. In such situation, the Company must take every step possible to overcome the handicaps of exporting products from Japan.



Specifically, it is very important for the Company to promote its retail
sales by offering appropriate incentives to its dealers, and to introduce innovative products that capture consumers needs, preceding other companies. The Company must continue to promote these operations and to compete with its competitors in
the U.S. in order to develop the business. Otherwise, the decrease in sales may have a material effect on the Companys consolidated results of operations and financial position.



Pipes, Valves, and Industrial Castings Segment



The business of Pipes and Valves is basically dependent on public investments. Therefore, sales and profitability of this
segment may be adversely affected by reductions in public investments by national or local governments.



In the business of ductile iron pipes and industrial casting, because of the relatively severe working environment, including the need to handle pig iron
and steel scraps melted at very high temperatures, it might be difficult to hire and retain qualified new employees. If the Company is not able to hire and retain qualified employees, nor to automate these processes, the Company may face with a
difficult phase to continue its business.



In addition,
increasing environmental restrictions on such items as noise, air pollution or bad smells caused by factories may require additional investments to cope with such restrictions and may reduce profitability as a result of an increase in production
costs.



Certain of the Companys competitors are located
in China or India where personnel costs are extremely low compared with Japan. Therefore, the competitors can produce their products at the lower costs and sell them at the lower prices than the Company can do. Accordingly, the Company must continue
to reduce production costs. As for export of its products, negative factors such as stronger yen, increased competition in international competitive bidding, increasing cost of freight and insurance, may impair profitability of export.



Reduction in private capital expenditure or residential construction
investment may adversely impact the business, financial results or condition of the Company.



4



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##### Table of Contents

Environmental Engineering Segment



In the business of Environmental Engineering, a large portion of the demand depends on public investments. If the Company is
unable to manage adverse developments such as a decrease in demand due to a reduction in public investments, intensifying competition owing to an increase in competitors, or the need to maintain high quality R&D personnel to develop new
technologies, the Companys financial results or condition may be adversely affected. Furthermore, demands of specification for the products vary from customer to customer, which raise product cost.



Other Segment



Other segment consists of primarily vending machines, weigh and measuring
control systems, electronic -equipped machinery, air-conditioning equipment, septic tanks, condominiums, construction, and other equipments services. While the Company encounters competition in the markets of above products, declining general
economic conditions, including reduction in private capital expenditures, construction investment and public investment may also adversely affect the business and financial results of this segment.



Cautionary Statements with Respect to Forward-Looking Statements



Certain sections of this annual report on Form 20-F may contain
forward-looking statements that are based on managements expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to
predict. Therefore, actual future results may differ materially from what is forecast in forward-looking statements due to a variety of factors, including, without limitation: general economic conditions in the Companys markets, particularly
government agricultural policies, levels of capital expenditures, both in public and private sectors, foreign currency exchange rates, continued competitive pricing pressures in the marketplace, as well as the Companys ability to continue to
gain acceptance of its products.



5



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##### Table of Contents

|Item 4. | Information on the Company
|------- | --------------------------



A.History and Development of the Company



KUBOTA Corporation (KABUSHIKIKAISHA KUBOTA), the ultimate parent company of the Kubota group, was founded in 1890 by Gonshiro Kubota and incorporated in 1930 under the Commercial Code of Japan. In 1949, stocks of the
Company were listed on Tokyo Stock Exchange and Osaka Securities Exchange. In 1976, stocks of the Company were also listed on New York Stock Exchange. Today, Kubota is a manufacturer of farm equipment, and producer of pipes, principally ductile iron
pipes, and related equipment for water supply and other utilities. In addition, the Company manufactures and sells engines, construction machinery, industrial castings, industrial machinery, environmental control plants and so on.



The Companys registered office is located at 2-47, Shikitsuhigashi
1-chome, Naniwa-ku, Osaka 556-8601, Japan, telephone +81-6-6648-2111.



The Companys production network primarily comprises 19 plants in Japan and 6 plants in overseas countries. Kubota also has 13 sales subsidiaries in overseas countries.



Principal Capital Expenditures and Divestitures



Capital expenditures in fiscal 2005, 2004, and 2003 amounted to ¥26,097 million, ¥21,396 million, and ¥35,845
million, respectively. The funding requirements for these capital expenditures were mainly provided by internal operations, partially provided by external debt financing.



The principal capital expenditures in progress as of March 31, 2005, 2004, and 2003 were as follows:



As of March 2005



|                                |  |                                          |  |                                                           |  |                                         |  |          
|------------------------------- |  | ---------------------------------------- |  | --------------------------------------------------------- |  | --------------------------------------- |  | ---------
|                                |  |                                          |  |                                                           |  | Estimated amountof expenditures         |  | Schedule 
|Location                        |  | Industry segment included                |  | Content                                                   |  | Total amount ofexpenditures (¥ billion) |  | Commenced
|Jackson (Georgia, U.S.A.)       |  | Internal Combustion Engine and Machinery |  | Production facilities for implements attached to tractors |  | ¥5.0                                    |  | Nov. 2004
|                                |  |                                          |  |                                                          
|Tsukuba (Ibaraki) Sakai (Osaka) |  | Internal Combustion Engine and Machinery |  | Production equipment for vertical diesel engines          |  | ¥0.9                                    |  | Oct. 2004



As of March
2004



No principal expenditures were in progress.



As of March 2003



|              |  |                                          |  |                                                |  |                                         |  |          
|------------- |  | ---------------------------------------- |  | ---------------------------------------------- |  | --------------------------------------- |  | ---------
|              |  |                                          |  |                                                |  | Estimated amount of expenditures        |  | Schedule 
|Location      |  | Industry segment included                |  | Content                                        |  | Total amount ofexpenditures (¥ billion) |  | Commenced
|Sakai (Osaka) |  | Internal Combustion Engine and Machinery |  | Establishment of centralized production system |  | ¥0.8                                    |  | Aug. 2002



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##### Table of Contents

B. Business Overview



The
Company classifies its products for revenue reporting purposes into the following 4 product segments: Internal Combustion Engine and Machinery (which includes farm equipment, engines and construction machinery); Pipes, Valves, and Industrial
Castings (which includes pipes, valves, and industrial castings); Environmental Engineering (which includes environmental engineering and pumps); and Other.



The Company reclassified its segment information for the year ended March 31, 2004 to confirm with the segment information for the year ended March 31,
2005. See further description in Segment Information in the attached 2005 Annual Report.



Net Sales by Product Group



Years ended
March 31, 2005, 2004, and 2003



|                                         |  |                 |  |                           |  |         |  |          
|---------------------------------------- |  | --------------- |  | ------------------------- |  | ------- |  | ---------
|                                         |  | Millions of yen |  | Thousands of U.S. dollars
|                                         |  | 2005            |  | 2005                     
|                                         |  | ¥               |  | %                         |  | $      
|Internal Combustion Engine and Machinery |  | 582,664         |  | 59.3                      |  |         |  | 5,445,458
|Pipes, Valves, and Industrial Castings   |  | 170,629         |  | 17.3                      |  |         |  | 1,594,664
|Environmental Engineering                |  | 117,633         |  | 12.0                      |  |         |  | 1,099,374
|Other                                    |  | 112,300         |  | 11.4                      |  |         |  | 1,049,532
|                                         |  |                 |  |                           |  |        
|Total                                    |  | 983,226         |  | 100.0                     |  |         |  | 9,189,028
|                                         | 
|                                         |  | Millions of yen
|                                         |  | 2004            |  | 2003                     
|                                         |  | ¥               |  | %                         |  | ¥       |  | %        
|Internal Combustion Engine and Machinery |  | 501,551         |  | 53.9                      |  | 444,169 |  | 48.0     
|Pipes, Valves, and Industrial Castings   |  | 175,178         |  | 18.8                      |  | 177,217 |  | 19.1     
|Environmental Engineering                |  | 115,721         |  | 12.4                      |  | 136,381 |  | 14.7     
|Other                                    |  | 137,787         |  | 14.9                      |  | 168,378 |  | 18.2     
|                                         |  |                 |  |                           |  |         |  |          
|Total                                    |  | 930,237         |  | 100.0                     |  | 926,145 |  | 100.0    



Operation of Each Segment



Internal Combustion Engine and Machinery



Internal Combustion Engine and Machinery includes farm equipment, engines
and construction machinery. Kubota is Japans largest manufacturer of farm equipment and small engines for agricultural use based on market share. Sales in this market in Japan are dominated by 4 major manufacturers, and the Company possesses a
substantially larger share than the second ranked company. Main products include tractors ranging from 10.5 to 125 horsepower, combine harvesters, rice transplanters, power tillers and reaper binders. The Company also manufactures and sells a line
of construction machinery including mini-excavators and wheel loaders as well as engines for various industrial uses. Overseas sales of this segment accounted for 55.9% of the total sales of this segment in fiscal 2005.



Domestic sales of farm equipment, engines and construction machinery are made
through wholesale-retail dealers, wholesalers and the National Federation of Agricultural Cooperative Associations. Overseas sales are made through trading companies, local distributors and the Companys overseas subsidiaries and affiliates.



The products in this segment are manufactured at 6 domestic
plants, and the Company has manufacturing subsidiaries in the United States, Germany, Peoples Republic of China and Thailand, and minority equity interests in an overseas manufacturing company.



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##### Table of Contents

Pipes, Valves, and Industrial Castings



Pipes, Valves, and Industrial Castings is comprised of various kinds of
pipes, valves, and industrial castings. Pipes and Valves consists of ductile iron pipes, spiral welded steel pipes, plastic pipes and fittings, filament winding (FW) pipes, and various valves. Most of these products are to municipalities and public
utilities for use principally in water supply and sewage systems along with industrial water supply. These products are also used for gas supply, telecommunication and irrigation systems.



Industrial castings include various iron and steel castings. Iron castings encompass rolls for the steel industry, machinery
parts, tunnel segments, and soil pipes and fittings. Steel castings include alloyed tubing and fittings for the petrochemical industry, rolls for the paper industry, centrifugal cast pipes used in oil tankers, and centrifugal cast steel columns and
piles used in civil engineering and construction.



The products
in this segment are manufactured at 10 plants in Japan, and the Company has a manufacturing subsidiary in Canada, and minority equity interest in an overseas manufacturing company.



Environmental Engineering



This segment develops and markets environmental control plants, pumps and related engineering. As for water treatment, the Company supplies water and
sewage treatment plants, night soil treatment plants, landfill leachate treatment plants, submerged membrane systems and biogas production systems. Regarding solid waste treatment, the Company supplies refuse incineration plants, industrial waste
treatment plants, pulverizing facilities. The Company is also engaged in related engineering, such as contaminated soil remediation and industrial waste treatment business.



This segment manufactures and supplies various pumps for waterworks, sewage facilities, irrigation system, rainwater
drainage and power supplies.



At present, almost all the sales
in this segment are to municipalities focusing on domestic environmental engineering market, which is competitive with many engineering companies. There are 2 manufacturing plants in Japan and no overseas plants.



Other



This segment encompasses all the other businesses that dont belong to the aforementioned 3 segments. This segment
consists of vending machines, electronic-equipped machinery, air-conditioning equipment, septic tanks, condominiums, construction, and other equipment and services.



The products in this segment are manufactured mainly at 4 plants in Japan, and the Company has a manufacturing subsidiary in
Indonesia.



Overseas Activities



The Companys overseas sales (which represent sales to unaffiliated
customers outside Japan) in fiscal 2005, 2004, and 2003 amounted to ¥345,324 million ($3,227,327 thousand), ¥286,891 million and ¥241,891 million, respectively. The ratios of such overseas sales to consolidated net sales in 2005, 2004,
and 2003 were 35.1%, 30.8 % and 26.1%, respectively. The sales of the Companys subsidiaries outside Japan in fiscal 2005, 2004, and 2003 amounted to ¥323,943 million ($3,027,504 thousand), ¥254,795 million and 213,181 million,
respectively. Its ratio to consolidated net sales in fiscal 2005, 2004, and 2003 were 32.9%, 27.4% and 23.0%, respectively.



The Company has manufacturing subsidiaries in the U.S.A., Canada, Germany, China, Indonesia and Thailand, and manufacturing affiliates in Indonesia and
China. International sales subsidiaries are located in the U.S.A., Canada, France, the U.K., Germany, Spain, Australia, Singapore, China and South Korea. In addition, a representative office is maintained in Beijing, and liaison offices are located
in Torrance (California : U.S.A.), Flowery Branch (Georgia : U.S.A.), Argenteuil (France), Dubai (U.A.E.), Suzhou (China), Bangkok (Thailand), Selangor (Malaysia) and Cairo (Egypt).



Seasonality of the Companys Businesses



In such businesses as ductile iron pipes, valves, environmental engineering, and pumps, which rely upon national government
or municipalities for most of their sales, there is a tendency that sales in the second half of the fiscal year are much larger than those in the first half. Because the fiscal years of the national government or municipalities generally end in
March, execution of public budgets in the second half is liable to be much larger than in the first half of the fiscal year.



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##### Table of Contents

Raw Materials and Source of Supply



The Company purchases raw materials or parts from numerous sources. The major materials purchased are steel scrap, polyvinyl
chloride resin, rolled steel coils, non-ferrous metals and alloys and pig iron. Some of the purchase prices of the major materials such as steel scrap fluctuate significantly by supply and demand conditions of the market. The Company has no
difficulty in obtaining adequate supplies of all of its raw materials requirements.



Marketing Channels



Domestic sales of farm
equipment, engines and construction machinery are made through wholesale-retail dealers, wholesalers and the National Federation of Agricultural Cooperative Associations. Overseas sales of those products are made through trading companies, local
distributors and the Companys overseas subsidiaries and affiliates.



A large portion of pipes, valves, environmental control plants, and a portion of industrial castings are sold to public-sector markets in Japan directly by the Company, as well as through dealers.



On the other hand, domestic sales of industrial machinery and part of
industrial castings are made to private-sector markets through dealers and trading companies, directly to the end-users or, in the case of vending machines, to manufacturers of beverages or other products sold in vending machines. Overseas sales of
those products are made directly by the Company or through trading companies, local distributors and the Companys overseas subsidiaries and an affiliate.



Dependent Contract, License, Patent and Manufacturing Process



The Company has many contracts. Some of them, for example, are for technical cooperation with other manufacturers, or for financing from banks. These are
relatively important to the Company, but the Company relies on no specific contracts.



With respect to licenses or patents, the Company does not rely on specific licenses or patents. As of March 31, 2005, the Company held 5,735 Japanese patent and utility model registrations, and 885 foreign patent and
utility model registrations. A utility model registration is a right granted under Japanese law and in certain other countries to inventions of lesser originality than those which qualify for patents. Although patent rights are important to Kubota,
the Company does not consider that the expiration of any single patent or group of related patents would materially affect the conduct of Kubotas business. Kubota grants others licenses to use its technology including its patents, and obtains
licenses under patents from third parties for technological assistance on a royalty basis. In fiscal 2005, royalty income and expenses were ¥672 million ($6,280 thousand) and ¥706 million ($6,598 thousand), respectively, under such licensing
arrangements.



Competition



The Company is the largest manufacturer of farm equipment in Japan based on
market share. There are 3 other major Japanese manufacturers of farm equipment and engines for agricultural use, all of which offer a complete line of machinery and engines in competition with the Company. The Company believes that foreign
manufacturers do not at present produce the kind of machinery or, in the case of farm tractors, the size of tractors suited to Japanese agriculture and that the Company has the advantages that accrue from an established production and distribution
system. In overseas markets, the Company experiences strong competition from Japanese and foreign companies in the sale of farm equipment and engines.



In Japan, there are 2 other major manufacturers of ductile iron pipes, 3 other major manufacturers of spiral welded steel pipes and 2 other major
manufacturers of plastic pipes according to internal research. In export markets for ductile iron pipes, the Company faces strong competition with foreign manufacturers. The Company also encounters strong competition with Japanese and foreign
companies in all of its product lines.



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##### Table of Contents

Governmental Regulations



Businesses of the Company tend to be affected by the regulations or restrictions in the countries where the Company or its subsidiaries operate. Those
are, for example, regulations concerning investments, tariffs, anti-monopoly, intellectual property, foreign exchange, and environment.



Domestic sales of farm equipment, which are the mainstay of the Companys business, are prone to be influenced by Japanese agricultural policies. For
example, policies that decrease rice prices or reduce rice paddy acreage will adversely influence the sales of farm equipment.



In overseas markets, restrictions on exhausted gas may affect the engines business of the Company.



C. Organization Structure



As
of March 31, 2005, the group of Kubota Corporation consists of Kubota Corporation, 121 subsidiaries and 29 affiliates. Kubota Corporation plays a leading role in the group. The main subsidiaries are as follows:





|        |  |                                                                                                                                            |  |                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------
|        |  |                                                                                                                                            |  | Percentage ownership (%)
|Japan   |  | Kubota Construction Co., Ltd. Kubota
Credit Co., Ltd. Kubota Environmental Service Co., Ltd. Kubota
Maison Co., Ltd.                       |  | 100.071.8100.0100.0     
|U.S.A.  |  | Kubota Tractor Corporation Kubota Credit Corporation,
U.S.A. Kubota Manufacturing of America Corporation Kubota
Engine America Corporation |  | 90.0100.0100.090.0      
|Canada  |  | Kubota Metal Corporation                                                                                                                   |  | 100.0                   
|Germany |  | Kubota Baumaschinen GmbH                                                                                                                   |  | 100.0                   
|France  |  | Kubota Europe S.A.S.                                                                                                                       |  | 73.8                    



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##### Table of Contents

D. Property, Plant and Equipment



The following table sets forth information with respect to Kubotas principal manufacturing facilities:



|                      |  |                 |  |             |  |                    |  |        |  |                                                                  
|--------------------- |  | --------------- |  | ----------- |  | ------------------ |  | ------ |  | -----------------------------------------------------------------
|Location              |  | Land            |  | Floor space |  | Principal products
|                      |  | (Square meters) |  |            
|                      |  | Owned           |  | Leased      |  | Owned              |  | Leased |  |                                                                  
|Amagasaki (Hyogo)     |  | 462,785         |  | 37,439      |  | 166,488            |  | 823    |  | Ductile iron pipes, Filament winding pipes, Rolls for steel mills
|Funabashi (Chiba)     |  | 564,388         |  | 18,414      |  | 145,220            |  | 7,656  |  | Ductile iron pipes, Spiral welded steel pipes                    
|Sakai (Osaka)         |  | 115,670         |  | 28,335      |  | 66,060             |  | 1,332  |  | Plastic pipes                                                    
|Odawara (Kanagawa)    |  | 128,327         |  | 668         |  | 86,745             |  | 83     |  | Plastic pipes                                                    
|Osaka (Osaka)         |  | 89,755          |  | 825         |  | 56,888             |  |       |  | Cast iron products                                               
|Sakai (Osaka)         |  | 421,386         |  | 11,616      |  | 145,260            |  | 38,425 |  | Farm equipment, Diesel engines                                   
|Utsunomiya (Tochigi)  |  | 154,281         |  |            |  | 77,031             |  | 56     |  | Farm equipment, Air-conditioning equipment                       
|Tsukuba (Ibaraki)     |  | 334,496         |  | 4,041       |  | 117,139            |  | 7,402  |  | Farm equipment, Diesel engines                                   
|Sakai (Osaka)         |  | 159,956         |  |            |  | 48,862             |  | 2,836  |  | Diesel engines                                                   
|Hirakata (Osaka)      |  | 306,079         |  |            |  | 149,755            |  | 2,366  |  | Construction machinery, Cast steel products, Pumps, Valves       
|Konan (Shiga)         |  | 221,818         |  | 3,180       |  | 80,632             |  | 373    |  | Septic tanks                                                     
|Yao (Osaka)           |  | 38,102          |  |            |  | 27,756             |  |       |  | Electronic machinery, Pulverizing equipment                      
|Ryugasaki (Ibaraki)   |  | 84,795          |  |            |  | 30,820             |  |       |  | Vending machines                                                 
|Georgia (U.S.A.)      |  | 611,000         |  |            |  | 57,876             |  |       |  | Lawn and garden tractors, Implements for tractors                
|Zweibrücken (Germany) |  | 70,898          |  | 6,343       |  | 11,108             |  | 5,515  |  | Mini-excavators                                                  



The Company considers
its principal manufacturing facilities to be well maintained and suitable for the purpose for which they are employed and believes that its plant capacity is adequate for its current and near-term needs.



In addition, the Company owns 2,127,571 square meters of land (321,742 square
meters of floor space) in Japan, used for the head office, branches, business offices and research facilities, and leases 4,054 square meters of land (79,760 square meters of floor space) used for sales offices, warehousing, employee housing and
other purposes.



The Company plans its capital expenditures
considering future business demand and cash flows. As of March 2005, the Company has planned to invest approximately ¥31.0 billion in fiscal year ending at March 31, 2006. The Company intends to fund the investment basically from cash and cash
equivalents, and also utilize available borrowings from financial institutions.



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New Construction



(¥billion)



|                         |  |                                          |  |                                                  |  |                                  |  |                    |  |           |  |               
|------------------------ |  | ---------------------------------------- |  | ------------------------------------------------ |  | -------------------------------- |  | ------------------ |  | --------- |  | --------------
|                         |  |                                          |  |                                                  |  | Estimated amount of expenditures |  | Schedule          
|Location                 |  | Industry segment included                |  | Content                                          |  | Totalamount ofexpenditures       |  | Amount alreadypaid |  | Commenced |  | To becompleted
|Jackson (Georgia, U.S.A) |  | Internal Combustion Engine and
Machinery |  | Production equipment for tractors and implements |  | ¥5.0                             |  | ¥0.4               |  | Nov. 2004 |  | Sep. 2005     



Expansion



(¥billion)



|                                |  |                                          |  |                                                  |  |                                  |  |                   |  |           |  |               
|------------------------------- |  | ---------------------------------------- |  | ------------------------------------------------ |  | -------------------------------- |  | ----------------- |  | --------- |  | --------------
|                                |  |                                          |  |                                                  |  | Estimated amount of expenditures |  | Schedule         
|Location                        |  | Industry segment included                |  | Content                                          |  | Totalamount ofexpenditures       |  | Amountalreadypaid |  | Commenced |  | To becompleted
|Sakai (Osaka) Tsukuba (Ibaraki) |  | Internal Combustion Engine and Machinery |  | Production equipment for vertical diesel engines |  | ¥0.9                             |  | ¥0.1              |  | Oct. 2004 |  | Jun. 2005     



Reforming



No material reforming is planned.



Disposition



No material disposition is planned.



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##### Table of Contents

|Item5. | Operating and Financial Review and Prospects
|------ | --------------------------------------------



Critical Accounting Policies and Estimates



The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S.A. (U.S. GAAP) with
the exceptions described in Note 1 of the consolidated financial statements SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The preparation of the consolidated financial statements requires management to make estimates and assumptions on the
selection and application of significant accounting policies. The Company reviews these estimates and assumptions periodically. Actual results may differ from estimated results. The following critical accounting policies that affect financial
conditions and operations require management to make significant estimates and assumptions:



1) Inventory Valuation



Completed real estate projects are stated at the lower of acquisition cost or fair value, less estimated costs to sell. The fair values of those assets are estimated based on the appraised values in the market. Land to be developed and
projects under development are carried at cost unless those assets are impaired. If carrying amounts of those assets exceed the undiscounted future cash flows expected to be realized from them, those assets are considered impaired and an impairment
loss is measured based on the amount by which the carrying value exceeds the fair value of those assets. If the market conditions and demand in the housing business are less favorable than managements projection, additional writedowns may be
required.



2) Impairment of Investments



The Company classifies all its debt securities and marketable equity
securities as available for sale. When a decline in the value of a marketable security is deemed to be other than temporary, the Company recognizes an impairment loss to the extent of the decline. In determining if and when such a decline in value
is other than temporary, the Company evaluates market conditions, trends of earnings, the extent to which cost exceeds market value, the duration of market declines, the ability and intent to hold the marketable securities, and other key measures.
If equity markets decline or operating results of the issuer of the security become worse, additional impairment losses may be required in the future.



3) Allowance for Doubtful Receivables



The Company evaluates the collectibility of the notes and accounts receivable, with the estimate based on various judgments, including the customers
financial conditions, historical experience, and the current economic circumstances. If the customers financial conditions or current economic circumstances become worse, additional allowances may be required in the future.



4) Deferred Tax Assets



The Company recognizes deferred tax assets with a valuation allowance to
adjust the carrying amount when it is more likely than not that the deferred tax assets will not be realized. The valuation of deferred tax assets principally depends on the estimation of future taxable income and tax planning strategies. If future
taxable income is lower than expected due to a change in economic circumstances and poor operating results, significant adjustments to deferred tax assets may be required.



5) Impairment of Long-Lived Assets



When events and circumstances indicate that the carrying amount of longlived assets to be held and used may not be recoverable and the carrying amounts
of those assets exceed the undiscounted future cash flows, an impairment loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived assets. Fair value is determined primarily using anticipated future
cash flows discounted at a rate commensurate with the risk involved. If estimates of future cash flows fall below managements projection due to an unexpected change in economic circumstances, additional impairment may be required.



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6) Retirement and Pension Plans



Benefit obligations and periodic benefit cost are valued based on assumptions used by actuaries in calculating such amounts.
These assumptions include the discount rate, retirement rate, rate of compensation increase, mortality rate, expected rate of return on plan assets, and other factors. These assumptions are based upon current statistical data and are reviewed every
fiscal year. Differences in actual experience or changes in assumptions may affect the benefit obligations and future periodic benefit cost.



The Company recognizes actuarial gains and losses in excess of 20% of the larger of the projected benefit obligations or plan assets in the year following
the year in which such gains and losses were incurred, and amortizes actuarial gains and losses between 10% and 20% over the participants remaining service period (approximately 15 years). Significant unrecognized actuarial gains or losses may
have a material effect on periodic benefit cost in the next fiscal year.



To determine the discount rate, the Company considers current market interest rates. To reflect the declining current market interest rates, the Company reduced the discount rate from 3.0% to 2.5% as of March 31,
2003. In fiscal 2003, this change increased the projected benefit obligations by approximately ¥21.9 billion. A further decrease of 50 basis points in the discount rate would increase the benefit obligations as of March 31, 2005, by
approximately ¥9.2 billion ($86 million) and would decrease income before income taxes for the year ending March 31, 2006, by approximately ¥0.2 billion ($2 million).



To determine the expected rate of return on plan assets, the Company considers actual returns in the past 5 to 10 years and
the current and expected components of plan assets, and anticipated market trends. Plan assets are managed by asset management companies and trust banks, and are invested primarily in fixed income and equity securities of Japanese and foreign
issuers. The Company assumed that the long-term rate of return on plan assets was 3.5% in fiscal 2004 and fiscal 2005. The Company anticipated that investment managers would continue to generate long-term returns of at least 3.5%, based on an asset
allocation assumption of 45% on fixed income securities, with an expected rate of return of 1.0%, and 55% on equity securities, with an expected rate of return of 5.5%.



The Company reviewed the components of plan assets and adopted a change in the portfolio of plan assets to 55% on fixed
income securities and 45% on equity securities to secure more stable returns from the fiscal 2006. As a result of the change, the expected rate of return on plan assets in fiscal 2006 would decrease from 3.5% to 3.0%. The Companys management
believes that 3.0% is a reasonable long-term rate of return despite an actual return on plan assets in the past 10 years of 2.3%, as significant losses on plan assets were incurred from fiscal 2001 to fiscal 2003, caused by the market downturn. A
decrease of 50 basis points in the expected rate of return on plan assets would result in an increase of periodic benefit costs in fiscal 2006 of approximately ¥0.4 billion ($4 million).



Based on a law issued by the Japanese government in June 2001, the Company
made applications for an exemption from the obligation to pay benefits for future employee service related to the substitutional portion of a contributory defined benefit pension plan and received approval from the Japanese Ministry of Health,
Labour and Welfare on January 30, 2003. After the approval, the Company made applications for an exemption from the obligation to pay benefits for past employee service related to the substitutional portion and received approval from the Japanese
Ministry of Health, Labour and Welfare on September 1, 2004. Based on the approval, the Company transferred the benefit obligation and the related government specified portion of the plan assets of the contributory defined benefit pension plan to
the government on January 31, 2005.



In accordance with EITF
No. 03-2, Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities, the Company recognized the difference of ¥58.6 billion ($548 million) between the substitutional
portion of accumulated benefit obligation settled and the related plan assets transferred to the Japanese government as a government subsidy in Other income (expenses) in the 2005 consolidated statement of income. The Company also recognized
derecognition of previously accrued salary progression of ¥11.1 billion ($104 million) and a settlement loss for the proportionate amount of the net unrecognized loss of ¥13.4 billion ($125 million). The net amount of ¥2.3 billion ($21
million) of derecognition of previously accrued salary progression and the settlement loss was allocated to cost of sales of ¥1.5 billion ($14 million) and selling, general, and administrative expenses of ¥0.7 billion ($7 million).



The Companys senior management and the Board of
Corporate Auditors had proactive discussions about these critical accounting policies, and they agreed that estimates and assumptions were appropriate in light of the current and expected market conditions, the Companys businesses, and
numerous other factors.



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##### Table of Contents

New Accounting Pronouncements



In March 2004, EITF reached a consensus on EITF Issue No. 03-1 (EITF 03-1), The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF 03-1 provides guidance on other-than-temporary impairment models for marketable debt and equity securities accounted for under SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities, and non-marketable equity securities accounted for under the cost method. FASB issued FASB Staff Position EITF Issue 03-1-1 in September 2004 which delayed the effective date of the
recognition and measurement of provisions of EITF 03-1. The adoption of EITF 03-1 is not expected to have a material effect on the Companys consolidated results of operations and financial position.



In November 2004, FASB issued SFAS No. 151, Inventory Costs, an
amendment of ARB No. 43 (ARB 43), Chapter 4 in order to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). This statement requires that those items be
recognized as current-period charges regardless of whether they meet the so abnormal criterion outlined in ARB 43. SFAS No. 151 also requires the allocation of fixed production overheads to inventory based on the normal capacity of the
production facilities. Unallocated overheads must be recognized as an expense in the period in which they are incurred. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this
statement is not expected to have a material effect on the Companys consolidated results of operations and financial position.



In December 2004, FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment to APB Opinion No. 29. This statement eliminates the
exception to measure exchanges at fair value for exchanges of similar productive assets and replaces it with a general exception for exchange transactions that do not have commercial substance. This statement is effective for nonmonetary exchanges
in fiscal periods beginning after June 15, 2005. The adoption of this statement is not expected to have a material effect on the Companys consolidated results of operations and financial position.



A. Operating Results



(The fiscal year
ended March 31, 2005 compared with the fiscal year ended March 31, 2004)



General Economic Conditions



During the year
ended March 31, 2005, although the Japanese economy initially maintained an upward trend, the tempo of economic growth slackened after the summer, reflecting slower growth of exports and higher prices of oil and raw materials. Overseas, while the
U.S. economy expanded smoothly supported by active housing investment and private capital expenditures, the EU economy decelerated gradually, affected by the stronger Euro.



While the domestic market for Internal Combustion Engine and Machinery was sluggish, overseas markets, especially the
small-sized tractors market in the U.S.A., were brisk due to active private consumption and the high level of housing starts. As for the public works related markets, the total amount of orders remained stagnant as ever due to the continuously
declining public works spending. The domestic demand for ductile iron pipe, which is one of the mainstays in the public works related products, continued to decline although the pace of decrease declined. Environmental Engineering also faced a
difficult operating environment in terms of receiving orders from public agencies.



Sales



Under such conditions, net sales of the
Company during the year under review were ¥983.2 billion ($9,189 million), a 5.7% increase from the prior year, and domestic sales were ¥637.9 billion ($5,962 million), a 0.8% decrease from the prior year. Although the negative impact from
the sale of building materials operations in December 2003 (a decrease of ¥28.5 billion) was largely offset by a favorable increase in sales in other segments, domestic sales slightly declined from the prior year.



Overseas sales were ¥345.3 billion ($3,227 million), a 20.4% increase
from the prior year. This increase was mainly due to the continuing growth in sales of tractors in North America where a very promising new product was introduced, and brisk sales of construction machinery and engines principally in the U.S.A. and
European markets. As a result, overseas sales accounted for 35.1% of net sales, 4.3 percentage points higher than in the prior year.



15



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##### Table of Contents

Sales by industry segment



1) Internal Combustion Engine and Machinery



Sales in Internal Combustion Engine and Machinery were ¥582.7 billion ($5,446 million), 16.2% higher than in the prior
year, comprising 59.3% of consolidated net sales. Domestic sales increased 5.8%, to ¥257.0 billion ($2,402 million), and overseas sales increased 25.9%, to ¥325.7 billion ($3,044 million). This segment consists of farm equipment and engines
as well as construction machinery.



In the domestic market, due
to the declining number of farmers and the negative impact of typhoons and earthquakes, market conditions were rather harsh. Accordingly, the Company executed aggressive sales promotion campaigns in connection with the introduction of new models of
competitively priced farm equipment offering improved performance. By stimulating the market through these activities, the Company further diversified its customer base and increased its market share, which led to higher sales. Sales of construction
machinery also increased due to the expansion of sales to rental companies and the introduction of new models supported by a recovery in demand. In overseas markets, sales of tractors in North America remained strong as a result of the introduction
of new models and sales promotions, including promotions offering a 0% promotional interest rate. In particular, sales of a newly introduced product, the utility vehicle (multipurpose four-wheel vehicles), greatly exceeded expectations,
fueling overall sales growth. In European markets, sales of tractors remained steady. In Asian and Oceanian markets, the Company recorded favorable sales, especially in Australia, South Korea, and Thailand. Sales of engines increased due principally
to growth in demand from European and North American manufacturers of industrial machinery. Sales of construction machinery, underpinned by growing worldwide demand, also expanded sharply in Europe, our main market, and in the U.S.A., where the
market for mini-excavators is growing rapidly.



2) Pipes,
Valves, and Industrial Castings



Sales in Pipes, Valves, and
Industrial Castings were ¥170.6 billion ($1,594 million), 2.6% lower than in the prior year, comprising 17.3% of consolidated net sales. Domestic sales increased 2.0%, to ¥155.4 billion ($1,452 million), but overseas sales declined 33.2%, to
¥15.2 billion ($142 million). This segment consists of pipes and valves as well as industrial castings. As for domestic sales of ductile iron pipes and PVC pipes, prices of these products improved substantially. However, sales of ductile iron
pipes decreased due to the lower demand from municipalities, while sales of PVC pipes increased, reflecting higher prices. Sales of industrial castings increased principally due to brisk demand from the steel, energy, and automobile industries.



On the other hand, overseas sales deteriorated significantly
because shipments of large orders to Middle East countries were over in the prior fiscal year, although sales of industrial castings rose.



3) Environmental Engineering



Sales in Environmental Engineering were ¥117.6 billion ($1,099 million), 1.7% higher than in the prior year, comprising 12.0% of consolidated net
sales. Domestic sales increased 1.3%, to ¥113.9 billion ($1,064 million), and overseas sales also increased, up 12.5%, to ¥3.7 billion ($35 million). This segment consists of environmental control plants and pumps.



In the domestic market, Sales in the Water & Sewage Engineering Division
decreased as a consequence of the lower level of bids accepted by local government in the prior year due to increased competition. Sales of pumps declined owing to reduced demand of large-sized pumps. On the other hand, sales in the Waste
Engineering Division increased due to the progress in construction of large orders. Overall, total sales in Environmental Engineering increased in the domestic market. Overseas sales increased due to favorable sales in a subsidiary, which sells
submerged membrane system.



4) Other



Sales in Other were ¥112.3 billion ($1,050 million), 18.5% lower than in
the prior year, comprising 11.4% of consolidated net sales. Domestic sales decreased 17.7%, to ¥111.6 billion ($1,043 million), and overseas sales declined 67.5%, to ¥0.7 billion ($7 million). This segment consists of vending machines,
electronic-equipped machinery, air-conditioning equipment, septic tanks, condominiums, construction, and other equipment and services.



Sales of this segment decreased sharply, affected by the impact of the business transfer of building materials operations. However, sales of vending
machines increased owing to brisk demand from the cigarette and bottling industries. Sales of air-conditioning equipment and condominiums also increased significantly. Additionally, sales of electronic-equipped machinery and septic tanks grew. On
the other hand, revenues from construction services declined from the prior year.



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Operating Income



Operating income increased 322.4% from the prior year, to ¥92.3 billion ($863 million). In spite of the appreciation of the yen and higher prices of
raw materials, a significant decrease in pension costs (a decrease of ¥44.9 billion), increased sales centering on the Internal Combustion Engine and Machinery segment, and the reduction of costs and spending control in public works related
business contributed to an increase in operating income. In the prior year, the Company recognized a large amount of unrecognized actuarial loss that resulted from unfavorable stock market conditions in Japan in the past few years before the prior
year and a reduction of the discount rate used in pension plans in the year before the prior year.



The Company also had expenses related to reorganization of the building materials business in the prior year (¥4.8 billion). In contrast, the Company
had non-recurring operating income in connection with the business transfer of 2 subsidiaries in the year under review. As a result of these factors, operating income for the year under review expanded significantly. Operating income or loss in each
industry segment (before elimination of intersegment profits and corporate expenses) was as follows: Internal Combustion Engine and Machinery, operating income of ¥79.2 billion ($740 million), a 46.5% increase; Pipes, Valves, and Industrial
Castings, operating income of ¥11.5 billion ($107 million), as compared to an operating loss of ¥5.7 billion in the prior year; Environmental Engineering, operating income of ¥5.7 billion ($53 million), a 4,262.6% increase; and Other,
operating income of ¥9.4 billion ($88 million), as compared to an operating loss of ¥7.8 billion in the prior year.



Profitability in Internal Combustion Engine and Machinery benefited from the brisk sales of lawn mowers as well as compact and utility tractors in the
U.S. market, due to steady private consumption and strong housing construction, which was similar with that of the prior year. In addition to the above factors, the decrease in pension costs contributed to an increase in operating income in this
segment. Profitability in Pipes, Valves, and Industrial Castings benefited from rigorous cost controls and the increased efficiency of the manufacturing process as well as the decrease in pension costs. In Environmental Engineering, profitability
improved due to the decrease in pension costs.



Cost of Sales



The cost of sales increased 1.7% from the prior year, to
¥713.3 billion ($6,666 million). The cost of sales as a percentage of net sales decreased 2.9 percentage points, to 72.5%. The decrease in the ratio was attributable to the substantial decrease in pension costs.



SG&A Expenses



Selling, general, and administrative (SG&A) expenses decreased 9.0% from the prior year, to ¥181.7 billion ($1,698
million). The ratio of SG&A expenses to net sales decreased 3.0 percentage points, to 18.5%. The decrease in pension costs as well as the Companys efforts for spending control in all aspects of business operations contributed to the
decrease in the ratio.



Loss (Gain) from Disposal and Impairment of
Businessesand Fixed Assets



Gain from disposal and
impairment of business and fixed assets was ¥4.1 billion ($38 million), as compared to a loss of ¥6.9 billion in the prior year. The gains in connection with the business transfer of 2 subsidiaries in the year under review contributed to
this improvement. The Company recognized a gain of ¥5.6 billion in connection with the sale of a subsidiary that operated a golf course. Also, the Company had a gain as a result of the sale of Firstserver, Inc., one of the Companys
subsidiaries that operated a rental computer server business.



Other Income
(Expenses)



Other income (expenses), net, was income of
¥69.3 billion ($647 million), an increase of ¥64.0 billion from the prior year. The increase is largely due to ¥58.6 billion from a government subsidy, which is the difference in the substitutional portion of accumulated benefit
obligation settled and related plan assets transferred to the Japanese government. In addition, the foreign exchange gain improved ¥5.1 billion ($48 million) and interest and dividend income increased by ¥2.2 billion ($21 million).



Income before Income Taxes, Minority Interests in Earningsof
Subsidiaries, and Equity in Net Income of Affiliated Companies



Due to the factors described above, income before income taxes, minority interests in earnings of subsidiaries, and equity in net income of affiliated companies increased 496.2%, to ¥161.6 billion ($1,510 million).



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Income Taxes



Income taxes increased 210.5% from the prior year, to ¥42.5 billion ($398 million). The effective tax rate decreased 24.3 percentage points, to 26.3%.
The primary reason for the decrease in the effective tax rate was due to the deductibility of the historical impairment losses and net operating losses related to the sale and dissolution of the subsidiaries. Related deferred tax assets were fully
reserved prior to the sale and dissolution of the subsidiaries. Income tax-current was ¥28.9 billion ($270 million), a decrease of ¥0.3 billion ($3 million), and income tax-deferred (expense) was ¥13.6 billion ($127 million) as compared
to income tax-deferred (benefit) of ¥15.6 billion in the prior year.



Minority Interests in Earnings of Subsidiariesand Equity in Net Income of Affiliated Companies



Minority interests in earnings of subsidiaries increased ¥1.0 billion, to ¥3.4 billion ($32 million). Equity in net income of affiliated companies
increased ¥1.5 billion from the prior year, to ¥2.3 billion ($22 million). Increased profit of the joint venture Kubota Matsushitadenko Exterior Works, Ltd., contributed to increased equity in net income of affiliated companies.



Net Income



Due to the factors described previously, net income was ¥117.9 billion ($1,102 million), compared with ¥11.7 billion
in the prior year. Return on shareholders equity improved 23.7 percentage points, to 27.0%, from the prior year.



Income per ADS



Basic net income per ADS (5 common shares) was ¥446 ($4.17), as compared to ¥44 in the prior year. The number of shares of treasury stock held by
the Company was 40.4 million as of March 31, 2005, and these shares were excluded from the calculation of net income per ADS.



Dividends



The Companys basic policy for the allocation of profit is to maintain or raise dividends. To this end, the Company determines the most appropriate
use of retained earnings by considering requirements of maintaining stable current business operations as well as the future business environment. A year-end cash dividend per ADS at the rate of ¥25 ($0.23) was approved at the general meeting of
shareholders, held on June 24, 2005. The Company also paid a ¥15 ($0.14) per ADS interim dividend to each shareholder.



Comprehensive Income



Comprehensive income was ¥119.3 billion ($1,115 million), a ¥33.5 billion improvement from the prior year. The increase resulted from the
expansion of net income, to ¥117.9 billion ($1,102 million). However, the increase was partially offset by a decrease in unrecognized gains on securities and adjustment to reduce the minimum pension liability.



(The fiscal year ended March 31, 2004 compared with the fiscal year ended March 31, 2003)



GeneralEconomic Conditions



During the year ended March 31, 2004, the Japanese economic recovery
continued at a gradual pace, supported by steady growth in private capital expenditure and exports. However, public investment remained weak, resulting in harsh business conditions for the Company. Overseas, in the U.S.A., brisk private consumption
continued, housing investment remained favorable, private capital expenditures expanded, and signs of an economic upturn prevailed.



While the domestic market for Internal Combustion Engine and Machinery showed slight improvement, the overseas market, especially the small size tractor
market in the U.S.A., was brisk due to increased private consumption and lower interest rates. As for the public works related market, the total amount of orders and order prices remained sluggish due to the reduction of public works spending. The
demand for ductile iron pipes, one of the mainstays in the public works related market, showed no signs of increase, although the pace of decrease declined.



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Sales



Under such conditions, net sales of the Company during the year under review were ¥930.2 billion, a 0.4% increase from the prior year. Domestic sales
were ¥643.3 billion, a 6.0% decrease from the prior year, resulting principally from persistently sluggish sales of public works related products, the sale of Kubota Lease Corporation, and the business transfer of the roofing and siding
materials operations to a newly formed affiliate (the Company has applied the equity method of accounting to the affiliated company). Overseas sales were ¥286.9 billion, an 18.6% increase from the prior year, mainly due to the strong sales of
tractors in North America and brisk export of ductile iron pipes to Middle Eastern countries. As the increase in overseas sales exceeded the decrease in domestic sales, net sales increased. The percentage of overseas sales to net sales was 30.8%,
4.7 percentage points higher than the prior year.



Sales by industry
segment



1) Internal Combustion Engine and Machinery



Sales in Internal Combustion Engine and Machinery totaled
¥501.5 billion, an increase of 12.9% from the prior year, comprising 53.9% of consolidated net sales. Domestic sales were ¥243.0 billion, an increase of 7.7%, and overseas sales were ¥258.5 billion, an increase of 18.3% from the prior
year. This segment consists of farm equipment and engines and construction machinery.



(1) Sales of farm equipment and engines were ¥450.7 billion, an increase of 12.9% from the prior year. Domestic sales were ¥219.8 billion, an
increase of 7.6%, and overseas sales were ¥231.0 billion, an increase of 18.3% from the prior year. In domestic markets, the Company has aggressively conducted sales promotion campaigns to introduce new models of farm equipment with improved
performance and price-competitiveness and thus stimulated the market and increased its market share. As a result, sales of farm equipment increased from the prior year. In overseas markets, sales of tractors in North America had a significant
increase resulting from sales campaigns, including a zero-percent promotional interest rate offered by the Companys retail finance subsidiary, and the introduction of new models, such as full model changes of the L-series tractors.
In the Asian market, sales of farm equipment grew favorably, especially in China and South Korea.



Sales of engines increased 4.4% from the prior year. Domestic sales increased 0.7%, and overseas sales also increased 5.0%, owing principally to growing
sales to original equipment manufacturers in EU markets as well as in the U.S. markets.



(2) Sales of construction machinery were ¥50.8 billion, an increase of 13.4% from the prior year. Domestic sales were ¥23.2 billion, an increase of 8.8%, and overseas sales were ¥27.6 billion, an increase
of 17.6% from the prior year. While demand for construction machinery in the Japanese market recovered, the Company made successful marketing efforts aimed at major rental companies, resulting in a sales increase. Overseas, while demand in EU
markets was recovering and demand in North America was strong, the Company achieved sales increases by introducing new models and executing effective sales campaigns.



2) Pipes, Valves, and Industrial Castings



Sales in Pipes, Valves, and Industrial Castings totaled ¥175.2 billion, a decrease of 1.2% from the prior year,
comprising 18.8% of consolidated net sales. Domestic sales were ¥152.5 billion, a decrease of 4.1%, and overseas sales were ¥22.7 billion, an increase of 24.6% from the prior year. This segment consists of pipes and valves and
industrial castings.



(1) Sales of pipes and valves
were ¥143.8 billion, a decrease of 1.2% from the prior year. Domestic sales were ¥130.7 billion, a decrease of 3.6%, and overseas sales were ¥13.1 billion, an increase of 30.1% from the prior year. While domestic sales of ductile iron
pipes decreased slightly from the prior year, domestic sales of PVC pipes remained at the same level in spite of a reduction in public works spending and the financial difficulties of local governments. However, sales of spiral-welded steel pipes
and valves declined significantly, and thus total domestic sales of this sub-segment decreased. Overseas sales surged as a result of the brisk export of ductile iron pipes to Middle Eastern countries.



(2) Sales of industrial castings were ¥31.4 billion, a decrease of 0.8%
from the prior year. Domestic sales were ¥21.8 billion, a decrease of 7.2%, and overseas sales were ¥9.6 billion, an increase of 17.7% from the prior year. Domestic sales declined mainly due to the weak demand for ductile tunnel segments in
construction markets, although the demand in steel industries recovered. Overseas sales increased due to the rising demand for reformer tubes in petrochemical industries.



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3) Environmental Engineering



Sales in Environmental Engineering totaled ¥115.7 billion, a decrease of 15.1% from the prior year, comprising 12.4% of
consolidated net sales. Domestic sales were ¥112.4 billion, a decrease of 16.5%, and overseas sales were ¥3.3 billion, an increase of 79.6% from the prior year. This segment consists of environmental control plants and pumps.



Due to prolonged sluggish public works spending and fierce competition,
domestic sales fell in the Solid Waste Engineering, Water Environment Engineering, and Pumps divisions. Sales in the Solid Waste Engineering division decreased due to a downturn in demand for rebuilding incinerators to prevent dioxin emissions and
as a result of the very low number of orders received during the prior fiscal year. Sales in the Water and Sewage Engineering division increased due to the high level of orders received in the prior year. Overseas sales increased due to the growing
export of pumps to the African and Southeast Asian markets.



4)
Building Materials and Housing



Sales in Building Materials
and Housing were ¥51.8 billion, a decrease of 19.5% from the prior year, comprising 5.6% of consolidated net sales. This segment consists mainly of building materials (roofing materials, siding materials, and septic tanks) and sales of
condominiums.



(1) Sales of building materials were ¥42.7
billion, a decrease of 25.5% from the prior year. On December 1, 2003, Matsushita Electric Works, Ltd. (MEW), and the Company established and held a 50% ownership in Kubota Matsushitadenko Exterior Works, Ltd. (hereinafter KMEW), the joint operation
entity, into which the Company transferred its roofing and siding materials business. The Company has applied the equity method of accounting to KMEW, due to its 50% ownership in the entity, and has excluded the sales of roofing and siding materials
during the period from December 1, 2003, through March 31, 2004, from its consolidated operations. Accordingly, sales of building materials fell sharply. Sales of septic tanks remained at the same level as in the prior year, owing to the focus of
marketing efforts on the expansion of market share.



(2) Sales
of condominiums were ¥9.1 billion, an increase of 29.7% from the prior year. Sales of condominiums surged from the prior year due to the completion of large orders during the year under review.



5) Other



Sales in Other were ¥86.0 billion, a decrease of 17.4% from the prior year, comprising 9.3% of consolidated net sales.
Domestic sales were ¥83.7 billion, a decrease of 17.1%, and overseas sales were ¥2.3 billion, a decrease of 27.2% from the prior year. This segment consists of vending machines, weighing and measuring control systems, electronic-equipped
machinery, air-conditioning equipment, construction, and other items.



The decrease was mainly due to the sale of Kubota Lease Corporation at the beginning of the year which had sales of ¥13.4 billion in the prior year. Although sales of electronic-equipped machinery increased due to a recovery in private
sector capital expenditures, sales of vending machines decreased, due to increasing price competition. Sales of construction also decreased, mainly due to the reduction in public works spending.



Operating Income



Operating income decreased 26.2% from the prior year, to ¥21.8 billion, and as a percentage of net sales decreased to
2.3%, 0.9% lower than the prior year. The decrease was mainly due to a significant increase in pension costs in fiscal 2004 (an increase of ¥43.4 billion) and expenses resulting mainly from the reorganization of the building materials business
(¥4.8 billion). The increase in pension costs resulted from the unfavorable stock market conditions in Japan, which caused a significant loss on plan assets in the prior year. Accordingly, the Company amortized a large amount of unrecognized
actuarial loss during fiscal 2004. Additionally, the Company reduced the discount rate used in pension plans from 3.0% to 2.5% as of March 31, 2003, resulting in an increase in benefit obligations. The expenses from the reorganization of the
building materials business include a loss resulting from the disposal of certain fixed assets related to the roofing and siding materials business.



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Operating income or loss in each industry segment



Operating income or loss in each industry segment (before elimination of intersegment profits and corporate expenses) was as
follows: Internal Combustion Engine and Machinery, operating income of ¥54.0 billion, a 4.7% decrease; Pipes, Valves, and Industrial Castings, operating loss of ¥5.7 billion, as compared to operating income of ¥1.9 billion in the prior
year; Environmental Engineering, operating income of ¥0.1 billion, a 98.5% decrease; Building Materials and Housing, operating loss of ¥6.4 billion, as compared to operating income of ¥32 million in the prior year; and Other, operating
loss of ¥1.4 billion, a 91.7% improvement over the prior year.



Profitability in Internal Combustion Engine and Machinery benefited from the brisk sales of lawn mowers, compact and utility tractors in the U.S. market, due to lower interest rates, and strong housing construction, which was consistent
with the prior year. However, this benefit was offset by the increase in pension costs and, in the end, operating income declined from the prior year. Profitability in Pipes, Valves, and Industrial Castings benefited from rigorous cost controls and
the increased efficiency of the manufacturing process production system. However, these benefits were offset by the surge in the prices of raw materials and the increase in pension costs. In Environmental Engineering, profitability deteriorated
because of lower sales to local governments. Building Materials and Housing recorded an operating loss of ¥6.4 billion, reflecting various expenses from the reorganization of the building materials business amounting to approximately ¥4.7
billion.



Cost of Sales



The cost of sales increased 0.9% from the prior year, to ¥701.7 billion.
The cost of sales as a percentage of net sales increased 0.3%, to 75.4%. In spite of a favorable product mix and continuous cost reduction efforts, the increase in pension costs (an increase of ¥28.2 billion) increased the ratio of cost of sales
to sales.



Selling, General, and Administrative Expenses



Selling, general, and administrative (SG&A) expenses
increased 10.2% from the prior year, to ¥199.8 billion. The ratio of SG&A expenses to net sales increased 1.9 percentage points, to 21.5%. The Company continued to reduce SG&A expenses by reducing staff at the corporate headquarters.
These efforts were successful and achieved the goal of reduced costs. However, the surge in pension costs (an increase of ¥15.2 billion) resulted in an overall increase in total SG&A expenses.



Loss from Disposal and Impairment of Businesses and Fixed Assets



Loss from disposal and impairment of businesses and fixed assets dropped
64.8%, to ¥6.9 billion. This improvement was due to an impairment loss recorded in the prior year related to a golf course owned by a subsidiary.



Other Income (Expenses)



Other income, net, was ¥5.2 billion, an increase of ¥28.7 billion from the prior year. The valuation losses on short-term and other investments
decreased ¥23.7 billion from the prior year, to ¥1.1 billion, and the gain on sales of securities increased by ¥3.2 billion. Interest expense was ¥4.3 billion and has been decreasing over the past 5 consecutive years due to the
reduction of interest-bearing debt.



Income before Income Taxes, Minority
Interests in Earnings of Subsidiaries, and Equity in Net Income of Affiliated Companies



Due to the factors above, income before income taxes, minority interests in earnings of subsidiaries, and equity in net income of affiliated companies increased 340.2%, to ¥27.1 billion.



Income Taxes



Income taxes increased 11.4% from the prior year, to ¥13.7 billion. The effective tax rate decreased 149.1 percentage
points, to 50.6%. The primary reason for the decrease was the non-deductibility of the impairment loss on the golf course in the prior year. The loss was accounted for without recording a related deferred tax asset because it was uncertain whether
the subsidiary would achieve profitability to allow for the utilization of the deferred tax asset in the future. Income tax-current was ¥29.3 billion, an increase of ¥7.7 billion, and income tax-deferred (benefit) increased ¥6.3 billion,
to ¥15.6 billion.



Minority Interests in Earnings of Subsidiaries and
Equity in Net Income of Affiliated Companies



Minority
interests in earnings of subsidiaries increased ¥0.4 billion, to ¥2.5 billion. Equity in net income of affiliated companies increased ¥0.5 billion from the prior year, to ¥0.8 billion.



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Net Income (Loss)



Due to the aforementioned factors, net income was ¥11.7 billion, compared with a loss of ¥8.0 billion in the prior year. Return on
shareholders equity improved 5.6%, to 3.3%, from the prior year.



Income per ADS



Basic net income per ADS (5
common shares) was ¥44, as compared to a loss per ADS of ¥29 in the prior year. The number of shares of treasury stock held by the Company was 69.6 million as of March 31, 2004, and these shares were excluded from the calculation of net
income per ADS.



Dividends



The Companys basic policy for the allocation of profit is to maintain
or raise dividends. To this end, the Company determines the most appropriate use of retained earnings by considering current business operations as well as the future business environment. A year-end cash dividend per ADS at the rate of ¥15 was
approved at the general meeting of shareholders, held on June 25, 2004. The Company also paid a ¥15 per ADS interim dividend to each shareholder. Accordingly, the annual cash dividends per ADS were ¥30.



Comprehensive Income



Comprehensive income was ¥85.9 billion, ¥142.1 billion improvement from the prior year. This increase was due to the
improvement in net income of ¥19.7 billion, an increase in unrealized gains on securities of ¥55.0 billion, and a ¥68.0 billion adjustment to reduce the minimum pension liability from the prior year.



B. Liquidity and Capital Resources



Finance and Liquidity Management



The
Companys financial policy is to ensure adequate financing and liquidity for its operations and to maintain the strength of its balance sheet. Through cash and cash equivalents, other current assets, cash flows provided by operating activities,
and borrowing, the Company is in a position to fully finance the expansion of its business, R&D, and capital expenditures for current and future business projects. The specific methods of obtaining financing available to the Company are
borrowing from financial institutions, the securitization of trade notes and accounts receivables, establishing committed lines of credit, and the issuance of bonds and commercial paper in the capital markets.



Annual interest rates of short-term borrowings ranged primarily from 0.02% to
2.70% at March 31, 2005. The weighted average interest rate on such short-term borrowings was 1.7%. As for long-term debt, interest rates were primarily fixed, and the weighted average interest rate on such longterm debt at March 31, 2005, was 1.6%.



In North America, the Company maintains an accounts
receivables securitization program of trade receivables and finance receivables. The Company may sell both trade and finance receivables through independent revolving-period securitization trusts. Trade receivables sold under the securitization
program and finance receivables sold under the securitization program are excluded from receivables in the accompanying consolidated balance sheets. In the year under review, a subsidiary in the U.S.A. decided to obtain borrowings using finance
receivables as collateral instead of selling finance receivables under the securitization program. The Company sold trade receivables totaling ¥84.5 billion ($789.8 million) during the year ended March 31, 2005. The Company also sold finance
receivables totaling ¥5.8 billion ($53.8 million) during the year ended March 31, 2005.



Regarding the lines of credit, the Company has established committed lines of credit totaling ¥30.0 billion ($280 million) with some Japanese banks. However, the Company currently does not use these lines as it is
focused on the reduction of interest-bearing debt. In the U.S.A., Europe, and Asia, the Company maintains adequate uncommitted lines of credit with financial institutions. The Company also maintains a commercial paper program allowing for the
issuance of commercial paper of up to ¥100.0 billion ($935 million). Total commercial paper at the end of March 2005 amounted to ¥6.0 billion ($56.1 million).



The Company utilizes Group financing. With Group financing, the Company is centralizing and pursuing the efficiency of cash
management domestically through the Kubota Cash Management System, under which the excess or shortage of cash at most of its subsidiaries in Japan is invested or funded, as necessary. Considering the financing resources mentioned above, the Company
believes it will have no difficulty in securing adequate financing resources to fund its operations and investment.



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To maintain the strength of its balance sheet and help secure adequate funding resources, the Company is
reducing its interest-bearing debt(*) focusing on debt excluding the effects of reduced cash flow caused by its sales financing programs. The Company is providing comprehensive sales financing to support machinery sales in the U.S.A. and Japan. The
Company believes an increase of debt related to sales financing programs is a result of business expansion and it is not appropriate to target reduction of the related debt; thus, the additional debt carried on its books to fund this program is
excluded when determining the target. At the end of March 2005, the amount of interest-bearing debt excluding the effects of reduced cash flow caused by its sales financing program was ¥158.2 billion ($1,479 million), and the amount of total
interest-bearing debt was ¥304.2 billion ($2,843 million). Of the ¥304.2 billion, ¥275.6 billion was borrowings from financial institutions, and the remaining ¥28.6 billion consisted of corporate bonds.



The amount of working capital decreased ¥28.4 billion, to ¥171.3
billion ($1,601 million), from the prior year-end. Additionally, the ratio of current assets to current liabilities decreased 14.2 percentage points, to 134.0%. The primary reason for this decrease was that a large portion of long-term debt moved
from long-term liabilities to the current portion of long-term debt. There is some seasonality to the Companys liquidity and capital resources because a high percentage of the notes and accounts receivable from local governments is collected
during April through June every year.



All things considered,
the Company believes that it can support its current and anticipated capital and operating expenditures for the foreseeable future. The currencies in which the Company has its debt are mainly Japanese yen and U.S. dollars. There are no restrictions
regarding the manner in which the funds may be used.



(*) Interest-bearing debt
= Short-term borrowings + Current portion of long-term debt + Long-term debt



Ratings



The Company has obtained a credit
rating from Rating and Investment Information, Inc. (R&I), a rating agency in Japan, to facilitate access to funds from the capital market in Japan. The Companys current rating is A+ as of March 2005 and its outlook is stable. The
Companys favorable credit rating provides it access to capital markets and investors.



Assets, Liabilities, and ShareholdersEquity



The Company restated its 2004 consolidated balance sheet as a result of reconsideration of its classification of retail finance receivables.



Retail finance receivables were previously classified as current assets in
the consolidated balance sheet.



The Company reconsidered its
classification of these receivables and restated its 2004 consolidated balance sheet considering Chapter 3, Section A, Current Assets and Current Liabilities of Accounting Research Bulletins No. 43, Restatement and Revision of
Accounting Research Bulletins to reflect amounts expected to be collected one year after the balance sheet date as long-term assets.



See Note 17 to the Consolidated Financial Statements.



1) Assets



Total assets at the end of March 2005 amounted to ¥1,193.1 billion ($11,150 million), an increase of ¥68.8 billion (6.1%) from the end of the
prior year. Current assets were ¥675.4 billion ($6,312 million), an increase of ¥60.9 billion from the end of the prior year. Current assets increased due mainly to increases in notes and accounts receivable, short-term finance receivables,
and inventories. The increases of notes and accounts receivable and inventories are mainly due to 9 newly consolidated subsidiaries and a sales increase in overseas markets. In spite of the increase of inventories, inventory turnover improved 0.3
point, to 6.6 times. In addition to the increase in current assets, the sharp increase in long-term finance receivables resulted in an increase in investments and long-term finance receivables. Substantial increases in short- and longterm finance
receivables originated from a rapid expansion of business as well as a reduction of sales of finance receivables in North America. On the other hand, property, plant, and equipment and other assets decreased. Property, plant, and equipment slightly
decreased ¥3.0 billion, to ¥219.8 billion ($2,054 million). The decrease in other assets was owing principally to a decrease in deferred tax assets, which is in connection with the transfer of the substitutional portion of the benefit
obligation and related plan assets to the Japanese government.



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2) Liabilities



Total liabilities amounted to ¥690.5 billion ($6,453 million), a decrease of ¥27.0 billion from the prior year-end. Current liabilities
increased, reflecting increases in short-term borrowings, current portion of long-term debt, and notes and accounts payable. The increase in short-term borrowings is corresponding to the increase in short-term finance receivables. The increase in
notes and accounts payable was due mainly to newly consolidated subsidiaries and the net sales increase.



In contrast, long-term liabilities decreased due mainly to the decrease in long-term debt and the sharp decline in accrued retirement and pension costs. A
large portion of long-term debt moved to current liabilities and accrued retirement and pension costs decreased because of the transfer of the substitutional portion of the benefit obligation and related plan assets to the Japanese government.



3) Minority Interests



Minority interests increased ¥5.9 billion, to ¥21.6 billion ($202
million), due to an increase in the number of subsidiaries that are not 100% owned.



4) Shareholders Equity



Total shareholders equity increased ¥89.9 billion, to ¥481.0 billion ($4,495 million). Due to the increase in net income, shareholders equity increased significantly, and the shareholders equity ratio(*1) exceeded
40%, which is a target at March 31, 2006, in the Medium-Term Management Strategy.



In order to reduce the number of outstanding shares and create more value for shareholders, the Company commenced a program for the purchase of shares of treasury stock in December 2001. During the year under review,
the Company retired 69.0 million shares of treasury stock in June 2004 and then additionally purchased 39.8 million shares of treasury stock. As a result, treasury stock at the end of March 2005 was 40.4 million shares, equivalent to ¥21.6
billion that was deducted from shareholders equity. For these purchases, the Company used net cash provided by operating activities. Next fiscal year, the Company plans to continue the purchase of shares of treasury stock. The debt-to-equity
ratio(*2) was 63.2%, 5.0 percentage points lower than at the prior year-end, due to the growth in shareholders equity that resulted from increased net income. As of June 30, 2005, the Company retired 39.0 million shares of treasury stock.



(*1) Shareholders equity ratio = shareholders equity / total
assets

(*2) Debt-to-equity ratio = interest-bearing debt / shareholders equity



Cash Flows



The Company reclassified certain amounts between operating and investing activities in its consolidated statements of cash flows as a result of
reconsideration of its classification of the cash flow activity related to the retail finance receivables. Activity related to the retail finance receivables on the consolidated statements of cash flows was previously classified into operating
activities as (Increase) decrease in notes and accounts receivable.



The Company reconsidered its classification of the cash flow activity related to loans provided by finance subsidiaries to customers of independent dealers of the Companys products and currently classifies such
activity into investing activities pursuant to the FASB No. 95, Statement of Cash Flows, and in consideration of such industry standards as Increase in finance receivables, Collection of finance receivables, and
Sales of finance receivables in the consolidated statements of cash flows.



See Note 1 to the consolidated financial statements.



Net cash provided by operating activities during the year under review was ¥66.9 billion ($625 million), a decrease of ¥42.7 billion from the prior year. The primary reason for this decrease was fluctuations
in notes and accounts receivable. The amount of notes and accounts receivable sold in North America in the prior year was significantly larger, and it resulted in the substantial decrease in notes and accounts receivable in the prior year.



In contrast, notes and accounts receivables increased in the
year under review, resulting in the decrease in net cash provided by operating activities.



Net cash used in investing activities was ¥78.2 billion ($731 million), an increase of ¥37.9 billion from the prior year. The increase is primarily attributable to a reduction in sales of finance receivables
as the Company obtained funding through increased borrowings.



Net cash provided by financing activities was ¥4.5 billion ($42 million), as compared to ¥55.1 billion of net cash used in financing activities in the prior year. The fluctuation is primarily due to increased borrowings and a
reduction in debt repayment.



As a result, including the effect
of exchange rate changes on cash and cash equivalents, cash and cash equivalents at the end of March 2005 was ¥74.6 billion ($697 million), a decrease of ¥6.7 billion from the prior year.



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##### Table of Contents

Derivatives



To offset currency and interest rate fluctuation risks, the Company uses various types of derivatives, including foreign exchange forward contracts,
currency swaps, and interest rate swaps. As a basic policy, the Company conducts its derivative transactions within the range of its outstanding credit and obligations, and the Company does not engage in speculative derivative transactions. The
counterparties for the Companys derivative transactions are financial institutions with high creditworthiness; therefore, the Company does not anticipate any credit losses on such transactions. For more specific details, please refer to Note
12 to the consolidated financial statements.



Countermeasures for the
Removal of Government Deposit Guarantees



Effective from
April 2002 in Japan, limits were placed on government guarantees of certain short-term deposits held by financial institutions. As a countermeasure, the Company maintains its deposits with a diverse group of financial institutions with high credit
ratings. In addition, the Company centralizes its risk management with financial institutions mainly through concentrating cash within the parent company.



C. Research and Development, Patents and Licenses, etc



Research and Development



The Company conducts its research and development activities with approximately 1,200 researchers and engineers. The following table shows the Companys research and development expenses for the last 3 fiscal years.



|                                          |  |                 |        |   |                           |   |        |      |  |   |        |   |  |         
|----------------------------------------- |  | --------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------ | - |  | --------
|                                          |  | Millions of yen |        |   | Thousands of U.S. dollars
|                                          |  | 2003            |        |   | 2004                      |   |        | 2005 |  |   | 2005  
|R&D Expenses                              |  | ¥               | 26,405 |   |                           | ¥ | 23,261 |      |  | ¥ | 21,963 |   |  | $205,262
|As a percentage of consolidated net sales |  |                 | 2.9    | % |                           |   | 2.5    | %    |  |   | 2.2    | % |  |        



The Company conducts
its R&D activities within the following basic policies: to upgrade and improve the social infrastructure, to improve the living environment, to work toward an efficient industrial society, and to preserve and protect the global environment.



The R&D activities are conducted principally in R&D
departments in each business division and subsidiary. In our business divisions and subsidiaries, there are about 40 R&D departments. Each department promotes the R&D activities fortifying each business.



Examples of R&D activities in the Companys 4 business groups are as
follows:



In Internal Combustion Engine and Machinery, the
Company developed new mid-sized tractors, named New Grandam series for domestic farmers. A smooth and agile performance is achieved by its new 16 speed transmission with clutch-less system and its automatical gear-sifting function. Total
R&D expenses of this group were ¥16.5 billion.



In
Pipes, Valves, and Industrial Castings, the Company developed new large-sized pipe fittings TYPE-NS which ware reinforced against earthquakes. The Company also developed tools and tooling for easier construction and simplifying work
operation of pipes and fittings. R&D expenses of this group were ¥2.0 billion.



In Environmental Engineering, the Company developed new submerged membrane systems and control units. The Company improved its filter and enlarged by size 50% compared to previous filters and whole systems in order to
apply them to large wastewater treatment facilities. R&D expenses of this group were ¥1.3 billion.



In Other segment, the Company developed its weighing and measuring control system, digital load cell indicator for truck scales. The system realized easy
operations with a color touch screen and graphical user interface. R&D expenses of this group were ¥1.8 billion.



The remaining ¥0.4 billion was spent on fundamental R&D activities.



Patent and License



With respect to licenses or patents, the Company does not rely on specific licenses or patents. As of March 31, 2005, the Company held 5,735 Japanese
patent and utility model registrations, and 885 foreign patent and utility model registrations. A utility model registration is a right granted under Japanese law and in certain other countries to inventions of lesser originality than those which
qualify for patents. Although patent rights are important to Kubota, the Company does not consider that the expiration of any single patent or group of related patents would materially affect the conduct of Kubotas business. Kubota grants
licenses to others to use its technology including its patents, and obtains licenses under patents from third parties for technological assistance on a royalty basis. In fiscal 2005, royalty income and expenses were ¥672 million ($6,280
thousand) and ¥706 million ($6,598 thousand), respectively, under such licensing arrangements.



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##### Table of Contents

D.Trend Information



Outlook for the Next
Fiscal Year



General Conditions



Although the Japanese economy is expected to break out of its stagnant
condition, the prospects are still unpredictable considering current risks, especially considering that the potential for higher prices of raw materials and crude oil may have a negative impact on the world economy. The Company expects the difficult
economic conditions to persist.



Medium-Term Management
Strategy



The Company formulated the Medium-Term
Management Strategy (for the 2 years ending March 31, 2006) in order to further improve profitability and is engaged in a concerted effort to implement the strategy corporate-wide. The key target of the strategy is to create a business
structure that can generate operating income of more than 8% of consolidated net sales on a regular basis. In fiscal 2005, the Company attained an operating income ratio of 9.4%, exceeding our target. Building on the progress made in the first year
of the strategy, the Company intends to pursue higher levels of achievement and to do its utmost to ensure that the strategy will be implemented with maximum effectiveness, relying on the 3 principal concepts of the strategy: Reforming the
business structure and profit structure, Reforming operational systems, and Strengthening the financial position.



Financial Outlook



Under such conditions, the Company expects consolidated net sales for the year ending March 31, 2006 to increase slightly from the prior year. Domestic
sales are expected to be almost the same amount as that of the year ended March 31, 2005. Overseas sales are expected to increase steadily due to sales expansion in the Internal Combustion Engine and Machinery segment.



The Company expects a steady improvement in operating income. Although the
price increases in raw materials and the appreciation of the yen will result in downward pressure on operating income, increases of overseas sales in the Internal Combustion Engine and Machinery, corporate-wide cost cuts, and a decrease in pension
costs are expected to contribute to the increase in operating income. The Company also expects a sharp decrease of net income mainly due to the significant decrease in other income-net as a result of a government subsidy recorded during the year
ended March 31, 2005.



Contingencies



Legal proceedings



In May 1998, the Company was investigated by the Fair Trade Commission of
Japan (the FTCJ) for an alleged violation of the Law Concerning Prohibition of Private Monopoly and Preservation of Fair Trade (the Anti-Monopoly Law) relating to participation in fixing the shares of ductile iron straight
pipe orders in Japan. The Company received a cease and desist recommendation from the FTCJ in March 1999, which was accepted by the Company in April 1999.



The FTCJ also brought a criminal accusation alleging violation of the Anti-Monopoly Law against the Company and 3 of its employees, who were indicted in
the Tokyo High Court in March 1999. On February 24, 2000, the Company was fined ¥130 million, and the 3 employees were given 6-10 months prison sentences, suspended for 2 years.



In the meanwhile, the Company received a surcharge order of ¥7,072 million from the FTCJ. The Company has challenged
this order and filed a petition for the initiation of hearing procedures that were started in March 2000. Under Section 49 of the Anti-Monopoly Law, upon initiation of the procedures the surcharge order lost effect. In addition, Section 7-2 of the
Anti-Monopoly Law stipulates that surcharges are imposed in cases where price cartels or cartels that influence prices by curtailing the volume of supply are carried out. The Company believes that the alleged share cartel does not meet the
requirement of Section 7-2, and has not established any provision for the ultimate liability, if any, which may result from the settlement of this matter. An unfavorable outcome from this issue could materially affect the Companys results of
operations or cash flows in a given year. The Company is not able to estimate the likelihood of such unfavorable outcome. As of this filing date, the Company is still in the process of the hearing procedures.



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##### Table of Contents

The Companys action in response to issues in connection with the health hazard of asbestos



Until 1995, the Companys plant in Amagasaki, Hyogo
Prefecture, which is now a company office, had produced asbestos-containing products. In April 2005, the Company was advised that some residents who lived near the former plant suffered from mesothelioma, a form of lung cancer and is said to be
mainly caused by aspiration of asbestos. After discussing this issue with those patients and their private support groups, and deliberating internally and consulting with outside advisors, the Company announced on June 30, 2005 that it would pay
consolation payments to three patients. Subsequently, such payments were made. The Company stated in its announcement that, although the causal relationship between the Companys manufacturing activities of asbestos-containing products and the
contraction of diseases such as mesothelioma was not clear, it reached this decision because of the need to act quickly to economically assist these long-suffering patients, who had incurred certain medical expenses, from the viewpoint of social
responsibility. The Company also stated that it would react seriously and faithfully if it learned of asbestos-related health hazards that occurred near its other plants.



Subsequent to the Companys announcement, in accordance with the Companys policies and procedures, the Company
decided to make consolation payments to additional patients with mesothelioma who lived near the former plant during a specified period and to the families of residents who died from mesothelioma.



With regard to current and former employees who died of, or are suffering
from, asbestos-related diseases, the Company has paid, or is paying, compensation in accordance with policies that were established in the early 1990s, which include compensation for medical expenses, special health checkups for retired employees,
and certain additional payments to workers compensation that are not required by law but are voluntarily made by the Company.



The Company expenses payments to residents and current and former employees when the Company determines that a payment is warranted based on the medical
condition of the individual concerned and in consideration of the Companys policy. During the years ended March 31, 2005, 2004 and 2003, the Company made payments aggregating ¥210 million ($1,963 thousand), ¥433 million and ¥142
million, respectively, to current and former employees affected by asbestos contamination. Although the Company has not been involved in any lawsuits up to the present time related to the asbestos-related health hazards of employees (including
former employees) who engaged in the manufacturing of asbestos-containing products, and residents who lived near the Companys plants at which asbestos-containing products were produced, the Company may face lawsuits related to this issue. The
Company believes that it is not possible at this time to reasonably estimate its total exposure and the related liability to current and former employees and residents related to this matter that might ultimately be incurred in the future. No
liability for this contingency has been recorded in the Companys accompanying consolidated balance sheets as of March 31, 2005 and 2004.



Subsequent event



On May 13, 2005, the Companys Board of Directors resolved to pay a cash dividend to shareholders of record on March 31, 2005 of ¥5 per common
share (¥25 per 5 common shares) or a total of ¥7 billion ($61million). The resolution to pay the cash dividend was approved at the general meeting held on June 24, 2005.



E. Off-balance Sheet Arrangements



The Company accounts for guarantees in accordance with FASB Interpretation No.45 (FIN 45), Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. Note 14 of the financial statements, which is incorporated herein by reference, elaborate on commitments and contingencies.



The Company utilizes accounts receivable securitization programs, which are important for the Company to broaden its funding sources and raise
cost-effective funds. In the programs, certain subsidiaries of Kubota sell the receivables to wholly-owned special purpose entites (SPEs), which in turn transfer the receivables to independent revolving-period securitization trusts (the
Trusts). At the time the receivables are sold to the Trusts, the receivables are removed from the consolidated balance sheet of the Company. The Company retains transferor and residual interests in the receivables sold, as well as the
excess cash flows and servicing fees. Transferor interest carried at cost represents principal payments due to the Company after the transferees investment has been fully paid or after an individual tranche expires. Residual interest recorded
at estimated fair value represents residual payments received in excess of interest payments due to the owner of the subordinated receivables and the servicing fee due to the Company. Such retained interests generally absorb all losses related to
sold receivables to the extent of their subordinated investment and are recorded in investment in sold receivables.



The Company is obligated to repurchase any receivable if the interest of the administrative agent is materially adversely affected by a breach of
representation or warranty made by the SPEs.



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##### Table of Contents

F. Tabular Disclosure of Contractual Obligations



The following summarizes contractual obligations at March 31, 2005.



|                                     |  |                           |           |                        |   |           |  |           |         |                   |   |         |  |        
|------------------------------------ |  | ------------------------- | --------- | ---------------------- | - | --------- |  | --------- | ------- | ----------------- | - | ------- |  | -------
|                                     |  | Millions of Yen          
|                                     |  |                           |           | Payments Due by Period
|Year Ended March 31, 2005            |  | Total                     |           | Less than year         |   | 1-3 years |  | 3-5 years |         | More than 5 years
|Contractual obligations:             |  |                           |           |                        |   |           |  |           |         |                   |   |         |  |        
|Short-term borrowings                |  |                           | ¥119,802  |                        |   | ¥119,802  |  |           | ¥      |                   |   | ¥      |  | ¥     
|Capital lease obligations            |  |                           | 4,841     |                        |   | 2,379     |  |           | 2,228   |                   |   | 185     |  | 49     
|Long-term debt                       |  |                           | 179,524   |                        |   | 64,498    |  |           | 70,577  |                   |   | 37,909  |  | 6,540  
|Deposits from customers              |  |                           | 3,322     |                        |   | 3,322     |  |           |        |                   |   |        |  |       
|Operating lease obligations          |  |                           | 1,478     |                        |   | 334       |  |           | 513     |                   |   | 245     |  | 386    
|Commitments for capital expenditures |  |                           | 1,155     |                        |   | 1,155     |  |           |        |                   |   |        |  |       
|                                     |  |                           |           |                        |   |           |  |           |         |                   |   |         |  |        
|Total                                |  |                           | ¥310,122  |                        |   | ¥191,490  |  |           | ¥73,318 |                   |   | ¥38,339 |  | ¥6,975 
|                                     |  |                           |           |                        |   |           |  |           |         |                   |   |         |  |        
|                                     | 
|                                     |  | Thousands of U.S. Dollars
|                                     |  |                           |           | Payments Due by Period
|Year Ended March 31, 2005            |  | Total                     |           | Less than year         |   | 1-3 years |  | 3-5 years |         | More than 5 years
|Contractual obligations:             |  |                           |           |                        |   |           |  |           |         |                   |   |         |  |        
|Short-term borrowings                |  | $                         | 1,119,645 |                        | $ | 1,119,645 |  | $         |        |                   | $ |        |  | $     
|Capital lease obligations            |  |                           | 45,243    |                        |   | 22,234    |  |           | 20,822  |                   |   | 1,729   |  | 458    
|Long-term debt                       |  |                           | 1,677,794 |                        |   | 602,785   |  |           | 659,598 |                   |   | 354,290 |  | 61,121 
|Deposits from customers              |  |                           | 31,047    |                        |   | 31,047    |  |           |        |                   |   |        |  |       
|Operating lease obligations          |  |                           | 13,813    |                        |   | 3,121     |  |           | 4,795   |                   |   | 2,289   |  | 3,608  
|Commitments for capital expenditures |  |                           | 10,794    |                        |   | 10,794    |  |           |        |                   |   |        |  |       
|                                     |  |                           |           |                        |   |           |  |           |         |                   |   |         |  |        
|Total                                |  | $                         | 2,898,336 |                        | $ | 1,789,626 |  | $         | 685,215 |                   | $ | 358,308 |  | $65,187
|                                     |  |                           |           |                        |   |           |  |           |         |                   |   |         |  |        



The Companys
contributions to pension plans for the year ending March 31, 2006 are expected to be ¥14,105 million ($131,822 thousand).



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##### Table of Contents

G. Safe Harbor



Projected
results of operations and other future forecasts contained in this annual report are the estimates of the Company based on information available to the Company as of this published date. Therefore, those projections include certain potential risks
and uncertainties. Accordingly, the users of this information are requested to note that the actual results could differ materially from those future projections. Major factors that could influence the ultimate outcome include the economic condition
surrounding the Company, foreign exchange rates, agricultural policy in Japan, the trend of public investment and private capital expenditure in Japan, the price-competitive pressure in the market, the ability for the Company to manufacture or
innovate products which will be accepted in the market. Finally the users of this information should note that the factors that could influence the ultimate outcome of the Companys activities are not limited to the above.



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##### Table of Contents

|Item 6. | Directors, Senior Management and Employees
|------- | ------------------------------------------



A. Directors and Senior Management



The information with respect to the directors and corporate auditor is as follows:



|                                 |  |                                                                                                                                              |           |                                                                                                  |                                                      |                                                                                                                                                                                               
|-------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------------------------------------------------------------------------------------------------ | ---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name (Birthday)                  |  | Number of CompanyShares Owned                                                                                                                |           | Current Positions and Brief Occupational History (including responsibilities in other companies)
|Daisuke Hatakake (Jun. 29,
1941) |  | 35,000 par value Shares of the Company                                                                                                       |           | President and Representative Director of the Company                                            
|                                 |  | Apr. 2003                                                                                                                                    |           | President and Representative Director of the Company (to present)                               
|                                 |  |                                                                                                                                              | Jun. 2002 |                                                                                                  | General Manager of Corporate Compliance Headquarters
|                                 |  |                                                                                                                                              |           | Jun. 2001                                                                                        |                                                      | Managing Director of the Company, in charge of Corporate Planning & Control Dept., Finance & Accounting Dept., in charge of Corporate Information Systems Planning Dept.
(assistant)          
|                                 |  |                                                                                                                                              |           | Aug. 2000                                                                                        |                                                      | In charge of PV Business Planning & Promotion Dept.                                                                                                                                           
|                                 |  |                                                                                                                                              |           | Jun. 2000                                                                                        |                                                      | In charge of Compliance Auditing Dept., Business Alliance Dept. (assistance), Corporate Information Systems Planning Dept. (assistance), General Manager of Corporate Planning & Control
Dept.
|                                 |  |                                                                                                                                              |           | Jun. 1999                                                                                        |                                                      | Director of the Company                                                                                                                                                                       
|                                 |  |                                                                                                                                              |           | Dec. 1998                                                                                        |                                                      | General Manager of Corporate Planning & Control Dept.                                                                                                                                         
|                                 |  |                                                                                                                                              |           | Apr. 1964                                                                                        |                                                      | Joined the Company                                                                                                                                                                            
|                                 |  |                                                                                                                                             
|Akio Nishino (Mar. 14,
1941)     |  | 26,000 par value Shares of the
Company                                                                                                       |           | Executive Vice President and Representative Director of the Company,                            
|                                 |  | In charge of Tokyo Administration Dept., General Manager of Environmental Engineering Consolidated Division, General Manager of Tokyo Office
|                                 |  |                                                                                                                                              |           | Apr. 2005                                                                                        |                                                      | Executive Vice President and Representative Director of the Company, in charge of Tokyo Office (to present)                                                                                   
|                                 |  |                                                                                                                                              |           | Apr. 2004                                                                                        |                                                      | In charge of Tokyo Administration Dept., Chairman of Kubota Construction Co., Ltd.                                                                                                            
|                                 |  |                                                                                                                                              |           | Apr. 2004                                                                                        |                                                      | Executive Managing Director of the Company                                                                                                                                                    
|                                 |  |                                                                                                                                              |           | Apr. 2003                                                                                        |                                                      | General Manager of Environmental Engineering Consolidated Division, General Manager of Tokyo Office (to present)                                                                              
|                                 |  |                                                                                                                                              |           | Jun. 2002                                                                                        |                                                      | Managing Director of the Company, Deputy General Manager of Environmental Engineering Consolidated Division, General Manager of Water Environmental Engineering Division                      
|                                 |  |                                                                                                                                              |           | Apr. 2001                                                                                        |                                                      | General Manager of Solid Waste Engineering Division                                                                                                                                           
|                                 |  |                                                                                                                                              |           | Jun. 2000                                                                                        |                                                      | Director of the Company, Deputy General Manager of Environmental Engineering Division                                                                                                         
|                                 |  |                                                                                                                                              |           | Feb. 1991                                                                                        |                                                      | General Manager of Incinerator Engineering Dept.                                                                                                                                              
|                                 |  |                                                                                                                                              |           | Apr. 1966                                                                                        |                                                      | Joined the Company                                                                                                                                                                            



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|                               |  |                                        |           |                                                                                                                                                                                                                                 |                                                                                              |                                                                                                                                
|------------------------------ |  | -------------------------------------- | --------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------
|Yoshihiro Fujio (Sep. 6, 1944) |  | 20,000 par value Shares of the Company |           | Executive Managing Director of the Company, General Manager of Industrial & Material Systems Consolidated Division                                                                                                             
|                               |  |                                        | Jun. 2004 |                                                                                                                                                                                                                                 | General Manager of Coordination Dept. in Industrial & Material Systems Consolidated Division
|                               |  |                                        |           | Apr. 2004                                                                                                                                                                                                                       |                                                                                              | Executive Managing Director of the Company, General Manager of Industrial & Material Systems Consolidated Division (to present)
|                               |  |                                        |           | Dec. 2003                                                                                                                                                                                                                       |                                                                                              | In charge of Housing & Building Materials Business Coordination Dept.                                                          
|                               |  |                                        |           | Apr. 2003                                                                                                                                                                                                                       |                                                                                              | Managing Director of the Company, in charge of Secretary & Public Relations Dept., Health & Safety Planning & Promotion Dept.  
|                               |  |                                        |           | Oct. 2002                                                                                                                                                                                                                       |                                                                                              | In charge of Environmental Protection and Health & Safety Promotion Dept. (assistant)                                          
|                               |  |                                        |           | Jun. 2002                                                                                                                                                                                                                       |                                                                                              | In charge of Personnel Dept., General Manager of Head Office                                                                   
|                               |  |                                        |           | Jun. 2001                                                                                                                                                                                                                       |                                                                                              | Director of the Company, in charge of Human Resources & Labor Relations Dept. (assistant)                                      
|                               |  |                                        |           | Jun. 2000                                                                                                                                                                                                                       |                                                                                              | General Manager of Electronic Equipped Machinery Division and General Manager of Kyuhoji Plant                                 
|                               |  |                                        |           | Dec. 1998                                                                                                                                                                                                                       |                                                                                              | General Manager of FA Sales Dept.                                                                                              
|                               |  |                                        |           | Apr. 1967                                                                                                                                                                                                                       |                                                                                              | Joined the Company                                                                                                             
|                               |  |                                       
|Moriya Hayashi (May 7, 1944)   |  | 25,000 par value Shares of the Company |           | Executive Managing Director of the Company, General Manager of Farm & Industrial Machinery Consolidated Division, General Manager of International Operations Headquarters in Farm & Industrial Machinery Consolidated Division
|                               |  |                                        |           | Apr. 2004                                                                                                                                                                                                                       |                                                                                              | Executive Managing Director of the Company, General Manager of Farm & Industrial Machinery Consolidated Division (to present)  
|                               |  |                                        |           | Apr. 2003                                                                                                                                                                                                                       |                                                                                              | Managing Director of the Company, General Manager of Tractor Division                                                          
|                               |  |                                        |           | Jan. 2002                                                                                                                                                                                                                       |                                                                                              | General Manager of International Operations Headquarters in Farm & Industrial Machinery Consolidated Division (to present)     
|                               |  |                                        |           | Oct. 2001                                                                                                                                                                                                                       |                                                                                              | Deputy General Manager of Tractor Division                                                                                     
|                               |  |                                        |           | Jun. 2001                                                                                                                                                                                                                       |                                                                                              | Director of the Company                                                                                                        
|                               |  |                                        |           | Jun. 1999                                                                                                                                                                                                                       |                                                                                              | President of Kubota Tractor Corporation                                                                                        
|                               |  |                                        |           | Apr. 1969                                                                                                                                                                                                                       |                                                                                              | Joined the Company                                                                                                             



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|                                 |  |                                        |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |                                                                                                                                                                                                       
|-------------------------------- |  | -------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Toshihiro Fukuda (Oct. 12, 1945) |  | 26,000 par value Shares of the Company |  | Executive Managing Director of the Company, In charge of CSR Planning & Coordination Dept., Environmental Protection Dept., General Affairs Dept., General Manager of Compliance Headquarters                                                                                                                                                                                         
|                                 |  |                                        |  | Apr. 2005                                                                                                                                                                                                                                                                                                                                                                              |  | Executive Managing Director of the Company, in charge of CSR Planning & Coordination Dept., General Manager of Compliance Headquarters(to present)                                                    
|                                 |  |                                        |  | Apr. 2004                                                                                                                                                                                                                                                                                                                                                                              |  | In charge of Environmental Protection Dept., General Affairs Dept. (to present)                                                                                                                       
|                                 |  |                                        |  | Apr. 2004                                                                                                                                                                                                                                                                                                                                                                              |  | Managing Director of the Company, in charge of Corporate Compliance Headquarters                                                                                                                      
|                                 |  |                                        |  | Apr. 2003                                                                                                                                                                                                                                                                                                                                                                              |  | General Manager of Farm Machinery Division                                                                                                                                                            
|                                 |  |                                        |  | Mar. 2003                                                                                                                                                                                                                                                                                                                                                                              |  | In charge of Related Products Division                                                                                                                                                                
|                                 |  |                                        |  | Jun. 2002                                                                                                                                                                                                                                                                                                                                                                              |  | Director of the Company                                                                                                                                                                               
|                                 |  |                                        |  | Oct. 2001                                                                                                                                                                                                                                                                                                                                                                              |  | Deputy General Manager of Sales Headquarters in Farm & Industrial Machinery Consolidated Division and General Manager of Sales Coordination Dept. in Farm & Industrial Machinery
Consolidated Division
|                                 |  |                                        |  | Dec. 1998                                                                                                                                                                                                                                                                                                                                                                              |  | General Manager of Coordination Dept. in Farm & Industrial Machinery Consolidated Division                                                                                                            
|                                 |  |                                        |  | Apr. 1969                                                                                                                                                                                                                                                                                                                                                                              |  | Joined the Company                                                                                                                                                                                    
|                                 |  |                                       
|Yasuo Masumoto (Apr. 21, 1947)   |  | 17,000 par value Shares of the Company |  | Managing Director of the Company, Deputy
General Manager of Industrial & Material Systems Consolidated Division, General Manager of Production Control Headquarters in Industrial & Material Systems Consolidated Division, General Manager of Purchasing Dept. in Industrial &
Material Systems Consolidated Division, in charge of Quality Assurance & Manufacturing Promotion Dept.
|                                 |  |                                        |  | Apr. 2005                                                                                                                                                                                                                                                                                                                                                                              |  | Deputy General Manager of Industrial & Material Systems Consolidated Division (to present)                                                                                                            
|                                 |  |                                        |  | Jan. 2005                                                                                                                                                                                                                                                                                                                                                                              |  | In charge of Quality Assurance & Manufacturing Promotion Dept. (to present)                                                                                                                           
|                                 |  |                                        |  | Jun. 2004                                                                                                                                                                                                                                                                                                                                                                              |  | General Manager of Purchasing Dept. in Industrial & Material Systems Consolidated Division (to present)                                                                                               
|                                 |  |                                        |  | Apr. 2004                                                                                                                                                                                                                                                                                                                                                                              |  | In charge of Manufacturing Planning & Promotion Dept.                                                                                                                                                 
|                                 |  |                                        |  | Apr. 2004                                                                                                                                                                                                                                                                                                                                                                              |  | Managing Director of the Company (to present)                                                                                                                                                         
|                                 |  |                                        |  | Apr. 2003                                                                                                                                                                                                                                                                                                                                                                              |  | General Manager of Production Control Headquarters in Industrial & Material Systems Consolidated Division (to present)                                                                                
|                                 |  |                                        |  | Jun. 2002                                                                                                                                                                                                                                                                                                                                                                              |  | Director of the Company                                                                                                                                                                               
|                                 |  |                                        |  | Oct. 2001                                                                                                                                                                                                                                                                                                                                                                              |  | General Manager of Farm Machinery Division                                                                                                                                                            
|                                 |  |                                        |  | Apr. 1999                                                                                                                                                                                                                                                                                                                                                                              |  | General Manager of Utsunomiya Plant                                                                                                                                                                   
|                                 |  |                                        |  | Apr. 1971                                                                                                                                                                                                                                                                                                                                                                              |  | Joined the Company                                                                                                                                                                                    



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|                                     |  |                                        |  |                                                                                                                                                                                              |  |                                                                                                                                                                         
|------------------------------------ |  | -------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Yoshiharu Nishiguchi (Jan. 29,
1947) |  | 17,000 par value Shares of the Company |  | Managing Director of the Company, In charge
of Personnel Dept., Health & Safety Planning & Promotion Dept., Secretary & Public Relations Dept., General Manager of Head Office              
|                                     |  |                                        |  | Apr. 2005                                                                                                                                                                                    |  | Managing Director of the Company, in charge of Personnel Dept., Health & Safety Planning & Promotion Dept., General Manager of Head Office (to present)                 
|                                     |  |                                        |  | Apr. 2004                                                                                                                                                                                    |  | In charge of Septic Tanks Division, Housing & Building Materials Business Coordination Dept., PV Business Planning & Promotion Dept., Secretary & Public Relations
Dept.
|                                     |  |                                        |  | Jun. 2003                                                                                                                                                                                    |  | In charge of Air Condition Equipment Division, Corporate Planning & Control Dept., Finance & Accounting Dept.                                                           
|                                     |  |                                        |  | Jun. 2003                                                                                                                                                                                    |  | Director of the Company                                                                                                                                                 
|                                     |  |                                        |  | Dec. 2002                                                                                                                                                                                    |  | General Manager of Compliance Auditing Dept.                                                                                                                            
|                                     |  |                                        |  | Jun. 2000                                                                                                                                                                                    |  | General Manager of Finance & Accounting Dept.                                                                                                                           
|                                     |  |                                        |  | Jul. 1998                                                                                                                                                                                    |  | General Manager of Accounting Dept.                                                                                                                                     
|                                     |  |                                        |  | Apr. 1970                                                                                                                                                                                    |  | Joined the Company                                                                                                                                                      
|                                     |  |                                       
|Eisaku Shinohara (Aug. 25, 1947)     |  | 16,000 par value Shares of the Company |  | Managing Director of the Company, In charge
of Research & Development Planning & Promotion Dept., General Manager of R & D Headquarters in Farm & Industrial Machinery Consolidated Division
|                                     |  |                                        |  | Apr. 2005                                                                                                                                                                                    |  | Managing Director of the Company, in charge of Research & Development Planning & Promotion Dept. (to present)                                                           
|                                     |  |                                        |  | Apr. 2004                                                                                                                                                                                    |  | General Manager of R&D Headquarters in Farm & Industrial Machinery Consolidated Division (to present)                                                                   
|                                     |  |                                        |  | Jun. 2003                                                                                                                                                                                    |  | Director of the Company                                                                                                                                                 
|                                     |  |                                        |  | Oct. 2001                                                                                                                                                                                    |  | Deputy General Manager of R&D Headquarters in Farm & Industrial Machinery Consolidated Division and General Manager of Vehicle Technology Generalization Dept.          
|                                     |  |                                        |  | Jun. 2000                                                                                                                                                                                    |  | General Manager of Construction Machinery Division and General Manager of Planning Dept. in Construction Machinery Division                                             
|                                     |  |                                        |  | Jun. 1999                                                                                                                                                                                    |  | Deputy General Manager of Construction Machinery Division and General Manager of Vehicle Technology Generalization Dept.                                                
|                                     |  |                                        |  | Apr. 1974                                                                                                                                                                                    |  | Joined the Company                                                                                                                                                      
|                                     |  |                                       
|Nobuo Izawa (Feb. 28, 1948)          |  | 10,000 par value Shares of the Company |  | Managing Director of the Company, Deputy
General Manager of Environmental Engineering Consolidated Division, General Manager of Pumps Division                                              
|                                     |  |                                        |  | Apr. 2005                                                                                                                                                                                    |  | Managing Director of the Company, Deputy General Manager of Environmental Engineering Consolidated Division (to present)                                                
|                                     |  |                                        |  | Jun. 2003                                                                                                                                                                                    |  | Director of the Company                                                                                                                                                 
|                                     |  |                                        |  | Apr. 2002                                                                                                                                                                                    |  | Ditto and General Manager of Planning Dept. in Pumps Division                                                                                                           
|                                     |  |                                        |  | Jun. 2001                                                                                                                                                                                    |  | General Manager of Pumps Division (to present)                                                                                                                          
|                                     |  |                                        |  | Apr. 1998                                                                                                                                                                                    |  | General Manager of Sales Dept. I in Pumps Division                                                                                                                      
|                                     |  |                                        |  | Apr. 1971                                                                                                                                                                                    |  | Joined the Company                                                                                                                                                      



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##### Table of Contents

|                                 |  |                                        |           |                                                                                                                                                            |                                                                                     |                                                                                                                                                   
|-------------------------------- |  | -------------------------------------- | --------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|Yoshihiko Tabata (Mar. 23, 1946) |  | 18,000 par value Shares of the
Company |           | Director of the Company, General Manager of
Engine Division                                                                                               
|                                 |  |                                        | Jun. 2004 |                                                                                                                                                            | Director of the Company (to present)                                               
|                                 |  |                                        |           | Oct. 2003                                                                                                                                                  |                                                                                     | General Manager of Engine Division (to present)                                                                                                   
|                                 |  |                                        |           | May 1998                                                                                                                                                   |                                                                                     | President of Kubota Engine America Corporation                                                                                                    
|                                 |  |                                        |           | Dec. 1976                                                                                                                                                  |                                                                                     | Joined the Company                                                                                                                                
|                                 |  |                                       
|Kazunobu Ueta (Jan. 1, 1947)     |  | 9,000 par value Shares of the Company  |           | Director of the Company, In charge of Farm
Facilities Division, General Manager of Sales Headquarters in Farm & Industrial Machinery Consolidated Division
|                                 |  |                                        |           | Apr. 2005                                                                                                                                                  |                                                                                     | In charge of Farm Facilities Division, General Manager of Sales Headquarters in Farm & Industrial Machinery Consolidated Division (to present)    
|                                 |  |                                        |           | Jun. 2004                                                                                                                                                  |                                                                                     | In charge of Related Products Division                                                                                                            
|                                 |  |                                        |           | Jun. 2004                                                                                                                                                  |                                                                                     | Director of the Company (to present)                                                                                                              
|                                 |  |                                        |           | Apr. 2004                                                                                                                                                  |                                                                                     | In charge of Related Products Division (assistant) and General Manager of Sales Control Dept. in Farm & Industrial Machinery Consolidated Division
|                                 |  |                                        |           | Apr. 2000                                                                                                                                                  |                                                                                     | Deputy General Manager of Sales Headquarters in Farm & Industrial Machinery Consolidated Division                                                 
|                                 |  |                                        |           | Apr. 1969                                                                                                                                                  |                                                                                     | Joined the Company                                                                                                                                
|                                 |  |                                       
|Takashi Shoji (Jun. 17, 1947)    |  | 6,000 par value Shares of the
Company  |           | Director of the Company, General Manager of
Waste Engineering Division                                                                                    
|                                 |  |                                        | Jun. 2004 |                                                                                                                                                            | Director of the Company, General Manager of Waste Engineering Division (to present)
|                                 |  |                                        |           | Apr. 2004                                                                                                                                                  |                                                                                     | Ditto and General Manager of Water Environmental Engineering Division                                                                             
|                                 |  |                                        |           | Jun. 2002                                                                                                                                                  |                                                                                     | General Manager of Solid Waste Engineering Division                                                                                               
|                                 |  |                                        |           | Apr. 2001                                                                                                                                                  |                                                                                     | General Manager of Sales Dept. I in Solid Waste Engineering Division                                                                              
|                                 |  |                                        |           | Jun. 1996                                                                                                                                                  |                                                                                     | General Manager of Incinerator Plant Sales Dept.                                                                                                  
|                                 |  |                                        |           | Apr. 1971                                                                                                                                                  |                                                                                     | Joined the Company                                                                                                                                
|                                 |  |                                       
|Tokuji Ohgi (Jul. 25, 1947)      |  | 8,000 par value Shares of the
Company  |           | Director of the Company, General Manager of
Ductile Iron Pipe Division                                                                                    
|                                 |  |                                        | Apr. 2005 |                                                                                                                                                            | General Manager of Ductile Iron Pipe Division (to present)                         
|                                 |  |                                        |           | Jun. 2004                                                                                                                                                  |                                                                                     | In charge of Personnel Dept., Health & Safety Planning & Promotion Dept., General Manager of Head Office                                          
|                                 |  |                                        |           | Jun. 2004                                                                                                                                                  |                                                                                     | Director of the Company (to present)                                                                                                              
|                                 |  |                                        |           | Apr. 2004                                                                                                                                                  |                                                                                     | In charge of Personnel Dept. (assistant), Health & Safety Planning & Promotion Dept. (assistant)                                                  
|                                 |  |                                        |           | Apr. 2003                                                                                                                                                  |                                                                                     | General Manager of Secretary & Public Relations Dept.                                                                                             
|                                 |  |                                        |           | Jun. 2001                                                                                                                                                  |                                                                                     | General Manager of Human Resources & Labor Relations Dept.                                                                                        
|                                 |  |                                        |           | Apr. 1972                                                                                                                                                  |                                                                                     | Joined the Company                                                                                                                                



34



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|                                   |  |                                        |  |                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                            
|---------------------------------- |  | -------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Morimitsu Katayama (Jan. 17, 1948) |  | 19,000 par value Shares of the Company |  | Director of the Company, In charge of
Quality Assurance & Manufacturing Promotion Dept. (assistant), General Manager of Manufacturing Headquarters in Farm & Industrial Machinery Consolidated Division, General Manager of Sakai Plant                                          
|                                   |  |                                        |  | Jan. 2005                                                                                                                                                                                                                                                                         |  | In charge of Quality Assurance & Manufacturing Promotion Dept. (assistant) (to present)                                                                                                                                                                                    
|                                   |  |                                        |  | Jun. 2004                                                                                                                                                                                                                                                                         |  | In charge of Manufacturing Planning & Promotion Dept. (assistant)                                                                                                                                                                                                          
|                                   |  |                                        |  | Jun. 2004                                                                                                                                                                                                                                                                         |  | Director of the Company (to present)                                                                                                                                                                                                                                       
|                                   |  |                                        |  | Apr. 2004                                                                                                                                                                                                                                                                         |  | General Manager of Manufacturing Headquarters in Farm & Industrial Machinery Consolidated Division (to present)                                                                                                                                                            
|                                   |  |                                        |  | Apr. 2003                                                                                                                                                                                                                                                                         |  | General Manager of Sakai Plant (to present)                                                                                                                                                                                                                                
|                                   |  |                                        |  | Oct. 2001                                                                                                                                                                                                                                                                         |  | Ditto and General Manager of Construction Machinery Division                                                                                                                                                                                                               
|                                   |  |                                        |  | Apr. 1999                                                                                                                                                                                                                                                                         |  | General Manager of Construction Machinery Manufacturing Dept. in Hirakata Plant                                                                                                                                                                                            
|                                   |  |                                        |  | Apr. 1963                                                                                                                                                                                                                                                                         |  | Joined the Company                                                                                                                                                                                                                                                         
|                                   |  |                                       
|Nobuyuki Toshikuni (Jan. 30, 1951) |  | 9,000 par value Shares of the Company  |  | Director of the Company, General Manager of
Tractor Division                                                                                                                                                                                                                     
|                                   |  | Jun. 2004                              |  | Director of the Company (to present)                                                                                                                                                                                                                                             
|                                   |  | Apr. 2004                              |  | General Manager of Tractor Division (to present)                                                                                                                                                                                                                                 
|                                   |  |                                        |  | Oct. 2001                                                                                                                                                                                                                                                                         |  | President of Kubota Tractor Corporation                                                                                                                                                                                                                                    
|                                   |  |                                        |  | Apr. 1999                                                                                                                                                                                                                                                                         |  | General Manager of Tractor Engineering Dept.                                                                                                                                                                                                                               
|                                   |  |                                        |  | Apr. 1973                                                                                                                                                                                                                                                                         |  | Joined the Company                                                                                                                                                                                                                                                         
|                                   |  |                                       
|Hirokazu Nara (Oct. 2, 1948)       |  | 12,000 par value Shares of the Company |  | Director of the Company In charge of Air
Condition Equipment Division, Housing & Building Materials Business Coordination Dept., Septic Tanks Division, PV Business Planning & Promotion Dept., Finance & Accounting Dept., General Manager of Corporate Planning & Control
Dept.
|                                   |  |                                        |  | Jun. 2005                                                                                                                                                                                                                                                                         |  | In charge of Finance & Accounting Dept., PV Business Planning & Promotion Dept., Housing & Building Materials Business Coordination Dept., Septic Tanks Division, Air Condition
Equipment Division (to present)                                                            
|                                   |  |                                        |  | Apr. 2005                                                                                                                                                                                                                                                                         |  | In charge of Air Condition Equipment Division (assistant), Septic Tanks Division (assistant), Housing & Building Materials Business Coordination Dept. (assistant), PV Business Planning &
Promotion Dept. (assistant), Finance & Accounting Dept. (assistant) (to present)
|                                   |  |                                        |  | Apr. 2003                                                                                                                                                                                                                                                                         |  | General Manager of Corporate Planning & Control Dept. (to present)                                                                                                                                                                                                         
|                                   |  |                                        |  | Jun. 1996                                                                                                                                                                                                                                                                         |  | General Manager of Planning Dept. in Vending Machinery Division                                                                                                                                                                                                            
|                                   |  |                                        |  | Apr. 1971                                                                                                                                                                                                                                                                         |  | Joined the Company                                                                                                                                                                                                                                                         



35



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##### Table of Contents

|                                   |  |                                        |           |                                                                                        |                                                      |                                                                             
|---------------------------------- |  | -------------------------------------- | --------- | -------------------------------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------------------------------------------
|Masayoshi Kitaoka (Dec. 11, 1949)  |  | 0 par value Shares of the Company      |           | Director of the Company, General Manager of
Farm Machinery Division                   
|                                   |  |                                        | Jun. 2005 |                                                                                        | Director of the Company (to present)                
|                                   |  |                                        |           | Apr. 2004                                                                              |                                                      | General Manager of Farm Machinery Division (to present)                     
|                                   |  |                                        |           | Dec. 2002                                                                              |                                                      | General Manager of Electronic Equipped Machinery Division and FA Sales Dept.
|                                   |  |                                        |           | Jun. 2001                                                                              |                                                      | Ditto and General Manager of Electronic Equipped Machinery Division         
|                                   |  |                                        |           | Aug. 2000                                                                              |                                                      | Ditto and General Manager of Kyuhoji Plant                                  
|                                   |  |                                        |           | Apr. 1998                                                                              |                                                      | General Manager of CAD Dept.                                                
|                                   |  |                                        |           | Apr. 1973                                                                              |                                                      | Joined the Company                                                          
|                                   |  |                                       
|Tetsuji Tomita (Mar. 6,
1950)      |  | 6,000 par value Shares of the Company  |           | Director of the Company, President of Kubota
Tractor Corporation                      
|                                   |  | Jun. 2005                              |           | Director of the Company                                                               
|                                   |  |                                        | Apr. 2004 |                                                                                        | President of Kubota Tractor Corporation (to present)
|                                   |  |                                        |           | Jan. 2003                                                                              |                                                      | President of Kubota Europe S.A.S.                                           
|                                   |  |                                        |           | Oct. 1999                                                                              |                                                      | General Manager of Export Dept. in Tractor Division                         
|                                   |  |                                        |           | Apr. 1973                                                                              |                                                      | Joined the Company                                                          
|                                   |  |                                       
|Masatoshi Kimata (Jun. 22,
1951)   |  | 14,000 par value Shares of the Company |           | Director of the Company, General Manager of
Tsukuba Plant                             
|                                   |  | Jun. 2005                              |           | Director of the Company (to present)                                                  
|                                   |  | Oct. 2001                              |           | General Manager of Tsukuba Plant (to present)                                         
|                                   |  |                                        |           | Apr. 1977                                                                              |                                                      | Joined the Company                                                          
|                                   |  |                                       
|Masamichi Nakahiro (Jun. 28,
1941) |  | 17,000 par value Shares of the
Company |           | Corporate Auditor of the Company                                                      
|                                   |  | Jun. 2000                              |           | Corporate Auditor of the Company (to present)                                         
|                                   |  | Jun. 1991                              |           | General Manager of Planning Dept. of Environmental Control Plant Consolidated Division
|                                   |  |                                        |           | Apr. 1966                                                                              |                                                      | Joined the Company                                                          
|                                   |  |                                       
|Susumu Sumikura (Jul. 1,
1943)     |  | 27,270 par value Shares of the Company |           | Corporate Auditor of the Company                                                      
|                                   |  | Jun. 2003                              |           | Corporate Auditor of the Company (to present)                                         
|                                   |  | Apr. 2002                              |           | Corporate Planning & Control Dept.                                                    
|                                   |  |                                        |           | Jun. 1999                                                                              |                                                      | General Manager of Business Alliance Dept                                   
|                                   |  |                                        |           | Dec. 1998                                                                              |                                                      | General Manager of Planning Dept of Electronic Equipped machinery Division  
|                                   |  |                                        |           | Apr. 1967                                                                              |                                                      | Joined the Company                                                          



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|                              |  |                                        |           |                                                                                                                       |                                                                                                      |                                                                                                                    
|----------------------------- |  | -------------------------------------- | --------- | --------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------
|Junichi Maeda (May 23, 1945)  |  | 14,000 par value Shares of the Company |           | Corporate Auditor of the Company                                                                                     
|                              |  | Jun. 2005                              |           | Corporate Auditor of the Company (to present)                                                                        
|                              |  |                                        | Jun. 2003 |                                                                                                                       | Director of the Company                                                                             
|                              |  |                                        |           | Apr. 2003                                                                                                             |                                                                                                      | General Manager of Ductile Iron Pipe Division                                                                      
|                              |  |                                        |           | Jun. 2001                                                                                                             |                                                                                                      | General Manager of Planning Dept. in Ductile Iron Pipe Division                                                    
|                              |  |                                        |           | Apr. 2001                                                                                                             |                                                                                                      | Ditto and General Manager of Production Management Dept. in Ductile Iron Pipe Division                             
|                              |  |                                        |           | Jun. 2000                                                                                                             |                                                                                                      | General Manager of Planning Dept. in Ductile Iron Pipe Division                                                    
|                              |  |                                        |           | Sep. 1972                                                                                                             |                                                                                                      | Joined the Company                                                                                                 
|                              |  |                                       
|Teisuke Sono (May 10, 1934)   |  | 4,000 par value Shares of the Company  |           | Corporate Auditor of the Company                                                                                     
|                              |  | Apr. 2004                              |           | Appointed as a visiting professor of Hokuriku University (to present)                                                
|                              |  |                                        |           | Jun. 2003                                                                                                             |                                                                                                      | Corporate Auditor of the Company (to present)                                                                      
|                              |  |                                        |           | Apr. 2001                                                                                                             |                                                                                                      | The professor of International Buddhist University                                                                 
|                              |  |                                        |           | Aug. 1996                                                                                                             |                                                                                                      | Judge of Osaka High Court                                                                                          
|                              |  |                                        |           | Oct. 1994                                                                                                             |                                                                                                      | Chief Justice of Kobe Family Court                                                                                 
|                              |  |                                        |           | Apr. 1973                                                                                                             |                                                                                                      | Judge                                                                                                              
|                              |  |                                        |           | Apr. 1963                                                                                                             |                                                                                                      | Deputy of Judge                                                                                                    
|                              |  |                                       
|Yoshio Suekawa (Sep. 1,
1937) |  | 1,000 par value Shares of the Company  |           | Corporate Auditor of the Company                                                                                     
|                              |  | Jun. 2004                              |           | Corporate Auditor of the Company (to present)                                                                        
|                              |  |                                        | Apr. 2004 |                                                                                                                       | Appointed as a special visiting professor, the Faculty of Commerce, Doshisha University (to present)
|                              |  |                                        |           | Jun. 2003                                                                                                             |                                                                                                      | Assumed statutory auditor of SUS-TECH Corporation                                                                  
|                              |  |                                        |           | Jul. 2002                                                                                                             |                                                                                                      | Established Suekawa CPA Office (to present)                                                                        
|                              |  |                                        |           | Jun. 2002                                                                                                             |                                                                                                      | Retired from Representative Partner of Deloitte Touche Tohmatsu, Osaka                                             
|                              |  |                                        |           | May 1989                                                                                                              |                                                                                                      | Assumed Representative Partner of Deloitte Touche Tohmatsu, Osaka                                                  
|                              |  |                                        |           | Jul. 1984                                                                                                             |                                                                                                      | Joined Sanwa Tokyo Marunouchi (currently, Deloitte Touche Tohmatsu)                                                
|                              |  |                                        |           | Oct. 1963                                                                                                             |                                                                                                      | Registered as a CPA with the Japanese Institute of Certified Public Accountants                                    
|                              |  |                                        |           | Oct. 1959                                                                                                             |                                                                                                      | Joined Lowe Bingham and Luckie (subsequently, PricewaterhouseCoopers, Osaka)                                       
|                              |  |                                       
|Yuzuru Mizuno (Jan. 21,
1948) |  | 0 par value Shares of the Company      |           | Corporate Auditor of the Company                                                                                     
|                              |  | Jul. 2005                              |           | Executive Senior Councilor of Corporate Accounting & Finance of Matsushita Electric Industrial Co., Ltd. (to present)
|                              |  |                                        |           | Jun. 2005                                                                                                             |                                                                                                      | Corporate Auditor of the Company (to present)                                                                      
|                              |  |                                        |           | Jul. 2004                                                                                                             |                                                                                                      | Executive Director of Matsushita Electric Industrial Co., Ltd., in charge of Corporate Finance & Investor Relations
|                              |  |                                        |           | Feb. 2004                                                                                                             |                                                                                                      | Director (non full-time) of Nippon Otis Elevator Company (to present)                                              
|                              |  |                                        |           | Oct. 2000                                                                                                             |                                                                                                      | President (non full-time) of Panasonic Finance (Japan) Co., Ltd.                                                   
|                              |  |                                        |           | Oct. 2000                                                                                                             |                                                                                                      | General Manager of Corporate Finance Dept. of Matsushita Electric Industrial Co., Ltd.                             
|                              |  |                                        |           | Jun. 1998                                                                                                             |                                                                                                      | Managing Director of Matsushita Industrial Corporation Sdn. Bhd.                                                   
|                              |  |                                        |           | Dec. 1995                                                                                                             |                                                                                                      | General Manager of Accounting Dept. in Compressor Division of Matsushita Electric Industrial Co., Ltd.             
|                              |  |                                        |           | Apr. 1970                                                                                                             |                                                                                                      | Joined Matsushita Electric Industrial Co., Ltd.                                                                    



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Between Directors or Corporate Auditors of the Company there is no family relationship. No Directors and
Corporate Auditors, except Teisuke Sono, Yoshio Suekawa and Yuzuru Mizuno, Corporate Auditors, of the Company have business activities performed outside the Company. No Directors have directorship of another company.



There is not any arrangement or understanding with major shareholders,
customers, suppliers or other pursuant to which any person named above was selected as a Director or a Corporate Auditor.



The Company is not dependent on specific Directors, researchers, or any other entity for its management.



B. Compensation



The aggregate
remuneration, including bonuses, paid by the Company in fiscal 2005 to all Directors (some of whom are also the executive officers) and Corporate Auditors of the Company as a group (29persons) was ¥475 million. No options to purchase securities
from the registrant or any of its subsidiaries were outstanding on March 31, 2005.



The Company accrued retirement benefits for Directors and Corporate Auditors under the Companys plan. During fiscal 2005 the Company accrued for retirement benefits for Directors and Corporate Auditors
aggregating ¥132 million. However, at the ordinary general meeting of shareholders held on June 24, 2005, the Company proposed and resolved that the retirement benefit systems for directors and corporate auditors should be terminated as of the
date of the meeting and retirement benefit should be paid to present directors and corporate auditors for the services rendered before termination of the system. Timing of payment will be at their retirements from their offices.



C. Board Practices



The
Companys Articles of Incorporation as revised as of June 24, 2005 provide that the number of Directors of the Company shall be not more than 30 and that of the Corporate Auditors shall be not more than 6.



Directors and Corporate Auditors shall be elected by the general meeting of
shareholders. The Board of Directors has ultimate responsibility for administration of the Companys affairs. Directors may, by resolution of the Board of Directors, appoint a Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, a President-Director, and one or more Executive Vice President-Directors, Executive Managing Directors and Managing Directors. The Chairman of the Board of Directors and President-Director are Representative Directors and severally
represent the Company. In addition, the Board of Directors may by its resolution, appoint one or more additional Representative Directors. The term of office of Directors shall, under the Articles of Incorporation of the Company, expire at the
conclusion of the ordinary general meeting of shareholders with respect to the last closing of accounts within one year from their assumption of office, and in the case of Corporate Auditors, within 4 years from their assumption of office. However,
they may serve any number of consecutive terms.



The Corporate
Auditors of the Company are not required to be and are not certified public accountants. However, at least one of the Corporate Auditors shall be a person who has not been a Director, general manager or employee of the Company or any of its
subsidiaries during the five-year period prior to his election as a Corporate Auditor. After the conclusion of the ordinary general meeting of shareholders to be held in June 2006, at least a half of the Corporate Auditors shall be required to be
persons who have not been a Director, corporate executive officer, general manager or employee of the Company or any of its subsidiaries.



The Corporate Auditors may not at the same time be Directors, corporate executive officers, managers or employees of the Company or any of its
subsidiaries. Each Corporate Auditor has the statutory duty to examine the Companys consolidated and non-consolidated financial statements and business reports to be submitted by the Board of Directors at the general meeting of shareholders
and also to supervise the administration by the Directors of the Companys affairs. They are required to attend in meetings of the Board of Directors and express opinions, if necessary, at such meetings, but they are not entitled to vote.



38



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##### Table of Contents

Pursuant to the Law Concerning Special Measures under the Commercial Code with respect to Audit, etc. of
Corporations (Kabushiki-Kaisha) of Japan, the Corporate Auditors constitute the Board of Corporate Auditors. The Board of Corporate Auditors has a statutory duty to prepare and submit its audit report to a Representative Director each year. A
Corporate Auditor may note his or her opinion in the audit report if his or her opinion is different from the opinion expressed in the audit report. The Board of Corporate Auditors is empowered to establish audit principles, method of examination by
Corporate Auditors of the Companys affairs and financial position and other matters concerning the performance of the Corporate Auditors duties.



There are no Directors service contracts with Kubota Corporation providing for benefits upon termination of service.



The rights of ADR holders, including their rights relating to corporate
governance practices, are governed by the Amended and Restated Deposit Agreement (incorporated by reference to the Registration Statement on Form F-6 (File No. 333-91654) filed on June 26, 2002).



D. Employees



|                                    |  |        |  |        |  |       
|----------------------------------- |  | ------ |  | ------ |  | ------
|Head Count at the End of the Period |  | 2003   |  | 2004   |  | 2005  
|                                    |  | 22,834 |  | 22,198 |  | 22,916



|                                         |  |        |  |        |  |       
|---------------------------------------- |  | ------ |  | ------ |  | ------
|Head Count in Each Segment               |  | 2003   |  | 2004   |  | 2005  
|Internal Combustion Engine and Machinery |  | 9,591  |  | 10,803 |  | 12,026
|Pipes, Valves, and Industrial Castings   |  | 4,497  |  | 4,240  |  | 4,116 
|Environmental Engineering                |  | 2,409  |  | 2,478  |  | 2,489 
|Other                                    |  | 5,541  |  | 4,246  |  | 3,872 
|Corporate                                |  | 796    |  | 431    |  | 413   
|                                         |  |        |  |        |  |       
|Total                                    |  | 22,834 |  | 22,198 |  | 22,916



The number of
full-time employees of Kubota as of March 31, 2005 was 22,916. Most employees of the Company in Japan, other than managerial personnel, are union members. The unions belong to the Federation of all Kubota Labor Union, which is affiliated with the
Japanese Trade Union Confederation. The Company has not experienced any strikes or work stoppages for 56 years and believes its relations with its employees or union to be excellent.



Basic wage rates are reviewed annually in Spring. In addition, in accordance with Japanese custom, Kubota grants its
full-time employees semiannual bonuses.



The parent company and
its domestic subsidiaries have a number of unfunded severance indemnity plans and defined benefit pension plans covering substantially all Japanese employees. Most employees of overseas subsidiaries are covered by defined benefit pension plans or
defined contribution pension plans. As is customary in Japan, the Company provides a wide range of fringe benefits to its employees.



E. Share Ownership



The total
number of shares of the Companys common stock beneficially owned by the Directors and Corporate Auditors as a group as of June 24, 2005 was as follows:



|               |  |                                  |  |                        |  |                     |  
|-------------- |  | -------------------------------- |  | ---------------------- |  | ------------------- | -
|Title of Class |  | Identity of persons or group     |  | Number of shares owned |  | Percentage of class |  
|Common stock   |  | Directors and Corporate Auditors |  | 356,270                |  | 0.03                | %



About individual shareholdings, see
Item6.A Directors and Senior Management.



39



---

##### Table of Contents

|Item 7. | Major Shareholders and Related Party Transactions
|------- | -------------------------------------------------



A. Major Shareholders



As of
March 31, 2005, 5 shareholders held more than 5 percent of the shares issued. The 10 largest shareholders are as follows:



|                                            |  |                             |  |      
|------------------------------------------- |  | --------------------------- |  | -----
|                                            |  | (As of March 31, 2005)     
|Name                                        |  | Number of shares (thousand) |  | (%)  
|Japan Trustee Services Bank, Ltd.           |  | 154,770                     |  | 11.54
|The Master Trust Bank of Japan, Ltd.        |  | 113,463                     |  | 8.46 
|Nippon Life Insurance Company               |  | 93,819                      |  | 6.99 
|Trust & Custody Services Bank, Ltd.         |  | 90,566                      |  | 6.75 
|Meiji Yasuda Life Insurance Company         |  | 78,851                      |  | 5.88 
|The Dai-ichi Mutual Life Insurance Company  |  | 48,618                      |  | 3.62 
|Sumitomo Mitsui Banking Corporation         |  | 34,620                      |  | 2.58 
|Kubota Fund (Employee Stock Ownership Plan) |  | 33,057                      |  | 2.46 
|Sumitomo Life Insurance Company             |  | 23,816                      |  | 1.77 
|State Street Bank and Trust Company 505103  |  | 16,317                      |  | 1.21 



(Note) Although the Company possesses
39,965,595 of its treasury stocks, it is not included in the table above.



As far as is known to the Company, there is no arrangement, the operation of which may at a subsequent date result in a change in control of the Company. The major shareholders have the same voting rights as other
common shareholders of the Company.



As of March 31, 2005,
there were 1,340,808,978 shares of Common Stock issued, of which 10,442,710 shares were in the form of ADR and 101,011,731 shares were held by the residents in the U.S. The number of registered ADR holders was 40 and the number of registered holders
of common stock in the U.S. was 91.



To the best knowledge of
the Company, the Company is not, directly or indirectly, owned or controlled by other corporations or by the Japanese or any foreign government.



B. Related Party Transactions



In the ordinary course of business, the Company has transactions with numerous companies. During the fiscal year ended March 31, 2005, the Company had sales transactions with affiliates accounted under the equity method, aggregating
¥64,465 million ($602,477 thousand). As of March 31, 2005, the Company had trade notes and accounts receivable from affiliated companies of ¥22,729 million ($212,421 thousand). The Company does not consider the amounts involved in such
transactions to be material to its business.



Refer to Note 3
of the Consolidated Financial Statements for additional information regarding the Companys investments in and advances to affiliated companies.



C. Interests of Experts and Counsel



Not applicable



40



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##### Table of Contents

|Item 8. | Financial Information
|------- | ---------------------



A. Consolidated Statements and Other Financial Information



The information required by this item, except as stated below, appears in the financial section, which is incorporated herein by reference, of the Companys 2005 Annual Report.



Legal Proceedings



Anti-Trust



In May 1998, the Company was investigated by the Fair Trade Commission of
Japan (the FTCJ) for an alleged violation of the Law Concerning Prohibition of Private Monopoly and Preservation of Fair Trade (the Anti-Monopoly Law) relating to participation in fixing the shares of ductile iron straight
pipe orders in Japan. The Company received a cease and desist recommendation from the FTCJ in March 1999, which was accepted by the Company in April 1999.



The FTCJ also brought a criminal accusation alleging violation of the Anti-Monopoly Law against the Company and 3 of its employees, who were indicted in
the Tokyo High Court in March 1999. On February 24, 2000, the Company was fined ¥130 million, and the 3 employees were given 6  10 months prison sentences, suspended for 2 years.



In the meanwhile, the Company received a surcharge order of ¥7,072
million ($66,093 thousand) from the FTCJ. The Company has challenged this order and filed a petition for the initiation of hearing procedures that were started in March 2000. Under Section 49 of the Anti-Monopoly Law, upon initiation of the
procedures the surcharge order lost effect. In addition, Section 7-2 of the Anti-Monopoly Law stipulates that surcharges are imposed in cases where price cartels or cartels that influence prices by curtailing the volume of supply are carried out.
The Company believes that the alleged share cartel does not meet the requirement of Section 7-2, and has not established any provision for the ultimate liability, if any, which may result from the settlement of this matter. An unfavorable outcome
from this issue could materially affect the Companys results of operations or cash flows in a given year. The Company is not able to estimate the likelihood of such unfavorable outcome. As of March 31, 2005 the Company is still in the process
of the hearing procedures.



Patent Infringement



In July 2003, Etesia, which manufactures mowers in
France, filed a patent infringement lawsuit and a noise regulation infringement lawsuit against the Company to the French district court. The district court rendered a verdict in favor of the Company in January 2005.



Policy on Dividends Distributions



The Company's basic policy for the allocation of profit is to maintain
or raise dividends. The Companys policy is to determine the most appropriate use of retained earnings, by considering current business operations as well as the future business environment.



B. Significant Changes



Except as disclosed in this annual report, there have been no significant changes since the date of latest annual financial statements of the Company.



41



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##### Table of Contents

|Item 9. | The Offer and Listing
|------- | ---------------------



A. Offer and Listing Details



The primary market for Kubotas common stock is the Tokyo Stock Exchange (the TSE) in the form of original common stock. Kubotas common stock has been listed on the TSE since 1949, and has also been listed on the
Osaka Securities Exchange since 1949.



Overseas, Kubotas
common stock is listed on the New York Stock Exchange (the NYSE) in the form of American Depositary Shares (ADSs) evidenced by American Depositary Receipts (ADRs). Prior to July 15, 2002, each ADS represented 20
shares of common stock. On July 15, 2002, the Company changed the unit of ADS from 20 common shares to 5 in order to help increase the number of ADS holders and improve the liquidity of its ADSs.



Kubotas ADSs, which have been listed on the NYSE since 1976, are issued
by JPMorgan Chase Bank, as Depositary. Kubotas common stock is also listed on Frankfurt Stock Exchange.



The following table sets forth, for the periods indicated, the reported high and low sales prices of Kubotas common stock on the TSE and of
Kubotas ADSs on the NYSE.



|                         |  |                                     |  |                                      |  |      |    |     |    |  |    |    |   |    |  |   
|------------------------ |  | ----------------------------------- |  | ------------------------------------ |  | ---- | -- | --- | -- |  | -- | -- | - | -- |  | --
|                         |  | TSE price per share of common stock |  | NYSE price per ADS (5 common shares)
|                         |  | High                                |  | Low                                  |  | High |    | Low
|Annual Highs and Lows    |  |                                     |  |                                      |  |      |    |     |    |  |    |    |   |   
|2001                     |  | ¥443                                |  | ¥307                                 |  | $    | 20 |     | 66 |  | $  | 13 |   | 25
|2002                     |  | 530                                 |  | 308                                  |  |      | 20 |     | 78 |  |    | 12 |   | 25
|2003                     |  | 435                                 |  | 280                                  |  |      | 17 |     | 25 |  |    | 11 |   | 50
|                         |  |                                     |  |                                      |  |     
|Quarterly Highs And Lows |  |                                     |  |                                      |  |      |    |     |    |  |    |    |   |   
|2004                     |  |                                     |  |                                      |  |      |    |     |    |  |    |    |   |   
|1 st                     |  | quarter                             |  | ¥331                                 |  | ¥260 |    | $   | 14 |  | 10 |    | $ | 11 |  | 06
|2 nd                     |  | quarter                             |  | 439                                  |  | 283  |    |     | 18 |  | 74 |    |   | 12 |  | 30
|3 rd                     |  | quarter                             |  | 445                                  |  | 370  |    |     | 21 |  | 10 |    |   | 16 |  | 80
|4 th                     |  | quarter                             |  | 517                                  |  | 411  |    |     | 24 |  | 15 |    |   | 19 |  | 75
|                         |  |                                     |  |                                      |  |     
|2005                     |  |                                     |  |                                      |  |      |    |     |    |  |    |    |   |   
|1 st                     |  | quarter                             |  | 596                                  |  | 446  |    |     | 27 |  | 90 |    |   | 19 |  | 05
|2 nd                     |  | quarter                             |  | 582                                  |  | 485  |    |     | 26 |  | 65 |    |   | 22 |  | 00
|3 rd                     |  | quarter                             |  | 539                                  |  | 466  |    |     | 25 |  | 24 |    |   | 22 |  | 10
|4 th                     |  | quarter                             |  | 595                                  |  | 510  |    |     | 28 |  | 46 |    |   | 24 |  | 41
|                         |  |                                     |  |                                      |  |     
|Monthly Highs and Lows   |  |                                     |  |                                      |  |      |    |     |    |  |    |    |   |   
|February, 2005           |  | ¥580                                |  | ¥546                                 |  | $    | 27 |     | 60 |  | $  | 26 |   | 00
|March                    |  |                                     |  | 595                                  |  | 552  |    |     | 28 |  | 46 |    |   | 26 |  | 40
|April                    |  |                                     |  | 596                                  |  | 517  |    |     | 27 |  | 20 |    |   | 24 |  | 20
|May                      |  |                                     |  | 604                                  |  | 537  |    |     | 27 |  | 89 |    |   | 25 |  | 29
|June                     |  |                                     |  | 651                                  |  | 576  |    |     | 29 |  | 85 |    |   | 27 |  | 31
|July                     |  |                                     |  | 659                                  |  | 603  |    |     | 29 |  | 50 |    |   | 27 |  | 67
|August                   |  |                                     |  | 718                                  |  | 649  |    |     | 32 |  | 60 |    |   | 29 |  | 50



The Company has never experienced
trade suspension, and keeps enough liquidity for trading.



42



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##### Table of Contents

B. Plan of Distribution



Not
applicable



C. Markets



The stocks
of the Company are listed on 2 stock exchanges in Japan (Tokyo and Osaka), and 2 overseas stock exchanges (New York and Frankfurt). In May 1949, the stocks were listed on Tokyo Stock Exchange (the TSE) and Osaka Securities Exchange. The
stocks were also listed on Frankfurt Stock Exchange in March 1974, and in November 1976 listed on New York Stock Exchange (the NYSE).



D. Selling Shareholders



Not
applicable



E. Dilution



Not applicable



F. Expenses of the Issue



Not
applicable



43



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##### Table of Contents

|Item 10. | Additional Information
|-------- | ----------------------



A. Share Capital



Not
applicable



B. Memorandum and Articles of Association



Organization



The Company is a joint stock corporation (kabushiki kaisha)incorporated in Japan under the Commercial Code (Shoho)of Japan. The Company is registered in the Commercial Register (shogyo tokibo)maintained by the Osaka
Legal Affairs Bureau.



Objects and
Purposes



Article 2 of the Articles of
Incorporation of the Company provides that its purpose is to engage in the following lines of business:



| | 1. | Manufacture, sale and laying work of cast iron pipe, various kinds of pipe and fittings thereof;
| | -- | ------------------------------------------------------------------------------------------------



| | 2. | Manufacture and sale of castings, powder-metallurgy products and ceramic and other moldings;
| | -- | --------------------------------------------------------------------------------------------



| | 3. | Manufacture and sale of internal combustion engines, automobiles, agricultural machinery and ancillary farming products;
| | -- | ------------------------------------------------------------------------------------------------------------------------



| | 4. | Manufacture, sale and installation of construction machinery, machine tools, pumps, valves, various kinds of industrial machinery and other machinery;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | Manufacture, sale and installation of weighing, measuring and control equipment, electrical, electronic and communication machinery and equipment, automatic vending machines and
automatizing machinery and equipment;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | Manufacture and sale of various kinds of materials for civil engineering and construction as well as various kinds of machinery and equipment for houses;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | Construction and civil engineering, and planning, manufacture, supervision, performance and sale of, and contracting for, houses, building structures, steel-frame structures and
storage facilities and equipment;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8. | Sale, purchase, lease and management of real estate and development of residential land;
| | -- | ----------------------------------------------------------------------------------------



| | 9. | Planning, manufacture, engineering and construction of, and contracting for, various environmental control devices and equipment and various plants;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | 10. | Treatment, recovery and recycling business of various kinds of wastewater, exhaust gas and contaminated soil;
| | --- | -------------------------------------------------------------------------------------------------------------



| | 11. | Treatment, recovery and recycling business of municipal and industrial wastes;
| | --- | ------------------------------------------------------------------------------



| | 12. | Manufacture and sale of chemicals for household use and for environmental control devices and equipment as well as bioproducts;
| | --- | -------------------------------------------------------------------------------------------------------------------------------



| | 13. | Manufacture, processing and sale of synthetic resins and other chemical synthetic products;
| | --- | -------------------------------------------------------------------------------------------



| | 14. | Development and sale of information processing and communication systems, and computer software;
| | --- | ------------------------------------------------------------------------------------------------



44



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##### Table of Contents

| | 15. | Operation of facilities for sports, lodging, training, health and medical care, recuperation and recreation;
| | --- | ------------------------------------------------------------------------------------------------------------



| | 16. | Road cargo transportation business, water transportation business and warehousing business;
| | --- | -------------------------------------------------------------------------------------------



| | 17. | General leasing business;
| | --- | -------------------------



| | 18. | Personnel dispatching agency business;
| | --- | --------------------------------------



| | 19. | Business of soliciting life insurance, casualty insurance agency business and insurance agency business pursuant to the Automobile Injury Compensation Law;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | 20. | Fee-charging employment agency;
| | --- | -------------------------------



| | 21. | Accounting and payroll administration services;
| | --- | -----------------------------------------------



| | 22. | Copying, printing and bookbinding businesses;
| | --- | ---------------------------------------------



| | 23. | Any consulting business relating to each of the foregoing items; and
| | --- | --------------------------------------------------------------------



| | 24. | Any other business ancillary to or relating to any of the foregoing items.
| | --- | --------------------------------------------------------------------------



Directors



Each Director has executive powers and duties to manage the affairs of the Company and each Representative Director, who is elected from among the
Directors by the Board of Directors, has the statutory authority to represent the Company in all respects. Under the Commercial Code, the Directors must refrain from engaging in any business competing with the Company unless approved by the Board of
Directors and any Director who has a special interest in the subject matter of a resolution to be taken by the Board of Directors cannot vote on such resolution. The maximum total amounts of remuneration to Directors and that to Corporate Auditors
must be, and accordingly has been, approved at a general meeting of shareholders. The Company must also obtain the approval at a general meeting of shareholders if the Company desires to change such maximum amount of compensation. Within such
authorized amounts the remuneration amount for each Director is determined by the Companys President who is delegated to do so by the Board of Directors, and that for each Corporate Auditor is determined upon consultation among the Corporate
Auditors.



Except as stated below, neither the Commercial Code
nor the Companys Articles of Incorporation make special provisions as to the Directors or Corporate Auditors power to vote in connection with their own compensation, the borrowing power exercisable by a Representative Director (or
a Director who is given power by a Representative Director to exercise such power), their retirement age or requirements to hold any shares of Common Stock of the Company. The Commercial Code specifically requires the resolution of the Board of
Directors for a company to acquire or dispose of material assets; to borrow a substantial amount of money; to appoint or dismiss important employees, such as executive officers; and to establish, change or abolish material corporate organizations
such as a branch office. The Regulations of the Board of Directors and the relevant internal regulation of the Company require a resolution of the Board of Directors for the Companys borrowing in an amount more than 5 billion yen or
guaranteeing in an amount more than one billion yen or its equivalent.



Common Stock



General



Except as
otherwise stated, set forth below is information relating to the Companys Common Stock, including brief summaries of the relevant provisions of the Companys Articles of Incorporation and Share Handling Regulations, as currently in
effect, and of the Commercial Code of Japan and related legislation.



A bill to modernize and make overall amendments to the Commercial Code passed the Diet and was promulgated July 26, 2005. As a result of such amendments, the provisions governing joint stock corporations, which are currently included in the
Commercial Code, will be embodied in a new company law (the New Company Law). The New Company Law will come into effect within one year and half after its promulgation and is currently expected to take effect in the spring of 2006.
Descriptions of the New Company Law are made below to the extent necessary or appropriate in the context.



45



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##### Table of Contents

Under the Commercial Code, generally, shares may be transferred only by delivering share certificates. In
order to assert shareholders rights against the Company, a shareholder must have its name and address registered on the Companys register of shareholders, in accordance with the Companys Share Handling Regulations. The registered
beneficial holder of deposited shares underlying the ADSs is the Depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert shareholders rights against the Company.



A new law to establish a new central clearing system for shares of listed
companies and to eliminate the issuance and use of certificates for such shares was promulgated in June 2004 and the relevant part of the law will come into effect within 5 years of the date of the promulgation. On the effective date, a new central
clearing system will be established and the shares of all Japanese companies listed on any Japanese stock exchange, including the shares of common stock of the Company, will be subject to the new central clearing system. On the same day, all
existing share certificates will become null and void and the companies are not required to withdraw those share certificates from shareholders. The transfer of such shares will be effected through entry in the books maintained under the new central
clearing system.



Authorized capital



Article 5 of the Articles of Incorporation of the Company provides that the
total number of shares authorized to be issued by the Company is 1,931,000,000 shares.



As of March 31, 2005, 1,340,808,978 shares of Common Stock were issued. All shares of Common Stock of the Company have no par value.



Dividends



Dividends  General



The Articles of Incorporation of the Company provide that the accounts shall be closed on March 31 of each year and that year-end dividends, if any, shall
be paid to shareholders, beneficial shareholders and pledgees of record as of the end of such day. After the close of the fiscal period, the Board of Directors prepares, among other things, a proposed allocation of profits for year-end dividends and
other purposes; this proposal is submitted to the Board of Corporate Auditors of the Company and to independent certified public accountants and then submitted for approval to the ordinary general meeting of shareholders, which is normally held in
June each year.



Under the New Company Law, subject to certain
limitations on the distributable surplus as described below, dividends, if any, may be paid to shareholders, beneficial shareholders, and pledgees of record as of a record date as set forth by the Companys Articles of Incorporation or as
determined by the board of directors from time to time. Dividends shall be paid by way of distribution of surplus. Dividends may be distributed in cash or in kind. In distributing dividends, the Company may determine the kind of assets to be
distributed, the book value of such assets, matters regarding allocation of such assets, and the effective date of such dividends, by a resolution of a general meeting of shareholders. However, the Company may generally determine such matters by a
resolution of the board of directors if (a) the Companys Articles of Incorporation so provide, (b) the term of its directors is set to be until the conclusion of the ordinary general meeting of shareholders held with respect to the last
closing of accounts within one year after such directors assumption of office, and (c) certain requirements regarding the financial statements and certain documents of the Company as set forth in an ordinance of the Ministry of Justice are
met; provided, however, that when the Company is to make in-kind dividends without giving shareholders the right to request payment of cash dividends in lieu of in-kind dividends, it shall determine such matters by a special shareholders resolution
(as defined in Voting Rights). When the Company makes payment of dividends, it shall allocate such dividends in proportion to the number of shares of any specific class held by each shareholder.



46



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##### Table of Contents

Dividends  Interim cash dividends



In addition to year-end dividends, the Board of Directors may by its resolution declare a cash distribution pursuant to
Article 293-5 of the Commercial Code and Article 29 of the Articles of Incorporation (an interim dividend) to shareholders, beneficial shareholders and pledgees of record as of the end of each September 30, without the shareholders
approval, but subject to the limitations described below.



Under the New Company Law, notwithstanding the necessity of obtaining approval of general meeting of shareholders in general under the New Company Law as described above, the Company is allowed to make payment of interim dividends during a
fiscal year by way of distribution of surplus by resolution of the board of directors; provided, however, that such payment of interim dividends shall be limited to cash dividends and also limited to once per fiscal year.



Dividends  Legal reserve



The Commercial Code provides that a company may not make any distribution of
profit by way of year-end dividends or interim dividends for any fiscal period unless it has set aside in its legal reserve an amount equal to at least one-tenth of the amount paid by way of appropriation of retained earnings for such fiscal period
or equal to one-tenth of the amount of such interim dividends until the aggregate amount of additional paid-in capital and legal reserve equals to at least one-quarter of its stated capital.



The New Company Law provides that when a joint stock company like the Company
makes distribution of surplus, it shall set aside in its legal reserve an amount equal to 10% of the amount of the surplus to be decreased as a result of such distribution of surplus in accordance with the provisions set forth in an ordinance of the
Ministry of Justice.



Dividends  Distributable amount



Under the Commercial Code, the Company is permitted to distribute profits
by way of year-end or interim dividends out of the excess of its net assets, as appearing on its non-consolidated balance sheet as at the end of the preceding fiscal year, over the aggregate of:



| | (i) | its stated capital;
| | --- | -------------------



| | (ii) | its additional paid-in capital;
| | ---- | -------------------------------



| | (iii) | its accumulated legal reserve;
| | ----- | ------------------------------



| | (iv) | the legal reserve to be set aside in respect of the fiscal period concerned; and
| | ---- | --------------------------------------------------------------------------------



| | (v) | such other amounts as provided for by an ordinance of the Ministry of Justice.
| | --- | ------------------------------------------------------------------------------



In the case of interim dividends, the net assets are calculated by reference to the non-consolidated balance sheet as at the last closing of the
Companys accounts in the same manner as year-end dividends, but adjusted to reflect; (a) the legal reserve to be set aside in respect of such interim dividends; (b) any subsequent payment by way of appropriation of retained earnings; (c) any
subsequent transfer of retained earnings to stated capital; (d) if the Company has been authorized, pursuant to a resolution of an ordinary general meeting of shareholders or a Board of Directors, to purchase shares of its Common Stock (see Section
B of this Item 10  Memorandum and Articles of Association  Common Stock  Acquisition by the Company of its Common Stock), the total amount of the purchase price of such shares so authorized by such resolution that may
be paid by the Company; and (e) such other amounts as are set out in an ordinance of the Ministry of Justice, provided that (x) if the Company reduces its stated capital, additional paid-in capital or accumulated legal reserve after the end of the
preceding fiscal year, the amount so reduced, less the amount paid to shareholders upon such reduction and certain other amounts, and (y) such other amounts as are set out in an ordinance of the Ministry of Justice, shall be added to the amount
distributable as interim dividends as described above. Interim dividends may not be paid where there is a risk that at the end of the fiscal year there might not be any excess of net assets over the aggregate of the amounts referred to in (i)
through (v) above.



Under the New Company Law, the Company is
permitted to make distribution of surplus to the extent that the aggregate book value of the assets to be distributed to shareholders does not exceed the Distributable Amount (as defined below) as at the effective date of such distribution of
surplus. Under the New Company Law, the Distributable Amount would include amounts gained or incurred as a result of certain events occurring after the end of the Companys last fiscal year. In addition, under the New Company Law, the Company
will be permitted to prepare extraordinary financial statements, or Extraordinary Financial Statements, as of a certain date during the fiscal year immediately after the Companys last fiscal year, or the Extraordinary Account Settlement Date,
which must be audited by corporate auditors and accounting auditors and approved by the Companys board of directors and, in certain cases, the general meeting of shareholders of the Company. Once the Extraordinary Financial Statements are so
audited and approved, the Company can make adjustments to the Distributable Amount by adding net income or by deducting loss for the period after the end of the Companys last fiscal year until the Extraordinary Account Settlement Date.



47



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##### Table of Contents

The amount of surplus at any given time shall be the amount of the Companys assets and the book
value of the Companys treasury stock after subtracting the amounts of the following items (1) through (4) as they appear on the Companys non-consolidated balance sheet as at the end of the Companys last fiscal year, and after
reflecting the changes in the Companys surplus after the end of the Companys last fiscal year, by adding the amounts of the following items (5), (6) and (7) and/or subtracting the amounts of the following items (8), (9) and (10):



| | (1) | its liabilities;
| | --- | ----------------



| | (2) | its stated capital;
| | --- | -------------------



| | (3) | its additional paid-in capital and accumulated legal reserve;
| | --- | -------------------------------------------------------------



| | (4) | other amounts as provided for by an ordinance of the Ministry of Justice;
| | --- | -------------------------------------------------------------------------



| | (5) | (if the Company transferred its treasury stock after the end of the last fiscal year) the transfer price of its treasury stock after subtracting the book value thereof;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | (if the Company decreased its stated capital after the end of the last fiscal year) the amount of decrease in its stated capital (excluding the amount transferred to the additional
paid-in capital or legal reserve);
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | (if the Company decreased its additional paid-in capital or legal reserve after the end of the last fiscal year) the amount of decrease in its additional paid-in capital or legal
reserve (excluding the amount transferred to the stated capital);
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | (if the Company cancelled its treasury stock after the end of the last fiscal year) the book value of its treasury stock so cancelled;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



| | (9) | (if the Company distributed surplus to shareholders after the end of the last fiscal year) the assets distributed to shareholders by way of such distribution of surplus; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (10) | other amounts as provided for by an ordinance of the Ministry of Justice.
| | ---- | -------------------------------------------------------------------------



The Distributable Amount of the Company at any given time shall be the aggregate amount of (a) the surplus, (b) (if the Company prepares Extraordinary
Financial Statements) the amount of profit as recorded for the period after the end of the Companys last fiscal year until the Extraordinary Account Settlement Date as provided for in an ordinance of the Ministry of Justice and (c) (if the
Company prepares Extraordinary Financial Statements) the transfer price of its treasury stock in the same period, after subtracting the amounts of the following items:



| | (1) | the book value of its treasury stock;
| | --- | -------------------------------------



| | (2) | (if the Company transferred its treasury stock after the end of the last fiscal year) the transfer price of its treasury stock;
| | --- | -------------------------------------------------------------------------------------------------------------------------------



| | (3) | (if the Company prepares Extraordinary Financial Statements) the losses as recorded for the period after the end of the Companys last fiscal year until the Extraordinary
Account Settlement Date as provided for in an ordinance of the Ministry of Justice; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | other amounts as provided for by an ordinance of the Ministry of Justice.
| | --- | -------------------------------------------------------------------------



Dividends  Ex-dividend date and prescription



In Japan the ex-dividend date and the record date for dividends precede the date of determination of the amount of the dividends to be paid.



Under its Articles of Incorporation, the Company is not obligated to pay
any dividends which are left unclaimed for a period of 3 years after the date on which they first became payable.



For information as to Japanese taxes on shareholder dividends, see Section E of this Item 10  Taxation  Japanese Taxation.



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Stock splits



The Company may at any time split shares in issue into a greater number of shares by resolution of the Board of Directors,
and may in principle amend its Articles of Incorporation to increase the number of the authorized shares to be issued in proportion to the relevant stock split pursuant to a resolution of the Board of Directors rather than a special shareholders
resolution (as defined in Voting Rights) which is otherwise required for amending the Articles of Incorporation.



In the event of a stock split, generally, shareholders will not be required to exchange share certificates for new share certificates, but certificates
representing the additional shares resulting from the stock split will be issued to shareholders. When a stock split is to be made, the Company must give public notice of the stock split, specifying the record date thereof, at least 2 weeks prior to
such record date. In addition, promptly after the stock split takes effect, the Company must give notice to each shareholder specifying the number of shares to which such shareholder is entitled by virtue of the stock split. After the New Company
Law becomes effective, no such notice to each shareholder is required.



Consolidation of Shares



The Company
may at any time consolidate shares in issue into a smaller number of shares by a special shareholders resolution (as defined in   Voting Rights). When a consolidation of shares is to be made, the Company must give public notice and
notice to each shareholder that, within a period of not less than one month specified in the notice, share certificates must be submitted to the Company for exchange. The Company must disclose the reason for the consolidation of shares at the
general meeting of shareholders.



General meeting of shareholders



The ordinary general meeting of shareholders of the
Company for each fiscal year is normally held in June in each year in Osaka, Japan. In addition, the Company may hold an extraordinary general meeting of shareholders whenever necessary by giving notice of convocation thereof at least 2 weeks prior
to the date set for the meeting.



Notice of convocation of a
shareholders meeting setting forth the place, time and purpose thereof, must be mailed to each shareholder having voting rights (or, in the case of a non-resident shareholder, to his or her standing proxy or mailing address in Japan) at least
2 weeks prior to the date set for the meeting. Under the Commercial Code, such notice may be given to shareholders by electronic means, subject to the consent of the relevant shareholders. The record date for an ordinary general meeting of
shareholders is March 31 of each year.



Any shareholder or
group of shareholders holding at least 3 percent (or, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a percentage lower than 3 percent, such percentage) of the total number
of voting rights for a period of 6 months (or, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a period shorter than 6 months, such period) or more may require the convocation
of a general meeting of shareholders for a particular purpose by submitting a written request to a Representative Director. Unless such shareholders meeting is convened promptly or a convocation notice of a meeting which is to be held not
later than 8 weeks (or, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a period shorter than 8 weeks, such period) from the day of such demand is dispatched, the requiring
shareholder may, upon obtaining a court approval, convene such shareholders meeting.



Any shareholder or group of shareholders holding at least 300 (or, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a number less than 300, such
number) voting rights or one percent (or, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a percentage lower than one percent, such percentage) of the total number of voting
rights for a period of 6 months (or, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a period shorter than 6 months, such period) or more may propose a matter to be considered
at a general meeting of shareholders by submitting a written request to a Representative Director at least 8 weeks (or, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a
period shorter than 8 weeks, such period) prior to the date set for such meeting.



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Voting rights



So long as the Company maintains the unit share system (see Section B of this Item 10  Memorandum and Articles of Association  Common
Stock  Unit share system below; currently 1,000 shares constitute one unit) a holder of shares constituting one or more full units is entitled to one voting right per unit of shares subject to the limitations on voting rights set
forth in the following 2 sentences. A corporate shareholder more than one-quarter of whose total voting rights are directly or indirectly owned by the Company (or when the New Company Law becomes effective, management of which is being controlled in
substance by the Company as provided for by an ordinance of the Ministry of Justice) may not exercise its voting rights with respect to shares of Common Stock of the Company that it owns. In addition, the Company may not exercise its voting rights
with respect to its shares that it owns. If the Company eliminates from its Articles of Incorporation the provisions relating to the unit of shares, holders of Common Stock will have one voting right for each share they hold. Except as otherwise
provided by law or by the Articles of Incorporation, a resolution can be adopted at a general meeting of shareholders by a majority of the number of voting rights of all the shareholders represented at the meeting. The Commercial Code (or when the
New Company Law becomes effective, the New Company Law) and the Companys Articles of Incorporation provide, however, that the quorum for the election of Directors and Corporate Auditors shall not be less than one-third of the total number of
voting rights of all the shareholders. The Companys shareholders are not entitled to cumulative voting in the election of Directors. Shareholders may exercise their voting rights through proxies, provided that the proxies are also shareholders
holding voting rights. The Companys shareholders also may cast their votes in writing. Shareholders may also exercise their voting rights by electronic means pursuant to the method determined by the Board of Directors.



The Commercial Code (or when the New Company Law becomes effective, the New
Company Law) and the Companys Articles of Incorporation provide that in order to amend the Articles of Incorporation and in certain other instances, including:



| | (1) | acquisition of its own shares from a specific party;
| | --- | ----------------------------------------------------



| | (2) | consolidation of shares;
| | --- | ------------------------



| | (3) | any offering of new shares at a specially favorable price (or any offering of stock acquisition rights to subscribe for or acquire shares of capital stock, or bonds with
stock acquisition rights at specially favorable conditions) to any persons other than shareholders;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | the removal of a director or corporate auditor (when the New Company Law becomes effective, the removal of a board member who is elected by cumulative voting);
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | the exemption of liability of a board member or corporate auditor with certain exceptions;
| | --- | ------------------------------------------------------------------------------------------



| | (6) | a reduction of stated capital (when the New Company Law becomes effective, with certain exceptions in which a shareholders resolution is not required);
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | (when the New Company Law becomes effective) a distribution of in-kind dividends which meets certain requirements;
| | --- | ------------------------------------------------------------------------------------------------------------------



| | (8) | dissolution, merger, or consolidation with certain exceptions in which a shareholders resolution is not required;
| | --- | ------------------------------------------------------------------------------------------------------------------



| | (9) | the transfer of the whole or a material part of the business;
| | --- | -------------------------------------------------------------



| | (10) | the taking over of the whole of the business of any other corporation with certain exceptions in which a shareholders resolution is not required;
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (11) | share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships with certain exceptions in which a shareholders resolution is not
required; or
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (12) | separating of the corporation into 2 or more corporations with certain exceptions in which a shareholders resolution is not required,
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------



the quorum shall be one-third of the total voting rights of all the shareholders and the
approval by at least two-thirds (or when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide for a percentage more than two-thirds, such percentage) of the voting rights of all the
shareholders represented at the meeting is required (in addition, when the New Company Law becomes effective and in the event that the Companys Articles of Incorporation provide that the approval by certain number of shareholders is required,
such approval is also required) (the special shareholders resolutions).



Pursuant to the terms of the Amended and Restated Deposit Agreement relating to American Depositary Receipts (ADRs) evidencing American Depositary Shares (ADSs), each ADS representing 5 shares of Common Stock of the
Company, as soon as practicable after receipt of notice of any meeting or solicitation of consents or proxies of shareholders of the Company, the Depositary (currently JPMorgan Chase Bank) will mail to the record holders of ADRs a notice which will
contain the information in the original notice. The record holders of ADRs on a date specified by the Depositary will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the shares of Common Stock of the
Company represented by their ADSs, including instructions to give a discretionary proxy to a person designated by the Company. The Depositary will endeavor, in so far as practicable, to vote the number of shares of Common Stock of the Company
represented by such ADSs in accordance with such instructions. The Depositary will not itself exercise any voting discretion in respect of any Deposited Shares.



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Issue of additional shares and pre-emptive rights



Holders of the Companys shares of Common Stock have no pre-emptive
rights under its Articles of Incorporation. Authorized but unissued shares may be issued at such times and upon such terms as the Board of Directors determines, subject to the limitations as to the offering of new shares at a specially
favorable price mentioned under Voting rights above. The Board of Directors may, however, determine that shareholders shall be given subscription rights regarding a particular issue of new shares, in which case such rights
must be given on uniform terms to all shareholders as at a record date at least 2 weeks prior to which public notice must be given. Each of the shareholders to whom such rights are given must also be given notice of the expiry thereof at least 2
weeks prior to the date on which such rights expire.



Rights to
subscribe for new shares may be made generally transferable by a resolution of the Board of Directors. Whether the Company will make subscription rights generally transferable in future rights offerings will depend upon the circumstances at the time
of such offerings.



Subject to certain conditions, the Company
may issue stock acquisition rights or bonds with stock acquisition rights by a resolution of the Board of Directors. Holders of stock acquisition rights may exercise their rights to acquire a certain number of shares within the exercise period as
prescribed in the terms of their stock acquisition rights. Upon exercise of stock acquisition rights, the Company will be obliged to issue the relevant number of new shares or alternatively to transfer the necessary number of treasury stock held by
it.



Liquidation rights



In the event of a liquidation of the Company, the assets remaining after
payment of all debts and liquidation expenses and taxes will be distributed among shareholders in proportion to the respective numbers of shares of Common Stock held.



Record date



March 31 is the record date for the Companys year-end dividends. So long as the Company maintains the unit share system, the shareholders and
beneficial shareholders who are registered as the holders of one or more units of shares in the Companys registers of shareholders and/or that of beneficial shareholders at the end of each March 31 are entitled to exercise shareholders
rights at the ordinary general meeting of shareholders with respect to the fiscal year ending on such March 31. September 30 is the record date for interim dividends. In addition, the Company may set a record date for determining the shareholders
and/or beneficial shareholders entitled to other rights and for other purposes by giving at least 2 weeks prior public notice.



The price of shares generally goes ex-dividends or ex-rights on Japanese stock exchanges on the third business day prior to a record date (or if the
record date is not a business day, the fourth business day prior thereto), for the purpose of dividends or rights offerings.



Acquisition by the Company of its Common Stock



The Company may acquire its own shares: (a) through a stock exchange on which such shares are listed or by way of tender
offer, pursuant to an ordinary resolution of an ordinary general meeting of shareholders or a resolution of the Board of Directors; (b) by purchase from a specific party other than a subsidiary of the Company, pursuant to a special shareholders
resolution of an ordinary general meeting of shareholders; or (c) by purchase from a subsidiary of the Company, pursuant to a resolution of the Board of Directors. Under the New Company Law, not only ordinary general meetings of shareholders but
also extraordinary general meetings of shareholders will be able to approve the acquisition by the Company of its own shares in the cases of (a) and (b) above.



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If shares are purchased by the Company pursuant to a resolution of the Board of Directors in the case of
(a) above, then the reason for the purchase, as well as the kind, number and aggregate purchase price of such shares must be reported to the shareholders at the ordinary general meeting of shareholders to be held immediately after such purchase of
shares. When the proposal for such acquisition by the Company from a specific party other than a subsidiary of the Company is submitted to an ordinary general meeting of shareholders, any other shareholder may make a written request to a
Representative Director, more than 5 calendar days prior to the relevant shareholders meeting, to include him/her as the seller in the proposed purchase. However, under the New Company Law, the acquisition of its own shares at a price not
exceeding the then market price to be provided under an ordinance of the Ministry of Justice will not trigger the right of any shareholder to include him/her as the seller of his/her shares in such proposed purchase.



Any such acquisition of shares must satisfy the requirements under the
Commercial Code. In the case of the acquisition by the Company of its own shares pursuant to an ordinary resolution of an ordinary general meeting of shareholders, the total amount of the purchase price may not exceed the amount of the retained
earnings available for dividend payments after taking into account a reduction, if any, of the stated capital, additional paid-in capital or legal reserve (if such reduction of the stated capital, additional paid-in capital or legal reserve has been
authorized pursuant to a resolution of the relevant ordinary general meeting of shareholders), minus the amount to be paid by way of appropriation of retained earnings for the relevant fiscal year and the amount to be transferred from retained
earnings to stated capital. If the Company purchases shares pursuant to a resolution of the Board of Directors, the total amount of the purchase price may not exceed the amount of the retained earnings available for interim dividend payments minus
the amount of any interim dividend the Company actually paid. However, if it is anticipated that the net assets on the non-consolidated balance sheet as at the end of the relevant fiscal year will be less than the aggregate amount of the stated
capital, additional paid-in capital and other items as described in (i) through (v) to Dividends-Distributable amount above, the Company may not acquire such shares. Under the New Company Law, the restriction on the source of
funds for the acquisition by the Company of its own shares will be integrated into those for the distribution of surplus to the shareholders. See Section B of this Item 10  Memorandum and Articles of Association  Common
Stock  Dividends.



Shares acquired by
the Company may be held by it for any period or may be cancelled by a resolution of the Board of Directors. The Company may also transfer to any person the shares held by it, subject to a resolution of the Board of Directors, and subject also to
other requirements similar to those applicable to the issuance of new shares, as described in Issue of additional shares and pre-emptive rights above. The Company may also utilize its treasury stock for the purpose of transfer to
any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company.



Unit share system



The Articles of Incorporation of the Company provide that 1,000 shares
constitute one unit of shares of Common Stock. Although the number of shares constituting one unit is included in the Articles of Incorporation, any amendment to the Articles of Incorporation reducing (but not increasing) the number of shares
constituting one unit or eliminating the provisions for the unit of shares may be made by a resolution of the Board of Directors rather than by a special shareholders resolution, which is otherwise required for amending the Articles of
Incorporation. The number of shares constituting one unit, however, cannot exceed 1,000 or one two-hundredth (1/200) of all issued shares.



Under the unit share system, shareholders shall have one voting right for each unit of shares that they hold. Any number of shares less than a full unit
will carry no voting rights.



Unless the Companys Board
of Directors adopts a resolution to eliminate the provision for the unit shares from the Articles of Incorporation or the shareholders amend the Articles of Incorporation by a special shareholders resolution to eliminate the provision not to issue
share certificates for less than a unit of shares, a share certificate for any number of shares less than one full unit will in general not be issued. As the transfer of shares normally requires the delivery of the share certificates thereof, any
fraction of a unit for which no share certificates are issued is not transferable.



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A holder of shares constituting less than one unit may require the Company to purchase such shares at
their market value in accordance with the provisions of the Share Handling Regulations of the Company.



In addition, the Articles of Incorporation of the Company provide that a holder of shares constituting less than one full unit may request the Company to
sell to such holder such amount of shares which will, when added together with the shares constituting less than one full unit held by such holder, constitute one full unit of Common Stock, in accordance with the provisions of the Share Handling
Regulations of the Company.



A holder who owns ADRs evidencing
less than 200 ADSs will indirectly own less than one full unit of shares of Common Stock. Although, as discussed above, under the unit share system holders of less than one full unit have the right to require the Company to purchase their shares or
sell shares held by the Company to such holders, holders of ADRs evidencing ADSs that represent other than integral multiples of full units are unable to withdraw the underlying shares of Common Stock representing less than one full unit and,
therefore, are unable, as a practical matter, to exercise the rights to require the Company to purchase such underlying shares or sell shares held by the Company to such holders unless the Companys Articles of Incorporation are amended to
eliminate the provision not to issue share certificates for the numbers of shares less than a unit. As a result, access to the Japanese markets by holders of ADRs through the withdrawal mechanism will not be available for dispositions of shares of
Common Stock in lots less than one full unit. The unit share system does not affect the transferability of ADSs, which may be transferred in lots of any size.



Sale by the Company of shares held by shareholders whose location is unknown



The Company is not required to send a notice to a shareholder if a notice to such shareholder fails to arrive at the
registered address of the shareholder in the Companys register of shareholders or at the address otherwise notified to the Company continuously for 5 years or more.



In addition, the Company may sell or otherwise dispose of shares of Common Stock for which the location of the shareholder
is unknown. Generally, if (i) notices to a shareholder fail to arrive continuously for 5 years or more at the shareholders registered address in the Companys register of shareholders or at the address otherwise notified to the Company,
and (ii) the shareholder fails to receive dividends on the shares continuously for 5 years or more at the address registered in the Companys register of shareholders or at the address otherwise notified to the Company, the Company may sell or
otherwise dispose of the shareholders shares by a resolution of the Board of Directors and after giving at least 3 months prior public and individual notice, and holding or depositing the proceeds of such sale or disposal of shares at
the then market price of the shares for the shareholder, the location of which is unknown.



Reporting of substantial shareholdings



The Securities and Exchange Law of Japan and regulations thereunder requires any person, regardless of his/her residence,
who has become, beneficially and solely or jointly, a holder of more than 5 percent of the total issued shares of Common Stock of a company listed on any Japanese stock exchange or whose shares are traded on the over-the-counter market in Japan to
file with the Director-General of a competent Local Finance Bureau of Ministry of Finance within 5 business days a report concerning such shareholdings.



A similar report must also be filed in respect of any subsequent change of one percent or more in any such holding or any change in material matters set
out in reports previously filed, with certain exceptions. For this purpose, shares issuable to such person upon conversion of convertible securities or exercise of share subscription warrants or stock acquisition rights are taken into account in
determining both the number of shares held by such holder and the issuers total issued share capital. Copies of such report must also be furnished to the issuer of such shares and all Japanese stock exchanges on which the shares are listed or
(in the case of shares traded over-the-counter) the Japan Securities Dealers Association.



Except for the general limitations under Japanese anti-trust and anti-monopoly regulations against holding of shares of Common Stock of a Japanese corporation which leads or may lead to a restraint of trade or a
monopoly, and except for general limitations under the Commercial Code or the Companys Articles of Incorporation on the rights of shareholders applicable regardless of residence or nationality, there is no limitation under Japanese laws and
regulations applicable to the Company or under its Articles of Incorporation on the rights of non-resident or foreign shareholders to hold the shares of Common Stock of the Company or exercise voting rights thereon.



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There is no provision in the Companys Articles of Incorporation that would have an effect of
delaying, deferring or preventing a change in control of the Company and that would operate only with respect to merger, consolidation, acquisition or corporate restructuring involving the Company.



Daily Price Fluctuation Limits under Japanese Stock
Exchange Rules



Stock prices on Japanese stock
exchanges are determined on a real-time basis by the balance between bids and offers. These stock exchanges are order-driven markets without specialists or market makers to guide price formation. In order to prevent excessive volatility, these stock
exchanges set daily upward and downward price range limitations for each listed stock, based on the previous days closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a
particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit on these stock exchanges may not be able to effect a sale at such price on a
particular trading day, or at all.



C. Material Contracts



Business division and transfer of roofing and siding materials



On September 26, 2003, the Company and Matsushita Electric Works Exterior Furnishings Co., Ltd. (100%-owned by Matsushita Electric Works, Ltd.) made the
contract to integrate their roofing and siding materials businesses. On November 21, 2003, the Company, Matsushita Electric Works Exterior Furnishings Co., Ltd. and Matsushita Electric Works, Ltd. entered into a shareholders agreement relating
to the business integration.



|                        |  |                                                                                                                                                                                                                                                                                
|----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Method of integration:  |  | The Company divided its roofing and siding materials businesses and transferred them to Matsushita Electric Works Exterior Furnishings Co., Ltd.. Matsushita Electric Works Exterior
Furnishings Co., LTD. changed its name to Kubota Matsushitadenko Exterior Works, Ltd. .
|Date :                  |  | Business division and transfer : December 1, 2003                                                                                                                                                                                                                              
|Share allotment ratio : |  | 840,000 common shares (50%) to the Company 840,000 common shares (50%) to Matsushita                                                                                                                                                                                           
|Capital stock :         |  | ¥8.0 billion (as of December 1, 2003)                                                                                                                                                                                                                                          



Business division and integration of plastic pipes



The Company resolved at the Board of Directors Meeting held on May 27, 2004 that the Company would divide and transfer its plastic pipes business into a company which was jointly established with C.I. Kasei Company Limited
(hereinafter C.I. Kasei ) on April 1, 2005 in order to integrate the business operation with C.I. Kasei.



|                        |  |                                                                                                                                                                       
|----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Method of integration:  |  | The Company and C.I. Kasei divided their plastic pipes businesses, and the businesses were integrated into a newly established company, named Kubota-C.I. Co.,
Ltd..
|Scheduled date :        |  | Business division and establishment of Kubota-C.I. Co., Ltd. : April 1, 2005                                                                                        
|Share allotment ratio : |  | 42,000 common shares (70%) to the Company 18,000
common shares (30%) to C.I. Kasei                                                                                    
|Capital stock :         |  | ¥3.0 billion                                                                                                                                                          



D. Exchange Controls



The
Foreign Exchange and Foreign Trade Law of Japan and its related cabinet orders and ministerial ordinances (the Foreign Exchange Regulations) govern the acquisition and holding of shares of Common Stock of the Company by exchange
non-residents and by foreign investors. The Foreign Exchange Regulations currently in effect do not, however, affect transactions between exchange non-residents to purchase or sell shares outside Japan using currencies other than
Japanese yen.



Exchange non-residents are:



| | (i) | individuals who do not reside in Japan; and
| | --- | -------------------------------------------



| | (ii) | corporations whose principal offices are located outside Japan.
| | ---- | ---------------------------------------------------------------



Generally, branches and other offices of non-resident corporations that are located within Japan are regarded as residents of Japan. Conversely, branches
and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.



Foreign investors are:



| | (i) | individuals who are exchange non-residents;
| | --- | -------------------------------------------



| | (ii) | corporations that are organized under the laws of foreign countries or whose principal offices are located outside of Japan; and
| | ---- | --------------------------------------------------------------------------------------------------------------------------------



| | (iii) | corporations (1) of which 50% or more of their shares are held by individuals who are exchange non-residents and/or corporations (a) that are organized under the laws of foreign
countries or (b) whose principal offices are located outside of Japan or (2) a majority of whose officers, or officers having the power of representation, are individuals who are exchange non-residents.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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In general, the acquisition of shares of a Japanese company (such as the shares of Common Stock of the
Company) by an exchange non-resident from a resident of Japan is not subject to any prior filing requirements. In certain limited circumstances, however, the Minister of Finance may require prior approval of an acquisition of this type. While prior
approval, as described above, is not required, in the case where a resident of Japan transfers shares of a Japanese company (such as the shares of Common Stock of the Company) for consideration exceeding ¥100 million to an exchange non-resident,
the resident of Japan who transfers the shares is required to report the transfer to the Minister of Finance within 20 days from the date of the transfer, unless the transfer was made through a bank, securities company or financial futures trader
licensed under Japanese law.



If a foreign investor acquires
shares of a Japanese company that is listed on a Japanese stock exchange (such as the shares of Common Stock of the Company) or that is traded on an over-the-counter market in Japan and, as a result of the acquisition, the foreign investor, in
combination with any existing holdings, directly or indirectly holds 10% or more of the issued shares of the relevant company, the foreign investor must file a report of the acquisition with the Minister of Finance and any other competent Ministers
having jurisdiction over that Japanese company within 15 days from and including the date of the acquisition, except where the offering of the companys shares was made overseas. In limited circumstances, such as where the foreign investor is
in a country that is not listed on an exemption schedule in the Foreign Exchange Regulations, a prior notification of the acquisition must be filed with the Minister of Finance and any other competent Ministers, who may then modify or prohibit the
proposed acquisition.



Under the Foreign Exchange Regulations,
dividends paid on and the proceeds from sales in Japan of shares of Common Stock of the Company held by non-residents of Japan may generally be converted into any foreign currency and repatriated abroad.



E. Taxation



Japanese Taxation



The following is a
summary of the major Japanese national tax consequences of the ownership, acquisition and disposition of shares of Common Stock of the Company and of ADRs evidencing ADSs representing shares of Common Stock of the Company by a non-resident Holder
(as defined below). The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular investor depending on its individual circumstances. Accordingly, holders of shares of Common
Stock of the Company or ADSs are encouraged to consult their tax advisors regarding the application of the considerations discussed below to their particular circumstances.



This summary is based in part upon the representations of the Depositary and the assumption that each obligation in the
deposit agreement, and in any related agreement, will be performed under its terms.



In general, taking into account the earlier assumption, for purposes of the income tax convention between Japan and the U.S.A. (the Treaty), and Japanese income tax purposes, U.S. holders of ADRs will be
treated as owning the Common Stock underlying the ADSs evidenced by the ADRs. For the purposes of the following discussion, a U.S. holder is a holder that:



| | (i) | is a resident of the U.S. for purposes of the Treaty;
| | --- | -----------------------------------------------------



| | (ii) | does not maintain a permanent establishment in Japan (a) with which ADRs or shares of Common Stock are effectively connected or (b) of which ADRs or shares of Common Stock form part
of the business property; and
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | is eligible for benefits under the Treaty with respect to income and gain derived in connection with the ADRs or shares of Common Stock.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------



The following is a summary of the principal Japanese tax consequences
(limited to national taxes) to holders of shares of Common Stock of the Company and of ADRs evidencing ADSs representing shares of Common Stock of the Company who are either individuals who are not residents of Japan or non-Japanese corporations,
without a permanent establishment in Japan (non-resident Holders).



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Dividends and gains on sales



Generally, an individual who is a non-resident of Japan or a non-Japanese corporation is subject to Japanese withholding tax
on dividends paid by Japanese corporations. The Company withholds taxes from dividends it pays as required by Japanese law. Stock splits in themselves are not subject to Japanese income tax.



In the absence of an applicable tax treaty, convention or agreement reducing
the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to individuals who are non-residents of Japan or
non-Japanese corporations is 20 percent. However, with respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of Common Stock of the Company) to any corporate or individual shareholders (including those
shareholders who are non-Japanese corporations or Japanese non-resident individuals, such as non-resident Holders), except for any individual shareholder who holds 5 percent or more of the total issued shares of the relevant Japanese corporation,
the aforementioned 20 percent withholding tax rate is reduced to (i) 7 percent for dividends due and payable on or before March 31, 2008, and (ii) 15 percent for dividends due and payable on or after April 1, 2008. At the date of this annual report,
Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax rate is reduced, in most cases to 15 percent for portfolio investors with, among other countries, Australia, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the U.K.



Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends paid by a Japanese corporation to a U.S. holder that is a
portfolio investor is generally limited to 10 percent of the gross amount actually distributed, and dividends paid by a Japanese corporation to a U.S. holder that is a pension fund is exempt from Japanese taxation by way of withholding or otherwise
unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension fund.



If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by the Company to any particular non-resident Holder is lower
than the withholding tax rate otherwise applicable under Japanese tax law or any particular non-resident Holder is exempt from Japanese income tax with respect to such dividends under the income tax treaty applicable to such particular non-resident
Holder, such non-resident Holder who is entitled to a reduced rate of or exemption from Japanese withholding tax on payment of dividends on the Companys shares of Common Stock by the Company is required to submit, through the Company, an
Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax on Dividends in advance to the relevant tax authority before payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may provide
this application service. With respect to ADSs, this reduced rate or exemption is applicable if the Depositary or its agent submits 2 Application Forms (one before payment of dividends, the other within 8 months after the Companys fiscal
year-end or semi-fiscal year-end). To claim this reduced rate or exemption, any relevant non-resident Holder of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other
information or documents as may be required by the Depositary. A non-resident Holder who is entitled, under an applicable income tax treaty, to a reduced treaty rate lower than the withholding tax rate otherwise applicable under Japanese tax law or
an exemption from the withholding tax, but failed to submit the required application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident Holder is
entitled to a reduced treaty rate under the applicable income tax treaty) or the whole of the withholding tax withheld (if such non-resident Holder is entitled to an exemption under the applicable income tax treaty) from the relevant Japanese tax
authority. The Company does not assume any responsibility to ensure withholding at the reduced treaty rate or not withholding for shareholders who would be eligible under an applicable tax treaty but do not follow the required procedures as stated
above.



Gains derived from the sale of shares of Common Stock
of the Company or ADRs outside Japan by a non-resident Holder holding such shares or ADSs as a portfolio investor are, in general, not subject to Japanese income or corporation tax. U.S. holders are not subject to Japanese income or corporation tax
with respect to such gains under the Treaty.



Inheritance and gift



Japanese inheritance and gift taxes at progressive rates
may be payable by an individual who has acquired shares of Common Stock or ADSs as a legatee, heir or donee even though neither the individual nor the deceased nor donor is a Japanese resident.



56



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##### Table of Contents

Holders of shares of Common Stock of the Company or ADSs should consult their tax advisors regarding the effect of these
taxes and, in the case of U.S. holders, the possible application of the Estate and Gift Tax Treaty between the U.S. and Japan.



United States federal income taxation



This section describes the material United States federal income tax consequences of owning Common Stock or ADSs. It applies to you only if you are a U.S.
holder, as defined below, and you own your Common Stock or ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:



| |  |  | a dealer in securities,
| | - |  | -----------------------



| |  |  | a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings,
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | a tax-exempt organization,
| | - |  | --------------------------



| |  |  | a life insurance company,
| | - |  | -------------------------



| |  |  | a person liable for alternative minimum tax,
| | - |  | --------------------------------------------



| |  |  | a person that actually or constructively owns 10% or more of the voting stock of the Company,
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | a person that holds Common Stock or ADSs as part of a straddle or a hedging or conversion transaction, or
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | a person whose functional currency is not the U.S. dollar.
| | - |  | ----------------------------------------------------------



This section is based on the Internal Revenue Code of 1986, as amended (the Code), its legislative history, existing and proposed regulations,
published rulings and court decisions, and as well as on the New Treaty and the Prior Treaty. These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of the Depositary
and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.



You are a U.S. holder if you are a beneficial owner of Common Stock or ADSs and you are:



| |  |  | a citizen or resident of the U.S.A.,
| | - |  | ------------------------------------



| |  |  | a domestic corporation,
| | - |  | -----------------------



| |  |  | an estate whose income is subject to United States federal income tax regardless of its source, or
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | a trust if a United States court can exercise primary supervision over the trust's administration and one or more United States persons are authorized to control all substantial
decisions of the trust.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



You should consult your own tax
advisor regarding the United States federal, state and local and other tax consequences of owning and disposing of Common Stock and ADSs in your particular circumstances.



This discussion addresses only United States federal income taxation.



In general, and taking into account the earlier assumptions, for United
States federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the Common Stock represented by those ADSs. Exchanges of Common Stock for ADRs, and ADRs for Common Stock, generally will not be subject to
United States federal income tax.



57



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##### Table of Contents

Taxation of Dividends



Under the United States federal income tax laws, the gross amount of any dividend paid by the Company out of its current or accumulated earnings and
profits (as determined for United States federal income tax purposes) is subject to United States federal income taxation. If you are a non-corporate U.S. holder, dividends paid to you in taxable years beginning after December 31, 2002 and before
January 1, 2009 that constitute qualified dividend income will be taxable to you at a maximum rate of 15% provided that you hold the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and
meet other holding period requirements. Dividends paid by the Company with respect to common stock or ADSs will be qualified dividend income.



You must include any Japanese tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. The dividend is
ordinary income that you must include in income when you, in the case of Common Stock, or the Depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction
generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of
the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or
loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible
for the special tax rate applicable to qualified dividend income. This gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated
earnings and profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the Common Stock or ADSs and thereafter as capital gain.



Subject to certain limitations, the Japanese tax withheld in accordance with
both the New Treaty and the Prior Treaty, and paid over to Japan will be creditable against your United States federal income tax liability. To the extent a refund of the tax withheld is available to you under Japanese law or under the New Treaty or
the Prior Treaty, the amount of tax withheld that is refundable will not be eligible for credit against your United States federal income tax liability. The rules governing foreign tax credits are complex and we urge you to consult your tax advisor
regarding the foreign tax credit in your situation.



Dividends
will be income from sources outside the United States, but dividends paid in taxable years beginning before January 1, 2007 generally will be passive income or financial services income, and dividends paid in taxable years
beginning after December 31, 2006 will, depending on your circumstances, be passive income or general income which, in either case, is treated separately from other types of income for purposes of computing the foreign tax
credit allowable to you.



Taxation of Capital Gains



If you sell or otherwise dispose of your Common Stock or ADSs, you
will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your Common Stock or ADSs.
Capital gain of a noncorporate U.S. holder that is recognized on or after May 6, 2003 and before January 1, 2009 is generally taxed at a maximum rate of 15% where the holder has a holding period greater than one year. The gain or loss will generally
be income or loss from sources within the United States for foreign tax credit limitation purposes.



F. Dividends and Paying Agents



Not applicable



G. Statement by Experts



Not
applicable



58



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##### Table of Contents

H. Documents on Display



According to the Securities Exchange Act of 1934, as amended, the Company is subject to the requirements of informational disclosure. The Company files various reports and other information, including this annual report on Form 20-F, to the
U.S. Securities and Exchange Commission. These reports may be inspected at the following sites.



U.S. Securities and Exchange Commission : 100 F Street, N.E., Washington D.C. 20549



Form 20-F is also available at the website of the Company. URL : http://www.kubota.co.jp



I. Subsidiary Information



Not applicable



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##### Table of Contents

|Item 11. | Quantitative and Qualitative Disclosures about Market Risk
|-------- | ----------------------------------------------------------



(a) Quantitative Information about Market Risk



In the information stated below, there are no material changes between fiscal 2005 and 2004.



Foreign Currency Exchange Risks



The following tables provide information regarding the Companys derivative financial instruments related to foreign exchange forward contracts and
currency swaps as of March 31, 2005, which was translated into Japanese yen at the year-end spot rate.



Foreign Exchange Forward Contracts and Currency Swaps



Sell U.S. Dollar, Buy Yen (as of March 31, 2005)



|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|---------------------------------------------------- |  | --------------- | ------- | -------------------- | - | ------- |  | --- | -------- |  | - | --------
|                                                     |  | Millions of Yen |         | Thousands of Dollars
|                                                     |  | Receive         |         | Pay                  |   | Receive |  | Pay
|Remaining Contract Term                              |  |                 |         |                      |   |         |  |     |          |  |   |         
|1-3 months                                           |  | ¥               | 26,875  |                      | ¥ | 27,606  |  | $   | 251,168  |  | $ | 258,000 
|4-6 months                                           |  |                 | 10,502  |                      |   | 10,700  |  |     | 98,150   |  |   | 100,000 
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|Total                                                |  | ¥               | 37,377  |                      | ¥ | 38,306  |  | $   | 349,318  |  | $ | 358,000 
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                 |         |                     
|Sell Euro, Buy Yen (as of March 31, 2005)            |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                
|                                                     |  | Millions of Yen |         | Thousands of Dollars
|                                                     |  | Receive         |         | Pay                  |   | Receive |  | Pay
|Remaining Contract Term                              |  |                 |         |                      |   |         |  |     |          |  |   |         
|1-3 months                                           |  | ¥               | 6,562   |                      | ¥ | 6,689   |  | $   | 61,327   |  | $ | 62,514  
|4-6 months                                           |  |                 | 3,654   |                      |   | 3,711   |  |     | 34,149   |  |   | 34,682  
|7-9 months                                           |  |                 | 615     |                      |   | 649     |  |     | 5,748    |  |   | 6,065   
|10-12 months                                         |  |                 | 370     |                      |   | 388     |  |     | 3,458    |  |   | 3,626   
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|Total                                                |  | ¥               | 11,201  |                      | ¥ | 11,437  |  | $   | 104,682  |  | $ | 106,887 
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                 |         |                     
|Sell Sterling Pound, Buy Euro (as of March 31, 2005) |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                
|                                                     |  | Millions of Yen |         | Thousands of Dollars
|                                                     |  | Receive         |         | Pay                  |   | Receive |  | Pay
|Remaining Contract Term                              |  |                 |         |                      |   |         |  |     |          |  |   |         
|1-3 months                                           |  |                 | ¥   967 |                      |   | ¥   940 |  |     | $  9,037 |  |   | $  8,785
|4-6 months                                           |  |                 | 408     |                      |   | 400     |  |     | 3,813    |  |   | 3,738   
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|Total                                                |  |                 | ¥1,375  |                      |   | ¥1,340  |  |     | $12,850  |  |   | $12,523 
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                 |         |                     
|Sell Baht, Buy Yen (as of March 31, 2005)            |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                
|                                                     |  | Millions of Yen |         | Thousands of Dollars
|                                                     |  | Receive         |         | Pay                  |   | Receive |  | Pay
|Remaining Contract Term                              |  |                 |         |                      |   |         |  |     |          |  |   |         
|1-3 months                                           |  |                 | ¥875    |                      |   | ¥883    |  |     | $8,178   |  |   | $8,252  
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|Total                                                |  |                 | ¥875    |                      |   | ¥883    |  |     | $8,178   |  |   | $8,252  
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                 |         |                     
|Sell Baht, Buy U.S. Dollar (as of March 31, 2005)    |  |                 |         |                      |   |         |  |     |          |  |   |         
|                                                     |  |                
|                                                     |  | Millions of Yen |         | Thousands of Dollars
|                                                     |  | Receive         |         | Pay                  |   | Receive |  | Pay
|Remaining Contract Term                              |  |                 |         |                      |   |         |  |     |          |  |   |         
|1-3 months                                           |  |                 | ¥222    |                      |   | ¥225    |  |     | $2,075   |  |   | $2,103  
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         
|Total                                                |  |                 | ¥222    |                      |   | ¥225    |  |     | $2,075   |  |   | $2,103  
|                                                     |  |                 |         |                      |   |         |  |     |          |  |   |         



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##### Table of Contents

|                                                 |  |                 |  |                     |     |         |      |     |   |    
|------------------------------------------------ |  | --------------- |  | ------------------- | --- | ------- | ---- | --- | - | ---
|Sell Yen, Buy U.S. Dollar (as of March 31, 2005) |  |                 |  |                    
|                                                 |  |                
|                                                 |  | Millions of Yen |  | Thousands ofDollars
|                                                 |  | Receive         |  | Pay                 |     | Receive |      | Pay
|Remaining Contract Term                          |  |                 |  |                     |     |         |      |     |   |    
|1-3 months                                       |  | ¥  17           |  | ¥                   | 18  |         | $159 |     | $ | 168
|4-6 months                                       |  | 53              |  |                     | 53  |         | 495  |     |   | 495
|7-9 months                                       |  | 32              |  |                     | 31  |         | 299  |     |   | 290
|                                                 |  |                 |  |                     |     |         |      |     |   |    
|Total                                            |  | ¥102            |  | ¥                   | 102 |         | $953 |     | $ | 953
|                                                 |  |                 |  |                     |     |         |      |     |   |    



Interest Rate Risks



The following table provides information, by March 31, 2005 about the
Companys interest rate swap contracts. The table represents notional principal amounts and weighted average interest rates by expected maturity dates. Notional principal amounts are used to calculate the contractual payments to be exchanged
under the contracts as of March 31, 2005, which are translated into yen at the year-end spot rate.



Interest Rate Swap Contracts



|                                                          |  |                      |   |  |                 |   |  |                |        |                          |         
|--------------------------------------------------------- |  | -------------------- | - |  | --------------- | - |  | -------------- | ------ | ------------------------ | --------
|                                                          |  | Weightedaverage rate |   |  | Notional amount
|Maturities, years ending March 31. (As of March 31, 2005) |  | Receive              |   |  | Pay             |   |  | Millionsof Yen |        | Thousands ofU.S. Dollars
|2006                                                      |  | 1.43                 | % |  | 1.74            | % |  | ¥              | 33,997 |                          | $317,729
|2007                                                      |  | 1.06                 |   |  | 1.58            |   |  |                | 19,353 |                          | 180,869 
|2008                                                      |  | 0.44                 |   |  | 1.01            |   |  |                | 8,573  |                          | 80,121  
|2009                                                      |  | 0.20                 |   |  | 0.81            |   |  |                | 4,500  |                          | 42,056  
|2010                                                      |  |                      |   |  |                 |   |  |                |        |                          |         



Cash Flow Hedges



Changes in the fair value of foreign exchange contracts and interest rate
swap agreements designated and qualifying as cash flow hedges are reported in other comprehensive income (loss). These amounts are subsequently reclassified into earnings through other income (expense) in the same period as the hedged items affect
earnings. For most forward exchange contracts, the amounts are reclassified when products related to hedged transactions are sold from overseas subsidiaries to customers. In the case of interest rate swaps, the amounts are reclassified when the
related interest expense is recognized. Substantially all of the net losses on derivatives included in accumulated other comprehensive income at March 31, 2005 will be reclassified into earnings within the next 12 months.



Equity Price Risk



The Companys short-term and other investments are exposed to changes in equity price risks and consist mainly of
available-for-sale securities. Fair value and other information for such equity securities are disclosed in Note 4, Short-Term and Other Investments of the consolidated financial statements.



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##### Table of Contents

Fair Value of Financial Instruments



The following tables provide information of fair value of finance instruments at the end of fiscal 2005.



|                                                          |  |                 |   |  |                           |   |  |                |   |  |            |  
|--------------------------------------------------------- |  | --------------- | - |  | ------------------------- | - |  | -------------- | - |  | ---------- | -
|                                                          |  | Millions of Yen |   |  | Thousands of U.S. Dollars |  
|                                                          |  | Carrying value  |   |  | Fair value                |   |  | Carrying value |   |  | Fair value |  
|Financial assets;                                         |  |                 |   |  |                           |   |  |                |   |  |            |  
|Financial receivables-net                                 |  | ¥131,646        |   |  | ¥126,164                  |   |  | $1,230,336     |   |  | $1,179,103 |  
|Financial liabilities;                                    |  |                 |   |  |                           |   |  |                |   |  |            |  
|Long-term debt                                            |  | (179,524        | ) |  | (178,584                  | ) |  | (1,677,794     | ) |  | (1,669,009 | )
|Derivative financial instruments recorded as liabilities; |  |                 |   |  |                           |   |  |                |   |  |            |  
|Foreign exchange instruments                              |  | (902            | ) |  | (902                      | ) |  | (8,430         | ) |  | (8,430     | )
|Interest rate swaps and other instruments                 |  | (98             | ) |  | (98                       | ) |  | (916           | ) |  | (916       | )



(b) Qualitative Information about
Market Risks



In order to manage potential adverse effects
caused by market fluctuations in the financial assets and liabilities, the Company may hedge the market risk of the financial assets and liabilities by using derivative instruments which include foreign exchange forward contracts, foreign currency
option contracts, interest swap agreements and currency swap agreements. The Company uses these derivative financial instruments solely for risk hedging purposes and no derivative transactions are held or used for speculative purposes. The financial
institutions with which the Company enters derivative agreements are selected based on the defined criteria on credit ratings of those financial institutions. Among the market risks described above, no specific hedging activities are undertaken with
regard to the price fluctuations of equity securities held by the Company as marketable securities.



Foreign Currency Exchange Risks



The Companys foreign currency exposure relates primarily to its foreign currency denominated assets in, and transactions with, its international operations. The Company utilizes foreign exchange forward contracts and foreign currency
option contracts primarily to fix the value of cash flow resulting from accounts receivable and payable and future transactions denominated in foreign currencies (mainly U.S. Dollars, Euros, and Sterling Pound).



Interest Risks



The Company is exposed to interest rate risks mainly inherent in its debt obligations with both fixed and variable rates.
Debt obligations that are sensitive to changes in interest rates are disclosed in Note 5, Short-Term Borrowings and Long-Term Debt of the consolidated financial statements. The Company uses interest rate swap agreements to enable the
Company to choose between fixed and variable interest rates depending on how the funds are used as well as diversifying funding methods and lowering funding costs.



The Companys policies in contracting borrowings are as follows:



| | 1) | to secure diversified financing resources
| | -- | -----------------------------------------

| | 2) | to procure long-term borrowings in fixed rates for long-term funds, and short-term borrowings for short-term funds
| | -- | ------------------------------------------------------------------------------------------------------------------

| | 3) | to maintain a balance between bonds and bank loans
| | -- | --------------------------------------------------

| | 4) | to reduce financing costs
| | -- | -------------------------



Under these policies, the Company uses interest rate swap agreements.



Fair value of Financial Instruments



The fair values of finance receivables, other investments, and long-term debt are based on quoted market prices when available or discounted cash flows
using the current interest rate on similar financing investments or borrowings. The fair value estimates of the financial instruments are not necessarily indicative of the amounts the Company might pay or receive from actual market transactions.



The carrying amounts of cash equivalents, short-term
investments, notes and accounts receivable and payable, and short-term borrowings approximate the fair value because of the short duration of those instruments.



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##### Table of Contents

|Item 12. | Description of Securities Other Than Equity Securities
|-------- | ------------------------------------------------------



Not applicable



PARTII



|Item 13. | Defaults, Dividend Arrearages and Delinquencies
|-------- | -----------------------------------------------



None



|Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds
|-------- | ----------------------------------------------------------------------------



None



|Item 15. | Controls and Procedures
|-------- | -----------------------



The Company's management, with the participation of its chief executive and chief financial officers, evaluated the effectiveness of the Company's
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934) as of March 31, 2005. Based on that evaluation, the Company's chief executive and chief financial officers concluded that
the disclosure controls and procedures were effective as of that date.



No change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) under the U.S. Securities Exchange Act of 1934) occurred during the year ended March 31, 2005 that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial reporting.



|Item 16A. | Audit Committee Financial Expert
|--------- | --------------------------------



The Companys Board of Corporate Auditors has determined that Yoshio Suekawa qualifies as an audit committee financial expert as defined
by the rules of the SEC. He is a certified public accountant in Japan. He started his career at Lowe Bingham and Luckie (subsequently, PricewaterhouseCoopers, Osaka) in 1959. Since then he has worked in several major accounting firms including
Deloitte Touche Tohmatsu as a public accountant for more than 40 years. From 1974 to 1976 he worked at the office of Price Waterhouse in Los Angeles. Currently He maintains Suekawa CPA Office and is a special visiting professor of the faculty of
commerce at Doshisha University. He was elected as one of the Companys Corporate Auditors at the ordinary general meeting of shareholders held on June 25, 2004. See Item 6.A. for information regarding his business experience.



|Item 16B. | Code of Ethics
|--------- | --------------



The Board of Directors of the Company adopted a Code of Ethics, which is applicable to its Chief Executive Officer, Chief Financial Officer,
General Manager of Finance & Accounting Department. This Code requires the relevant Officers to act honestly and candidly, including the ethical handling of conflict of interest, and to comply with all applicable laws, accounting standards,
rules and regulations of self-regulatory organization, and policies and internal regulation of the Company. The Code also requires the relevant Officers to conduct full, fair, accurate, timely and understandable disclosure in reports and documents
which are filed with or submitted to the SEC, and in other communications with the public and prompt internal reporting of violations of this Code. The Code of Ethics has been incorporated by reference as exhibits to this Annual Report.



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##### Table of Contents

|Item 16C. | Principal Accountant Fees and Services
|--------- | --------------------------------------



Policies for Pre-Approval of Audit and Non-Audit Services rendered by Independent Auditors



The Board of Corporate Auditors of the Company consists of 6 auditors, including 3 outside corporate auditors. The Board has
adopted Pre-Approval Policies and Procedures for Audit and Non-Audit Services (the Policies) for the purpose of supervising its independent auditors work. The Policies govern external auditors to render audit or non-audit services
to the Company. The Policies classify audit and non-audit services into 3 categories depending on the nature of services and regulate them differently.



The first category includes the following services and they are pre-approved comprehensively.



| |  | All services necessary to perform audit or review of the Company and any subsidiaries to comply with the rules of the SEC, Commercial Code of Japan, Securities and Exchange Law of
Japan, rules and regulation of Stock Exchanges in Japan and any other rules and regulation, and related consultation of accounting procedures and voluntary audit and examination of subsidiaries.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Audit-related services, such as due diligence related to merger & acquisition activity, audit of employee benefit plans including audit of pension fund and audit or review of
information systems related to accounting.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Services and consultation related to the preparation of tax returns.
|- |  | --------------------------------------------------------------------



| |  | Other services, such as consultation related to information systems other than accounting, consultation related to welfare of employees and training of employees regarding
accounting practices.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The second category
includes non-audit services which are restricted by the Sarbanes-Oxley act and the rules of SEC to be rendered by the same public accountants which renders audit services to the Company. The Policies prohibits such services to be rendered.



The third category includes additional services other than the
above which may be pre-approved by the Board on an individual basis.



No services were provided for which pre-approval was waived pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.



Fees and Services of Deloitte Touche Tohmatsu



The following table discloses the aggregate fees accrued or paid to Deloitte Touche Tohmatsu for each of the last 2 fiscal years:



|                   |  |                          |  |                         
|------------------ |  | ------------------------ |  | ------------------------
|                   |  | (Millions of yen)       
|                   |  | Year endedMarch 31, 2005 |  | Year endedMarch 31, 2004
|Audit fees         |  | ¥195                     |  | ¥191                    
|Audit-related fees |  | 17                       |  | 30                      
|Tax fees           |  | 129                      |  | 70                      
|All other fees     |  | 203                      |  | 15                      
|                   |  |                          |  |                         
|Total              |  | ¥544                     |  | ¥306                    
|                   |  |                          |  |                         



Audit fees include
fees charged for professional services rendered for audits of the Companys semi-annual and annual consolidated financial statements, statutory audits of the Company and its subsidiaries.



64



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##### Table of Contents

Audit-related fees include fees charged for assurance and related services such as due diligence,
accounting consultations and audits in connection with mergers and acquisitions, employee benefit plan audits, internal control reviews, and consultations concerning financial accounting and reporting standards.



Tax fees include fees charged for services related to tax compliance,
including the preparation of tax returns and claims for refund, tax planning and tax advice, including assistance with tax audits and appeals, advice related to mergers and acquisitions, tax services for employee benefit plans and assistance with
respect to requests for rulings from tax authorities.



All
other fees include fees charged for services rendered with respect to consultation, design and implementation relating to the Companys reorganization.



|Item 16D. | Exemptions from the Listing Standards for Audit Committees
|--------- | ----------------------------------------------------------



Not applicable



|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|--------- | ----------------------------------------------------------------------



The following table sets forth the Companys purchases of its common stock during fiscal 2005:



|                                       |  |                                      |  |                                        |  |                                                                                      |  |                                                                                   
|-------------------------------------- |  | ------------------------------------ |  | -------------------------------------- |  | ------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------
|Period                                 |  | (a) Total Number of Shares Purchased |  | (b) Average Price Paid per Share (Yen) |  | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or
Programs |  | (d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|April 1, 2004  April 30, 2004         |  | 13,397                               |  | 488.73                                 |  | 0                                                                                    |  | 0                                                                                 
|May 1, 2004  May 31, 2004             |  | 5,896                                |  | 467.94                                 |  | 0                                                                                    |  | 0                                                                                 
|June 1, 2004  June 30, 2004           |  | 12,452                               |  | 527.51                                 |  | 0                                                                                    |  | 30,000,000                                                                        
|July 1, 2004  July 31, 2004           |  | 20,358                               |  | 544.11                                 |  | 0                                                                                    |  | 30,000,000                                                                        
|August 1, 2004  August 31, 2004       |  | 10,132,056                           |  | 529.71                                 |  | 10,124,000                                                                           |  | 19,876,000                                                                        
|September 1, 2004  September 30, 2004 |  | 8,193,051                            |  | 551.71                                 |  | 8,177,000                                                                            |  | 20,000,000                                                                        
|October 1, 2004  October 31, 2004     |  | 21,868                               |  | 503.00                                 |  | 0                                                                                    |  | 20,000,000                                                                        
|November 1, 2004  November 30, 2004   |  | 5,974,513                            |  | 508.54                                 |  | 5,946,000                                                                            |  | 14,054,000                                                                        
|December 1, 2004  December 31, 2004   |  | 5,629,497                            |  | 501.27                                 |  | 5,581,000                                                                            |  | 19,056,000                                                                        
|January 1, 2005  January 31, 2005     |  | 24,543                               |  | 517.32                                 |  | 0                                                                                    |  | 19,056,000                                                                        
|February 1, 2005  February 28, 2005   |  | 4,870,793                            |  | 567.93                                 |  | 4,850,000                                                                            |  | 14,206,000                                                                        
|March 1, 2005  March 31, 2005         |  | 5,010,887                            |  | 575.99                                 |  | 5,000,000                                                                            |  | 9,206,000                                                                         
|                                       |  |                                      |  |                                        |  |                                                                                      |  |                                                                                   
|Total                                  |  | 39,909,311                           |  |                                       |  | 39,678,000                                                                           |  |                                                                                  



Note:1) In accordance with the
Commercial Code and its related legislations, all purchases other than purchases publicly announced were made as a result of holders of shares less than one unit, which is 1000 shares of common stock, requesting the Company to purchase shares that
are a fraction of a unit.



2) In fiscal 2005, the Company established 3
programs of purchasing its shares on market. The Company executed the programs pursuant to Article 211-3, Paragraph 1, item 2 of the Commercial Code. None of these programs was terminated prior to expiration. Details of each program are as follows:



|    |  |                                                                               |  |                                   |  |                                         
|--- |  | ----------------------------------------------------------------------------- |  | --------------------------------- |  | ----------------------------------------
|    | 
|(1) |  | The program resolved at the Board of Directors Meeting held on June 25, 2004
|    |  |                                                                               | 
|    |  | i  )                                                                          |  | Day of announcement:              |  | June 25, 2004                           
|    |  |                                                                               | 
|    |  | ii  )                                                                         |  | Type of shares to be purchased:   |  | Shares of common stock of the Company   
|    |  |                                                                               | 
|    |  | iii  )                                                                        |  | Number of shares to be purchased: |  | Not exceeding 30.0 million shares       
|    |  |                                                                               | 
|    |  | iv  )                                                                         |  | Amount of shares to be purchased: |  | Not exceeding ¥18.0 billion             
|    |  |                                                                               | 
|    |  | v  )                                                                          |  | Term of validity:                 |  | From June 28, 2004 to September 27, 2004



65



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##### Table of Contents

|                                                                                      |  |  |  |     |   |  |                                   |  |                                             
|------------------------------------------------------------------------------------- |  |  |  | --- | - |  | --------------------------------- |  | --------------------------------------------
|(2)The program resolved at the Board of Directors Meeting held on September 28, 2004
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | i   | ) |  | Day of announcement:              |  | September 28, 2004                          
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | ii  | ) |  | Type of shares to be purchased:   |  | Shares of common stock of the Company       
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | iii | ) |  | Number of shares to be purchased: |  | Not exceeding 20.0 million shares           
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | iv  | ) |  | Amount of shares to be purchased: |  | Not exceeding ¥12.0 billion                 
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | v   | ) |  | Term of validity:                 |  | From September 29, 2004 to December 15, 2004
|                                                                                     
|(3)The program resolved at the Board of Directors Meeting held on December 16, 2004 
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | i   | ) |  | Day of announcement:              |  | December 16, 2004                           
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | ii  | ) |  | Type of shares to be purchased:   |  | Shares of common stock of the Company       
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | iii | ) |  | Number of shares to be purchased: |  | Not exceeding 20.0 million shares           
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | iv  | ) |  | Amount of shares to be purchased: |  | Not exceeding ¥12.0 billion                 
|                                                                                      |  |  |  |    
|                                                                                      |  |  |  | v   | ) |  | Term of validity:                 |  | From December 17, 2004 to March 22, 2005    



PART   III



|Item 17. | Financial Statements
|-------- | --------------------



See Consolidated Financial Statements attached hereto.



|Item 18. | Financial Statements
|-------- | --------------------



Not applicable



66



---

##### Table of Contents

|Item 19. | Exhibits
|-------- | --------



Documents filed as exhibits to this annual report are as follows:



The financial section of the Company's 2005 Annual Report to Shareholders



|                                                                                                          |  |                                                                     
|--------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------
|                                                                                                          |  | Pages in the Financial Section of 2005 Annual Report to Shareholders
|Five-Year Financial Summary of Operations [Information
with respect to Item 3 is included ]               |  | 11                                                                  
|                                                                                                          | 
|Segment Information                                                                                       |  | 24 to 25                                                            
|                                                                                                          | 
|Consolidated Financial Statements as indicated in accompanying Index to Consolidated Financial Statements |  | 26 to 49                                                            
|                                                                                                          | 
|Independent Auditors' Report                                                                              |  | 50                                                                  



1.1 Articles of Incorporation of the
Registrant (English translation)



1.2 Share Handling Regulations of the
Registrant (English translation)



2.1 Form of Amended and Restated Deposit
Agreement among the Registrant, JPMorgan Chase Bank as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt (incorporated by reference to the Registration
Statement on Form F-6 (File No. 333-91654) filed on June 26, 2002)



8.1 List of
Significant Subsidiaries (See Organizational Structure in Item 4.C. of this Form 20-F)



11.1 Code of Ethics for Senior Financial Officers of the Registrant (English translation)



12.1 Certification of the principal executive officer of the Company required by Rule 13a-14(a)



12.2 Certification of the principal financial officer of the Company required by Rule 13a-14(a)



13.1 Certification required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of
the United States Code



(Note) The Company has not included as exhibits certain
instruments with respect to its long-term debt, the amount of debt authorized under each of which does not exceed 10% of its total assets, and it agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.



67



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##### Table of Contents

SIGNATURE



The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.



|                         |  |                    |  |                                             
|------------------------ |  | ------------------ |  | --------------------------------------------
|                         |  | KUBOTA CORPORATION
|                         |  |                   
|Date; September 21, 2005 |  | By                 |  | /s/ Hirokazu Nara                           
|                         |  |                    |  | Hirokazu Nara                               
|                         |  |                    |  | Director                                    
|                         |  |                    |  | (Principal Financial and Accounting Officer)



---

##### Table of Contents













Kubota Corporation and Subsidiaries























Consolidated Financial Statements



and Financial Statements Schedule Comprising



Item 17 of Annual Report on Form 20-F



to Securities and Exchange Commission



for the Years Ended March 31, 2005, 2004, and 2003,



and Independent Auditors Report



---

##### Table of Contents

Kubota Corporation and Subsidiaries



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE



Consolidated
Financial Statements and Independent Auditors Report Included in the Financial Section of the Companys 2005 Annual Report to Shareholders Attached Hereto and Incorporated by Reference:



|                                                                                                                                                                                                                             |  |                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------
|                                                                                                                                                                                                                             |  | Page in Financial Section of    Annual Report to Shareholders
|Five-Year Financial Summary                                                                                                                                                                                                  |  | 11                                                           
|                                                                                                                                                                                                                             | 
|Segment Information (Years Ended March 31, 2005 and 2004)                                                                                                                                                                    |  | 22 and 23                                                    
|                                                                                                                                                                                                                             | 
|Consolidated Balance Sheets (as of March 31, 2005 and 2004 (as restated))                                                                                                                                                    |  | 24 and 25                                                    
|                                                                                                                                                                                                                             | 
|Consolidated Statements of Income (Years Ended March 31, 2005, 2004, and 2003)                                                                                                                                               |  | 26                                                           
|                                                                                                                                                                                                                             | 
|Consolidated Statements of Comprehensive Income (Loss) (Years Ended March 31, 2005, 2004, and 2003)                                                                                                                          |  | 27                                                           
|                                                                                                                                                                                                                             | 
|Consolidated Statements of Shareholders Equity (Years Ended March 31, 2005, 2004, and 2003)                                                                                                                                 |  | 27                                                           
|                                                                                                                                                                                                                             | 
|Consolidated Statements of Cash Flows (Years Ended March 31, 2005, 2004, and 2003)                                                                                                                                           |  | 28                                                           
|                                                                                                                                                                                                                             | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                   |  | 29 to 49                                                     
|                                                                                                                                                                                                                             | 
|Independent Auditors Report                                                                                                                                                                                                 |  | 50                                                           
|                                                                                                                                                                                                                             | 
|Financial Statement Schedule and Other Supplemental Information:                                                                                                                                                             |  |                                                              
|                                                                                                                                                                                                                             | 
|Schedule II : Valuation and Qualifying Accounts (Years Ended March 31, 2005, 2004, and 2003)                                                                                                                                 |  | A                                                            
|                                                                                                                                                                                                                             | 
|Supplemental Note to Consolidated Financial Statements with Respect to Income Taxes to Conform with Regulation S-X                                                                                                           |  | B                                                            
|                                                                                                                                                                                                                            
|All other schedules and supplemental information are omitted because they are not applicable, or not required, or because the required information is included in the consolidated
financial statements or in notes thereto.
|                                                                                                                                                                                                                             | 
|Independent Auditors Report                                                                                                                                                                                                 |  | C                                                            



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##### Table of Contents

FIVE-YEAR FINANCIAL SUMMARY



Kubota
Corporation and Subsidiaries    Years Ended March 31, 2005, 2004, 2003, 2002, and 2001



|                                                                             |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|---------------------------------------------------------------------------- |  | ---------------------------------------------- | --------- | - | ----------------------------------------------------------------- | - | --------- | ---- |  | - | --------- | -- |  | ---- | --------- | - | ---- | - | --------- | - |  | ---------------- | -
|                                                                             |  | Millions of Yen (Except Per Share Information) |           |   | Thousands of U.S. Dollars (Except Per Share Information) (Note 1) |  
|                                                                             |  | 2005                                           |           |   | 2004                                                              |   |           | 2003 |  |   | 2002      |    |  | 2001 |           |   | 2005 |  
|                                                                             | 
|For the year                                                                 |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|Net sales                                                                    |  | ¥                                              | 983,226   |   |                                                                   | ¥ | 930,237   |      |  | ¥ | 926,145   |    |  | ¥    | 965,791   |   |      | ¥ | 984,767   |   |  | $  9,189,028     |  
|Percentage of previous year                                                  |  |                                                | 105.7     | % |                                                                   |   | 100.4     | %    |  |   | 95.9      | %  |  |      | 98.1      | % |      |   | 101.0     | % |  |                  |  
|Cost of sales                                                                |  |                                                | 713,312   |   |                                                                   |   | 701,727   |      |  |   | 695,571   |    |  |      | 729,863   |   |      |   | 742,516   |   |  | 6,666,468        |  
|Selling, general, and administrative expenses                                |  |                                                | 181,727   |   |                                                                   |   | 199,768   |      |  |   | 181,353   |    |  |      | 188,713   |   |      |   | 198,569   |   |  | 1,698,383        |  
|Loss (gain) from disposal and impairment of businesses and fixed assets      |  |                                                | (4,112    | ) |                                                                   |   | 6,893     |      |  |   | 19,608    |    |  |      | 12,791    |   |      |   | 489       |   |  | (38,430          | )
|Operating income                                                             |  |                                                | 92,299    |   |                                                                   |   | 21,849    |      |  |   | 29,613    |    |  |      | 34,424    |   |      |   | 43,193    |   |  | 862,607          |  
|Cumulative effect of an accounting change                                    |  |                                                |          |   |                                                                   |   |          |      |  |   |          |    |  |      |          |   |      |   | (21,559   | ) |  |                 |  
|Net income (loss):                                                           |  |                                                | 117,901   |   |                                                                   |   | 11,700    |      |  |   | (8,004    | )  |  |      | 9,530     |   |      |   | 9,795     |   |  | 1,101,879        |  
|Percentage of previous year                                                  |  |                                                | 1,007.7   | % |                                                                   |   |          |      |  |   |          |    |  |      | 97.3      | % |      |   | 59.6      | % |  |                  |  
|Percentage of net sales                                                      |  |                                                | 12.0      | % |                                                                   |   | 1.3       | %    |  |   | (0.9      | )% |  |      | 1.0       | % |      |   | 1.0       | % |  |                  |  
|Net income (loss) per common share (Yen and U.S. Dollars):                   |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|Basic                                                                        |  | ¥                                              | 89.11     |   |                                                                   | ¥ | 8.72      |      |  | ¥ | (5.84     | )  |  | ¥    | 6.78      |   |      | ¥ | 6.95      |   |  | $           0.83 |  
|Diluted                                                                      |  |                                                | 86.83     |   |                                                                   |   | 8.53      |      |  |   | (5.84     | )  |  |      | 6.67      |   |      |   | 6.83      |   |  | 0.81             |  
|Net income (loss) per 5 common shares (Yen and U.S. Dollars):                |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|Basic                                                                        |  | ¥                                              | 446       |   |                                                                   | ¥ | 44        |      |  | ¥ | (29       | )  |  | ¥    | 34        |   |      | ¥ | 35        |   |  | $           4.17 |  
|Diluted                                                                      |  |                                                | 434       |   |                                                                   |   | 43        |      |  |   | (29       | )  |  |      | 33        |   |      |   | 34        |   |  | 4.06             |  
|Pro forma amounts assuming accounting change was applied retroactively:      |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|Net income                                                                   |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      | ¥ | 31,354    |   |  |                  |  
|Net income per common share (Yen):                                           |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|Basic                                                                        |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      | ¥ | 22        |   |  |                  |  
|Diluted                                                                      |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   | 21        |   |  |                  |  
|Net income per 5 common shares (Yen):                                        |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|Basic                                                                        |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      | ¥ | 111       |   |  |                  |  
|Diluted                                                                      |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   | 104       |   |  |                  |  
|Cash dividends per common share (Yen and U.S. Dollars):                      |  | ¥                                              | 6         |   |                                                                   | ¥ | 6         |      |  | ¥ | 6         |    |  | ¥    | 6         |   |      | ¥ | 6         |   |  | $           0.06 |  
|Cash dividends per 5 common shares (Yen and U.S. Dollars):                   |  | ¥                                              | 30        |   |                                                                   | ¥ | 30        |      |  | ¥ | 30        |    |  | ¥    | 30        |   |      | ¥ | 30        |   |  | $           0.28 |  
|                                                                             |  |                                                |           |   |                                                                   |  
|At year-end                                                                  |  |                                                |           |   |                                                                   |   |           |      |  |   |           |    |  |      |           |   |      |   |           |   |  |                  |  
|Total assets                                                                 |  | ¥                                              | 1,193,056 |   |                                                                   | ¥ | 1,124,225 |      |  | ¥ | 1,139,011 |    |  | ¥    | 1,200,117 |   |      | ¥ | 1,290,756 |   |  | $11,150,056      |  
|Working capital                                                              |  |                                                | 171,326   |   |                                                                   |   | 199,747   |      |  |   | 159,221   |    |  |      | 169,428   |   |      |   | 162,644   |   |  | 1,601,178        |  
|Long-term debt                                                               |  |                                                | 117,488   |   |                                                                   |   | 144,845   |      |  |   | 155,966   |    |  |      | 167,850   |   |      |   | 182,238   |   |  | 1,098,019        |  
|Total shareholders equity                                                   |  |                                                | 481,019   |   |                                                                   |   | 391,082   |      |  |   | 315,443   |    |  |      | 394,970   |   |      |   | 434,979   |   |  | 4,495,505        |  
|Shareholders equity per common share outstanding (Yen and U.S. Dollars):    |  | ¥                                              | 369.90    |   |                                                                   | ¥ | 291.81    |      |  | ¥ | 234.45    |    |  | ¥    | 284.07    |   |      | ¥ | 308.54    |   |  | $           3.46 |  
|Shareholders equity per 5 common shares outstanding (Yen and U.S. Dollars): |  | ¥                                              | 1,849     |   |                                                                   | ¥ | 1,459     |      |  | ¥ | 1,172     |    |  | ¥    | 1,420     |   |      | ¥ | 1,543     |   |  | $         17.28  |  

---



|       |  |    |  |                                                                                                                                                                                                                                               
|------ |  | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes: |  | 1. |  | The U.S. dollar amounts in this report represent translations of Japanese yen, for convenience only, at the rate of ¥107=US$1. See Note 1 to the consolidated financial
statements.                                                           
|       |  | 2. |  | The Company has not accounted for a nonmonetary security exchange transaction in accordance with accounting principles generally accepted in the United States of America. See Note 1 to the
consolidated financial statements.               
|       |  | 3. |  | Per share amounts have been calculated per common share and per 5 common shares since each American Depository Share represents 5 shares of common stock.                                                                                     
|       |  | 4. |  | Cash dividends per common share are based on dividends paid during the year.                                                                                                                                                                  
|       |  | 5. |  | Pro forma data reflect the effect of an accounting change in retirement and pension costs to account for actuarial gains and losses in accordance with its current policy as described in Note 6
to the consolidated financial statements.    
|       |  | 6. |  | Working capital is the amount of total current assets less total current liabilities in the consolidated balance sheets. Working capital from 2001 through 2004 was restated as described in Note
17 to the consolidated financial statements.



11



---

##### Table of Contents

SEGMENT INFORMATION



The following segment
information for the years ended March 31, 2005 and 2004, which is required under the regulations of the Securities and Exchange Law of Japan, is not consistent with accounting principles generally accepted in the United States of America.



In December 2003, the Company transferred the building
materials business to one of its affiliated companies. Accordingly, the Building Materials & Housing segment was considered immaterial, and was included in the Other segment. The industry segment information for the year
ended March 31, 2004 has been reclassified to conform with the industry segment information for the year ended March 31, 2005.



Industry Segments



|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|------------------------------------- |  | ----------------------------------- | --------- | ---------------------------------- | - | ---------- | ------------------------ |  | ------------ |  | ------------ | ----- |  | ------------------------ | --------- |  | ------------ | --------- | - |  | - | ------------
|                                      |  | Millions of Yen                    
|Year Ended March 31, 2005             |  | InternalCombustionEngine &Machinery |           | Pipes,Valves, & IndustrialCastings |   |            | EnvironmentalEngineering |  | Other        |  |              | Total |  | Corporate & Eliminations |           |  | Consolidated
|                                     
|Net sales:                            |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Unaffiliated customers                |  |                                     | ¥582,664  |                                    |   | ¥170,629   |                          |  | ¥117,633     |  | ¥112,300     |       |  | ¥                        | 983,226   |  |              | ¥        |   |  |   | ¥   983,226 
|Intersegment                          |  |                                     | 88        |                                    |   | 8,237      |                          |  | 249          |  | 14,956       |       |  |                          | 23,530    |  |              | (23,530   | ) |  |   |            
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Total                                 |  |                                     | 582,752   |                                    |   | 178,866    |                          |  | 117,882      |  | 127,256      |       |  |                          | 1,006,756 |  |              | (23,530   | ) |  |   | 983,226     
|Cost of sales and operating expenses  |  |                                     | 503,596   |                                    |   | 167,391    |                          |  | 112,167      |  | 117,848      |       |  |                          | 901,002   |  |              | (10,075   | ) |  |   | 890,927     
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Operating income                      |  |                                     | ¥  79,156 |                                    |   | ¥  11,475  |                          |  | ¥    5,715   |  | ¥    9,408   |       |  | ¥                        | 105,754   |  |              | ¥(13,455  | ) |  |   | ¥     92,299
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Identifiable assets at March 31, 2005 |  |                                     | ¥614,123  |                                    |   | ¥190,669   |                          |  | ¥105,890     |  | ¥100,874     |       |  | ¥                        | 1,011,556 |  |              | ¥181,500  |   |  |   | ¥1,193,056  
|Depreciation                          |  |                                     | 14,154    |                                    |   | 6,368      |                          |  | 930          |  | 1,678        |       |  |                          | 23,130    |  |              | 2,338     |   |  |   | 25,468      
|Capital expenditures                  |  |                                     | 17,482    |                                    |   | 1,823      |                          |  | 358          |  | 1,388        |       |  |                          | 21,051    |  |              | 5,046     |   |  |   | 26,097      
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|                                      | 
|                                      |  | Millions of Yen                    
|Year Ended March 31, 2004             |  | InternalCombustionEngine &Machinery |           | Pipes,Valves, & IndustrialCastings |   |            | EnvironmentalEngineering |  | Other        |  |              | Total |  | Corporate & Eliminations |           |  | Consolidated
|                                     
|Net sales:                            |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Unaffiliated customers                |  |                                     | ¥501,551  |                                    |   | ¥175,178   |                          |  | ¥115,721     |  | ¥137,787     |       |  |                          | ¥930,237  |  |              | ¥        |   |  |   | ¥  930,237  
|Intersegment                          |  |                                     | 32        |                                    |   | 6,923      |                          |  | 696          |  | 16,581       |       |  |                          | 24,232    |  |              | (24,232   | ) |  |   |            
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Total                                 |  |                                     | 501,583   |                                    |   | 182,101    |                          |  | 116,417      |  | 154,368      |       |  |                          | 954,469   |  |              | (24,232   | ) |  |   | 930,237     
|Cost of sales and operating expenses  |  |                                     | 447,559   |                                    |   | 187,783    |                          |  | 116,286      |  | 162,180      |       |  |                          | 913,808   |  |              | (5,420    | ) |  |   | 908,388     
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Operating income (loss)               |  |                                     | ¥  54,024 |                                    |   | ¥   (5,682 | )                        |  | ¥       131  |  | ¥   (7,812   | )     |  |                          | ¥  40,661 |  |              | ¥(18,812  | ) |  |   | ¥     21,849
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Identifiable assets at March 31, 2004 |  |                                     | ¥512,885  |                                    |   | ¥204,764   |                          |  | ¥101,086     |  | ¥109,829     |       |  |                          | ¥928,564  |  |              | ¥195,661  |   |  |   | ¥1,124,225  
|Depreciation                          |  |                                     | 12,713    |                                    |   | 7,440      |                          |  | 927          |  | 3,777        |       |  |                          | 24,857    |  |              | 2,397     |   |  |   | 27,254      
|Capital expenditures                  |  |                                     | 13,096    |                                    |   | 2,504      |                          |  | 2,711        |  | 2,117        |       |  |                          | 20,428    |  |              | 968       |   |  |   | 21,396      
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|                                      | 
|                                      |  | Thousands of U.S. Dollars          
|Year Ended March 31, 2005             |  | InternalCombustionEngine &Machinery |           | Pipes,Valves, & IndustrialCastings |   |            | EnvironmentalEngineering |  | Other        |  |              | Total |  | Corporate &Eliminations  |           |  | Consolidated
|                                     
|Net sales:                            |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Unaffiliated customers                |  | $                                   | 5,445,458 |                                    | $ | 1,594,664  |                          |  | $1,099,374   |  | $1,049,532   |       |  | $                        | 9,189,028 |  | $            |          |   |  | $ | 9,189,028   
|Intersegment                          |  |                                     | 823       |                                    |   | 76,981     |                          |  | 2,327        |  | 139,776      |       |  |                          | 219,907   |  |              | (219,907  | ) |  |   |            
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Total                                 |  |                                     | 5,446,281 |                                    |   | 1,671,645  |                          |  | 1,101,701    |  | 1,189,308    |       |  |                          | 9,408,935 |  |              | (219,907  | ) |  |   | 9,189,028   
|Cost of sales and operating expenses  |  |                                     | 4,706,505 |                                    |   | 1,564,402  |                          |  | 1,048,290    |  | 1,101,383    |       |  |                          | 8,420,580 |  |              | (94,159   | ) |  |   | 8,326,421   
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Operating income                      |  | $                                   | 739,776   |                                    | $ | 107,243    |                          |  | $     53,411 |  | $     87,925 |       |  | $                        | 988,355   |  | $            | (125,748  | ) |  | $ | 862,607     
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             
|Identifiable assets at March 31, 2005 |  | $                                   | 5,739,467 |                                    | $ | 1,781,953  |                          |  | $   989,626  |  | $   942,748  |       |  | $                        | 9,453,794 |  | $            | 1,696,262 |   |  | $ | 11,150,056  
|Depreciation                          |  |                                     | 132,280   |                                    |   | 59,514     |                          |  | 8,692        |  | 15,682       |       |  |                          | 216,168   |  |              | 21,851    |   |  |   | 238,019     
|Capital expenditures                  |  |                                     | 163,383   |                                    |   | 17,037     |                          |  | 3,346        |  | 12,972       |       |  |                          | 196,738   |  |              | 47,159    |   |  |   | 243,897     
|                                      |  |                                     |           |                                    |   |            |                          |  |              |  |              |       |  |                          |           |  |              |           |   |  |   |             



22



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##### Table of Contents

Geographic Segments



|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|------------------------------------- |  | ------------------------- | --------- | ------------- | ----------- | ----------- | --------- | ----- | ------------ | ------------------------ | - | ---------- | ------------ |  | - | ------------
|                                      |  | Millions of Yen          
|Year Ended March 31, 2005             |  | Japan                     |           | North America |             | Other Areas |           | Total |              | Corporate & Eliminations |   |            | Consolidated
|                                     
|Net sales:                            |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Unaffiliated customers                |  |                           | ¥659,283  |               | ¥232,135    |             | ¥91,808   |       | ¥   983,226  |                          |   | ¥         |              |  |   | ¥   983,226 
|Intersegment                          |  |                           | 193,242   |               | 3,000       |             | 2,792     |       | 199,034      |                          |   | (199,034   | )            |  |   |            
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Total                                 |  |                           | 852,525   |               | 235,135     |             | 94,600    |       | 1,182,260    |                          |   | (199,034   | )            |  |   | 983,226     
|Cost of sales and operating expenses  |  |                           | 772,886   |               | 215,044     |             | 87,207    |       | 1,075,137    |                          |   | (184,210   | )            |  |   | 890,927     
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Operating income                      |  |                           | ¥  79,639 |               | ¥  20,091   |             | ¥  7,393  |       | ¥   107,123  |                          |   | ¥ (14,824  | )            |  |   | ¥     92,299
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Identifiable assets at March 31, 2005 |  |                           | ¥746,627  |               | ¥259,218    |             | ¥64,737   |       | ¥1,070,582   |                          |   | ¥122,474   |              |  |   | ¥1,193,056  
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|                                      | 
|                                      |  | Millions of Yen          
|Year Ended March 31, 2004             |  | Japan                     |           | North America |             | Other Areas |           | Total |              | Corporate & Eliminations |   |            | Consolidated
|                                     
|Net sales:                            |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Unaffiliated customers                |  |                           | ¥675,442  |               | ¥188,767    |             | ¥66,028   |       | ¥   930,237  |                          |   | ¥         |              |  |   | ¥   930,237 
|Intersegment                          |  |                           | 154,741   |               | 2,656       |             | 1,949     |       | 159,346      |                          |   | (159,346   | )            |  |   |            
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Total                                 |  |                           | 830,183   |               | 191,423     |             | 67,977    |       | 1,089,583    |                          |   | (159,346   | )            |  |   | 930,237     
|Cost of sales and operating expenses  |  |                           | 815,158   |               | 172,195     |             | 63,338    |       | 1,050,691    |                          |   | (142,303   | )            |  |   | 908,388     
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Operating income                      |  |                           | ¥  15,025 |               | ¥  19,228   |             | ¥  4,639  |       | ¥     38,892 |                          |   | ¥ (17,043  | )            |  |   | ¥     21,849
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Identifiable assets at March 31, 2004 |  |                           | ¥752,041  |               | ¥177,163    |             | ¥44,290   |       | ¥   973,494  |                          |   | ¥150,731   |              |  |   | ¥1,124,225  
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|                                      | 
|                                      |  | Thousands of U.S. Dollars
|Year Ended March 31, 2005             |  | Japan                     |           | North America |             | Other Areas |           | Total |              | Corporate & Eliminations |   |            | Consolidated
|                                     
|Net sales:                            |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Unaffiliated customers                |  | $                         | 6,161,524 |               | $2,169,486  |             | $858,018  |       | $  9,189,028 |                          | $ |           |              |  | $ | 9,189,028   
|Intersegment                          |  |                           | 1,806,000 |               | 28,037      |             | 26,094    |       | 1,860,131    |                          |   | (1,860,131 | )            |  |   |            
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Total                                 |  |                           | 7,967,524 |               | 2,197,523   |             | 884,112   |       | 11,049,159   |                          |   | (1,860,131 | )            |  |   | 9,189,028   
|Cost of sales and operating expenses  |  |                           | 7,223,234 |               | 2,009,757   |             | 815,019   |       | 10,048,010   |                          |   | (1,721,589 | )            |  |   | 8,326,421   
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Operating income                      |  | $                         | 744,290   |               | $   187,766 |             | $  69,093 |       | $  1,001,149 |                          | $ | (138,542   | )            |  | $ | 862,607     
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             
|Identifiable assets at March 31, 2005 |  | $                         | 6,977,822 |               | $2,422,598  |             | $605,019  |       | $10,005,439  |                          | $ | 1,144,617  |              |  | $ | 11,150,056  
|                                      |  |                           |           |               |             |             |           |       |              |                          |   |            |              |  |   |             



Sales by Region



|                                    |  |                 |         |  |                           |   |      |   |         |  |       |      |  |   |          
|----------------------------------- |  | --------------- | ------- |  | ------------------------- | - | ---- | - | ------- |  | ----- | ---- |  | - | ---------
|                                    |  | Millions of Yen |         |  | Thousands of U.S. Dollars
|Years Ended March 31, 2005 and 2004 |  | 2005            |         |  |                           |   | 2004 |   |         |  |       | 2005
|                                   
|Japan                               |  | ¥               | 637,902 |  | 64.9                      | % |      | ¥ | 643,346 |  | 69.2  | %    |  | $ | 5,961,701
|Overseas:                           |  |                 |         |  |                           |   |      |   |         |  |       |      |  |   |          
|North America                       |  |                 | 232,631 |  | 23.6                      |   |      |   | 189,273 |  | 20.3  |      |  |   | 2,174,121
|Other Areas                         |  |                 | 112,693 |  | 11.5                      |   |      |   | 97,618  |  | 10.5  |      |  |   | 1,053,206
|                                    |  |                 |         |  |                           |   |      |   |         |  |       |      |  |   |          
|Subtotal                            |  |                 | 345,324 |  | 35.1                      |   |      |   | 286,891 |  | 30.8  |      |  |   | 3,227,327
|                                    |  |                 |         |  |                           |   |      |   |         |  |       |      |  |   |          
|Total                               |  | ¥               | 983,226 |  | 100.0                     | % |      | ¥ | 930,237 |  | 100.0 | %    |  | $ | 9,189,028
|                                    |  |                 |         |  |                           |   |      |   |         |  |       |      |  |   |          



Sales by region represent sales to
unaffiliated customers based on the customers locations.



23



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##### Table of Contents

CONSOLIDATED BALANCE SHEETS



Kubota
Corporation and Subsidiaries    March 31, 2005 and 2004



|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|------------------------------------------------------------ |  | --------------- | --------- | - | ---------------------------------- | - | --------- | ---- |  | - | ---------- | -
|                                                             |  | Millions of Yen |           |   | Thousands of U.S. Dollars (Note 1) |  
|                                                             |  | 2005            |           |   | 2004 As Restated(Note 17)          |   |           | 2005 | 
|                                                             | 
|ASSETS                                                       |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Current assets:                                              |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Cash and cash equivalents                                    |  | ¥               | 74,563    |   |                                    | ¥ | 81,221    |      |  | $ | 696,850    |  
|Short-term investments (Note 4)                              |  |                 |          |   |                                    |   | 3,001     |      |  |   |           |  
|Notes and accounts receivable (Notes 1, 3, 5 and 15):        |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Trade notes                                                  |  |                 | 72,517    |   |                                    |   | 73,834    |      |  |   | 677,729    |  
|Trade accounts                                               |  |                 | 248,338   |   |                                    |   | 227,021   |      |  |   | 2,320,916  |  
|Less: Allowance for doubtful notes and accounts receivable   |  |                 | (2,257    | ) |                                    |   | (2,408    | )    |  |   | (21,093    | )
|Short-term finance receivablesnet (Notes 1, 5 and 15)       |  |                 | 50,921    |   |                                    |   | 26,876    |      |  |   | 475,897    |  
|Inventories (Note 2)                                         |  |                 | 155,146   |   |                                    |   | 142,973   |      |  |   | 1,449,963  |  
|Other current assets (Notes 9 and 15)                        |  |                 | 76,143    |   |                                    |   | 61,909    |      |  |   | 711,617    |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total current assets                                         |  |                 | 675,371   |   |                                    |   | 614,427   |      |  |   | 6,311,879  |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Investments and long-term finance receivables:               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Investments in and advances to affiliated companies (Note 3) |  |                 | 11,808    |   |                                    |   | 12,982    |      |  |   | 110,355    |  
|Other investments (Notes 4 and 5)                            |  |                 | 146,979   |   |                                    |   | 148,482   |      |  |   | 1,373,636  |  
|Long-term finance receivablesnet (Notes 1, 5 and 15)        |  |                 | 80,725    |   |                                    |   | 47,964    |      |  |   | 754,439    |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total investments and long-term finance receivables          |  |                 | 239,512   |   |                                    |   | 209,428   |      |  |   | 2,238,430  |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Property, plant, and equipment(Note 5):                      |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Land                                                         |  |                 | 83,031    |   |                                    |   | 81,671    |      |  |   | 775,990    |  
|Buildings                                                    |  |                 | 200,173   |   |                                    |   | 200,535   |      |  |   | 1,870,776  |  
|Machinery and equipment                                      |  |                 | 359,659   |   |                                    |   | 364,572   |      |  |   | 3,361,299  |  
|Construction in progress                                     |  |                 | 4,499     |   |                                    |   | 2,313     |      |  |   | 42,047     |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total                                                        |  |                 | 647,362   |   |                                    |   | 649,091   |      |  |   | 6,050,112  |  
|Accumulated depreciation                                     |  |                 | (427,612  | ) |                                    |   | (426,345  | )    |  |   | (3,996,374 | )
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Net property, plant, and equipment                           |  |                 | 219,750   |   |                                    |   | 222,746   |      |  |   | 2,053,738  |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Other assets (Notes 1 and 9)                                 |  |                 | 58,423    |   |                                    |   | 77,624    |      |  |   | 546,009    |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total                                                        |  | ¥               | 1,193,056 |   |                                    | ¥ | 1,124,225 |      |  | $ | 11,150,056 |  
|                                                             |  |                 |           |   |                                    |   |           |      |  |   |            |  



See
notes to consolidated financial statements.



24



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##### Table of Contents

|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | --------- | - | ---------------------------------- | - | --------- | ---- |  | - | ---------- | -
|                                                                                                                                                                                               |  | Millions of Yen |           |   | Thousands of U.S. Dollars (Note 1) |  
|                                                                                                                                                                                               |  | 2005            |           |   | 2004 As Restated (Note 17)         |   |           | 2005 | 
|                                                                                                                                                                                               | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                           |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Current liabilities:                                                                                                                                                                           |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Short-term borrowings (Note 5)                                                                                                                                                                 |  | ¥               | 119,802   |   |                                    | ¥ | 85,999    |      |  | $ | 1,119,645  |  
|Trade notes payable                                                                                                                                                                            |  |                 | 33,675    |   |                                    |   | 35,309    |      |  |   | 314,720    |  
|Trade accounts payable                                                                                                                                                                         |  |                 | 183,367   |   |                                    |   | 158,397   |      |  |   | 1,713,710  |  
|Advances received from customers                                                                                                                                                               |  |                 | 4,104     |   |                                    |   | 6,026     |      |  |   | 38,355     |  
|Notes and accounts payable for capital expenditures                                                                                                                                            |  |                 | 9,094     |   |                                    |   | 7,747     |      |  |   | 84,991     |  
|Accrued payroll costs                                                                                                                                                                          |  |                 | 23,616    |   |                                    |   | 23,519    |      |  |   | 220,710    |  
|Accrued expenses                                                                                                                                                                               |  |                 | 24,998    |   |                                    |   | 21,545    |      |  |   | 233,626    |  
|Income taxes payable                                                                                                                                                                           |  |                 | 12,223    |   |                                    |   | 15,179    |      |  |   | 114,234    |  
|Other current liabilities (Note 14)                                                                                                                                                            |  |                 | 26,289    |   |                                    |   | 25,101    |      |  |   | 245,691    |  
|Current portion of long-term debt (Note 5)                                                                                                                                                     |  |                 | 66,877    |   |                                    |   | 35,858    |      |  |   | 625,019    |  
|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total current liabilities                                                                                                                                                                      |  |                 | 504,045   |   |                                    |   | 414,680   |      |  |   | 4,710,701  |  
|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Long-term liabilities:                                                                                                                                                                         |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Long-term debt (Note 5)                                                                                                                                                                        |  |                 | 117,488   |   |                                    |   | 144,845   |      |  |   | 1,098,019  |  
|Accrued retirement and pension costs (Note 6)                                                                                                                                                  |  |                 | 65,836    |   |                                    |   | 143,679   |      |  |   | 615,290    |  
|Other long-term liabilities (Note 9)                                                                                                                                                           |  |                 | 3,093     |   |                                    |   | 14,293    |      |  |   | 28,906     |  
|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total long-term liabilities                                                                                                                                                                    |  |                 | 186,417   |   |                                    |   | 302,817   |      |  |   | 1,742,215  |  
|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Commitments and contingencies (Note 14)                                                                                                                                                        |  |                 |           |   |                                    |   |           |      |  |   |            |  
|                                                                                                                                                                                               |  |                 |          
|Minority interests                                                                                                                                                                             |  |                 | 21,575    |   |                                    |   | 15,646    |      |  |   | 201,635    |  
|                                                                                                                                                                                               |  |                 |          
|Shareholders equity (Notes 7 and 11):                                                                                                                                                         |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Common stock, authorized 1,931,000,000 shares and 2,000,000,000 shares in 2005 and 2004, respectively outstanding 1,300,413,082 shares and
1,340,197,124 shares in 2005 and 2004, respectively |  |                 | 78,156    |   |                                    |   | 78,156    |      |  |   | 730,430    |  
|Additional paid-in capital                                                                                                                                                                     |  |                 | 87,263    |   |                                    |   | 87,263    |      |  |   | 815,542    |  
|Legal reserve                                                                                                                                                                                  |  |                 | 19,539    |   |                                    |   | 19,539    |      |  |   | 182,607    |  
|Retained earnings                                                                                                                                                                              |  |                 | 290,187   |   |                                    |   | 204,156   |      |  |   | 2,712,028  |  
|Accumulated other comprehensive income                                                                                                                                                         |  |                 | 27,507    |   |                                    |   | 26,075    |      |  |   | 257,075    |  
|Treasury stock (40,395,896 shares and 69,611,854 shares in 2005 and 2004, respectively), at cost                                                                                               |  |                 | (21,633   | ) |                                    |   | (24,107   | )    |  |   | (202,177   | )
|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total shareholders equity                                                                                                                                                                     |  |                 | 481,019   |   |                                    |   | 391,082   |      |  |   | 4,495,505  |  
|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  
|Total                                                                                                                                                                                          |  | ¥               | 1,193,056 |   |                                    | ¥ | 1,124,225 |      |  | $ | 11,150,056 |  
|                                                                                                                                                                                               |  |                 |           |   |                                    |   |           |      |  |   |            |  





25



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##### Table of Contents

CONSOLIDATED STATEMENTS OF INCOME



Kubota Corporation and Subsidiaries    Years Ended March 31, 2005, 2004, and 2003



|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|---------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------- | - | -------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | --------- | -
|                                                                                                                             |  | Millions of Yen |         |   | Thousands ofU.S. Dollars(Note 1) |  
|                                                                                                                             |  | 2005            |         |   | 2004                             |   |         | 2003 |  |   | 2005    |  
|                                                                                                                             | 
|Net sales (Note 3)                                                                                                           |  | ¥               | 983,226 |   |                                  | ¥ | 930,237 |      |  | ¥ | 926,145 |   |  | $ | 9,189,028 |  
|Cost of sales                                                                                                                |  |                 | 713,312 |   |                                  |   | 701,727 |      |  |   | 695,571 |   |  |   | 6,666,468 |  
|Selling, general, and administrative expenses                                                                                |  |                 | 181,727 |   |                                  |   | 199,768 |      |  |   | 181,353 |   |  |   | 1,698,383 |  
|Loss (gain) from disposal and impairment of businesses and fixed assets (Note 13)                                            |  |                 | (4,112  | ) |                                  |   | 6,893   |      |  |   | 19,608  |   |  |   | (38,430   | )
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Operating income                                                                                                             |  |                 | 92,299  |   |                                  |   | 21,849  |      |  |   | 29,613  |   |  |   | 862,607   |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Other income (expenses):                                                                                                     |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Interest and dividend income                                                                                                 |  |                 | 9,488   |   |                                  |   | 7,264   |      |  |   | 7,622   |   |  |   | 88,673    |  
|Interest expense                                                                                                             |  |                 | (4,699  | ) |                                  |   | (4,286  | )    |  |   | (4,818  | ) |  |   | (43,916   | )
|Valuation losses on short-term and other investments                                                                         |  |                 | (423    | ) |                                  |   | (1,083  | )    |  |   | (24,822 | ) |  |   | (3,953    | )
|Subsidy from the government (Note 6)                                                                                         |  |                 | 58,571  |   |                                  |   |        |      |  |   |        |   |  |   | 547,393   |  
|Othernet (Note 8)                                                                                                           |  |                 | 6,325   |   |                                  |   | 3,353   |      |  |   | (1,439  | ) |  |   | 59,112    |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Other income (expenses), net                                                                                                 |  |                 | 69,262  |   |                                  |   | 5,248   |      |  |   | (23,457 | ) |  |   | 647,309   |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Income before income taxes, minority interests in earnings of subsidiaries, and equity in net income of affiliated
companies |  |                 | 161,561 |   |                                  |   | 27,097  |      |  |   | 6,156   |   |  |   | 1,509,916 |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Income taxes (Note 9):                                                                                                       |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Current                                                                                                                      |  |                 | 28,917  |   |                                  |   | 29,255  |      |  |   | 21,538  |   |  |   | 270,252   |  
|Deferred                                                                                                                     |  |                 | 13,625  |   |                                  |   | (15,554 | )    |  |   | (9,242  | ) |  |   | 127,337   |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Total income taxes                                                                                                           |  |                 | 42,542  |   |                                  |   | 13,701  |      |  |   | 12,296  |   |  |   | 397,589   |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Minority interests in earnings of subsidiaries                                                                               |  |                 | 3,442   |   |                                  |   | 2,476   |      |  |   | 2,097   |   |  |   | 32,168    |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Equity in net income of affiliated companies (Note 3)                                                                        |  |                 | 2,324   |   |                                  |   | 780     |      |  |   | 233     |   |  |   | 21,720    |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  
|Net income (loss)                                                                                                            |  | ¥               | 117,901 |   |                                  | ¥ | 11,700  |      |  | ¥ | (8,004  | ) |  | $ | 1,101,879 |  
|                                                                                                                             |  |                 |         |   |                                  |   |         |      |  |   |         |   |  |   |           |  



|                                              |  |     |       |  |                      |      |  |   |       |   |  |      
|--------------------------------------------- |  | --- | ----- |  | -------------------- | ---- |  | - | ----- | - |  | -----
|                                              |  |    
|                                              |  | Yen |       |  | U.S. Dollars(Note 1)
|Net income (loss) per common share (Note 10): |  |     |       |  |                      |      |  |   |       |   |  |      
|Basic                                         |  | ¥   | 89.11 |  | ¥                    | 8.72 |  | ¥ | (5.84 | ) |  | $0.83
|Diluted                                       |  |     | 86.83 |  |                      | 8.53 |  |   | (5.84 | ) |  | 0.81 
|                                              |  |     |       |  |                      |      |  |   |       |   |  |      



See notes to consolidated financial
statements.



26



---

##### Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)



Kubota Corporation and Subsidiaries    Years Ended March 31, 2005, 2004, and 2003



|                                                         |  |                 |         |   |                                  |   |        |      |  |   |         |   |  |   |           |  
|-------------------------------------------------------- |  | --------------- | ------- | - | -------------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | --------- | -
|                                                         |  | Millions of Yen |         |   | Thousands ofU.S. Dollars(Note 1) |  
|                                                         |  | 2005            |         |   | 2004                             |   |        | 2003 |  |   | 2005    |  
|                                                         | 
|Net income (loss)                                        |  | ¥               | 117,901 |   |                                  | ¥ | 11,700 |      |  | ¥ | (8,004  | ) |  | $ | 1,101,879 |  
|                                                         |  |                 |         |   |                                  |   |        |      |  |   |         |   |  |   |           |  
|Other comprehensive income (loss), net of tax (Note 11): |  |                 |         |   |                                  |   |        |      |  |   |         |   |  |   |           |  
|Foreign currency translation adjustments                 |  |                 | (1,468  | ) |                                  |   | (7,535 | )    |  |   | (6,366  | ) |  |   | (13,720   | )
|Unrealized gains (losses) on securities                  |  |                 | 517     |   |                                  |   | 43,368 |      |  |   | (11,602 | ) |  |   | 4,832     |  
|Minimum pension liability adjustment                     |  |                 | 3,492   |   |                                  |   | 37,565 |      |  |   | (30,386 | ) |  |   | 32,636    |  
|Unrealized gains (losses) on derivatives                 |  |                 | (1,109  | ) |                                  |   | 772    |      |  |   | 131     |   |  |   | (10,365   | )
|                                                         |  |                 |         |   |                                  |   |        |      |  |   |         |   |  |   |           |  
|Other comprehensive income (loss)                        |  |                 | 1,432   |   |                                  |   | 74,170 |      |  |   | (48,223 | ) |  |   | 13,383    |  
|                                                         |  |                 |         |   |                                  |   |        |      |  |   |         |   |  |   |           |  
|Comprehensive income (loss)                              |  | ¥               | 119,333 |   |                                  | ¥ | 85,870 |      |  | ¥ | (56,227 | ) |  | $ | 1,115,262 |  
|                                                         |  |                 |         |   |                                  |   |        |      |  |   |         |   |  |   |           |  



See notes to consolidated financial
statements.



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY



Kubota Corporation and Subsidiaries    Years Ended March 31, 2005, 2004, and 2003



|                                    |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   |         |  
|----------------------------------- |  | ------------------------------------------ | - |  | --------------- | ------ | ------------------------ | - | ------------ |  | ---------------- | ------ |  | ------------------------------------------ | ------- | - | --------------------- | --------- | - |  | - | ------- | -
|                                    |  |                                            |   |  | Millions of Yen |       
|                                    |  | Shares ofCommonStockOutstanding(Thousands) |   |  | CommonStock     |        | AdditionalPaid-inCapital |   | LegalReserve |  | RetainedEarnings |        |  | AccumulatedOtherComprehensiveIncome (Loss) |         |   | TreasuryStock at Cost |          
|                                    | 
|Balance, March 31, 2002             |  | 1,390,419                                  |   |  | ¥               | 78,156 |                          | ¥ | 87,263       |  | ¥                | 19,539 |  | ¥                                          | 216,810 |   |                       | ¥     128 |   |  | ¥ | (6,926  | )
|Net loss                            |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            | (8,004  | ) |                       |           |   |  |   |         |  
|Other comprehensive loss            |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       | (48,223   | ) |  |   |         |  
|Cash dividends, ¥6 per common share |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            | (8,289  | ) |                       |           |   |  |   |         |  
|Purchases of treasury stock         |  | (44,969                                    | ) |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   | (15,011 | )
|                                    |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   |         |  
|Balance, March 31, 2003             |  | 1,345,450                                  |   |  |                 | 78,156 |                          |   | 87,263       |  |                  | 19,539 |  |                                            | 200,517 |   |                       | (48,095   | ) |  |   | (21,937 | )
|Net income                          |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            | 11,700  |   |                       |           |   |  |   |         |  
|Other comprehensive income          |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       | 74,170    |   |  |   |         |  
|Cash dividends, ¥6 per common share |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            | (8,061  | ) |                       |           |   |  |   |         |  
|Purchases of treasury stock         |  | (5,253                                     | ) |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   | (2,170  | )
|                                    |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   |         |  
|Balance, March 31, 2004             |  | 1,340,197                                  |   |  |                 | 78,156 |                          |   | 87,263       |  |                  | 19,539 |  |                                            | 204,156 |   |                       | 26,075    |   |  |   | (24,107 | )
|Net income                          |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            | 117,901 |   |                       |           |   |  |   |         |  
|Other comprehensive income          |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       | 1,432     |   |  |   |         |  
|Cash dividends, ¥6 per common share |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            | (7,989  | ) |                       |           |   |  |   |         |  
|Purchases of treasury stock         |  | (39,784                                    | ) |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   | (21,407 | )
|Retirement of treasury stock        |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            | (23,881 | ) |                       |           |   |  |   | 23,881  |  
|                                    |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   |         |  
|Balance, March 31, 2005             |  | 1,300,413                                  |   |  | ¥               | 78,156 |                          | ¥ | 87,263       |  | ¥                | 19,539 |  | ¥                                          | 290,187 |   |                       | ¥27,507   |   |  | ¥ | (21,633 | )
|                                    |  |                                            |   |  |                 |        |                          |   |              |  |                  |        |  |                                            |         |   |                       |           |   |  |   |         |  



|                                       |  |                                    |         |                          |   |              |  |                  |         |  |                                       |           |                       |  |          |  |   |          |  
|-------------------------------------- |  | ---------------------------------- | ------- | ------------------------ | - | ------------ |  | ---------------- | ------- |  | ------------------------------------- | --------- | --------------------- |  | -------- |  | - | -------- | -
|                                       |  | Thousands of U.S. Dollars (Note 1) |        
|                                       |  | CommonStock                        |         | AdditionalPaid-inCapital |   | LegalReserve |  | RetainedEarnings |         |  | AccumulatedComprehensiveIncome (Loss) |           | TreasuryStock at Cost | 
|                                       | 
|Balance, March 31, 2004                |  | $                                  | 730,430 |                          | $ | 815,542      |  | $                | 182,607 |  | $                                     | 1,908,000 |                       |  | $243,692 |  | $ | (225,299 | )
|Net income                             |  |                                    |         |                          |   |              |  |                  |         |  |                                       | 1,101,879 |                       |  |          |  |   |          |  
|Other comprehensive income             |  |                                    |         |                          |   |              |  |                  |         |  |                                       |           |                       |  | 13,383   |  |   |          |  
|Cash dividends, $0.06 per common share |  |                                    |         |                          |   |              |  |                  |         |  |                                       | (74,664   | )                     |  |          |  |   |          |  
|Purchases of treasury stock            |  |                                    |         |                          |   |              |  |                  |         |  |                                       |           |                       |  |          |  |   | (200,065 | )
|Retirement of treasury stock           |  |                                    |         |                          |   |              |  |                  |         |  |                                       | (223,187  | )                     |  |          |  |   | 223,187  |  
|                                       |  |                                    |         |                          |   |              |  |                  |         |  |                                       |           |                       |  |          |  |   |          |  
|Balance, March 31, 2005                |  | $                                  | 730,430 |                          | $ | 815,542      |  | $                | 182,607 |  | $                                     | 2,712,028 |                       |  | $257,075 |  | $ | (202,177 | )
|                                       |  |                                    |         |                          |   |              |  |                  |         |  |                                       |           |                       |  |          |  |   |          |  



See notes to consolidated financial
statements.



27



---

##### Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS



Kubota Corporation and Subsidiaries    Years Ended March 31, 2005, 2004, and 2003



|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|---------------------------------------------------------------------------------------- |  | --------------- | - |  | --------------------------------- | - |  | --------- | - |  | ----------- | -
|                                                                                         |  | Millions of Yen |   |  | Thousandsof U.S. Dollars (Note 1) |  
|                                                                                         |  | 2005            |   |  | 2004                              |   |  | 2003      |   |  | 2005        |  
|                                                                                         | 
|Operating activities:                                                                    |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Net income (loss)                                                                        |  | ¥117,901        |   |  | ¥  11,700                         |   |  | ¥  (8,004 | ) |  | $1,101,879  |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Depreciation and amortization                                                            |  | 25,808          |   |  | 27,755                            |   |  | 38,804    |   |  | 241,196     |  
|Provision for doubtful receivables                                                       |  | 79              |   |  | 783                               |   |  | 961       |   |  | 738         |  
|Provision for (reversal of) accrued retirement and pension costs                         |  | (7,306          | ) |  | 48,516                            |   |  | (4,416    | ) |  | (68,280     | )
|Subsidy from the government                                                              |  | (58,571         | ) |  |                                  |   |  |          |   |  | (547,393    | )
|Loss (gain) on sales of securities                                                       |  | (1,604          | ) |  | (3,161                            | ) |  | 5         |   |  | (14,991     | )
|Valuation losses on short-term and other investments                                     |  | 423             |   |  | 1,083                             |   |  | 24,822    |   |  | 3,953       |  
|Loss on disposals of fixed assets                                                        |  | 1,341           |   |  | 4,122                             |   |  | 2,484     |   |  | 12,533      |  
|Impairment loss on fixed assets                                                          |  | 1,095           |   |  | 1,263                             |   |  | 17,403    |   |  | 10,234      |  
|Equity in net income of affiliated companies                                             |  | (2,324          | ) |  | (780                              | ) |  | (233      | ) |  | (21,720     | )
|Deferred income taxes                                                                    |  | 13,625          |   |  | (15,554                           | ) |  | (9,242    | ) |  | 127,337     |  
|Change in assets and liabilities, net of effects from sales and transfer of businesses:  |  |                 |   |  |                                   |   |  |           |   |  |             |  
|(Increase) decrease in notes and accounts receivable                                     |  | (19,540         | ) |  | 48,241                            |   |  | 36,917    |   |  | (182,617    | )
|(Increase) decrease in inventories                                                       |  | (8,129          | ) |  | 6,954                             |   |  | 2,455     |   |  | (75,972     | )
|Increase in other current assets                                                         |  | (15,159         | ) |  | (15,812                           | ) |  | (5,637    | ) |  | (141,673    | )
|Increase (decrease) in trade notes and accounts payable                                  |  | 22,404          |   |  | (9,521                            | ) |  | (20,315   | ) |  | 209,383     |  
|Increase (decrease) in income taxes payable                                              |  | (3,363          | ) |  | 5,195                             |   |  | (2,332    | ) |  | (31,430     | )
|Increase (decrease) in other current liabilities                                         |  | 3,151           |   |  | 310                               |   |  | (3,340    | ) |  | 29,449      |  
|Other                                                                                    |  | (2,923          | ) |  | (1,519                            | ) |  | (1,038    | ) |  | (27,318     | )
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Net cash provided by operating activities                                                |  | 66,908          |   |  | 109,575                           |   |  | 69,294    |   |  | 625,308     |  
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Investing activities:                                                                    |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Purchases of fixed assets                                                                |  | (20,818         | ) |  | (26,493                           | ) |  | (33,838   | ) |  | (194,561    | )
|Purchases of investments and change in advances                                          |  | (495            | ) |  | 9,257                             |   |  | (2,056    | ) |  | (4,626      | )
|Proceeds from sales of property, plant, and equipment                                    |  | 2,769           |   |  | 3,129                             |   |  | 1,803     |   |  | 25,878      |  
|Proceeds from sales of investments                                                       |  | 2,981           |   |  | 8,182                             |   |  | 5,153     |   |  | 27,860      |  
|Proceeds from sale of business                                                           |  | 1,117           |   |  | 2,562                             |   |  |          |   |  | 10,439      |  
|Increase in finance receivables                                                          |  | (119,878        | ) |  | (115,117                          | ) |  | (73,487   | ) |  | (1,120,355  | )
|Collection of finance receivables                                                        |  | 53,575          |   |  | 31,192                            |   |  | 27,554    |   |  | 500,701     |  
|Sales of finance receivables                                                             |  | 5,208           |   |  | 50,019                            |   |  | 40,892    |   |  | 48,673      |  
|Net (increase) decrease in short-term investments                                        |  | 3,001           |   |  | (2,991                            | ) |  | 1,384     |   |  | 28,047      |  
|Cash transferred in sale of a business                                                   |  | (6,048          | ) |  |                                  |   |  |          |   |  | (56,523     | )
|Other                                                                                    |  | 360             |   |  | (117                              | ) |  | (39       | ) |  | 3,364       |  
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Net cash used in investing activities                                                    |  | (78,228         | ) |  | (40,377                           | ) |  | (32,634   | ) |  | (731,103    | )
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Financing activities:                                                                    |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Proceeds from issuance of long-term debt                                                 |  | 39,582          |   |  | 37,128                            |   |  | 65,627    |   |  | 369,925     |  
|Repayments of long-term debt                                                             |  | (39,081         | ) |  | (74,171                           | ) |  | (45,447   | ) |  | (365,243    | )
|Net increase (decrease) in short-term borrowings                                         |  | 34,453          |   |  | (7,489                            | ) |  | (26,548   | ) |  | 321,991     |  
|Cash dividends                                                                           |  | (7,989          | ) |  | (8,061                            | ) |  | (8,289    | ) |  | (74,664     | )
|Purchases of treasury stock                                                              |  | (21,451         | ) |  | (2,223                            | ) |  | (15,011   | ) |  | (200,476    | )
|Other                                                                                    |  | (1,006          | ) |  | (281                              | ) |  | (341      | ) |  | (9,402      | )
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Net cash provided by (used in) financing activities                                      |  | 4,508           |   |  | (55,097                           | ) |  | (30,009   | ) |  | 42,131      |  
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Effect of exchange rate changes on cash and cash equivalents                             |  | 154             |   |  | (242                              | ) |  | (272      | ) |  | 1,439       |  
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Net increase (decrease) in cash and cash equivalents                                     |  | (6,658          | ) |  | 13,859                            |   |  | 6,379     |   |  | (62,225     | )
|                                                                                         |  |                 |   | 
|Cash and cash equivalents, beginning of year                                             |  | 81,221          |   |  | 67,362                            |   |  | 60,983    |   |  | 759,075     |  
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  
|Cash and cash equivalents, end of year                                                   |  | ¥  74,563       |   |  | ¥  81,221                         |   |  | ¥  67,362 |   |  | $   696,850 |  
|                                                                                         |  |                 |   |  |                                   |   |  |           |   |  |             |  



See notes to consolidated financial
statements.



28



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##### Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Kubota Corporation and Subsidiaries    Years Ended March 31, 2005, 2004, and 2003



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Description of Business



Kubota Corporation (the parent
company) and subsidiaries (collectively the Company) are one of Japans leading manufacturers of a comprehensive range of machinery and other industrial and consumer products, including farm equipment, engines, pipe and fluid
systems engineering, industrial castings, environmental control plants, and housing materials and equipment.



The manufacturing operations of the Company are conducted primarily at 19 plants in Japan and at 6 overseas plants located in the United States and
certain other countries. Farm equipment, construction machinery, ductile iron pipe, and certain other products are not only sold in Japan but are also sold in overseas markets which consist mainly of North America, Europe, and Asia.



Basis of Financial Statements



The consolidated financial statements are presented in accordance with accounting principles
generally accepted in the United States of America (US GAAP) with the exception of FASB Emerging Issues Task Force (EITF) Issue No. 91-5, Nonmonetary Exchange of Cost-Method Investments (see Investments).
The presentation of segment information required by Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about Segments of an Enterprise and Related Information, also has been omitted.



Certain reclassifications have been made to the consolidated financial
statements for 2004 and 2003 to conform with classifications used in 2005.



Translation into United States Dollars



The parent company and
its domestic subsidiaries maintain their accounts in Japanese yen, the currency of the country in which they are incorporated and principally operate. The United States dollar amounts included herein represent a translation using the approximate
exchange rate at March 31, 2005 of ¥107=US$1, solely for convenience of readers outside Japan. The translation should not be construed as a representation that the yen amounts have been, could have been, or could in the future be, converted into
United States dollars.



Consolidation



The consolidated financial statements include the accounts of the parent company and all
majority-owned subsidiaries. The accounts of certain consolidated subsidiaries that have December 31 fiscal year-ends have been included in the March 31 consolidated financial statements. The accounts of variable interest entities (VIEs) as defined
by the FASB Interpretation No. 46 (revised December 2003) are included in the consolidated financial statements, if applicable. Intercompany items have been eliminated in consolidation.



Investments mainly in 20%~50%-owned companies (the affiliated companies) are accounted for using the equity
method of accounting.



Revenue Recognition



The Company recognizes revenue related to product sales when (1) persuasive evidence of an
arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable, and (4) collectibility is reasonably assured.



Sales of environmental and other plant and equipment are recorded when the installation of plant and equipment is completed
and accepted by the customer. For long-term contracts, such sales are recorded under the percentage-of-completion method of accounting. Housing real estate sales are recorded when the title is legally transferred to the customer in accordance with
the underlying contract and real estate laws and regulations. Estimated losses on sales contracts are recorded in the period in which they are identified.



In the case of finance receivables in which the face amount includes finance charges (principally retail financing), income is recorded over the terms of
the receivables using the interest method.



Foreign Currency Translation



Under the provisions of SFAS No. 52,Foreign Currency
Translation, assets and liabilities of foreign subsidiaries are translated into Japanese yen at year-end exchange rates, and income and expenses are translated at the average exchange rates for the year. The resulting translation adjustments
are included in accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets. Exchange gains and losses resulting from foreign currency transactions and translation of assets and liabilities denominated in foreign
currencies are included in the consolidated statements of income.



Finance
Receivables



Finance receivables arise from sales of farm equipment and
construction machinery to customers under retail finance agreements. The term of the receivables varies from one to eight years, with interest at rates ranging from 0.0% to 14.5% per annum.



Allowance for Doubtful Receivables



The Company provides an allowance for doubtful notes and receivables. The allowance for
doubtful receivables is based on historical collection trends and managements judgement on the collectibility of these accounts. Historical collection trends, as well as prevailing and anticipated economic conditions, are routinely monitored
by management, and any adjustment required to the allowance is reflected in current operations.



Inventories



Manufacturing inventories
are stated at the lower of cost, substantially determined using the average-cost method, or market, representing the estimated selling price less costs to sell. Completed real estate projects are stated at the lower of acquisition cost or fair value
less estimated costs to sell. The fair values of those assets are estimates based on the appraised values in the market. Land to be developed and projects under development are carried at cost unless an impairment loss is required. An impairment
loss on those assets is recognized when their carrying amounts exceed the undiscounted future cash flows expected to be realized from them and is measured based on the present values of those expected future cash flows.



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##### Table of Contents

Investments



Under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, the Company classifies all its debt securities and marketable equity
securities as available for sale and carries them at fair value with a corresponding recognition of the net unrealized holding gain or loss (net of tax) as an other comprehensive income item of shareholders equity. The fair values of those
securities are determined based on quoted market prices.



Gains
and losses on sales of available-for-sale securities as well as other nonmarketable equity securities which are carried at cost are computed on the average-cost method. When a decline in the value of the marketable security is deemed to be other
than temporary, the Company recognizes an impairment loss to the extent of the decline. In determining if and when such a decline in value is other than temporary, the Company evaluates market conditions, trends of earnings, the extent to which cost
exceeds market value, the duration of market declines, the ability and intent to hold the marketable securities, and other key measures. Other non-marketable securities are stated at cost and reviewed periodically for impairment.



On April 1, 1996, The Bank of Tokyo, Ltd. (BOT) and The
Mitsubishi Bank, Limited, merged. Upon the merger, each common share of BOT owned by the Company which had been carried at cost was converted into 0.8 share of the combined entity, The Bank of Tokyo-Mitsubishi, Ltd. (currently part of Mitsubishi
Tokyo Financial Group, Inc.) For purposes of comparability with financial statements under Japanese GAAP, the Company did not account for the exchange under EITF 91-5, which requires recognition of a nonmonetary exchange gain on the common shares of
BOT.



If EITF 91-5 had been adopted, net loss would have
increased by ¥545 million for the year ended March 31, 2003 and net income would have increased by ¥3,081 million for the year ended March 31, 1997. There would have been no impact on operating results for the years ended March 31, 2005, and
2004. Retained earnings would have decreased by ¥380 million ($3,551 thousand) at March 31, 2005, 2004, and 2003, with a corresponding increase in accumulated other comprehensive income. These amounts primarily reflect the unrecognized gain on
the initial nonmonetary exchange in 1997 and subsequent losses on sales and impairment of the investment through 2003.



Property, Plant, and Equipment



Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation of plant and equipment is principally computed using the declining-balance
method based on the estimated useful lives of the assets. The estimated useful lives are principally as follows:



|                        |  |            
|----------------------- |  | -----------
|Buildings               |  | 10~50 years
|Machinery and equipment |  | 2~14 years 



Income Taxes



The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for
Income Taxes. Under SFAS No. 109, deferred tax assets and liabilities are computed based on the differences between the financial statement and the income tax bases of assets and liabilities and tax loss and other carryforwards using the
enacted tax rate. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that management believes will more likely than not be realized.



Consideration Given by a Vendor to a Customer



The Company accounts for consideration given to a customer in accordance with EITF 01-9, Accounting for Consideration Given by a
Vendor to a Customer (Including a Reseller of the Vendors Products). EITF 01-9 defines the income statement classification of consideration given by a vendor to a customer or a reseller of the vendors products. In accordance with
EITF 01-9, certain sales incentives are deducted from revenue.



Research and
Development and Advertising



Research and development and advertising
costs are expensed as incurred.



Shipping and Handling Costs



Shipping and handling costs are included in selling, general, and administrative
expenses.



Net Income per Common Share



Basic net income per common share has been computed by dividing net income available to
common shareholders by the weighted average number of common shares outstanding for the period.



Diluted net income per common share reflects the potential dilution and has been computed on the basis that all convertible debentures were converted at
the beginning of the year or at the time of issuance (if later).



Derivative
Financial Instruments



The Company accounts for derivative financial
instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No.
133, and No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. These standards establish accounting and reporting standards for derivative instruments and for hedging activities, and require that an
entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.



On the date the derivative contract is entered into, the Company designates the derivative as a hedge of a forecasted transaction or the variability of
cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and
strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges to specific assets and liabilities on the consolidated balance sheet or to specific firm commitments or
forecasted transactions. The Company considers all hedges to be highly effective in offsetting changes in cash flows of hedged items, because the currency, index of interest rates, amount, and terms of the derivatives correspond to those of the
hedged items in accordance with the Companys policy.



Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income (loss), until earnings are affected by the variability in cash flows of
the designated hedged item.



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Impairment of Long-Lived Assets



The Company accounts for impairment of long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.



The Company evaluates long-lived
assets to be held and used for impairment using an estimate of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the estimate of undiscounted cash flows is
less than the carrying amount of the assets, an impairment loss is recorded based on the fair value of the assets.



The Company evaluates long-lived assets to be disposed of by sale at the lower of carrying amount or fair value less cost to sell.



Cash Flow Information



The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At March 31,
2005, 2004, and 2003, time deposits with original maturities of three months or less amounting to ¥3,333 million ($31,150 thousand), ¥7,866 million, and ¥14,945 million, respectively, were included in cash and cash equivalents.



Cash paid for interest amounted to ¥4,401 million ($41,131
thousand), ¥4,459 million, and ¥4,759 million, and for income taxes amounted to ¥32,092 million ($299,925 thousand), ¥24,030 million, and ¥24,117 million in 2005, 2004, and 2003, respectively.



In June 2004, the Company retired treasury stock of ¥23,881 million
($223,187 thousand).



Use of Estimates in the Preparation of the Financial
Statements



Management uses estimates in preparing the consolidated
financial statements in conformity with US GAAP. Significant estimates used in the preparation of the consolidated financial statements are primarily in the areas of collectibility of private-sector notes and accounts receivable, inventory
valuation, impairment of long-lived assets, valuation allowance for deferred tax assets, and accruals for employee retirement and pension plans. These estimates are assessed by the Company on a regular basis and management believes that material
changes will not occur in the near term, although actual results could ultimately differ from these estimates.



New Accounting Standards



In March
2004, EITF reached a consensus on EITF Issue No. 03-1 (EITF 03-1), The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF 03-1 provides guidance on other-than-temporary impairment
models for marketable debt and equity securities accounted for under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, and non-marketable equity securities accounted for under the cost method. FASB issued
FASB Staff Position EITF Issue 03-1-1 in September 2004 which delayed the effective date of the recognition and measurement of provisions of EITF 03-1. The adoption of EITF 03-1 is not expected to have a material effect on the Companys
consolidated results of operations and financial position.



In
November 2004, FASB issued SFAS No. 151,Inventory Costs, an amendment of ARB No. 43 (ARB 43), Chapter 4 in order to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage). This statement requires that those items be recognized as current-period charges regardless of whether they meet the so abnormal criterion outlined in ARB 43. SFAS No. 151 also requires the allocation of fixed
production overheads to inventory based on the normal capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period in which they are incurred. This statement is effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. The adoption of this statement is not expected to have a material effect on the Companys consolidated results of operations and financial position.



In December 2004, FASB issued SFAS No. 153, Exchanges of Nonmonetary
Assets, an amendment to APB Opinion No. 29. This statement eliminates the exception to measure exchanges at fair value for exchanges of similar productive assets and replaces it with a general exception for exchange transactions that do not
have commercial substance. This statement is effective for nonmonetary exchanges in fiscal periods beginning after June 15, 2005. The adoption of this statement is not expected to have a material effect on the Companys consolidated results of
operations and financial position.



Reclassification of Retail Finance
Receivables in the Consolidated Statements of Cash Flows and in the Consolidated Balance Sheet



Activity related to the retail finance receivables in the consolidated statements of cash flows was previously classified into operating activities as (Increase) decrease in notes and accounts receivable.
The Company reconsidered its classification of the cash flow activity related to loans provided by finance subsidiaries to customers of independent dealers of the Companys products and currently classifies such activity into investing
activities pursuant to the FASB No. 95, Statement of Cash Flows and in consideration of industry standards as Increase in finance receivables, Collection of finance receivables, and Sales of finance
receivables in the consolidated statements of cash flows.



Additionally, the Company previously reflected loans provided by a finance subsidiary to customers of Company-owned dealers as Finance receivables in its consolidated balance
sheet. The Company reconsidered its classification and currently presents the current portion of such receivables as Trade accounts receivable and the long-term portion as Other assets as such receivables consist of balances
due from direct customers of the Company in connection with the sale of the Companys products. The remaining balance in the current and long-term portion of Finance receivables, after such reclassification, is comprised of loans
provided by finance subsidiaries to customers of independent dealers of the Companys products. The reclassification has been made to the presentation of the prior years balance sheet and the statements of cash flows to conform with
classifications used for the year ended March 31, 2005.



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The impact of the reclassification of the affected line items in the consolidated statements of cash
flows with respect to the years ended March 31, 2004 and 2003 is as follows:



Consolidated Statements of Cash Flows



|                                          |  |                        |   |  |                  |   |  |                 |   |  |                        |   |  |                  |   |  |                 |  
|----------------------------------------- |  | ---------------------- | - |  | ---------------- | - |  | --------------- | - |  | ---------------------- | - |  | ---------------- | - |  | --------------- | -
|                                          |  | Millions of Yen        |  
|                                          |  | 2004                   |   |  | 2003             |  
|                                          |  | PreviousClassification |   |  | Reclassification |   |  | As Reclassified |   |  | PreviousClassification |   |  | Reclassification |   |  | As Reclassified |  
|                                          | 
|Provision for doubtful receivables        |  | ¥    728               |   |  | ¥        55      |   |  | ¥      783      |   |  | ¥    817               |   |  | ¥    144         |   |  | ¥    961        |  
|Decrease in notes and accounts receivable |  | 13,439                 |   |  | 34,802           |   |  | 48,241          |   |  | 31,649                 |   |  | 5,268            |   |  | 36,917          |  
|Other                                     |  | (568                   | ) |  | (951             | ) |  | (1,519          | ) |  | (667                   | ) |  | (371             | ) |  | (1,038          | )
|Net cash provided by operating activities |  | 75,669                 |   |  | 33,906           |   |  | 109,575         |   |  | 64,253                 |   |  | 5,041            |   |  | 69,294          |  
|Increase in finance receivables           |  |                       |   |  | (115,117         | ) |  | (115,117        | ) |  |                       |   |  | (73,487          | ) |  | (73,487         | )
|Collection of finance receivables         |  |                       |   |  | 31,192           |   |  | 31,192          |   |  |                       |   |  | 27,554           |   |  | 27,554          |  
|Sales of finance receivables              |  |                       |   |  | 50,019           |   |  | 50,019          |   |  |                       |   |  | 40,892           |   |  | 40,892          |  
|Net cash used in investing activities     |  | (6,471                 | ) |  | (33,906          | ) |  | (40,377         | ) |  | (27,593                | ) |  | (5,041           | ) |  | (32,634         | )
|                                          |  |                        |   |  |                  |   |  |                 |   |  |                        |   |  |                  |   |  |                 |  



The impact of the
reclassification of the affected line items in the consolidated balance sheet at March 31, 2004 is disclosed in Note 17.



2. INVENTORIES



Inventories at March 31, 2005 and 2004 were as follows:



|                                                                         |  |                 |         |                          |   |         |  |   |          
|------------------------------------------------------------------------ |  | --------------- | ------- | ------------------------ | - | ------- |  | - | ---------
|                                                                         |  | Millions of Yen |         | Thousands ofU.S. Dollars
|                                                                         |  | 2005            |         | 2004                     |   | 2005   
|                                                                        
|Manufacturing:                                                           |  |                 |         |                          |   |         |  |   |          
|Finished products                                                        |  | ¥               | 93,576  |                          | ¥ | 85,434  |  | $ | 874,542  
|Spare parts                                                              |  |                 | 18,516  |                          |   | 17,547  |  |   | 173,047  
|Work in process                                                          |  |                 | 21,658  |                          |   | 20,640  |  |   | 202,411  
|Raw materials and supplies                                               |  |                 | 17,362  |                          |   | 14,865  |  |   | 162,262  
|                                                                         |  |                 |         |                          |   |         |  |   |          
|Subtotal                                                                 |  |                 | 151,112 |                          |   | 138,486 |  |   | 1,412,262
|Real estate:                                                             |  |                 |         |                          |   |         |  |   |          
|Completed projects, land to be developed, and projects under development |  |                 | 4,034   |                          |   | 4,487   |  |   | 37,701   
|                                                                         |  |                 |         |                          |   |         |  |   |          
|                                                                         |  | ¥               | 155,146 |                          | ¥ | 142,973 |  | $ | 1,449,963
|                                                                         |  |                 |         |                          |   |         |  |   |          



The Company wrote down
the value of completed projects, land to be developed, and projects under development by ¥363 million in 2004, due to the slumping real estate market in Japan. This amount was included in cost of sales in the consolidated statement of income.



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3. INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES



Investments in and advances to affiliated companies at March 31, 2005 and 2004 consisted of
the following:



|                                                                          |  |                 |         |                          |   |         |  |   |          
|------------------------------------------------------------------------- |  | --------------- | ------- | ------------------------ | - | ------- |  | - | ---------
|                                                                          |  | Millions of Yen |         | Thousands ofU.S. Dollars
|                                                                          |  | 2005            |         | 2004                     |   | 2005   
|                                                                         
|Investments                                                               |  |                 | ¥11,558 |                          |   | ¥12,385 |  |   | $108,019 
|Advances                                                                  |  |                 | 250     |                          |   | 597     |  |   | 2,336    
|                                                                          |  |                 |         |                          |   |         |  |   |          
|                                                                          |  |                 | ¥11,808 |                          |   | ¥12,982 |  |   | $110,355 
|                                                                          |  |                 |         |                          |   |         |  |   |          
|                                                                          |  |                 |        
|A summary of financial information of affiliated companies is as follows: |  |                 |         |                          |   |         |  |   |          
|                                                                          |  |                
|                                                                          |  | Millions of Yen |         | Thousands ofU.S. Dollars
|At March 31, 2005 and 2004                                                |  | 2005            |         | 2004                     |   | 2005   
|                                                                         
|Current assets                                                            |  | ¥               | 66,245  |                          | ¥ | 77,416  |  | $ | 619,112  
|Noncurrent assets                                                         |  |                 | 54,342  |                          |   | 62,084  |  |   | 507,869  
|                                                                          |  |                 |         |                          |   |         |  |   |          
|Total assets                                                              |  |                 | 120,587 |                          |   | 139,500 |  |   | 1,126,981
|Current liabilities                                                       |  |                 | 63,076  |                          |   | 70,944  |  |   | 589,495  
|Noncurrent liabilities                                                    |  |                 | 29,102  |                          |   | 37,162  |  |   | 271,981  
|                                                                          |  |                 |         |                          |   |         |  |   |          
|Net assets                                                                |  | ¥               | 28,409  |                          | ¥ | 31,394  |  | $ | 265,505  
|                                                                          |  |                 |         |                          |   |         |  |   |          



|                                           |  |                 |         |                          |   |         |  |      |         |  |   |          
|------------------------------------------ |  | --------------- | ------- | ------------------------ | - | ------- |  | ---- | ------- |  | - | ---------
|                                           |  | Millions of Yen |         | Thousands ofU.S. Dollars
|Years ended March 31, 2005, 2004, and 2003 |  | 2005            |         | 2004                     |   | 2003    |  | 2005
|                                          
|Net sales                                  |  | ¥               | 222,753 |                          | ¥ | 153,819 |  | ¥    | 174,233 |  | $ | 2,081,804
|Cost of sales                              |  |                 | 165,050 |                          |   | 115,154 |  |      | 133,671 |  |   | 1,542,523
|Other incomenet                           |  |                 | 722     |                          |   | 995     |  |      | 1,860   |  |   | 6,748    
|Net income                                 |  |                 | 4,886   |                          |   | 2,236   |  |      | 1,711   |  |   | 45,664   



Trade notes and
accounts receivable from affiliated companies at March 31, 2005 and 2004 were ¥22,729 million ($212,421 thousand) and ¥23,875 million, respectively.



Sales to affiliated companies aggregated ¥64,465 million ($602,477 thousand), ¥74,886 million, and ¥82,433 million for the years ended March
31, 2005, 2004, and 2003, respectively.



Cash dividends
received from affiliated companies were ¥28 million ($262 thousand), ¥486 million, and ¥523 million for the years ended March 31, 2005, 2004, and 2003, respectively.



4. SHORT-TERM AND OTHER INVESTMENTS



The cost, fair value, and gross unrealized holding gains and losses for securities by major security type at March 31, 2005 and 2004 were as follows:



|                                            |  |                 |        |            |   |                             |  |                              |  |      |  |            |        |                             |   |                              |  |         |  |     
|------------------------------------------- |  | --------------- | ------ | ---------- | - | --------------------------- |  | ---------------------------- |  | ---- |  | ---------- | ------ | --------------------------- | - | ---------------------------- |  | ------- |  | ----
|                                            |  | Millions of Yen
|                                            |  | 2005            |        | 2004      
|                                            |  | Cost            |        | Fair Value |   | GrossUnrealizedHoldingGains |  | GrossUnrealizedHoldingLosses |  | Cost |  | Fair Value |        | GrossUnrealizedHoldingGains |   | GrossUnrealizedHoldingLosses
|                                           
|Short-term investments:                     |  |                 |        |            |   |                             |  |                              |  |      |  |            |        |                             |   |                              |  |         |  |     
|Available-for-sale:                         |  |                 |        |            |   |                             |  |                              |  |      |  |            |        |                             |   |                              |  |         |  |     
|Corporate debt securities                   |  | ¥               |       |            | ¥ |                            |  | ¥                           |  | ¥   |  | ¥          | 3,001  |                             | ¥ | 3,001                        |  | ¥      |  | ¥  
|                                            |  |                 |        |            |   |                             |  |                             
|Other investments:                          |  |                 |        |            |   |                             |  |                              |  |      |  |            |        |                             |   |                              |  |         |  |     
|Available-for-sale:                         |  |                 |        |            |   |                             |  |                              |  |      |  |            |        |                             |   |                              |  |         |  |     
|Equity securities of financial institutions |  |                 | 22,040 |            |   | 87,232                      |  | 65,193                       |  | 1    |  |            | 22,307 |                             |   | 89,682                       |  | 67,375  |  |    
|Other equity securities                     |  |                 | 19,812 |            |   | 47,423                      |  | 27,717                       |  | 106  |  |            | 19,431 |                             |   | 44,463                       |  | 25,289  |  | 257 
|Government debt securities                  |  |                 |       |            |   |                            |  |                             |  |     |  |            | 795    |                             |   | 845                          |  | 50      |  |    
|Corporate debt securities                   |  |                 | 813    |            |   | 820                         |  | 12                           |  | 5    |  |            | 813    |                             |   | 850                          |  | 37      |  |    
|                                            |  |                 |        |            |   |                             |  |                              |  |      |  |            |        |                             |   |                              |  |         |  |     
|                                            |  | ¥               | 42,665 |            | ¥ | 135,475                     |  | ¥92,922                      |  | ¥112 |  | ¥          | 46,347 |                             | ¥ | 138,841                      |  | ¥92,751 |  | ¥257
|                                            |  |                 |        |            |   |                             |  |                              |  |      |  |            |        |                             |   |                              |  |         |  |     





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|                                           |  |                           |         |            |   |                             |  |                              |         |  |       
|------------------------------------------ |  | ------------------------- | ------- | ---------- | - | --------------------------- |  | ---------------------------- | ------- |  | ------
|                                           |  | Thousands of U.S. Dollars
|                                           |  | 2005                     
|                                           |  | Cost                      |         | Fair Value |   | GrossUnrealizedHoldingGains |  | GrossUnrealizedHoldingLosses
|                                          
|Short-term investments:                    |  |                           |         |            |   |                             |  |                              |         |  |       
|Available-for-sale:                        |  |                           |         |            |   |                             |  |                              |         |  |       
|Corporate debt securities                  |  | $                         |        |            | $ |                            |  | $                            |        |  | $    
|                                           |  |                           |         |           
|Other investments:                         |  |                           |         |            |   |                             |  |                              |         |  |       
|Available-for-sale:                        |  |                           |         |            |   |                             |  |                              |         |  |       
|Equity securities offinancial institutions |  |                           | 205,981 |            |   | 815,252                     |  |                              | 609,280 |  | 9     
|Other equity securities                    |  |                           | 185,159 |            |   | 443,205                     |  |                              | 259,037 |  | 991   
|Government debt securities                 |  |                           |        |            |   |                            |  |                              |        |  |      
|Corporate debt securities                  |  |                           | 7,598   |            |   | 7,664                       |  |                              | 113     |  | 47    
|                                           |  |                           |         |            |   |                             |  |                              |         |  |       
|                                           |  | $                         | 398,738 |            | $ | 1,266,121                   |  | $                            | 868,430 |  | $1,047
|                                           |  |                           |         |            |   |                             |  |                              |         |  |       



Gross unrealized
holding losses and fair values on available-for-sale securities at March 31, 2005 and 2004 aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows:



|                                            |  |                     |  |                              |  |                     |  |                              |  |            |  |                              |  |            |  |                             
|------------------------------------------- |  | ------------------- |  | ---------------------------- |  | ------------------- |  | ---------------------------- |  | ---------- |  | ---------------------------- |  | ---------- |  | ----------------------------
|                                            |  | Millions of Yen    
|                                            |  | 2005                |  | 2004                        
|                                            |  | Less than 12 months |  | 12 months or longer          |  | Less than 12 months |  | 12 months or longer         
|                                            |  | Fair Value          |  | GrossUnrealizedHoldingLosses |  | Fair Value          |  | GrossUnrealizedHoldingLosses |  | Fair Value |  | GrossUnrealizedHoldingLosses |  | Fair Value |  | GrossUnrealizedHoldingLosses
|                                           
|Other investments:                          |  |                     |  |                              |  |                     |  |                              |  |            |  |                              |  |            |  |                             
|Available-for-sale:                         |  |                     |  |                              |  |                     |  |                              |  |            |  |                              |  |            |  |                             
|Equity securities of financial institutions |  | ¥      9            |  | ¥    1                       |  | ¥                  |  | ¥                           |  | ¥         |  | ¥                           |  | ¥         |  | ¥                          
|Other equity securities                     |  | 1,865               |  | 106                          |  |                    |  |                             |  | 328        |  | 26                           |  | 1,103      |  | 231                         
|Corporate debt securities                   |  | 0                   |  | 5                            |  |                    |  |                             |  |           |  |                             |  |           |  |                            
|                                            |  |                     |  |                              |  |                     |  |                              |  |            |  |                              |  |            |  |                             
|                                            |  | ¥1,874              |  | ¥112                         |  | ¥                  |  | ¥                           |  | ¥328       |  | ¥  26                        |  | ¥1,103     |  | ¥231                        
|                                            |  |                     |  |                              |  |                     |  |                              |  |            |  |                              |  |            |  |                             



|                                           |  |                           |  |                              |  |            |  |                             
|------------------------------------------ |  | ------------------------- |  | ---------------------------- |  | ---------- |  | ----------------------------
|                                           |  | Thousands of U.S. Dollars
|                                           |  | 2005                     
|                                           |  | Less than 12 months       |  | 12 months or longer         
|                                           |  | Fair Value                |  | GrossUnrealizedHoldingLosses |  | Fair Value |  | GrossUnrealizedHoldingLosses
|                                          
|Other investments:                         |  |                           |  |                              |  |            |  |                             
|Available-for-sale:                        |  |                           |  |                              |  |            |  |                             
|Equity securities offinancial institutions |  | $      84                 |  | $       9                    |  | $         |  | $                          
|Other equity securities                    |  | 17,430                    |  | 991                          |  |           |  |                            
|Corporate debt securities                  |  | 0                         |  | 47                           |  |           |  |                            
|                                           |  |                           |  |                              |  |            |  |                             
|                                           |  | $17,514                   |  | $1,047                       |  | $         |  | $                          
|                                           |  |                           |  |                              |  |            |  |                             



Proceeds from sales of
available-for-sale securities and gross realized gains and losses that have been included in earnings as a result of those sales for the years ended March 31, 2005, 2004, and 2003 were as follows:



|                      |  |                 |       |   |                          |   |       |      |  |   |       |   |  |         |  
|--------------------- |  | --------------- | ----- | - | ------------------------ | - | ----- | ---- |  | - | ----- | - |  | ------- | -
|                      |  | Millions of Yen |       |   | Thousands ofU.S. Dollars |  
|                      |  | 2005            |       |   | 2004                     |   |       | 2003 |  |   | 2005  |  
|                      | 
|Proceeds from sales   |  | ¥               | 2,981 |   |                          | ¥ | 8,182 |      |  | ¥ | 5,153 |   |  | $27,860 |  
|Gross realized gains  |  |                 | 1,821 |   |                          |   | 3,228 |      |  |   | 654   |   |  | 17,019  |  
|Gross realized losses |  |                 | (217  | ) |                          |   | (67   | )    |  |   | (659  | ) |  | (2,028  | )



34



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##### Table of Contents

At March 31, 2005, the cost of debt securities classified as available-for-sale was ¥800 million
($7,477 thousand) and such securities mature in 2011.



Investments in non-traded and unaffiliated companies, for which there is no readily determinable fair value, were stated at cost of ¥11,504 million ($107,514 thousand) and ¥12,642 million at March 31, 2005 and 2004, respectively.



Investments in non-marketable equity securities for which
there is no readily determinable fair value were accounted for using the cost method and each investment in non-marketable equity securities is reviewed annually for impairment or upon the occurrence of an event on change in circumstances that may
have a significant adverse effect on the carrying value of the investment.



For the years ended March 31, 2005, 2004, and 2003, valuation losses on short-term and other investments were recognized to reflect the decline in fair value considered to be other-than-temporary totaling ¥423
million ($3,953 thousand), ¥1,083 million, and ¥24,822 million, respectively.



5. SHORT-TERM BORROWINGS AND LONG-TERM DEBT



Short-term
borrowings at March 31, 2005 consisted of notes payable to banks of ¥113,802 million ($1,063,570 thousand) and commercial paper of ¥6,000 million ($56,075 thousand). Short-term borrowings at March 31, 2004 consisted of notes payable to
banks. Stated annual interest rates of short-term borrowings ranged primarily from 0.02% to 2.70% and from 0.29% to 1.68% at March 31, 2005 and 2004, respectively. The weighted average interest rates on such short-term borrowings at March 31, 2005
and 2004 were 1.7% and 0.9%, respectively.



Available lines of
credit with certain banks totaled ¥30,000 million ($280,374 thousand) at March 31, 2005 and 2004, respectively. The Company had no outstanding balances as of March 31, 2005 and 2004 related to lines of credit.



Long-term debt at March 31, 2005 and 2004 consisted of the following:



|                                                                                               |  |                              |  |                 |         |   |                          |   |         |      |  |   |           |  
|---------------------------------------------------------------------------------------------- |  | ---------------------------- |  | --------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | --------- | -
|                                                                                               |  |                              |  | Millions of Yen |         |   | Thousands ofU.S. Dollars |  
|                                                                                               |  | Due in Years Ending March 31 |  | 2005            |         |   | 2004                     |   |         | 2005 | 
|                                                                                               | 
|Unsecured bonds:                                                                               |  |                              |  |                 |         |   |                          |   |         |      |  |   |           |  
|1.8% yen bonds                                                                                 |  | 2006                         |  | ¥               | 10,000  |   |                          | ¥ | 10,000  |      |  | $ | 93,458    |  
|                                                                                               |  |                              |  |                
|Unsecured convertible bonds:                                                                   |  |                              |  |                 |         |   |                          |   |         |      |  |   |           |  
|0.85% yen bonds                                                                                |  | 2005                         |  |                 |        |   |                          |   | 19,513  |      |  |   |          |  
|0.9% yen bonds                                                                                 |  | 2006                         |  |                 | 18,627  |   |                          |   | 18,627  |      |  |   | 174,084   |  
|                                                                                               |  |                              |  |                
|Loans, principally from banks and insurance companies, maturing on various dates through 2015: |  |                              |  |                 |         |   |                          |   |         |      |  |   |           |  
|Collateralized                                                                                 |  |                              |  |                 | 16,662  |   |                          |   |        |      |  |   | 155,720   |  
|Unsecured                                                                                      |  |                              |  |                 | 134,235 |   |                          |   | 128,773 |      |  |   | 1,254,533 |  
|Capital lease obligations                                                                      |  |                              |  |                 | 4,841   |   |                          |   | 3,790   |      |  |   | 45,243    |  
|                                                                                               |  |                              |  |                 |         |   |                          |   |         |      |  |   |           |  
|Total                                                                                          |  |                              |  |                 | 184,365 |   |                          |   | 180,703 |      |  |   | 1,723,038 |  
|Less current portion                                                                           |  |                              |  |                 | (66,877 | ) |                          |   | (35,858 | )    |  |   | (625,019  | )
|                                                                                               |  |                              |  |                 |         |   |                          |   |         |      |  |   |           |  
|                                                                                               |  |                              |  | ¥               | 117,488 |   |                          | ¥ | 144,845 |      |  | $ | 1,098,019 |  
|                                                                                               |  |                              |  |                 |         |   |                          |   |         |      |  |   |           |  



The interest rates on
unsecured bonds and unsecured convertible bonds were fixed. The interest rates of the long-term loans from banks and insurance companies were principally fixed and the weighted average rates at March 31, 2005 and 2004 were 1.6% and 1.4%,
respectively.



Annual maturities of long-term debt at March 31,
2005 were as follows:



|                       |  |                 |           |                          |   |          
|---------------------- |  | --------------- | --------- | ------------------------ | - | ---------
|Years ending March 31, |  | Millions of Yen |           | Thousands ofU.S. Dollars
|                      
|2006                   |  |                 | ¥  66,877 |                          | $ | 625,019  
|2007                   |  |                 | 34,784    |                          |   | 325,084  
|2008                   |  |                 | 38,021    |                          |   | 355,337  
|2009                   |  |                 | 20,138    |                          |   | 188,206  
|2010                   |  |                 | 17,956    |                          |   | 167,813  
|2011 and thereafter    |  |                 | 6,589     |                          |   | 61,579   
|                       |  |                 |           |                          |   |          
|Total                  |  |                 | ¥184,365  |                          | $ | 1,723,038
|                       |  |                 |           |                          |   |          



35



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##### Table of Contents

At March 31, 2005, assets pledged as collateral for debt were as follows:



|                                                                 |  |                 |  |                         
|---------------------------------------------------------------- |  | --------------- |  | ------------------------
|                                                                 |  | Millions of Yen |  | Thousands ofU.S. Dollars
|                                                                
|Trade notes                                                      |  | ¥  1,299        |  | $  12,140               
|Trade accounts                                                   |  | 688             |  | 6,430                   
|Finance receivables                                              |  | 53,868          |  | 503,439                 
|Other investments                                                |  | 9               |  | 84                      
|Property, plant, and equipment                                   |  | 9,919           |  | 92,701                  
|                                                                 |  |                 |  |                         
|Total                                                            |  | ¥65,783         |  | $614,794                
|                                                                 |  |                 |  |                         
|                                                                 |  |                
|The above assets were pledged against the following liabilities: |  |                 |  |                         
|                                                                 |  | Millions of Yen |  | Thousands ofU.S. Dollars
|                                                                
|Short-term borrowings                                            |  | ¥38,462         |  | $359,458                
|Current portion of long-term debt                                |  | 10,056          |  | 93,981                  
|Long-term debt                                                   |  | 6,606           |  | 61,739                  
|                                                                 |  |                 |  |                         
|Total                                                            |  | ¥55,124         |  | $515,178                
|                                                                 |  |                 |  |                         



The conversion price
of the unsecured yen convertible bonds is ¥769 per share, which exceeded the fair value of the stock on the debt issuance date, and the number of shares into which outstanding bonds were convertible at March 31, 2005 totaled 24,222 thousand
shares.



Both short-term and long-term bank loans are made
under general agreements which provide that security and guarantees for present and future indebtedness will be given upon request of the bank, and that the bank shall have the right to offset cash deposits against obligations that have become due
or, in the event of default, against all obligations due to the bank. Long-term agreements with lenders other than banks also generally provide that the Company must give additional security upon request of the lender.



6. RETIREMENT AND PENSION PLANS



The parent company and its domestic subsidiaries have a number of unfunded
severance indemnity plans and defined benefit pension plans covering substantially all Japanese employees. Most employees of overseas subsidiaries are covered by defined benefit pension plans or defined contribution pension plans.



Among them, the parent company has an unfunded severance indemnity plan which
covers substantially all of its employees. Employees who terminate their employment receive benefits in the form of lump-sum payments. Benefits to be received under the plan were previously determined based on the rate of pay at the time of
termination, length of service, and certain other factors. Effective April 2003, the Company introduced a point-based benefits system, under which benefits are calculated based on accumulated points allocated to employees each year
according to their job classification and performance.



The
parent company also had a contributory defined benefit pension plan covering all of its employees (the Contributory Plan). The Contributory Plan consisted of a substitutional portion based on the pay-related part of the old-age pension
benefits prescribed by the Japanese Welfare Pension Insurance Law and a corporate portion based on a defined benefit pension arrangement established at the discretion of management.



Based on a law issued by the Japanese government in June 2001, the Company made applications for an exemption from the
obligation to pay benefits for future employee service related to the substitutional portion and received approval from the Japanese Ministry of Health, Labour and Welfare on January 30, 2003. After the approval, the Company made applications for an
exemption from the obligation to pay benefits for past employee service related to the substitutional portion and received approval from the Japanese Ministry of Health, Labour and Welfare on September 1, 2004. Based on the approval, the Company
transferred the benefit obligation and the related government-specified portion of the plan assets of the Contributory Plan to the government on January 31, 2005.



36



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##### Table of Contents

In accordance with EITF No. 03-2, Accounting for the Transfer to the Japanese Government of the
Substitutional Portion of Employee Pension Fund Liabilities, the Company recognized the difference of ¥58,571 million ($547,393 thousand) between the substitutional portion of accumulated benefit obligation settled and the related plan
assets transferred to the Japanese government as a government subsidy in Other income (expenses) in the 2005 consolidated statement of income. The Company also recognized derecognition of previously accrued salary progression of ¥11,111 million
($103,841 thousand) and a settlement loss for the proportionate amount of the net unrecognized loss attributable to the substitutional portion of ¥13,366 million ($124,916 thousand). The net amount of ¥2,255 million ($21,075 thousand) of
derecognition of previously accrued salary progression and the settlement loss was allocated to cost of sales of ¥1,511 million ($14,121 thousand) and selling, general, and administrative expenses of ¥744 million ($6,953 thousand).



As a result of the transfer of the substitutional portion, the
parent company has a non-contributory defined benefit pension plan covering substantially all of its employees (the Non-contributory Plan), which has succeeded the corporate portion of the Contributory Plan. The Non-contributory Plan
consists of a lifetime pension plan and a limited annuity plan. Employees who terminate have the option to receive benefits from the Non-contributory Plan in the form of lump-sum payments or annuity payments. Benefits are determined based on the
rate of pay at the time of termination, the length of service, and reason for retirement. Annual contributions are made by the parent company for an amount determined on the basis of an accepted actuarial method for the Non-contributory Plan. The
Non-contributory Plan is administered by a board of trustees composed of management and employee representatives. Plan assets, which are managed by trust banks and investment advisors, are invested primarily in corporate and government bonds and
stocks.



The Companys measurement date of benefit
obligations and plan assets is March 31.



Net periodic benefit
cost for the unfunded severance indemnity plan, the Contributory Plan, and the Non-contributory Plan of the parent company and for the unfunded severance indemnity plans and noncontributory defined benefit pension plans of certain subsidiaries for
the years ended March 31, 2005, 2004, and 2003 consisted of the following components:



|                                                       |  |                 |   |  |                          |        |   |      |   |        |      |  |           |  
|------------------------------------------------------ |  | --------------- | - |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | --------- | -
|                                                       |  | Millions of Yen |   |  | Thousands ofU.S. Dollars |       
|                                                       |  | 2005            |   |  | 2004                     |        |   | 2003 |   |        | 2005 | 
|                                                       | 
|Service cost                                           |  | ¥  8,343        |   |  | ¥                        | 9,458  |   |      | ¥ | 10,128 |      |  | $  77,972 |  
|Interest cost                                          |  | 7,457           |   |  |                          | 8,502  |   |      |   | 9,600  |      |  | 69,691    |  
|Expected return on plan assets                         |  | (3,129          | ) |  |                          | (4,999 | ) |      |   | (5,862 | )    |  | (29,243   | )
|Amortization of transition obligation                  |  |                |   |  |                          | 1,124  |   |      |   | 1,615  |      |  |          |  
|Amortization of prior service benefit                  |  | (522            | ) |  |                          | (230   | ) |      |   | (797   | )    |  | (4,878    | )
|Recognized actuarial loss                              |  | 2,047           |   |  |                          | 52,141 |   |      |   | 5,591  |      |  | 19,131    |  
|Derecognition of previously accrued salary progression |  | (11,111         | ) |  |                          |       |   |      |   |       |      |  | (103,841  | )
|Settlement loss                                        |  | 13,366          |   |  |                          |       |   |      |   |       |      |  | 124,916   |  
|                                                       |  |                 |   |  |                          |        |   |      |   |        |      |  |           |  
|Actuarial periodic benefit cost                        |  | 16,451          |   |  |                          | 65,996 |   |      |   | 20,275 |      |  | 153,748   |  
|Employee contributions                                 |  |                |   |  |                          |       |   |      |   | (1,005 | )    |  |          |  
|                                                       |  |                 |   |  |                          |        |   |      |   |        |      |  |           |  
|Net periodic benefit cost                              |  | ¥16,451         |   |  | ¥                        | 65,996 |   |      | ¥ | 19,270 |      |  | $153,748  |  
|                                                       |  |                 |   |  |                          |        |   |      |   |        |      |  |           |  



Weighted-average
assumptions used in calculating benefit obligations and net periodic benefit cost were as follows:



|                                                        |  |      |   |  |      |   |  |      |  
|------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                                        |  | 2005 |   |  | 2004 |   |  |      |  
|                                                        | 
|Benefit obligations at March 31:                        |  |      |   |  |      |   |  |      |  
|Discount rate                                           |  | 2.5  | % |  | 2.5  | % |  |      |  
|Rate of compensation increase                           |  | 6.5  | % |  | 6.5  | % |  |      |  
|                                                        |  |      |  
|                                                        |  | 2005 |   |  | 2004 |   |  | 2003 |  
|                                                        | 
|Net periodic benefit cost for the years ended March 31: |  |      |   |  |      |   |  |      |  
|Discount rate                                           |  | 2.5  | % |  | 2.5  | % |  | 3.0  | %
|Expected return on plan assets                          |  | 3.5  | % |  | 3.5  | % |  | 3.5  | %
|Rate of compensation increase                           |  | 6.5  | % |  | 6.5  | % |  | 6.5  | %



37



---

##### Table of Contents

To determine the expected rate of return on plan assets, the Company considers actual returns in the past
5 to 10 years, the current and expected components of plan assets, and anticipated market trends. The Company anticipates that the plans investments will generate long-term returns of 3.5%, which is based on an asset allocation assumption of
45% of debt securities, with an expected rate of return of 1.0%, and 55% of equity securities, with an expected rate of return of 5.5%. The Company believes that 3.5% is a reasonable long-term rate of return despite an actual return on plan assets
in the past 10 years of 2.3%, as significant losses on plan assets were incurred from fiscal 2001 to 2003 caused by the recent market downturn. Based on current economic conditions, the Company expects better returns on its plan assets in the
future.



During the year ended March 31, 2005, the Company
reviewed the components of plan assets and adopted an asset allocation of 55% on fixed income securities and 45% on equity securities to secure stable returns.



Pension plan weighted-average asset allocations by asset category were as follows:



|                                                                                                |  |       |   |  |       |  
|----------------------------------------------------------------------------------------------- |  | ----- | - |  | ----- | -
|                                                                                                |  | 2005  |   |  | 2004  |  
|                                                                                                | 
|Equity securities                                                                               |  | 43.6  | % |  | 31.5  | %
|Debt securities                                                                                 |  | 54.4  | % |  | 22.7  | %
|Cash related to the transfer of the substitutional portion of employee pension fund liabilities |  |      | % |  | 45.1  | %
|Other                                                                                           |  | 2.0   | % |  | 0.7   | %
|                                                                                                |  |       |   |  |       |  
|                                                                                                |  | 100.0 | % |  | 100.0 | %
|                                                                                                |  |       |   |  |       |  



The Companys
investment policy is to invest in equity securities and debt securities of companies in Japan and overseas primarily in Europe and the United States in order to diversify risk. The Company believes that investment in equity securities of 45% and
debt securities of 55% is a proper allocation ratio and is consistent with the Companys investment objectives.



Plan assets at March 31, 2004 consisted of a significant amount of cash to be transferred to the government in connection with the transfer to the
Japanese government of the substitutional portion of employee pension fund liabilities and assets.



Employer contributions to pension plans for the year ending March 31, 2006 are expected to be ¥14,105 million ($131,822 thousand).



The following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid:



|                       |  |                 |  |                         
|---------------------- |  | --------------- |  | ------------------------
|Years ending March 31, |  | Millions of Yen |  | Thousands ofU.S. Dollars
|                      
|2006                   |  | ¥11,140         |  | $104,112                
|2007                   |  | 12,556          |  | 117,346                 
|2008                   |  | 12,932          |  | 120,860                 
|2009                   |  | 13,015          |  | 121,636                 
|2010                   |  | 13,278          |  | 124,093                 
|20112015              |  | 60,054          |  | 561,252                 



38



---

##### Table of Contents

Reconciliations of beginning and ending balances of the benefit obligations and the fair value of the
plan assets, together with accumulated benefit obligations and aggregate information for accumulated benefit obligations in excess of plan assets, were as follows:



|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|------------------------------------------------------------------------------------------------------ |  | --------------- | - |  | ----------------------- | - |  | ---------- | -
|                                                                                                       |  | Millions of Yen |   |  | Thousandsof U.S.Dollars |  
|                                                                                                       |  | 2005            |   |  | 2004                    |   |  | 2005       |  
|                                                                                                       | 
|Change in benefit obligations:                                                                         |  |                 |   |  |                         |   |  |            |  
|Benefit obligations at beginning of year                                                               |  | ¥354,418        |   |  | ¥353,138                |   |  | $3,312,318 |  
|Service cost, less employee contributions                                                              |  | 8,343           |   |  | 9,458                   |   |  | 77,972     |  
|Interest cost                                                                                          |  | 7,457           |   |  | 8,502                   |   |  | 69,691     |  
|Amendments                                                                                             |  | (3,420          | ) |  |                        |   |  | (31,963    | )
|Transfer to the Japanese government of the substitutional portion of employee pension fund liabilities |  | (155,466        | ) |  |                        |   |  | (1,452,953 | )
|Actuarial (gain) loss                                                                                  |  | (9,821          | ) |  | 1,480                   |   |  | (91,785    | )
|Benefits paid (settlement)                                                                             |  | (14,792         | ) |  | (4,538                  | ) |  | (138,243   | )
|Benefits paid (other)                                                                                  |  | (10,611         | ) |  | (13,806                 | ) |  | (99,168    | )
|Foreign currency exchange rate changes                                                                 |  | 142             |   |  | 184                     |   |  | 1,327      |  
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Benefit obligations at end of year                                                                     |  | ¥176,250        |   |  | ¥354,418                |   |  | $1,647,196 |  
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Change in plan assets:                                                                                 |  |                 |   |  |                         |   |  |            |  
|Fair value of plan assets at beginning of year                                                         |  | ¥191,817        |   |  | ¥155,989                |   |  | $1,792,682 |  
|Actual return on plan assets                                                                           |  | 4,344           |   |  | 37,641                  |   |  | 40,598     |  
|Employer contributions                                                                                 |  | 14,035          |   |  | 12,647                  |   |  | 131,168    |  
|Transfer to the Japanese government of the substitutional portion of employee pension fund liabilities |  | (85,784         | ) |  |                        |   |  | (801,720   | )
|Benefits paid (settlement)                                                                             |  | (5,868          | ) |  | (801                    | ) |  | (54,841    | )
|Benefits paid (other)                                                                                  |  | (10,611         | ) |  | (13,806                 | ) |  | (99,168    | )
|Foreign currency exchange rate changes                                                                 |  | 127             |   |  | 147                     |   |  | 1,187      |  
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Fair value of plan assets at end of year                                                               |  | ¥108,060        |   |  | ¥191,817                |   |  | $1,009,906 |  
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Plans funded status at end of year:                                                                   |  |                 |   |  |                         |   |  |            |  
|Funded status                                                                                          |  | ¥(68,190        | ) |  | ¥(162,601               | ) |  | $ (637,290 | )
|Unrecognized actuarial loss                                                                            |  | 11,284          |   |  | 37,733                  |   |  | 105,458    |  
|Unrecognized prior service benefit                                                                     |  | (8,248          | ) |  | (5,350                  | ) |  | (77,084    | )
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Net amount recognized                                                                                  |  | ¥(65,154        | ) |  | ¥(130,218               | ) |  | $ (608,916 | )
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Amounts recognized in the consolidated balance sheets:                                                 |  |                 |   |  |                         |   |  |            |  
|Accrued retirement and pension costs                                                                   |  | ¥(65,836        | ) |  | ¥(143,679               | ) |  | $ (615,290 | )
|Prepaid expenses for benefit plans, included in other assets                                           |  | 682             |   |  | 601                     |   |  | 6,374      |  
|Intangible assets, included in other assets                                                            |  |                |   |  | 6,869                   |   |  |           |  
|Accumulated other comprehensive income                                                                 |  |                |   |  | 5,991                   |   |  |           |  
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Net amount recognized                                                                                  |  | ¥(65,154        | ) |  | ¥(130,218               | ) |  | $ (608,916 | )
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Accumulated benefit obligations:                                                                       |  |                 |   |  |                         |   |  |            |  
|Accumulated benefit obligations at end of year                                                         |  | ¥167,954        |   |  | ¥322,944                |   |  | $1,569,664 |  
|                                                                                                       |  |                 |   |  |                         |   |  |            |  
|Retirement and pension plans with accumulated benefit obligations in excess of plan assets:            |  |                 |   |  |                         |   |  |            |  
|Projected benefit obligations                                                                          |  | ¥174,549        |   |  | ¥353,015                |   |  | $1,631,299 |  
|Accumulated benefit obligations                                                                        |  | 166,253         |   |  | 321,541                 |   |  | 1,553,766  |  
|Fair value of plan assets                                                                              |  | 106,227         |   |  | 190,328                 |   |  | 992,776    |  
|                                                                                                       |  |                 |   |  |                         |   |  |            |  



The unrecognized
prior service costs (benefits) due to amendments of the benefit plans are being amortized over approximately 15 years.



The Company recognizes actuarial gains and losses in excess of 20% of the larger of the projected benefit obligation or plan assets in the year following
the year in which such gains and losses were incurred, and amortizes actuarial gains and losses between 10% and 20% over the average participants remaining service period (approximately 15 years).



39



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7. SHAREHOLDERS EQUITY



Japanese companies are subject to the Japanese Commercial Code (the Code).



The Code requires at least 50% of the issue price of new shares to be
designated as stated capital as determined by resolution of the Board of Directors. Proceeds in excess of amounts designated as stated capital, as reduced by stock issue expenses less the applicable tax benefit, are credited to additional paid-in
capital. Under the Code, shares are recorded with no par value.



Under the Code, companies may issue new common shares to existing shareholders without consideration as a stock split pursuant to a resolution of the Board of Directors.



The Code requires that an amount at least equal to 10% of the aggregate amount of cash dividends and certain other cash
payments which are made as an appropriation of retained earnings applicable to each fiscal period shall be appropriated and set aside as a legal reserve until such reserve equals 25% of stated capital.



The Code permits companies to transfer a portion of additional paid-in
capital and the legal reserve to stated capital by resolution of the Board of Directors. The Code also permits companies to transfer a portion of unappropriated retained earnings, available for dividends, to stated capital by resolution of the
shareholders.



The Code allows for an appropriation of retained
earnings applicable to each fiscal period to be set aside as a legal reserve until the total additional paid-in capital and the legal reserve equals 25% of stated capital. The amount of total additional paid-in capital and the legal reserve which
exceeds 25% of stated capital can be transferred to retained earnings which may be available for dividends by resolution of the shareholders.



Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Semiannual interim
dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code.



Under the Code, the amount available for dividends is based on retained earnings, less treasury stock, as recorded on the books of the parent company.
Certain adjustments, not recorded on the parent companys books, are reflected in the consolidated financial statements. At March 31, 2005, retained earnings, less treasury stock, recorded on the parent companys books of account were
¥178,097 million ($1,664,458 thousand).



The Code allows
for the repurchase of treasury stock by resolution of the Board of Directors under the authorization of the Companys articles of incorporation or by resolution of the general shareholders meeting. The Code also allows for the disposal of
such treasury stock by resolution of the Board of Directors. The repurchased amount of treasury stock cannot exceed the amount available for future dividends plus the amount of stated capital, additional paid-in capital, or the legal reserve to be
reduced in the case where such reduction was resolved at the general shareholders meeting.



At the general shareholders meeting held on June 25, 2004, the articles of incorporation were amended to authorize the Board of Directors to
repurchase treasury stock. Approximately 40 million shares amounting to ¥21,407 million ($200,065 thousand) and 5 million shares amounting to ¥2,170 million were purchased during the years ended March 31, 2005 and 2004, respectively.



The Company retired 69 million shares amounting to ¥23,881
million ($223,187 thousand) of treasury stock by resolution of the Board of Directors on May 14, 2004.



On May 13, 2005, the Board of Directors resolved to retire 39 million shares of treasury stock on June 30, 2005.



8. OTHER INCOME (EXPENSES), NET



Othernet as shown in other income (expenses) for the years ended March 31, 2005, 2004,
and 2003 consisted of the following:



|                                       |  |                 |       |      |                          |        |      |  |   |        |   |  |        
|-------------------------------------- |  | --------------- | ----- | ---- | ------------------------ | ------ | ---- |  | - | ------ | - |  | -------
|                                       |  | Millions of Yen |       |      | Thousands ofU.S. Dollars
|                                       |  | 2005            |       | 2004 |                          |        | 2003 |  |   | 2005  
|                                      
|Gain (loss) on sales of securitiesnet |  | ¥               | 1,604 |      | ¥                        | 3,161  |      |  | ¥ | (5     | ) |  | $14,991
|Foreign exchange (loss) gainnet       |  |                 | 3,597 |      |                          | (1,534 | )    |  |   | (2,482 | ) |  | 33,617 
|Othernet                              |  |                 | 1,124 |      |                          | 1,726  |      |  |   | 1,048  |   |  | 10,504 
|                                       |  |                 |       |      |                          |        |      |  |   |        |   |  |        
|                                       |  | ¥               | 6,325 |      | ¥                        | 3,353  |      |  | ¥ | (1,439 | ) |  | $59,112
|                                       |  |                 |       |      |                          |        |      |  |   |        |   |  |        





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9. INCOME TAXES



The approximate effects of temporary differences and tax loss and credit carryforwards that gave rise to deferred tax balances at March 31, 2005 and 2004 were as follows:



|                                                           |  |                   |        |                           |   |                    |  |                        |         |                    |   |                        |  |           |  |            
|---------------------------------------------------------- |  | ----------------- | ------ | ------------------------- | - | ------------------ |  | ---------------------- | ------- | ------------------ | - | ---------------------- |  | --------- |  | -----------
|                                                           |  | Millions of Yen   |        | Thousands of U.S. Dollars
|                                                           |  | 2005              |        | 2004                      |   | 2005              
|                                                           |  | DeferredTaxAssets |        | DeferredTaxLiabilities    |   | DeferredTax Assets |  | DeferredTaxLiabilities |         | DeferredTax Assets |   | DeferredTaxLiabilities
|                                                           |  |                   |        |                           |   |                    | 
|Allowance for doubtful receivables                         |  | ¥                 | 1,645  |                           | ¥ | 55                 |  | ¥                      | 2,010   |                    | ¥ | 47                     |  | $  15,374 |  | $       514
|Intercompany profits                                       |  |                   | 9,305  |                           |   |                   |  |                        | 8,664   |                    |   |                       |  | 86,963    |  |           
|Adjustments of investment securities                       |  |                   | 15,465 |                           |   | 37,692             |  |                        | 11,889  |                    |   | 37,597                 |  | 144,533   |  | 352,262    
|Write-downs of inventories and fixed assets                |  |                   | 6,145  |                           |   |                   |  |                        | 13,541  |                    |   |                       |  | 57,430    |  |           
|Enterprise tax                                             |  |                   | 948    |                           |   |                   |  |                        | 1,226   |                    |   |                       |  | 8,860     |  |           
|Accrued bonus                                              |  |                   | 6,250  |                           |   |                   |  |                        | 6,193   |                    |   |                       |  | 58,411    |  |           
|Retirement and pension costs                               |  |                   | 29,340 |                           |   |                   |  |                        | 57,261  |                    |   |                       |  | 274,205   |  |           
|Unremitted earnings of foreign subsidiaries and affiliates |  |                   |       |                           |   | 4,403              |  |                        |        |                    |   | 3,203                  |  |          |  | 41,149     
|Other temporary differences                                |  |                   | 11,322 |                           |   | 3,987              |  |                        | 11,056  |                    |   | 3,696                  |  | 105,813   |  | 37,262     
|Tax loss and credit carryforwards                          |  |                   | 9,602  |                           |   |                   |  |                        | 10,950  |                    |   |                       |  | 89,738    |  |           
|                                                           |  |                   |        |                           |   |                    |  |                        |         |                    |   |                        |  |           |  |            
|Subtotal                                                   |  |                   | 90,022 |                           |   | 46,137             |  |                        | 122,790 |                    |   | 44,543                 |  | 841,327   |  | 431,187    
|Less valuation allowance                                   |  |                   | 3,824  |                           |   |                   |  |                        | 22,913  |                    |   |                       |  | 35,738    |  |           
|                                                           |  |                   |        |                           |   |                    |  |                        |         |                    |   |                        |  |           |  |            
|                                                           |  | ¥                 | 86,198 |                           | ¥ | 46,137             |  | ¥                      | 99,877  |                    | ¥ | 44,543                 |  | $805,589  |  | $431,187   
|                                                           |  |                   |        |                           |   |                    |  |                        |         |                    |   |                        |  |           |  |            



Net deferred tax
balances at March 31, 2005 and 2004 were reflected in the accompanying consolidated balance sheets under the following captions:



|                            |  |                 |        |   |                          |   |        |      |  |          |  
|--------------------------- |  | --------------- | ------ | - | ------------------------ | - | ------ | ---- |  | -------- | -
|                            |  | Millions of Yen |        |   | Thousands ofU.S. Dollars |  
|                            |  | 2005            |        |   | 2004                     |   |        | 2005 | 
|                            | 
|Other current assets        |  | ¥               | 21,322 |   |                          | ¥ | 22,047 |      |  | $199,271 |  
|Other assets                |  |                 | 19,728 |   |                          |   | 33,961 |      |  | 184,374  |  
|Other long-term liabilities |  |                 | (989   | ) |                          |   | (674   | )    |  | (9,243   | )
|                            |  |                 |        |   |                          |   |        |      |  |          |  
|Net deferred tax assets     |  | ¥               | 40,061 |   |                          | ¥ | 55,334 |      |  | $374,402 |  
|                            |  |                 |        |   |                          |   |        |      |  |          |  



In March 2003, an
amendment to Japanese tax regulation was enacted and the normal statutory tax rate was decreased from 42.0% to 40.6% effective April 1, 2004.



The provision for income taxes for the year ended March 31, 2003 included a ¥1,789 million adjustment to record the impact on deferred tax assets and
liabilities expected to be realized subsequent to April 1, 2004 for the change in the enacted tax rate.



A valuation allowance is recorded against the deferred tax assets for items which may not be realized. The net changes in the valuation allowance for the
years ended March 31, 2005, 2004, and 2003 were a decrease of ¥19,089 million ($178,402 thousand), an increase of ¥2,154 million, and an increase of ¥4,881 million, respectively. Such changes were due primarily to the realization or
nonrealization of tax benefits regarding operating losses of subsidiaries.



Based upon the level of historical taxable income and projections for future taxable income over the periods which the net deductible temporary differences are expected to reverse and/or the tax losses and credits are
carried forward, management believes it is more likely than not that the Company will realize the benefits of these deferred tax assets, net of the existing valuation allowances at March 31, 2005.



At March 31, 2005, the tax loss carryforwards in the aggregate amounted to
approximately ¥23,000 million ($214,953 thousand), which are available to offset future taxable income, and will expire in the period from 2006 through 2010.



41



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##### Table of Contents

The effective income tax rates of the Company for each of the three years in the period ended March 31,
2005 differed from the normal Japanese statutory tax rates as follows:



|                                                             |  |       |   |  |      |   |  |       |  
|------------------------------------------------------------ |  | ----- | - |  | ---- | - |  | ----- | -
|                                                             |  | 2005  |   |  | 2004 |   |  | 2003  |  
|                                                             | 
|Normal Japanese statutory tax rates                          |  | 40.6  | % |  | 42.0 | % |  | 42.0  | %
|Increase (decrease) in taxes resulting from:                 |  |       |   |  |      |   |  |       |  
|Increase (decrease) in valuation allowance                   |  | (13.0 | ) |  | 13.8 |   |  | 108.8 |  
|Permanently nondeductible expenses                           |  | 0.4   |   |  | 3.7  |   |  | 14.0  |  
|Nontaxable dividend income                                   |  | (0.1  | ) |  | (0.4 | ) |  | (3.0  | )
|Inhabitant tax per capita                                    |  | 0.1   |   |  | 0.7  |   |  | 3.0   |  
|Change in tax rate                                           |  |      |   |  | (0.7 | ) |  | 29.1  |  
|Extra tax deduction on expenses for research and development |  | (1.3  | ) |  | (8.1 | ) |  |      |  
|Othernet                                                    |  | (0.4  | ) |  | (0.4 | ) |  | 5.8   |  
|                                                             |  |       |   |  |      |   |  |       |  
|Effective income tax rates                                   |  | 26.3  | % |  | 50.6 | % |  | 199.7 | %
|                                                             |  |       |   |  |      |   |  |       |  



Provisions have been
recorded for unremitted earnings of all foreign subsidiaries and affiliates where earnings are not deemed to be permanently reinvested. Substantially all of the undistributed earnings of domestic subsidiaries and affiliates would not, under present
Japanese tax law, be subject to tax through tax-free distributions.



10. NET
INCOME (LOSS) PER COMMON SHARE



A reconciliation of the numerators and
denominators of the basic and diluted net income (loss) per common share computation for the years ended March 31, 2005, 2004, and 2003 was as follows:



|                                           |  |                              |  |           |                          |           |   |  |           
|------------------------------------------ |  | ---------------------------- |  | --------- | ------------------------ | --------- | - |  | ----------
|                                           |  | Millions of Yen              |  |           | Thousands ofU.S. Dollars
|                                           |  | 2005                         |  | 2004      |                          | 2003      |   |  | 2005      
|                                           |  |                              | 
|Net income (loss)                          |  | ¥117,901                     |  | ¥11,700   |                          | ¥(8,004   | ) |  | $1,101,879
|Effect of dilutive convertible bonds       |  | 188                          |  | 337       |                          |          |   |  | 1,757     
|                                           |  |                              |  |           |                          |           |   |  |           
|Diluted net income (loss)                  |  | ¥118,089                     |  | ¥12,037   |                          | ¥(8,004   | ) |  | $1,103,636
|                                           |  |                              |  |           |                          |           |   |  |           
|                                           |  |                             
|                                           |  | Number of Shares (Thousands) |  |           |                         
|Weighted average common shares outstanding |  | 1,323,068                    |  | 1,342,386 |                          | 1,370,382 |   |  |           
|Effect of dilutive convertible bonds       |  | 36,910                       |  | 68,944    |                          |          |   |  |           
|                                           |  |                              |  |           |                          |           |   |  |           
|Diluted common shares outstanding          |  | 1,359,978                    |  | 1,411,330 |                          | 1,370,382 |   |  |           
|                                           |  |                              |  |           |                          |           |   |  |           



11. OTHER COMPREHENSIVE INCOME
(LOSS)



The components of other comprehensive income (loss), including
reclassification adjustments and tax effects for the years ended March 31, 2005, 2004, and 2003 are as follows:



|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|-------------------------------------------------------------- |  | ---------------- | - |  | ------------------------- | - |  | ---------------- | - |  | ---------------- | - |  | -------------------- | - |  | ---------------- | -
|                                                               |  | Millions of Yen  |   |  | Thousands of U.S. Dollars |  
|                                                               |  | 2005             |   |  | 2005                      |  
|                                                               |  | Before-TaxAmount |   |  | Tax Benefit(Expense)      |   |  | Net-of-TaxAmount |   |  | Before-TaxAmount |   |  | Tax Benefit(Expense) |   |  | Net-of-TaxAmount |  
|                                                               | 
|Foreign currency translation adjustments:                      |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|Foreign currency translation adjustments arising during period |  | ¥(1,628          | ) |  | ¥     103                 |   |  | ¥(1,525          | ) |  | $(15,215         | ) |  | $       962          |   |  | $(14,253         | )
|Reclassification adjustment for losses realized in net income  |  | 57               |   |  |                          |   |  | 57               |   |  | 533              |   |  |                     |   |  | 533              |  
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|                                                               |  | (1,571           | ) |  | 103                       |   |  | (1,468           | ) |  | (14,682          | ) |  | 962                  |   |  | (13,720          | )
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|Unrealized gains on securities:                                |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|Unrealized gains on securities arising during period           |  | 2,046            |   |  | (827                      | ) |  | 1,219            |   |  | 19,121           |   |  | (7,729               | ) |  | 11,392           |  
|Reclassification adjustment for gains realized in net income   |  | (1,181           | ) |  | 479                       |   |  | (702             | ) |  | (11,037          | ) |  | 4,477                |   |  | (6,560           | )
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|                                                               |  | 865              |   |  | (348                      | ) |  | 517              |   |  | 8,084            |   |  | (3,252               | ) |  | 4,832            |  
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|Minimum pension liability adjustment                           |  | 5,991            |   |  | (2,499                    | ) |  | 3,492            |   |  | 55,991           |   |  | (23,355              | ) |  | 32,636           |  
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|Unrealized losses on derivatives:                              |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|Unrealized losses on derivatives arising during period         |  | (1,429           | ) |  | 591                       |   |  | (838             | ) |  | (13,355          | ) |  | 5,523                |   |  | (7,832           | )
|Reclassification adjustments for gains realized in net income  |  | (456             | ) |  | 185                       |   |  | (271             | ) |  | (4,262           | ) |  | 1,729                |   |  | (2,533           | )
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|                                                               |  | (1,885           | ) |  | 776                       |   |  | (1,109           | ) |  | (17,617          | ) |  | 7,252                |   |  | (10,365          | )
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  
|Other comprehensive income                                     |  | ¥ 3,400          |   |  | ¥(1,968                   | ) |  | ¥  1,432         |   |  | $ 31,776         |   |  | $(18,393             | ) |  | $ 13,383         |  
|                                                               |  |                  |   |  |                           |   |  |                  |   |  |                  |   |  |                      |   |  |                  |  





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|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|-------------------------------------------------------------- |  | ----------------- | ------- | - | --------------------- | ----------- | - | ----------------- | ------- | -
|                                                               |  | Millions of Yen   |        
|                                                               |  | 2004              |        
|                                                               |  | Before-Tax Amount |         |   | Tax Benefit (Expense) |             |   | Net-of-Tax Amount |        
|                                                               | 
|Foreign currency translation adjustments:                      |  |                   |         |   |                       |             |   |                   |         |  
|Foreign currency translation adjustments arising during period |  | ¥                 | (7,786  | ) |                       | ¥       211 |   |                   | ¥(7,575 | )
|Reclassification adjustment for losses realized in net income  |  |                   | 40      |   |                       |            |   |                   | 40      |  
|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|                                                               |  |                   | (7,746  | ) |                       | 211         |   |                   | (7,535  | )
|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|Unrealized gains on securities:                                |  |                   |         |   |                       |             |   |                   |         |  
|Unrealized gains on securities arising during period           |  |                   | 75,094  |   |                       | (30,492     | ) |                   | 44,602  |  
|Reclassification adjustment for gains realized in net income   |  |                   | (2,078  | ) |                       | 844         |   |                   | (1,234  | )
|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|                                                               |  |                   | 73,016  |   |                       | (29,648     | ) |                   | 43,368  |  
|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|Minimum pension liability adjustment                           |  |                   | 64,797  |   |                       | (27,232     | ) |                   | 37,565  |  
|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|Unrealized gains on derivatives:                               |  |                   |         |   |                       |             |   |                   |         |  
|Unrealized gains on derivatives arising during period          |  |                   | 3,751   |   |                       | (1,573      | ) |                   | 2,178   |  
|Reclassification adjustments for gains realized in net income  |  |                   | (2,424  | ) |                       | 1,018       |   |                   | (1,406  | )
|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|                                                               |  |                   | 1,327   |   |                       | (555        | ) |                   | 772     |  
|                                                               |  |                   |         |   |                       |             |   |                   |         |  
|Other comprehensive income                                     |  | ¥                 | 131,394 |   |                       | ¥(57,224)   |   |                   | ¥74,170 |  
|                                                               |  |                   |         |   |                       |             |   |                   |         |  



|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|-------------------------------------------------------------- |  | ----------------- | ------- | - | --------------------- | --------- | - | ----------------- | - | ------- | -
|                                                               |  | Millions of Yen   |        
|                                                               |  | 2003              |        
|                                                               |  | Before-Tax Amount |         |   | Tax Benefit (Expense) |           |   | Net-of-Tax Amount |  
|                                                               | 
|Foreign currency translation adjustments:                      |  |                   |         |   |                       |           |   |                   |   |         |  
|Foreign currency translation adjustments arising during period |  | ¥                 | (6,482  | ) |                       | ¥     316 |   |                   | ¥ | (6,166  | )
|Reclassification adjustment for gains realized in net income   |  |                   | (200    | ) |                       |          |   |                   |   | (200    | )
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|                                                               |  |                   | (6,682  | ) |                       | 316       |   |                   |   | (6,366  | )
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|Unrealized losses on securities:                               |  |                   |         |   |                       |           |   |                   |   |         |  
|Unrealized losses on securities arising during period          |  |                   | (44,827 | ) |                       | 18,825    |   |                   |   | (26,002 | )
|Reclassification adjustment for losses realized in net income  |  |                   | 24,827  |   |                       | (10,427   | ) |                   |   | 14,400  |  
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|                                                               |  |                   | (20,000 | ) |                       | 8,398     |   |                   |   | (11,602 | )
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|Minimum pension liability adjustment                           |  |                   | (52,389 | ) |                       | 22,003    |   |                   |   | (30,386 | )
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|Unrealized gains on derivatives:                               |  |                   |         |   |                       |           |   |                   |   |         |  
|Unrealized gains on derivatives arising during period          |  |                   | 1,043   |   |                       | (442      | ) |                   |   | 601     |  
|Reclassification adjustments for gains realized in net income  |  |                   | (811    | ) |                       | 341       |   |                   |   | (470    | )
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|                                                               |  |                   | 232     |   |                       | (101      | ) |                   |   | 131     |  
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  
|Other comprehensive loss                                       |  | ¥                 | (78,839 | ) |                       | ¥30,616   |   |                   | ¥ | (48,223 | )
|                                                               |  |                   |         |   |                       |           |   |                   |   |         |  



43



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##### Table of Contents

The balances of each classification within accumulated other comprehensive income were as follows:



|                        |  |                                    |   |  |                                |  |                                      |   |  |                                          |   |  |                                       
|----------------------- |  | ---------------------------------- | - |  | ------------------------------ |  | ------------------------------------ | - |  | ---------------------------------------- | - |  | --------------------------------------
|                        |  | Millions of Yen                   
|                        |  | Cumulative Translation Adjustments |   |  | Unrealized Gains on Securities |  | Minimum Pension Liability Adjustment |   |  | Unrealized Gains (Losses) on Derivatives |   |  | Accumulated Other Comprehensive Income
|                       
|Balance, April 1, 2004  |  | ¥(11,445                           | ) |  | ¥40,499                        |  | ¥(3,492                              | ) |  | ¥     513                                |   |  | ¥26,075                               
|Currentperiod change   |  | (1,468                             | ) |  | 517                            |  | 3,492                                |   |  | (1,109                                   | ) |  | 1,432                                 
|                        |  |                                    |   |  |                                |  |                                      |   |  |                                          |   |  |                                       
|Balance, March 31, 2005 |  | ¥(12,913                           | ) |  | ¥41,016                        |  | ¥                                   |   |  | ¥   (596                                 | ) |  | ¥27,507                               
|                        |  |                                    |   |  |                                |  |                                      |   |  |                                          |   |  |                                       
|                        | 
|                        |  | Thousands of U.S. Dollars         
|                        |  | Cumulative Translation Adjustments |   |  | Unrealized Gains on Securities |  | Minimum Pension Liability Adjustment |   |  | Unrealized Gains (Losses) on Derivatives |   |  | Accumulated Other Comprehensive Income
|                       
|Balance, April 1, 2004  |  | $(106,962                          | ) |  | $378,495                       |  | $(32,636                             | ) |  | $   4,795                                |   |  | $243,692                              
|Currentperiod change   |  | (13,720                            | ) |  | 4,832                          |  | 32,636                               |   |  | (10,365                                  | ) |  | 13,383                                
|                        |  |                                    |   |  |                                |  |                                      |   |  |                                          |   |  |                                       
|Balance, March 31, 2005 |  | $(120,682                          | ) |  | $383,327                       |  | $                                   |   |  | $  (5,570                                | ) |  | $257,075                              
|                        |  |                                    |   |  |                                |  |                                      |   |  |                                          |   |  |                                       



12. FINANCIAL INSTRUMENTS



In the normal course of business, the Company invests in various
financial assets and incurs various financial liabilities. The Company also enters into agreements involving derivative instruments to manage its exposure to fluctuations in foreign exchange and interest rates.



Market Risk Management



Market Risk Exposures



The Company is subject to market rate risks due to fluctuation of foreign currency exchange rates, interest rates, and equity prices. Among these risks, the Company
manages foreign currency exchange and interest rate risks by using derivative financial instruments in accordance with established policies and procedures. The Company does not use derivative financial instruments for trading purposes. The credit
risks associated with these instruments are not considered to be significant since the counterparties are reliable major international financial institutions and the Company does not anticipate any such losses. The net cash requirements arising from
the previously mentioned risk management activities are not expected to be material.



Foreign Currency Exchange Risks



The Companys
foreign currency exposure relates primarily to its foreign currency denominated assets in its international operations. The Company entered into foreign exchange forward contracts and currency swaps designated to mitigate its exposure to foreign
currency exchange risks.



The following table provides
information regarding the Companys derivative financial instruments related to foreign currency exchange transactions as of March 31, 2005, which was translated into Japanese yen at the year-end currency exchange rate.



Foreign Exchange Forward Contracts and Currency Swaps



|                                  |  |         |  |                 |  |                          
|--------------------------------- |  | ------- |  | --------------- |  | -------------------------
|                                  |  |         |  | Millions of Yen |  | Thousands of U.S. Dollars
|Maturities, Years Ending March 31 |  |         |  | 2006            |  | 2006                     
|                                 
|Sell U.S. Dollar, buy Yen         |  | Receive |  | ¥37,377         |  | $349,318                 
|                                  |  | Pay     |  | 38,306          |  | 358,000                  
|                                  |  |         |  |                 |  |                          
|Sell Euro, buy Yen                |  | Receive |  | 11,201          |  | 104,682                  
|                                  |  | Pay     |  | 11,437          |  | 106,888                  
|                                  |  |         |  |                 |  |                          
|Sell Sterling Pound, buy Euro     |  | Receive |  | 1,375           |  | 12,850                   
|                                  |  | Pay     |  | 1,340           |  | 12,523                   
|                                  |  |         |  |                 |  |                          
|Sell Baht, buy Yen                |  | Receive |  | 875             |  | 8,178                    
|                                  |  | Pay     |  | 883             |  | 8,252                    
|                                  |  |         |  |                 |  |                          
|Sell Baht, buy U.S. Dollar        |  | Receive |  | 222             |  | 2,075                    
|                                  |  | Pay     |  | 225             |  | 2,103                    
|                                  |  |         |  |                 |  |                          
|Sell Yen, buy U.S. Dollar         |  | Receive |  | 102             |  | 953                      
|                                  |  | Pay     |  | 102             |  | 953                      
|                                  |  |         |  |                 |  |                          



44



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##### Table of Contents

Interest Rate Risks



The Company is exposed to interest rate risks mainly inherent in its debt obligations with both fixed and variable rates. Debt obligations
that are sensitive to interest rate changes are disclosed in Note 5. In order to hedge these risks, the Company uses interest rate swap contracts to change the characteristics of its fixed and variable rate exposures.



The following table provides information, by maturity date, about the
Companys interest rate swap contracts. The table represents notional principal amounts and weighted average interest rates by expected maturity dates. Notional principal amounts are used to calculate the contractual payments to be exchanged
under the contracts as of March 31, 2005, which are translated into Japanese yen at the year-end currency exchange rate.



Interest Rate Swap Contracts



|                                   |  |                      |   |  |                 |   |  |                |        |                          |         
|---------------------------------- |  | -------------------- | - |  | --------------- | - |  | -------------- | ------ | ------------------------ | --------
|                                   |  | WeightedAverage Rate |   |  | Notional Amount
|Maturities, Years Ending March 31, |  | Receive              |   |  | Pay             |   |  | Millionsof Yen |        | Thousands ofU.S. Dollars
|                                  
|2006                               |  | 1.43                 | % |  | 1.74            | % |  | ¥              | 33,997 |                          | $317,729
|2007                               |  | 1.06                 |   |  | 1.58            |   |  |                | 19,353 |                          | 180,869 
|2008                               |  | 0.44                 |   |  | 1.01            |   |  |                | 8,573  |                          | 80,121  
|2009                               |  | 0.20                 |   |  | 0.81            |   |  |                | 4,500  |                          | 42,056  



Cash Flow Hedges



Changes in the fair value of foreign exchange contracts and interest
rate swap agreements designated and qualifying as cash flow hedges are reported in other comprehensive income (loss). These amounts are subsequently reclassified into earnings through other income (expense) in the same period as the hedged items
affect earnings. For most forward exchange contracts, the amounts are reclassified when products related to hedged transactions are sold from overseas subsidiaries to customers. In the case of interest rate swaps, the amounts are reclassified when
the related interest expense is recognized. Substantially all of the unrecognized net losses on derivatives included in accumulated other comprehensive loss of ¥596 million ($5,570 thousand) at March 31, 2005 will be reclassified into earnings
within the next 12 months.



Equity Price Risks



The Companys short-term and other investments are exposed to changes in equity price
risks and consist mainly of available-for-sale securities. Fair value and other information for such equity securities is disclosed in Note 4.



Fair Value of Financial Instruments



The Company had the following financial instruments at March 31, 2005 and 2004:



|                                                                   |  |                 |   |  |                           |   |  |                |   |  |            |   |  |                |   |  |            |  
|------------------------------------------------------------------ |  | --------------- | - |  | ------------------------- | - |  | -------------- | - |  | ---------- | - |  | -------------- | - |  | ---------- | -
|                                                                   |  | Millions of Yen |   |  | Thousands of U.S. Dollars |  
|                                                                   |  | 2005            |   |  | 2004                      |   |  | 2005           |  
|                                                                   |  | Carrying Value  |   |  | Fair Value                |   |  | Carrying Value |   |  | Fair Value |   |  | Carrying Value |   |  | Fair Value |  
|                                                                   |  |                 |   | 
|Financial assets:                                                  |  |                 |   |  |                           |   |  |                |   |  |            |   |  |                |   |  |            |  
|Finance receivablesnet                                            |  | ¥131,646        |   |  | ¥126,164                  |   |  | ¥  74,840      |   |  | ¥  68,788  |   |  | $1,230,336     |   |  | $1,179,103 |  
|Financial liabilities:                                             |  |                 |   |  |                           |   |  |                |   |  |            |   |  |                |   |  |            |  
|Long-term debt                                                     |  | (179,524        | ) |  | (178,584                  | ) |  | (176,913       | ) |  | (176,384   | ) |  | (1,677,794     | ) |  | (1,669,009 | )
|Derivative financial instruments recorded as (liabilities) assets: |  |                 |   |  |                           |   |  |                |   |  |            |   |  |                |   |  |            |  
|Foreign exchange instruments                                       |  | (902            | ) |  | (902                      | ) |  | 1,006          |   |  | 1,006      |   |  | (8,430         | ) |  | (8,430     | )
|Interest rate swaps and other instruments                          |  | (98             | ) |  | (98                       | ) |  | (131           | ) |  | (131       | ) |  | (916           | ) |  | (916       | )



Short-term and other
investments are disclosed in Note 4.



The fair values of
finance receivables and long-term debt are based on discounted cash flows using the current interest rate on similar financing investments or borrowings. The fair value estimates of the financial instruments are not necessarily indicative of the
amounts the Company might pay or receive from actual market transactions.



The carrying amounts of cash and cash equivalents, notes and accounts receivable and payable, and short-term borrowings approximate the fair value because of the short maturity of those instruments.



Concentration of Credit Risks



A certain level of group concentrations of the Companys business activities is found
in the domestic farm equipment sales through the National Federation of Agricultural Cooperative Associations and affiliated dealers. The concentrated credit risk of the domestic farm equipment business consists principally of notes and accounts
receivable and financial guarantees, for which the Company historically has not experienced any significant uncollectibility. Additionally, transactions associated with country risk are limited.



45



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##### Table of Contents

13. SUPPLEMENTAL EXPENSE INFORMATION



Selling, General, and Administrative Expenses



Amounts of certain costs and expenses for the years ended March 31, 2005, 2004, and 2003 were as follows:



|                                  |  |                 |        |                          |   |        |  |      |        |  |         
|--------------------------------- |  | --------------- | ------ | ------------------------ | - | ------ |  | ---- | ------ |  | --------
|                                  |  | Millions of Yen |        | Thousands ofU.S. Dollars
|                                  |  | 2005            |        | 2004                     |   | 2003   |  | 2005
|                                 
|Research and development expenses |  | ¥               | 21,963 |                          | ¥ | 23,261 |  | ¥    | 26,405 |  | $205,262
|Advertising costs                 |  |                 | 9,586  |                          |   | 9,638  |  |      | 9,534  |  | 89,589  
|Shipping and handling costs       |  |                 | 40,412 |                          |   | 39,137 |  |      | 37,725 |  | 377,682 



Loss (Gain) from Disposal and
Impairment of Businesses and Fixed Assets



Loss (gain) from disposal and
impairment of businesses and fixed assets for the year ended March 31, 2005 includes a loss of ¥1,095 million ($10,234 thousand) resulting from the impairment of long-lived assets and a gain of ¥6,548 million ($61,196 thousand) resulting
mainly from the sale of two subsidiaries. The Company recognized a gain of ¥5,526 million ($51,645 thousand) for the sale of a company which operates a golf course. Also the Company recorded a gain of ¥1,573 million ($14,701 thousand)
related to the sale of a company which is involved in a rental computer server service.



Loss (gain) from disposal and impairment of businesses and fixed assets for the year ended March 31, 2004 includes a loss of ¥1,263 million resulting from the impairment of long-lived assets and a loss of
¥4,122 million resulting primarily from the disposal of certain fixed assets related to the roofing and siding materials business.



Loss (gain) from disposal and impairment of businesses and fixed assets for the year ended March 31, 2003 includes a loss of ¥16,792 million resulting
from the impairment of long-lived assets, primarily the land and buildings of a golf course held and operated by the Company with a fair value of ¥730 million. As a result of the significant deterioration of the golf business, the Company
evaluated the recoverability of related assets and recognized an impairment loss. The fair value of the golf course was determined by the expected cash flow approach.



14. COMMITMENTS AND CONTINGENCIES



Commitments



Commitments for capital expenditures outstanding at March 31, 2005 approximated ¥1,155 million ($10,794 thousand).



The Company leases certain office space and equipment and employee housing under cancelable and noncancelable lease agreements.



Future minimum lease payments required under capital and noncancelable
operating leases that have initial or remaining lease term in excess of one year as of March 31, 2005 were as follows:



|                                                    |  |                 |       |                           |                 |         |               |   |        |                 |  |   |       
|--------------------------------------------------- |  | --------------- | ----- | ------------------------- | --------------- | ------- | ------------- | - | ------ | --------------- |  | - | ------
|                                                    |  | Millions of Yen |       | Thousands of U.S. Dollars
|Years ending March 31,                              |  | CapitalLeases   |       |                           | OperatingLeases |         | CapitalLeases |   |        | OperatingLeases
|                                                   
|2006                                                |  | ¥               | 2,428 |                           |                 | ¥   334 |               | $ | 22,692 |                 |  | $ | 3,121 
|2007                                                |  |                 | 1,302 |                           |                 | 267     |               |   | 12,168 |                 |  |   | 2,496 
|2008                                                |  |                 | 957   |                           |                 | 246     |               |   | 8,944  |                 |  |   | 2,299 
|2009                                                |  |                 | 114   |                           |                 | 162     |               |   | 1,065  |                 |  |   | 1,514 
|2010                                                |  |                 | 75    |                           |                 | 83      |               |   | 701    |                 |  |   | 776   
|2011 and thereafter                                 |  |                 | 50    |                           |                 | 386     |               |   | 467    |                 |  |   | 3,607 
|                                                    |  |                 |       |                           |                 |         |               |   |        |                 |  |   |       
|Total minimum lease payments                        |  |                 | 4,926 |                           |                 | ¥1,478  |               |   | 46,037 |                 |  | $ | 13,813
|                                                    |  |                 |       |                           |                 |         |               |   |        |                 |  |   |       
|Less: amounts representing interest                 |  |                 | (85   | )                         |                 |         |               |   | (794   | )               |  |   |       
|                                                    |  |                 |       |                           |                 |         |               |   |        |                 |  |   |       
|Present value of net minimum capital lease payments |  | ¥               | 4,841 |                           |                 |         |               | $ | 45,243 |                 |  |   |       
|                                                    |  |                 |       |                           |                 |         |               |   |        |                 |  |   |       



Capital lease obligations are included in current portion of long-term debt and long-term debt in the consolidated balance sheets. Rental expenses under operating leases for the years ended
March 31, 2005, 2004, and 2003 were ¥7,029 million ($65,692 thousand), ¥8,553 million, and ¥8,182 million, respectively.



46



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##### Table of Contents

Guarantees



The Company is contingently liable as guarantor of the indebtedness of distributors, including affiliated companies, and customers for their borrowings from financial
institutions. The Company is also contingently liable as guarantor of the housing loans of employees. The Company would have to perform under these guarantees in the events of default on a payment within the guarantee periods of 1 year to 10 years
for distributors and customers and of 1 year to 20 years for employees with housing loans.



Maximum potential amounts of undiscounted future payments of these financial guarantees as of March 31, 2005 were as follows:



|                                         |  |                 |  |                          
|---------------------------------------- |  | --------------- |  | -------------------------
|                                         |  | Millions of Yen |  | Thousands of U.S. Dollars
|                                        
|Borrowings of distributors and customers |  | ¥1,224          |  | $11,439                  
|Housing loans of employees               |  | 1,755           |  | 16,402                   
|                                         |  |                 |  |                          
|Total                                    |  | ¥2,979          |  | $27,841                  
|                                         |  |                 |  |                          



The Company issues
contractual product warranties under which it generally guarantees the performance of products delivered and services rendered for a certain period or term. The Company determines its reserve for product warranties based on an analysis of the
historical data of costs to perform under product warranties.



The changes in the accrued product warranty cost for the years ended March 31, 2005 and 2004 were as follows:



|                             |  |                 |   |  |                           |   |  |         |  
|---------------------------- |  | --------------- | - |  | ------------------------- | - |  | ------- | -
|                             |  | Millions of Yen |   |  | Thousands of U.S. Dollars |  
|                             |  | 2005            |   |  | 2004                      |   |  | 2005    |  
|                             | 
|Balance at beginning of year |  | ¥2,209          |   |  | ¥1,748                    |   |  | $20,645 |  
|Addition                     |  | 3,663           |   |  | 4,978                     |   |  | 34,234  |  
|Utilization                  |  | (3,138          | ) |  | (3,293                    | ) |  | (29,327 | )
|Other                        |  | (16             | ) |  | (1,224                    | ) |  | (150    | )
|                             |  |                 |   |  |                           |   |  |         |  
|Balance at end of year       |  | ¥2,718          |   |  | ¥2,209                    |   |  | $25,402 |  
|                             |  |                 |   |  |                           |   |  |         |  



Accrued product
warranty cost is included in other current liabilities in the consolidated balance sheets.



Legal Proceedings



In the fiscal year
ended March 31, 1999, the Fair Trade Commission of Japan (the FTCJ) began an investigation of the Company for an alleged violation of the Anti-Monopoly Law (prohibition of private monopoly or unfair trade restraint) relating to
participation in fixing the shares of ductile iron straight pipe orders in Japan. In March 1999, the Company received a cease and desist recommendation from the FTCJ, which was accepted by the Company in April 1999.



In connection with this investigation, on December 24, 1999, the Company
received a surcharge order of ¥7,072 million from the FTCJ. The Company has challenged this order and filed a petition for the initiation of hearing procedures that were started in March 2000 and continued through the year ended March 31, 2005.
Under Section 49 of the Anti-Monopoly Law, upon the initiation of the procedures, the surcharge order lost effect. In addition, Section 7-2 of the law stipulates that surcharges are imposed in cases where price cartels or cartels that influence
prices by curtailing the volume of supply are carried out. The Company believes that the alleged share cartel does not meet the requirement of Section 7-2 and has not established any provision for the ultimate liability, if any, which may result
from the settlement of this matter.



An unfavorable outcome
from this issue could materially affect the Companys results of operations or cash flows in a given year. The Company is not able to estimate the likelihood of such an unfavorable outcome or the amount of related losses, if any.



Asbestos-Related Matters



The Company previously manufactured and sold asbestos-containing products such as
asbestos-pipes and building materials (roofing and siding materials). In April 2005, the Company was advised that some residents who lived near the Companys plant once called Kanzaki Plant in Amagasaki, Hyogo Prefecture suffered
from mesothelioma, a form of lung cancer and is said to be mainly caused by aspiration of asbestos. In June 2005, the Company voluntarily decided to make consolation payments to certain residents with mesothelioma. Additionally, in accordance with
its policies and procedures, the Company has made compensation payments to current and former employees, who suffered, or currently suffering, from asbestos-related disease.



The Company expenses payments to residents and current and former employees when the Company determines that a payment is
warranted based on the medical condition of the individual concerned and in the consideration of the Companys policy. During the years ended March 31, 2005, 2004 and 2003, the Company made payments aggregating ¥210 million ($1,963
thousand), ¥433 million and ¥142 million, respectively, to current and former employees affected by asbestos contamination. Although the Company has not been involved in any lawsuits up to the present time related to the asbestos-related
health hazards of employees (including former employees) who engaged in the manufacturing of asbestos-containing products, and residents who lived near the Companys plants at which asbestos-containing products were produced, the Company may
face lawsuits related to this issue. The Company believes that it is not possible at this time to reasonably estimate its total exposure and the related liability to current and former employees and residents related to this matter that might
ultimately be incurred in the future. No liability for this contingency has been recorded in the Companys accompanying consolidated balance sheets as of March 31, 2005 and 2004.



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##### Table of Contents

15. SALE OF ACCOUNTS RECEIVABLE



The Company sells trade and finance receivables to investors through bankruptcy-remote independent revolving-period securitization trusts.
As of March 31, 2005, the Company has agreements to sell up to ¥33,740 million ($315,327 thousand) of trade receivables and an unspecified amount of finance receivables, subject to the approval of the trusts.



The Company sold trade receivables, net of loss reserves, totaling
¥84,504 million ($789,757 thousand), ¥69,218 million and ¥37,746 million during the years ended March 31, 2005, 2004, and 2003, respectively. The Company sold finance receivables, net of loss reserves, totaling ¥5,752 million
($53,757 thousand), ¥50,338 million and ¥43,840 million during the years ended March 31, 2005, 2004, and 2003, respectively.



The Company did not recognize any gains or losses from the sale of trade receivables for the years ended March 31, 2005, 2004, and 2003. The
Companys sales of financial receivables resulted in a net gain of ¥129 million ($1,206 thousand), ¥902 million and ¥752 million during the years ended March 31, 2005, 2004, and 2003, respectively.



Under the terms of the agreements, new receivables are added to the pool as
collections reduce previously sold accounts receivable. At the time the receivables are sold under the securitization program, the balances are removed from the consolidated balance sheet of the Company. In determining the gain or loss for each
qualifying sale of receivables, the investment in the sold receivables pool is allocated between the portion sold and the portion retained based on their relative fair values on the date of sale.



The Company retains a residual interest in sold receivables, which represents
residual payments received in excess of payments due to the investor. Retained interests are recorded at fair value based on the net present value of future anticipated cash flows, which is calculated by analyzing yield, estimated credit losses,
contractual servicing rates and the average life of the transferred receivables.



The Companys residual interest in trade and financial receivables at March 31, 2005 and 2004 was as follows:



|                                         |  |                 |        |                          |   |        |  |         
|---------------------------------------- |  | --------------- | ------ | ------------------------ | - | ------ |  | --------
|                                         |  | Millions of Yen |        | Thousands ofU.S. Dollars
|                                         |  | 2005            |        | 2004                     |   | 2005  
|                                        
|Residual interest in trade receivables   |  | ¥               | 37,332 |                          | ¥ | 23,080 |  | $348,897
|Residual interest in finance receivables |  |                 | 6,376  |                          |   | 6,262  |  | 59,589  



The Company continues
to service the receivables for a fee based on a percentage of the receivables transferred. The investors and the securitization trusts have no recourse to the Companys assets for failure of debtors to pay when due.



The following key economic assumptions were used in measuring the retained
interest in receivables sold by the Company during the years ended March 31:



|                               |  |      |   |  |      |  
|------------------------------ |  | ---- | - |  | ---- | -
|                               |  | 2005 |   |  | 2004 |  
|                               | 
|Trade receivables:             |  |      |   |  |      |  
|Weighted average life (months) |  | 6.5  |   |  | 6.5  | %
|Expected credit losses         |  | 0.2  | % |  | 0.2  | %
|Expected net dilution          |  | 9.4  | % |  | 4.2  | %
|Finance receivables:           |  |      |   |  |      |  
|Weighted-average life (months) |  | 50.4 |   |  | 49.6 | %
|Expected credit losses         |  | 0.1  | % |  | 0.1  | %
|Discount rate                  |  | 10.1 | % |  | 10.2 | %



The following table
summarizes certain cash flows received from securitization trusts for the years ended March 31:



|                                                             |  |                 |        |                          |   |        |  |      |        |  |         
|------------------------------------------------------------ |  | --------------- | ------ | ------------------------ | - | ------ |  | ---- | ------ |  | --------
|                                                             |  | Millions of Yen |        | Thousands ofU.S. Dollars
|                                                             |  | 2005            |        | 2004                     |   | 2003   |  | 2005
|                                                            
|Trade receivables:                                           |  |                 |        |                          |   |        |  |      |        |  |         
|Proceeds from revolving period sales                         |  | ¥               | 13,555 |                          | ¥ | 10,908 |  | ¥    | 5,985  |  | $126,682
|Servicing fees received                                      |  |                 | 270    |                          |   | 231    |  |      | 189    |  | 2,523   
|Finance receivables:                                         |  |                 |        |                          |   |        |  |      |        |  |         
|Proceeds from revolving period sales                         |  |                 |       |                          |   | 38,367 |  |      | 33,389 |  |        
|Servicing fees received                                      |  |                 | 210    |                          |   | 279    |  |      | 387    |  | 1,963   
|Cash flows received on retained interests in securitizations |  |                 | 359    |                          |   | 662    |  |      | 1,200  |  | 3,355   



The Company has
determined that a change of up to 25% in any of the above economic assumptions on trade receivables would not have a material impact on the consolidated financial statements of the Company.



48



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##### Table of Contents

The following depicts the sensitivity of the fair value of retained interests in finance receivables at
March 31, 2005 to adverse changes in the key economic assumptions used to measure fair value:



|                                                |  |                 |   |  |                         
|----------------------------------------------- |  | --------------- | - |  | ------------------------
|                                                |  | Millions of Yen |   |  | Thousands ofU.S. Dollars
|                                               
|Finance receivables:                            |  |                 |   |  |                         
|Fair value of retained interest                 |  | ¥11,061         |   |  | $103,374                
|Expected credit losses (annual rate)            |  | 0.07            | % |  |                         
|Impact on fair value of 10% adverse change      |  | 1               |   |  | 9                       
|Impact on fair value of 20% adverse change      |  | 2               |   |  | 19                      
|Residual cash flows discount rate (annual rate) |  | 10.13           | % |  |                         
|Impact on fair value of 10% adverse change      |  | 88              |   |  | 822                     
|Impact on fair value of 20% adverse change      |  | 178             |   |  | 1,664                   



Considerable judgment
is required in interpreting market data to develop estimates of fair values, so the above estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of a variation in a
particular assumption on the fair value of the retained interest is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in
lower prepayments and increased credit losses), which might magnify or counteract the sensitivities. In addition, the above-estimated amounts generated from the sensitivity analysis include estimates of market risk, which assume for analytical
purposes that certain adverse market considerations may occur. Actual future market conditions may differ materially, and accordingly, the forward-looking estimates should not be considered to be projections by the Company of future events or
losses.



16. SUBSEQUENT EVENT



On May 13, 2005, the Companys Board of Directors resolved to pay a cash dividend to
shareholders of record on March 31, 2005 of ¥5 per common share (¥25 per 5 common shares) or a total of ¥6,504 million ($60,785 thousand). The resolution to pay the cash dividend is subject to shareholders approval at the general
meeting to be held on June 24, 2005.



17. RESTATEMENT OF RETAIL FINANCE
RECEIVABLES IN THE CONSOLIDATED BALANCE SHEET



Retail finance receivables
were previously classified as current assets in the consolidated balance sheet at March 31, 2004.



Subsequent to the issuance of the Companys 2004 financial statements, the Company reconsidered its classification of these receivables considering
Chapter 3, Section A, Current Assets and Current Liabilities of Accounting Research Bulletins No. 43, Restatement and Revision of Accounting Research Bulletins. In accordance with such guidance, the Company has restated its
consolidated balance sheet at March 31, 2004 to reflect amounts expected to be collected one year after the balance sheet date as a long-term asset.



The impact of the restatement of the affected line items in the consolidated balance sheet at March 31, 2004 is as follows:



|                                                     |  |                       |   |  |             |   |  |                  |   |  |                             |  
|---------------------------------------------------- |  | --------------------- | - |  | ----------- | - |  | ---------------- | - |  | --------------------------- | -
|                                                     |  | Millions of Yen       |  
|                                                     |  | 2004                  |  
|                                                     |  | As PreviouslyReported |   |  | Restatement |   |  | Reclassification |   |  | As Restatedand Reclassified |  
|                                                     | 
|Notes and accounts receivable:                       |  |                       |   |  |             |   |  |                  |   |  |                             |  
|Trade accounts                                       |  | ¥206,609              |   |  | ¥          |   |  | ¥20,412          |   |  | ¥227,021                    |  
|Finance receivablesnet                              |  | 114,713               |   |  | (67,267     | ) |  | (47,446          | ) |  |                            |  
|Allowance for doubtful notes and accounts receivable |  | (3,054                | ) |  | 488         |   |  | 158              |   |  | (2,408                      | )
|Short-term finance receivablesnet                   |  |                      |   |  |            |   |  | 26,876           |   |  | 26,876                      |  
|Other current assets                                 |  | 62,105                |   |  | (196        | ) |  |                 |   |  | 61,909                      |  
|Total current assets                                 |  | 681,402               |   |  | (66,975     | ) |  |                 |   |  | 614,427                     |  
|                                                     |  |                       |   | 
|Long-term finance receivablesnet                    |  |                      |   |  | 66,779      |   |  | (18,815          | ) |  | 47,964                      |  
|Other assets                                         |  | 58,613                |   |  | 196         |   |  | 18,815           |   |  | 77,624                      |  



A description of the
Reclassification is disclosed in Note 1.



49



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders of Kubota Corporation:



We have audited the accompanying consolidated balance sheets of Kubota Corporation and subsidiaries (the Company) as of March 31, 2005 and 2004, and the related consolidated statements of income,
comprehensive income (loss), shareholders equity, and cash flows for each of the three years in the period ended March 31, 2005, all expressed in Japanese yen. These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



Certain information required by Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about Segments of
an Enterprise and Related Information has not been presented in the accompanying consolidated financial statements. In our opinion, presentation concerning operating segments and other information is required for a complete presentation of the
Companys consolidated financial statements.



The Company has not
accounted for a nonmonetary security exchange transaction, that occurred during the year ended March 31, 1997, in accordance with accounting principles generally accepted in the United States of America. In our opinion, the recognition of the
nonmonetary exchange gain, and the related impact in subsequent periods, is required by accounting principles generally accepted in the United States of America. The Company has disclosed the effects of the departure and other relevant information
in Note 1 to the consolidated financial statements.



In our opinion, except for
the omission of segment and other information required by SFAS No. 131 and the effect of not properly recording a nonmonetary security exchange transaction, as discussed in the preceding paragraphs, such consolidated financial statements present
fairly, in all material respects, the financial position of Kubota Corporation and subsidiaries as of March 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2005 in
conformity with accounting principles generally accepted in the United States of America.



As discussed in note 17 to the consolidated financial statements, the accompanying consolidated balance sheet as of March 31, 2004 has been restated.



Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.



|                            
|----------------------------
|/s/ Deloitte Touche Tohmatsu
|Osaka,
Japan                

June 3, 2005, except for Asbestos-related matters described in Note 14, as to which the date is August 24, 2005.



50



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##### Table of Contents

Schedule II: Valuation and Qualifying Accounts



Kubota Corporation and Subsidiaries          March 31, 2005, 2004, and 2003





|                                                       |  |                            |  |                                         |  |                           |  |                                 |   |  |                     
|------------------------------------------------------ |  | -------------------------- |  | --------------------------------------- |  | ------------------------- |  | ------------------------------- | - |  | --------------------
|                                                       |  | (Million of Yen)          
|Column A                                               |  | Column B                   |  | Column C                                |  | Column D                  |  |                                 |   |  | Column E            
|Description                                            |  | Balance,Beginning of Year  |  | Additions- Charged to Costsand Expenses |  | DeductionsActualWrite-Off |  | TranslationAdjustments andOther |   |  | Balance, End of Year
|Allowance for doubtful notes and accounts receivable : |  |                            |  |                                         |  |                           |  |                                 |   |  |                     
|                                                       |  |                            |  |                                         | 
|Year ended March 31, 2005                              |  | ¥3,054                     |  | ¥  79                                   |  | ¥   175                   |  | ¥(701                           | ) |  | ¥2,257              
|                                                       |  |                            |  |                                         | 
|Year ended March 31, 2004                              |  | ¥4,089                     |  | ¥728                                    |  | ¥1,040                    |  | ¥(723                           | ) |  | ¥3,054              
|                                                       |  |                            |  |                                         | 
|Year ended March 31, 2003                              |  | ¥4,052                     |  | ¥817                                    |  | ¥   722                   |  | ¥  (58                          | ) |  | ¥4,089              
|                                                       |  |                            |  |                                         | 
|Column A                                               |  | Column B                   |  | Column C                                |  | Column D                  |  |                                 |   |  | Column E            
|Description                                            |  | Balance, Beginning of Year |  | Additions                               |  | Deductions                |  |                                 |   |  | Balance, End of Year
|Valuation on deferred tax assets :                     |  |                            |  |                                         |  |                           |  |                                 |   |  |                     
|                                                       |  |                            |  |                                         | 
|Year ended March 31, 2005                              |  | ¥22,913                    |  | ¥2,466                                  |  | ¥21,555                   |  |                                 |   |  | ¥  3,824            
|                                                       |  |                            |  |                                         | 
|Year ended March 31, 2004                              |  | ¥20,759                    |  | ¥2,508                                  |  | ¥     354                 |  |                                 |   |  | ¥22,913             
|                                                       |  |                            |  |                                         | 
|Year ended March 31, 2003                              |  | ¥15,878                    |  | ¥7,572                                  |  | ¥  2,691                  |  |                                 |   |  | ¥20,759             



A



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##### Table of Contents

Supplemental Note to Consolidated Financial Statements with Respect to Income Taxes to Conform with Regulation S-X



Kubota Corporation and Subsidiaries              Years ended March 31, 2005, 2004, and 2003



Income before income taxes, minority interests in earnings of
subsidiaries, and equity in net income (loss) of affiliated companies for the years ended March 31, 2005, 2004, and 2003 were comprised of the following :



|                                         |  |                 |         |      |   |        |      |  |   |         |  
|---------------------------------------- |  | --------------- | ------- | ---- | - | ------ | ---- |  | - | ------- | -
|                                         |  | Millions of Yen |        
|                                         |  | 2005            |         | 2004 |   |        | 2003 | 
|Parent company and domestic subsidiaries |  | ¥               | 128,987 |      | ¥ | (1,438 | )    |  | ¥ | (17,933 | )
|Foreign subsidiaries                     |  |                 | 32,574  |      |   | 28,535 |      |  |   | 24,089  |  
|                                         |  |                 |         |      |   |        |      |  |   |         |  
|Total                                    |  | ¥               | 161,561 |      | ¥ | 27,097 |      |  | ¥ | 6,156   |  
|                                         |  |                 |         |      |   |        |      |  |   |         |  



Provisions for income taxes for the
years ended March 31, 2005, 2004, and 2003 were comprised of the following :



|                                         |  |                 |        |   |      |   |         |      |  |   |        |  
|---------------------------------------- |  | --------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                         |  | Millions of Yen |       
|                                         |  | 2005            |        |   | 2004 |   |         | 2003 | 
|Income tax  current :                   |  |                 |        |   |      |   |         |      |  |   |        |  
|Parent company and domestic subsidiaries |  | ¥               | 16,206 |   |      | ¥ | 16,519  |      |  | ¥ | 12,871 |  
|Foreign subsidiaries                     |  |                 | 12,711 |   |      |   | 12,736  |      |  |   | 8,667  |  
|                                         |  |                 |        |   |      |   |         |      |  |   |        |  
|                                         |  | ¥               | 28,917 |   |      | ¥ | 29,255  |      |  | ¥ | 21,538 |  
|                                         |  |                 |        |   |      |   |         |      |  |   |        |  
|Income tax  deferred :                  |  |                 |        |   |      |   |         |      |  |   |        |  
|Parent company and domestic subsidiaries |  | ¥               | 14,503 |   |      | ¥ | (13,607 | )    |  | ¥ | (9,858 | )
|Foreign subsidiaries                     |  |                 | (878   | ) |      |   | (1,947  | )    |  |   | 616    |  
|                                         |  |                 |        |   |      |   |         |      |  |   |        |  
|                                         |  | ¥               | 13,625 |   |      | ¥ | (15,554 | )    |  | ¥ | (9,242 | )
|                                         |  |                 |        |   |      |   |         |      |  |   |        |  



B



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders of Kubota Corporation (Kabushiki Kaisha Kubota):



We have audited the consolidated financial statements of Kubota Corporation (Kabushiki Kaisha Kubota) and subsidiaries as of March 31, 2005 and 2004, and for each of the
three years in the period ended March 31, 2005, all expressed in Japanese yen, and have issued our report thereon dated June 3, 2005, except for Asbestos-related matters described in Note 14, as to which the date is August 24, 2005 (which report
expresses a qualified opinion regarding the omission of segment information required by Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, and the effect of not
properly recording a nonmonetary security exchange transaction in accordance with accounting principles generally accepted in the United States of America); such consolidated financial statements and report are included in your 2005 Annual Report to
Shareholders and are included in Item 17 of this Form 20-F.



Our audits also
included the supplemental note to the consolidated financial statements to conform with regulation S-X and the financial statement schedule of Kubota Corporation and subsidiaries, listed in the index to consolidated financial statements and
schedule. The consolidated financial statement supplemental note and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion based on our audits.



In our opinion, such consolidated financial statement supplemental note and schedule, when
considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.







/s/ Deloitte Touche Tohmatsu



Osaka, Japan

June 3, 2005, except for Asbestos-related matters described in Note 14, as to which the date is August 24, 2005.



C