CONSOLIDATED BALANCE SHEETS(unaudited)

Kuraray Co., Ltd. and Consolidated Subsidiaries

Thousands of

September 30,
1999

Thousands ofU.S.dollars

Millions of yen
March 31,

September 30,

September 30,

1999

1998

1999

September 30,
1999

ASSETS

Marketable securities

March 31,

September 30,

September 30,

1999

1998

1999

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent assets:
Cash and cash equivalents

U.S.dollars

Millions of yen

Current liabilities:¥26,728
21,426¥28,917¥49,140$249,794

Short‑term bank loans

10,072

11,714200,243

Current portion of long‑term debt

¥4,43819,608¥5,809¥7,546$41,477

20,382

11,800183,252

46,250
1,064
9,126
5,042
23
20,634
106,185

49,876

52,699432,243

886

1,048

9,944

5,822

5,913

85,290

4,305

5,294

47,121−−

215

21,181

41,941

192,842108,261

126,241

992,384

93,923103,309886,738

2,866

2,847

26,832

12,684

11,966

118,822

Notes and accounts payable:
Notes and accounts receivable:
Trade
Unconsolidated subsidiaries and affiliates
Other
Loans receivable from unconsolidated subsidiaries and affiliates
Allowance for doubtful accounts

Inventories
Deferred income taxes
Other current assets
Total current assets

Trade87,726
862
3,154
404
(701)
91,44589,466

91,223819,869

1,316

670

8,056

3,493

2,177

29,477

Accrued income taxes

509

371

3,776

Deferred income taxes

(844)

(992)

(6,552)

Accrued expenses and other

93,94093,449854,626

71,651
3,878
1,403
216,53170,62482,541

669,6363,604

21

36,243

Long‑term debt

956

1,311

13,112

Deferred income taxes

208,113238,176

2,023,654

Unconsolidated subsidiaries and affiliates
Other

Total current liabilities

Long‑term liabilities:

Accrued retirement benefits
Other
Total long‑term liabilities

94,881
2,871
12,714
10,989121,455

9,978

12,846

102,701

119,451

130,968

1,135,093

365

370

373

3,411

Property, plant and equipment:
Land
Buildings
Machinery and equipment
Construction in progress
Less accumulated depreciation

25,36385,599348,1075,107
464,176(331,977)
132,199

237,037

25,39725,001

79,53577,949799,991

332,365

330,151

3,253,336

17,255

9,698

47,729454,552

442,799(325,526)(323,394)

129,026

119,405

Minority interests

4,338,093
3,102,589
1,235,504
Shareholders' equity:

Investments and other assets:
Investment securities
Investments in unconsolidated subsidiaries and affiliates

Common stock with par value of ¥50 ($0.47) per share:

68,467
2,671

77,143

66,928639,879

Authorized−700,000,000shares

2,983

6,429

24,963Issued and outstanding−369,741,907 shares at September 30, 1999

Loans receivable:
Unconsolidated subsidiaries and affiliates
Other
Deferred income taxes
Other
Allowance for doubtful accounts

81,824

Issued and outstanding−363,913,184 shares at March 31, 1999

5,556
1,319
3,220
70,972(940)
151,265¥499,995

6,040

5,419

51,925

1,329

1,286

12,327

Additional paid‑in capital

3,149

343

30,093Retained earnings

61,08558,368663,290

(877)

(421)

(8,785)150,852

138,352¥487,991¥495,933

1,413,692$4,672,850

764,71078,660Issued and outstanding−354,532,527 shares at September 30, 1998

Treasury stock at cost
Total shareholders' equity

Note : The United States dollar amounts represent translation of Japanese yen at the rate of ¥107=$1.
Certain reclassifications of previously reported amounts have been made to conform with current classifications.

−１−

73,80078,180111,991
271,995(5)
271,990¥499,995

74,22568,063730,654

107,029

96,4891,046,645

259,914238,352

2,542,009

(5)

(1)

(47)

259,909238,351¥487,991¥495,933

2,541,962$4,672,850

CONSOLIDATED STATEMENTS OF INCOME(unaudited)
Kuraray Co., Ltd. and Consolidated Subsidiaries

Millions of yen
Six months ended
September 30, September 30,1999
1998

Year ended
March 31,
1999

Thousands ofU.S.dollars
Six months ended
September 30,
1999$1,449,355

Net sales¥155,081¥162,332¥336,466

Cost of sales

114,608

117,763

250,195

1,071,103

40,47344,56986,271

378,252

30,44730,19559,123

284,551

10,026

14,374

27,14893,701Other income (expenses):
Interest and dividend income
Equity in earnings of affiliates
Interest expenses
Other, net

2,017
51
(1,405)
1,086

2,214
24
(1,716)(2,834)4,464
6(3,269)(4,508)18,850477(13,131)
10,150(Income before income taxes)11,775

12,062

23,841110,047

5,218
(72)
5,146

5,306
471
5,777

10,352309
10,661

48,766(672)
48,094

(0)

(6)

(9)

(0)

¥6,6296,279

13,171$61,953(Gross profit)
Selling, general and administrative expenses(Operating income)

Income taxes
Current
Deferred

Minority interests in net income of
consolidated subsidiaries
Net income

U.S.dollars

Yen
Net income per share:
Primary¥18.09¥17.72¥36.83$0.17

Note : The United States dollar amounts represent translation of Japanese yen at the rate of ¥107=$1.
Certain reclassifications of previously reported amounts have been made to conform with current classifications.

−２−CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(unaudited)
Kuraray Co., Ltd. and Consolidated Subsidiaries

Commonstock
Balance at March 31, 1998
¥73,694
Net income
Conversion of convertible debentures
6Stock issued on exercise of warrants
100
Cash dividends,¥4.50 per share
Bonuses to directors and statutory auditors
Balance at September 30, 1998
73,800Net income
Effect of changes in accounting for income taxes
Stock issued on exercise of warrants
4,860
Cash dividends,¥4.50 per share
Effect of changes in reporting entity
Balance at March 31, 1999
78,660Net income
Conversion of convertible debentures
100
Stock issued on exercise of warrants
3,064
Cash dividends,¥4.50 per share
Bonuses to directors and statutory auditors
Effect of changes in reporting entity
Balance at September 30, 1999
¥81,824

Balance at March 31, 1999
Net income
Conversion of convertible debentures
Stock issued on exercise of warrants
Cash dividends,$0.04 per share
Bonuses to directors and statutory auditors
Effect of changes in reporting entity
Balance at September 30, 1999

$735,140
935
28,635$764,710Additional
paid‑incapitalMillions of yen¥67,932¥91,877
6,279

6125

68,063(1,595)(72)
96,489
6,892
6,069

6,162

74,225(1,595)(826)
107,029
6,629

100
3,855

¥78,180(1,638)(62)33¥111,991

Thousands of U.S.dollars$693,692$1,000,271
61,953935
36,027(15,308)(579)
308$730,654$1,046,645

Note : The United States dollar amounts represent translation of Japanese yen at the rate of ¥107=$1.

−３−

Retainedearnings

SEGMENT INFORMATION
Industrial segment information(unaudited)
Kuraray Co., Ltd. and Consolidated Subsidiaries

Net sales and Operating income

Six months ended September 30, 1999
Chemical and synthetic fibers
Chemical products
Man‑made leather, nonwoven
fabrics and fastening materials
Diversified businesses
Total
Elimination
Consolidated total

Six months ended September 30, 1998
Chemical and synthetic fibers
Chemical products
Man‑made leather, nonwoven
fabrics and fastening materials
Diversified businesses
Total
Elimination
Consolidated total

Six months ended September 30, 1999
Chemical and synthetic fibers
Chemical products
Man‑made leather, nonwoven
fabrics and fastening materialsDiversified businesses
Total
Elimination
Consolidated total

Net sales tooutside customers¥48,103
71,427
16,74718,804
155,081−¥155,081

Net sales tooutside customers¥51,597
72,763
18,40019,572
162,332−¥162,332

Millions of yen
Net sales tointersegment
Net sales¥921¥49,024
845
72,272
178
10,842
12,786(12,786)¥−

Operatingincome¥1,190
6,515

16,92529,646
167,867(12,786)¥155,081

1,128
1,501
10,334(308)¥10,026

Millions of yen
Net sales tointersegment
Net sales¥755¥52,352712
73,475

Operatingincome¥1,331
8,813

282
8,017
9,766
(9,766)¥−

18,682
27,589172,098(9,766)¥162,332

2,771
1,550
14,465(91)¥14,374

Net sales tooutside customers$449,561
667,542

Thousands of U.S.dollars
Net sales tointersegment
Net sales$8,607$458,168
7,897
675,439

Operatingincome$11,12160,889156,514
175,738
1,449,355−$1,449,355

1,664
158,178
101,327
277,065
119,495
1,568,850(119,495)(119,495)$‑ $1,449,355

10,542
14,02896,580(2,879)$93,701

Note: The United States dollar amounts represent translation of Japanese yen at the rate of ¥107=$1.

−４−

Industrial segment information(unaudited)
Kuraray Co., Ltd. and Consolidated Subsidiaries

Identifiable assets, Capital expenditure, Depreciation and amortization

Six months ended September 30, 1999
Chemical and synthetic fibers
Chemical products
Man‑made leather, nonwoven
fabrics and fastening materials
Diversified businesses
Total
Elimination and Corporate
Consolidated total

Six months ended September 30, 1998
Chemical and synthetic fibers
Chemical products
Man‑made leather, nonwoven
fabrics and fastening materialsDiversified businesses
Total
Elimination and Corporate
Consolidated total

Six months ended September 30, 1999
Chemical and synthetic fibers
Chemical products
Man‑made leather, nonwoven
fabrics and fastening materials
Diversified businesses
Total
Elimination and Corporate
Consolidated total

Identifiable
assets¥76,674
148,793

Millions of yen
Capitalexpenditures¥1,443
6,293

Depreciation andamortization¥1,647
4,285

743
4,658
13,137

1,219
620
7,771

36,59059,212321,269
178,726¥499,995−−¥13,137¥7,771

Identifiable
assets¥83,398
135,747

Millions of yen
Capitalexpenditures¥2,136
5,714

Depreciation andamortization¥1,870
3,962

2,872
1,602
12,324

926
612
7,370

35,64460,432
315,221
180,712¥495,933

Identifiable
assets$716,579
1,390,589
341,963
553,383
3,002,514
1,670,336$4,672,850−−¥12,324¥7,370Thousands of U.S.dollars
CapitalDepreciation andexpenditures
amortization$13,485$15,392
58,81340,047
6,944
43,533
122,775−$122,775

Note: The United States dollar amounts represent translation of Japanese yen at the rate of ¥107=$1.

−５−

11,393
5,794
72,626−$72,626