Consolidated Earnings Report for theSecond Quarter of the Fiscal Year Ending
December 31, 2014 (Unaudited)

October 29, 2014
Kuraray Co., Ltd.

October 29, 2014
Kuraray Co., Ltd.
Consolidated Earnings Report for the second Quarter of the Fiscal YearEnding December 31, 2014
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 Division,
Corporate Communications Department
Akiko Ide+81-3-6701-1070(Millions of yen rounded down unless otherwise stated)

Name:
Tel:

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 Second Quarter of the Fiscal
Year Ending December 31, 2014 (April 1, 2014 to September 30, 2014)(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(Change)Ordinary Income(Change)

Net Income(Change)(Change)

Fiscal 2014 2Q

222,613

11.7%

26,945

9.3%

27,048

8.7%

17,035

8.1%

Fiscal 2013 2Q

199,269

10.2%

24,657

3.2%

24,89513.8%

15,765

23.7%

Note: Comprehensive income: For the fiscal 2014 second quarter:¥10,847 million(70.7%)For the fiscal 2013 second quarter:¥37,064 million

199.0%Net Income
per Share (Yen)

Fully Diluted
Net Income
per Share (Yen)

Fiscal 2014 2Q

48.62

48.52

Fiscal 2013 2Q

45.04

44.91

(2) Consolidated Financial Position
Total Assets(Millions of yen)
Shareholders’ Equity Ratio (%)

Net Assets

As of September 30, 2014

644,214454,347

69.5

As of March 31, 2014

634,252

452,459

70.3(Reference)
Shareholders’ equity:

As of September 30, 2014:¥448,039 million

As of March 31, 2014:¥445,834 million

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

Jun. 30

Sept. 30

Dec. 31Mar. 31AnnualFiscal 2014

―

18.00

―

18.00

36.00

Period to Dec. 2014

―

18.00
9.00

―

27.00

Period to Dec. 2014
(Forecast)

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

3. Forecasts of Consolidated Financial Results for the Fiscal YearEnding December 31, 2014 (April 1, 2014 to December 31, 2014)(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

415,000―

Operating Income

Ordinary Income

44,00043,000――Net Income
26,000―Note: Revisions to forecasts of consolidated financial results during this period: Yes

Net Income
per Share
74.19

Yen

From fiscal 2014, the Company changed its fiscal year-end from March 31 to December 31 upon
the approval of “Partial Amendment of the Articles of Incorporation” at the 133rd Ordinary
General Meeting of Shareholders held on June 20, 2014. Accordingly, the consolidated reporting
period ending December 31, 2014 will be the nine-month period from April 1, 2014 to December
31, 2014 for the Company and its subsidiaries that previously maintained a fiscal year-end of March
31.
Please note that the consolidated reporting period for subsidiaries with a fiscal year-end of
December 31 will remain January 1, 2014 to December 31, 2014.
[Reference]
The following percentages (adjusted change) compare the projected results for fiscal 2014 with

figures covering an adjusted nine-month period for fiscal 2013 (April 1, 2013 to December 31,2013) for the Company and its consolidated subsidiaries in light of the previous fiscal year-end of
March 31.
(Millions of yen)
Net Sales
415,000

22.1%

Operating Income

Ordinary Income

44,00043,000

14.9%

12.0%

Net Income
26,00012.6%

4. Other(1)

Changes in Important Subsidiaries during the Period (Changes in Special
Subsidiaries Involving Changes in the Scope of Consolidation)No(2)

Adoption of Special Accounting Practices in the Preparation of Quarterly
Consolidated Financial Statements
No(3)

Changes in Accounting Principles, Procedures and Presentation Methods inConnection with the Preparation of Quarterly Consolidated Financial Statements
1. Changes following revision of accounting standards: Yes
2. Changes besides 1. above: No
3. Changes of accounting estimates: No
4. Restatement: No(Note: Please see “Changes in Accounting Policies and, Accounting Estimates andRestatement” on page 4 about the details.)(4)

Number of Shares Issued and Outstanding (Common Shares)
1. Number of shares issued and outstanding (including treasury stock) as of theperiod-end:
As of September 30, 2014
382,863,603 shares
As of March 31, 2014
382,863,603 shares
2. Number of treasury stock as of the period-end:
As of September 30, 2014
32,404,912 shares
As of March 31, 2014
32,551,718 shares
3. Average number of shares for the period (Cumulative):
As of September 30, 2014
350,385,175 shares
As of September 30, 2013
350,029,057 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 was undergoing the review procedure
process at the time of this release.
Cautionary Statement with Respect to Forecasts of Consolidated Business Results(Cautionary note regarding forward-looking statements)
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 materiallyfrom forecasts. Please refer to “Basis for (the Revision in) Forecasts, Including Consolidated
Operating Results Forecasts” on page 4 of the Attachment for the assumptions used.

Index of the Attachment
1. Qualitative Information and Financial Statements.............................................................................

2(1) Qualitative Information and Overview of Consolidated Business Results.....................................

2(2) Basis for (the Revision in) Forecasts, Including Consolidated Operating Results Forecasts.......

4

2. Items Regarding Summary (and Notes) Information.........................................................................

4

Changes in Accounting Policies, Accounting Estimates and Restatement.....................................

4

3. Quarterly Consolidated Financial Statements.....................................................................................

6(1) Quarterly Consolidated Balance Sheets...............................................................................................

6(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income.........................................................................................................................

8

Quarterly Consolidated Statements of Income..................................................................................

8

Quarterly Consolidated Statements of Comprehensive Income......................................................

10(3) Quarterly Consolidated Statements of Cash Flows............................................................................

11(4) Notes regarding Quarterly Consolidated Financial Statements........................................................

13

Notes regarding Going Concern Assumptions...................................................................................

13

Additional Information...........................................................................................................................

13

Material Changes in Shareholders’ Equity...........................................................................................

13

Segment and Other Information...........................................................................................................

14

Subsequent Events..................................................................................................................................

17

1. Qualitative Information and Financial Statements(1) Qualitative Information and Overview of Consolidated Business Results
In the first half of fiscal 2014 (April 1, 2014–September 30, 2014), the Japanese economy
began to feel the negative impact of the consumption tax hike. Overseas, the economic
outlook was dim. Despite continued brisk growth in the U.S. economy, recovery stalled inEurope, growth in China slowed, and business sentiments varied widely by region in otheremerging countries. However, these factors had little effect on the Company’s second quarter
results.
Under these circumstances, the Kuraray Group accelerated the global expansion of
its core business to achieve sustained growth while proactively developing new businesses in
the water treatment, environment, energy, optical and electronics fields to secure future
growth.
Consequently, cumulative consolidated operating results for the first half of fiscal
2014 are as follows: net sales rose ¥23,344 million, or 11.7%, compared with thecorresponding period of the previous fiscal year to ¥222,613 million; operating income grew
¥2,287 million, or 9.3%, to ¥26,945 million; ordinary income increased ¥2,153 million, or
8.7%, to ¥27,048 million; and net income rose ¥1,269 million, or 8.1%, to ¥17,035 million.
Results by Business Segment
Vinyl Acetate
Sales in this segment grew 16.7% year on year to ¥105,115 million, and segment income
rose 1.2% year on year to ¥24,812 million. In addition, the vinyl acetate-related business of
E. I. du Pont de Nemours and Company (“DuPont”) was acquired by the Company on June 1,
2014. One month of results (for June) for the vinyl acetate-related business have been
included in this segment.
(1) The sales volume of optical-use poval films has increased in step with a trend toward
large LCD panels. In response, in April 2014 the Saijo Plant brought new production
facilities on line. Poval resin were firm due to the effect of upward revisions in productprices. On the other hand, PVB films were affected by ongoing stagnant market demandfor construction materials in Europe. Sales of water soluble PVA films grew favorably on
the back of brisk demand. In response, the Company decided to establish a new plant in
the United States to produce water soluble PVA films, with operational kickoff scheduled
for January 2016. On June 1, both the manufacturing and marketing functions of thevinyl acetate-related business acquired from DuPont were successfully integrated.
(2) Sales of EVAL ethylene vinyl alcohol copolymer (EVOH resin) expanded favorably,2particularly in the United States and Asia.
Isoprene
Sales in this segment grew 6.5% year on year to ¥27,029 million, and segment income
jumped 36.1% year on year to ¥2,815 million.
(1) In isoprene chemicals, sales of fine chemicals were favorable and sales of SEPTON
thermoplastic elastomer were firm. Demand for liquid rubber rebounded.
(2) Sales of GENESTAR heat-resistant polyamide resin for LED reflector, connector andautomotive applications remained favorable.
Functional Materials
Sales in this segment grew 12.3% year on year to ¥25,980 million. Segment income fell
24.5% to ¥356 million.
(1) Sales of methacrylic resin remained stagnant due to sluggish market conditions.
(2) In the medical business, sales of dental materials were favorable.
(3) With regard to CLARINO man-made leather, business performance began to improve
due to the effect of the Company’s initiatives aimed at achieving structural
improvements, such as the transfer of conventional production processes to China.
Fibers and Textiles
The performance of KURALON was healthy for use in automotive brake hose applications
and as an asbestos substitute in fiber reinforced cement (FRC). As a result, sales in thissegment grew 3.4% year on year to ¥22,002 million, and segment income increased 26.3%
year on year to ¥1,678 million.
Trading
Sales were favorable in the fiber-related business, especially for polyester, and resin andchemical-related businesses. Also, the Company continued to expand its overseas businessnetwork. As a result, segment sales increased 10.8% year on year to ¥58,741 million, andsegment income increased 2.9% to ¥1,769 million.
OthersOther businesses were firm overall. As a result, segment sales increased 5.7% year on yearto ¥32,264 million, however segment income decreased 5.0% to ¥1,322 million.

3(2)Basis for (the Revision in) Forecasts, Including Consolidated Operating Results Forecasts
Kuraray has revised its full-year consolidated operating results forecast as shown below in the table to reflect
the present operating results forecast for the vinyl acetate-related business acquired from DuPont for theperiod from June 2014 to December 2014 including tentative goodwill amortization. Moreover, as thepurchase price allocation of the newly acquired vinyl acetate-related business progresses, we will announce
any subsequent changes to profit and loss.
The revised consolidated full-year operating results forecast for the fiscal year ending December 31, 2014
(April 1, 2014–December 31, 2014) is as follows.
(Millions of yen)
Net Sales

Operating Income

Ordinary Income

Net Income

Net Income Per Share

385,000

44,00043,00026,000¥74.22

Revised Forecast (B)415,000

44,00043,00026,000¥74.19Amount Adjusted (B − A)

30,000－－－Percent Adjusted

7.8%

－

－

－

Original Forecast (A)(Announced April 25, 2014)

2. Items Regarding Summary (and Notes) Information
Changes in Accounting Policies, Accounting Estimates and Restatement(Changes in Accounting Policies Accompanying Revisions or Other Changes in Accounting
and Other Standards)
From the first quarter of the consolidated reporting period ending December 31, 2014, theCompany applies “Accounting Standard for Retirement Benefits” (Accounting Standards
Board of Japan (ASBJ) Statement No. 26, May 17, 2012; hereinafter the “AccountingStandard for Retirement Benefits”), “Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, May 17, 2012; hereinafter the “Guidance on Retirement
Benefits”) and the provisions set forth in Clause 35 of the Accounting Standard for
Retirement Benefits and Clause 67 of the Guidance on Retirement Benefits. We haverevised the calculation method for service costs and retirement benefit obligations lesspension assets. Because of this, the Company has changed the method of calculating
projected retirement benefits from the straight-line method over the estimated number of
total service years to the projected benefit method. Furthermore, the Company has decided
to change the basis used for setting the discount rate from the number of years an employee
is expected to continue working to a weighted average discount rate, which reflects the
projected payment period of retirement benefits and an amount projected for each payment
period.

4

The application of the Accounting Standard for Retirement Benefits and the
Guidance on Retirement Benefits is subject to the transitional accounting treatment set
forth in Clause 37 of the Accounting Standard for Retirement Benefits. As of April 1, 2014,
the effect of the change in the calculation method for service costs and retirement benefit
obligations less pension assets has been added to or deducted from retained earnings.
As a result, as of April 1, 2014, net defined benefit liabilities rose ¥2,366 million
and net defined benefit assets and retained earnings declined ¥1,826 million and ¥2,712
million respectively. In addition, the effect on operating income, ordinary income and income
before income taxes and minority interests in the first half of the consolidated reporting
period ending December 31, 2014 was minimal.

53. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Millions of yen)March 31, 2014

September 30, 2014ASSETS
Current Assets
Cash and cash deposits
Notes and accounts receivable–trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent Assets
Tangible fixed assets

49,746

34,108

91,11997,00658,301

5,804

60,984

67,956

11,992

12,617

15,65819,356

5,889

6,312

9,175

12,349

(465)

(487)

302,402

255,023

44,70750,662

91,921

108,122

21,481

21,59959,13948,024

4,970

4,845

222,219

233,253

Goodwill
Other
Total intangible fixed assets
Investments and other assets

26,59866,73030,60029,09557,19895,826

Investment securities
Long-term loans receivable

39,28546,801297

318

Net defined benefit assets
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

2,031

169

6,260

6,944

4,604

5,926

(47)

(48)

Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total tangible fixed assets
Intangible fixed assets

52,431331,849634,252

6

60,111
389,191644,214

(Millions of yen)March 31, 2014

September 30, 2014

LIABILITIESCurrent Liabilities
Notes and accounts payable–trade35,39339,328

Short-term loans payable
Commercial papers

13,143

7,833－

10,000Accrued expenses

8,073

6,687

Income taxes payable
Provision for bonuses

7,272

7,006

6,931

6,869

51

7

18,28021,197

89,14598,931

Bonds payable

10,00010,000Long-term loans payable
Deferred tax liabilities

42,18742,332

18,343

17,292

Provision for directors’ retirement benefits

161

139

Provision for environmental measures
Net defined benefit liabilities

886

886

5,448

9,059

Asset retirement obligations

2,656

2,619

Other

12,962

8,606

92,64790,935

181,793

189,867

88,95588,955

Other provision
Other
Total current liabilities
Long-term liabilities

Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Capital stock
Capital surplus

87,147

87,163Retained earnings
Treasury stock

279,616

287,632(38,425)(38,252)

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gain or losses on hedges

417,293425,498

6,944

8,878

(4)

18

Foreign currency translation adjustments
Remeasurements of defined benefit plans

27,02518,769(5,424)(5,125)28,541

22,541

1,005

1,013

5,618

5,294

452,459454,347

634,252

644,214

Total accumulated other comprehensive
incomeSubscription rights to shares
Minority interests
Total net assets
Total 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)
Fiscal 2013 2Q

Fiscal 2014 2Q(April 1, 2013 –(April 1, 2014 –Sept. 30, 2013)

Sept. 30, 2014)

Net sales

199,269

222,613

Cost of sales

136,210

153,246

Gross profit

63,05869,366

Selling expenses

9,904

10,878General and administrative expenses

28,496

31,543

Total selling, general and administrative expenses

38,40042,421

24,657

26,945Interest income

337

142

Dividends income

1,197

1,371

0

1

Other, net

662

573

Total non-operating income

2,197

2,089

Interest expenses

505

257

Other expenses

1,454

1,728

Total non-operating expenses

1,959

1,985

24,89527,048Acquisition-related cost

－

1,863

Retirement benefit expenses－

622

Impairment loss

118

204

Loss on abandonment of non-current assets

280

143

Total extraordinary expenses

399

2,834

Income before income taxes and minority interests in net income of
consolidated subsidiaries

24,49524,214

Income taxes－current

8,894

8,703

Income taxes－deferred(342)(1,335)

Selling, general and administrative expenses

Operating income
Non-operating income

Equity in earnings of affiliates

Non-operating expenses

Ordinary income
Extraordinary loss8

(Millions of yen)
Fiscal 2013 2Q

Fiscal 2014 2Q(April 1, 2013 –(April 1, 2014 –Sept. 30, 2013)

Sept. 30, 2014)

Total income taxes

8,552

7,367

Income before minority interests in net income of consolidated
subsidiaries

15,942

16,846

177(188)

15,765

17,035

Minority interests in income (loss)
Net income

9Quarterly Consolidated Statements of Comprehensive Income(Millions of yen)

Income before minority interests in net income of
consolidated subsidiaries

Fiscal 2013 2Q

Fiscal 2014 2Q(April 1, 2013 –(April 1, 2014 –Sept. 30, 2013)

Sept. 30, 2014)

15,942

16,846

Valuation difference on available-for-sale securities

464

1,934

Deferred gain or losses on hedges

(3)

22

Foreign currency translation adjustments

20,837(8,255)Pension liability adjustments

(176)

298

Total other comprehensive income

21,121(5,999)37,064

10,84736,886

11,035

177(188)

Other comprehensive income

Quarterly comprehensive income
Comprehensive income attributable to:
Owners of the parent
Minority interests10(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)Six-month period

Six-month period

ended Sept. 30, 2013

ended Sept. 30, 2014

(April 1, 2013 –(April 1, 2014 –Sept. 30, 2013)

Sept. 30, 2014)

Net cash provided by (used in) operating activities
Income before income taxes and minority interests

24,49524,214

Depreciation and amortization

16,43018,870

Impairment loss

118

204

Loss from disposal of tangible fixed assets

280

143

Acquisition-related cost

－

1,863

Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories

670(6,978)243(4,077)(10,492)

4,244

Other, net(221)(2,298)Subtotal

31,52536,186

Income taxes paid

(9,261)(8,650)

Other

1,027

1,508

Net cash provided by (used in) operating activities

23,291

29,043

7,754

1,033

investment(22,993)

5,000

Proceeds from sales and redemption of investment
securities

10,290231

Purchase of investment securities(471)(1,773)(24,900)(26,208)－(66,767)(531)(1,800)(30,852)(90,284)

Increase (decrease) in notes and accounts payable―trade

Net cash provided by (used in) investing activities
Net decrease in time depositsNetdecrease(increase)
securities

inshort-term

Purchase of tangible fixed assets and intangible fixed
assetsPayments for acquisition of business
Other, net
Net cash provided by (used in) investing activities

11

(Millions of yen)Six-month period

Six-month period

ended Sept. 30, 2013

ended Sept. 30, 2014

(April 1, 2013 –(April 1, 2014 –Sept. 30, 2013)

Sept. 30, 2014)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable

(30)

563

Proceeds from long-term loans payable

10,054233

Repayment of long-term loans payable(55)(5,962)(6,279)(6,305)－

10,000

Other, net

1,031

(174)

Net cash provided by (used in) financing activities

4,721(1,645)

Effect of Exchange Rate Changes on Cash and Cash
Equivalents
Net Increase(decrease) in Cash and Cash Equivalents

1,197

781

(1,642)(62,104)

Cash and Cash Equivalents, Beginning of the Period

29,885

100,64226

928,26938,546

Cash dividends paid
Net increase (decrease) in commercial papers

Increase in cash and cash equivalents from newly
consolidated subsidiaries
Cash and Cash Equivalents, End of the Period12(4) Notes Regarding Quarterly Consolidated Financial Statements
Notes Regarding Going Concern Assumptions
None
Additional Information
Kuraray’s fiscal year-end was originally set at March 31; however, to improve the Company’s
global business management efficiency and management transparency through the timely
and appropriate disclosure of accounting information, the Company has changed its fiscal
year-end to December 31 through the resolution of the 133rd Ordinary General Meeting of
Shareholders held on June 20, 2014.
The consolidated reporting period ending December 31, 2014 will constitute thenine-month period from April 1, 2014 through December 31, 2014. However, with regard to
those overseas subsidiaries whose fiscal year-end is already December 31, the Company will
use the 12-month period from January 1, 2014 to December 31, 2014 when preparing its
consolidated statements of income for the consolidated fiscal year ending December 31,
2014.
Regarding the creation of consolidated financial statements, the Company will
uniformly use December 31, 2014 as the closing date for the fiscal year ending December 31,
2014. Because the acquisition of DuPont’s vinyl acetate related business, completed on June
1, 2014, will have a great effect on the management of overseas consolidated subsidiaries,
the Company determined that it would be difficult in practice to unify the closing date of
their accounts from the first quarter of the consolidated reporting period ending December
31, 2014.
As a result, in compiling the results for the first half of the cumulative consolidated
reporting period ending December 31, 2014, the semiannual consolidated statements ofincome or loss for overseas consolidated subsidiaries for the six -month period from January
1, 2014 to June 30, 2014 will be used in the same manner used from that used before thechange of the closing date.
Material Changes in Shareholders’ Equity
None

13

Segment and Other Information
Segment Information
I. First Half of Fiscal 2013 (April 1, 2013 to September 30, 2013)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment

1

OthersTotal

Elimination on Consolidat
Consolidation

ed

and

and

Statements

TextilesCorporate

Vinyl

Isoprene Functional

FibersAcetateMaterials

Trading

Total

2

3

of IncomeNet Sales
Outside77,610 15,046

15,404 15,988

51,739 175,789

23,479 199,269－

199,269

12,440 10,341

7,721

1,270

7,033

44,095(44,095)－

90,051 25,388

23,126 21,275

53,009 212,851

30,513 243,364(44,095)

199,269

1,719

1,391

(6,850)24,657

customers
Inter-segment

5,287

37,062

sales andtransfers
Total

Segment Income 24,527

2,068

471

1,328

30,11531,507

Notes:
1.

The “Others” category incorporates operations not included in business segments reported, including
activated carbon, environmental business and engineering.

2.

Elimination on Consolidation and Corporate is as follows: Included within negative segment income of¥6,850 million is the elimination of intersegment transactions of ¥38 million and corporate expenses of¥6,812 million. Corporate expenses mainly comprise headquarters’ general and administrative expenses
and the submitting company’s basic research expenses not usually attributed to segments.

3.

Segment income is adjusted with operating income under consolidated statements of income.

14

II. First Half of Fiscal 2014 (April 1, 2014 to September 30, 2014)
1. Net sales, income and loss by reporting segment(Millions of yen)
Reporting Segment
Vinyl

Isoprene Functional

FibersAcetateMaterials

and1

OthersTrading

Total

Total

Elimination on Consolidat
Consolidation

ed

and

Statements
2

TextilesCorporate3

of IncomeNet Sales
Outside91,054 15,410

17,396 16,611

57,611 198,084

24,529 222,613－

222,613

14,061 11,619

8,583

1,130

7,734

48,520(48,520)－

Total

105,115 27,029

25,980 22,002

58,741 238,870

32,264 271,134(48,520)

222,613

Segment Income

24,812

1,769

1,322

(5,809)26,945

customers
Inter-segment

5,390

40,785sales andtransfers

2,815

356

1,678

31,43232,754

Notes:
1.

The “Others” category incorporates operations not included in business segments reported, including
activated carbon, environmental business and engineering.

2.

Elimination on Consolidation and Corporate is as follows: Included within negative segment income of¥5,809 million is the elimination of intersegment transactions of ¥789 million and corporate expenses of¥6,598 million. Corporate expenses mainly comprise headquarters’ general and administrative expenses
and the submitting company’s basic research expenses not usually attributed to segments.

3.

Segment income is adjusted with operating income under consolidated statements of income.

2. Information regarding the assets of each reporting segment
The amount of assets for each reporting segment has fluctuated significantly compared withthe end of the previous consolidated fiscal year. The overview is as follows.
In the first quarter of the consolidated reporting period ending December 31, 2014,
the assets of the Vinyl Acetate segment increased ¥64,778 million from March 31, 2014 dueto the acquisition of the vinyl acetate related business from DuPont mainly by subsidiaries
of Kuraray. However, the acquisition price is now going through a process of adjustment toreflect the change in working capital as per the agreement with DuPont. The increase in theamount of assets is therefore tentative.
3. Information regarding goodwill and impairment loss on fixed assets for each reporting
segment

15

(Significant fluctuations in the value of goodwill)In the Vinyl Acetate segment, with the acquisition of the vinyl acetate related business from
DuPont, goodwill in the first half of the consolidated reporting period stood at ¥43,133
million. The amount of goodwill is tentative as the allocation of the acquisition cost has notbeen completed.

16Subsequent Events
Sale of Subsidiary Shares
Kuraray Co., Ltd. concluded an agreement on October 17, 2014 (Japan local time) to transfer
all of the shares of its consolidated subsidiary Kuraray Deutschland GmbH and its
unconsolidated subsidiary Kuraray Belgium N.V. to GVC S.A., a subsidiary of GVC Holdings,
Inc.
1. Purpose of sale
The European Commission approved the transfer of the vinyl acetate-related business from
E.I. du Pont de Nemours and Company in June 2014 on the condition that the European
polyvinyl butyral (PVB) sheet business (“the Business”) be transferred to a third party. In
accordance with this ruling, Kuraray concluded a transfer agreement for all of the shares ofKuraray Deutschland GmbH and Kuraray Belgium N.V., both of which operate theEuropean PVB business.
2. Name of buyer
GVC S.A.
3. Date of sale
Planned for January 2015
4. Subsidiary names and description of businesses
Subsidiary name

Description of businesses

Kuraray Deutschland GmbH

Manufacture and sale of PVB sheet

Kuraray Belgium N.V.

R&D, technical services, etc. for PVB sheet businesses

5. Number of shares to be sold, sale price, gain/loss on sale and post-sale percentage ofownership(1) Number of shares to be soldKuraray Deutschland GmbH:
Kuraray Belgium N.V.:

5,000,000 shares
5,000 shares(2) Sale price
The price was set at €12 million (approx. ¥1,666 million)* along with adjustments of net
cash (debt) balance and net working capital on the date of transfer.
*Based on the exchange rate as of September 30, 2014
(3) Gain/loss on saleAs the fair value of the assets and debt is not yet set and the book value of the shares has

17not been determined, the gain/loss on sale is currently unknown.
(4) Post-sale percentage of ownership–%
6. Description of significant riders, if applicable
Kuraray licences the intellectual property related to the Business.
In addition, the transfer of shares requires the customary regulatory approvals.

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