BUSINESS REPORT
2013
Year ended March 31, 2013

The Pursuit of ExcellenceGrowing from Our Roots
Kureha Corporation is a diverse specialty chemicals and plastics manufacturer
that leverages its technological development expertise to create original products in such fields as advanced materials, pharmaceuticals, agrochemicals andpackaging materials. Since its establishment in 1944, Kureha’s growth andexpansion has been driven by innovative products developed in-house, rather
than a reliance on outside technology.
Over the past decade, Kureha has moved to transform and further
strengthen its business portfolio with a global outlook, strategically selecting
and focusing on key business areas where the company can benefit from thecompetitive advantage afforded by its unique technologies and marketingstrengths. We have enhanced our production capacity in areas of strength,
and taken proactive steps to improve products and services to meetmarket demands. To ensure sustainable growth, we have also
focused on developing new technologies and products,
thereby establishing a business foundation to spur
Kureha’s growth into the future.
The result of these efforts is visible in the formation of a balanced business portfolio that enables
us to stand strong amid increasingly fierce global
competition. Going forward, to strengthen thisfoundation and grow at a global level, we will
enhance the efficiency of business operations
and boost competitiveness.
Kureha’s roots, and its strengths, are in techBalanced
nology. Building on unique technological
Growthcapabilities, we will evolve in response to continuPortfolio
ally shifting markets and customer needs. Taking toheart Kureha’s company mission of “the pursuit ofexcellence,” and offering differentiated products andservices through innovation, we are committed todelivering the greatest value to all stakeholders.

R&D
Innovation

The Pursuit of
Excellence
GlobalGrowthPotential

Contents
Consolidated Financial Highlights ....................3

Directors, Executive Officers andCorporate Auditors ....................................................19

Consolidated Statements of
Changes in Net Assets .............................................27

President’s Message .....................................................4

Consolidated Five-Year Summary ..................20

Consolidated Statements of Cash Flows ....28

The Year’s Highlights ....................................................8

Management Discussion and Analysis ......21

Review of Operations ..............................................10

Consolidated Balance Sheets ............................24

Notes to Consolidated Financial
Statements .......................................................................29

Research & Development .....................................14

Consolidated Statements of Income ...........26

Kureha Group and Affiliates ................................52

Responsible Care .........................................................16

Consolidated Statements ofComprehensive Income ........................................26

Investor Information .................................................53

At a Glance ..........................................................................2

Corporate Governance ...........................................17

Three sources of Kureha’s strength:

R&D Innovation:
The Source of Our CompetitivenessWe pride ourselves on our expertise in polymer engineering and processing
as well as organic synthesis and carbon materials development. These technologies provide the base for the development of our original innovative
materials and products. We are constantly adding and fusing new ideas tothese accumulated technologies, and in the spirit of “if it doesn’t exist, create
it,” each day we pursue technology solutions that only Kureha can provide tomeet unmet needs.

Balanced Growth Portfolio:
Maximization of Earnings and Diversification of Risk
Our innovative products and services are broadly based but highly specialized, supporting a wide range of industries, including electrical andelectronic-appliances automotive, agriculture, medicine and energy. We
maximize earnings and diversify risk through broad-based business development in promising growth fields such as the environment, energy, healthand lifestyle. We continuously optimize our portfolio to align with shifting
market needs while securing our earnings path.

Global Growth Potential:
Further Growth in Global Markets
Kureha’s overseas sales had reached 24% of total revenue as of March 2013.
Along with exports from Japan, we have production, processing and sales
locations in the United States, Germany, the Netherlands, France, the U.K.,
China and Vietnam, enabling an effective response to needs in overseas
markets. With continued growth expected in newly emerging countries andmany other regions, we are taking active and strategic steps to expand salesof highly competitive products in line with the needs of overseas markets,
whether for advanced materials, chemicals, or plastic products.

At a Glance

24.3%

23.5%

Net Sales/Net Sales Composition

Advanced Materials¥27,650 million

21.2%
ANNUAL REPORT 2013

Specialty Chemicals

KUREHA CORPORATION

2¥32,833 million
Net Sales

25.2%¥130,550 million
2013

Specialty Plastics¥40,900 million

31.3%

Construction and Other Operations¥14,967 million ¥14,197 million

11.5%(Construction)

10.9%(Other Operations)2Consolidated Financial Highlights
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Business Areas
Thousands of
U.S. dollars

Millions of yen

Battery Materials

2013¥130,550
8,458
3,212
19,9848,882
4,389¥128,358
8,472
1,460
14,3609,580
5,080$1,388,091
89,93034,152
212,482
94,43946,666¥205,284
96,211
68,448¥186,223
88,55456,683$2,182,711
1,022,977
727,783

Yen

Pharmaceuticals
Industrial Chemicals
Agrochemicals

Amounts per share:
Net income – basic
Net assets

¥

18.51
546.69U.S. dollars¥

8.51
510.37

$

0.19
5.81

Percent

Ratios:
Net income to net sales
Return on equity
Return on assets
Equity ratio

2.5%
3.5
3.4
45.7

1.1%
1.7
4.3
47.0

3

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥94.05 to US$1, therate of exchange prevailing on the Tokyo Foreign Exchange Market on March 29, 2013.
2. For amounts per share, see Note 21 of the Notes on Consolidated Financial Statements.
3. Return on equity = [Net income / (Average net assets - Average minority interests - Average stock subscription rights)]
x 100.
4. Return on assets = (Recurring income / Average total assets) x 100.

Household Products
Synthetic Fiber Products
Packaging Materials
Net Sales

Operating Income

Net Income(Millions of yen)

(Millions of yen)

(Millions of yen) (Left scale)

Net Income per Share(Yen) (Right scale)Engineering & Construction
Environment Management

150,000

10,0004,000

30

120,000

8,000

3,200

24

90,000

6,000

2,400

18

60,000

4,000

1,600

12

30,000

2,000

800

6

Logistics

02009 2010 2011 2012 201302009 2010 2011 2012 201302009 2010 2011 2012 2013

ANNUAL REPORT 2013

Carbon Fibers & Products

For the year:
Net sales
Operating income
Net income
Capital expenditure
Depreciation
R&D expenses
Year-end:
Total assets
Net assets
Interest-bearing debt

2012

0

KUREHA CORPORATION

Advanced Plastics

2013

ANNUAL REPORT 2013

President’s Message

KUREHA CORPORATION

4‘Speed and Passion’—Driving our global growth

Yutaka Kobayashi
President &Chief Executive Officer

One thing remains constant: our commitment
to moving forward, and thinking globally,
to meet tomorrow’s needs through unique
technologies and specialty products.

ongoing process. Even more than usual, however, this has been ayear in which we have closely reviewed our direction to ensure
Kureha is firmly positioned on a path to global growth.
A number of factors have contributed to this reassessment. We
have faced an economic slowdown in Europe and decelerating
growth in emerging markets including China. Specific challenges
have also arisen, such as prolonged inventory adjustments for solar
power equipment due to excess supply within the solar generation
market and slower than anticipated growth in the lithium-ion
battery market for electric vehicles.
In navigating this business environment, as the new CEO of
Kureha, I believe two things will be essential in taking thecompany forward – speed and passion. By that I mean swift
decision-making that captures growth opportunities and enables
us to adapt flexibility to market movements, and the drive andthe energy to continuously innovate.
With this in mind, we have taken two key steps:• In April 2013, we launched a cross-functional corporate revitalization initiative, headed by myself, focused on securing
productivity improvements and enhancing cost competitiveness, as well as developing human resources that are global inmind and skill.
• We have started reviewing our Grow Globally II mid- termbusiness plan, launched April 2012, to ensure that we arepositioned to meet the changing needs of the domestic andglobal business environment.

“constant evolution through innovation.” This includes addressing
the short and mid-term challenges and opportunities we face, toensure that we can expand markets and maximize the value ofexisting products, as well as focusing on the long-term future of
the company, including investing in advanced R&D to uncover

ANNUAL REPORT 2013

Monitoring progress and refining corporate strategy is an

Kureha is a dynamic company, founded on the philosophy ofthe next generation of products and materials.
While many aspects of our business and our operating

5

environment are forever changing, one thing remains constant:our commitment to moving forward, and thinking globally, tomeet tomorrow’s needs through unique technologies andspecialty products.

Recent progress
It is reassuring to see that, while we continue our efforts torealign and revitalize our business for future growth, our wellbalanced product portfolio enabled us to post stable results
during fiscal 2012 (ended March 31, 2013). This included aconsolidated sales increase of 1.7% year on year to ¥130.5 billion
and operating income of ¥8.458 billion, down 0.2%. While
recurring income decreased 16.5% to ¥6.570 billion, net income
increased sharply from the previous year to ¥3.212 billion, up
120%, as the company was no longer required to post earthquake-related extraordinary losses.
These results indicate that the fundamental strategic premiseof concentrating on key growth areas, as set out in the initial
Grow Globally mid-term plan and continued under Grow
Globally II, is correct. This includes promoting global growth forexisting products such as PPS (polyphenylene sulfide), PVDFKUREHA CORPORATION

Constant evolution

ANNUAL REPORT 2013

Given Kureha’s broad product portfolio,advanced production technologies and global
network, there is significant scope to succeed
in competitive growth areas, where we canoffer a combination of cost competitivenessand high quality

6(polyvinylidene fluoride), carbon fiber products, Krehalon foodproduct offering. While this strategy has clear benefits and has

packaging films and the agricultural fungicide Metconazole, as

proved successful for certain products, we are determined to further

well as pursuing new business areas.

enhance and secure our competitiveness at a global level by

The revised Grow Globally II builds on this approach. While
the plan remains focused on accelerating global growth byrevitalization task force is now working to identify areas where coststeadily cultivating and expanding new businesses, it also

reduction is possible, including adoption of less expensive raw

contains an increased commitment to developing the humanmaterials and simplified manufacturing processes.

resources that will underpin Kureha’s global ambitions.
Developing global human resources is important as we consider

KUREHA CORPORATION

reducing costs and promoting operational efficiency. Our corporate

Given Kureha’s broad product portfolio, advanced production
technologies and global network, there is significant scope tothe shifting focus of our business and changing market needs

succeed in competitive growth areas that display expanding

globally. If we look even further ahead, to the kind of company

demand, where we can offer customers a combination of cost

Kureha will need to be to thrive for decades to come, it is critical.

competitiveness and high quality. Kureha naturally remains

Reform for global competitivenessPart of the focus of the corporate revitalization initiative launchedcommitted to securing a market-leading position for each of our
product lines, but there may also be scope for us to operate in amore competitive, but ultimately larger, market segment.

in April, therefore, is to look at how we can fundamentally shift

Take battery materials, for example. We are committed tothe mindset of Kureha to internationalize not only our operations

expanding the business for anode (negative electrode) materials

but also our human resources and our outlook. For example, as aand PVDF for binders used in both vehicles and stationary

way to nurture a global, and globally minded, workforce, webatteries. Although these products suffered slightly from sluggish

intend to encourage more young employees to work overseas

demand during the past fiscal year, demand is expected to growearly in their careers and rotate jobs more frequently to explore

this year and beyond due to the expanding hybrid electric vehicle

their global capabilities. Gaining such experience early on will

market and other factors. Lithium-ion batteries are set to play amake them better prepared for future management roles in the

key role in addressing a number of energy and environmental

company’s global business development.

challenges, and although it is an increasingly competitive

We must also consider how best to expand markets and maxi-

segment, it has enormous opportunities for growth. Kureha’s

mize the value of our products. As a leading supplier of specialty

battery materials display superior attributes in terms of perfor-

chemicals and plastics, Kureha has in the past focused on securing

mance and reliability, and hold an industry-leading position.

not only a leading position in the markets where we operate, but on
cultivating niche markets where we can present a unique, unrivalled

We must also continue to have the flexibility to quickly adapt tochanging needs and take advantage of emerging opportunities.

again investing in R&D to plant the seeds for the next generation

ness. We were the first in the world to mass produce the materialof technologies and materials. On April 1 this year, we establishedby leveraging unique polymerization technologies, and are now

a new division focused on highly innovative and advanced R&D

continuing to develop a range of applications that take advantage

related to the three core areas of the environment, resourceof PGA’s biodegradability, high mechanical strength and gas

development and health, thereby laying the foundation for thebarrier properties. Despite not being the primary application

Company’s future direction.

during the early commercialization period, Kureha has recently

I am confident that we are aligning ourselves for continued global

reoriented the PGA business to take advantage of the material’s

growth, and firmly believe that we are seeing signs that our strategy isstrong reputation as an application in oil and particularly shale gas

producing results. We must continue to work with passion, andextraction, a growth sector. We will further accelerate PGA market

accelerate efforts to develop our business internationally.

development and cultivation and, by expanding our sales andWe look forward to your continued support.

marketing efforts in key energy industry hubs worldwide, will focus
on increased adoption in the shale gas sector.

Investing in the future

July 2013

Having reviewed our business strategy, we will over the coming
year focus on comprehensive market development to ensurethat we are effectively positioned for global business expansion
across a range of growth sectors. In doing so, we must continue
to leverage Kureha’s unique technological strengths, and remaincommitted to nurturing the development of new advanced
materials and applications.
We are stepping up our investment in R&D activities, which
had declined marginally in recent years. R&D funding remains
critical to Kureha’s operations and future vitality, and we arefocused on putting this expenditure back on a growth track. In
fiscal 2013, Kureha plans to increase R&D spending to ¥5.0 billion,
up from ¥4.4 billion in the previous year. In addition to developing new applications and expanding markets, we are also

Yutaka Kobayashi
President &Chief Executive Officer

7
KUREHA CORPORATIONThis is no more evident than in the PGA (polyglycolic acid) busi-

ANNUAL REPORT 2013

In addition to developing new applications
and expanding markets for existingproducts, we are again investing in R&D
to plant the seeds for the next generation oftechnologies and materials

ANNUAL REPORT 2013

The Year’s Highlights

KUREHA CORPORATION8New Production Facilities at
Kureha Subsidiaries

Kureha Battery Materials Japan
Partners with Kuraray and the INCJ
to Drive KBMJ’s Global Expansion

New Fiber Products Factory Constructed at
Kureha Gohsen Co., Ltd.

Partners to acquire ¥20.0 billion equity stake tosupport global growth of KBMJ’s unique, industry
leading lithium-ion battery technology

Kureha Gohsen manufactures and sells a wide range of plastic
products, centering on fiber products made from polyvinylidene
fluoride (PVDF). In April 2012, Kureha transferred sales operationsfor Seaguar recreational-use fishing lines to the company,
strengthening its management foundation by integrating
manufacture and sales with Kureha Gohsen’s existing product lines
of synthetic fiber products and commercial fishing lines. In April
2013, which also marked the50th anniversary of the firm’s
founding, production
operations began at a newly
constructed fiber plant,
established to further enhance
the production structure.

Higashi-Hiroshima Factory Completed atResinous Kasei Co., Ltd.
Resinous Kasai, a manufacturer of epoxy resin adhesives (used inelectrical and electronic materials, and construction of roadfacilities), completed construction of its Higashi-Hiroshima Factoryin February 2013. Resinous Kasei established the new plant, its
second production facility in western Japan, to meet robust
demand for the material, and to secure its supply chain in the wakeof the Great East Japan Earthquake. In conjunction withcompletion of the new facility, the research and development
function for the material was moved to the Higashi-Hiroshima
Factory from the Iwaki Factory. The move provided the researchlaboratories with more than twice the previous space, and going
forward the firm plans to double the number of R&D personnel,
further accelerating the product development process.

In July 2012, Kureha Battery Materials Japan Co., Ltd. (KBMJ), Kureha’s
subsidiary that sells hard carbon anode materials and PVDF binder
for lithium-ion batteries, received additional financial backup as
Kureha, ITOCHU Corporation (Itochu), Kuraray Co., Ltd. (Kuraray) andthe Innovation Network Corporation of Japan (INCJ) agreed to jointly
support the further acceleration of KBMJ’s growth. Under thisagreement, Kuraray and the INCJ will newly acquire equity stakes in
KBMJ through participation in a third-party allocation, together with
Kureha and Itochu, investing up to ¥20.0 billion in KBMJ. KBMJ will
allocate those funds to establish a larger global supply structure for
LiBs materials, namely CARBOTRON P and BIOCARBOTRON.
The partnership aims to support KBMJ’s global expansion, with afocus on its unique, industry-leading CARBOTRON P battery materials
technology for LiBs, which are essential to hybrid and electricvehicles, among other technologies. The inclusion of the INCJ, which
is tasked with nurturing next-generation industries through thepromotion of open innovation in Japan, further highlights thequality and potential of KBMJ’s industry-leading solutions. “Lithiumion batteries are a core component in addressing energy andenvironmental challenges, and this is an exciting time in our industry.
We see substantial opportunity and are pleased for the additional
support, as we continue to expand our business and make ourtechnologies available to more business partners worldwide” said
Hideo Nakatani, President & Chief Executive Officer at KBMJ.
CARBOTRON P was used in the world’s first commercially available
LiB in 1991 and, as large-format batteries have evolved for use inelectric cars and require far higher standards, has seen increased
demand due to its performance and reliability. The increased emphasison durability in such applications and the need to withstand repeatedrecharging have seen CARBOTRON P recognized for its highly stableproperties and superb charge/discharge performance.

50.1%

20%
(% ownership stake)

20%

9.9%*
* INCJ has 9.9% ownership stake andnon-voting preferred shares

Nanohana Project, the Agriculture Revitalization Project, and the
Rebuilding of Culinary Culture through Community Support Project.
These three projects, directed respectively by Tohoku University,
Fukushima University, and Iwate Prefectural University Morioka
Junior College, conduct activities in which students and residents ofdisaster areas work together for restoration.
Kureha has been donating a portion of its revenue from sales of
NEW Krewrap to aid these projects since October 2011, and willcontinue to provide reconstruction support to the disaster areas.
Total donations amounted to ¥57,852,264 as of the end ofJune 2013.

The earthquake and tsunami from the Great East Japan Earthquakeof March 2011 caused considerable damage to the Pacific coastal
region of eastern Japan. The prefectures of Iwate and Miyagi, as well
as Fukushima where Kureha’s Iwaki Factory is located, suffered lossof life, the destruction of homes, salt damage to agricultural lands
from seawater, and damage to sales of agricultural products causedby harmful rumors and misinformation relating to the nuclear
accident. Restoration and reconstruction in these areas remains apressing concern.
Kureha is providing financial support for three projects aimed atrevitalization of food and agriculture in the disaster areas—theRebuilding of Culinary Culture throughCommunity Support Project

ANNUAL REPORT 2013

Smiling Together – The East Japan Support Project

Nanohana Project
Neighbors gather in a community center to cook and enjoy
local cuisines

Iwate

Nanohana (canola) flowers, known for soil desalinating
effects, bloomed in spring

Miyagi

Agriculture Revitalization Project

FukushimaTokyo

Farmers raise fruits and vegetables in radiation-controlledenvironment

KUREHA CORPORATION

9Review of Operations

Advanced Materials
Major product areas:

Advanced plastics (PPS, PVDF, PGA), carbon products
Advanced materials division sales were down 12% year-on-year to ¥27.7
billion, with the division reporting an operating loss of ¥2.1 billion. This waslargely due to continued inventory adjustments significantly impacting theperformance of carbon fiber products, as well as PVDF resin being impacted
by a decline in demand.

ANNUAL REPORT 2013

Advanced plastics sales weaken

KUREHA CORPORATION

10Net Sales (Left scale)Operating Income (Right scale)(Millions of yen)

Sales of advanced plastics were down 7% from ¥14.7 billion to ¥13.7 billion. Sales of
PPS resin for use in automotive applications and at the U.S. joint venture performed
steadily, while sales for electronic and electrical materials applications slowed. Sales of
PVDF resin for industrial use recovered in comparison to the previous year. However,
PVDF resin for use in lithium-ion battery binders, which experienced strong demand inrecent years especially in the period following the Great East Japan Earthquake,recorded a fall in demand in the face of increased competition among lithium-ion
battery suppliers in the electronic and electrical market.
PGA experienced contrasting fortunes during the period, making significant gains
in its use for the extraction of shale gas resources, but also experiencing a temporary
halt in operations at the PGA plant, which forced the company to report operating andamortized costs as non-operating losses.

40,0002,000

35,0001,750

30,0001,500

25,0001,250

20,0001,000

Continuing inventory adjustment for carbon products

15,000750

10,000

500

5,000

250

Demand for carbon fiber as an insulating material in silicon ingots manufacturing forsolar powered equipment is yet to recover due to continuing inventory adjustments,
while use as negative electrode materials in lithium-ion batteries also suffered fromsluggish demand. As a result, sales of carbon products were down 37% from ¥6.9
billion to ¥4.4 billion.

00-5,000

2009

2010

2011

2012 2013

Major Product Areas• Polyphenylene sulfide (PPS)• Polyvinylidene fluoride (PVDF)• Polyglycolic acid (PGA)• Carbon fiber• Bead-shaped activated carbon• Specialty carbon material-5,000

Outlook: FY2013 divisional sales are forecast to increase 19% to ¥33.0 billion, while
operating loss is expected to remain largely constant at ¥2.0 billion. Kureha anticipatesthat PPS resin for use in the auto sector will continue to demonstrate steady growth. PPS
resin production at the Iwaki factory will continue at full capacity and operating capacity
at the U.S. plant is also expected to further contribute to earnings. Sales expansion is also
expected for PVDF for use in electrode binders for lithium-ion batteries in the auto
industry and for use in other industrial applications. Kureha will further accelerate PGA
market development and cultivation, with a focus on increased adoption in the shale gas
sector. Demand for carbon materials for use in negative electrode materials for largescale lithium-ion batteries is expected to grow due to the expanding hybrid electricvehicle market, while the recovery of demand as an insulating material for solar powered
equipment is expected to be further delayed. Over the medium term, carbon fiber andother products inthe division are
expected to see
demand growth,and will serve as
key drivers for theCompany’s
expansion.
PGA molded articles (Kuredux) Hard carbon anode materials forlithium-ion batteries (Cabotron)

Specialty Chemicals
Major product areas:

Industrial chemicals, agrochemicals, pharmaceuticals
Specialty chemicals division sales were up 9% year-on-year to ¥32.8 billion
from ¥30.2 billion. The division made an operating profit of ¥6.1 billion, up
30%, thanks to the receipt of settlement funds from a patent lawsuit
concerning Kremezin, and the strong performance of the pharmaceuticals
and agrochemicals businesses.

Pharmaceuticals growth(Millions of yen)

Industrial chemicals recorded sales of ¥9.4 billion, a 4% increase. Although sales ofinorganic chemicals such as sodium hydroxide (caustic soda) recovered, the rise incosts of raw materials negatively impacted organic chemicals, which resulted in a
decline in operating profit.

40,00016,00035,00014,00030,00012,000Agrochemicals reported an increase in sales

25,00010,00020,0008,000

15,0006,000

Sales of agrochemical products were up 9% year-on-year to ¥8.3 billion. Metconazole, anagricultural fungicide, saw an increase in export sales volume, especially during the firstpart of the year when the yen was strong. The negative currency meant that there waslittle impact on operating income, which remained on a par with the previous year.

10,000

4,000

5,000

2,000

0

2009

2010

2011

2012 2013

Major Product Areas0

Outlook: Fiscal 2013 divisional sales are expected to increase by 4% to ¥34.0 billion,
while operating income is projected to decline by 12% to ¥5.4 billion. Kureha willcontinue efforts to expand the market and enhance its supply structure for agrochemical products. Sales volumes of Metconazole are expected to remain largely
unchanged, while it is anticipated that the favorable exchange rate will contribute
positively. For pharmaceutical products, Kremezin is expected to see sales growth,
although there will be no corresponding contribution from settlement funds frompatent lawsuits. Kureha projects that industrial chemicals will maintain revenue levels
by successfully transferring the impact of rising raw material prices to final products.

• Caustic soda
• Hydrochloric acid• Sodium hypochlorite• Monochlorobenzene• para-Dichlorobenzene• ortho-Dichlorobenzene• Anti-cancer agent

Therapeutic agent forchronic renal failure (KREMEZIN)• Therapeutic agent for chronic
renal failure• Agricultural and horticulture
fungicide

Agricultural and horticulture
fungicide (Metconazole)

11
KUREHA CORPORATION

Industrial chemicals sales improve

Net Sales (Left scale)Operating Income (Right scale)

ANNUAL REPORT 2013

Sales of pharmaceutical products increased 23% from ¥8.0 billion to ¥9.8 billion.
Despite the official drug price cuts, Kremezin, a chronic kidney disease treatment, saw
an increase in sales volume. Settlement funds following a patent infringement casealso contributed to the strong divisional performance.

Review of Operations

Specialty Plastics
Major product areas:

Food packaging materials for commercial use,household packaging products
Specialty plastics division sales increased by 9% from ¥37.7 billion to ¥40.9
billion, while operating income for the division grew by 34% to ¥3.0 billion.
Sales of consumer products including household wrap films and fishing lines
products were up, but packaging materials for commercial use declined due
to sluggish demand growth in China.

ANNUAL REPORT 2013

Continued consumer product sales growth

KUREHA CORPORATION

12

Sales of household products grew by 27% in comparison with the previous year,
reaching ¥17.8 billion for the full year. NEW Krewrap sales and operating income
increased on the back of sales volume recovery and the company’s continued efforts
to improve profitability. Kureha’s Seaguar fishing line business, which was transferred tothe subsidiary, Kureha Gohsen in April 2012, performed strongly.

Net Sales (Left scale)Operating Income (Right scale)(Millions of yen)
50,00010,00045,0009,000

40,0008,000

35,0007,000

30,0006,000

25,0005,000

20,0004,000

15,0003,000

10,000

2,000
1,000

5,000
0

2009

2010

2011

2012 2013

0

Slowing demand in China
Sales for food packaging materials for commercial use were down 18% to ¥7.9 billion.
PVDC films, multilayer shrinkable films, and multilayer bottles experienced a decline indemand, although the Company sought to reduce costs to help strengthen profitability. In Europe, hikes in raw material prices led to cost increases, despite the steady
growth in sales. PVDC compound sales growth in China slowed, partly due toemerging competition in the market.
Outlook: Fiscal 2013 divisional sales are forecast to increase by 5% to ¥43.0 billion.
Operating income is also projected to increase by 31% to ¥3.9 billion due to expected
growth in sales volume of PVDC compounds in China, and strengthened cost competitiveness at the Vietnam film plant. Kureha also will continue its efforts to further
improve New Krewrap products. The strategy of providing high value-added products
continues, as does price optimization efforts for consumer products. For the synthetic
textile related business, including Seaguar, Kureha will work to enhance the effectiveness of business consolidation with Kureha Gohsen.

Major Product Areas• Polyvinyliden chloride (PVDC) film
• PVDC compound• Multilayer shrinkable film

Household wrap film (New Krewrap)• Multilayer non-shrinkable film
• Multilayer bottle• Household wrap film
Food packaging film (Krehalon)• Plastic containers• PVDF fishing lines• Machinery for auto-seal foodpackaging

Fishing lines (Seaguar)Construction and Other Operations
Major product areas:

Construction, environmental engineering, transport/
warehousing, and trading related businesses

Net Sales (Left scale)Operating Income (Right scale)Other

35,000Construction
Related
7,000

30,0006,000

25,0005,000

20,0004,000

15,0003,000

10,000

2,000

5,000

1,000

(Millions of yen)00-5,000

2009

2010

2011

2012 2013

Note: Construction related business was separated fromother business segment from fiscal 2011.

Major Product Areas• Environmental engineering andindustrial waste treatment• Industrial facility design,
construction and management-1,000

Sales at construction-related businesses declined by 8% from ¥16.3 billion to ¥15.0
billion, partly due to the reduction in post-disaster reconstruction operations, as well as
increases in materials and labor costs.

Increased costs impact environmental engineeringbusiness
Environmental engineering sales were up 17% from ¥7.5 billion to ¥8.8 billion. Demandfor disaster waste removal operations increased, while industrial waste processing
operations declined. Additionally, contributing to improved sales was environmental
engineering-related activities, which transferred to this business from construction
related businesses to improve synergies and profitability. However, costs associatedwith waste-processing were up, resulting in a decline in operating income from theprevious year.

Logistics and warehousing businesses largely stable
Logistics and warehousing business sales were down 3% to ¥10.3 billion, mainly due tothe severe competitive environment. Sales at trading-related businesses were up 26%
to ¥2.3 billion from ¥1.8 billion.
Outlook: Fiscal 2013 divisional sales for construction are projected to decline by 6% to¥14.0 billion, with operating income also expected to fall due to the gradual reduction inearthquake-related reconstruction operations and exacerbated by increasing materials
and labor costs. Divisional sales for other operations are estimated to increase by 13% to¥16.0 billion, with operating income also to rise by 122% to ¥1.3 billion. Kureha will makefurther efforts to improve profitability in industrial waste related operations, specificallyincreasing micro-PCB (Polychlorinated Biphenyls) processing work.

• Civil engineering andconstruction• Transport and warehousing• Environmental andphysiochemical testing andanalysis

Construction work

Industrial waste treatment facility

13
KUREHA CORPORATION

Difficult operating environment for construction
related businesses

ANNUAL REPORT 2013

Construction sales were down 8% from ¥16.3 billion to ¥15.0 billion, with
operating profit of ¥1.0 billion. Sales of other operations increased 10% to¥14.2 billion from ¥13.0 billion, with an operating profit of ¥0.6 billion.
Although both divisions recorded an operating profit, the level of profitability decreased for both construction and other operations incomparison with the previous year, in part due to the burden of increased
costs and expenses.

Research & Development

Kureha Corporation performs primary research anddevelopment (R&D), providing technology to all of
the Kureha Group business. Kureha’s R&D, with theaim of providing solutions that benefit the global
environment and people’s lives, designates priority
research areas by identifying fields with a highdegree of social value such as the environment,
energy and health, and in which Kureha is able toleverage its technological strengths.
The R&D Division comprises five facilities—ResearchCenter, PGA Research Laboratories, Agrochemical

ANNUAL REPORT 2013

Research Laboratories, Advanced Materials ResearchLaboratories, and Polymer Processing Technology
Center. Each facility has clearly defined researchdomains and targets, aiming to commercialize its
research outcomes as quickly as possible. Furthermore,on July 1, 2012, Kureha opened the Adsorptive

KUREHA CORPORATION

14

Medicine Technology Center within the pharmaceuticals business division in order to provide supporting
research for Kremezin, a therapeutic agent for chronic
kidney disease. Efforts such as these further deepenties between R&D and relevant business and manufacturing divisions, enhance operational efficiency, andspeed up the development process.

Research Center

Advanced Materials
Research Laboratories

In the fiscal year ended March 2013, Kureha’s R&D spending amounted to ¥4,389 million. An overview ofspending is as follows.

Specialty Chemicals Division
In agrochemicals, Kureha is working to expand markets, both in Japan and overseas, forthe agricultural fungicide Metconazole and the seed treatment fungicide Ipconazole. To
meet robust demand for Metconazole, we are working to enhance productivity, and areproviding support for the expansion of production facilities.
In pharmaceuticals, we are providing supporting research to enhance the earnings
of Kremezin.
R&D spending in this division amounted to ¥1,731 million.

Specialty Plastics Division
For Krehalon (polyvinylidene chloride (PVDC) resin), Kureha is pursuing technology
development to ensure stable supply and improve quality. In addition, to further global
business development we are actively providing technical assistance to customers inJapan and overseas.
R&D spending in this division amounted to ¥900 million.

R&D initiatives for new businesses
Kureha’s R&D priorities in recent years have been PGA (polyglycolic acid) resin and hardcarbon anode materials for lithium-ion batteries. Since full establishment of these twobusinesses is now in sight, we plan to focus our research efforts on exploratory research
for the next new businesses, and enhancing the competitiveness of existing businesses.
In fiscal 2012 Kureha established the R&D Strategic Planning Department within
the R&D Division. This was the first step of a coordinated effort to generate new
businesses by integrating components of the various technologies that Kureha has
accumulated. We further introduced a system for researchers to propose themes for
exploratory research, and established an Emerging Technologies Department in themain Research Center as a new function specializing in such exploratory research
themes. Under this new system, twice a year we solicit exploratory research themes
from researchers, while providing a framework to support researchers and study thepotential of ideas. Kureha will closely manage these newly discovered research themes
during the research stage, monitor their progress, and generate future businesses that
contribute to the sustainable growth of the company.

15
KUREHA CORPORATIONIn engineering plastics, for Fortron KPS (polyphenylene sulfide (PPS) resin), which is widelyused in automobiles and electronic devices, Kureha is developing new grades of the material
and exploring ways to further raise productivity. For KF Polymer (polyvinylidene fluoride(PVDF) resin), we are developing and improving the backsheets used for solar panels.
For Kuredux (polyglycolic acid (PGA) resin), Kureha is proactively working to develop
new applications. We are making steady progress in the development of applications foroil drilling and extraction, utilizing PGA’s strength and degradability. We are also
conducting technical development to expand the range of new applications that takeadvantage of the resin’s various unique properties.
In battery-related materials, to secure our competitive advantage in anode materials forthe large-scale lithium-ion batteries used in hybrid and electric vehicles, Kureha is optimizing
its production processes, and pursuing R&D aimed at achieving its business plan. We arealso developing high-performance grade binders to help maintain and grow market share.
R&D spending in this division amounted to ¥1,756 million.

ANNUAL REPORT 2013

Advanced Materials Division

Responsible Care
We will comply
with international
policies andregulations

Kureha, an inaugural member of the Japan Responsible CareCouncil founded in 1995, continues to pursue Responsible Careinitiatives to improve health, safety and environmental performancethroughout its operations. We regard our commitment to
Responsible Care as an integral part of our corporate responsibility.

We will consider
the global
environmentand operatesafelyRC
PolicyWe will manage
and utilize
environmental
and safety
information

We will provide
safe products
to society

We will establish
better relations
with society

Responsible Care implementation

chemical material and industrial waste, odor control, and adoption ofTogether, all Kureha group companies have established the All Kureha

the Energy Consumption Index.

ANNUAL REPORT 2013

Responsible Care Committee. Through this committee, the company

16

is working to enhance its efforts in various fields, including environ-

Disaster prevention

mental protection, security and disaster response, labor safety and

Safety and disaster prevention are among the most importanthygiene, product safety and quality assurance, logistics safety, energy

responsibilities of a manufacturing factory. In order to respond to theconservation, and community relations.

trust the community places in the company, Kureha manages its

Kureha has obtained ISO 14001, the international standard for environ-facilities and operations in strict compliance with the relevant laws. In

mental management, as well as ISO 9001 for product quality management

addition, the company implements a safety and disaster prevention

and OHSAS 18001 for labor safety and hygiene management. The Company

program which includes its own voluntary control criteria, activities

is further enhancing efforts aimed at improving responsible care activities

and training.

KUREHA CORPORATION

through a “plan, do, check, act”activity cycle.

Contributing to the community
Reducing the burden on the environment

In addition to Kureha General Hospital being used as a community medical

Since its establishment, Kureha has developed technologies andfacility in the southern part of Iwaki City, Kureha contributes to the local

products with a view to reducing the burden on the environment. In

community in a variety of different ways. These include opening company

the case of the Iwaki Factory, Kureha seeks to create a manufacturing

sports facilities for public use, volunteering for clean up activities, offering

facility that minimizes stress on the environment by implementing

science classes at elementary schools and holding community meetings tomeasures such as air and water pollution prevention, reduction of

initiate dialogue with local neighborhood associations.

CO2 Production(Thousands of tonnes) (Left scale)Specific Energy Consumption Index
at Iwaki Factory (Right scale)
150

100

120

80

90

60

60

40

30

20

0

2009

2010

2011

2012

2013

Disaster drill0

Wastewater treatment system

Kureha General HospitalCorporate GovernanceMaximizing the corporate value of all group companies is a fundamental
policy of Kureha. In order to achieve this goal, Kureha is working to enhance
governance and other internal control functions, guarantee business
transparency and fair disclosure of information, and to implement
Responsible Care policies.

Management, execution and decision-making
framework

management and supervision of the President & CEO. Based on

1. Supervisory and executive responsibilities are clearly

this department assesses the suitability and effectiveness ofinternal management control systems including compliance andaccelerate managerial decision-making and execution.

risk management. It then proposes necessary or desired changes

The Board of Directors is limited to a maximum of 10
directors (including 2 external directors). The Board, presided

and improvements, so as to enhance both management
efficiency and public trust in Kureha.

over by the President & CEO, meets once a month in principle,
to make decisions on important administrative matters andInternal control system

pursue supervision.

To further strengthen its internal control system, Kureha has

The Executive Committee, chaired by the President & CEO

established a set of basic policies, committees and internal rules toand comprised of executive officers appointed by the President

ensure that it observes laws and regulations and conducts its& CEO, meets twice a month in principle. The committee

business operations in an appropriate and fair manner.

considers mid- and long-term management strategy and basic

Under this system, Kureha publishes Internal Control Reports

policies that cover all aspects of general management, andunder the responsibility of the President & CEO. In addition, Kureha

passes resolutions and implements these policies.

has also established a set of Basic Rules for Internal Control of

To clarify responsibilities for fiscal year results, a one-year
term was established for directors and executive officers.

Financial Reports to ensure the reliability of the financial reports
and to guarantee implementation of management’s assessment

The Consolidated Executive Committee, chaired by theand certified public accountant’s auditing of the effectiveness of

President & CEO, serves as a forum to exchange views on basic

internal control of financial reports, as stipulated in the Financial

management policies and other matters relating to the Kureha

Instruments and Exchange Law.

Group, thereby reinforcing the efforts of the consolidated
management team.

Compliance program framework
Kureha has in place a compliance program framework, based on

2. A total of four corporate auditors (including two external

the Kureha Group Ethical Charter and its Compliance Rules.

auditors) undertake auditing activities. This group works within

Kureha’s compliance objective is to ensure that all executives anda framework that allows them to monitor the deliberation

employees act in a manner that is consistent with legal

processes of board resolutions and reports, as well as have acompliance and that also meets the standards of our society. This

representative corporate auditor attend and monitor meetings

framework is constantly being improved and reinforced so as toof the Executive Committee. In addition, auditors are able tocultivate a compliance-focused corporate culture.

access documentation including all documents requiring senior

The Compliance Committee, led by the President & Chiefapproval, results of internal audits, and documentation on the

Executive Officer (CEO), keeps employees informed of compliancestatus of customer inquiries.

issues through training programs and other activities based on the

In addition, an Internal Control and Auditing Department
acts independently of other departments and under direct

Compliance Handbook and the Compliance Standards. In addition,
direct access to internal and external (lawyers) advisers for inquiries

17
KUREHA CORPORATION

distinguished to strengthen corporate governance and

ANNUAL REPORT 2013

an annual internal audit plan approved by the Board of Directors,

Diagram of Internal Control Systems (As of June 30, 2013)
General Meeting of Shareholders
Appoints

Appoints

Board of Directors(Limited to a maximumof ten members, including
two external members)

Audit

LiaiseAppoints

Board of Corporate Auditors(Four members, including
two external members)
LiaiseLiaisePresident &Chief Executive Officer

Independent
Auditor

ANNUAL REPORT 2013

Compliance Committee
Antitrust Committee
Trade Control (Export/Import) Committee
Labeling and Trade Promotions Committee
Personal Information Protection Committee

Responsible Care Committee
Energy Management Committee

KUREHA CORPORATION

18

Executive
Committee

Internal Control and
Auditing Department
Audit

All divisions ofKureha Corporation

Audit
Audit

Information Management
Committee
Information Disclosure Committee
Information Security Committee

Kureha Group companies

Risk Management Committee(Executive function)

Internal Control ofFinancial Reporting Committee

and reporting on compliance issues is maintained so that legal

minimizing economic damage, and ensuring the continuation ofviolations, confirmed or suspected, can be detected and deterredcorporate activities.

at an early stage.

Kureha has also established an Information Management
Committee to identify a clear set of information management

Risk management system

rules and promote procedures for the appropriate control of

To enable the Company to recognize and minimize the risks it isCompany information. Suitable measures are also being taken for

exposed to during business activities, Kureha has established athe management of information security and disclosure.

Risk Management Committee. The committee proposes concrete

To address environmental and safety risks, management

measures to the President & CEO aimed at reducing and avoiding

procedures for the environment, quality, and labor safety haverisk and manages the implementation of such measures. In

been established that comply with ISO 14001, ISO 9001, andaddition, to respond to unforeseen circumstances, a system is in

OHSAS 18001 standards. In addition, Kureha is continuing withplace for the establishment of an emergency response task force,

ongoing efforts to improve environmental conservation, quality

with the objective of prioritizing the safety of personnel,

assurance, and occupational health and safety.

Directors, Executive Officers and Corporate Auditors

Board of Directors

Keikichi Munakata

Tadashi Sagawa

President & Chief Executive Officer

Senior Executive Vice President
Chief Financial Officer
Chief Administrative Officer

Executive Vice President
General Manager of Iwaki Factory,
Manufacturing Sector
ANNUAL REPORT 2013

Yutaka Kobayashi

Shusuke Matsuo

Tsuneharu Takeda

Shigeto Umatani

Senior Vice President
General Manager ofAdvanced Materials Division
General Manager of PGA Division

Outside Director

Outside Director

Board of Corporate Auditors
Yoichi Kiyosuke

Mitsuo Sato

Haruki Yamaguchi

Masaru Kitamura

Yoshiki Shigaki

Yoshio Noda

Yoshinori Shiojiri

Senior Vice President, President of
KUREHA PGA LLC (USA)Vice President, General Manager ofCorporate Planning Division

Vice President, Deputy General Manager
of Iwaki Factory

Naoki Fukuzawa

Toru Yoshida

Hiroyuki Tanaka

Senior Vice President, General
Manager of Krehalon Division

Vice President, General Manager of
Accounting Center

Vice President, General Manager of
Administration Division

Takashi Yamamoto

Hiroshi Sakabe

Michihiro Sato

Senior Vice President, General
Manager of Engineering Division

Vice President, General Manager ofResearch & Development Division

Vice President, General Manager of
Plastics Processing Factory

Futoshi Saito

FumihikoYamada

Vice President, Deputy General Manager
of Advanced Materials Division

Vice President, General Manager ofHome Products Division

Officers

KUREHA CORPORATION

19

Consolidated Five-Year Summary
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2013, 2012, 2011, 2010 and 2009

Thousands of
U.S. dollars(Note 2)Millions of yen

For the year:
Net sales:
Domestic
Overseas
Net sales by segment:
Advanced materials
Specialty chemicals
Specialty plastics
Other operations

ANNUAL REPORT 2013

Construction Related
Other

KUREHA CORPORATION

20

Operating income
Advanced materials
Specialty chemicals
Specialty plastics
Other operations
Construction Related
Other
Elimination or corporate
Net income
Capital expenditure
Depreciation
R&D expenses
Advanced materials
Specialty chemicals
Specialty plastics
Other operations
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

Year-end:
Total assets
Net assets
Interest-bearing debt

2013

2012

2011

2010

2009

2013

¥130,550
98,26932,278¥128,358
97,46130,896¥132,309
101,696
30,613¥134,606
107,740
26,866¥143,741
116,182
27,559$1,388,091
1,044,859
343,200

27,65032,83340,90029,164
14,967
14,197
8,458(2,131)
6,136
2,988
1,651
1,038
613
(186)
3,212
19,984
8,882
4,389
1,756
1,731
900
—
10,246(19,595)
10,264

31,25330,182
37,672
29,25016,30012,950
8,472
534
4,715
2,226
2,046
1,114
932
(1,051)
1,460
14,360
9,580
5,080
1,933
2,293
853
—
12,144(14,169)370

33,391
33,552
41,092
24,274
12,76011,514
6,350
363
5,203
1,790
(348)
(387)
39
(658)
692
14,076
10,266
5,502
1,741
2,765
996
—
12,509(11,432)
2,720

28,42335,83142,43027,921——
5,706(3,645)
6,619
1,948
1,379
—
—
(595)
1,571
16,943
11,126
6,240
1,787
3,372
1,080
—
15,847(17,682)
1,999

32,42433,89843,53833,881
—
—
9,456
678
5,732
1,655
2,104
—
—
(713)
3,373
17,82910,304
6,085
1,960
2,956
1,125
45
11,420(20,518)
10,705

293,992
349,101
434,875
310,090
159,138
150,951
89,930(22,658)
65,241
31,77017,554
11,036
6,517(1,977)34,152
212,482
94,43946,666
18,67018,4059,569—
108,942(208,346)
109,133¥205,284
96,211
68,448¥186,223
88,55456,683¥181,753
89,50054,885¥184,623
96,82247,969¥182,224
97,07544,033$2,182,711
1,022,977
727,783

Yen

Amounts per share:
Net income – basic
Net assets
Cash dividends¥18.51546.6910¥8.51510.3710¥3.97517.47
10

U.S. dollars

¥

8.77
538.1
10

¥

18.75
533.4510$0.195.81
0.10

Percent

Ratios:Operating income to net sales
Net income to net sales
Return on equity
Return on assets
Equity ratio

6.5%
2.5
3.5
3.4
45.7

6.6%
1.1
1.7
4.3
47.0

4.8%
0.5
0.7
3.1
48.9

4.2%
1.2
1.6
3.0
52.2

6.6%
2.3
3.4
4.7
52.4

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥94.05 to US$1, the rate of exchange prevailing on the Tokyo Foreign
Exchange Market on March 29, 2013.
2. For amounts per share, see Note 21 of the Notes to Consolidated Financial Statements.

Management Discussion and Analysis

Analysis of business results
Net sales in the subject fiscal year increased ¥2,191 million
year-on-year to ¥130,550 million.
Gross profit, however, declined ¥1,222 million to ¥33,767
million, and the gross profit margin declined from 27.3% in theprevious fiscal year to 25.9%. Selling, general and administrative
expenses declined ¥1,209 million from the previous fiscal year to¥25,309 million. Operating income declined ¥13 million yearon-year to ¥8,458 million, while the operating income ratio
declined from 6.6% in the previous fiscal year to 6.5%.
Other expenses (net of other income) for the fiscal year
ended March 31, 2013 amounted to ¥2,992 million, a decreaseof ¥2,292 million, compared to ¥5,284 million for the fiscal year
ended March 31, 2012 mainly since the Company no longer
recorded a loss due to disaster in the subject fiscal year.
As a result of above, income before income taxes andminority interests increased ¥2,277 million to ¥5,466 million.
Total income taxes amounted to ¥2,297 million. Minority
interests amounted ¥44 million of loss. As a result, net income
increased ¥1,752 million from previous fiscal year to ¥3,212
million.

Cash flow analysis
The balance of cash and cash equivalents at the end of thesubject fiscal year (March 31, 2013) amounted to ¥9,954
million, an increase of ¥1,097 million from the end of theprevious fiscal year (March 31, 2012). An outline of individual
cash flows and the main factors affecting each is as follows:
Cash flow from operating activities
Net cash provided by operating activities amounted to ¥10,246
million, a decrease of ¥1,897 million from the previous fiscal

Net Sales(Millions of yen)

Cash flow from investment activities
Net cash used in investment activities amounted to ¥19,595
million, an increase of ¥5,426 million from the previous fiscal
year. This was due mainly to an increase in payments forpurchases of property, plant and equipment and intangible fixed
assets.
Cash flow from financing activities
Net cash provided by financing activities amounted to ¥10,264
million, an increase of ¥9,894 million from the previous fiscal
year. This was due mainly to proceeds from issuance of bonds
with stock acquisition rights, offsetting the redemption of bonds.

Financial policy
The Kureha Group’s basic policy is to maximize cash flows fromoperating activities by securing earnings in line with its businessplan and by enhancing asset efficiency, and to allocate cash withpriority given to capital expenditure for new businesses andexpansion of existing businesses, investments and loans, researchand development, and dividend payments to investors. In linewith this policy, Kureha procures required capital with priority
given to securing long-term funding, and in consideration of thebalance between long- and short-term borrowings.

Balance sheet analysis
As of March 31, 2013, total assets amounted to ¥205,284
million, an increase of ¥19,061 million from the end of theprevious fiscal year (March 31, 2012). Current assets totaled¥68,210 million, an increase of ¥1,389 million from the previous
fiscal year. This was mainly due to an increase in inventories.
Property, plant and equipment, net totaled ¥99,444 million, up¥12,326 million from a year earlier, due mainly to a high level ofcapital expenditure, including in overseas production facilities,
which exceeded depreciation expenses. Investment and otherassets totaled ¥37,629 million, an increase of ¥5,346 million,
due mainly to a rise of the market value of investments in securi-

Operating Income

Net Income

Operating Income to
Net Sales (Right scale) (%)

Net Income to Net Sales(Left scale) (Millions of yen)

150,000(Left scale) (Millions of yen)
(Right scale) (%)

12,000

8

4,000

4

9,000

6

3,000

3

6,000

4

2,000

2

3,000

2

1,000

1

0

0

125,000
100,000
75,00050,00025,00002009 2010 2011 2012 2013

Domestic

Overseas02009 2010 2011 2012 20132009 2010 2011 2012 2013

0

ANNUAL REPORT 2013

During the fiscal year ended March 31, 2013, while the Japanese
economy was supported by demand related to reconstruction efforts
following the Great East Japan Earthquake, foreign demand
continued to stagnate due to factors such as the continued European
debt crisis, as well as the slowdown of the economy and increased
political risk in China, resulting in difficult management environment for the Group.

year. This was due mainly to an increase in income before
income taxes and minority interests, a decrease in trade notes andaccounts receivable and a decrease in trade notes and accounts
payable.

21
KUREHA CORPORATIONBusiness environment

ANNUAL REPORT 2013ties at the end of the previous fiscal year.
Total liabilities at the end of the subject fiscal year amounted
to ¥109,073 million, an increase of ¥11,404 million from theend of the previous fiscal year. This was due mainly to a ¥11,764
million increase in interest-bearing debt to ¥68,448 million
following an issuance of bonds with stock acquisition rights, adecline in borrowings and redemption of bonds in addition to adecrease in trade notes and accounts payable.
Total net assets for the subject fiscal year amounted to¥96,211 million, an increase of ¥7,656 million from the previous
fiscal year. This was due mainly to the balance of net income of¥3,212 million, a ¥1,716 million dividend payout from retained
earnings, an increase in unrealized gain on available-for-salesecurities and translation adjustments, and an increase inminority interests.

KUREHA CORPORATION

22

Management Co., Ltd.).
In addition, as a joint initiative, the Advanced Materials,
Specialty Chemicals, and Specialty Plastics Divisions invested¥2,457 million in such areas as environmental conservation
projects (Kureha), and private power plant facilities (Kureha).
Capital required for these investments was procured fromcash-at-hand, corporate bonds, and borrowings.

Business and other risks

The Kureha Group’s business operations are diverse, comprising
the Advanced Materials Division focused on PPS resin, PVDF
resin and carbon products; the Specialty Chemicals Divisionfocused on pharmaceuticals, agrochemicals and industrial chemicals; the Specialty Plastics Division focused on householdproducts and food packaging; the Construction Related Divisionfocused on construction and engineering; and the Other
Overview of capital expenditure
Operations Division including environmental businesses and
The Kureha Group has designated advanced materials, pharmalogistics. By region, the Group conducts business in Japan as wellceuticals and agrochemicals, and environment-related businesses as
as Europe, North America, and Asia.
core businesses that drive earnings, and as such actively invests in
The main factors that could affect the operating results, stock
these areas. Total capital expenditure during the fiscal year ended
price, financial position and other aspects of the Kureha Group
March 31, Net
2013Salesamounted to ¥19,984 million.
are as follows.
Operating Income
Net Income(Left scale) (Millions of yen)
Forward-looking statements(Leftin scale)this text
areofbased(Millionsyen) on evalua(Millions of yen)
Capital expenditure by business division:
tions madesecurities
reportfilingOperating Income
to at the time of the Company’s
Net Income
to NetSales(Right scale) (%)
scale)25,(%) 2013).
The Advanced Materials Division invested ¥8,740 million,
Net Sales (Right(Junemainly for PVDF (polyvinylidene fluoride) resin production(1) Changes8 in the business environment
in Japan and overseas;
150,000
4,000
412,000facilities(Kureha and Kureha (Changshu) Fluoropolymers
Co.,changes in the market price of productsLtd.), epoxy resin production facilities (Resinous Kasei Co.,
Ltd.),125,000
and carbon fiber production facilities (Kureha and Kureha
The Kureha Group’s business is exposed to external factors such
3,000
9,000
Advanced Materials LLC).
as changes 6in markets or customers,
and intensification of3
100,000
The
Specialty Chemicals Division invested ¥1,369 million,
competition with competing companies. Accordingly, changes
primarily on production facilities for chlorine / caustic soda
such as a decrease in demand for the Group’s principle products,
75,000(Kureha).
2,000 overseas, and an increase in2
customers 4shifting production
6,000
The Specialty Plastics Division invested ¥6,365 million,
production capacity by competing firms, could therefore influprimarily
ence the Group’s operating results and financial position.
50,000for manufacturing facilities for food packaging materials (Kureha and Kureha Vietnam Co., Ltd.) and building
of
1,000
1
3,000
2
new synthetic
fibers manufacturing facilities (Kureha Gohsen(2) Changes in fuel and raw material prices
25,000Co., Ltd.).
Raw materials such as naphtha and coal used by the Kureha Group,
The Construction
Related Division invested ¥1030 million,
0
0 As a0
as well as fuel,are susceptible to0 changes in market conditions.
2010 2011 of
2012
2013
2009 2010 2011 2012 20132009 2010 2011 2012 2013
mainly for2009
the renovationbuildings.
result, changes such as an increasein the price of these raw materials,
Domestic
Overseas
The Other
Operations
Division invested ¥947 million,or the inability to shift the additional cost to product prices in a
mainly on industrial waste processing facilities (Kureha Ecology
timely and appropriate manner, could have a negative effect on the

Net Assets

Total Assets

Cash Flows fromOperating Activities
Cash Flows from
Investing Activities(Left scale) (Millions of yen)

(Millions of yen)

Equity Ratio(Right scale) (%)(Millions of yen)

250,000

20,000120,000

60

100,000

50

80,00040

60,00030

40,00020

20,00010

15,000200,000

10,0005,000

150,000

0-5,000100,000-10,000-15,000

50,000-20,000-25,000

2009 2010 2011 2012 2013

Return on Assets
Return on Equity(%)

02009 2010 2011 2012 2013

Interest-Bearing Debt
(Millions of yen)02009 2010 2011 2012 2013

Capital Expenditure
Depreciation(Millions of yen)0Operating Income(7) Investment securities

Net SalesGroup’s operating
results and financial position.
(Millions of yen)

Net Income(Left scale) (Millions of yen)

(Left scale) (Millions of yen)

Of the to¥28,333 million in investment in securities, the Kureha
Operating Income
Net
Incometo Net Sales(3) Product liabilityGroup
held a total of ¥20,241(Rightmillionscale)for(%)the purpose of long(Rightscale)
(%)
Net
Sales
The Kureha Group’s core business is chemical manufacturing.
term holdings (9.9% of total assets on a consolidated basis) as of(8) Occurrence of natural disasters or accidents
Manufacturing
for the Kureha
2,000 Group’s principal products2is4
concentrated in the production division of the Iwaki Factory(4) TheSpecialty Chemicals Division’s pharmaceutical business(Iwaki, Fukushima Prefecture), and as such the Company makes
50,000One of the Kureha Group’s core businesses is the manufacture
continual 2efforts focused on
this facility for environmental1 conser1,000
3,000
and salevation and to ensure safety. However, damage to production
25,000of pharmaceuticals. Accordingly, revisions to drug prices
under Japan’s medical insurance system could have a negative
facilities as a result of natural disasters such as major earthquakes
effect on0 the Group’s operating results.
or typhoons,
could have a negative effecton0
0
0
0 or due to accidents,
2009 2010 2011 2012 201320092010 20112012 2013
the Group’s
financial
position.
2009 2010 2011 20122013 operating results and(5) Country Domesticrisks for overseas
businesses
Overseas(9) Litigation
The Kureha Group conducts business in Europe, North Americaand Asia. Accordingly, changes such as deterioration in the
The Kureha Group has established the “Kureha Group Ethicalpolitical or economic situation in these regions, the enactment or
Charter,” “Compliance Rules” and “Compliance Standards,” andabolishment of laws and regulations, international tax practice
strives to ensure that the Group strictly complies with all laws,
risks such Cashas transfer
pricefromtaxation, and deterioration Totalin public
However,
there is a risk that theAssetsAssets regulations and societal norms.Net
Flows(Left scale) could(Millionsbeof theyen)target of(Millions of yen)safety, as wellas unforeseen
circumstances such as terrorism,
Group’s domestic or overseas businesses
Operating
Activities
armed conflict
naturalfrom
disaster, could have a negative effect on
lawsuits, administrative measuresor otheraction. A major lawsuit
EquityRatio
CashorFlows(Right scale)(%) could have a negative
the Group’s
operating results
and financial position.
or other action be taken filed against
KurehaInvesting
Activities
effect on the Group’s operating results and financial position.
(Millions of yen)
(6) Currency
fluctuations
250,000
20,000120,000
60
The itemsinKureha Group’s financial statements not denomi15,000
nated in yen are susceptible to fluctuations in exchange
rates
100,000
50
200,000
when10,000
converted into yen. The Group concludes exchange
contracts
5,000and takes other steps to minimize the effects of fluctua80,000
40
150,000
tions in exchange
rates.
0
However, fluctuations in exchange rates beyond those predicted
60,00030
could -5,000
have a negative effect on the Group’s operating
100,000 results andfinancial-10,000position.
40,00020-15,000

50,00020,000-20,000-25,000

2009 2010 2011 2012 2013

0

Return on Assets
Return on Equity

2009 2010 2011 2012 201302009 2010 2011 2012 2013

Capital Expenditure
Depreciation

Interest-Bearing Debt
(Millions of yen)(%)

(Millions of yen)

80,0006

10

25,0005

20,00060,0004

15,00040,0003

10,0002
20,000

5,000

1
0

0

2009 2010 2011 2012 20132009 2010 2011 2012 201302009 2010 2011 2012 2013

0

ANNUAL REPORT 2013

the end of8 the subject fiscal
year. Significant changes in market
4,000
4prices, or in the financial position of the issuing companies,
could have a negative effect on the Group’s operating results andfinancial position.
3,000
3
6

23
KUREHA CORPORATION

The150,000
Group is acutely aware of the risks connectedwith its
12,000products and the manufacturing process, and is careful to continually125,000
exercise Responsible Care (autonomous management forenvironmental conservation, disaster safety and othermeasures).
9,000
However,should a significant, unforeseen quality issue arise,
100,000
there could be a negative effect on the Group’s operating results
and financial
position.
75,0006,000

Consolidated Balance Sheets
Kureha Corporation and its Consolidated Subsidiaries
As of March 31, 2013 and 2012

Thousands of
U.S. dollars(Note 2)Millions of yen

2013

2012

2013

¥ 9,954
27,48025,318
2,129
3,418
(92)
68,210¥8,857
29,58622,151
2,630
3,665
(69)
66,821$105,837
292,185
269,197
22,63636,342(978)725,252

Property, plant and equipment, net (Note 11):
Buildings and structures
Machinery, equipment and vehicles
Land
Construction in progress
OthersTotal property, plant and equipment, net

32,17635,68013,467
15,681
2,438
99,44429,89733,387
13,4548,537
1,841
87,118342,115379,372
143,189
166,730
25,922
1,057,352

Investments and other assets:
Investments in securities (Notes 8, 9 & 11)
Long-term loans (Note 8)
Deferred tax assets (Note 14)
OthersLess: Allowance for doubtful accounts
Total investments and other assets

28,333
2,060
1,371
6,033
(169)
37,62923,720
2,209
839
5,836
(322)
32,283

301,254
21,903
14,57764,146(1,796)400,095¥205,284¥186,223$2,182,711

ANNUAL REPORT 2013ASSETS
Current assets:
Cash and time deposits (Notes 5 & 8)
Trade notes and accounts receivable (Notes 6 & 8)
Inventories (Note 7)
Deferred tax assets (Note 14)
OthersLess: Allowance for doubtful accounts (Note 8)
Total current assets

KUREHA CORPORATION

24

Total assets (Note 23)
The accompanying notes are an integral part of these statements.

LIABILITIES AND NET ASSETS
Current liabilities:
Trade notes and accounts payable (Notes 6, 8 & 11)
Short-term loans payable including current portion of
long-term debt (Notes 8, 10 & 11)
Other payables (Note 8)
Accrued income taxes (Note 14)
Accrued expenses
Accrued bonuses
Allowance for loss due to disaster
Others (Note 14)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 8, 10 & 11)
Deferred tax liabilities (Note 14)
Reserve for employees' retirement benefits (Note 13)
Retirement allowance for directors and corporate
auditors
Asset retirement obligations
Reserve for environmental measures
OthersTotal long-term liabilities
Total liabilities

Net assets:
Shareholders’ equity (Note 22):
Capital, non par value
Authorized: 2013 and 2012 – 600,000,000 shares
Issued: 181,683,909 shares in 2013 and 2012
Capital surplus
Retained earnings
Less: Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities(Note 9)Deferred loss on hedges (Note 19)
Translation adjustments
Total accumulated other comprehensive income (loss)
Stock acquisition rights (Note 16)
Minority interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these statements.

2012

2013

¥15,940¥ 19,262$169,484

18,088
7,146
1,899
4,854
2,283
—
2,665
52,87721,049
6,123
576
4,665
2,126
579
2,933
57,316

192,323
75,98020,191
51,61024,274—28,335562,222

50,3592,794
556

35,6341,827
650

535,449
29,707
5,911

341
797
474
871
56,195
109,073

336
785
163
953
40,352
97,669

3,625
8,474
5,039
9,261
597,501
1,159,734

12,46010,017
72,614(4,510)90,58012,4609,149
71,988(4,546)89,051

132,482
106,507772,078(47,953)
963,104

5,636(32)(2,300)
3,303
62
2,264
96,211¥205,284

3,609(5)(5,048)(1,444)82
864
88,554¥186,223

59,925(340)(24,455)
35,119659
24,072
1,022,977$2,182,711

25
KUREHA CORPORATION

Millions of yen

2013

ANNUAL REPORT 2013

Thousands of
U.S. dollars(Note 2)

Consolidated Statements of Income
Kureha Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Millions of yen

2013¥130,550
96,782
33,767

2012¥128,358
93,36834,99025,3098,458

26,518
8,472

269,101
89,930

643
(820)
311
148
6
3
—
—
(1,431)

683
(787)
97
—
132
80
700
24
—

6,836
(8,718)
3,306
1,573
63
31
—
—
(15,215)

(810)
(263)
(148)
—
(634)
(2,992)(1,529)—(97)(3,797)(790)(5,284)(8,612)(2,796)(1,573)—(6,741)(31,812)

Income before income taxes and minority interests

5,466

3,188

58,118

Income taxes (Note 14):
Current
Deferred
Total income taxes

2,466
(168)
2,297

1,018
483
1,501

26,220(1,786)24,4233,168(44)¥3,2121,686
226¥1,460

33,684(467)$34,152

Net sales (Note 23)
Cost of sales
Gross profit

ANNUAL REPORT 2013

Selling, general and administrative expenses (Note 17)
Operating income

KUREHA CORPORATION

26

Thousands of
U.S. dollars(Note 2)Other income (expenses):
Interest and dividend income
Interest expenses
Subsidy income
Compensation income
Gain on sales of property, plant and equipment (Note 18)
Gain on sales of investments in securities (Note 9)
Gain on business transfer
Gain on insurance claim
Depreciation of idle assets
Loss on disposal and sales of property, plant and equipment(Note 18)
Provision for environmental measures
Advanced depreciation of property, plant and equipment
Loss due to disaster (Note 24)
Other, net
Other expenses, net

Net income before minority interests
Minority interests
Net income

2013$1,388,091
1,029,048
359,032

The accompanying notes are an integral part of these statements.

Consolidated Statements of Comprehensive Income
Kureha Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Millions of yen

Net income before minority interests
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities
Deferred gain (loss) on hedges
Translation adjustments
Share of other comprehensive income in affiliates
Total other comprehensive income (loss) (Note 20)
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Owners of minority interests
The accompanying notes are an integral part of these statements.

Thousands of
U.S. dollars(Note 2)

2013
¥3,1682012¥1,686

2,037
(26)
2,560
211
4,782
¥7,951

(116)
30
(890)
6
(969)
¥716

21,658(276)
27,2192,243
50,845$84,540¥7,961
(9)

¥493
223

$84,646(95)

2013$33,684

Consolidated Statements of Changes in Net Assets
Kureha Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2013 and 2012

181,683,909

181,683,909¥12,460——————¥12,460

Retainedearnings¥9,149———¥71,988(1,716)
3,212¥(4,546)

—
—

(1)
37

—
—

0
866

(870)

—

—

—
—

¥10,017¥72,614¥(4,510)¥90,580

Minority
interests

Total net
assets

Accumulated other comprehensive income
Total
accumulated
Unrealized gain
Stock
other
on availablefor-sale
DeferredTranslation comprehensive subscription
rightsincomesecurities
loss on hedges adjustments

BALANCE-MARCH 31, 2012
Dividends paid
Net income
Acquisition of treasury stock
Disposal of treasury stock
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2013

BALANCE-MARCH 31, 2012
Dividends paid
Net income
Acquisition of treasury stock
Disposal of treasury stock
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2013

¥3,609
—
—
—
—
—
2,026
¥5,636

¥ (5)
—
—
—
—
—
(26)
¥(32)

¥(5,048)
—
—
—
—
—
2,748
¥(2,300)¥(1,444)
—
—
—
—
—
4,748
¥3,303

CapitalCapitalsurplusRetainedearnings$132,482
—
—
—
—
—
—
$132,482$97,278
—
—
—
0
9,207
—
$106,507$765,422(18,245)
34,152——(9,250)—$772,078

¥82
—
—
—
—
—
(20)
¥62

$38,373—————
21,541$59,925$(53) $(53,673) $(15,353)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(276)
29,21850,483$(340) $(24,455) $35,119

¥864
—
—
—
—
—
1,400
¥2,264—¥88,554(1,716)
3,212
(1)
38
(3)
6,127
¥96,211

Thousands of U.S. dollars (Note 2)
Shareholders’ equity
TreasuryTotalstock,
shareholders’at costequity$(48,335)
—
—
(10)
393
—
—
$(47,953)

Accumulated other comprehensive income
Total
accumulated
Unrealized gain
Stock
other
on availableDeferredfor-saleloss
Translation comprehensive subscription
rightsincomesecurities
on hedges
adjustments

BALANCE-MARCH 31, 2012
Dividends paid
Net income
Acquisition of treasury stock
Disposal of treasury stock
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2013
The accompanying notes are an integral part of these statements.

¥89,051(1,716)
3,212
(1)
38
(3)

$871
—
—
—
—
—
(212)
$659

Minority
interests$946,847(18,245)
34,152
(10)
404
(31)
—
$963,104

Total net
assets$9,186 $ 941,562—(18,245)—
34,152
—
(10)
—
404
—
(31)
14,885
65,146$24,072 $1,022,977

ANNUAL REPORT 2013

BALANCE-MARCH 31, 2012
Dividends paid
Net income
Acquisition of treasury stock
Disposal of treasury stock
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2013

CapitalsurplusCapital27
KUREHA CORPORATION

Number ofcommon stock

Millions of yen
Shareholders’ equity
TreasuryTotalstock,
shareholders’at costequityConsolidated Statements of Cash Flows
Kureha Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Thousands of
U.S. dollars(Note 2)Millions of yen

2012

ANNUAL REPORT 2013

2013

KUREHA CORPORATION

28

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation
Amortization of goodwill(Decrease) increase in allowance for doubtful accounts(Increase) decrease in prepaid pension expense
Decrease in reserve for employees’ retirement benefits
Increase (decrease) in retirement allowance for directors
and corporate auditors
Decrease in allowance for loss due to disaster
Increase in provision for environmental measures
Interest and dividend income
Interest expenses
Loss on disposal and sale of property, plant andequipment
Unrealized loss on securities and investments in securities
Gain on sale of investments in securities
Decrease (increase) in trade notes and accounts receivable
Increase in inventories
Decrease (increase) in other assets(Decrease) increase in trade notes and accounts payable
Increase in other liabilities
Other, net
Subtotal
Dividends and interest received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for disposal of property, plant and equipment
Purchase of investments in securities
Proceeds from sales of investments in securities
Payments of loans receivable
Proceeds from collection of loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net decrease in commercial paper
Net increase in short-term loans payable
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of bonds with stock acquisition rights
Redemption of bonds
Dividends paid
Dividends paid to minority shareholders
Proceeds from issuance of bonds
Proceeds from stock issuance to minority shareholders
Other, net
Net cash provided by 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 beginning of year
Increase in cash and cash equivalents resulting from inclusionof consolidated subsidiaries
Cash and cash equivalents at end of year (Note 5)
The accompanying notes are an integral part of these statements.

2013¥ 5,466¥ 3,188$ 58,118

8,882
77
(127)
(184)
(104)

9,580
98
186
85
(113)

94,439818(1,350)(1,956)(1,105)

5
(579)
311
(644)
820

(28)
(1,242)
—
(684)
787

53
(6,156)
3,306(6,847)
8,718

803
1
(3)
3,027
(2,734)
198(3,737)748(1,053)
11,174
1,100(830)(1,198)
10,246

1,396
88
(79)
(2,481)(3,133)
(88)
5,237
1,217
(1,162)
12,854
968
(773)
(903)
12,144

8,538
10
(31)
32,185(29,069)
2,105(39,734)
7,953(11,196)
118,809
11,695(8,825)(12,737)
108,942(18,992)
113
(538)
(243)
33
(210)
315
(72)
(19,595)(14,454)
214
(906)
(18)
581
(426)
144
694
(14,169)(201,935)
1,201(5,720)(2,583)350(2,232)
3,349(765)(208,346)

—
573
5,284
(5,070)14,923(5,000)(1,716)
(15)
—
1,455
(169)
10,264
181
1,097
8,857

(4,000)2,962
3,399(5,179)——(1,716)
(13)
4,966
50
(99)
370
(285)
(1,938)
10,746—
6,092
56,182(53,907)—¥ 9,95450¥ 8,857

158,670(53,163)(18,245)(159)—

15,470(1,796)109,133
1,924
11,664
94,173—$105,837

Notes to Consolidated Financial Statements
Kureha Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated financial statements have been prepared based on the accounts maintained by Kureha
Corporation (the “Company”) and its consolidated subsidiaries (collectively the “Group”) in accordance with the provisions set
forth in the Companies Act and the Financial Instruments and Exchange Act of Japan, and in conformity with accounting
principles generally accepted in Japan, which are different, in certain respects, from the application and disclosure requirementsof International Financial Reporting Standards.
As permitted by the Financial Instruments and Exchange Act, for the years ended March 31, 2013 and 2012, amounts of lessthan one million yen have been omitted. Consequently, totals shown in the accompanying consolidated financial statements forthe years ended March 31, 2013 and 2012 do not necessarily agree with the sums of the individual amounts.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theCompany’s consolidated financial statements issued domestically in order to present them in a format which is more familiar toreaders outside Japan.

3. Principles of Consolidation

I. Scope of consolidation
The Company has consolidated 37 (38 in 2012) subsidiaries and two affiliates (one in 2012) as of March 31, 2013. The
accounts of two subsidiaries (three in 2012) and three affiliates (three in 2012) were not consolidated and not applied to equity
method for the year ended March 31, 2013 , as they would not have a material effect on the accompanying consolidated
financial statements.
II. Fiscal terms of consolidated subsidiaries
The fiscal terms of 13 consolidated subsidiaries close their accounts at December 31. In preparing the consolidated financial
statements, those accounts at December 31, 2012 are used, but major transactions which were executed during the three months
between December 31 and March 31 are adjusted as necessary for consolidation.

4. Summary of Significant Accounting Policies

I. Securities
Securities included in marketable securities and investments in securities are designated as available-for-sale securities and arestated as follows:
Available-for-sale securities with market quotations are stated at the average market price during the month before the balance
sheet date.
Valuation difference on these securities is reported at net of taxes as a separate component of net assets.
The cost of securities sold is determined based on the moving average cost at the time of sale.
Available-for-sale securities without market quotations are stated at cost by the moving average method.
II. Derivatives and hedge accounting
Derivative financial instruments are stated at fair value and any changes in the fair value are recognized as gain or loss.
Interest rate swaps qualified for hedge accounting are measured at fair value, and unrealized gains or losses are deferred until
maturity. Interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not re-measured at market
value, but the differential paid or received under the swap agreements are recognized and included in the interest expense or
income.
The Company and its consolidated subsidiaries utilize foreign exchange forward contracts to avoid the risk from futureexchange rate fluctuations in connection with the foreign currency denominated receivables and payables and also interest rate
swaps to reduce the financing costs related to long-term debt and short-term borrowings as a means to manage the interest raterisk. Certain foreign exchange forward contracts utilized by the Company and certain consolidated subsidiaries are exposed to an
exchange rate fluctuation risk and interest rate risk from the movement of the interest rates is mitigated by converting floatinginterest rates to fixed interest rates using interest rate swap agreements. The Company and its consolidated subsidiaries use
derivatives to hedge risks in accordance with internal rules.
III. Inventories
Inventories are stated at cost in principle determined by the gross average method. Inventories held for sale in the ordinary courseof business are measured at the lower of cost or net selling value, which is defined as the selling price less incremental estimatedmanufacturing costs and estimated direct selling expenses.

29
KUREHA CORPORATION

The accounts of consolidated financial statements presented herein are originally expressed in Japanese yen. The U.S. dollar
amounts shown in the accompanying consolidated financial statements and notes thereto have been translated from Japanese yen
into U.S. dollars on the basis of ¥94.05 to U.S. $1, the rate of exchange prevailing as of March 29, 2013. And, for translation of
millions of Japanese yen to thousands of U.S. dollars, amounts of less than one thousand dollar have been omitted. These U.S.
dollar amounts are not intended to imply that the Japanese yen amounts have been or could be converted, realized or settled in
U.S. dollars at this or any other rate.

ANNUAL REPORT 2013

2. U.S. Dollar Amounts

IV. Depreciation and amortization of fixed assets
Property, plant and equipment except for leased assets
Property, plant and equipment are principally stated at cost. Depreciation except for buildings is computed in accordance withthe declining balance method based on the estimated useful lives and residual value. The depreciation of buildings is computedon the straight-line method. Accumulated depreciation which was directly deducted from property, plant and equipment as ofMarch 31, 2013 and 2012 were ¥162,419 million ($1,726,943 thousand) and ¥162,961 million, respectively.
The useful lives of major property, plant and equipment are summarized as follows:

ANNUAL REPORT 2013

Buildings and structures
Machinery, equipment and vehicles
Other (tools, furniture and fixtures)

KUREHA CORPORATION

30

10 to 50 years
7 to 20 years
4 to 10 years

Changes in accounting policies that are difficult to distinguish from changes in accounting estimates
In prior years, the Company and its domestic consolidated subsidiaries calculated depreciation of property, plant and equipmentby the declining balance method (except for buildings which include buildings and facilities, and leased assets).
Effective April 1, 2012, the Company and its domestic consolidated subsidiaries changed their depreciation method of
property, plant and equipment from the declining balance method to the straight-line method.
To accomplish “Grow Globally II medium-term business plan,” which was formulated in the previous fiscal year, theCompany will take a policy to actively expand its global operations and respond to global intensification of competition. In
addition, the Company examined carefully both its utilization of domestically owned property, plant and equipment and thestructure of future capital investments.
As a result of this examination, the Company confirmed that these will likely be operated on a long-term basis, reliably overuseful lives and their repair and maintenance expense will likely be occurred on an average basis. Moreover, the occurrence of
rapid technological and economic obsolescence would not be expected.
Based on the assumption that the Company will expand its global operations in the future, it has determined that the Groupwill adopt the straight-line method for their depreciation, which has already been adopted by all overseas consolidated
subsidiaries. As a consequence, the Company determined that this change would more appropriately reflect the actual conditionof investment in property, plant and equipment with a focus on the production facilities and more easily identify the result ofcapital investments as a whole group.
As a result of this change, depreciation expense decreased by ¥1,758 million ($18,692 thousand), and operating income andincome before income taxes and minority interests increased by ¥1,758 million ($18,692 thousand) from the corresponding
amounts which would have been recorded under the previous method.
Intangible fixed assets except for leased assets
Intangible fixed assets except for software are amortized by the straight-line method based on the estimated useful lives.
Software for in-house use is amortized by the straight-line method based on the estimated useful lives (5 years).
Leased assets
Leased assets under finance lease arrangements which do not transfer ownership of the leased assets to the lessee are depreciatedby the straight-line method over respective lease periods without salvage value.
V. Allowance for doubtful accounts
Allowance for doubtful accounts of general receivables was established to provide for future losses, which are estimated based on
the past credit loss experience.
In addition, uncollectible amount is estimated individually for doubtful receivables.
VI. Reserve for employees’ retirement benefits
The reserve for employees’ retirement benefits is recorded based on the estimated projected benefit obligations and the plan
assets at the end of the fiscal year. Certain domestic consolidated subsidiaries calculate their retirement benefit obligations using
the liability which would be paid if all the employees voluntarily retired at each consolidated balance sheet date or liability
reserve for pension financing calculation purpose.
The unrecognized transition amount which arose from adopting a new standard has been fully amortized when incurred.
Past service cost is fully amortized when incurred. Actuarial gain or loss is amortized in the year following the year in which thegain or loss is recognized, on a straight-line basis over certain periods within the employees’ average remaining service years.
VII. Retirement allowance for directors and corporate auditors
The retirement allowance for directors and statutory auditors is recorded based on the amount that would be required inaccordance with the internal rule at the balance sheet date to provide for the payment for the retirement benefits.

VIII. Reserve for environmental measures
Reserve for environmental measures is recorded for disposal of PCB (polychlorinated biphenyl) that would be requiredby the Waste Disposal Law.
IX. Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows consist of cash on hand, bank deposits payable on
demand and short-term investments due within three months from acquisition with minor value fluctuation risk.

A) Overview
Accounting standard for retirement benefits has been revised from the viewpoint of improvements to financial reporting andinternational convergence, mainly focusing on (a) how unrecognized actuarial differences and prior service cost should be
accounted for, (b) how projected benefit obligations and service cost should be determined and (c) enhancement of disclosures.
B) Date of adoption
The Company and certain consolidated subsidiaries will adopt the revised accounting standards effective from the fiscal year
ending March 31, 2014. However, the Company and certain consolidated subsidiaries will adopt the amendments to themethod for calculating projected benefit obligations and service cost from the beginning of the fiscal year ending March 31,
2015.
C) The effect of adopting the accounting standards
The effect of adopting these accounting standards is currently under evaluation.

5. Cash and Cash Equivalents

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2013 and 2012:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Cash and cash equivalents

2013¥9,954
9,954

2012¥8,857
8,857

2013$105,837
105,837

6. Trade Notes

Trade notes due at the end of the fiscal year are settled on the date of clearing.
As the end of the year ended March 31, 2013 fell on a bank holiday, the following trade notes due at the end of the fiscal year
are included in the balance at the end of the year.
Thousands of
U.S. dollars

Millions of yen

2012

2013
Trade notes receivable
Trade notes payable

¥307
936

¥399
519

2013
$3,2649,952

31
KUREHA CORPORATIONXI. Unapplied new accounting standards“Accounting Standard for Retirement Benefits” (the Accounting Standards Board of Japan (hereinafter “ASBJ”) Statement No.
26, May 17, 2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012)

ANNUAL REPORT 2013

X. Changes in presentation“Subsidy income” (¥311 million ($3,306 thousand) for the year ended March 31, 2013) and “advanced depreciation of property,
plant and equipment” (¥148 million ($1,573 thousand) for the year ended March 31, 2013) which were included in “other, net”
under other income (expenses) for the year ended March 31, 2012 are separately presented from the year ended March 31, 2013as it became material in amount.
To reflect the change in presentation, the consolidated statements for the year ended March 31, 2012 are reclassified.
As a result, “subsidy income” of ¥97 million and “advanced depreciation of property, plant and equipment” of ¥ (97) million
for the year ended March 31, 2012 are separately presented.

7. Inventories
Inventories as of March 31, 2013 and 2012, respectively, consisted of the following:
Millions of yen

Finished products and merchandiseWork-in-process
Raw materials and supplies
Total

2013
¥18,670
1,730
4,918¥25,318

2012¥15,540
1,118
5,493¥22,151

Thousands of
U.S. dollars

2013$198,511
18,39452,291$269,197

ANNUAL REPORT 2013

8. Financial Instruments and Related Disclosures

KUREHA CORPORATION

32

I. Status of financial instruments
A) Group policy for financial instruments
The Group uses financial instruments, mainly bank loans and bonds for the purpose of raising its necessary fund for equipment
investment plan. Cash surpluses, if any, are invested only in short-term deposits, etc. Working capital for short-term ongoing
operations is procured from short-term bank loans. Derivatives are used, not for speculative purposes, but to manage exposure tofinancial risks as described below.
B) Nature and extent of risks arising from financial instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies
are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign
currencies, is hedged by using forward foreign currency contracts. Investments in securities, equity instruments of customers andsuppliers of the Group, are exposed to the risk of market price fluctuations. And long-term receivables are made to the employees.
Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign
currencies, partly accompanied by the export of materials, are exposed to the market risk of fluctuation in foreign currency
exchange rates, those risks are almost netted against the balance of receivables denominated in the same foreign currency as noted
above. And, the payables in Euro are always within the balance of receivables in Euro.
Although a part of such bank loans, bonds and lease obligation, which are mainly for the purpose of equipment investment,
are exposed to market risks from changes in variable interest rates; those risks are mitigated by using mostly derivatives of interestrate swaps.
Derivatives mainly include forward foreign currency contracts and interest-rate swaps, which are used to manage exposure tomarket risks from changes in foreign currency exchange rates of receivables and payables, and from changes in interest rates ofbank loans. Please see Note 19 for more detail about derivatives.
C) Risk management for financial instruments
Credit risk management (risk of counterparty’s failure to repay)
Credit risk is the risk of economic loss arising from counterparty’s failure to repay or service debt according to the contractual
terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include setting up an
individual credit limit and monitoring of payment terms and balances of major customers by each business administration
department to identify the default risk of customers at an early stage. A credit limit is changed, if necessary, based on a periodic
monitoring of customers’ financial positions. And the Group manages to mitigate the risk of receivable collection due todeteriorating financial position by utilizing such facilities as credit insurance or factoring. In using derivatives, the Group chooses
highly creditworthy financial institutions to avoid counterparty risk.
Market risk management (foreign exchange risk and interest rate risk)
The Company and certain consolidated subsidiaries manage market risk resulting from fluctuations in foreign currency exchange
rates of foreign currency trade receivables and payables, which are to be identified through management per month and per
currency. Such foreign exchange risk is hedged principally by forward foreign currency contracts. Interest-rate swaps are used to
manage exposure to market risks from changes in interest rates of bank loans.
Investments in securities are managed by monitoring market values and financial position of issuers on a regular basis.
Basic principles of derivative transactions have been based on the internal guidelines which prescribe the authority and thelimit for each transaction. The same principles are applicable to the consolidated subsidiaries.
Liquidity risk management (risk of the Group’s failure to pay at maturity)
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Groupmanages its liquidity risk by controlling a monthly cash flow plan, and the Company manages it by using commercial paper andcommitment line.

D) Fair value of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are not available, other rational
valuation techniques are used instead. The fair values hereof may vary upon applying various procedures, as the valuation
techniques include variable factors. Also please note that the contract amounts themselves shown in Note 19 Derivatives andHedging Activities do not imply the market risk exposure regarding derivative transactions.
II. Fair value of financial instruments
Carrying amount, fair value and the differences as of March 31, 2013 and 2012 are as follows:(This information excludes financial instruments whose fair value cannot be reliably determined)

March 31, 2013

Cash and time deposits
Trade notes and accounts receivable
Allowance for doubtful accounts
Sub-total
Investments in securities:
Available-for-sale securities
Long-term loans including current portion
Total assets
Trade notes and accounts payable
Short-term loans payable
Other payables
Bonds
Bonds with stock acquisition rights
Long-term debt including current portion
Total liabilities
Derivatives:
Not qualifying for hedge accounting
Qualifying for hedge accounting

Fair value¥9,954
27,480(92)
27,387¥9,954¥—27,387—

19,312
2,157¥58,812
15,94012,1587,146
20,00015,00021,289¥91,535

19,312
2,324¥58,979
15,94012,1587,146
20,65816,36920,430¥92,703

—
166
¥166
—
—
—
(658)
(1,369)859¥(1,167)

¥1
(52)

¥1
(52)

¥—
—

Carrying
amountThousands of U.S. dollars
Unrealized
gain/loss

Fair value$105,837
292,185(978)291,196$105,837$—

291,196—205,337
22,934$625,326
169,484
129,271
75,980212,652
159,489
226,358$973,258

205,337
24,710$627,102
169,484
129,271
75,980219,649
174,045
217,224$985,677—
1,765$1,765———(6,996)(14,556)
9,133$(12,408)

$

$

$—
—

10
(552)

10
(552)

ANNUAL REPORT 2013

Cash and time deposits
Trade notes and accounts receivable
Allowance for doubtful accounts
Sub-total
Investments in securities:
Available-for-sale securities
Long-term loans including current portion
Total assets
Trade notes and accounts payable
Short-term loans payable
Other payables
Bonds
Bonds with stock acquisition rights
Long-term debt including current portion
Total liabilities
Derivatives:
Not qualifying for hedge accounting
Qualifying for hedge accounting

Millions of yen
Unrealized
gain/loss

33
KUREHA CORPORATIONMarch 31, 2013

Carrying
amountANNUAL REPORT 2013

March 31, 2012

KUREHA CORPORATION

34

Cash and time deposits
Trade notes and accounts receivable
Allowance for doubtful accounts
Sub-total
Investments in securities:
Available-for-sale securities
Long-term loans including current portion
Total assets
Trade notes and accounts payable
Short-term loans payable
Other payables
Bonds including current portion
Bonds with stock acquisition rights
Long-term debt including current portion
Total liabilities
Derivatives:
Not qualifying for hedge accounting
Qualifying for hedge accounting

Carrying
amountMillions of yen
Unrealized
gain/loss

Fair value¥ 8,857
29,586(69)
29,517¥ 8,857

29,517—

16,103
2,262¥56,741
19,262
11,234
6,123
25,000—20,449¥82,069

16,103
2,379¥56,858
19,262
11,234
6,123
25,699—20,823¥83,143

—
117
¥ 117
—
—
—
(699)
—
(373)
¥ (1,073)

¥

¥

¥

(24)
(6)

(24)
(6)

¥

—

—
—

A) Method of fair value measurement of financial instruments
1. Asset
Cash and time deposits, and trade notes and accounts receivable
The carrying amounts of these accounts approximate fair value because of their short maturities.
Investments in securities
The fair values of investments in securities are measured at the quoted market price of the stock exchange for the equity
instruments.
Long-term loans
The fair values of long-term loans are measured at the present value of the future cash flows discounted by a rate of return, an
appropriate rate such as government bond rate added to a credit spread, with respect to each credit risk segment of credit control.
2. Liability
Trade notes and accounts payable, short-term loans payable, and other payable
The carrying amounts of these accounts approximate fair value because of their short maturities.
Bonds
The fair values of the bonds issued by the Company are measured based on the market price.
Bonds with stock acquisition rights
The fair values of bonds with stock acquisition rights are measured based on the prices obtained from the financial institutions
with which they are transacted.
Long-term debt
The fair values of long-term debt are measured by discounting the principal and interest discounted by an assumed new
borrowing rate. As a part of long-term debt with floating interest rates are subject to deferral method of interest rate swaps, thefair values of the said interest rate swaps are included in the long-term debt.

B) Carrying amount of financial instruments whose fair value cannot be reliably determined as of March 31, 2013 and 2012
Carrying amountThousands of
U.S. dollars

Millions of yen

2012

2013
Investments in equity instruments that do not have aquoted market price in an active market

2013
¥117

¥167

$1,775

Cash and time deposits
Trade notes and accounts receivable
Long-term loans
Total

March 31, 2013

Cash and time deposits
Trade notes and accounts receivable
Long-term loans
Total

March 31, 2012

Cash and time deposits
Trade notes and accounts receivable
Long-term loans
Total

Due after one year
through five years

Due after five years
through ten years

Millions of yen
Due after
ten years

¥—
—
663
¥663

¥—
—
664
¥664

¥—
—
733
¥733

Due after one year
through five years

Due after five years
through ten years

Thousands of U.S. dollars
Due after
ten years

$—
—
7,049
$7,049$——
7,060$7,060$——
7,793$7,793Due after one year
through five years

Due after five years
through ten years

Millions of yen
Due after
ten years

¥—
—
632
¥632

¥—
—
709
¥709

¥—
—
867
¥867

¥9,954
27,48096¥37,531
Due in one
year or less

$105,837
292,185
1,020$399,053
Due in one
year or less¥8,857
29,586
53¥38,497D) The aggregate annual maturities of bonds and long-term debt as of March 31, 2013 and 2012
Millions of yen
March 31, 2013

Bonds
Bonds with stock acquisition rights
Long-term debt
Total

Due in one
year or less

¥—
—
5,929
¥5,929Due after one Due after two Due after three Due after four
year through years through years through years throughtwo years
three years
four years
five years

¥—
—
4,158
¥4,158¥10,000—
3,998¥13,998

¥—
—
3,256
¥3,256¥5,000
15,0002,251¥22,251

Due after
five years¥5,000—
1,695¥6,695

Thousands of U.S. dollars
March 31, 2013

Due in one
year or less

Bonds
Bonds with stock acquisition rights
Long-term debt
Total

$—
—
63,040$63,040

Due after one Due after two Due after three Due after four
year through years through years through years throughtwo years
three years
four years
five years$——
44,210$44,210$106,326—
42,509$148,835$——34,619$34,619$53,163
159,489
23,934$236,586

Due after
five years$53,163—
18,022$71,18535
KUREHA CORPORATIONMarch 31, 2013

Due in one
year or less

ANNUAL REPORT 2013

C) The aggregate annual maturities of financial assets and securities with contractual maturities as of March 31, 2013 and 2012

Millions of yen
March 31, 2012

Due in one
year or less

Bonds
Long-term debt
Total

¥5,0004,814¥9,814Due after one Due after two Due after three Due after four
year through years through years through years throughtwo years
three years
four years
five years

¥—
5,364
¥5,364¥—
3,365¥3,365¥10,000
2,875¥12,875¥—
2,178¥2,178Due after
five years¥10,000
1,849¥11,849

9. Securities
Investments in unconsolidated subsidiaries and affiliates amount to ¥3,158 million ($33,577 thousand) and ¥2,712 million as ofMarch 31, 2013 and 2012, respectively.
The acquisition cost and carrying amount of available-for-sale securities whose fair value were available as of March 31, 2013
and 2012 were as follows:

ANNUAL REPORT 2013

March 31, 2013

KUREHA CORPORATION

36

Securities with unrealized gain:
Equity securities
Sub-total
Securities with unrealized loss:
Equity securities
Sub-total
Total

March 31, 2013

Securities with unrealized gain:
Equity securities
Sub-total
Securities with unrealized loss:
Equity securities
Sub-total
Total

March 31, 2012

Securities with unrealized gain:
Equity securities
Sub-total
Securities with unrealized loss:
Equity securities
Sub-total
Total

Acquisition
cost

Carrying
amountMillions of yen
Unrealized
gain (loss)¥ 7,960
7,960¥17,114
17,114¥9,154
9,154

2,487
2,487
¥10,447

2,197
2,197
¥19,312

(289)
(289)
¥8,865Acquisition
cost

Carrying
amountThousands of U.S. dollars
Unrealized
gain (loss)$ 84,635
84,635$181,967
181,967$97,331
97,331

26,443
26,443$111,079

23,35923,359$205,337(3,072)(3,072)$94,258

Acquisition
cost

Carrying
amountMillions of yen
Unrealized
gain (loss)¥ 6,355
6,355¥13,101
13,101¥ 6,745
6,745

4,028
4,028
¥10,384

3,002
3,002
¥16,103(1,026)(1,026)¥ 5,718

Proceeds from sales of available-for-sale securities and related gross realized gain and loss on those sales for the years ended March
31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2013
Proceeds from sales
Gross realized gain
Gross realized loss

¥33
3
—

2013

¥582
80
—

$350
31
—

10. Short-term Loans Payable, Long-term Debt and Lease Obligations
Short-term loans payable and long-term debt as of March 31, 2013 and 2012 consisted of the following:

Short-term loans with average interest rate of 0.85%
Current portion of long-term debt with averageinterest rate of 1.56%
Current portion of unsecured bonds maturing on
March 8, 2013 with the interest rate of 1.60%
Sub-total
Unsecured bonds maturing on June 17, 2015 with theinterest rate of 2.06%
Unsecured bonds maturing on September 15, 2017with the interest rate of 0.95%
Unsecured bonds maturing on October 19, 2018with the interest rate of 0.82%
Zero coupon convertible bonds due 2018 (bonds with stockacquisition rights) maturing on March 14, 2018 (Note1)
Long-term debt maturing in 2014 through 2028
with average interest rate of 1.56%
Total

2013
¥12,158

2012¥11,2342013$129,271

5,929

4,814

63,040—18,0885,000
21,049—192,323

10,00010,000106,326

5,000

5,000

53,163

5,000

5,000

53,16315,000—159,489

15,359¥68,447

15,634¥56,683

163,306$727,772

37
KUREHA CORPORATION(Note 1) Summary of zero coupon convertible bonds due 2018 (bonds with stock acquisition rights)
Type of stock should be issued
Common stock
Issue price of stock acquisition right
Zero (no consideration)
Initial conversion price
433 yen per share ($4.60)
Aggregate amount of bond
15,000 million yen ($159,489 thousand)Aggregate amount of stock issued by exercisingstock acquisition right—
Ratio of stock acquisition right granted
100%
Exercise period
From March 28, 2013 to February 28, 2018(at the place where the stock acquisition right is to
be exercised)

Note: When the bondholder claims for exercising stock acquisition rights, the amount should be paid for the stocks acquired
were fulfilled by substitution of the redemption amount of the bonds. Further, when the stock acquisition right was
exercised, the Company considers as the bondholder has claimed for exercise.
The aggregate annual maturities of long-term debt as of March 31, 2013 were as follows:Year ending March 31

2014
2015
2016
2017
2018

Millions of yen¥5,929
4,158
3,998
3,256
2,251

ANNUAL REPORT 2013

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars$63,040
44,21042,50934,61923,934

The aggregate annual maturities of lease obligations as of March 31, 2013 were as follows:Year ending March 31

Millions of yen

2014
2015
2016
2017
2018

¥151
110
79
42
8

Thousands of
U.S. dollars$1,605
1,169
839
446
85

Note:	Average interest rate on lease obligations is omitted since above lease obligations recorded in the consolidated balance
sheets as of March 31, 2013 include interest equivalent amounts.

ANNUAL REPORT 2013

11. Assets Pledged as Collateral

KUREHA CORPORATION

38

The following assets of the Group are pledged as collateral for trade notes and accounts payable, short-term loans payable andlong-term debt in the amount of ¥1,657 million ($17,618 thousand) and ¥1,795 million as of March 31, 2013 and 2012,
respectively:
Thousands of
U.S. dollars

Millions of yen

Buildings and structures
Machinery, equipment and vehicles
Land
Investments in securities
Total

2013
¥17,273
13,627
3,897
4,632¥39,430

2012¥16,702
13,2293,897
4,434¥38,264

2013$183,657
144,891
41,43549,250$419,245

12. Loan Commitment Agreements
The Company and its consolidated subsidiaries entered into loan commitment agreements and overdraft agreements with thefinancial institutions. The outstanding balance as of March 31, 2013 and 2012 was as follows:
Thousands of
U.S. dollars

Millions of yen

Total commitment available
Amount utilized
Balance available

2013¥12,509143¥12,365

2012¥11,237390¥10,846

2013$133,003
1,520$131,472

13. Reserve for Employees’ Retirement Benefits
The Company and certain consolidated subsidiaries have principally tax qualified pension plans and lump-sum retirement benefit
plans. In addition, in some cases, merit allowances which are not included in the actuarial calculation of projected benefit
obligations may be paid upon the retirement of certain employees.
The reserve for employees’ retirement benefits as of March 31, 2013 and 2012 consisted of the following:
Millions of yen

Projected benefit obligations
Plan assets
Funded status
Unrecognized actuarial differences
Sub-total
Prepaid pension costReserve for employees’ retirement benefits

2013¥(20,718)
18,252(2,466)
4,151
1,685
2,241
¥ (556)

2012¥(21,337)
17,402(3,935)
5,342
1,406
2,057
¥ (650)Thousands of
U.S. dollars

2013$(220,287)
194,066(26,220)
44,136
17,91623,827$ (5,911)

Net pension expenses related to the retirement benefits for the years ended March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Net pension expenses

2012
¥925
386
(311)
620
¥1,620

2013
¥908
377
(306)
653
¥1,6332013$ 9,654
4,008(3,253)
6,943$17,363

Note: 	In addition to above expenses, the Company and its domestic consolidated subsidiaries recorded merit allowances
amounting to ¥18 million ($191 thousand) and ¥15 million for the years ended March 31, 2013 and 2012, respectively.

2013
1.736%
1.736%
Straight-line basis

Discount rate
Expected rate of return on plan assets
Method of attributing the projected benefits to periods of services

2012
1.736%
1.736%
Straight-line basis

14. Income Taxes

ANNUAL REPORT 2013

Assumptions used in calculation of the above information for the years ended March 31, 2013 and 2012 were as follows:

The significant components of deferred tax assets and liabilities as of March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

2013
Deferred tax assets:
Tax loss carried forward
Unrealized gain on fixed assets
Accrued bonuses
Accrued expenses
Accumulated depreciation
Loss on disposal and sales of fixed assets
Research and development costs
Asset retirement obligations
Write-down of inventories
Reserve for employees’ retirement benefits
Loss on impairment
Reserve for environmental measures
Retirement allowance for directors and corporate auditors
Allowance for doubtful accounts
Tax credit for research and development costs
Settlement package
Casualty loss
Loss on discontinues operation
OthersSub-total
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Shortfall in depreciation
Net unrealized gain on available-for-sale securities
Prepaid pension expenses
Retained earnings of subsidiaries
Asset retirement obligations
OthersTotal deferred tax liabilities
Net deferred tax assets

2012

39

2013

¥5,022
1,152
827
521
378
330
293
282
263
178
173
168
123
54
—
—
—
—
1,474
11,245(1,697)
9,547

¥812
981
781
417
9
530
379
251
249
194
349
61
122
109
410
377
215
114
1,253
7,623
(1,646)
5,976$ 53,397
12,248
8,793
5,539
4,019
3,508
3,115
2,998
2,796
1,892
1,839
1,786
1,307
574
—
—
—
—
15,672
119,564(18,043)
101,509(4,418)(3,134)
(786)
(204)
(166)
(131)
(8,841)
¥705

(961)
(2,018)
(719)
(356)
(175)
(117)
(4,348)¥1,627(46,975)(33,322)(8,357)(2,169)(1,765)(1,392)(94,003)$ 7,496

KUREHA CORPORATION

Millions of yen

Deferred tax assets and liabilities as of March 31, 2013 and 2012 are presented as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2013
Current assets
Deferred tax assets
Investments and other assets
Deferred tax assets
Current liabilities
OthersLong-term liabilities
Deferred tax liabilities, non-current

2013¥2,129¥2,630$ 22,636

1,371

839

14,577

(0)

(13)

(0)

(2,794)(1,827)(29,707)

ANNUAL REPORT 2013

Reconciliations of the difference between the statutory income tax rate and the effective income tax rate for the years ended
March 31, 2013 and 2012 were as follows:

KUREHA CORPORATION

40

Statutory income tax rate:
Expense not deductible for tax purpose
Non-taxable revenue
Tax credit for research and development costs
Amounts recognized unrealized gain tax effectRetained earnings of overseas subsidiaries
Valuation allowance
Decrease in deferred tax assets at the end of the year due to changes in tax rate
Others
Effective income tax rate

2013
37.75%
5.83(1.98)(10.35)1.02(2.77)
12.66—(0.12)
42.04%

2012
40.44%
4.26(4.08)(3.98)
3.04
1.44(4.96)
8.14
2.80
47.10%

15. Commitments and Guarantee Liabilities
The Group guarantees employees’ bank loans to the amounts of ¥128 million ($1,360 thousand) and ¥189 million as of March
31, 2013 and 2012, respectively.

16. Stock Option Plan
The Company issued stock acquisition rights (stock options) in accordance with the provisions of the Companies Act based on
the resolution of the general shareholders’ meeting and the Board of Directors’ meeting held on June 27, 2007 as follows:
I. Accounting for stock option related expenses for the years ended March 31, 2013 and 2012
Thousands of
U.S. dollars

Millions of yen

2012

2013
Share-based compensation included in selling, generaland administrative expenses

¥17

2013
¥20

$180

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

2nd Stock Option Plan
8 directors of the Company
Common stock 49,400 shares
July 23, 2008
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 26, 2008 to June 25, 2009
From July 23, 2008 to July 22, 2038
3rd Stock Option Plan
8 directors of the Company
Common stock 55,500 shares
July 22, 2009
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 25, 2009 to June 24, 2010
From July 22, 2009 to July 21, 2039

41
KUREHA CORPORATION

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

1st Stock Option Plan
8 directors of the Company
Common stock 47,500 shares
July 18, 2007
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 27, 2007 to June 26, 2008
From July 18, 2007 to July 17, 2037

ANNUAL REPORT 2013

II. Details of stock options, volume and activityA) Detail of stock options

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

ANNUAL REPORT 2013

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

KUREHA CORPORATION

42

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

4th Stock Option Plan
8 directors of the Company
Common stock 55,300 shares
July 21, 2010
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 25, 2010 to June 24, 2011
From July 21, 2010 to July 20, 2040
5th Stock Option Plan
7 directors of the Company
Common stock 56,600 shares
July 20, 2011
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 24, 2011 to June 23, 2012
From July 20, 2011 to July 19, 2041
6th Stock Option Plan
7 directors of the Company
Common stock 76,500 shares
July 18, 2012
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 26, 2012 to June 25, 2013
From July 18, 2012 to July 17, 2042

B) Volume and activity of stock options for the year ended March 31, 2013:
Volume of stock options:
Before vesting:
As of March 31, 2012
GrantedForfeited
VestedOutstanding
After vesting:
As of March 31, 2012
VestedExercised
Forfeited
Outstanding

197,000
76,50015,40083,500174,600

Yen

Exercise price
Average stock price at the time of exercise
Fair value at the date of grant

U.S. dollars

Exercised

Outstanding

Exercised

Outstanding

¥  1
339
—

¥  1
—
381

$0.01
3.60
—

$0.01
—
4.05

C) Valuation method for fair value of stock options:
The valuation method for fair value of 2012 stock options granted during the year ended March 31, 2013 is as follows:
Valuation method: Black-Scholes formula
Major basic numerical values and valuation method:
6th Stock Option Plan
36.8%
4.0 years¥10 ($0.10) per share
0.12%

Stock price volatility
Expected years to expiration
Expected dividends
Risk-free interest rateD) Estimation method for the vested number of stock options
Since it is difficult to make a reasonable estimate on future forfeited stock options, the actual number of forfeited stock options
is reflected in the estimation.

17. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2013 and 2012 are as follows:
Millions of yen

Salaries, wages and bonuses
Provision for bonuses
Employees’ retirement benefit expenses
Research and development expenses

2013¥7,611
623
653
4,389

2012
¥7,712
721
645
5,080

Thousands of
U.S. dollars

2013$80,925
6,624
6,943
46,66643
KUREHA CORPORATION

Price information:

ANNUAL REPORT 2013—
83,50083,500——18. Gain or Loss on Property, Plant and Equipment
Gain on sale of property, plant and equipment and loss on disposal and sales of property, plant and equipment for the years
ended March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

2012

ANNUAL REPORT 20132013
Gain on sale of property, plant and equipment:Land
Machinery, equipment and vehicles
Total
Loss on disposal of property, plant and equipment:
Machinery, equipment and vehicles
Buildings and structures
Others (tools, furniture and fixtures)
Total
Loss on sale of property, plant and equipment:
Machinery, equipment and vehicles
Total

2013

¥—
6
¥6

¥126
6
¥132

$—
63
$63

¥413
382
0
¥796

¥453
975
91
¥1,520$4,391
4,061
0$8,463

¥14
¥14

¥8
¥8

148
$148

19. Derivatives and Hedging Activities

I. Derivative contracts to which hedge accounting is not applied as of March 31, 2013 and 2012 are as follows:
Millions of yen

44
KUREHA CORPORATION

2012

2013
Contract
amountForeign exchange forward contracts:
Selling:
U.S. dollars
Euro
Buying:U.S. dollars
Euro
Total

Fair value

Unrealized
gain (loss)

Contract
amountUnrealized
gain (loss)

¥855
230

¥0
1

¥0
1

¥835
346

¥(8)
(14)

¥(8)
(14)

71
16
¥ —

0
0
¥1

0
0
¥1

77
118
¥—

0
(2)
¥(26)

0(2)¥(26)

Thousands of U.S. dollars

2013
Contract
amountForeign exchange forward contracts:
Selling:
U.S. dollars
Euro
Buying:U.S. dollars
Euro
Total

Fair value

Fair value

Unrealized
gain (loss)$9,090
2,445

$ 0
10

$ 0
10

754
170
$ —

0
0
$10

0
0
$10

Notes: 1. Fair value is calculated using the forward rates.
2. For foreign exchange forward contracts, unrealized gain (loss) is presented as fair value.

II. Derivative contracts to which hedge accounting is applied as of March 31, 2012 and 2013 are as follows:A) Currency related
Millions of yen

As of March 31, 2013
Hedge accounting
methodClassification of derivative
contracts

Principle processing
methodForeign exchange
contract (selling) inEuro

Major hedged items

Accounts receivable

Contract
amount¥2,285Contract
amountover one year

Fair value

¥—

¥(12)

Thousands of U.S. dollars
Classification of derivative
contracts

Principle processing
methodForeign exchange
contract (selling) inEuro

Major hedged items

Accounts receivable

Contract
amount$24,295

Contract
amountover one year$—

As of March 31, 2012

Fair value$(127)

Millions of yen

Hedge accounting
methodClassification of derivative
contracts

Principle processing
methodForeign exchange
contract (selling) inEuro

Major hedged items

Accounts receivable

Contract
amount¥873

Contract
amountover one year¥—

Fair value¥34

Notes: 1. Fair value is calculated using the forward rates.
2.	Contract amount is presented in full amount, and unrealized gain (loss) calculated using investment ratio is presented
as fair value.
B) Interest rate related
Millions of yen

As of March 31, 2013
Classification of derivative
contracts

Principle processing
methodInterest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term debt

¥1,298¥1,298Interest rate swaps
meeting certain
conditions

Interest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term debt

983

983

¥2,281¥2,281

Total

Major hedged items

Contract
amountContract
amountover one year

Hedge accounting
methodANNUAL REPORT 2013

Hedge accounting
methodFair value¥(40)(Note 2)¥(40)45
KUREHA CORPORATIONAs of March 31, 2013

Thousands of U.S. dollars

As of March 31, 2013
Hedge accounting
methodClassification of derivative
contracts

Contract
amountMajor hedged items

Contract
amountover one year

Principle processing
methodInterest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term debt

$13,801$13,801

Interest rate swaps
meeting certain
conditions

Interest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term debt

10,451

10,451$24,253$24,253

Total

ANNUAL REPORT 2013

As of March 31, 2012

KUREHA CORPORATION

46

Hedge accounting
methodFair value$(425)(Note 2)$(425)
Millions of yen

Classification of derivative
contracts

Contract
amountMajor hedged items

Contract
amountover one year

Principle processing
methodInterest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term debt

¥777

¥777

Interest rate swaps
meeting certain
conditions

Interest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term debt

2,003

1,899

Fair value¥(40)(Note 2)

Total
¥2,780¥2,676¥(40)
Notes: 1. Fair value is calculated using prices quoted by financial institutions.
2.	With respect to interest rate swap contracts which meet certain conditions, fair values of the interest rate swap contracts
are included in the fair values of the relevant long-term debt, since they are used for recording long-term debt as hedged
items.

20. Other Comprehensive Income (Loss)

Reclassification adjustments and tax effect amounts of other comprehensive income(loss) for the year ended March 31, 2013 and2012 were as follows:

2013
Unrealized gain (loss) on available-for-sale securities:
Amount for the year
Reclassification adjustment
Amount before tax effectTax effect amount
Unrealized gain (loss) on available-for-sale securities
Deferred gain (loss) on hedges:
Amount for the year
Reclassification adjustment
Amount before tax effectTax effect amountDeferred gain (loss) on hedges
Translation adjustments:
Amount for the year
Share of other comprehensive income in affiliates:
Amount for the year
Total other comprehensive income (loss)

Millions of yen

Thousands of
U.S. dollars

2012

2013

¥3,155(2)
3,152(1,115)2,037¥(682)
2
(680)
564
(116)

$33,545(21)
33,514(11,855)
21,658

(29)
(16)
(46)
19
(26)

95
(45)
49
(18)
30

(308)
(170)
(489)
202
(276)

2,560

(890)

27,219211¥4,7826¥(969)2,243$50,845

21. Per Share Information
Net assets per share as of March 31, 2013 and 2012 and net income per share for the years then ended were as follows:Yen

Net assets per share
Basic net income per share
Diluted net income per share

U.S. dollars

2012¥510.37
8.51
8.50

2013
¥546.69
18.71
18.51

2013
$5.81
0.19
0.19

Above per share information was computed using the following data:
Thousands of
U.S. dollars

Millions of yen or shares

2013

2012

¥3,2123,212¥1,460
1,460

171,699,531

171,664,943

1,900,117
1,708,360
191,757

170,971—
170,971$34,152
34,152————

22. Shareholders’ Equity
For the year ended March 31, 2013
I. Issued stock
Type of share

Common stock

Share at beginning of year

Increase

Decrease—

181,683,909

Share at end of year—

181,683,909

II. Treasury stock
Type of share

Common stock

Share at beginning of year

Increase

Decrease

5,152

10,031,300

Share at end of year

83,5009,952,952

III. Dividends
A) Dividends paid
Date of approval

April 17, 2012
Board of Directors
October 16, 2012
Board of Directors

Date of approval

April 17, 2012
Board of Directors
October 16, 2012
Board of Directors

Type of share

Common stock
Common stock

Type of share

Common stock
Common stock

Amount(millions of yen)

858

Amount per
share (yen)858
Amount(thousands of
U.S. dollars)

9,122
9,122

5
5

Amountper share(U.S. dollars)

0.05
0.05

Measurement date

Effective Date

March 31,2012
September 30,
2012

June 4,2012
December 4,
2012

Measurement date

Effective Date

March 31,2012
September 30,
2012

June 4,2012
December 4,
2012

ANNUAL REPORT 2013

2013

47
KUREHA CORPORATION

Basic net income per share:
Net income per consolidated income statements
Net income attributed to common stock
Weighted average number of common stock during theperiodDiluted net income per share:
Number of increased common stock used in computing
diluted net income per share:
Bonds with stock acquisition rights
Stock acquisition rights

B) Dividends declared
Date of approval

Type of share

April 23, 2013
Board of Directors

Commonstock

Date of approval

Type of share

April 23, 2013
Board of Directors

Commonstock

Source of dividend

Amount(millions of yen)

Source of dividend

Amount(thousands of
U.S. dollars)

Retained
Earnings

858

Retained
Earnings

9,122

Amount per
share (yen)Measurement date

Effective Date

Amount per share(U.S. dollars)
Measurement date

Effective Date

5

0.05

March 31,2013

March 31,2013

June 4,2013

June 4,2013

For the year ended March 31, 2012
IV. Issued stock
Type of share

Share at beginning of year

ANNUAL REPORT 2013

Common stock

KUREHA CORPORATION

48

Increase

Decrease—

181,683,909

Share at end of year—

181,683,909

V. Treasury stock
Type of share

Share at beginning of year

Common stock

Increase

Decrease

20,902

10,017,010

Share at end of year

6,612

10,031,300

VI. Dividends
A) Dividends paid
Date of approval

April 19, 2011
Board of Directors
October 18, 2011
Board of Directors

Type of share

Common stock

Amount(millions of yen)

858

Common stock

Amount per share (yen)

5

858

5

Measurement date

March 31,2011
September 30,
2011

Effective Date

June 2,2011
December 2,
2011B) Dividends declared
Date of approval

April 17, 2012
Board of Directors

Type of share

Commonstock

Source of dividend

Retained
Earnings

Amount(millions of yen)

858

Amount per
share (yen)5

Measurement date

March 31,2012

Effective Date

June 4,
2012

23. Segment Information
I. Overview of the reportable segments
The Company’s reportable segments are determined on the basis that separate financial information of such segments areavailable and examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and assess the business performances of such segments within the Group. The Company has separate divisions byproduct, and each division formulates a comprehensive strategy for business activities in domestic and overseas markets.
Major products and services for each segment are as follows:
Segment
Advanced materials
Specialty chemicals

Specialty plastics

Products and services
PPS resin, PVDF resin, carbon fiber, bead-shaped activated carbon,
anode materials for lithium ion batteries, PGA resin
Therapeutic agent for chronic renal failure, anti-cancer agent, agricultural andhorticultural fungicide, granular potting soil, horticultural potting soil
caustic soda, hydrochloric acid, sodium hypochlorite
monochlorobenzene, para-dichlorobenzene, ortho-dichlorobenzene
Household plastic wrap, garbage bags for kitchen sink, cooking sheet,silicon coted aluminium foil, plastic containers, PVDF fishing line, PVDC film, PVDC
compound, multilayer shrinkable film, multilayer bottle,
high barrier lamination film, machinery for auto-seal food packaging

Civil engineering and construction contracting business, industrial facility design,
construction and management service
Environmental engineering and industrial waste treatment business, transport andwarehousing business, laboratory tests, analysis, measurement, and inspection service

Other operations

II. Valuation method for reportable segment profit (loss) and asset amounts
The accounting method for reportable business segments is presented in accordance with “Summary of Significant Accounting
Policies.” The reportable segment profit figures are based on operating profit. Inter–segment internal rates of return and theamounts transferred are presented based on the current market prices at the time of this report.
As described in “Changes in accounting policies that are difficult to distinguish from changes in accounting estimates,” inprior years, the Company and its domestic consolidated subsidiaries calculated depreciation of property, plant and equipment by
the declining balance method (except for buildings which includes buildings and facilities, and leased assets).
Effective April 1, 2012, the Company and its domestic consolidated subsidiaries changed their depreciation method of
property, plant and equipment from the declining balance method to the straight-line method.
As a result of this change, operating loss of “Advanced materials” decreased by ¥612 million ($6,507 thousand), operating
income of “Specialty chemicals” increased by ¥575 million ($6,113 thousand), operating income of “Specialty plastics” increasedby ¥327 million ($3,476 thousand), operating income of “Construction related” increased by ¥2 million ($21 thousand) andoperating income of “other” increased by ¥240 million ($2,551 thousand) from the corresponding amounts which would havebeen recorded under the previous method, respectively.

ANNUAL REPORT 2013

Construction related

III. Segment information by type of business

Advancedmaterials

Specialty
chemicals¥27,650
1,525
29,176¥(2,131)¥70,462
3,796¥32,833
256
33,089¥6,136¥21,865
1,142¥40,900
1,103
42,004¥2,988¥34,579
1,441¥14,967
7,506
22,474¥1,038¥9,214109¥14,197
7,099
21,296¥613¥13,433
724¥130,550
17,491
148,041¥8,645¥149,554
7,214

8,740

1,369

6,365

103

947

17,526

Advancedmaterials

Net sales:
Outside customers
Inter-segment
Total
Operating income (loss)
AssetsDepreciation
Adjustment for increasein fixed assets

Specialty
chemicals$293,992 $349,101
16,214
2,721
310,217351,823$(22,658) $65,241$749,197 $232,482
12,14240,361
92,92914,556

Thousands of U.S. dollars
2013
Reportable segment
Specialty
Construction
plastics
relatedOther$434,875
11,727446,613$31,770$367,666
15,321$159,138
79,808238,958$11,036$97,969
1,158

67,676

1,095

Total

Total

Adjustment(Note 1)

Consolidated(Note 2)

¥— ¥130,550(17,491)—(17,491) 130,550¥(186) ¥8,458¥ 55,730 ¥205,284
1,668
8,882
2,457

19,984

Adjustment(Note 1)

Consolidated(Note 2)$150,951 $1,388,091 $
— $1,388,091
75,481
185,975 (185,975)—
226,432 1,574,066 (185,975) 1,388,091$6,517 $91,919 $(1,977)$89,930$142,828 $1,590,154 $ 592,557 $2,182,711
7,698
76,703
17,73594,43910,069186,347

26,124

212,482

KUREHA CORPORATIONNet sales:
Outside customers
Inter-segment
Total
Operating income (loss)
AssetsDepreciation
Adjustment for increasein fixed assets

49

Millions of yen
2013
Reportable segment
Specialty
Construction
plastics
relatedOtherANNUAL REPORT 2013

Advancedmaterials

50

Specialty
chemicalsMillions of yen
2012
Reportable segment
Specialty
Construction
plastics
related
Other

Adjustment(Note 1)

Total

Consolidated(Note 2)

Net sales:
Outside customers¥31,253¥30,182¥37,672¥16,300¥12,950 ¥128,358 ¥— ¥128,358
347
957
10,781
6,878
20,481(20,481)—Inter-segment
1,516
Total
32,76930,53038,63027,081
19,828148,840(20,481) 128,358¥4,715¥2,226¥1,114¥932 ¥9,523 ¥(1,051) ¥8,472
Operating income (loss)¥534
Assets¥60,884¥21,629¥27,214¥11,815¥12,548 ¥134,093 ¥52,130 ¥186,223
2,943
1,735
1,775
113
912
7,480
2,099
9,580
Depreciation
Adjustment for increasein fixed assets
8,711
1,285
1,817
112
1,072
13,0001,359
14,360Notes: 1. Adjustment for segment operating income (loss) is due to inter-segment elimination.
		Adjustment for segment assets includes corporate assets such as cash and cash equivalents, investments in securities, andother corporate shared facilities that are not allocated to each reportable segment.
2. Segment operating income (loss) is adjusted with operating income on the consolidated statements of income.
Geographical segment information of the Company for the year ended March 31, 2013 and 2012 was summarized as follows:
Millions of yen
2013

Sales

Japan

EuropeAsia¥98,269¥14,631¥11,370

Other¥6,277

Total¥130,550

KUREHA CORPORATION

Thousands of U.S. dollars
2013
Japan

Sales

$1,044,859

Europe

Asia

Other

$155,566$120,893$66,741

Total$1,388,091

Millions of yen
2012
Japan

Sales

Europe¥97,461Asia¥12,311Other¥12,411¥6,174

Total¥128,358

Note: Sales are categorized by country and regions based on customer’s location.
Millions of yen
2013
Japan

Property and equipment¥73,214

United States

Other¥16,914¥9,315

Total¥99,444

Thousands of U.S. dollars
2013
Japan

Property and equipment$778,458

United States

Other$179,840$99,043

Total$1,057,352

Millions of yen
2012
Japan

Property and equipment¥66,641

United States¥15,554

Other¥4,922

Total¥87,118

24. Loss Due to Disaster
Loss recorded due to the Great East Japan Earthquake for the year ended March 31, 2013 and 2012 is as follows:
Thousands of
U.S. dollars

Millions of yen

2013
Estimated cost for facility restoration
Fixed costs of operation during suspension
Disposal of inventories
Total

¥—
—
—
¥—

2012
¥1,565
1,842
389¥3,797

2013
$—
—
—
$—

25. Subsequent Events
The following appropriation of retained earnings has been approved by the general meeting of the Board of Directors held on
April 23, 2013.

¥858$9,122

ANNUAL REPORT 2013

Cash dividends at ¥5.00 ($0.05) per share

Thousands of
U.S. dollars

51
KUREHA CORPORATION

Millions of yen

Kureha Group and Affiliates

KurehaGroup
Companies

Company Name

Major BusinessJapan

Kureha Extech Co., Ltd.

Manufacture/sale of plastic film and products◇

Kureha Gohsen Co., Ltd.

Manufacture/sale of plastic fiber and products◇

Extron Japan Co., Ltd.

Manufacture/sale of plastic products◇

Krefine Co., Ltd.

Manufacture/sale of plastic compounds and products*1

Kureha Battery Materials Japan Co., Ltd.

Sales of lithium-ion battery materials◇

CNPJ Co., Ltd.

Manufacture/sale of lithium-ion battery materials◇

KHJ2 Co., Ltd.

Manufacture/sale of lithium-ion battery materials◇

Bio Hard Carbon Co., Ltd.

Manufacture/sale of plant-based carbon materials*2

Kureha Unyu Co., Ltd.

Transportation and storage services◇

Otoba Tsusho Co., Ltd.

Transportation and storage services◇

Otoba Unso Co., Ltd.

Transportation and storage services◇

Otoba Butsuryu Co., Ltd.

Transportation and storage services◇

Otoba Ryutsu Co., Ltd.

Transportation and storage services◇

Otoba Yuso Co., Ltd.

Transportation and storage services◇

Kansai Kureha Unyu Co., Ltd.

Transportation and storage services◇

Kurehanishiki Construction Co., Ltd.

Construction◇

Kureha Denki Co., Ltd.

Electric services◇

Kureha Setsubi Co., Ltd.

Plumbing and sanitary services◇

Kureha Koji Co., Ltd.

Civil engineering and construction◇

Kureha Engineering Co., Ltd.

Plant engineering and maintenance◇

Kureha Ecology Management Co., Ltd.

Waste treatment and management◇

Kureha Special Laboratory Co., Ltd.

Environmental/physiochemical evaluation and analysis◇

Kureha Trading Co., Ltd.

Trading of chemical and plastic products◇

Resinous Kasei Co., Ltd.

Manufacture/sale of advanced materials◇

Kureha Service Co., Ltd.

Real estate, travel and welfare services for Kureha Group◇

Kureha Staff Service Co., Ltd.

Recruiting and staffing services for Kureha Group◇

Kureha-kai Medical Corporation

Operation and management of Kureha General Hospital		—

Kureha America Inc.

Holding company and finance◇

Kureha America LLC

Sale of advanced products and packaging materials◇

Kureha Advanced Materials LLC

Manufacture/sale of carbon fiber products◇

Kureha PGA LLC

Manufacture/sale of PGA resins◇

Kureha GmbH

Sale of advanced products◇

ANNUAL REPORT 2013

Country

KUREHA CORPORATION

52

USA

Germany

The Netherlands Kureha Europe B.V.

Holding company and finance◇Krehalon Industrie B.V.

Manufacture/sale of food packaging products◇

FranceKrehalon France & Benelux S.A.S.

Sale of food packaging products◇UK

Krehalon UK Ltd.

Sale of food packaging products

◇

China

Kureha (China) Investment Co., Ltd.

Holding company and finance◇

Kureha Chemicals Shanghai Co., Ltd.

Manufacture/sale of carbon fiber products◇

Kureha (Shanghai) Co., Ltd.

Sale of advanced materials*1

Kureha (Changshu) Fluoropolymers Co., Ltd.

Manufacture/sale of PVDF resins and compounds◇

Kureha SKT New Material Co., Ltd.

Manufacture/sale of PVDC resins and compounds*2

Kureha Vietnam Co., Ltd.

Manufacture/sale of food packaging films◇

Vietnam◇ Consolidated subsidiaries*1 Unconsolidated subsidiaries not accounted for by equity method*2 Affiliated companies accounted for by equity method

Investor Information(As of March 31, 2013)

Major Stockholders

Corporate Name

Kureha Corporation

Meiji Yasuda Life Insurance Company

Headquarters

3-3-2, Nihonbashi-Hamacho,
Chuo-ku, Tokyo 103-8552, Japan
Tel: 81-3-3249-4666
Fax: 81-3-3249-4744

Tokio Marine & Nichido Fire Insurance Co., Ltd.

Date of Establishment

June 21, 1944

Paid-in Capital¥12,460 million

Number of Employees

4,046 (consolidated)
1,687 (non-consolidated)

Independent Auditor

Nihombashi Corporation

Stock Information
Number of Shares ofCommon Stock Issued

181,683,909 shares

The Master Trust Bank of Japan Ltd. (trust account)
Daiichi Sankyo Co., Ltd.
Japan Trustee Service Bank. Ltd. (trust account)
The Nomura Trust and Banking Co., Ltd. (trust account)
Mizuho Corporate Bank, Ltd.
JuniperMizuho Trust & Banking Co., Ltd.
JP Morgan Chase Bank 385166
ANNUAL REPORT 2013

Corporate Data

Number of Shareholders 17,485

53
31,113,672 (17.13% of total)

Stock Exchange Listings Tokyo Stock Exchange
Transfer Agent

Mizuho Trust & Banking
Co., Ltd.

Kureha Corporation
Headquarters

KUREHA CORPORATION

Number of Shares Heldby Foreign Shareholders

http://www.kureha.co.jp/

Printed in Japan