For the nine months ended Sept. 30, 2016, revenues of Kubota Corp. and its subsidiaries (hereinafter, the “Company”) decreased by 73.6 billion yen ($683.7 million), or 5.9%, from the same period in the prior year to 1.18 trillion yen ($11.1 billion).

Domestic revenues decreased by 5.9% from the same period in the prior year due to lower revenues in all segments of Farm & Industrial Machinery, Water & Environment, and Other.

Overseas revenues decreased by 5.9% from the same period in the prior year. In Farm & Industrial Machinery, revenues were down due to the effect of yen appreciation while sales of construction machinery, combine harvesters and rice transplanters rose. Revenues in Water & Environment also decreased mainly owing to a decrease in sales of ductile iron pipes and industrial castings.

Operating income decreased by 12.8% from the same period in the prior year since the increased revenues on a constant‐currency basis could not offset the negative effect of yen appreciation and increased sales promotion expenses. Income before income taxes and equity in net income of affiliated companies, which is operating income less other expenses‐net of 15.8% from the same period in the prior year.

Kubota Corp. changed its fiscal year‐end from March 31 to Dec. 31 from last fiscal year. For this reason, the business term for the last fiscal year, a transitional period for the change in the fiscal year‐end, was the nine‐month period that commenced on April 1, 2015 and ended on Dec. 31, 2015. Therefore, the results of operations for the nine months ended Sept. 30, 2016 are compared with the results for the same period in the prior year that commenced on Jan. 1, 2015 and ended on Sept. 30, 2015.

Farm & Industrial Machinery

Farm & Industrial Machinery is comprised of farm equipment, agricultural‐related products, engines, construction machinery, and electronic equipped machinery.

Revenues in this segment decreased by 4.9% from the same period in the prior year to ¥946.8 billion and accounted for 80.2% of consolidated revenues.

Domestic revenues decreased by 8.0%. Sales of tractors and construction machinery decreased mainly due to the adverse reaction to the front‐loaded demand caused by the strengthening of emission regulations last fiscal year.

Overseas revenues were down by 4.0%. Overseas sales grew steadily on a local currency basis in all regions. In North America, significantly increased sales of construction machinery due to the favorable market demand and the full‐scale entry of new products offset lower sales of tractors which was caused by the stagnation in the agricultural market and delay of shipments in the first half of the current year. In Europe, sales of tractors, engines and construction machinery increased owing to the market expansion along with the economic recovery and investment promotional tax policy in France, full‐scale entry of large‐scale tractors, and expanded sales in Turkey while sales of implements in the agriculture‐related market declined.

Revenues in Asia outside Japan were higher than in the prior year. In Thailand, revenues remained almost flat since the positive impact of strong sales after the rainy season and expansion in exports to surrounding countries offset the negative impact of decreased sales of tractors in the first half of the current year which was linked with water shortages caused by the drought last year. Sales of farm equipment increased in China, where new lines of combines were launched, and in Indonesia, where agricultural mechanization has been proceeding. However, revenues translated in yen in all the regions, North America, Europe and Asia outside Japan, decreased due to the effect of considerable yen appreciation against all foreign currencies.

Operating income in Farm & Industrial Machinery decreased by 13.6% from the same period in the prior year since the increased revenues on a constant‐currency basis could not offset the negative effect of yen appreciation and increased sales promotion expenses.