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Kubota 6-K 2007 Table of Contents
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 6 - K
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the month of June 2007
Commission File Number: 1-07294
KUBOTA CORPORATION (Translation of registrant’s name into English)
2-47, Shikitsuhigashi 1-chome, Naniwa-ku, Osaka, Japan (Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F :
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) :
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) :
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 :
Yes No X
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b) : 82-
Table of ContentsInformation furnished on this form:
Exhibit Number
Table of ContentsCONVOCATION NOTICE FOR THE 117TH ORDINARY GENERAL MEETING OF SHAREHOLDERS This is a translation of a notice in Japanese Circulated to Japanese shareholders. KUBOTA CORPORTION OSAKA, JAPAN
Table of Contents(Translation)
CONVOCATION NOTICE FOR THE 117th ORDINARY GENERAL MEETING OF SHAREHOLDERS Dear Sirs: Notice is hereby given that the 117th Ordinary General Meeting of Shareholders of Kubota Corporation will be held as described hereunder. Your attendance is respectfully requested.
Matters for which the meeting is held: Matters to be reported:
Matters requiring resolutions: 1st Subject for Discussion: Matters concerning election of 21 Directors 2nd Subject for Discussion: Matters concerning election of 2 Corporate Auditors 3rd Subject for Discussion: Matters concerning bonus payments for Directors If you are unable to attend the meeting, the Company cordially requests that you study the referential materials annexed hereto, indicate your approval or disapproval of the proposals on the enclosed form of the voting exercise card with your signature thereon and return it to us. When you attend the meeting, please present the enclosed form of the voting exercise card at the reception desk of the meeting. If the Company amends the referential materials for the matters to be reported, the Company will release amendments of them on its website. URL; http://www.kubota.co.jp/ir/english/sh_info/convocation/index_open.html
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Table of ContentsREFERENTIAL MATERIALS FOR THE MATTERS TO BE REPORTED AND THE 1ST SUBJECT FOR DISCUSSION Business Report for the 117th Period (from April 1, 2006, to March 31, 2007) I. Item of Overview of Operations (1) Review of Operations 1) General Condition of Kubota Corporation and its subsidiaries Driven by expansion in overseas business activities, Kubota Corporation and its subsidiaries (hereinafter, “the Company”) continued to report a robust performance for fiscal 2007, ended March 31, 2007. Operating income, which is the best measure of the Company’s earning power, moved to record levels for the third consecutive fiscal year. Overseas, we expanded the scope of our business activities by introducing new products meeting customer needs, principally in the Internal Combustion Engine and Machinery segment, and implemented aggressive measures to further develop our position in Asia outside Japan. In the domestic market, demand was relatively weak, but we secured profitability by continuing to reduce costs and increase productivity. These management efforts in Japan and overseas enabled Kubota to report growth in both revenues and profits for the fiscal year under review. The Company reported consolidated revenues of ¥1,127.5 billion, an annual increase of ¥61.7 billion (5.8%), in fiscal 2007. Although revenues in Japan declined slightly, overall expansion was driven by continued major growth in overseas revenues, especially sales of tractors, engines, and construction machinery. As a consequence, the ratio of overseas revenues to consolidated revenues rose 5.8 percentage points, to 46.5%. Operating income climbed ¥9.3 billion (7.7%), to ¥130.3 billion, from the prior year, the highest level in the Company’s history. By segment, operating income in Internal Combustion Engine and Machinery expanded substantially, supported by the increase in revenues and the positive effect of the weakening of the yen. Pipes, Valves, and Industrial Castings also reported a gain in operating profit, owing to continued cost-cutting, including reductions in fixed expenses, and higher revenues in overseas markets. Environmental Engineering, however, posted a substantial decline in profitability and reported an operating loss accompanying the decline in sales prices. Operating income in Other, however, showed steady expansion, as a result of increased sales of vending machines and other products. Notwithstanding the rise in operating income, income from continuing operations before income taxes, minority interests in earnings of subsidiaries, and equity in net income of affiliated companies decreased ¥9.0 billion (6.4%), to ¥131.6 billion. This decline was due to the absence of the gain on an exchange of shares of ¥15.9 billion reported in the prior year. After deductions of ¥49.0 billion in income taxes (representing an effective tax rate of 37.2%), ¥4.9 billion of minority interests in earnings of subsidiaries and equity in net income of affiliated companies, and a ¥1.3 billion loss from discontinued operations, net of taxes, net income decreased ¥4.6 billion (5.6 %), to ¥76.5 billion from the prior year. 2) Review of Operations by Industry Segments (a) Internal Combustion Engine and Machinery Revenues in Internal Combustion Engine and Machinery were ¥746.8 billion, 10.8% higher than the prior year, comprising 66.3% of consolidated revenues. Domestic revenues decreased 4.1%, to ¥258.3 billion, and overseas revenues increased 20.7%, to ¥488.5 billion. This segment comprises farm equipment, engines and construction machinery. In the domestic market, sales of farm equipment declined because of lackluster market conditions. In the domestic market for farm equipment, new government agricultural policies have been introduced, and the implementation of these measures is resulting in structural changes within the agricultural sector, leading to a postponement of equipment purchases, principally among medium-sized farms. Within this operating environment, to revitalize the market, Kubota implemented sales expansion policies carefully tailored to various customer groups and was able to increase its market share; however, these efforts did not compensate for the market slump. On the other hand, sales of construction machinery significantly rose due to steady demand for construction machinery, introduction of new models, and expansion of sales to major machinery rental companies. In addition, sales of engines, mainly to manufacturers of construction and industrial machinery, showed steady expansion.
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Table of ContentsIn overseas markets, sales of tractors, the Company’s core product, expanded steadily. In the United States, sales of medium-sized tractors showed marked expansion accompanying the introduction of new models, while sales of small-sized tractors weakened along with the slowdown in housing starts. In Europe, sales of tractors showed strong expansion as the Company introduced new products and implemented an active marketing program. Moreover, in Asia outside Japan, sales of tractors sustained a high rate of growth in Thailand, where demand for tractors is expanding rapidly. Sales of construction machinery reported steady expansion in Europe, the principal overseas markets of construction machinery, along with rising demand and the introduction of new products. Sales of construction machinery in North America also increased. In addition, sales of engines in Europe and the United States grew steadily, and sales of combine harvesters in China increased rapidly. (b) Pipes, Valves, and Industrial Castings Revenues in Pipes, Valves, and Industrial Castings were ¥194.2 billion, 2.4 % higher than the prior year, comprising 17.2 % of consolidated revenues. Domestic revenues decreased 2.2 %, to ¥163.4 billion, and overseas revenues increased 36.7 %, to ¥30.8 billion. This segment comprises pipes, valves and industrial castings. In the domestic market, demand for ductile iron pipes and plastic pipes was lackluster, but the Company was able to slightly increase sales of plastic pipes by raising prices, while sales of ductile iron pipes declined marginally. Sales of industrial castings expanded, mainly to the private sector, such as the steel and energy industries, but sales of products to the public sector fell sharply. In overseas markets, exports of ductile iron pipe to the Middle East were robust, and sales of industrial castings continued to increase significantly, owing to high levels of private-sector capital expenditures. (c) Environmental Engineering Revenues in Environmental Engineering were ¥90.6 billion, 17.5% lower than the prior year, comprising 8.0% of consolidated revenues. Domestic revenues decreased 17.6%, to ¥86.5 billion, and overseas revenues decreased 16.8 %, to ¥4.1 billion. This segment comprises environmental control plants and pumps. In the domestic market, the operating environment continued to be extremely challenging because of the decline in public-sector demand and the drop in sales prices accompanying more intense competition. In addition, the suspension of designating pre-approved suppliers that resulted from compliance issues had a major negative impact. As a result, the Water & Sewage Engineering Division and Pumps Division suffered substantial declines in revenues. Overseas revenues also declined due to a decrease in sales of pumps, which is the main export product in this segment. (d) Other Revenues in Other were ¥95.8 billion, 4.1% higher than the prior year, comprising 8.5% of consolidated revenues. Domestic revenues increased 4.9%, to ¥95.3 billion, and overseas revenues decreased 60.0%, to ¥0.5 billion. This segment comprises vending machines, electronically equipped machinery, air-conditioning equipment, construction, septic tanks, condominiums and other business. Sales of construction fell sharply because of the Company’s realignment measures, including discontinuance of receiving orders from the public sector as an original contractor. Sales of vending machines, condominiums and air-conditioning equipment increased favorably, while sales of electronically equipped machinery and septic tanks declined.
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Table of ContentsRevenues by Industry Segment
3) Capital Expenditures The Company made capital expenditures totaling ¥44.7 billion during the fiscal year under review, including investments for the expansion of production capacity in the Internal Combustion Engine and Machinery segment and land. 4) Financing Financing for capital expenditures was obtained mainly from the Company’s internal resources, but along with the increase in finance receivables accompanying the expansion of business activities in the United States, necessary additional funding was obtained mainly from borrowings. (2) Management Issues upon which the Company should Implement Countermeasures To achieve further development and steady increases in enterprise value, the Company is actively addressing the following management issues. (1) Accelerating the Expansion of Internal Combustion Engine and Machinery in Overseas Operations The Company is allocating management resources to the overseas operations of Internal Combustion Engine and Machinery on a priority basis to expand its business domain from the perspective of the product portfolio and geographical coverage, while working to strengthen the business structure of this segment to the level appropriate for a global enterprise. From a product portfolio point of view, the Company is broadening the scope of overseas operations of the segment by expanding the model lineup of tractors, construction machinery, and farm machinery as well as substantially diversifying the product lineup. Concerning diesel engines, which are key components in Kubota products, the Company is endeavoring to develop and manufacture its diesel engines in a timely manner that meets more stringent emission regulations to be introduced in Japan, North America, and Europe. Through this effort, the Company is enhancing the competitive edge of its diesel engine powered products and further expanding sales of diesel engines to other manufacturers. From a geographical perspective, the Company is promptly implementing different strategies in North America, Europe, and Asia, responding to the regional characteristics of each market. In North America and Europe, which are currently the segment’s principal markets, the Company is working to significantly enhance its product and service supply capabilities. In Asia outside Japan, where rapid market expansion is ongoing, the Company is moving forward actively with initiatives to strengthen the capabilities of its production and sales networks in Thailand and China. Through the full implementation of these initiatives, the Company is promoting the geographical diversification of the overseas operations of Internal Combustion Engine and Machinery. Moreover, to prevail in intense competition and accelerate the expansion of overseas business activities, it will be essential to enhance the segment’s business structure to enable it to outpace the competition in global markets. The Company will fortify production capacity in Japan and overseas to meet rising overseas demand while also training personnel who can carry out the work of a global enterprise, speed up R&D activities, and work to consistently enhance design and manufacturing capabilities as well as operating efficiency all with the objective of strengthening the segment’s business structure from a comprehensive perspective.
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Table of Contents(2) Restructuring the Public Works Related Businesses The Company’s public works related businesses are included in Pipes, Valves, and Industrial Castings and Environment Engineering. These businesses are confronting an exceptionally challenging operating environment because of the continuous cutbacks in public works investment. To respond effectively to changes in the operating environment, the Company is undertaking drastic restructuring in its business structure. (a) Pipes, Valves, and Industrial Castings Segment to Step Up Initiatives to Expand Core Businesses The Company has worked to strengthen its profitability by making drastic reductions in costs, including fixed expenses, bringing about major increases in productivity, and becoming thoroughly market-oriented and competitive. As a result of these efforts, the Company has been successful in raising the ratio of operating profitability to double-digit levels. Going forward, to increase profits, the Company must actively focus on expanding core businesses while advancing into closely related areas as it strives to maintain and increase its earning power. This will require shifting the business activities from the public sector to the private sector, and also from the domestic market to overseas markets. The decision made at the end of the fiscal year under review to establish a joint venture in India for manufacturing ductile iron pipe is symbolic of what must be done in other product areas—shift the thrust of business development to the private sector and to opportunities overseas as a part of initiatives to further expand core businesses. (b) Restructuring Environmental Engineering The deterioration of the market environment and the intensification of competition in this segment have occurred faster than anticipated, thus creating a highly challenging set of operating conditions. In addition, the emergence of compliance issues has acted to accelerate deterioration in business performance, and the segment has fallen into a tough situation. To revitalize and restructure this segment, the Company is aggressively working to shift its business model and concentrate on its core competencies. Specifically, by developing its positions in the private sector and overseas markets, the Company is endeavoring to reduce dependency of this segment on the public sector while also promoting a shift from the plant engineering business to the sales and installation of machinery and equipment. In addition, by focusing on water-related businesses, the Company will work to make more efficient use of management resources in this segment and thereby promptly recover sound profitability and strengthen its business structure. To make a successful transition to its new business model, the segment must have strong product development capabilities for stand-alone equipment and be cost-competitive. With this in mind, in April 2007, the Company formed the Environmental Equipment R&D Center. Through the activities of this new center, the Company intends to make the manufacturing technology and development capabilities nurtured by Internal Combustion Engine and Machinery available to this segment and, while taking thorough measures to lower costs, differentiate its technology from that of other companies. (c) Moving toward Close Teamwork between the Two Segments Both Pipes, Valves, and Industrial Castings and Environmental Engineering have core strengths in water-related products. By moving toward close teamwork between these segments, the Company will seek to realize synergies among their products and technologies and achieve greater operational efficiencies. The Company has taken specific measures in this direction by combining the organizations of the two segments within the parent company, beginning in April 2007. Going forward, by promoting the sharing of information related to products and technologies connected with “water” and strengthening teamwork in development and sales activities, the Company will work to increase the competitiveness of both segments.
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Table of Contents(3) Management Based on Corporate Social Responsibility (CSR) To achieve medium-to-long term growth and development, the Company must be an enterprise that continuously contributes to the sustainable development of society in harmony with the environment in addition to increasing its economic value. With this awareness, the Company is implementing CSR management as the most important management policy, and it pursues its corporate activities with a strong sense of responsibility regarding the economic, social, and environmental aspects of its activities as a global corporate citizen that responds positively to the expectations and trust of its various stakeholders. Looking ahead, the Company will adhere strongly to its management principle: “The Kubota Group contributes to the development of society and the preservation of the earth’s environment through its products, technology, and services that provide the foundation for society and for affluent lifestyles.” To remain an upstanding and proud member of society, the Company will also strengthen its compliance, internal controls, and corporate governance, as well as ensure full adherence to these and other aspects of its activities that are basic to management in the spirit of CSR. During the fiscal year under review, the management and staff of Kubota worked together and achieved the best performance in the Company’s history in terms of operating profit. However, we cannot rest here because of the many uncertainties in the operating environment. Various developments, such as concern about a slowdown in the U.S. economy, changes in the agricultural market in Japan as new government policies go into effect, continuing price hikes of raw materials, and the uncertainty of foreign currency exchange and interest rate movements, are expected to bring about changes that will have a major impact on the Company’s management and performance. By responding quickly and appropriately to these changes in the operating environment and devoting our fullest energies to addressing the previously mentioned issues, we are committed to continuing to build our corporate value. We thank you for your investment in Kubota and your continuing support in the years ahead.
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Table of Contents(3) The financial position and the results of operations 1) Consolidated Financial Summary
Notes:
2) Financial Summary (Non-consolidated)
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Table of ContentsNotes:
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Table of Contents(4) Main Subsidiaries and Affiliated Companies
Notes:
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Table of Contents(5) Main Line of Business (As of March 31, 2007) The Company is conducting its businesses in four fields: Internal Combustion Engine and Machinery Pipes, Valves, and Industrial Castings Environmental Engineering and Other Internal Combustion Engine and Machinery
Pipes, Valves, and Industrial Castings
Environmental Engineering
Other
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Table of Contents(6) Main domestic Offices and Factories
Main subsidiaries and affiliated companies
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(9) Material matters regarding the Company 1) Actions for the health hazard of asbestos The Company’s actions taken for asbestos health hazard issue since April 2006 are as follows. The Company will continuously cope with this issue faithfully from the view point of Corporate Social Responsibility as one of manufacturers that once manufactured asbestos-containing products.
Kubota Corporation has established “Relief Payment System for the Asbestos-Related Patients and the Family Members of the Deceased near the Former Kanzaki Plant” on April 17, 2006 and paid the relief payments to 125 parties up to March 31, 2007.
Kubota Corporation has decided to contribute ¥1.7 billion in total to Hyogo College of Medicine and Osaka Medical Center for Cancer and Cardiovascular Diseases for the purpose of medical treatment and research of asbestos-related diseases in 10 years starting from the fiscal year ended March 31, 2007. Kubota Corporation has paid such a contribution allocated for the fiscal year ended March, 2007, before September 30, 2006. 2) Compliance issue regarding Act concerning Prohibition of Private Monopoly and Maintenance of Fair Trade Kubota Corporation was sentenced to penalties for the violation of Act concerning Prohibition of Private Monopoly and Maintenance of Fair Trade (hereinafter “Anti-monopoly Law”), as follows. Kubota Corporation takes the penalties very seriously and apologizes for giving the great concern to shareholders.
In relation to this consent order, Kubota Corporation was ordered by the Kinki Regional Development Bureau of the Ministry of Land, Infrastructure and Transport, to suspend its sales activities of engineering works regarding machinery and equipment in Metropolis of Tokyo (Suspension Period: 15 days from January 24, 2007 to February 7, 2007).
Osaka District Court adjudicated Kubota Corporation and the former employee concerned to be guilty and Kubota Corporation and the former employee concerned accepted this adjudication on April 23, 2007. Kubota Corporation integrated Industrial & Material Systems Consolidated Division and Environmental Engineering Consolidated Division into “Water, Environment & Infrastructure Consolidated Division” on April 1, 2007. The Company will continue to thoroughly reinforce its organizational structure, with a corporate compliance being top of mind, and cope with restructuring its businesses with such a firm determination that if certain business of the Company causes or is charged to cause compliance problem, the Company may decide to withdraw from such business. The Company cordially thanks and asks all investors in advance for continued understanding and support.
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4) Number of shares constituting one full unit of shares of Kubota Corporation shall be one thousand. 5) Principal Shareholders (Top 10)
Notes:
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Table of ContentsIII. Item of Directors of Kubota Corporation (1) Name of Directors and Corporate Auditors (As of March 31, 2007) RD = Representative Director, P = President, EVP = Executive Vice President, EMD = Executive Managing Director, MD = Managing Director, D = Director, CA = Corporate Auditor, GM = General Manager
Notes:
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(2) Compensation for Directors and Corporate Auditors
Notes:
(3) Activity report for Outside Corporate Auditors
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Table of ContentsIV. Independent Auditor (1) Name of Independent Auditor Deloitte Touche Tohmatsu (Japanese member firm of Deloitte Touche Tohmatsu, Swiss Verein) (2) Compensation for the Independent Auditor for the fiscal year ended March 31, 2007
Notes:
(3) Policies for Determining Dismissal or Non-reelection of Independent Auditor The Board of Corporate Auditors examines the dismissal or non-reelection of the Independent Auditor if Kubota Corporation believes that it infringes upon or contravenes laws and regulations such as the Corporate Law, Certified Public Accountant Law, or other laws. If the Board of Corporate Auditors determines that the dismissal or non-reelection is reasonable, it submits, in accordance with the rules and regulations for the Board of Corporate Auditors, a request to the Board of Directors to include the “dismissal or non-reelection of accounting auditor” in the agenda of the ordinary general meeting of shareholders.
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Table of ContentsV. Item of Systems to be developed to Establish Internal Control Systems Kubota Corporation has set and is implementing the following nine systems to ensure the propriety of our business operations:
As the basis of a system to ensure that Directors and employees perform their duties in compliance with laws and regulations, and the articles of incorporation, Kubota Corporation establishes the “Charter for Action” and “Code of Conduct” to be observed by all Directors and employees of Kubota Corporation and its subsidiaries. Organizationally, Kubota Corporation creates a Corporate Compliance Headquarters and CSR Planning & Coordination Dept. under the supervision of the Director in charge of Corporate Staff Section, which undertakes such activities as education and training to promote compliance with laws and ethics, and Kubota Corporation also performs internal audits. In addition, Kubota Corporation sets up the “Kubota Hotline,” a service counter for in-house whistle blowing and consultation that is equipped with rules to protect whistle blowers, to discover at an early stage any improper conduct that infringes on laws or other regulations and to prevent such infringements from occurring.
Kubota Corporation properly keeps and controls information on the execution of duties by the Directors in accordance with its in-house rules and regulations, such as rules and regulations on custody of documents and other items. Kubota Corporation also maintains a standard by which such documents are available for examination, as necessary.
Kubota Corporation manages risks of compliance, environment, health and safety, disasters, quality, and other risks relating to the performance of business operations by establishing responsible departments or committees for each category of risks, and by providing rules and regulations, manuals, and other guidelines to respond to such risks. The Director in charge of the relevant duties issues instructions to respond to new risks in which there is no responsible unit in place.
The Board of Directors decides management execution policy, matters set in laws and regulations and other important matters regarding management, and oversights Directors execution of their duties. Kubota Corporation enhances our decision-making process by having adequate discussions in “management committee”, with the participation of the President and other Directors, to decide important management matters. Kubota Corporation also implements multidimensional studies in an “investment council,” mainly consisting of Directors in charge of indirect departments, to discuss important investment projects. The results of these discussions are reported to the Board of Directors to enhance the effectiveness of the system.
To create a control environment for Kubota Corporation, Kubota Corporation establishes the “Charter for Action” and “Code of Conduct” and shares these philosophies. To ensure proper business operations of Kubota Corporation, including its subsidiaries, Kubota Corporation sets its in-house rules and establishes proper internal control systems. The internal auditing department audits the status of establishment and operation of internal control systems especially over financial reporting after self-audits by each department, and reports the results to the Directors in charge, the President and Corporate Auditors. Kubota Corporation manages its subsidiaries in accordance with “Rules and Regulations for Subsidiaries and Affiliated Companies” in order to keep their proper operations.
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The Directors and employees report the following matters to the Corporate Auditors without delay, in addition to the matters that need to be reported in accordance with laws and regulations:
Kubota Corporation establishes an office of Corporate Auditors and assigns employees to exclusively support the Corporate Auditors perform their duties.
Assignment or other handling of the employees in Item7. is made after consultation and agreement between the Director in charge of Personnel Dept. and the Corporate Auditors.
In April 2007, as part of our efforts to promote Items 3. and 5., Kubota Corporation started operating internal control systems including the design of in-house rules (rules and regulations), which are the basis for “proper performance of business operations.” Kubota Corporation always asks our Directors and employees to commit themselves to “performing the right job” by observing Kubota Corporation’s rules and regulations, and Kubota Corporation tries our best to further promote internal controls of Kubota Corporation. VI. Policy on appropriation of retained surplus Kubota Corporation’s basic policy for the return of profit to shareholders is to maintain stable dividends or raise dividends together with share buy-back and cancellation of treasury stock. Kubota Corporation recognizes returning profit to shareholders is one of the most important missions and will strive to expand it, considering requirements of maintaining sound business operations as well as adapting to the future business environment. Kubota Corporation decided at the Board of Directors’ Meeting held on May 11, 2007 that Kubota Corporation would pay ¥35 year-end dividend per American Depositary Share (ADS) on June 25, 2007. As a result, the annual dividend per ADS for the fiscal year ended March 31, 2007 will be ¥60, an increase of ¥10 from the fiscal year ended March 31, 2006.
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Table of ContentsConsolidated Balance Sheets
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Table of ContentsConsolidated Balance Sheets
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Table of ContentsConsolidated Statements of Income (In millions of yen)
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Table of ContentsConsolidated Statement of Shareholders’ Equity (In millions of yen)
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Table of ContentsNotes of Consolidated Financial Statements Significant Accounting Policies
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) persuant to the provision of the Corporate Law Accounting Regulations Article 148 Paragraph 1. Certain supplementary material and notes required under US GAAP are omitted persuant to the same provision.
Inventories are mainly stated at the lower of cost which is determined by the moving-average method, or market.
The Company has adopoted the Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities”. Available-for-sale securities are stated at fair value based on market prices at fiscal year-end and similar. Any changes in unrealized holding gains or losses are included directly in stockholders' equity, and cost of securities sold is determined by the moving-average method.
Depreciation of tangible fixed assets is mainly computed by using the declining-balance method. Depreciation of intangible fixed assets is computed by using the straight-line method. Pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets,” the Company performs impairment test at least once per year on goodwill which should not be amortized.
The allowance for doubtful accounts is provided for possible bad debt at an amount determined based on the historical experience of bad debt for normal receivables; in addition, an estimate of uncollectible amounts is made by reference to specific doubtful receivables from customers which are experiencing financial difficulties. Accrued employees’ retirement benefits are provided for payments of retirement benefits in accordance with SFAS No.87, “Employers’ Accounting for Pensions” and SFAS No.158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” based on the fair value of both projected benefit obligations and plan assets at year-end. The unrecognized prior service costs are amortized by the straight-line method over the average remaining years of service of the employees. 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. (A Change in Accounting Policies) The Company adopted SFAS No.158 from the fiscal year ended March 31, 2007. The Company recognizes its overfunded or underfunded status of the defined benefit postretirement plan as an asset or liability in the consolidated balance sheets with a corresponding adjustment to accumulated other comprehensive income, net of tax. The statement replaced SFAS No.87 which required to report at least minimum pension liability measured as excess of the accumulated benefit obligation over the fair value of the plan assets. Adoption of SFAS No.158 had no impact on the consolidated results of operations.
Finance income and expenses from retail finance business were previously classified mainly into “Interest income” and “Interest expense” in other income (expenses). However, the Company currently classifies them into “Revenues” and “Cost of revenues”, since the significance of retail finance business has been increasing and the business is becoming one of major or central operations of the Company. Accordingly, the reclassification has been made to the presentation of the prior year’s statement of income.
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The Company accounts for discontinued operations in accordance with SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets” and presents the results of discontinued operations as a separate line item in the consolidated statements of income under loss from discontinued operations, net of taxes. The figures of the consolidated statement of income for the prior year related to the discontinued operations have been separately reported from the ongoing operating results to conform with the current year presentation.
Notes to Consolidated Balance Sheets
Notes to Consolidated Statements of Income
Note to Consolidated Statement of Shareholders’ Equity
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Table of ContentsBalance Sheets (Non-consolidated)
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Table of ContentsBalance Sheets (Non-consolidated)
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Table of ContentsStatements of Income (Non-consolidated)
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Table of ContentsStatement of changes in Net Assets (Non-consolidated)
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Table of ContentsNotes of Financial Statements (Non-consolidated) Significant Accounting Policies 1. Valuation of Securities Investments in subsidiaries and affiliates are stated at cost, which is determined by the moving-average method. Marketable securities classified as other securities are stated at fair value based on market prices at fiscal year-end and similar. Any changes in unrealized holding gains or losses are included directly in stockholders’ equity, and cost of securities sold is determined by the moving-average method. Non-marketable securities classified as other securities are stated at cost, which is determined by the moving-average method. 2. Valuation of Inventories Inventories are stated at cost, which is determined by the moving-average method. Finished goods and work-in- process which are manufactured under specific production orders are stated at cost, which is determined by the specific cost method. 3. Depreciation Method of Fixed Assets Depreciation of tangible fixed assets is computed by using the declining-balance method. Depreciation of intangible fixed assets is computed by using the straight-line method. With regard to internal-use software, depreciation is computed by using the straight-line method based on availability period in the Company (five years). 4. Basis for Allowances The allowance for doubtful receivables is provided for possible bad debt at an amount determined based on the historical experience of bad debt for normal receivables; in addition, an estimate of uncollectible amounts is made by reference to specific doubtful receivables from customers which are experiencing financial difficulties. Reserve for warranty costs is provided based on an analysis of the historical data of costs to perform under product warranties, under which Kubota Corporation generally guarantees the performance of products delivered. Accrued directors’ bonuses is provided for bonuses payment to directors based on an estimated amount incurred during the fiscal year ended March 31, 2007. Liabilities for severance payments to the employees are provided for payments of retirement benefits based on the retirement benefit obligation and the fair value of the pension plan assets at year-end. Prior service costs are amortized by the straight-line method over the average remaining years of service of the employees. Actuarial gains or losses are amortized in the years following the year in which gains or losses are recognized by the declining-balance method over the average remaining years of service of the employees. Allowance for losses from guarantees of loans is provided for possible losses related to guarantees for liabilities at the estimated amount in view of financial conditions of the guaranteed companies. 5. Consumption taxes are accounted for as deposits received or deposits paid. Notes to Change in Accounting Policies 1. Accounting standard for directors’ bonuses Effective from the fiscal year ended March 31, 2007, the Company adopted “Accounting Standard for Directors’ Bonus” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 4 issued on November 29, 2005). As a result, Operating income, Ordinary income, Income before income taxes has decreased by ¥212 million respectively. 2. Accounting standard for presentation of net assets in the balance sheet Effective from the fiscal year ended March 31, 2007, the Company adopted “Accounting Standard for Presentations of Net Assets in the Balance Sheet” (ASBJ Statement No. 5 issued on December 9, 2005) and “Guidance on Accounting Standard for Presentation on Net Assets in Balance Sheet” (ASBJ Guidance No. 8 issued on December 9, 2005). The equivalent amount of the total Shareholders’ equity regulated formerly is ¥492,368 million. The reclassification in accordance with the display of this year has been made to the presentation of the prior year’s balance sheets.
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Table of ContentsNotes to Change in Presentation The estimated losses from investments in and advances to subsidiaries and affiliated companies were previously displayed as “Loss from impairment of stock and other investment in subsidiaries and affiliated companies”. However, the Company reconsidered the components of the losses and currently displays them as “Loss from investments on subsidiaries and affiliated companies” to represent the components more appropriately. Notes to Balance Sheets
Notes to Statement of changes in Net Assets
Note: The number of shares decreased is as follows.
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Table of Contents3. Type and number of treasury stock
4. Dividend (1) Details of dividend paid
Notes to Deferred Income Tax
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Table of ContentsNotes to finance lease transactions
Notes to related party transactions
Regarding amount in the above table, amount of transaction does not include consumption tax and balance at March 31, 2007 includes consumption tax. Terms and conditions of business and decision policies of terms and conditions of business and others Notes:
Notes to per ADS information
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Table of ContentsTranscript copy of the independent auditors’ report concerning Consolidated Financial Statements (Translation) INDEPENDENT AUDITORS’ REPORT May 9, 2007
Pursuant to the fourth clause of Article 444 of the Corporate Law, we have audited the consolidated financial statements, namely, the consolidated balance sheet as of March 31, 2007 of Kubota Corporation and consolidated subsidiaries (“the Company”), and the related consolidated statements of income and shareholders’ equity, and the related notes for the fiscal year from April 1, 2006 to March 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2007, and the results of its operations for the year then ended in conformity with the recognition and measurement criteria of accounting principles generally accepted in the United States of America, as modified by the first clause of Article 148 of the accounting regulation of the Corporate Law of Japan (Refer to Note 1, Basis of Preparation of Consolidated Financial Statements of Significant Accounting Policies). Our firm and the engagement partners do not have any financial interest in the Company for which disclosure is required under the provisions of the Certified Public Accountants Law. The above represents a translation, for convenience only, of the original report issued in the Japanese language.
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Table of ContentsTranscript copy of the independent auditors’ report concerning Financial Statements (Non-consolidated) (Translation) INDEPENDENT AUDITORS’ REPORT May 9, 2007
Pursuant to the first item, second clause of Article 436 of the Corporate Law, we have audited the financial statements, namely, the balance sheet as of March 31, 2007 of Kubota Corporation (“the Company”) and the related statements of income and changes in net assets, and the related notes for the 117th fiscal year form April 1, 2006 to March 31, 2007, and the accompanying supplemental schedules. 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 audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the accompanying supplemental schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and the accompanying supplemental schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement and the accompanying supplemental schedules presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and the accompanying supplemental schedules referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2007, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in Japan. Our firm and the engagement partners do not have any financial interest in the Company for which disclosure is required under the provisions of the Certified Public Accountants Law. The above represents a translation, for convenience only, of the original report issued in the Japanese language.
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Table of ContentsTranscript Copy of the Audit Report of the Board of Corporate Auditors (TRANSLATION) AUDIT REPORT In respect of the execution of duties of the Directors during the 117th fiscal year from April 1, 2006 to March 31, 2007, the Board of Corporate Auditors (hereinafter “we”), following the discussion among us, have prepared this audit report based on the audit report prepared by each Corporate Auditor, and hereby report as follows, : 1. Methods and details of audits by Corporate Auditors and the Board of Corporate Auditors We have formulated an audit policy, sharing of duties among auditors, and other audit-related items. We have received reports from each Corporate Auditor on the implementation and results of audits, and received reports from the Directors of Kubota Corporation, the Independent Auditor, and other parties on their execution of duties, and requested explanations from them when necessary. In accordance with the Standards for Auditing by Corporate Auditors, the audit policy, sharing of duties among auditors, and other audit-related items that were determined by us, each Corporate Auditor: communicated well with Directors, the internal auditing department, other employees, and other bodies; gathered information and improved the audit environment; attended the Board of Directors meetings and other important meetings; received reports from Directors and other employees on their execution of duties; requested explanations from them when necessary; reviewed documents concerning matters such as important decisions; and conducted inspections of the business and financial condition at Kubota Corporation’s Head Office and other principle offices. Each Corporate Auditor also monitored and verified: the Board of Directors’ resolution on a system to ensure that the directors’ execution of their duties comply with laws and Kubota Corporation’s Articles of Incorporation, and also comply with the establishing and improving structure prescribed in the Corporate Law Enforcement Regulation Article 100 Paragraphs 1 and 3 to ensure that joint-stock company’s operations are carried out appropriately; and a system (internal control systems) established based on the said resolution. Each Corporate Auditor strove to communicate well and exchange information with the subsidiaries’ Directors and Corporate Auditors, and inspected some subsidiaries whenever necessary. Through these methods, each Corporate Auditor examined the business report for the 117th period and the supplementary schedules for the fiscal year under review. In addition, we monitored and verified whether the Independent Auditor made appropriate audits while maintaining its independence. We received reports from the Independent Auditor on its operations, and requested explanations when necessary. The Independent Auditor notified us and we requested its explanations when necessary, concerning its establishment of a “System for Ensuring the Appropriate Execution of Duties” (the Corporate Calculation Regulations Article 159) in accordance with the “Quality Control Standards for Audits” (issued by the Business Accounting Council on October 28, 2005). Through these methods, we reviewed the financial statements (balance sheets, statements of income, statement of changes in net assets and notes of non-consolidated financial statements) and the supplementary schedules, as well as the consolidated financial statements (consolidated balance sheets, consolidated statements of income, consolidated statement of shareholders’ equity and notes of consolidated financial statements), for the fiscal year under review. 2. Results of the Audit:
We have found that the auditing methods employed by Deloitte Touche Tohmatsu, Independent Auditor, and the results thereof are appropriate and sufficient.
We have found that the auditing methods employed by Deloitte Touche Tohmatsu, Independent Auditor, and the results thereof are appropriate and sufficient. May 10, 2007
The above represents a translation, for convenience only, of the original report issued in the Japanese language.
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Table of ContentsREFERENTIAL MATERIALS FOR EXERCISE OF VOTING RIGHTS 1. Subjects for discussion and referential materials 1st Subject for discussion: Matters concerning election of 21 Directors The term of office of all 21 Directors of Kubota Corporation will expire at the conclusion of this ordinary general meeting of shareholders. It is proposed to elect 21 Directors of Kubota Corporation. The candidates for Directors are as follows:
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Note: No conflict of interest exists between Kubota Corporation and any of the above candidates for Directors.
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Table of Contents2nd Subject for discussion: Matters concerning election of 2 Corporate Auditors The term of office of Corporate Auditors of Kubota Corporation, namely Messrs. Susumu Sumikura and Teisuke Sono will expire at the conclusion of the 117th ordinary general meeting of shareholders. It is proposed to elect two Corporate Auditors of Kubota Corporation. Kubota Corporation agreed with the Board of Corporate Auditors regarding this subject for discussion.
Notes:
3rd Subject for discussion: Matters concerning bonus payments for Directors Kubota Corporation will pay directors’ bonuses (¥212 million) for 21 Directors at the end of the fiscal year ended March 31, 2007, in consideration with results of operations for the fiscal year ended March 31, 2007. Kubota Corporation asks shareholders to entrust the amount of payment to each Director which will be resolved at the Board of Directors.
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Table of ContentsTo whom it may concern Kubota Corporation 2-47, Shikitsu-higashi 1-chome, Naniwa-ku, Osaka 556-8601, Japan Contact: IR Group Finance & Accounting Department Phone: +81-6-6648-2645 Notice on purchase of shares on market Please be advised that Kubota Corporation (“the Company”) resolved at the Board of Directors’ Meeting held on June 22, 2007 that the Company would execute purchase of its shares on market, pursuant to Article 156 of the Corporate law after applying the regulations of Article 165 Paragraph 3 of said law. 1. Purpose for the purchase of shares The Company will purchase its shares in order to create more value per share, as a part of returning profit to shareholders. 2. Details of purchase of shares
(Reference)
End of document
Table of ContentsTo: Shareholders
Resolution of the Ordinary General Meeting of Shareholders We take pleasure in informing you that the followings were duly reported and resolved at the 117th Ordinary General Meeting of Shareholders held on June 22, 2007. Matters reported:
Matters resolved: 1st Subject: Matters concerning election of 21 Directors The above proposal was approved and passed as proposed. Seventeen persons, namely Messrs. Daisuke Hatakake, Moriya Hayashi, Toshihiro Fukuda, Yasuo Masumoto, Eisaku Shinohara, Yoshihiko Tabata, Kazunobu Ueta, Morimitsu Katayama, Nobuyuki Toshikuni, Hirokazu Nara, Masayoshi Kitaoka, Tetsuji Tomita, Masatoshi Kimata, Nobuyo Shioji, Takeshi Torigoe, Satoru Sakamoto and Hideki Iwabu were re-elected, and four persons, namely Messrs. Takashi Yoshii, Kohkichi Uji, Toshihiro Kubo and Kenshiro Ogawa were newly elected. 2nd Subject: Matters concerning election of 2 Corporate Auditors The above proposal was approved and passed as proposed. Two persons, namely Messrs. Yoshiharu Nishiguchi and Masanobu Wakabayashi were newly elected. 3rd Subject: Matters concerning bonus payments for Directors The proposal concerning payments of ¥ 212 million of bonuses for Directors, was approved and passed as proposed. End of document
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Table of ContentsSIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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