Business Results for theThird Quarter of the Fiscal Year Ending
December 31, 2018 (Unaudited)

November 8, 2018
Kuraray Co., Ltd.

November 8, 2018
Kuraray Co., Ltd.

Consolidated Earnings Report for the Third Quarter of the Fiscal Year Ending December 31,
2018

Name of listed company:
Stock code:
Stock exchange listing:
URL:

Kuraray Co., Ltd.
3405
Tokyo, first section
http://www.kuraray.com/

Representative:
Title:
Name:

Representative Director and President
Masaaki Ito

Contact:
Title:

Manager, Corporate Communications Department, Corporate Management Planning
OfficeFumio Uegaki+81-3-6701-1070

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)(Millions of yen rounded down unless otherwise stated)

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending December
31, 2018 (January 1, 2018 to September 30, 2018)(1) Consolidated Operating Results(Percentage changes displayed for net sales, operating income, ordinary income and net income attributable to owners of theparent are comparisons with the corresponding period of the previous fiscal year.)(Millions of yen)
Net Sales
(%)
18.5
―

449,929
379,663

Fiscal 2018 3Q
Fiscal 2017 3Q

Note: Comprehensive income:57,17758,342

(%)
(2.0)
―

Ordinary Income
54,832
57,089Net Income Attributableto Owners of the Parent

(%)
(4.0)
―

35,06637,496

(%)
(6.5)
―

For the fiscal 2018 third quarter: ¥32,707 million (−16.8%)
For the fiscal 2017 third quarter: ¥39,320 million (―%)

Net Income per
Share (Yen)
Fiscal 2018 3Q
Fiscal 2017 3Q

Operating Income

100.28106.58Fully Diluted Net
Income per Share(Yen)
100.09106.29Note: Percentage change in comparison with the third quarter of the previous fiscal year is not stated because changes toaccounting principles were applied retroactively.

(2) Consolidated Financial Position
As of September 30, 2018
As of December 31, 2017

Total Assets
958,310
776,735(Millions of yen)
Net Assets
581,212565,487

Equity Ratio (%)
59.7
71.7

[Reference] Equity attributable to owners of the parent: As of September 30, 2018: ¥572,048 million
As of December 31, 2017: ¥556,966 million

2. Dividends
Record Date
Fiscal 2017
Fiscal 2018
Fiscal 2018
(Forecast)(Yen)
Mar. 31――

Cash Dividends per ShareJun. 30
Sep. 30
Dec. 31
20.00
22.00
―
20.00
―

Annual
42.00

22.00

42.00

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

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending December 31, 2018
(January 1, 2018 to December 31, 2018)(Percentage changes displayed for net sales, operating income, ordinary income and net income attributable to owners of theparent are comparisons with the previous fiscal year)(Millions of yen)
Net Sales

Full Fiscal Year

610,000

Operating
Ordinary
Net Income Attributable Net Income per
IncomeIncometo Owners of the Parent
Share (Yen)
(%)
(%)
(%)
(%)
17.7 77,000
0.8 75,000
1.0
49,000(10.0)
139.66

Notes: 1. Revisions to forecasts of consolidated financial results during this period: No
2. The percentage changes in comparison with the previous interim period and the previous full fiscal year have been
restated to reflect the retroactive application of changes in accounting principles.

[Reference](1) Changes in Important Subsidiaries during the Period (Changes in Special Subsidiaries
Involving Changes in the Scope of Consolidation)
Added: No companies

Excluded: No companies(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: No
2. Changes besides 1. above: Yes
3. Changes in accounting estimates: Yes
4. Restatement: No(4) 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, 2018354,863,603 shares
As of December 31, 2017354,863,603 shares

2.

Number of treasury stock as of the period-end:
As of September 30, 2018
6,189,991 shares
As of December 31, 2017
4,040,182 shares

3.

Average number of shares for the period (cumulative):
As of September 30, 2018349,671,638 shares
As of September 30, 2017
351,812,027 shares

Note: It is not required that this type of earnings report be audited.
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 materially fromforecasts. 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 regarding Business Results ..............................................................................

2(1) Overview of Consolidated Business Results ........................................................................................

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

4

2. Quarterly Consolidated Financial Statements and Notes ......................................................................

5(1) Quarterly Consolidated Balance Sheets .................................................................................................

5(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income ...........................................................................................................................

7

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

7

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

9(3) Notes regarding Quarterly Consolidated Financial Statements ........................................................

10

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

10

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

10

Changes in Accounting Principles, etc. .................................................................................................

10

Segment Information, etc. .......................................................................................................................

121

1. Qualitative Information regarding Business Results(1) Overview of Consolidated Business Results
In the third quarter of fiscal 2018 (January 1, 2018–September 30, 2018), the world
economy continued to enjoy stable growth due to firm investment and consumption,
especially in Europe and the United States. We believe attention still needs to be paid to
economic trends in emerging countries where the currency is being devalued and theeconomic impact of trade negotiations being pursued by the United States. In thechemicals industry, corporate profits were held down, partly due to higher raw material andfuel costs.
The Kuraray Group launched the medium-term management plan “PROUD 2020” fromfiscal 2018. It aims to achieve its long-term vision of becoming a “Specialty Chemical
Company, growing sustainably by incorporating new foundational platforms into its own
technologies.” We will steadily take specific measures related to the key management
strategies underlined in the plan. We will also continue working to establish a new businessportfolio from a medium- to long-term perspective.
Consequently, cumulative consolidated operating results for the third quarter of fiscal 2018
are as follows: net sales rose ¥70,266 million, or 18.5%, compared with the previous fiscal
year to ¥449,929 million; operating income declined ¥1,164 million, or 2.0%, to ¥57,177
million; ordinary income decreased ¥2,256 million, or 4.0%, to ¥54,832 million; and net
income attributable to owners of the parent fell ¥2,430 million, or 6.5%, to ¥35,066
million.
Furthermore, from the first quarter of fiscal 2018, we unified our method of evaluatingproducts, raw materials, and work in process accounted for under inventories to the first-in,
first-out method. Retroactively applying the new method, we have recalculated the previous
year’s results to facilitate comparisons with the previous year’s business performance. In
addition, we changed the depreciation method and estimated useful lives used for tangible
fixed assets as well as the method of allocating corporate costs to each segment.
In the previous fiscal year, the Clarino business was included in the Functional Materials
segment. However, due to the organizational reforms carried out on January 1, 2018, theCompany decided to move this business to the Fibers and Textiles segment. Comparisonsand analyses for the third quarter of fiscal 2018 are based on the segmentation following
this change.
In addition, the acquisition of Calgon Carbon Corporation was completed on March 9,
2018, and said company has been included in the scope of consolidation from the firstquarter of fiscal 2018.

2

Results by Business Segment
Vinyl Acetate
Sales in this segment increased 6.2% year on year to ¥207,514 million, and segment income
fell 8.2% year on year to ¥43,395 million. In addition, while sales for each business havegrown, the aforementioned changes to the depreciation method and estimated useful lives
used for tangible fixed assets as well as the method for allocating corporate costs negatively
impacted segment income.
(1) As for PVA resin, results remained favorable due to an improved product mix. At thesame time, sales of optical-use poval film rose due to a steady expansion in demand. In
addition, to respond to the growing display market and needs for larger panels, in the
consolidated first quarter we decided to invest in new facilities at the Kurashiki Plant
with operations expected to begin at the end of 2019. The sales volume ofwater-soluble PVA film increased, especially for unit dose detergent packet
applications. Sales of PVB film expanded but were impacted by the higher raw
material and fuel prices.
(2) Sales of EVAL ethylene vinyl alcohol copolymer (EVOH resin) were affected by
shutdown maintenance and delays in construction to expand capacity at the U.S. plant.
Isoprene
Sales in this segment increased 2.1% year on year to ¥42,677 million, and segment income
fell 2.6% year on year to ¥6,203 million. In addition, with joint funding from PTT Global
Chemical Public Company Limited and Sumitomo Corporation, Kuraray established a joint
venture company in the second quarter to manufacture and market butadiene derivatives inThailand.
(1) In isoprene chemicals, the sales volume of fine chemicals, SEPTON thermoplastic
elastomer, and liquid rubber expanded but were affected by higher raw material andfuel costs.
(2) The sales volume of GENESTAR heat-resistant polyamide resin expanded, especiallyfor automotive and connector applications, but was impacted by higher raw material
and fuel prices.
Functional Materials
Sales in this segment jumped 140.7% year on year to ¥99,049 million, and segment income
climbed 33.4% year on year to ¥6,652 million. From the first quarter of fiscal 2018 forward,
Calgon Carbon results are included in consolidation.
(1) In the methacrylic resin business, sales were favorable due to an expansion in sales ofhigh-value added products in addition to continuing healthy market conditions.
(2) In the medical business, an expansion in sales of zirconia-based dental material
products contributed to sales.
(3) Although Calgon Carbon’s sales volumes increased, mainly in the United States, in the
Carbon Materials business the sales volume of general purpose applications decreased.

3

Fibers and Textiles
Sales of CLARINO man-made leather for use in sports shoes declined but continued to
expand for luxury item applications. In consumer goods and materials, sales ofhigh-value-added KURAFLEX products expanded. However, sales of KURALON wereaffected by higher raw material and fuel costs. As a result, sales in this segment fell 2.5%
year on year to ¥48,232 million while segment income decreased 11.6% year on year to¥5,414 million.
Trading
In fiber-related businesses, clothing sales remained firm for sportswear and uniforms. Salesof overseas sewn products also expanded. In addition, sales of resins and chemicals,particularly exports, were favorable. As a result, segment sales increased 5.3% year on yearto ¥101,962 million, and segment income climbed 4.2% to ¥2,993 million.
OthersIn other businesses, segment sales grew 20.6% year on year to ¥42,757 million, andsegment income fell 55.9% to ¥755 million due to increased R&D and other costs.
(2) Basis for the Revision in Forecasts, Including Consolidated Operating Results
Forecasts
After reviewing the consolidated operating results forecasts released on May 15, 2018,
Kuraray had decided not to make any revisions.

42. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets

ASSETS
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
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total tangible fixed assets
Intangible fixed assets
Goodwill
Customer-related assets
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Long-term loans receivable
Net defined benefit assets
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

5(Millions of yen)

December 31, 2017

September 30, 2018

60,904
113,876
38,296
86,041
14,69928,235
7,198
11,652(436)
360,468

60,211130,824
31,911
104,001
15,15935,7497,665
14,223(566)
399,179

59,267
164,803
19,671
38,187
5,266
287,196

70,723
190,30721,44153,684
6,577
342,735

24,567
26,07026,38777,024

105,725
26,30931,880163,915

35,420
229
1,963
6,739
7,734
(42)
52,045416,266
776,735

35,751
237
1,906
7,462
7,162
(40)
52,480559,131
958,310(Millions of yen)
LIABILITIESCurrent Liabilities
Notes and accounts payable—trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for bonuses
Other provision
Other
Total current liabilities
Noncurrent Liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for directors’ retirement benefits
Provision for environmental measures
Net defined benefit liabilities
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ Equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated Other Comprehensive Income
Valuation difference on available-for-sale securities
Deferred gain or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription Rights to Shares
Noncontrolling Interests
Total Net Assets
Total liabilities and net assets

6

December 31, 2017

September 30, 2018

39,864
7,864
13,09013,5946,000
827,631
108,053

44,59446,705
12,073
8,078
9,436
235
28,538
149,661

10,00042,09915,251
224
6,184
14,597
4,469
10,367103,193
211,247

50,000120,049
17,290224
5,876
18,164
4,917
10,912
227,435
377,097

88,95587,219344,653(6,110)514,718

88,95587,210366,338(9,762)532,741

13,007(603)
33,681(3,836)42,248539
7,980
565,487776,735

12,124(2)
31,021(3,835)39,307591
8,572
581,212958,310

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income
Quarterly Consolidated Statements of Income(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange loss
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Compensation income
Gain on transfer of know-how
Gain on sale of investment securities
Total extraordinary income
Extraordinary loss
Disaster loss
Acquisition expenses
Loss on disposal of tangible fixed assets
Loss on provision for environmental measures
Loss on anti-monopoly act
Loss on valuation of investment securities
Total extraordinary loss
Income before income taxes and noncontrolling interests
Income taxes—current
Income taxes—deferred
7

Fiscal 2017 3Q(January 1, 2017 –September 30, 2017)379,663244,538
135,124

Fiscal 2018 3Q(January 1, 2018 –September 30, 2018)449,929299,321150,608

20,85855,92476,782
58,342

25,13968,29093,43057,177

261
1,334
22
928
2,546

297
1,167
247
1,142
2,854

543
1,042
2,214
3,799
57,089

965
1,653
2,580
5,199
54,832

―
2,500
1,352
3,852

336
―
―
336

417
901
―
3,146
1,019
556
6,041
54,90018,848(2,146)

1,468
1,030
623
―
―
―
3,121
52,046
16,746(594)

Fiscal 2017 2Q(January 1, 2017 –September 30, 2017)
Total income taxes
Net income
Net income attributable to noncontrolling interests
Net income attributable to owners of the parent

16,701
38,198701
37,496

8(Millions of yen)
Fiscal 2018 2Q(January 1, 2018 –September 30, 2018)16,15135,895829
35,066

Quarterly Consolidated Statements of Comprehensive Income

Net income
Other comprehensive income (loss)
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income (loss)
Quarterly comprehensive income
Comprehensive income attributable to:
Owners of the parent
Noncontrolling interests

9(Millions of yen)

Fiscal 2017 3Q(January 1, 2017 –September 30, 2017)38,198

Fiscal 2018 3Q(January 1, 2018 –September 30, 2018)35,895

400
(764)
1,065
421
1,122
39,320(884)
600(2,905)1(3,188)32,707

38,610710

31,878828

(3) Notes regarding Quarterly Consolidated Financial Statements
Notes regarding Going Concern Assumptions
None
Material Changes in Shareholders’ Equity
On May 15, 2018, Kuraray’s Board of Directors resolved to acquire treasury stock and, accordingly, theCompany purchased 2,200,000 shares. As a result, in the cumulative consolidated third quarter, treasury
stock increased ¥3,652 million, totaling ¥9,762 million as of September 30, 2018.
Changes in Accounting Principles, etc.
1. Changes in Accounting Principles● Changes in the Inventory Evaluation Method
Previously, Kuraray and some consolidated subsidiaries generally applied the total average method toevaluate products, raw materials and work in process within inventories. However, from the first quarterof fiscal 2018, this method was replaced for the most part with the first-in, first-out method. The change
in the relevant accounting principle has been retroactively applied and the consolidated financial
statements for the previous fiscal year have been restated accordingly.
Due to accelerating global business expansion, over the last few years Kuraray’s overseas inventory andnet sales ratios have been growing. Prompted by this trend, we reconsidered our inventory evaluation
method, taking into account the need to ensure both proper evaluation procedures and Group-wide
unity regarding accounting principles and income calculations. To facilitate the evaluation of inventories
and more accurately calculate income, Kuraray and some of its consolidated subsidiaries therefore
adopted the first-in, first-out method to better track the movement of inventory. We also determinedthat this method would more accurately reflect the Group’s operating situation.
Because of this change, in the third quarter of the previous fiscal year, operating income decreased ¥69
million and ordinary income and net income before income taxes decreased ¥56 million compared toprevious results calculated by applying the new method retroactively. In addition, due to the cumulative
effect of changes to accounting principles on the book value of net assets at the beginning of theprevious fiscal year, the balance of retained earnings at the beginning of the previous fiscal year after the
retroactive application of these changes increased ¥129 million.
2. Changes in Accounting Estimates and Changes in Accounting Principles That Are Difficult
to Differentiate from Changes in Accounting Estimates● Changes in the Depreciation Method and the Estimated Useful Lives of Tangible Fixed
AssetsIn principle, Kuraray and its domestic consolidated subsidiaries originally used the declining-balancemethod to depreciate tangible fixed assets, except for buildings, structures acquired after April 1, 2016,
and leased assets. From the first quarter of fiscal 2018, however, the straight-line method is applied.
As a result of the accelerating global business expansion over the last few years, the ratio of production
accounted for by overseas facilities has been growing. Prompted by this trend, we reconsidered thedepreciation method used for tangible fixed assets, taking into account the need to both properly
calculate income and unify the Group’s accounting principles. Kuraray and its domestic consolidated
subsidiaries therefore adopted the straight-line method for the depreciation of tangible fixed assets
because said tangible fixed assets are stable, making the rate of depreciation also stable. We also
determined that this method would more accurately reflect the Group’s operating situation.
10

In addition, the Group has long depreciated machinery and equipment on the basis of estimated useful
lives of between 4 and 20 years. However, from the first quarter of fiscal 2018, the Group switched togenerally using 10 years.
This switch was prompted by the aforementioned changes in the operating environment, leading us toreconsider the estimated useful life of machinery and equipment in order to more accurately calculate
income as well as unify the Group's accounting practices. The new estimate assumes an economically
viable period for machinery and equipment that reflects actual usage based on the global supply structure.
On this basis, a 10-year useful life is a logical period for depreciation when calculating income. We also
determined that the change would more accurately reflect the Group’s operating situation.
Because of the abovementioned changes, in the third quarter of the previous fiscal year, operating
income, ordinary income, and net income before income taxes each increased ¥849 million comparedwith amounts calculated under the previous method.

11

Segment Information, etc.
● Segment Information
I. Third Quarter of Fiscal 2017 (January 1, 2017 to September 30, 2017)
1. Net sales, income and loss by reporting segment
Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles

Net sales(1) Outside
171,695
customers(2) Inter-segment
23,701sales andtransfers
Total
195,396
Segment income
47,279(loss)

Total

Other
Business1(Millions of yen)
Total Adjustment2 Consolidated
Statements3of Income

22,42729,73836,78793,511 354,160

25,502 379,663—

379,663

19,354

11,42012,667

3,293

9,956

80,394(80,394)—

41,782

41,15849,45596,804 424,598

35,459 460,057(80,394)

379,663

6,370

4,987

6,126

2,871

1,711

(11,005)

58,34270,437

67,63569,347

Notes:
1. The “Other Business” category incorporates operations not included in business segment
reporting, including the environmental business and engineering business.
2. Adjustment is as follows: Included within segment loss of ¥11,005 million is the elimination ofintersegment transactions of ¥1,018 million and corporate expenses of ¥12,023 million.
Corporate expenses mainly comprise headquarters’ general and administrative expenses and thesubmitting company’s basic research expenses.
3. Segment income is adjusted to agree with operating income in the consolidated statements ofincome.
II. Third Quarter of Fiscal 2018 (January 1, 2018 to September 30, 2018)
1. Net sales, income and loss by reporting segment
Reporting Segment
Vinyl Isoprene Functional Fibers and Trading
AcetateMaterials Textiles

Net sales(1) Outside
174,205
customers(2) Inter-segment
33,309sales andtransfers
Total
207,514Segment income
43,395(loss)

Total

Other
Business1(Millions of yen)
Total Adjustment2 Consolidated
Statements3of Income

22,66784,55335,55799,936 416,920

33,009 449,929

20,00914,496

12,675

2,025

9,747

42,677

99,04948,232 101,962 499,436

6,203

6,652

5,414

2,993

82,51564,658—449,929

92,263(92,263)—

42,757 542,193(92,263)449,929(8,236)57,177755

65,414

Notes:
1. The “Other Business” category incorporates operations not included in business segment
reporting, including the environmental business and engineering business.
2. Adjustment is as follows: Included within segment loss of ¥8,236 million is the elimination ofintersegment transactions of ¥1,077 million and corporate expenses of ¥9,313 million.
Corporate expenses mainly comprise the submitting company’s basic research expenses.
Furthermore, although the headquarters’ main general and administrative expenses are stillrecognized as corporate expenses, Kuraray has adopted the method of allocating them to eachreporting segment from the first quarter of fiscal 2018.
3. Segment income is adjusted to agree with operating income in the consolidated statements ofincome.
12

2. Information regarding the Assets of Each Reporting Segment
In the first quarter of fiscal 2018, with the acquisition of all of Calgon Carbon Corporation’s shares andthe company’s inclusion in the scope of consolidation, the Functional Materials segment’s assets
increased ¥175,053 million in comparison with December 31, 2017.
3. Information regarding Goodwill or Impairment Loss of Tangible Fixed Assets for Each
Reporting Segment
Important Changes in the Amount of Goodwill
In the Functional Materials segment, with the acquisition of all of Calgon Carbon Corporation’s sharesand said company’s inclusion in the scope of consolidation, ¥85,688 million in goodwill was generated
in the first quarter of fiscal 2018. Please note, because purchase price allocation has not been completed,the calculation of the amount of goodwill remains tentative.
4. Matters related to changes in reporting segments
Changes in reporting segments
From the first quarter of fiscal 2018, the Clarino business was reclassified into the Fibers and Textiles
segment from its original place in the Functional Materials segment following organizational revisions.
The segment information for the third quarter of the previous fiscal year has been restated to reflect thechange in classification.
Changes in the inventory evaluation method
As mentioned above in the Changes in Accounting Principles section, Kuraray and some of its
consolidated subsidiaries originally applied the total average method to evaluate products, raw materials
and works in process under inventories. However, from the first quarter of fiscal 2018, the Groupswitched to using the first-in, first-out method. A comparison with the third quarter results of theprevious fiscal year after the retroactive application of the new method shows that segment income forvinyl acetate decreased ¥625 million, segment income for isoprene decreased ¥78 million, segment
income for functional materials increased ¥146 million, segment income for fibers and textiles increased¥605 million, and segment income for other decreased ¥283 million.
Changes in the depreciation method of tangible fixed assets
In principle, the declining-balance depreciation method has been applied to tangible fixed assets, except
for buildings, structures acquired after April 1, 2016, and leased assets. However, from the first quarterof fiscal 2018, the Group has switched to the straight-line method. In addition, the Group previously
depreciated its machinery and equipment using estimated useful lives of between 4 and 20 years.
However, from the first quarter of fiscal 2018, the Group has generally switched to using 10 years
instead.
As a result, in the cumulative consolidated third quarter of fiscal 2018, segment income for vinyl acetate
decreased ¥1,842 million, segment income for isoprene increased ¥248 million, segment income forfunctional materials increased ¥691 million, segment income for fibers and textiles increased ¥1,004
million, and segment income for other increased ¥58 million.

13