Kubota Corporation Reported Today its Consolidated Results of Operations for the Three Months Ended June 30, 2003

OSAKA, Japan--(BUSINESS WIRE)--Aug. 7, 2003--Kubota Corporation --

During the three months under review, net sales were 185.2 billion yen, a decrease of 0.2 billion yen (0.1%) from the prior period. Sales in Internal Combustion Engines and Machinery, the leading segment increased by 6.9 billion yen (6.2%) mainly due to strong sales of tractors in the U.S.A. Sales in Pipes, Valves, and Industrial Castings also increased by 1.7 billion yen (5.8%) principally due to the expanded export sales of ductile iron pipes to Middle East countries. In addition, sales in Building Materials and Housing increased by 0.3 billion yen (1.9%) mainly due to sales of condominiums. On the other hand, sales in Environmental Engineering declined by 5.5 billion yen (38.7%), because sales of large orders were not recorded during the period under review. Sales in the Other segment also decreased by 3.7 billion yen (22.3%), affected by the sale of our leasing subsidiary at the beginning of the period under review. Accordingly, total net sales during the three months under review decreased slightly from the prior period.

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Operating income decreased 5.0 billion yen (34.9%) to 9.3 billion yen. Although sales in Internal Combustion Engines and Machinery segment increased, a cost reduction program was implemented and a gain was recorded from the sale of our leasing subsidiary, because of the significant increase of pension cost of 8.6 billion yen from the prior period, which was caused mainly by the immediate recognition of unrecognized actuarial losses (a), operating income declined from the prior period.

Income before income taxes, minority interests in earnings of subsidiaries, and equity in net income of affiliated companies fell 0.9 billion yen (7.5%) to 11.5 billion yen due mainly to the decrease in foreign exchange losses of 5.0 billion yen. As a result, net income during the three months under review was 3.5 billion yen, a decrease of 2.0 billion yen (36.1%) from the prior period.

(a) Pension accounting adopted by the Company:

In order to solve quickly the issue of the unrecognized actuarial loss of the plan fund's status, the Company recognizes immediately actuarial losses in excess of 20% of the benefit obligation, and amortizes actuarial losses between 10% to 20% over the average participants' remaining service period (about 15 years). The Company forecasts the expenses of actuarial losses will increase by approximately 46.4 billion yen to 52.0 billion yen during the year ending March 31, 2004, compared to the expenses of 5.6 billion yen during the prior year.