FOR IMMEDIATE RELEASE

Kurita Water Industries Reports Earnings for the Fiscal Year Ended March 2006
Tokyo, Japan April 28, 2006—Kurita Water Industries Ltd. (TSE Security Code 6370) announced
consolidated net sales for the fiscal year ended March 31, 2006 (April 1, 2005 – March 31, 2006) of
173,683 million yen, and net income of 10,519 million yen, or 81.76 yen per share.

Results of Operations
Total consolidated orders for the Kurita Group increased 7.3% from a year earlier to 183,910 million yen,while net sales increased 7.9% to 173,683 million yen. Operating income grew 8.5% to 17,311 million
yen and ordinary income rose 10.2% to 18,425 million yen, resulting in a net income increase of 12.1% to10,519 million yen. By segment, water treatment chemicals sales increased 7.7% to 54,549 million yen,while water treatment facilities sales rose 8.0% to 119,133 million yen.
In the private sector, capital expenditures in the electronics industry were strong in Japan, Taiwan andSouth Korea on the back of buoyant demand for liquid crystal display (LCD) TVs and plasma display
panel (PDP) TVs. In the water treatment industry, both factory operating rates and capital expenditures
were solid mainly in the basic materials industry such as steel, petroleum and chemicals. On the other
hand, business climate for public spending related businesses remained severe due primarily to shrinking
budgets for public works projects.
Taking into consideration the Group’s business performance for the year, future business growth plans,
and the Group’s policy of rewarding its shareholders for their support, the Company has decided to raise
its year-end dividend by ¥2 to ¥11 per share. As the Company also raised its interim dividend by ¥2 to¥11 per share, annual dividend for the year will total ¥22 per share. Going forward, the Company willcontinue its commitment to its basic policy of maintaining stable dividend payouts.

Segment Information
Water Treatment Chemicals
Total Group orders for the segment increased 3.4% from a year earlier to 53,903 million yen, while sales
grew 7.7% to 54,549 million yen, resulting in a 7.1% increase in operating income to 7,961 million yen.
During the year, the Group concentrated its efforts on securing stable order flows by pursuing closer
relationships with its clients, expanding sales of water treatment chemicals that accommodate clients’needs, and promoting packaged water treatment management contracts. Also, the Group implemented
wide ranging measures to ensure revenue and earnings by shifting its focus to high value-added and highmargin products, responding to the hike in raw materials costs, and reducing logistics costs.
Orders for the Group’s mainstay boiler water treatment chemicals and cooling water treatment chemicals
were flat compared with a year earlier, while wastewater treatment chemicals saw an order increase. In
other products, orders for process treatment chemicals used in the pulp and paper industry and for process
treatment chemicals used in the oil refining and petrochemical industry both increased. Orders for
packaged water treatment management contracts also increased.
Water Treatment Facilities
Total Group orders for the segment increased 9.1% to 130,007 million yen, while sales rose 8.0% to119,133 million yen, and operating income grew 9.8% to 9,349 million yen.

In the private sector, the Group focused its efforts on securing stable order flows by expanding theultra-pure water supply business, by expanding its “Solutions Business” of offering clients solutions that
address their needs to improve productivity and reduce environmental burdens, as well as bystrengthening marketing efforts to strategic clients.
Orders for the Group’s mainline ultra-pure water production systems, including the ultra-pure watersupply business, for the electronics industry increased both in Japan and overseas compared with a year
earlier. Also, orders for maintenance services for the ultra-pure water production systems and orders fortool cleaning service for semiconductor and LCD production equipment both increased. In the water
treatment business, orders for maintenance services for the general water treatment facilities increased,
and orders for water treatment facilities for the raw materials industry also grew, while orders for water
treatment facilities from automobile and pharmaceutical industries decreased. Orders for soil remediation
increased on the back of robust demand in land trading.
In the public sector, despite the Group’s concentrated efforts to secure order intake by implementing
locally oriented marketing activity and strengthening cooperation between Group companies, Grouporders fell sharply compared with a year earlier.
Significant Events That were Decided or Took Place during the Period
In an effort to expand and strengthen its marketing structure in the water treatment chemicals business,
the Group decided to make two sales agencies in Aichi and Gifu prefectures its wholly-owned
subsidiaries and merged them to create Kurita Chemicals Tokai Ltd.
The Group also decided to relocate and expand its Akoh Factory in Hyogo prefecture to cope with the
expansion in tool cleaning business for electronics industries.

Outlook for the Fiscal Year ending March 31, 2007
The Group forecasts 190,000 million yen in net sales, 21,000 million yen in ordinary income, and 11,500
million yen in net income for the fiscal year ending March 31, 2007.
While the Group expects the market to remain firm supported by strong factory operating rates andcapital expenditures, possible impact of movements in crude oil prices on corporate profits remains a
concern.
Under such an environment, the Group initiated a new medium-term management plan “G-8 (Growth2008)”, starting this fiscal year. The Group will pursue more growth than ever and expand its businessfurther by improving profitability in its core businesses and further aggressively enhancing Kurita’s
proprietary businesses.

Outlook by Segment
Water Treatment Chemicals
In water treatment chemicals, factory operating rates at clients, which have a large impact on the Group’s
order intake, are expected to remain solid at similar levels seen in the fiscal year ended March, 2006.
However, there are concerns that cost increases in this segment and further cost cutting efforts by clientsamid rising basic materials costs, as well as increased competition may adversely affect the segment’s
profitability. Under such circumstances, the Group aims to focus on strategic markets and to strengthenmarketing of “solution” business that offer clients solutions for their problems by further pursuing closer
ties with clients, and thereby to maintain and increase order flows. The Group will also continue its
efforts to reduce manufacturing and logistics costs of water treatment chemicals in order to maintainprofitability.

Water Treatment Facilities
Capital expenditures in the private sector in water treatment facilities are largely expected to be robust,
although there are concerns that large-scale capital expenditures have run its course in theelectronics-related industries, which may affect the segment performance. Under such an environment,
the Group aims to secure order flows by expanding its proprietary businesses, such as the ultra-pure watersupply business, and also by further aggressively expanding business in Asia. In the public sector, thesevere operating environment is expected to continue for the foreseeable future, reflecting shrinking
budgets for public works projects. However, the Group will strive to ensure order flows by exploring
initiatives such as private finance initiative (PFI) and other new business models. Also, the Group will
focus its efforts on securing revenues by driving forward initiatives to offer modularized and ready-madesystems in order to achieve improved productivity through higher quality, lower cost and shorter
order-receipt to delivery period.

Medium-Term Strategies
In April 2006, the Group started a new medium-term management plan “G-8 (Growth 2008)” with“growth and innovation” as its main theme. For the current fiscal year ending March 2007, which is thefirst year of the business plan, the Group will pursue more growth than ever and expand its businessfurther by improving profitability in its core businesses and further aggressively enhancing Kurita’s
proprietary businesses. Specific objectives for the first year of the plan are as follows:a. Further strengthen collaboration within the Group and pursue closer ties with clients to provide
high quality products and services quickly.
b. Make exhaustive efforts to improve profitability of the Group’s core businesses including water
treatment chemicals, water treatment facilities and maintenance services.
c. Further aggressively expanding business in overseas markets.
d. Develop world-class new products and services.
e. Actively implement measures and make investments to achieve further expansion in scale andgrowth.
f. Make Group-wide efforts to strengthen and implement compliance measures

Financial Condition (Cash Flow Trends)
Consolidated net cash and cash equivalents at the end of the year were 29,871 million yen, representing adecrease of 494 million yen, or 1.6%, from the end of the previous fiscal year.
Net cash inflow from operating activities amounted to 13,856 million yen, an increase of 5,559 million
yen from a year earlier. This is primarily due to the cash inflows from income before income taxes
which totaled 18,200 million yen, depreciation and amortization totaling 4,906 million yen and anincrease in trades payable totaling 2,314 million yen, which were partly offset mainly by an increase intrades receivable by 5,259 million yen, and payment of income taxes of 6,981 million yen.
Net cash outflow from investing activities was 12,318 million yen, an increase of 1,649 million yen froma year earlier, primarily reflecting net purchase of securities of 1,697 million yen and acquisition of
tangible fixed assets of 10,962 million yen.
Net cash outflow from financing activities was 2,516 million yen, an increase of 94 million yen from ayear earlier period, mainly reflecting dividend payment of 2,678 million yen.

Business Risks
Major risk factors that could affect the Group’s future performance include, but are not limited to,
economic trends, capital expenditure trends in water treatment facilities and factory operating rates atclients, public investment trends, price movements in oil and other basic materials, and competition with

peers.
Factors that may affect the Group’s business performance
The water treatment chemicals business performance is affected by fluctuations in demand levels
reflecting changes in factory operating rates at companies in steel, petroleum refining and petrochemical,
and pulp and paper industries, the Group’s main clients. The Group’s business performance is also
affected by movements in basic materials prices reflecting rising crude oil prices.
The water treatment facilities business performance is affected by demand fluctuations caused by trends
in capital expenditures at companies in the electronics related industries, the Group’s main clients. Also,
the Group’s business performance in public sector projects is affected by financial conditions of andexecution of budgets by municipal governments.
The Group considers impact of exchange rate movements on its business performance would be
insignificant as its overseas operations account for only a small proportion of its overall sales.
About seasonal concentration of profit from the water treatment facilities business on the second
half of a fiscal year
The Kurita Group’s operating income from the water treatment facilities business tends to be skewed
toward the second half of the fiscal year. This is because recognition of sales of water treatment facilities
for public works projects, particularly sales from completed work and sales recognized according to thepercentage of completion method for long-term projects, are concentrated toward the end of a fiscal yearof the public sector typically ending March.

Subsequent Significant Events That Occurred After the End of the Fiscal YearIn April 2006, the Company was investigated by the Fair Trade Commission and the Osaka District
Public Prosecutors Office over possible violation of the Act concerning Prohibition of Private Monopoly
and Maintenance of Fair Trade for a human waste treatment facility construction project.

About the Kurita GroupThe Kurita Group provides a wide range of products, technologies, and maintenance services related towater treatment. The two core lines of the Group’s business consist of: 1) water treatment chemicals used
for boiler water, cooling water, waste water and in manufacturing processes, and 2) water treatment
facilities such as ultra-pure water production systems, wastewater treatment facilities, and sewage water
treatment facilities. The business scope of both lines includes production, sales, and maintenanceservices. For additional information about the Kurita Group, please visit the Company’s website at
http://www.kurita.co.jp/english

Forward-Looking Statements
This news release contains various forward-looking statements which are based on current expectations
and assumptions of future events. Except for the historical information contained herein, all figures andstatements with respect to future performance, projections and business plans of the Kurita Group
constitute forward-looking statements. Although Kurita believes that its expectations and assumptions arereasonable, actual results and trends of the Group’s performance could differ materially from thoseexpressed or implied by such figures or statements because of risks and uncertainties, including but notlimited to factory operating ratios at major clients in the steel, petroleum and paper/pulp industries;
capital expenditure trends in the electronics, food processing, pharmaceuticals, basic material andautomobile industries; and the financial condition and budgeting actions of national and local
governments in Japan.

KURITA WATER INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In million yen)

Net sales
Cost of sales
Gross Profit
Selling, general and administrative
expenses
Operating income
Non-operating income
Non-operating expense
Ordinary income
Extraordinary gains
Extraordinary losses
Income before income taxes
Income taxes
Minority interests in earnings ofconsolidated subsidiaries
Net income

Year ended
March 31, 2006

Year ended
March 31, 2005

Increase/
DecreaseAmount173,683
122,630
51,052

%
100.0
70.6
29.4

Amount160,896
112,077
48,819

%
100.0
69.7
30.3

Amount12,787
10,5532,233

33,741

19.4

32,86720.4

874

17,3111,334
220
18,4251,205
1,430
18,200
7,495

10.0
0.7
0.1
10.6
0.7
0.8
10.5
4.3

15,951
1,068
295
16,725128477
16,376
6,837

9.9
0.7
0.2
10.4
0.1
0.3
10.2
4.3

1,360
266
-75
1,700
1,077
953
1,824
658

184

0.1

154

0.1

30

10,519

6.1

9,383

5.8

1,136

CONDENSED CONSOLIDATED BALANCE SHEET(in million yen)
As of March 31, 2006

As of March 31, 2005

Increase/
Decrease[Assets]
Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - tradeMarketable securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets

30,107
10,11566,957
6,162
8,070
2,170
1,773
-125
125,231

30,6799,958
61,158
2,794
8,075
2,038
1,852
-156
116,400

-572
157
5,799
3,368
-5
132
-79
31
8,831

Fixed assets
Tangible fixed assets
Intangible fixed assets
Investment and other assets
Total fixed assets
Total assets

53,991
2,863
30,68787,542
212,774

43,8553,180
28,99376,028
192,428

10,136-317
1,694
11,514
20,346[Liabilities]
Current liabilities
Notes payable - trade
Accounts payable - trade
Short-term borrowings
Accounts payable, other/Accrued expenses
Income taxes payable
Advances received
Accrued employees’ bonuses
Allowance for product warranty
Other
Total current liabilities

1,638
28,773320
13,493
4,376
2,055
2,362
739
1,118
54,877

1,521
26,642
85
7,413
3,924
942
2,060
992
884
44,465

117
2,131
235
6,080
452
1,113
302
-253
234
10,412

180
1,526
8,261

270
8,689

-90
1,526
-428

Fixed liabilities
Long-term borrowings
Deferred tax liabilities related to revaluation
Accrued employees’ retirement benefits
Accrued retirement benefits for directors andcorporate auditors
Other
Total fixed liabilities
Total liabilities

488

704

-216

777
11,233
66,111821
10,48554,951-44748
11,160[Minority interests]
Minority interests

1,295

1,110

185

13,45011,426
122,350
-740
3,873
-200
-4,793
145,366

13,45011,409115,318
-257
2,067
-790
-4,830136,366

17
7,032
-483
1,806
590
37
9,000

212,774

192,428

20,346[Shareholders’ equity]
Common stock
Additional paid-in capital
Retained earnings
Unrealized gains (losses) on revaluation of land
Revaluation surplus of other securities
Foreign currency translation adjustments
Treasury stock
Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity

CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
March 31, 2006
Amount(In million yen)
Year ended
March 31, 2005
AmountCash flows from operating activities
Income before income taxes
Depreciation and amortization
Impairment losses
Amortization of consolidation goodwill
Equity in earnings of unconsolidated subsidiaries and affiliates
Decrease in allowance for employees’ retirement benefits
Increase (decrease) in reserve for bonuses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in other allowancesInterest and dividend income
Other non-operating income
Interest expense
Other non-operating expenses and extraordinary losses(Gains) losses on sale/revaluation of investment securities(Gains) losses on sale/disposal of tangible fixed assets
Increase in notes and accounts receivables, trade
Increase (decrease) in inventories
Increase (decrease) in other current assets
Increase in notes and accounts payable, trade
Increase (decrease) in advances received
Increase in other current liabilities
Bonus paid to directors
Other
Sub totalInterest and dividend received
Other non-operating income received
Interest paid
Other non-operating expenses paid
Income taxes paid
Net cash provided by operating activities

18,200
4,906
846
-24
-266
-447
238
-56
-510
-452
-328
41
311
-1,205411-5,259
156
175
2,314
1,077
362
-180
-212
20,096
589
374
-43
-179
-6,981
13,856

16,376
4,361
-17
-244
-463
-112
5
8
-356
-345
38
224
-128
472
-4,063-1,375
-440
848
-431
37
-138
69
14,323
424
322
-36
-257
-6,4798,297

Cash flows from investing activities
Deposits into time deposit accounts
Withdrawals from time deposits
Payments for purchases of marketable securities
Proceeds from sale of marketable securities
Payments for purchases of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payments for purchases of investment securities
Proceeds from sale of investment securities
Other expenses
Other income
Net cash used in investing activities

-305
314
-10,807
10,239-10,962817-3,914
2,785
-986
500
-12,318-3,5181,594-5,03810,008-5,905100-8,096546-829
468-10,669

Cash flows from financing activities
Proceeds from short-term borrowings
Repayment of short-term borrowings
Repayment of long-term borrowings
Acquisition/sale of treasury stock
Dividends paid
Dividends paid to minority stockholders
Payment by minority shareholders
Net cash used in financing activities

220
-84
-11
-2,572-106
38-2,516

-60
-125
-10
-2,185-42-2,422173-804
30,36522-4,77235,137310-

29,87130,365

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents of newly consolidated subsidiaries at
beginning of period
Cash and cash equivalents at end of period

SEGMENT INFORMATION
Year Ended March 31, 2006

(April 1, 2005 to March 31, 2006)(In million yen)

I. Net sales and operating
income(1) External sales(2) Inter-segment sales
Total
Operating expenses
Operating income/loss
II. Assets, depreciation andcapital expenditures
AssetsDepreciation
Capital expenditures

Year Ended March 31, 2005

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

54,549322
54,872
46,910
7,961

119,133
573
119,706
110,357
9,349

46,191
1,608
2,018

124,280
3,298
14,519Eliminationor corporate

Consolidated

173,683895
174,578
157,268
17,310

-895
-895
-895
0

173,683
173,683
156,372
17,311

170,471
4,906
16,53742,302-

212,774
4,906
16,537(April 1, 2004 to March 31, 2005)(In million yen)

I. Net sales and operating
income(1) External sales(2) Inter-segment sales
Total
Operating expenses
Operating income/loss
II. Assets, depreciationand capital expenditures
AssetsDepreciation
Capital expenditures

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

50,637
199
50,83743,403
7,433

110,259681
110,941
102,425
8,515

43,4331,465
1,322

108,025
2,895
5,383

Eliminationor corporate

Consolidated

160,896881
161,778
145,829
15,949

-881
-881
-883
1

160,896
160,896
144,945
15,951

151,459
4,361
6,706

40,969-192,428
4,361
6,706

OVERSEAS SALES
Year ended March 31, 2006 (April 1, 2005 to March 31, 2006)(In million yen)

I. Overseas sales
II. Consolidated net sales
III. Ratio of overseas sales to total
consolidated sales

Asia

North
America

Europe

Other

Total

16,602
-

2,340
-

1,121
-

1,724
-

21,788
173,683

9.6%

1.3%

0.6%

1.0%

12.5%

Year ended March 31, 2005 (April 1, 2004 to March 31, 2005)(In million yen)

I. Overseas sales
II. Consolidated net sales
III. Ratio of overseas sales to total
consolidated sales

Asia

North
America

Europe

Other

Total

18,966
-

979
-

1,015
-

1,440
-

22,402160,896

11.8%

0.6%

0.6%

0.9%

13.9%

Notes:
1. Geographic segmentation is based on geographic proximity.
2. Major countries or regions in each segment are as follows:(1) Asia:
South Korea, China, Taiwan, Singapore, Indonesia, and Thailand(2) North America:
U.S.A.
(3) Europe:
Germany(4) Other areas:
Brazil3. “Overseas sales” includes sales by the Company and its consolidated subsidiaries to the countries
or regions other than Japan.

NET SALES, ORDER INTAKE, ORDER BACKLOGNet Sales

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

Year ended
March 31, 2006
Amount54,549119,133
173,683

%
31.4
68.6
100.0

(In million yen)
Year ended
March 31, 2005
Amount%50,63731.5
110,25968.5
160,896
100.0

Order Intake

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

Year ended
March 31, 2006

(In million yen)
Year ended
March 31, 2005

Amount53,903130,007
183,910Amount52,120119,213
171,334

%
29.3
70.7
100.0

%
30.4
69.6
100.0

Order Backlog

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

Year ended
March 31, 2006

(in million yen)
Year ended
March 31, 2005

Amount3,607
56,34059,947

Amount4,253
45,46749,720

%
6.0
94.0
100.0

%
8.6
91.4
100.0