FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Six Months Ended September
30, 2014
Tokyo, Japan, October 30, 2014—Kurita Water Industries Ltd. (TSE Securities Code6370) announced net sales of 88,956 million yen and net income of 5,885 million yen,or 49.39 yen per share, for the six months ended September 30, 2014 (April 1, 2014 –September 30, 2014).
Results of Operations
Total consolidated orders for the Kurita Group in the six months ended September 30,
2014 rose 8.1% from the level of the same period of the previous fiscal year, to 96,967
million yen, and net sales increased 7.5%, to 88,956 million yen. Operating income was
8,636 million yen, up 28.9% versus the same period of the previous fiscal year, andordinary income was 9,191 million yen, up 28.4%. Net income amounted to 5,885
million yen, up 43.4%.
During the six months under review, the U.S. economy was solid, but the European
economy saw a tardy recovery. Economies in Asia slowed but continued to expand. In
Japan, there was weakness in part of the economy, including production in the
manufacturing industry, due to the effect of a reaction to a spike in demand before theconsumption tax hike, but capital expenditure rose on the back of an improvement incorporate earnings. The economy overall remained on a moderate recovery trend.
In this environment, the Kurita Group took steps to retain earnings strength andexpand overseas operations, harnessing its combined strength in water treatment
chemicals, water treatment facilities and maintenance services.
Segment Information
Water Treatment Chemicals
Total Group orders for the Water Treatment Chemicals segment were 29,732 million
yen, up 1.4% versus the same period of the fiscal year ended March 31, 2014, whilesales rose 1.9% to 29,349 million yen. Operating income was down 7.5% to 4,100
million yen.
In Japan, although mainstay products—boiler water treatment chemicals, coolingwater treatment chemicals, and wastewater treatment chemicals—saw decreased orders
and sales from the same period of the previous fiscal year due mainly to a decline incapacity utilization at customers’ plants, process treatment chemicals for the pulp andpaper industries rose in orders and sales.
Overseas, orders for and sales of boiler water treatment chemicals, wastewater
treatment chemicals, and process treatment chemicals for the petroleum refining andpetrochemical industries, among other chemicals, increased due to the addition of new
customers especially in Southeast Asia and China. In the overall segment, sales rose.
Income, however, declined, reflecting the worsening of the cost rate chiefly due to a
decline in sales of the main products in Japan, and an increase in selling, general andadministrative expenses to strengthen the overseas business structure.

1

Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 67,235 million yen,up 11.3% versus the same period of the previous fiscal year, sales rose 10.5%, to 59,606
million yen, and operating income climbed 99.4%, to 4,539 million yen.
In Japan, in the electronics industry, plant construction and expansion projects werelimited, and orders for water treatment facilities declined from a year ago. Meanwhile,orders for and sales of maintenance services rose, backed by strong demand forelectronic components and an improvement in customers’ earnings. Results in theultrapure water supply business remained roughly flat. In the general industries, orders
for and sales of water treatment facilities for electric power increased.
Overseas, orders and sales increased, chiefly reflecting large-scale projects in China,
South Korea, and Taiwan. Overall sales in the Water Treatment Facilities segment rose.
Income in the segment increased significantly on increased sales and an improvement in
the cost rate.
Financial Condition
Assets, liabilities and net assets
Current assets totaled 168,473 million yen at the end of the second quarter (September
30, 2014), an increase of 5,973 million yen versus the end of the previous fiscal year
(March 31, 2014). This was mainly a result of increases of 2,593 million yen in cash
and deposits, 3,000 million yen in marketable securities, and 1,848 million yen in workin process, which overweighed a decline of 1,494 million yen in trade accounts
receivable.
The increase in cash and deposits and the decline in trade accounts receivable was theresult of progress in collecting receivables. The increase in marketable securities was
mainly the result of increased investment in negotiable certificates, which are treated as
marketable securities. The increase in work in process was mainly the result of progressin the water treatment facilities business.
Noncurrent assets totaled 110,494 million yen at the end of the first half (September
30, 2014), a decline of 1,931 million yen versus the end of the previous fiscal year. The
decline was principally attributable to a 4,074 million yen decrease in property, plantand equipment, which was partly offset by a 2,184 million yen rise in investments andother assets. The decline in property, plant and equipment was due to depreciation ofultrapure water supply business facilities exceeding capital expenditures. The increase
in investments and other assets reflected a rise in unrealized gains on investment
securities due to rises in the market prices of the shares held by the Group.
Current liabilities totaled 36,669 million yen at the end of the period, a slight declineof 230 million yen versus the end of the previous fiscal year.
Noncurrent liabilities totaled 19,643 million yen at the end of the period, an increaseof 771 million yen versus the end of the previous fiscal year. This was primarily
attributable to a 980 million yen rise in net defined benefit liability associated with achange in the Accounting Standard for Retirement Benefits.
Net assets totaled 222,654 million yen at the end of the period, an increase of 3,501
million yen versus the end of the previous fiscal year. Shareholders’ equity increased
primarily due to an increase of 2,741 million yen in retained earnings, which were partly
offset by a fall of 446 million yen in capital surplus. The fall in capital surplus was
attributable to additional acquisitions of equity in consolidated subsidiaries. The
increase in retained earnings resulted from net income of 5,885 million yen exceeding a
year-end dividend for the previous fiscal year of 2,621 million yen and a reduction of
501 million yen at the beginning of this fiscal year in association with the change in the
Accounting Standard for Retirement Benefits. Accumulated other comprehensive
2

income rose 1,629 million yen, chiefly reflecting an increase in unrealized gains onavailable-for-sale securities associated with a rise in unrealized gains from investment
securities.
Cash flows
Consolidated net cash and cash equivalents at the end of the first half of the fiscal year
(September 30, 2014) stood at 28,545 million yen, a decrease of 12,483 million yen
from the end of the previous fiscal year (March 31, 2014). Cash flows in each category
and their main factors are outlined below.
Cash flows from operating activities
Net cash provided by operating activities during the first half of the fiscal year ending
March 31, 2015, totaled 12,524 million yen, a decrease of 1,908 million yen from a year
ago. Inflows from income before income taxes and minority interests (9,191 millionyen), depreciation and amortization (7,375 million yen), and a decrease in trade notes
and accounts receivable (1,575 million yen) were partially offset by income taxes paid
(2,550 million yen), an increase in inventories (2,003 million yen), and other outflows(1,101 million yen).
Cash flows from investing activities
Net cash used in investing activities stood at 21,492 million yen, an increase of 3,917
million yen from a year earlier, primarily reflecting net deposits into time deposit
accounts of 16,068 million yen, net payments for the purchase of marketable securities(after the deduction of proceeds from sale and redemption of marketable securities) of
2,000 million yen, and payments for the purchase of property, plant and equipment,
including capital expenditures for ultrapure water supply business, of 3,216 million yen.
Cash flows from financing activities
Net cash used in financing activities came to 3,368 million yen, an increase of 548
million yen from a year earlier, attributable mainly to cash dividends paid of 2,686
million yen and the purchase of shares of subsidiaries without change in the scope of
consolidation of 815 million yen.
Outlook for the Fiscal Year Ending March 31, 2015
On October 27, 2014, the Company entered into an agreement with BK Giulini GmbH(“BKG”) and its ultimate parent company, Israel Chemicals Limited, to acquire,through a subsidiary, the Water Solutions, Paper Solutions and Alumina Compounds
businesses of BKG and its affiliates. However, because it is difficult to reasonably
estimate the effect of the acquisition on consolidated results now, the Company has notchanged its full-year consolidated earnings forecast published on April 30, 2014. Whenthe effect of the acquisition becomes clear, the Company will communicate it
immediately.
This outlook is produced by the Company based on information available at the timeof publication of this document. Actual results may differ significantly from the outlook
due to change in a range of factors.

3

Other Information(1) Accounting treatment specific to the preparation of quarterly consolidated financial
statements
Tax expense
The Company calculates tax expense by producing a reasonable estimate of theeffective tax rate after applying tax-effect accounting to income before income taxes
and minority interests for the fiscal year and then multiplying quarterly income before
income taxes and minority interests by this estimated effective tax rate.
(2) Changes in accounting principles and changes or restatement of accounting
estimates
Accounting standard for retirement benefits
From the three months ended June 30, 2014, the provisions set forth in the text ofParagraph 35 of the Accounting Standard for Retirement Benefits (ASBJ Statement No.
26 on May 17, 2012) and of Paragraph 67 of the Guideline on Accounting Standard for
Retirement Benefits (ASBJ Guideline No. 25 on May 17, 2012) have been applied, andthe method for calculating retirement benefit obligations and service costs has beenchanged. The method for determining discount rates has been changed fromdetermining the duration of bonds, which is the basis of a discount rate, based on anumber of years close to the employees’ average remaining service years to using
discount rates set for each estimated timing of benefit payments.
As the application of the Accounting Standard for Retirement Benefits follows thetransitional treatment as provided for in Paragraph 37 of the Accounting Standard for
Retirement Benefits, we have made an adjustment for the amount affected by thechange in the method for calculating retirement benefit obligations and service costs toretained earnings at the beginning of the first half under review.
As a result, net defined benefit liability rose 779 million yen, and retained earnings
fell 501 million yen at the beginning of the first half. The effect of the change inaccounting policy is minor.
Accounting standard for business combinations etc.
From the beginning of a fiscal year starting on or after April 1, 2014, the adoption of the
Accounting Standard for Business Combinations (ASBJ Statement No. 21 on
September 13, 2013), the Accounting Standard for Consolidated Financial Statements(ASBJ Statement No. 22 on September 13, 2013), and the Accounting Standard forBusiness Divestitures (ASBJ Statement No. 7 on September 13, 2013) is permitted andfrom the three months ended June 30, 2014, the Company is applying these accounting
standards (except for the provisions set forth in Paragraph 39 of the AccountingStandard for Consolidated Financial Statements). Under these accounting standards, theCompany has adopted the method of posting the results of changes in its equity in its
subsidiaries that it controls in capital surplus and posting acquisition-related costs as
expenses in the fiscal year when the acquisition occurs. For business combinations to be
carried out on and after April 1, 2014, the Company has adopted the method ofreflecting a revision to the allocation of the acquisition cost on the completion ofprovisional accounting treatment in consolidated financial statements for the
consolidated quarter to which the date of the business combination belongs.
The application of the Accounting Standard for Business Combinations etc. follows
the transitional treatment as provided for in Paragraph 58-2 (4) of the AccountingStandard for Business Combinations, Paragraph 44-5 (4) of the Accounting Standard forConsolidated Financial Statements, and Paragraph 57-4 (4) of the Accounting Standard
for Business Divestitures, and the accounting standards are being applied from the4

beginning of the first three months ended June 30, 2014.
The effect of the application of the accounting standards on earnings in the first half
under review and capital surplus at the end of the first half is minor.

5

Financial Statements — Consolidated
Balance Sheet — Consolidated(Million yen)

AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Accounts receivable - tradeMarketable securities
Finished products
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings (net)
Machinery and equipment (net)Other (net)Total property, plant and equipment
Intangible fixed assets
Investments and other assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets
Liabilities
Current liabilities
Notes payable – trade
Accounts payable - trade
Income taxes payable
Provision for bonuses
Other provision
Other
Total current liabilities
Noncurrent liabilities
Net defined benefit liability
Provision
Other
Total noncurrent liabilities
Total liabilities

As ofMarch 31, 2014
Amount

As of
September 30, 2014
Amount47,336
7,287
50,50347,999
1,788
2,568
1,455
3,745
(184)
162,500

49,9296,863
49,00950,999
1,786
4,416
1,547
4,058
(137)
168,473

20,79532,76524,29477,855
1,578

19,19330,38924,19873,781
1,538

33,401(409)
32,991
112,425
274,925

35,568(393)
35,175
110,494
278,968

1,860
17,027
2,535
2,246
2,309
10,92036,899

1,698
16,971
3,308
2,629
1,979
10,08336,66911,36398
7,411
18,872
55,772

12,343
71
7,229
19,64356,313

6

(Million yen)

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains on available-for-sale securities
Unrealized gains (losses) on revaluation of land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

As ofMarch 31, 2014
Amount

As of
September 30, 2014
Amount13,45011,426
185,159(2)
210,034

13,45010,980187,900(4)
212,327

7,862
(564)
384
(25)
7,657
1,461
219,153274,925

9,839
(564)
25
(12)
9,286
1,040
222,654
278,968

7

Statements of Income and Comprehensive Income — Consolidated
Statement of Income(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Directors' and corporate auditors' compensations,salaries and allowances
Provision for bonuses
Research and development expenses
Other
Total Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of unconsolidated subsidiaries andaffiliates
Other
Total non-operating income
Non-operating expenses
Interest expense
Loss on disposal of noncurrent assets
Other
Total non-operating expenses
Ordinary income
Extraordinary losses
Contribution
Total extraordinary losses
Income before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in earnings (losses) of consolidated
subsidiaries
Net income

Six months ended
September 30, 2013
Amount82,77256,02526,747Six months ended
September 30, 2014
Amount88,95660,511
28,444

7,101

7,223

1,544
2,204
9,193
20,044
6,702

1,457
2,141
8,985
19,808
8,636

84
169

79
194

107

139

164
526

260
674

31
9
30
70
7,158

33
29
55
119
9,191

500
500
6,658
2,536
4,121

–
–
9,191
3,312
5,879

16

(5)

4,104

5,885

8

Statement of Comprehensive Income(Million yen)

Income before minority interests
Other comprehensive income
Unrealized gains on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Components:
Comprehensive income attributable to owners of theparent company
Comprehensive income attributable to minority interests

Six months ended
September 30, 2013
Amount4,121

Six months ended
September 30, 2014
Amount
5,879

2,593
1,132
–

1,974
(397)
12

54

5

3,781
7,902

1,595
7,475

7,818

7,515

84

(40)

9

Statement of Cash Flows — Consolidated(Million yen)Six months ended
September 30, 2013
AmountCash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Increase (decrease) in provision(Increase) decrease in notes and accounts receivable trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable trade
Increase (decrease) in net defined benefit liability
Income taxes paid
Other
Net cash provided by (used in) operating activities
Cash flows from investing activities
Deposits into time deposit accounts
Withdrawals from time deposits
Payments for purchases of marketable securities
Proceeds from sale and redemption of marketablesecurities
Payments for purchases of property, plant andequipment
Proceeds from sale of property, plant and equipment
Payments for purchases of investment securities
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term loans payable
Repayment of finance lease obligations
Purchase of treasury stock
Proceeds from share issuance to minority shareholders
Cash dividends paid
Cash dividends paid to minority shareholders
Purchase of shares of subsidiaries without change inscope of consolidation
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of theperiodCash and cash equivalents at the end of the period

Six months ended
September 30, 2014
Amount

6,658
7,364
1,215

9,191
7,375
(21)

7,699

1,575

(2,395)(2,003)(2,474)(171)–(2,735)(898)
14,432230(2,550)(1,101)
12,524(10,606)
6,348(52,000)(26,587)
10,519(44,000)

42,00042,000(3,152)(3,216)

5
(6)
(333)
169
(17,575)

23
(5)
(345)
118
(21,492)

(2)
–
(301)
(0)
–
(2,500)
(13)

330
48
(295)
(1)
51
(2,623)
(63)

–

(815)

(2,820)(3,368)

435

(147)

(5,528)(12,483)

33,31341,02827,78428,54510

Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Six months ended September 30, 2014 (April 1, 2014 – September 30, 2014)
Not applicable(Notes on Significant Changes in Shareholders’ Equity)
Six months ended September 30, 2014 (April 1, 2014 – September 30, 2014)
Not applicable(Segment Information)
1. Sales and income by reportable segment
Six months ended September 30, 2013 (April 1, 2013 – September 30, 2013)(Million yen)

Reportable Segments

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

Sales
Sales to outside customers
Inter-segment sales or transfers

28,806122

53,965
114

82,772
237

–
(237)

82,772–

Total

28,92954,08083,009(237)

82,772

4,433

2,276

6,710

(7)

6,702

Segment income

Six months ended September 30, 2014 (April 1, 2014 – September 30, 2014)(Million yen)

Reportable Segment

Sales
Sales to outside customers
Inter-segment sales or transfers
Total
Segment income

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

29,349134
29,483
4,100

59,606105
59,712
4,539

88,956239
89,1958,640

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)
–
(239)
(239)
(3)

88,956–
88,956
8,636

Notes:
1. Adjustments related to sales represent elimination of inter-segment sales. Resultant adjustment of segment
income is reflected in segment income Adjustments.
2. Segment income is shown at the operating income level.

11Material subsequent event
Material business acquisition
On October 27, 2014, the Company entered into an agreement with BK Giulini GmbH(“BKG”) and its ultimate parent company, Israel Chemicals Limited, to acquire,through a subsidiary, the Water Solutions, Paper Solutions and Alumina Compounds
businesses (the “Business”) of BKG and its affiliates (the “Transaction”).
1. Name, address, and representative of the consolidated subsidiary(1) Name: Kurita Europe APW GmbH(Currently Blitz F14-246 GmbH; the consolidated subsidiary has applied forregistration of a change in its business name to the above)(2) Address: Industriering 43, 41751 Viersen, Germany(3) Representative: Koichi Iioka
2. Name, address, and representative of the company to be acquired(1) Name: BK Giulini GmbH
(2) Address: Giulinistraße 2, 67065 Ludwigshafen/Rhein, Germany(3) Representative: Eli Glazer(4) Paid-in capital: EUR 16 million euros (as of December 31, 2013)(5) Business: Manufacturing, developing and marketing water treatment chemicals,
paper chemicals, alumina compounds, intermediates for pharma and cosmetics andgypsum
3. Purpose of the Transaction
The Transaction will enable Kurita to strengthen its overseas business platform throughcombining the Business’s broad customer base in Europe and other regions with
Kurita’s existing customer base, which is mainly in Japan and the Asia region. In
addition, Kurita sees the technologies and products of the Business as highly
complementary with those of Kurita, leading up to the development of more diverse
product offering for its customers.
4. Outline of the agreement on the acquisition(1) Date of acquisition
The Transaction is expected to be closed by the end of 2014 through the official
approvals of the authorities, including antitrust reviews.
(2) Business to be acquired
Manufacturing, developing and marketing the water treatment chemicals, paper
chemicals, and alumina compounds of BKG(3) Assets to be acquired
Assets belonging to the Business(4) Amount of assets and liabilities of the Business
The assets and liabilities have yet to be determined.
(5) Acquisition amount
We will make an adjustment for excess or deficiency in working capital and net
interest-bearing debt at the time of closing to 250 million euros.

12

Supplementary Information — Consolidated(1) Order Intake(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2013
2014
%
AmountAmount29,32732.7
29,732%30.7

Water Treatment Facilities

60,411

67.3

67,235

69.3

Total

89,739100.0

96,967100.0(2) Net Sales(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2013
2014
Amount%Amount
28,80634.8
29,349%33.0

Water Treatment Facilities

53,96565.2

59,606

67.0

Total

82,772100.0

88,956100.0(3) Capital Expenditures (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2013
2014
Amount%Amount
816
41.2
690

%
21.9

Water Treatment Facilities

1,166

58.8

2,456

78.1

Total

1,982

100.0

3,146

100.0

(4) Depreciation (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2013
2014
Amount%Amount
549
7.8
580

%
8.1

Water Treatment Facilities

6,534

92.2

6,549

91.9

Total

7,083

100.0

7,129

100.0

13