October 30, 2008
Kuraray Co., Ltd.
Consolidated Financial Results for the Interim Period of the Fiscal YearEnding March 31, 2009
Name of listed company: Kuraray Co., Ltd.
Stock code: 3405
Stock exchange listings: Tokyo and Osaka, first sections
URL: http://www.kuraray.co.jp
Representative
Title: Representative Director and President
Name: Fumio Ito
Contact
Title: General Manager, Office of Corporate Communications
Name: Mitsuji Tanaka
Tel: +81-3-6701-1074(Millions of yen rounded down unless otherwise stated)

1. Consolidated Financial Results for the Interim Period of the Fiscal
Year Ending March 31, 2009 (April 1, 2008 to September 30, 2008)(1) Consolidated Operating Results (Cumulative)(Percentages displayed for net sales, operating income, net income are comparisonswith the corresponding period of the previous fiscal year)(Millions of Yen)
Net Sales

Operating Income

Net Income

Fiscal 2008 Interim

209,319―

23,273―

13,407―

Fiscal 2007 Interim

206,197

7.8%

24,28226.8%

13,89840.6%

Net Income
per Share(Yen)
Fully Diluted
Net Income
per Share

Fiscal 2008 Interim

38.50

38.44

Fiscal 2007 Interim

38.59

38.49

(2) Financial Position (Consolidated)
Total Assets

Shareholders’Equity Ratio

Net Assets

Net Assets
per Share

Millions of Yen

Millions of Yen%

Yen

497,227

351,91470.2

1,001.82

490,365

344,83369.7

981.82As of September 30,
2008
As of March 31, 2008

(Reference)
Shareholders’ equity: As of September 30, 2008
As of March 31, 2008

¥348,877 million¥341,889 million

2. Dividends(Yen)
Cash Dividends per Share
Record Date

Jun. 30,

Sep. 30,

Dec. 31,Mar. 31,

2008

2008

2008

2009

AnnualFiscal 2007

―

11.00

―

11.00

22.00

Fiscal 2008

―

12.00

xx

xx

xx

Fiscal 2008 (Forecast)

xx

―

―

13.00

25.00

Note: Revision of cash dividend forecast during this period: No
3. Forecasts of Consolidated Financial Results for the Fiscal YearEnding March 31, 2009 (April 1, 2008 to March 31, 2009)(Percentages displayed for net sales, operating income, net income are comparisons withthe corresponding period of the previous fiscal year)
Net Sales
Millionsof yenFull Fiscal Year

425,000

Operating Income%
1.8

Millionsof yen46,000%△4.4

Net Income

Net Income
Millionsof yen26,000per Share%
1.7

Millionsof yenYen
74.66

Note: Revisions of consolidated financial results forecasts during this period: Yes
4. Others in Qualitative Information and Financial Statements
(1)

(2)

Changes in Important Subsidiaries during the Period (Changes inSpecial Subsidiaries Involving Changes in the Scope ofConsolidation
No
Adoption of the Simplified Accounting Method and Special
Accounting Practices for presenting Quarterly Consolidated
Financial Statements
Applied(3)(4)(Note: Please refer to “4. Others”of “Qualitative Information and
Financial Statements” )Changes in Accounting Principles, Procedures and Presentation
Methods for the Preparation of Quarterly Consolidated Financial
Statements(Recorded under “Changes in Important Items Considered
Fundamental to the Preparation of Quarterly Consolidated Financial
Statements”)
1. Changes in accordance with revisions of accounting standards andrelated practices: Applied
2. Changes in items other than 1. Above: Yes(Note: Please refer to “4. Others”of “Qualitative Information and
Financial Statements” )The Number of Shares Issues and Outstanding (Common
Shares)1. The Number of shares issued and outstanding (including treasury
stock) as of the period-end:
As of September 30, 2008 382,863,603 shares
As of March 31, 2008
382,863,603 shares
2. The Number of treasury stock as of the period-end:
As of September 30, 2008 34,619,932 shares
As of March 31, 2008
34,642,074 shares
3. Average number of shares for the period:
As of September 30, 2008 348,242,804 shares
As of September 30, 2007 360,195,603 shares

Cautionary Statement with respect to Forecasts of Consolidated Business Results
1. The forecasts presented in this document are based on management’s
assumptions and beliefs in light of currently available information.
Kuraray Co., Ltd. cautions readers that a variety of factors could cause
actual results to differ materially from forecasts.
2. Kuraray Co., Ltd. is applying Accounting Standard for Quarterly Financial
Reporting (ASBJ Statement No. 12) and Guidance on AccountingStandard for Quarterly Financial Reporting (ASBJ Guidance No. 14) fromthe fiscal year ending March 31, 2009. Furthermore, the Company
prepares quarterly consolidated financial statements according to quarterly
consolidated financial statement rules.

Qualitative Information and Financial Statements
1. Qualitative Information and Overview of Consolidated BusinessResults
In the interim period (April 1, 2008 to September 30, 2008) of the current
fiscal year, Kuraray was not immune to the ongoing severe operating
environment due to the unabated surge in raw material and fuel prices.
Moreover, in the latter half of the period under review, worldwide financial
uncertainty triggered by turmoil in the United States financial market andconcern about the deceleration of the real economy has intensified. Amid
this environment, however, Kuraray actively implemented such
Groupwide initiatives as the introduction of products with higher added
value, strategic price revisions and cost reductions.
As a result, the interim period saw revenues increase while earnings
declined. Net sales increased 1.5% compared with the same period of theprevious fiscal year to ¥209,319 million. Operating income declined 4.2%
to ¥23,273 million, net income slumped 3.5% to ¥13,407 million. The
following section provides explanations of results by business segment andperformance by geographical segment.
Note: Kuraray began applying new quarterly accounting standards from thecurrent fiscal year. Consequently, rate of change from the same period of theprevious fiscal year (or the yen amount of change from the same period of theprevious fiscal year) is stated as reference for qualitative information withregard to business results.
Results by Business Segment
Chemicals and Resins
Sales in the Chemicals and Resins segment amounted to ¥127,583 million, up
8.2% year on year, and operating income totaled ¥26,458 million, up 13.0％
year on year.
1. The Poval business saw overall increased revenues and earnings. Amid aworldwide shortage, Kuraray carried out Poval resin price revisions both inJapan and overseas. Sales of optical-use Poval films increased owing to
expanded demand for LCD displays, but the impact of LCD panel
inventory adjustments was felt from the latter half of the interim period.
Sales of polyvinyl butyral (PVB) film grew owing to continued robust
demand for construction applications in Europe.
2. Revenues for EVAL, an ethylene vinyl alcohol polymer resin, increased,
while earnings declined. Despite a decline in automotive applications in the
United States due to high gasoline prices and a slumping economy, overall

volume was brisk owing to expanding food packaging applications and thegrowth of emerging markets in Asia, Central and South America. However,Kuraray’s aggressive price revisions were not enough to offset surging
material and fuel costs.
3. Sales in the methacrylic resin business were flat and earnings declined.
Growth of molding materials and sheets, mainly general-use items, wassluggish. However, Kuraray’s aggressive price revisions were not enoughto offset the impact of soaring material and fuel costs.
4. In the isoprene business, overall, the impact of surging fuel costs led tostagnant sales and earnings. For SEPTON thermoplastic elastomers,
together with the development of highly original products, Kuraray madeefforts to implement price revisions and cost reductions. In specialty
chemicals, although solvents were somewhat sluggish, performance inother areas was brisk. In fine chemicals, while performance declined due tothe discontinued production of certain aroma chemicals, profitability
improved.
Fibers and Textiles
Sales in the Fibers and Textiles segment dipped 4.1% year on year to ¥51,123
million, and operating income dropped 25.3% to ¥2,878 million.
1. Despite robust applications for KURALON as an asbestos substitute in
FRC (fiber reinforced cement), sales were sluggish due to the impact of a
weak economy on construction and fisheries materials fields.
2. Man-made leather, despite firm applications and accessories, was forced to
struggle due to low demand for footwear and clothing applications
continuing from last year.
3. With nonwoven fabrics, Kuraray has undertaken price revisions on an
as-needed basis to deal with soaring material and fuel costs. Sales of hookand loop fasteners were brisk, led chiefly by ECOMAGIC and other highly
original products.
4. For polyester, in addition to the impact of a worsening economy causing
anemic demand in the uniform field, soaring material and fuel prices have
had a negative effect.
High-Performance Materials, Medical Products and Others
In this segment, sales declined 12.4% year on year to ¥30,612 million, andoperating income decreased 31.4% to ¥2,692 million.
1. In the medical products business, revenues decreased and earnings were
flat. Sales of dental materials were robust, mainly on account ofdevelopment in the European market. In October 2007, however,revenues decreased as a result of Kuraray’s dialyzer business having been

integrated into Asahi Kasei Kuraray Medical Co., Ltd.
2. Sales and earnings of GENESTAR heat-resistant polyamide resin were flat.
Although Kuraray implemented price revisions, soaring raw material andfuel prices made an impact.
3. In the activated carbon business, soaring raw material and fuel prices werebehind an unavoidable worsening of performance. Results declined inother businesses as well, mainly in the engineering business where orders
fell due to the worsening economy.
Unallocatable operating income included in elimination or corporate increased¥2,390 million, to ¥8,911 million.
Performance by Geographic Segment
Japan
Sales in Japan declined year on year to ¥140,960 million. Sales of optical-use
Poval film, EVAL and SEPTON expanded, attributable to increased demand,
although CLARINO, KURALON and other fibers and textiles were adversely
affected by the country’s slowing economy. Declining orders in theengineering business also added to the unfavorable results in Japan. Other
factors included the October 2007 integration of the dialyzer business, and in
March 2008, the scaling down of the aroma chemical business.
North America
Sales volumes of EVAL increased, mainly for food packaging applications,and sales of SEPTON were brisk. Sales were sluggish for CLARINO. In
addition, the appreciation of the yen against the dollar had a negative impact
on this region’s sales when converted into yen. As a result, sales in North
America decreased year on year, to ¥15,088 million.
EuropePerformance was robust for PVB films used in laminated glass withconstruction applications, Poval resins and EVAL for food packaging
applications. As a result, sales in Europe rose year on year to ¥42,108 million.
Asia
Two China-based subsidiary companies—Kuraray (Shanghai) Co., Ltd. andKuraray Trading (Shanghai) Co., Ltd.—were newly consolidated from thecurrent fiscal year. Furthermore, Kuraray has from January 2008 expanded thescope of its Poval resin business by making Poval Asia Pte., Ltd. (nowKuraray Asia Pacific Pte. Ltd.) a wholly-owned subsidiary. As a result, sales in
Asia rose year on year, to ¥11,162 million.

2. Qualitative Information Regarding Changes in Consolidated
Financial Position
Assets, Liabilities and Net Assets
Total assets increased ¥6,861 million compared to the end of the previous
fiscal year to ¥497,227 million, mainly owing to an increase in fixed assets.
Liabilities declined ¥219 million, to ¥145,312 million, and net assets increased¥7,080 million to ¥351,914 million. The major factor for the increase in net
assets was the rise in retained earnings. Shareholders’ equity stood at ¥348,877
million, for the equity ratio of 70.2%.
Cash Flows
Cash and cash equivalents increased ¥1,587 million from the end of theprevious fiscal year to ¥13,776 million, as a result of ¥22,956 million provided
by operating activities, ¥23,786 million used in investing activities and ¥1,753
million provided by financing activities.
Brief details of cash flows from operating, investing and financing
activities are explained below.
Cash Flows from Operating Activities
Net cash provided by operating activities increased ¥1,908 million, comparedwith the same period of the previous fiscal year, to ¥22,956 million. Major
components included income before income taxes and minority interests of¥22,046 million, depreciation and amortization of ¥17,183 million andincome taxes paid of ¥8,751 million.
Cash Flows from Investing Activities
Net cash used in investing activities increased to ¥23,786 million. Major
components included proceeds of ¥1,533 million from sales and redemptionof marketable and investment securities, payments of ¥20,469 million for theacquisition of property, plant, equipment and intangible assets and payment
for the purchase of investment securities of ¥3,643 million.
Cash Flows from Financing Activities
Net cash provided by financing activities totaled ¥1,753 million. Major
components included an increase of ¥1,625 million in short-term loans,proceeds of ¥4,266 million from long-term loans and dividends paid of¥3,830 million.
3. Qualitative Information Regarding Consolidated Performance
Forecast
The operating environment which surrounds the Kuraray Group is
expected to become increasingly severe with the unavoidable impact onthe real economy brought about by the worldwide credit crisis. Kuraray isactively implementing such Groupwide initiatives as the promotion of
selection and focus measures with more of its businesses, as well as cost
reductions and other efficient business practices. Kuraray is moving
forward cautiously, giving sufficient consideration to the operating
environment, including trends in demand for capital investment.
Under this environment, with regard to performance forecasts for thefull year, Kuraray takes into account falling demand brought about by
worsening economic conditions and the impact of a strong yen. Given this,Kuraray expects consolidated net sales of ¥425,000 million, a decline of¥25,000 million from the previous forecast, and an increase of ¥7,400
million from the previous fiscal period.
With regard to operating income, although Kuraray has aggressively
revised prices, the impact of soaring raw material and fuel prices has been
unavoidable. Kuraray predicts full-year consolidated operating income of¥46,000 million, a decline of ¥5,000 million from the previous forecast,and an decrease of ¥2,100 million from the previous fiscal period. Net
income is expected to be ¥26,000 million, a decline of ¥2,000 million
from the previous forecast and an increase of ¥400 million from theprevious fiscal period.
Taking into account various assumptions for the latter half of thecurrent fiscal year (October 1, 2008 to March 31, 2009), Kuraray has
revised the average exchange rate for $1.00 to ¥100 (previously forecast at¥105) and the Euro 1.00 to ¥130 (previously forecast at ¥160), and forthe price of naphtha produced in Japan, ¥71,000 per kiloliter (previously
forecast at ¥68,000).
Net Sales
Prior

Announced

Forecast (A)(B)
changed(B-A)
Change Ratio (%)
Results

fromPrevious

FiscalYear450,000of YenForecast Revision

AmountMillions

Operating Income
Millions

51,000of YenNet Income
Millions

28,000Net Income
per Share
Yen

80.41

of Yen425,000

46,00026,00074.66△25,000△5,000△2,000

△5.75

△5.6

△9.8

△7.1

△7.2

417,601

48,13025,55472.15

4. Others(1) Changes in Important Subsidiaries during the Period (Changes
in Special Subsidiaries Involving Changes in the Scope ofConsolidation:
No(2) Adoption of the Simplified Accounting Method and Special
Accounting Practices for presenting Quarterly Consolidated
Financial Statements:
Yes(i)
Simplified accounting method
Tax expenses related to certain consolidated subsidiaries thathave no significant impact on Kuraray’s quarterly consolidated
financial statements are calculated by multiplying income
before income taxes and minority interests for the period
under review by the effective income tax rate after theapplication of the tax effect accounting in the consolidated
statements of income for the previous fiscal year.
(ii)
Special accounting practices used in the preparation ofquarterly consolidated financial statements
No(3) Changes in Accounting Principles, Procedures and Presentation
Methods for the Preparation of Quarterly Consolidated
Financial Statements(i)
Kuraray began applying the Accounting Standards for
Quarterly Financial Reporting (Accounting Standards Boardof Japan [ASBJ] Statement No. 12) and the Guidance on the
Accounting Standards for Quarterly Financial Reporting(ASBJ Guidance No. 14) from the fiscal year ending March 31,
2009. Also, Kuraray prepares quarterly consolidated financial
statements according to the Regulations Concerning
Terminology, Formats and Preparation Methods of Quarterly
Consolidated Financial Statements (Cabinet Office Order No.
66 of 2002).
(ii)
Previously, inventories held for the purpose of ordinary sales
were evaluated at cost mainly using the total average method.
Under this method, the book value of inventories held over acertain period of time was devalued at regular rates. However,Kuraray began to apply the Accounting Standards forInventory Evaluation (ASBJ Standard No. 9, first implemented
July 5, 2006) from the first quarter of the fiscal year ending
March 31, 2009. Accordingly, Kuraray evaluates suchinventories at cost mainly using the total average method and(iii)(iv)

posts such securities at book value that is devalued inaccordance with the deterioration of profitability.
As a result of the application of this policy, in thecurrent consolidated interim period, operating income
declined ¥115 million, while income before income taxes andminority interests declined ¥1,269 million.
In addition, loss on disposal of inventories, which waspreviously included in Non-Operating expenses, is now
included in cost of sales from the first quarter in line with theapplication of the said standards as these inventories areinevitably generated in the normal course of Kuraray’s
operations.
As a result of the application of this policy, in thecurrent consolidated interim period, operating income
declined ¥370 million. In the same period, there was nomaterial impact on operating income, and no impact on
income before income taxes and minority interests.
From the first quarter of the fiscal year ending March 31, 2009,
Kuraray began to apply the Practical Solution on Unificationof Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements (ASBJ Practical Issues Task
Force No. 18), and has made necessary revisions in its
consolidated financial statement.
In the consolidated interim period under review, theapplication of this policy had no material impact on operating
income, income before income taxes and minority interests.
From the first quarter of the fiscal year ending March 31, 2009,
Kuraray began applying the Accounting Standards for Lease
Transactions (Business Accounting Council, the 1st
Committee Standard No. 13, first implemented June 17, 1993,
last amended March 30, 2007) and the Guidance on the
Accounting Standards for Lease Transactions (The JapaneseInstitute of Certified Public Accountants, Accounting PracticeCommittee Guidance No. 16, first implemented January 18,
1994, last amended March 30, 2007) from the first quarter ofthe fiscal year ending March 31, 2009. As the result of theapplication of this policy, the method of accounting for
financial leases that do not transfer ownership changed fromtreating such leases as operating lease transactions to treatingthem as sales/purchase transactions. Lease assets are
depreciated down to a residual value of zero, using thestraight-line method with in their lease service life.
In the consolidated interim period under review, the(v)application of this policy had no impact on operating income,income before income taxes and minority interests.
In line with revisions to the statutory useful life andclassification of assets based on the amended Corporate Tax
Law of Japan, from the quarter under review, Kuraray andsome of its consolidated subsidiaries have partially revised theuseful life applied to certain machinery and equipment.
In the consolidated interim period under review, theapplication of this policy had no material impact on operating
income, income before income taxes and minority interests.

5. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Millions of yen)

September 30, 2008ASSETS
Current Assets
Cash and cash deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
OthersAllowance for doubtful accounts

March 31, 2008

15,01994,492―53,008
10,983
11,926
5,955
8,732
△760

11,10995,472
2,062
50,834
11,455
10,2447,362
8,764△1,021

199,357

196,282

Tangible fixed assets
Buildings and structures (net)
Machinery and equipment (net)Land
Construction in progress
Others (net)34,743
108,448
19,20429,6183,952

33,853
110,229
19,094
26,5102,674

Total tangible fixed assets

195,967

192,362

27,2894,987

28,596
5,411

Total intangible fixed assets

32,27634,008Investments and other assets
Investment securities
Long-term loans
Deferred tax assets
Prepaid pension cost
OthersAllowance for doubtful accounts

52,661
1,052
3,714
7,510
4,960
△274

51,590
392
3,538
7,540
4,962
△311

Total investments and other assets

69,62567,712297,869

294,083

497,227

490,365

Total current assets
Noncurrent Assets

Intangible fixed assets
Goodwill
OthersTotal fixed assets
Total Assets

(Millions of yen)
September 30, 2008

March 31, 2008

LIABILITIESCurrent Liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Reserve for bonuses
Other provision
Other

37,263
13,565
5,929
7,092
45
20,047

39,17011,997
8,826
6,716
66
22,296

Total current liabilities

83,94389,074

Corporate bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for director’s retirement benefits
Others

10,00015,8306,166
13,804
177
15,38910,00011,954
5,686
12,959191
15,665

Total noncurrent liabilities

61,36856,457

145,312145,532

88,95587,225
198,720△40,894

88,95587,228189,282△40,919

334,007324,547

Noncurrent liabilities

Total liabilities
NET ASSETS
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustments

5,806

6,895

19
9,044

18
10,427

Total valuation and translation adjustments

14,87017,341

109
2,928

69
2,875

Total net assets

351,914344,833

Total liabilities and net assets

497,227

490,365

Subscription right to shares
Minority interests

(2) Quarterly Consolidated Statement of Income(Millions of yen)
Fiscal 2008 1Q(April 1, 2008 – September 30,
2008)

Net sales
Cost of sales

209,319
148,504

Gross profit

608,815

Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income

10,916
26,62537,542
23,273Non-operating income
Interest income
Dividends income
Miscellaneous income

204
950
482

Total non-operating income

1,637

Non-operating expenses
Interest expenses
Equity in loss of affiliates
Miscellaneous expenses
Total non-operating expenses
Extraordinary income
Gain on sales of investment securities
Total extraordinary income

458
7
2,193
2,659
1,264
1,264

Extraordinary loss
Loss on valuation of inventories
Impairment loss
Loss on disposal of property, tangible fixed assets
Loss on valuation of investment securities

1,153
153
107
54

Total extraordinary loss

1,469

Income before income taxes

22,046

Income taxes-current
Deferred income taxes-deferred

6,037
2,513

Total income taxes

8,550

Minority interests in income
Net income

88
13,407

(3) Quarterly Consolidated Statement of Cash Flows(Millions of yen)

Fiscal 2008 1Q(April 1, 2008 – September 30,
2008)
Net cash provided by (used in) operating activities
Income before income
Depreciation and amortization
Loss on disposal of tangible fixed assets
Impairment loss
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on valuation of inventories
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in inventories
Decrease (increase) in notes and accounts payable-trade
Other, net

22,046
17,183107
153△1,264
54
1,153
1,368
△4,495△2,456△3,768Sub-total

30,084

Income taxes paid

△8,751Others, net

1,623

Net cash provided by operating activities

22,956

Net cash provided by (used in) investment activities
Purchase of fixed of assets tangible fixed assets and intangible
fixed assets
Purchase of investment securities
Proceeds from sales and redemption of short-term investment
securities and investment securities
Other, net
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities△20,469△3,643
1,533△1,207△23,786
1,625
4,266△3,830△307
1,753

Effect of exchange rate changes on cash and cash equivalents△23

Net increase (decrease) in cash and cash equivalents

899

Cash and cash equivalents, beginning of year
Increase in cash and cash equivalents from newly consolidated
subsidiary

12,189687

Cash and cash equivalents, end of year

13,776

Kuraray began applying the Accounting Standards for Quarterly Financial
Reporting (Accounting Standards Board of Japan [ASBJ] Statement No. 12;
March 14, 2007) and the Guidance on the Accounting Standards for Quarterly
Financial Reporting; March 14, 2007 (ASBJ Guidance No. 14) from the fiscal
year ending March 31, 2009. Also, Kuraray prepares quarterly consolidated
financial statements according to the Regulations Concerning Terminology,
Formats and Preparation Methods of Quarterly Consolidated Financial
Statements (Cabinet Office Order No. 66 of 2002).
(4) Notes Regarding Going Concern Assumptions
None(5) Segment Information(i) Industrial segment information
Fiscal 2008 Interim Period (April 1, 2008 to September 30, 2008)(Millions of yen)
Fibers andtextiles

HighPerformancematerials,
medicalproducts andothers127,583

51,12330,612

96301

127,680
26,458288,397
12,106
8,853

51,4252,878
80,2672,718
4,380

Chemicals
and resins
Net sales(1) Outside customers(2) Inter-segment sales andtransfers
Total
Operating income
AssetsDepreciation and amortization
Capital expenditures

Eliminatedonconsolidationand corporate

Consolidated
total

209,319―

209,319

5,336

5,734

（5,734）―35,9482,692
68,6661,285
5,299

215,053
32,029473,331
16,10918,533（5,734）（8,756）59,895
1,074
1,243

209,319
23,273497,227
17,183
19,777

Total

Notes:
1. Industry segments are aggregated into three segments based upon the classification of sales.
2. Principal products by business:(1) Chemicals and Resins: Poval resin and film; PVB resin and film; ethylene vinyl alcohol polymer resin (EVAL); isoprene; finechemicals; methacrylate resin; processed resin products; and others(2) Fibers and Textiles: KURALON; man-made leather (CLARINO); dry-laid nonwoven fabric (KURAFLEX); hook and loop fastener(MAGIC TAPE); polyester; textiles; others(3) High-Performance Materials, Medical Products and Others: medical products; high-performance materials; activated carbon;
high-performance membranes; engineering services; others
3. Previously, inventories held for the purpose of ordinary sales were evaluated at cost mainly using the total average method. Under thismethod, the book value of inventories held over a certain period of time was devaluated at regular rates. However, Kuraray began to
apply the Accounting Standards for Inventory Evaluation (ASBJ Standard No. 9, first implemented July 5, 2006) from the first quarter ofthe fiscal year ending March 31, 2009. Accordingly, Kuraray evaluates such inventories at cost mainly using the total average method andposts such inventories’ book value devaluated in accordance with the deterioration of their profitability.
In addition, loss on disposal of inventories attributable to deteriorated profitability, which was previously included in
non-operating expenses, is now included in cost of sales from the quarter under review in line with the application of the said standards,
as these inventories are inevitably generated in the normal course of Kuraray’s operations.
The application of this policy has reduced operating income in the consolidated interim period under review by ¥190

million in the chemicals and resins segment, ¥188 million in the fibers and textiles, ¥43 million in the high-performance materials,
medical products and others segment and ¥63 million in eliminated on consolidation of corporate segment.
4. From the first quarter of the fiscal year ending March 31, 2009, Kuraray began to apply the Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements (ASBJ Practical Issues Task Force No. 18),and has made necessary revisions in its consolidated financial statement.
The application of this policy had no material impact on performance of each segment.
5. In line with revisions to statutory useful life and classification of assets based on the amended Corporate Tax Law of Japan, from thequarter under review, Kuraray and some of its consolidated subsidiaries have partially revised the useful life applied to certain machineryand equipment.
The application of this policy has no material impact on performance of each segment.

(ii) Geographical segment information
Fiscal 2008 Interim Period (April 1, 2008 to September 30, 2008)
Japan
Net sales(1) Outside
customers(2)
Inter-segment
Total
Operatingincome (loss)

North
America

Europe

Asia

Total

(Millions of yen)
EliminationonConsolidated
consolidation
Total
and corporate

140,960

15,08842,108

11,162

209,319―

209,319

14,364

2,899

1,917

65

19,247（19,247）―

155,324

17,98844,025

11,227

228,566（19,247）

209,319

26,069

981

4,029

324

31,405（8,132）

23,273

Notes:
1. The segmentation of country or region is based on the geographical proximity.
2. Major countries and regions included in each category are as follows:(1) North America:

United States of America(2) Europe:

Germany , Belgium(3) Asia:

Singapore , Hong Kong

3. Previously, inventories held for the purpose of ordinary sales were evaluated at cost mainly using a total average method. Under thismethod, the book value of inventories held over a certain period of time was devaluated at regular rates. However, Kuraray began to
apply the Accounting Standards for Inventory Evaluation (ASBJ Standard No. 9, first implemented July 5, 2006) from the first quarter ofthe fiscal year ending March 31, 2009. Accordingly, Kuraray evaluates such inventories at cost mainly using the total average method andposts such inventories’ book value devaluated in accordance with the deterioration of their profitability.
In addition, loss on disposal of inventories attributable to deteriorated profitability, which was previously included in
non-operating expenses, is now included in cost of sales from the quarter under review in line with the application of the said standards,
as these inventories are inevitably generated in the normal course of Kuraray’s operations.
The application of this policy has reduced operating income in the segments of Japan and elimination on consolidation andcorporate, ¥422 million and ¥63 million, respectively.
4. From the first quarter of the fiscal year ending March 31, 2009, Kuraray began to apply the Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements (ASBJ Practical Issues Task Force No. 18),and has made necessary revisions in its consolidated financial statement.
The application of this policy had no material impact on the performance of any segment.
5. In line with revisions to statutory useful life and the classification of assets based on the amended Corporate Tax Law of Japan, fromthe quarter under review, Kuraray and some of its consolidated subsidiaries have partially revised the useful life applied to certainmachinery and equipment.
The application of this policy has no material impact on the performance of any segment.

(iii) Foreign Sales
Fiscal 2008 Interim Period (April 1, 2008 to September 30, 2008)(Millions of yen)
North America
I Overseas sales
II Consolidated net

Europe

Asia

Other

Total

14,68344,22041,456

5,336

105,696

―

―

―

―

209,319

7.0

21.1

19.8

2.5

50.5

sales
III Percentage ofconsolidated

netsales (%)
Notes:
1. The segmentation of country or region is based on the geographical proximity.
2. Major countries and regions included in each category are as follows:(1) North America:

United States of America , Canada(2) Europe:

Germany , United Kingdom(3) Asia:

China , South Korea(4) Other:

Latin America , Africa

3. Overseas sales represent the total of all the sales achieved outside Japan by the Company and its consolidated subsidiaries.

(6) Notes Regarding Substantial Changes in Shareholders’ Equity
NoneConsolidated Financial Statements for
the Interim Period of the Previous Fiscal Year
(April 1, 2007 to September 30, 2007)(1) Consolidated Statements of Income (Summary)(Millions of yen)

Fiscal 2007 1Q(April 1, 2007 – September 30,
2007)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest and dividends income
Equity in earnings of affiliates
Miscellaneous income
Non-operating expenses
Interest expense
Miscellaneous expense
Extraordinary income
Gain on sales of investment securities
Gain on revision of retirement benefit plan
Extraordinary loss
Business structure improvement losses
Impairment loss
Loss on disposal of tangible fixed assets
Income before income taxes
Income taxes – current
Income taxes – deferred
Minority interests in income (deductible)
Interim net income

206,197
145,636
60,561
36,27824,282
1,274
13
893

2,181

296
3,479

3,775

149
68

218

602
194
136
8,541
△516

934
21,9728,025
48
13,898

(2) Consolidated Statements of Cash Flows (Summary)(Millions of yen)

Fiscal 2007 Interim(April 1, 2007 – September 30,
2007)
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for retirement benefits
Impairment loss
Loss on disposal of tangible fixed assets
Gain on sales of investment securities
Interest and dividends income
Interest expenses
Decrease in notes and accounts receivable
Increase in inventories
Decrease in notes and accounts payable
Decrease (increase) in prepaid pension costs
Other, net

21,972
14,410
△5
△237
194
136
△149
△1,274296△1,432△123△4,697△291△1,946Sub-total

26,853

Interest and dividend income received

1,234Interest expenses paid
Income taxes paid

△281
△6,758Net cash provided by operating activities

21,048Cash flows from investing activities
Net decrease (increase) in time deposits
Net decrease (increase) in short-term investment securities
Payments for acquisition of property, plant, equipment andintangible assets
Proceeds from sales of property, plant and equipment
Payments for disposal of tangible fixed assets and intangible fixed
assetsPayments for purchase of investment securities
Proceeds from sales and redemption of investment securities
Purchase of insurance funds
Proceeds from cancellation of insurance funds
Other, net
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Net decrease (increase) in commercial paper
Proceeds from long-term loans payable

1,120
△45
△22,074
88△1,124
△311
190
△83
2,920
1,251
△18,068
4,455
2,000
5,900

Repayment of long-term loans payable
Cash dividends paid to minority shareholders
Proceeds from sales of treasury stock
Purchase of treasury stock
Cash dividends paid

△5,00013354△30,109△3,679Net cash used in financing activities△26,092

Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of the period
Effect of changes in reporting entities
Cash and cash equivalents, end of the interim period

205△22,907
34,032
112
111,237

(3) Segment Information
Industrial Segment Information
Fiscal 2007 Interim Period (April 1, 2007 to September 30, 2007)(Million of yen)
Chemicals
and resins
Net sales and operating
income(1) Outside customers(2) Inter-segment sales andtransfers
Total
Operating expenses
Operating income
2.
Assets, depreciation andamortization and capital
expenditures
AssetsDepreciation and amortization
Capital expenditures

Fibers andtextiles

HighPerformancematerials,
medicalproducts andothersTotal

Eliminatedonconsolidationand corporate

Consolidated
total

1.

117,951

53,30734,939206,197―

206,197477

321

13,244

14,043（14,043）―

118,428
95,021
23,40653,62849,7783,850

48,18344,256
3,927

220,241
189,056
31,185（14,043）（7,140）（6,902）

206,197
181,915
24,282

286,483
10,30813,80980,902
2,111
3,538

69,7381,033
3,366

437,124
13,453
20,71457,893957
1,936

495,017
14,41022,650Notes:
1. Industry segments are aggregated into three segments based upon the classification of sales.
2. Principal products by business:(1) Chemicals and Resins: Poval resin and film; PVB resin and film; ethylene vinyl alcohol polymer resin (EVAL); isoprene; finechemicals; methacrylate resin; processed resin products; and others(2) Fibers and Textiles: KURALON; man-made leather (CLARINO); dry-laid nonwoven fabric (KURAFLEX); hook and loop fastener(MAGIC TAPE); polyester; textiles; others(3) High-Performance Materials, Medical Products and Others: medical products; high-performance materials; activated carbon;
high-performance membranes; engineering services; others
3. Unallocatable operating income within operating expenses in the eliminated on consolidation and corporate segment amounted to¥6,520 million. This mainly represents fundamental research expenses for the parent company and the corporate division of theCompanies.
4. Corporate assets in the eliminated on consolidation and corporate segment were ¥72,966 million. Corporate assets mainly represent
surplus operating funds, long-term investment funds and assets held by the fundamental research departments and the corporate divisionof the Companies.
5. Effective from the current consolidated interim accounting period, Kuraray and its domestic subsidiaries adopted the depreciation
method prescribed under the amended Corporate Tax Law for tangible fixed assets acquired on or after April 1, 2007. The application ofthis policy has no material impact on performance of each segment.
6. Effective from the current consolidated interim accounting period, Kuraray and its domestic subsidiaries adopted the depreciation
method prescribed under the amended Corporate Tax Law. With regard to tangible fixed assets acquired on or before March 31, 2007, a
5% residual amount is amortized using the straight-line method over 5 years up to one yen memorandum value from the fiscal year
following the year in which the accumulated depreciation amount becomes 95% of acquired cost. The depreciation amount each year isrecorded in “Depreciation” item. The application of this policy has no material impact on performance of each segment.

Geographical segment information
Fiscal 2008 Interim Period (April 1, 2008 to September 30, 2008)
Japan
1. Net sales
and operating
incomeNet sales(1) Outside
customers(2)
Inter-segment
Total
Operatingexpenses
Operatingincome2 Assets

144,125

North
America

16,181

Europe

Asia

Total

38,154

7,736

206,197(Millions of yen)
EliminationonConsolidated
consolidation
Total
and corporate―

206,197

13,405

2,161

2,206

1,383

19,157（19,157）―

157,531

18,34340,361

9,119

225,354（19,157）

206,197

130,944

16,74937,4589,117

194,269（12,354）

181,915

26,586

1,594

2,902

1

31,085（6,802）

24,282（282,159）

48,93098,6118,209

437,911

57,105495,017

Notes:
1. The segmentation of country or region is based on the geographical proximity.
2. Major countries and regions included in each category are as follows:(1) North America:

United States of America(2) Europe:

Germany , Belgium(3) Asia:

Singapore , Hong Kong

3. Unallocatable operating income within operating expenses in the eliminated on consolidation and corporate segment are as stated in
Note 3 in “Industrial Segment Information.”
4. Corporate assets in the eliminated on consolidation and corporate segment are as stated in Note 4 of “Industrial Segment
Information.”
5. Effective from the current consolidated interim accounting period, Kuraray and its domestic subsidiaries adopted the depreciation
method prescribed under the amended Corporate Tax Law for tangible fixed assets acquired on or after April 1, 2007. The application ofthis policy has no material impact on performance of each segment.
6. Effective from the current consolidated interim accounting period, Kuraray and its domestic subsidiaries adopted the depreciation
method prescribed under the amended Corporate Tax Law. With regard to tangible fixed assets acquired on or before March 31, 2007, a
5% residual amount is amortized using the straight-line method over 5 years up to one yen memorandum value from the fiscal year
following the year in which the accumulated depreciation amount becomes 95% of acquired cost. The depreciation amount each year isrecorded in “Depreciation” item. The application of this policy has no material impact on performance of each segment.

Foreign Sales
Fiscal 2008 Interim Period (April 1, 2008 to September 30, 2008)(Millions of yen)
North America
I Overseas sales
II Consolidated net

Europe

Asia

Other

Total

16,36640,50337,522

4,730

―

―

―

―

7.9

19.6

18.2

2.1

98,722

sales
III Percentage ofconsolidated

netsales (%)
Notes:
1. The segmentation of country or region is based on the geographical proximity.
2. Major countries and regions included in each category are as follows:(1) North America:

United States of America ,Canada(2) Europe:

Germany ,United Kingdom(3) Asia:

China , South Korea(4) Other:

Latin America , Africa

3. Overseas sales represent the total of all the sales achieved outside Japan by the Company and its consolidated subsidiaries.

(6) Other information
None

47.9