Consolidated Earnings Report for theSecond Quarter of the Fiscal Year Ending
March 31, 2012 (Unaudited)

October 31, 2011
Kuraray Co., Ltd.

October 31, 2011
Kuraray Co., Ltd.
Consolidated Earnings Report for the Interim Period of the Fiscal YearEnding March 31, 2012
Name of listed company:
Stock code:
Stock exchange listing:
URL:

Kuraray Co., Ltd.
3405
Tokyo, first section
http://www.kuraray.co.jp/en

Representative:
Title:
Name:

Representative Director and President
Fumio Ito

Contact:
Title:

Manager, Corporate Management Planning Office,Corporate Communications Department
Tomoyuki Shimamoto+81-3-6701-1071

Name:
Tel:

(Millions of yen rounded down unless otherwise stated)
Preparation of supplementary documentation for the quarterly earnings report: Yes
Holding of quarterly earnings results briefing: Yes (For securities analysts and institutional
investors)

1. Consolidated Financial Results for the Interim Period of the Fiscal
Year Ending March 31, 2012 (April 1, 2011 to September 30, 2011)(1) Consolidated Operating Results (Cumulative)(Percentages displayed for net sales, operating income, ordinary income and net income are comparisons withthe corresponding period of the previous fiscal year.)(Millions of yen)
Net Sales

Operating Income

Ordinary Income(Change)(Change)(Change)

Net Income(Change)

Fiscal 2011 Interim

185,635

2.7%

29,36415.3%

28,981

15.9%

17,214

23.7%

Fiscal 2010 Interim

180,775

15.1%

25,461160.9%

24,995165.7%

13,913166.5%

Note: Comprehensive income: For the fiscal 2011 interim period:
For the fiscal 2010 interim period:
Fully Diluted
Net Income
Net Income
per Share (Yen)per Share (Yen)
Fiscal 2011 Interim

49.43

49.35

Fiscal 2010 Interim

39.96

39.90

¥20,907 million (― %)¥1,812 million (― %)(2) Consolidated Financial Position(Millions of yen)
Total Assets
As of September 30, 2011

Shareholders’Equity Ratio (%)

Total Net Assets

534,123

364,720

67.2

As of March 31, 2011
507,328
346,825
67.6(Reference)
Shareholders’ equity: As of September 30, 2011:¥358,891 million
As of March 31, 2011:¥343,105 million
Note: Shareholders’ equity here represents total net assets less share subscription rights and minority
interests.

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

Jun. 30

Sept. 30

Fiscal 2010

―

13.00

Fiscal 2011

―

16.00

Fiscal 2011 (Forecast)

Dec. 31Mar. 31Annual

―

14.00

27.00

―

17.00

33.00

Note: Revisions to cash dividend forecast during this period: No

3. Forecasts of Consolidated Financial Results for the Fiscal YearEnding March 31, 2012 (April 1, 2011 to March 31, 2012)(Percentages displayed for net sales, operating income, ordinary income and net income are comparisons withthe corresponding period of the previous fiscal year)(Millions of yen)
Net Sales
Full Fiscal Year

390,000

7.4%

Operating Income

Ordinary Income

60,00058,500

13.0%

14.6%

Net Income
34,00018.3%

Net Income
per Share
97.62

Yen

Note: Revisions to forecasts of consolidated financial results during this period: Yes

4. Other
(1)

(2)
(3)

Changes in Important Subsidiaries during the Period (Changes inSpecial Subsidiaries Involving Changes in the Scope ofConsolidation)No
Adoption of Special Accounting Practices in the Preparation of
Quarterly Consolidated Financial Statements
No
Changes in Accounting Principles, Procedures and Presentation
Methods in Connection with the Preparation of Quarterly
Consolidated Financial Statements
1. Changes following revision of accounting standards: Yes
2. Changes besides 1. above: None
3. Changes of accounting estimates: None
4. Restatement: None(4)(Note: Please see “Changes in Accounting Policies, Accounting
Estimates and Restatement” on page 5 about the details.)
Number of Shares Issued and Outstanding (Common Shares)
1. Number of shares issued and outstanding (including treasury stock)
as of the period-end:
As of September 30, 2011 382,863,603 shares
As of March 31, 2011
382,863,603 shares
2. Number of treasury stock as of the period-end:
As of September 30, 2011
34,557,776 shares
As of March 31, 2011
34,611,169 shares
3. Average number of shares for the period (cumulative):
As of September 30, 2011 348,284,800 shares
As of September 30, 2010 348,135,295 shares

Indication of quarterly review procedure implementation status
This quarterly earnings report is exempt from the quarterly review procedure
based upon the Financial Instruments and Exchange Act. Furthermore, it wasundergoing the review procedure process at the time of this release.
Cautionary Statement with Respect to Forecasts of Consolidated Business Results
The results forecasts presented in this document are based upon currently
available information and assumptions deemed rational. A variety of factors
could cause actual results to differ materially from forecasts. Please refer to“Qualitative Information on Consolidated Operating Results Forecast” onpage 4 of the Attachment for the assumptions used.
Access to Documents and Other Materials Relating to the Quarterly Results Briefing to Be
Held on October 31, 2011
Related documents and materials, including the video of the briefing, will be
posted on the Company’s website immediately after the briefing is closed.

Index of the Attachment
1. Qualitative Information and Financial Statements......................................................................... 2(1) Qualitative Information on Consolidated Business Results.......................................................... 2(2) Qualitative Information on Consolidated Operating Results Forecast....................................... 4
2. Items regarding Summary (and Other) Information ..................................................................... 5
Changes in Accounting Policies, Accounting Estimates and Restatement................................. 5
3. Quarterly Consolidated Financial Statements ................................................................................. 6(1) Quarterly Consolidated Balance Sheets............................................................................................ 6(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statementsof Comprehensive Income ................................................................................................................ 8
Quarterly Consolidated Statements of Income .............................................................................. 8
Quarterly Consolidated Statements of Comprehensive Income ................................................. 9(3) Quarterly Consolidated Statements of Cash Flows .....................................................................10(4) Notes regarding Going Concern Assumptions ............................................................................11(5) Segment and Other Information.....................................................................................................11(6) Material Changes in Shareholders’ Equity .....................................................................................12(7) Additional Information.....................................................................................................................12

1. Qualitative Information and Financial Statements(1) Qualitative Information on Consolidated Business Results
During the interim period of fiscal 2011 (April 1, 2011 to September 30,2011), uncertainties in the Kuraray Group’s operating environment increased,reflecting financial crises in Europe and the economic slowdown in the UnitedStates. In addition, economies in emerging countries, which had continued toshow healthy growth, plateaued during the period. On the domestic front,
circumstances permitted no optimism as the already deflationary economy
further deteriorated and the yen continued to appreciate.
Confronting these circumstances, the Kuraray Group’s Kashima Plant
promptly resumed operations that had been suspended due to the Great East
Japan Earthquake, while implementing price revisions to compensate forclimbing raw material and fuel prices. Furthermore, in line with the GS-Twins
medium-term action plan, the Group continued to steadily implement
measures aimed at expanding businesses and achieving future growth.
As a result, net sales for the interim period rose ¥4,859 million, or
2.7%, compared with the corresponding period of the previous fiscal year to¥185,635 million, operating income grew ¥3,903 million, or 15.3%, to¥29,364 million, ordinary income increased ¥3,985 million, or 15.9%, to¥28,981 million and net income surged ¥3,301 million, or 23.7%, to ¥17,214
million.
Results by Business Segment
ResinsDemand for resins, except those for LCD-related applications, was steady inEurope, the United States and Asia. As a result, sales in this segment grew
3.6% year on year to ¥77,540 million, and operating income rose 2.7% to¥25,910 million.
(1) The expansion of poval resin sales slowed in Europe, while sales ofvalue-added products grew in the markets of emerging and othercountries. Sales of optical-use poval films remained flat year on year,
reflecting the stagnant performance of the LCD TV sector in the second
quarter. To better prepare for the anticipated demand expansion in thisbusiness over the medium term, Kuraray decided to build a new
production line at its Saijo Plant, which will add an annual capacity of 3.2
million square meters. This new line is scheduled to begin production inJune 2013. Sales of polyvinyl butyral (PVB) film were stable.
(2) Sales of EVAL ethylene vinyl alcohol copolymer (EVOH resin) for
automobiles and food packaging remained favorable in Europe, theUnited States and emerging countries.

2

Chemicals
Despite the suspension of production in some product categories due to theearthquake, sales in this segment remained generally stable. In addition, during
the period under review, the Company focused on revising prices to reflect
raw and fuel price hikes. As a result, sales in this segment rose 3.8% year on
year to ¥38,931 million, while operating income soared 50.8% to ¥5,156
million.
(1) Sales of methacrylic resin for use as sheets and molding materials
increased. Improvements in market conditions supported this positive
result.
(2) In isoprene chemicals, sales of SEPTON thermoplastic elastomer andliquid isoprene rubber (LIR) were steady. Although the performance of
certain products in this segment was still affected by the aftermath of theearthquake, the performance of fine chemicals remained steadythroughout the period under review.
(3) The performance of GENESTAR heat-resistant polyamide resin was
impacted by rising raw material and fuel prices in the second quarter.
Also impacted by the stagnant performance of GENESTAR for LED
reflector applications, GENESTAR sales declined year on year. On theearnings front, however, Kuraray secured profitability by pioneering new
GENESTAR applications, among other initiatives.
(4) Kuraray Medical Inc. saw revenue increase due to the inclusion of thedental materials business of Noritake Dental Supply Co., Limited, which
was merged into the Company in April 2011.
Fibers and Textiles
Although sales of KURALON were brisk, demand for certain other products
remained stagnant. As a result, sales in this segment decreased 3.3% year on
year to ¥29,560 million; however, operating income grew 631.0% to ¥616
million.
(1) Sales were healthy for KURALON for use in primary cell separators andautomotive brake hoses. Demand for this product for use as an asbestos
substitute in fiber reinforced cement (FRC) also increased in European
construction market.
(2) Sales of CLARINO man-made leather were healthy for school bag
applications. The use of new processed products expanded steadily for
footwear and interior applications, which has effectively reduced theCompany’s deficit in CLARINO operations. Kuraray is continuing
radical business restructuring in these operations.
(3) Sales of KURAFLEX nonwoven fabrics for use in wet wipes were stable
despite stagnant demand for these products’ use in commercial counter
cloth and industrial masks.

3

Trading
Although certain operations in this segment were affected by the earthquake,sales of differentiated materials in such fiber-related businesses as polyester
grew steadily. As a result, segment sales were down 1.8% year on year to¥56,795 million, while operating income surged 16.3% to ¥1,752 million.
OthersSales of activated carbon for use in water purification systems and capacitors(electric storage devices) were brisk, and other items also saw stable demand
growth. As a result, sales in this segment climbed 22.7% year on year to¥33,713 million, and operating income jumped 23.9% to ¥2,984 million.
(2) Qualitative Information on Consolidated Operating Results
Forecast
For the Kuraray Group, uncertainties continue to prevail in the operating
environment, including with regard to the developing situations in theEuropean and U.S. economies, for the second half of fiscal 2011, the year
ending March 31, 2012. Such circumstances, especially the ongoingappreciation of the yen, are expected to place downward pressure on theGroup’s net sales. Accordingly, Kuraray has revised its performance forecasts
for fiscal 2011, as shown in the table below.
Revised forecasts for the fiscal year ending March 31, 2012 (April 1,
2011–March 31, 2012)
Net Sales

Operating
Income(Millions of yen, unless otherwise stated)
Ordinary
Net Income
Net Income
Incomeper Share (Yen)

400,000

60,00058,50034,000

97.63

Revised forecast (B)390,000

60,00058,50034,00097.62

Change (B – A)

(10,000)―――

Change (%)

(2.5)

―

―

―

(Reference) Fiscal 2010 Results

363,191

53,09551,062

28,742Previous forecast (A)(Announced on April
2011)

27,

Assumptions for the third quarter and later are as follows:•¥77=US$1•¥105=1 euro•
Domestic naphtha price: ¥50,000 per kiloliter

4

82.55

2. Items regarding Summary (and Other) Information
Changes in Accounting Policies, Accounting Estimates andRestatement(Changes in Accounting Policies)
From the first quarter of the fiscal year ending March 31, 2012, Kuraray isapplying the “Accounting Standard for Earnings Per Share” (ASBJ Statement
No. 2, June 30, 2010) and the “Guidance on Accounting Standard for
Earnings Per Share” (ASBJ Guidance No. 4, June 30, 2010).
In calculating quarterly net income per share on a diluted basis, themethod used to reflect the effects of stock options, the rights to which willvest to the holders of said options after a certain period of time, has beenchanged to one under which an amount contingent upon said holders’services to be provided to the Company will comprise part of the assessed fairvalue of stock options and shall be included in the amount to be paid in at thetime of the exercise of the rights.

5

3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Millions of yen)March 31, 2011

September 30, 2011ASSETS
Current Assets
Cash and deposits

34,22135,192

Notes and accounts receivable—trade76,13579,462

Short-term investment securities

127,128

131,074

Merchandise and finished goods

40,53447,025Work in process

8,122

8,815

Raw materials and supplies

12,732

13,608Deferred tax assets

6,046

5,875

Other

6,475

7,806

Allowance for doubtful accounts

(802)

(868)

310,594

327,990

Buildings and structures, net

33,701

34,391

Machinery, equipment and vehicles, net

79,21676,739Land

17,976

19,791

Construction in progress

11,867

20,920

Other, net

2,477

2,421

145,238

154,264

Goodwill

12,725

14,121

Other

2,842

2,797

Total intangible fixed assets

15,56816,918Investment securities

19,577

18,959Long-term loans receivable

1,189

579

Deferred tax assets

4,725

4,508

Prepaid pension costs

6,243

6,035

Other

4,378

5,012

Allowance for doubtful accounts

(186)

(146)

Total investments and other assets

35,92634,949196,733

206,132

507,328

534,123

Total current assets
Noncurrent Assets
Tangible fixed assets

Total tangible fixed assets
Intangible fixed assets

Investments and other assets

Total noncurrent assets
Total assets

6

(Millions of yen)March 31, 2011

September 30, 2011

LIABILITIESCurrent Liabilities
Notes and accounts payable—trade30,30834,059

Short-term loans payable

12,73813,217

Current portion of bonds

10,00010,000

Income taxes payable

10,36910,059Provision for bonuses

6,670

6,579

Provision for loss on disaster

300

69

1

6

Other

15,825

19,610Total current liabilities

86,214

93,603Long-term loans payable

43,03542,573

Deferred tax liabilities

4,918

4,984

Provision for retirement benefits
Provision for directors’ retirement benefits

14,641

15,135

167

177

Provision for environmental measures

1,122

1,117

Asset retirement obligations

2,222

2,262

Other

8,179

9,547

Total noncurrent liabilities

74,28875,799160,502

169,402

Capital stock

88,95588,955

Capital surplus

87,147

87,147Retained earnings

225,743

238,068

Treasury stock(40,856)(40,793)

Total shareholders’ equity

360,989373,377

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

2,280

2,316

(14)

(28)

Foreign currency translation adjustment(19,916)(16,542)

(233)

(230)

(17,884)(14,486)

Subscription rights to shares

560

903

Minority interests

3,159

4,925

Total net assets

346,825

364,720507,328

534,123

Other provision

Noncurrent liabilities

Total liabilities
NET ASSETS
Shareholders’ equity

Pension liability adjustment
Total accumulated other comprehensive
incomeTotal liabilities and net assets

7

(2) Quarterly Consolidated Statements of Income and Quarterly
Consolidated Statements of Comprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)Six-month period

Six-month period

ended Sept. 30,

ended Sept. 30, 20112010 (April 1, 2010

(April 1, 2011 –– Sept. 30, 2010)

Sept. 30, 2011)

Net sales
Cost of sales

180,775

185,635

121,933

122,874

Gross profit

58,842

62,760

Selling expenses

9,376

9,189

General and administrative expenses

24,00424,206

Total selling, general and administrative expenses

33,38133,39625,461

29,364

Interest income

208

199

Dividends income

918

929

Equity in earnings of affiliates

128Selling, general and administrative expenses

Operating income
Non-operating income

Other, net

550

503

Total non-operating income

1,690

1,640

Interest expenses

587

532

Other expenses

1,568

1,491

Total non-operating expenses

2,155

2,024

24,99528,981Gain on change in equity－

845

Total extraordinary income－

845

Loss on disaster－

929

Provision for loss on disaster－

60

Loss on valuation of investment securities

627

539

Loss on disposal of tangible fixed assets

219

235

Impairment loss
Impact of the application of the Accounting Standard for Asset
Retirement Obligations
Business structure improvement losses

－

128

1,548

－

183

－

Total extraordinary loss

2,579

1,893

Income before income taxes and minority interests

22,41627,933

Income taxes―current
Income taxes―deferred

8,843

9,978

(416)

444

Total income taxes

8,427

10,423

Income before minority interests

13,98917,50975

295

13,913

17,214Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss

Minority interests
Net income

8Quarterly Consolidated Statements of Comprehensive Income(Millions of yen)Six-month period ended
Sept. 30, 2010
(April 1, 2010 – Sept. 30,
2010)

Six-month period ended
Sept. 30, 2011
(April 1, 2011 – Sept. 30,
2011)

13,98917,509(1,857)

35

53

(14)

(10,372)

3,374

Pension liability adjustment－

2

Shares of other comprehensive income ofassociates accounted for using equity method(0)0(12,176)

3,397

1,812

20,907

1,736

20,612

75

294

Income before minority interests
Other comprehensive income
Valuation
securities

differenceonavailable-for-sale

Deferred gains or losses on hedges
Foreign currency translation adjustment

Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Minority interests9(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)Six-month period
ended Sept. 30,
2010(April 1, 2010 –Sept. 30, 2010)

Six-month
period ended
Sept. 30, 2011
(April 1, 2011 –Sept. 30, 2011)22,416
16,295—219

27,933
14,732
128
235

1,548
—
627
—
(5,554)(1,647)
2,915
203

—
60
539
(845)
(2,098)(6,981)
2,927
469

Subtotal

37,02637,099

Income taxes paid
Other

(6,007)547(10,082)646

Net Cash Provided by Operating Activities

31,566

27,664

Net decrease in time deposits
Net decrease in short-term investment securities
Purchase of tangible fixed assets and intangible assets
Other, net

834
16,996(9,012)
(502)

3,208
4,988
(15,827)(1,292)Net Cash Provided by (Used in) Investing Activities

8,315(8,921)

1,565(6,000)(4,444)(2,784)
(175)

(166)
—
(607)
(4,875)(170)(11,839)(5,819)Cash Flows from Operating Activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Loss on disposal of tangible fixed assets
Impact of the application of the Accounting Standard for
Asset Retirement Obligations
Increase in provision for loss on disaster
Loss on valuation of investment securities
Gain on change in equity
Increase in notes and accounts receivable―trade
Increase in inventories
Increase in notes and accounts payable―trade
Other, net

Cash Flows from Investing Activities

Cash Flows from Financing Activities
Net increase (decrease) in short-term loans payable
Decrease in commercial paper
Repayment of long-term loans payable
Cash dividends paid
Other, net
Net Cash Used in Financing Activities
Effect of Exchange Rate Changes on Cash and Cash
Equivalents

(966)

248

Net Increase in Cash and Cash Equivalents

27,076

13,171

Cash and Cash Equivalents, Beginning of the Period

16,412

29,423——4
043,48842,600

Increase in cash and cash equivalents from newly
consolidated subsidiary
Increase in cash and cash equivalents from merger
Cash and Cash Equivalents, End of the Period10(4) Notes regarding Going Concern Assumptions
None(5) Segment and Other Information[Segment Information]
I. Interim Period of Fiscal 2010 (April 1, 2010 to September 30, 2010)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
ResinsFibers andChemicals
Trading
Textiles

Total

Other
Business1

Total

Consolidated
Adjustment2 Statementsof Income3

Net Sales
Outside customers

58,94023,216

21,06456,168 159,389

21,386

180,775－

180,775

Inter-segment sales andtransfers

15,875

14,278

9,516

1,688

41,3586,082

47,440(47,440)－

Total

74,81537,49530,58057,856 200,747

27,468228,216(47,440)

180,775

Segment Income

25,239

3,418

84

1,506

2,408

32,657(7,196)25,461

30,249Notes:
1. The “Other Business” category incorporates operations not included in reporting
segments, including activated carbon, environmental business and engineering.
2. Adjustment is as follows: Included within the segment income adjustment of ¥7,196
million is the elimination of intersegment transactions of ¥128 million and corporate
expenses of ¥7,324 million. Corporate expenses mainly comprise headquarters’ generaland administrative expenses and the submitting company’s basic research expenses not
usually attributed to reporting segments.
3. Segment income is adjusted with operating income under consolidated statements ofincome.

II. Interim Period of Fiscal 2011 (April 1, 2011 to September 30, 2011)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
ResinsChemicals

Consolidated

Fibers andTrading
Textiles

Total

Other
Business1

Total

Adjustment2 Statementsof Income3

Net Sales
Outside customers

62,18524,435

21,22554,870 162,717

22,917

185,635－

185,635

Inter-segment sales andtransfers

15,354

14,495

8,335

1,924

40,10910,79550,905(50,905)－

Total

77,54038,931

29,56056,795 202,827

33,713

236,540(50,905)

185,635

Segment Income

25,910

5,156

616

1,752

2,984

36,419(7,055)29,36433,435

Notes:
1. The “Other Business” category incorporates operations not included in reporting
segments, including activated carbon, environmental business and engineering.

11

2. Adjustment is as follows: Included within the segment income adjustment of ¥7,055
million is the elimination of intersegment transactions of ¥298 million and corporate
expenses of ¥6,756 million. Corporate expenses mainly comprise headquarters’ generaland administrative expenses and the submitting company’s basic research expenses not
usually attributed to reporting segments.
3. Segment income is adjusted with operating income under consolidated statements ofincome.

(6) Material Changes in Shareholders’ Equity
None(7) Additional Information
From the first quarter of the fiscal year ending March 31, 2012, Kuraray has
been applying the “Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No. 24, December 4, 2009) and the “Guidanceon Accounting Standard for Accounting Changes and Error Corrections”(ASBJ Guidance No. 24, December 4, 2009).

12