BUSINESS REPORT 2012
Year ended March 31, 2012

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

Kureha is a leading diversified chemical products manufacturer that has applied its technological development expertise to
create original products in fields including advanced products, pharmaceuticals, agrochemicals, and packaging materials.
Since its establishment in 1944, Kureha’s growth and development has come exclusively from producing innovative
products developed in-house rather than from using outside technology.
Since 2001, Kureha has undergone a major transformation to enable it to constantly develop products to meet theever-changing needs of customers. As part of this transformation, it moved away from manufacturing commodity
chemicals to focus on key strategic business areas–including advanced products, pharmaceuticals and agrochemicals, andhigh-barrier packaging materials–where the company can benefit from its original technology and marketing strengths tosecure steady growth.
To support its transformation, Kureha developed a new mission, “the pursuit of excellence,” with the aim of
becoming a leading global specialty products company. Kureha also changed its name from Kureha Chemical Industry
Co., Ltd., to Kureha Corporation on October 1, 2005.
These moves have already reaped rewards, with Kureha displaying significant development, production, and marketing
abilities. Kureha’s goal is to foster future growth by advancing a model that takes a global perspective and focuses on
winnable markets in each of its business areas, including those that are still in the developmental phase.

Corporate Identity
MissionCorporatephilosophy

The pursuit of excellence•We treasure people and the natural environment•We constantly evolve through innovation•We contribute to society by developing beneficial products

Investor Information(As of June 26, 2012)(As of March 31, 2012)

Board Of Directors

Corporate Data

Takao IWASAKI
Yutaka KOBAYASHI
Naoya SUZUKI
Keikichi MUNAKATA
Norikazu SUNOU
Tadashi SAGAWA
Shusuke MATSUO
Kunihiko SAITO
Takeshi TAKAHASHI

President & CEO
Senior Executive Vice President
Executive Vice President
Executive Vice President & CFO
Executive Vice President
Senior Vice President
Senior Vice President
Independent Outside Director
Independent Outside Director

Employeecode ofconduct

Contents
Consolidated Financial Highlights
President’s Message
The Year’s Highlights
Review of Operations
Research & Development
Responsible Care
Corporate GovernanceConsolidated Five-Year Summary
Management Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Main Group Companies by Segment
Executives
Investor Information

1
2
6
8
12
13
14
16
17
20
22
22
23
24
25
48
49
49

Forward-looking statements
This report contains forward-looking statements thatare based on management’s assumptions and beliefs inlight of the information currently available to it. Thesestatements are subject to risks and uncertainties that
could cause actual results to differ materially fromthose discussed in this report. Such risks include but
are not limited to market trends and economic
conditions.

Date of Establishment
Paid-in Capital
Number of Employees
Independent Auditor

Board Of Corporate Auditors

Stock Information

Youichi KIYOSUKEHaruki YAMAGUCHI
Mitsuo SATOH
Masaru KITAMURA

Number of Shares ofCommon Stock Issued

Corporate Auditor
Corporate Auditor
Corporate Auditor
Corporate Auditor

Takao IWASAKI
Yutaka KOBAYASHI
Naoya SUZUKI
Keikichi MUNAKATA
Norikazu SUNOU
Koji HAGINO
Hideo NAKATANI
Tadashi SAGAWA
Shusuke MATSUO
Yoshiki SHIGAKI
Naoki FUKUZAWA
Takashi YAMAMOTO
Yoshiharu OGUCHI
Yoshio NODA
Toru YOSHIDA
Hiroshi SAKABE
Futoshi SAITOKUREHA CORPORATION
3-3-2, Nihonbashi-Hamacho,
Chuo-ku, Tokyo 103-8552, Japan
Tel: 81-3-3249-4666
Fax: 81-3-3249-4744
June 21, 1944
¥12,460 million
4,032 (consolidated)
1,628 (non-consolidated)
Nihombashi Corporation

181,683,909 shares

Number of Shareholders 15,533
Number of Shares Heldby Foreign Shareholders

35,876 (19.8% of total)

Stock Exchange Listings Tokyo Stock Exchange

Executive Officers
We always act as global corporate citizens, recognizing our corporate social responsibilities.
•In relation to our clients:
Customer satisfaction is our prime priority•In relation to our work:
We will always pursue progress and innovation
We will maintain a global perspective as we respond to change•In relation to our colleagues: Mutual respect and teamwork will always be fundamental tosound employee relationships

Corporate Name
Headquarters

President & CEO
Senior Executive Vice President
Executive Vice President
Executive Vice President & CFO
Executive Vice President
Executive Vice President
Executive Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Vice President
Vice President
Vice President
Vice President
Vice President

Transfer Agent

Mizuho Trust & Banking
Co., Ltd.

Major Stockholders
Meiji Yasuda Life Insurance Company
Tokio Marine & Nichido Fire Insurance Co., Ltd.
The Master Trust Bank of Japan, Ltd.
Japan Trustee Service Bank, Ltd.(trust account)
Daiichi Sankyo Co., Ltd.
The Nomura Trust and Banking Co., Ltd.(trust account)
Mizuho Corporate Bank, Ltd.
Juniper
The Chase Manhattan Bank,
N.A. London S.L. Omnibus Account

BUSINESS REPORT 2012

Kureha takes pride in its history of developing original, innovative technology

Executives

KUREHA CORPORATION

ProfileMizuho Trust & Banking Co., Ltd.

49

Consolidated Financial Highlights
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

Millions of yen

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

Thousands of
U.S. dollars

2012/2011

2012

2012

2011

¥128,358
8,472
1,460
14,3609,580
5,080¥132,309
6,350
692
14,076
10,266
5,502

–3.0%
33.4%
111.0%
2.0%
–6.7%
–7.7%

$1,561,722
103,078
17,763
174,717
116,559
61,808¥186,223
88,55456,683¥181,753
89,50054,885

2.5%
–1.1%
3.3%

$2,265,762
1,077,430
689,658

Yen

Amounts per share:
Net income – basic
Net assets

Percentage change¥

8.51
510.37

Percentage change¥

3.97
517.47

Percent

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

1.1%
1.7%
4.3%
47.0%

114.4%–1.4%

U.S. dollars

$

0.10
6.20

Change

0.5%
0.7%
3.1%
48.9%

Net Sales

Operating Income(Millions of yen)

Net Income(Millions of yen)

(Millions of yen) (Left scale)

Net Income per Share

Sales by Segment(2012)(Millions of yen)

BUSINESS REPORT 2012

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥82.19 to US$1, the rate of exchange prevailing on the Tokyo Foreign
Exchange Market on March 30, 2012.
2. For amounts per share, see Note 23 of the Notes on Consolidated Financial Statements.
3. Return on equity = [Net income / (Average net assets - Average minority interests - Average stock subscription rights)] x 100.
4. Return on assets = (Recurring income / Average total assets) x 100.

150,000

15,0007,500

50¥12,950
10.1%
120,000

12,0006,000

4090,000

9,000

4,500

30

¥16,300
12.7%¥37,672
29.4%
60,000

6,000

3,000

20

30,000

3,000

1,500

10

0

2008 2009 2010 2011 201202008 2009 2010 2011 201202008 2009 2010 2011 2012

0

¥31,253
24.3%

KUREHA CORPORATION(Yen) (Right scale)¥30,182
23.5%

Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction Related
Other

1

President’s Message

Kureha is committed to moving
forward - and thinking globally to meet changing market needs

KUREHA CORPORATION

BUSINESS REPORT 2012

Takao Iwasaki

2

President &Chief Executive Officer

Responding flexibly to changes in theeconomic and social environment, andstriving to enhance corporate value,
we will manage our business withconsideration for the global environment

Meeting today’s challenges
As I consider our progress during the past year, and look at the path forward, our corporate philosophy of“constant evolution through innovation” appears more apt than ever. Kureha remains a dynamic company,
and one that is committed to moving forward – and thinking globally – to meet changing market needs.
Today’s is a challenging business environment. During the past fiscal year we have been forced to contend with production disruptions at our core Iwaki Factory due to the Great East Japan Earthquake andsubsequent nuclear power plant accident, the European debt crisis, financial tightening in China, floods inThailand, and the yen reaching historically high levels. While these issues did have an impact on our earnings, I am pleased with the overall performance and proud to say that Kureha responded with great vigor,
including rapidly resuming production at the Iwaki factory following damage caused by the earthquakeand subsequent aftershocks.
For fiscal 2011 (ended March 2012), consolidated net sales amounted to ¥128,358 million, down 3.0%
year-on-year. Operating income, however, increased by 33.4% year-on-year to ¥8,472 million, and recur¥1,460 million, despite recording ¥3,797 million of disaster-related losses from the earthquake.
The challenges we have faced have further strengthened our resolve to ensure that Kureha is a company
capable of responding flexibly to the kind of turbulence seen of late in the economic and social landscape,as well as to sudden shifts in the market. This fundamental approach underpins the strategy of Kureha’s

BUSINESS REPORT 2012

ring income was up 39.5% to ¥7,867 million. Net income more than doubled from the previous year to

Recent progress
The initial Grow Globally mid-term business plan covered the period up to fiscal 2012. Under this plan,
our strategy was to concentrate specifically on key growth areas, including promoting global growth for

KUREHA CORPORATION

Grow Globally business plan.

existing products such as PPS (polyphenylene sulfide), PVDF (polyvinylidene fluoride), carbon fiber products, Krehalon food packaging films, the agricultural fungicide Metconazole, Kremezin (a therapeutic agent
for chronic kidney disease), as well as steady growth of Krewrap household wrapping film.
Although financially our performance diverged significantly from the original plan, we made significant progress with new businesses and in the way that our business is structured to respond to today’s
global market. I believe that the fundamental premise of the Grow Globally plan, as well as the basic direction for corporate management under that plan, was correct.

3

Grow Globally II
Building on these foundations, the Grow Globally II mid-term business plan was formulated this year andlaunched in April 2012. The plan’s core objective remains consistent, namely to accelerate global growthand, while recovering investments, steadily cultivate and expand new businesses. In addition, the planunderscores Kureha’s commitment to retaining and developing the human resources that are the foundation of the company’s global ambitions and provide the basis of our technical expertise. While responding
flexibly to changes in the economic and social environment, and striving to enhance corporate value, wewill also undertake to manage our business with consideration for the global environment.
Under Grow Globally II, Kureha is targeting operating profits of ¥20 billion on sales of ¥200 billion
by the fiscal year ending March 2016, with the contribution of overseas sales to expand to 33% from thecurrent 20%. We will further strengthen existing businesses in which we hold a competitive advantage,
such as PVDF, PPS, Krehalon food packaging films and Kremezin, while also steadily cultivating and expanding new businesses such as PGA (polyglycolic acid) resin and the lithium-ion battery anode material
Carbotron P.
We have continued to seed and cultivate new businesses – an area of activity that will remain crucial
during the course of Grow Globally II - and now at a stage where we aim to reap the benefits of these efforts. This involves new products being accepted by the market and adopted in use. Since support is necessary to develop and bolster applications, we have put in place a research structure specific to each product.
For example, Kureha’s Carbotron P lithium-ion battery anode material offers exceptional durability andcharge-discharge properties, and is highly evaluated among users. We anticipate that it will be even more
widely used in electric vehicles, hybrids, and plug-in hybrid electric vehicles, a growing field in which Japanese companies and technologies are playing a central role.
The ability to respond to fast-evolving market needs and supply Carbotron P at volumes that meet

BUSINESS REPORT 2012

rapidly growing demand for lithium-ion battery materials will require considerable capital investment. As
a result, we have taken the decision to partner with Itochu Corporation, a major Japanese trading company, for this business. We have put in place a structure, centered on our affiliate, Kureha Battery Materials Japan Co., Ltd., that will allow us to quickly respond to new developments in lithium-ion batteries andexpand our business through tie-ups with more business partners worldwide.
Another key component of our new business development strategy is PGA (polyglycolic acid) resin, a

KUREHA CORPORATION

one-of-a-kind material that Kureha became the first company in the world to mass produce by leveraging
its unique polymerization technologies. We are currently developing a wide range of applications that takeadvantage of the material’s biodegradability, high mechanical strength and gas barrier properties. PGA has
developed a strong reputation for its application in shale gas and oil extraction. Our new plant in West
Virginia in the United States, which will produce 4,000 tonnes annually, will soon begin full-scale commercial operations.

The strength of unique technologies
4

Kureha’s strengths are in our ability to utilize the company’s unique technologies and harness the depth ofexpertise across our global team to secure future growth. This will remain central to the company’s approach as it continues its evolution into new businesses and markets under Grow Globally II. Leveraging

Kureha’s strengths are in
our ability to utilize thecompany’s unique technologies
and harness the depth ofexpertise across our global
team to secure future growththese strengths, and with a commitment to nurturing the development of new advanced materials andapplications, the seeds of next generation businesses are already being sown.
We continue to further expand and enhance our laboratory complex, positioning it as the catalyst anddriving force behind our R&D activities, while the Iwaki Factory continues to function as our main plant
and as a control tower for operations, working together with the community to pursue manufacturing thatis of value to society. Together, this base of core operations and know-how will remain in Japan, and serveas the driver from which we will continue to develop and grow our operations.
With our roots firmly in Iwaki, we remain committed to the revitalization of the local community,
Fukushima, and the Tohoku region more broadly. We will cultivate materials technologies - one of theremaining beacons of Japanese industrial growth - and develop our business internationally. This is the essence of Kureha’s “Grow Globally” concept.
We look forward to your continued support.

KUREHA CORPORATION

BUSINESS REPORT 2012

July 2012

5

The Year’s Highlights

Construction Begins on
a PVDF Resin Factoryin China

Krehalon Food Packaging
Film Factory in Vietnam Begins
Full-Scale Operations

KUREHA CORPORATION

BUSINESS REPORT 2012T6o meet the growing demand for PVDF
(polyvinylidene fluoride) resin used as a bindermaterial in lithium-ion batteries as well as anengineering plastic for general industry use, Kureha
established Kureha (Changshu) Fluoropolymers Co., Ltd.
in January 2012 in Changshu, Jiangsu Province, China.
A groundbreaking ceremony for the subsidiary’s newplant was held on June 7, 2012, attended by more than
100 guests, including a Chinese government delegation,
Changshu Mayor Wang Yang, and officials involved withthe construction.
Kureha began commercial production of PVDF in
1970, the first company in Japan to do so, building on
its own technology in high-molecular-weight polymers.
Since then, PVDF
has been adopted
in a wide range ofapplications.
Constant
demand growth isforecasted for PVDF
resin as bindermaterial for lithiumion batteries, not only due to increased production of small
format lithium-ion batteries for consumer products suchas mobile phones, tablets and notebook computers, butalso from a sharp increase in demand from large format
lithium-ion batteries, utilized in hybrid and battery electricvehicles and stationary power storage. In addition, we also
expect greater demand for general industrial applications,such as PV back sheets for solar cells and water treatment
membranes.
Kureha expanded the PVDF production facilities
at its Iwaki Factory in July 2011, increasing capacityfrom 2,700 to 4,000 tonnes annually. Together with the
Kureha (Changshu) Fluoropolymer’s plant now underconstruction, Kureha will establish a stable supply base tomeet the growth in demand in Asia and global markets.

Kureha manufactures Krehalon food packaging
films which have exceptional oxygen and moisturebarrier properties and allow foods to be stored for
longer time. Krehalon is widely used by manufacturers ofretort-sausage, fresh red meat, processed meat, and cheese.
In 2009, Kureha established Kureha Vietnam Co., Ltd.,
located in Bien Hoa city, Dong Nai Province, Vietnam, asa manufacturing and sales company for Krehalon. Kureha
made the decision by taking consideration of maturity of
the Japanese market and the growth prospects presented
by rising living standards in Southeast Asia, India andOceania. The mission of Kureha Vietnam is to meet thegrowing demand in the region and to be competitive inthe markets.
Since then, Kureha has successively transferred film
manufacturing facilities from Japan to Kureha Vietnam.
In addition, in November 2011, a new manufacturing
plant of compounds used as raw materials for films wasestablished at Kureha Vietnam to enable an integrated
manufacturing process. We are moving forward to fullscale operations at the new plant, and strengthening thecompetitiveness by offering high quality and performance
products to the markets. Kureha will further expand the
Krehalon businesses in new markets and continue todevelop operations globally.

Good Design Award 2011
NEW Krewrap Receives
Good Design Award for
Sixth Consecutive Year, Seventh in Total

Advanced Technology for
Proper and Safe Processing ofIndustrial Waste
Kureha Ecology Management Co., Ltd.

BUSINESS REPORT 2012K

ureha Ecology Management Co., Ltd., which
designs and builds waste incineration facilities
using proprietary technologies, is a wholly-owned
subsidiary of Kureha, headquartered in Iwaki, Fukushima
Prefecture. The company has the ability to accept difficultto-process industrial waste from throughout Japan,
processing it effectively and safely in compliance with laws
and regulations. The Waste-Tech Park facility in the city of
Iwaki has two large incinerators, and the Kanagawa site in
Kawasaki City three incinerators. With those facilities, thecompany is now able to incinerate around 600 tonnes ofindustrial waste daily.
The processing facilities at Kureha Ecology
Management incorporating highly efficient combustionand exhaust gas treatment systems, and have achieved
the highest standards for management and control.
Making full use of these strengths, the company handles
incineration of industrial waste that is particularly difficult
to process, such as halogen compounds, chemical waste,
waste oil, and medical waste.
In 2011, Kureha Ecology Management received
certification from Japan’s Minister of the Environment forprocessing to render harmless waste electronics and othermaterials containing trace amounts of polychlorinatedbiphenyl (PCB), becoming only the third such certificate
to be conferred in Japan, The company also began
incinerating insulating oil containing trace amounts of
PCB. The use of PCB is strictly regulated on account of
its toxicity, and the government has taken the initiativeon treatment of PCB waste to make it harmless. Kureha
Ecology Management is one of a handful of firms thathas begun treatment of waste contaminated with trace
amounts of PCB.
Kureha Ecology Management continues to improve
its processing technologies through ongoing research anddevelopment, and as one of the leading companies in thewaste treatment industry will strive to ensure safety andsecurity in a recycling-oriented society.

KUREHA CORPORATION

K

ureha’s NEW Krewrap household wrapping film
received the Good Design Award during the fiscal
2011 awards program sponsored by the Japan
Institute of Design Promotion (JDP). NEW Krewrap hasreceived the award a total of seven times beginning in
2004, with this year’s award the sixth consecutive honor
since 2006. (No application was made in 2005.)
The Good Design Awards (“G” Mark program) wasestablished in 1957 by the Ministry of International
Trade and Industry as Japan’s only comprehensive
program for design evaluation and advocacy. For morethan five decades the program has helped chart a course
for improved lifestyle and good business, with the aim ofcreating culture and standards of living for a new era. The“G” Mark that signifies a Good Design Award recipient ispopularly recognized by the general public as a symbol ofsuperior design.
The packaging for NEW Krewrap has been redesigned
annually for the last eight consecutive years, with thebasic aim of making it the most convenient design forenjoyable use among all users globally. Improvements in2011 provided greater ease of usability, a stronger andmore durable carton, and updated labeling. Evaluatorsstated that, “At first glance the wrapping film seems
to be a perfect product, but we were able to sense the
manufacturer’s zeal for further modifications to make iteasier to use.”
Kureha will continue to draw on its corporate DNAof “customer-oriented craftsmanship” to further improve
NEW Krewrap.

7

Review Of Operations

Net Sales
Operating Income(Millions of yen)
40,00035,00030,00025,00020,00015,00010,000
5,000
0
-5000

ADVANCED
MATERIALS
DIVISION

BUSINESS REPORT 2012

Major product areas:advanced plastics (PPS resin, PVDF resin), carbon fiberand PGAKUREHA CORPORATION

2009

2010

2011

2012

PGA factory construction completed
Heat-resistance materials
for heat-treatment furnaces

8

2008

Advanced materials division sales were down 6% yearon-year to ¥31.3 billion, with the division reporting an
operating profit of ¥0.5 billion. Demand for advanced
plastics continued to expand while carbon products havebeen impacted by the emergence of significant inventory
adjustments.

Demand growth for advanced plastics
Sales of advanced plastics were up 2% from ¥14.3 billion
to ¥14.7 billion. PPS resin recorded growth in profits
as a result of strong demand for use in the automotive
sector, with the recent growth in popularity of hybrid carsin particular having a positive influence. Business at the
U.S. PPS joint venture has also demonstrated improved
performance. In addition, PVDF resin also recorded
stronger sales and operating profits in comparison to theprevious year, mainly due to growing demand for use inelectrode binders for lithium-ion batteries. On this basis,
PVDF production has continued running at full capacity
even after the capacity expansion completed last summer.

Construction of Kureha’s PGA plant in the U.S.
was completed in September 2012, although it isstill in a trial production phase and as a result the company
had to accrue operating costs as non-operating losses. As
has previously been reported, the focus for development ofapplications has been shifting from the beverage to energy
sector. For example, Kureha is now working with several
companies operating in the shale gas industry to utilize
PGA to improve the recovery ratio of residuals.
Outlook: FY2012 divisional sales are forecast to increase
12% to ¥35.0 billion, while operating income is todeteriorate to ¥100 million. Kureha anticipates that
PPS resin for use in the auto sector will continue todemonstrate steady growth. PPS resin production at
the Iwaki factory will continue at full capacity, while
operating capacity at the U.S. plant is expected to further
contribute to earnings. PVDF resin sales are also expected
to grow for use in lithium-ion battery binders. In contrast,
however, demand for carbon products for use in lithiumion battery anode is expected to grow, but use in siliconbased manufacturing equipment for solar equipment tocontinue to worsen and is expected to place pressure on
operating profits. For PGA, evaluation for use in shale
gas and applications supporting oil extraction activities is
expected to be completed in the second half of the fiscal
year.
Major Product Areas• PPS resin• PVDF resin• Carbon fiber• Bead-shaped activated carbon• Specialty carbon material• PGA (Polyglycolic Acid) resin

Net Sales
Operating Income(Millions of yen)
40,00035,00030,00025,00020,00015,00010,000
5,000
0

2008

2009

2010

2011

2012

SPECIALTY
CHEMICALSDIVISION
Therapeutic agent forchronic renal failure (KREMEZIN )Pharmaceuticals revenue weakens
Sales of pharmaceutical products declined from ¥10.2
billion to ¥8.0 billion, as a result of the accelerated
shipments of Kremezin during the previous year to secure
inventory immediately after the earthquake, which led to acomparative decline in shipments during FY2011.

Industrial chemicals to see delay in recovery
Sales of industrial chemicals declined 9% to ¥9.0
billion. Although sales of organic chemicals remained
flat, inorganic chemicals were negatively impacted bydemand-side delays in recovery following the March 2011
earthquake.

Agrochemicals profits to expand
Sales of agrochemical products were up 5% year-on-yearto ¥7.6 billion. Metconazole, an agricultural fungicide,recorded an expansion of profits following an increase insales volume that offset the negative impact of the weakened

Outlook: Fiscal 2012 divisional sales are expected toincrease to ¥33.5 billion, with operating income also
projected to increase slightly. Kureha expects export
sales of Metconazole to expand, but also to be hit by theadverse impact of currency fluctuation. For Kremezin,
official prices have been revised down by 7%, although thecompany is anticipating an expansion of sales volumes,
and the company is also due to receive proceeds from thesettlement of a patent infringement case.

Major Product Areas• Caustic soda
• Hydrochloric acid• Sodium hypochlorite• Monochlorobenzene• para-Dichlorobenzene• ortho-Dichlorobenzene• Anti cancer agent• Therapeutic agent for chronic kidney disease• Agricultural and horticulture fungicide

BUSINESS REPORT 2012

Specialty chemicals division sales were down 10% year-onyear to ¥30.2 billion from ¥33.6 billion while operating
profit declined 9% to ¥4.7 billion. This was in partdue to decreased shipments of industrial chemicals andpharmaceutical products, which were negatively impacted
by earthquake.

Euro. Kureha’s success in securing growth of agrochemicalsales was also significant for having come at a time when
the company withdrew from the agrochemical materials(fertilized granulated soils) business, which resulted in theremoval of some ¥700 million of sales revenue.

KUREHA CORPORATION

Major product areas:industrial chemicals, agrochemicals, pharmaceuticals

Agricultural fungicide(Metconazole)9Net Sales
Operating Income(Millions of yen)
50,00045,00040,00035,00030,00025,00020,00015,00010,000
5,000
0

2008

2009

2010

2011

2012

SPECIALTY
PLASTICSDIVISION
Food packaging film Krehalon
application example

KUREHA CORPORATION

BUSINESS REPORT 2012

Major product areas:
food packaging materials for commercial use, household
packaging products
Specialty plastics division sales declined 8% to ¥37.7
billion from ¥41.1 billion. Operating income improved
25% to ¥2.2 billion, thanks to improved utilization ofKureha’s Vietnamese plant for Food packaging films andsuccessful efforts to improve the price performance of
Krewrap household packaging goods.

Outlook: Fiscal 2012 divisional sales are forecast to recoversignificantly by 17% to ¥44.0 billion. Operating income isalso projected to see an even more marked, 93% increaseto ¥4.3 billion due to further improvement utilization andprofitability at the Vietnam plant, increased shipments of
PVDC compounds to China having recovered from theimpact of the earthquake, and continued sales increase ofhousehold packaging products.

Improved utilization of Vietnam plant
Sales of food packaging materials for commercial use were
down 13% to ¥9.6 billion, while profits improved due
to an increased utilization ratio of production facilities inVietnam. In Europe, hikes in raw material prices led tocost increases at the multi-layer shrinkable film business.

NEW Krewrap records improved profitability
Sales of household products were down 20% to ¥14.0
billion from ¥17.5 billion. Despite an initial delay inthe recovery of shipments of New Krewrap, profitability
improved due to cost-cutting efforts and sales began torecover during the second half of the fiscal year.

10

NEW Krewrap

Major Product Areas• PVDC film
• PVDC compound• Multilayer shrinkable film
• Multilayer non-shrinkable film
• Multilayer bottle• Household wrapping film
• Kitchen sink use garbage bags
• Plastic containers• PVDF fishing lines• Machinery for auto-seal food packaging

Net Sales
Operating Income(Millions of yen)
35,000

Other
Construction
Related30,00025,00020,00015,00010,000
5,000
0
-5000

2008

2009

2010

2011

2012

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

Construction related
businesses

Construction sales were up 22% year-on-year to ¥16.3
billion from ¥12.8 billion, with an operating profit of ¥1.1
billion representing a significant improvement from theprevious deficit of ¥0.4 billion. Sales of other operations
collectively also increased 12% to ¥13.0 billion from ¥11.5
billion, with an operating profit of ¥0.9 billion.

Expansion of construction operations
Construction related businesses continued to expand as
a result of earthquake related reconstruction works. In
addition, Kureha conducted cost-cutting efforts that led to
improved profitability.

Logistics and warehousing businesses largely
unchanged
Logistics and warehousing business sales were down 3% to¥10.6 billion, and trading related business sales were also
down 5% to ¥1.8 billion.
Outlook: Fiscal 2012 divisional sales for construction
are projected to decline by 20% to ¥13.0 billion, with
operating income also expected to decline, due to thegradual reduction in earthquake related reconstruction
operations. Divisional sales for other operations are
estimated to increase by 12% to ¥14.5 billion, with
operating income to stay flat at ¥0.9 billion. Growth
in industrial waste related operations is anticipated,
specifically micro-PCB (Polychlorinated Biphenyls)
processing work.

Environmental engineering profitability improves

Major Product Areas

Environmental engineering sales were up 23% to¥7.5 billion from ¥5.8 billion. Demand for industrial
waste processing operations increased in response toearthquake recovery efforts, while the Kanagawa plantalso saw increased utilization rates and contributed to an
improvement in earnings.

• Environmental engineering and industrial waste treatment
businesses• Industrial facility design, construction and managementbusinesses• Civil engineering and construction contracting businesses• Transport and warehousing businesses

BUSINESS REPORT 2012

Major product areas:
construction, environmental engineering,transport/warehousing, and trading related businesses

Industrial waste treatment-related
businesses

KUREHA CORPORATIONCONSTRUCTION
AND OTHEROPERATIONSDIVISION

11

Research & Development
Kureha Corporation conducts research and development (R&D) for the
Kureha Group. The R&D Division, with the aim of providing solutions that
benefit the global environment and people’s lives, designates priority researchareas by identifying fields with a high degree of social value such as theenvironment, energy and health, and in which the Kureha Group is able toleverage its technological strengths.
In April 2011, to commercialize research outcomes as quickly as possible,
we reorganized the functions of the R&D Division into three areas—
Laboratories, Technology centers, and Advanced Research Department —andclarified the research domains of each. This established an R&D structure witheven deeper ties to business and manufacturing departments.
Kureha currently has a structure comprising five R&D laboratories—
Research Center, Agrochemical Research Laboratories, Advanced Materials
Research Laboratories, PGA Research Laboratories, Biomedical ResearchLaboratories and Polymer processing Technologies Center. The approximately
300 R&D staff members in these facilities strive to maintain and increase thecompetitive advantage of existing businesses, with a focus on efficiency, speed
and maximizing business profitability, and aimed at achieving global growthand steadily producing results from new businesses.
Kureha’s R&D spending amounted to ¥5,080 million in the fiscal year
ended March 2012. An overview of spending is as follows.

KUREHA CORPORATION

BUSINESS REPORT 2012

1. ADVANCED MATERIALS DIVISION
In engineering plastics, for Fortron KPS (PPS resin), which is widely used in
automobiles and electronic devices, Kureha is developing new grades of thematerial and studying ways to achieve further production yields improvements.
For KF Polymer® (polyvinylidene fluoride resin), we are developing andimproving the protective sheets used for solar panels, and providing support for
production technologies.
For Kuredux® (Polyglycolic Acid (PGA) resin), we are working proactively
in conjunction with the PGA Division to develop new applications. Currently,
we are making steady progress in the development of applications for Kuredux®
in oil drilling and extraction, which make use of the material’s degradability.
We are also exploring new applications that take advantage of the resin’s various
unique properties, and are working toward technology developments relating
to its modification.
In battery-related materials, to secure our competitive advantage inanode materials for the large-scale lithium-ion batteries used in hybrid andelectric vehicles, Kureha is optimizing its production processes and providing
development support in line with business strategies. We are also developing
high-performance grades of binders to help maintain and grow market share.
R&D spending in this division amounted to ¥1,933 million.

Research Center

2. SPECIALTY CHEMICALS DIVISION
For Kremezin®, a therapeutic agent for chronic kidney disease (CKD), Kureha isactively pursuing business development in Europe and North America throughcollaboration with other companies. To expand sales in Japan, we are working
to collect evidence of the drug’s efficacy for disorders related to CKD.
In agrochemicals, Kureha is working to expand markets and applications,both in Japan and overseas, for the agricultural fungicide Metconazole and theseed treatment fungicide Ipconazole. To meet robust demand for Metconazole,
we are working to enhance productivity, and are providing support for the
expansion of production facilities.
R&D spending in this division amounted to ¥2,293 million.

Advanced Materials Research Laboratories

3. SPECIALTY PLASTICS DIVISION12For Krehalon (polyvinylidene chloride resin), Kureha is providing technologicalsupport at its production subsidiary in Vietnam to ensure stable supply andimprove quality. In addition, to further global business development we are
actively providing technical assistance to customers in Japan and overseas.
R&D spending in this division amounted to ¥853 million.

PGA Research Laboratories
Polymer Processing Technology CenterResponsible Care
Kureha was an inaugural member of the Japan Responsible Care Council andstated its commitment to implementing Responsible Care in April, 1995.
As a global corporate citizen, Kureha takes its commitments to society very
seriously, for example including in areas such as the environment and healthand safety.

Responsible Care implementation
Together, all Kureha group companies have established the All Kureha
Responsible Care Committee. Through this committee, the company isworking to enhance its efforts in various fields, including environmental
protection, security and disaster response, labor safety and hygiene, productsafety and quality assurance, logistics safety, energy conservation, andcommunity relations.
Kureha has obtained ISO 14001, the international standard forenvironmental management, as well as ISO 9001 for product quality
management and OHSAS 18001 for labor safety and hygiene management.
The Company is further enhancing efforts aimed at improving responsible
care activities through a “plan, do, check, act” activity cycle.

Reducing the burden on the environment

We will comply
with international
policies andregulations
We will consider
the global
environmentand operatesafelyRC
PolicyWe will manage
and utilize
environmental
and safety
information

We will provide
safe products
to society

We will establish
better relations
with society

Since its establishment, Kureha has developed technologies and productswith a view to reducing the burden on the environment. In the case of the
Iwaki Factory, Kureha seeks to create a manufacturing facility that minimizes
stress on the environment by implementing measures such as air and waterpollution prevention, reduction of chemical material and industrial waste,
odor control, and adoption of the Energy Consumption Index.

Disaster prevention
Safety and disaster prevention are among the most important responsibilities
of a manufacturing factory. In order to respond to the trust the community
places in the company, Kureha manages its facilities and operations in strict
compliance with the relevant laws. In addition, the company implements
a safety and disaster prevention program which includes its own voluntary
control criteria, activities and training.

Disaster drill

Contributing to the community

150

100

120

80

90

60

60

40

30

20

0

2008

2009

2010

2011

2012

0

Wastewater treatment system

Kureha General Hospital

KUREHA CORPORATION

CO2 Production(Thousands of tonnes) (Left scale)Specific Energy Consumption
Efficiency and Usage Method
at the Iwaki Factory (Right scale)

BUSINESS REPORT 2012

In addition to Kureha General Hospital being used as a community medical
facility in the southern part of Iwaki City, Kureha contributes to the local
community in a variety of different ways. These include opening company
sports facilities for public use, volunteering for clean up activities, offeringscience classes at elementary schools and holding community meetings toinitiate dialogue with local neighborhood associations.

13

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

Compliance program framework
Kureha has in place a compliance program framework, based on the KurehaGroup Ethical Charter and its Compliance Rules. Kureha’s complianceobjective is to ensure that all executives and employees act in a manner thatis consistent with legal compliance and that also meets the standards of oursociety. This framework is constantly being improved and reinforced so as tocultivate a compliance-focused corporate culture.
The Compliance Committee, led by the President & Chief Executive
Officer (CEO), keeps employees informed of compliance issues throughtraining programs and other activities based on the Compliance Handbook
and the Compliance Standards. In addition, direct access to internal andexternal (lawyers) advisers for inquiries and reporting on compliance issues ismaintained so that legal violations, confirmed or suspected, can be detected
and deterred at an early stage.

KUREHA CORPORATION

BUSINESS REPORT 2012Management, execution and decision-making framework

14

1. Supervisory and executive responsibilities are clearly distinguished tostrengthen corporate governance and accelerate managerial decisionmaking and execution.
The Board of Directors is limited to a maximum of 10 directors(including 2 external directors). The Board, presided over by the President& CEO, meets once a month in principle, to make decisions on important
administrative matters and pursue supervision.
The Executive Committee, chaired by the President & CEO andcomprised of executive officers appointed by the President & CEO, meets
twice a month in principle. The committee considers mid- and long-term
management strategy and basic policies that cover all aspects of generalmanagement, and passes resolutions and implements these policies.
To clarify responsibilities for fiscal year results, a one-year term wasestablished for directors and executive officers.
The Consolidated Executive Committee, chaired by the President &CEO, serves as a forum to exchange views on basic management policies
and other matters relating to the Kureha Group, thereby reinforcing theefforts of the consolidated management team.
2. A total of four corporate four auditors (including two external auditors)
undertake auditing activities. This group works within a framework thatallows them to monitor the deliberation processes of board resolutions
and reports, as well as have a representative corporate auditor attend andmonitor meetings of the Executive Committee. In addition, auditors areable to access documentation including all documents requiring seniorapproval, results of internal audits, and documentation on the status ofcustomer inquiries.
In addition, an Internal Control and Auditing Department acts
independently of other departments and under direct management andsupervision of the President & CEO. Based on an annual internal audit
plan approved by the Board of Directors, this department assesses thesuitability and effectiveness of internal management control systems
including compliance and risk management. It then proposes necessary or
desired changes and improvements, so as to enhance both management
efficiency and public trust in Kureha.

Internal control system
To further strengthen its internal control system, Kureha has established a setof basic policies, committees and internal rules to ensure that it observes laws
and regulations and conducts its business operations in an appropriate andfair manner.

Diagram of Internal Control Systems (As of June 30, 2012)
General Meeting of Shareholders
Appoints

Appoints

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

LiaiseAppoints

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

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

Executive
Committee

Internal Control and
Auditing Department
Audit

Responsible Care Committee

All division ofKureha Corporation

Audit
Audit

Information Management
Committee
Information Disclosure Committee
Information Security Committee

Kureha Group companies

Risk Management Committee

Risk management system
To enable the Company to recognize and minimize the risks it is exposed
to during business activities, Kureha has established a Risk Management
Committee. The committee proposes concrete measures to the President &CEO aimed at reducing and avoiding risk and manages the implementationof such measures. In addition, to respond to unforeseen circumstances,a system is in place for the establishment of an emergency response task
force, with the objective of prioritizing the safety of personnel, minimizing
economic damage, and ensuring the continuation of corporate activities.
Kureha has also established an Information Management Committee to
identify a clear set of information management rules and promote proceduresfor the appropriate control of Company information. Suitable measures arealso being taken for the management of information security and disclosure.
To address environmental and safety risks, management procedures forthe environment, quality, and labor safety have been established that comply
with ISO 14001, ISO 9001, and OHSAS 18001 standards. In addition,
Kureha is continuing with ongoing efforts to improve environmental
conservation, quality assurance, and occupational health and safety.

KUREHA CORPORATION

Under this system, Kureha publishes Internal Control Reports under
the responsibility of the President & CEO. In addition, Kureha has alsoestablished a set of Basic Rules for Internal Control of Financial Reports toensure the reliability of the financial reports and to guarantee implementationof management’s assessment and certified public accountant’s auditing of
the effectiveness of internal control of financial reports, as stipulated in the
Financial Instruments and Exchange Law.

BUSINESS REPORT 2012

Internal Control ofFinancial Reporting Committee*

15Consolidated Five-Year Summary
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2012, 2011, 2010, 2009 and 2008
Thousands of
U.S. dollars(Note 2)Millions of yen

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

BUSINESS REPORT 2012

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

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

2012

2011

2010

2009

2008

2012

¥128,358
97,46130,896¥132,309
101,696
30,613¥134,606
107,740
26,866¥143,741
116,182
27,559¥149,776
116,666
33,110$1,561,722
1,185,801
375,90931,25330,182
37,672
29,25016,30012,950
8,472
534
4,715
2,226
2,046
1,114
932
(1,051)
1,460
14,360
9,580
5,080
1,933
2,293
853
—
12,144(14,169)370

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

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

32,42433,89843,53833,881
—
—
9,456
678
5,732
1,655
2,104
—
—
(713)
3,373
17,82910,304
6,085
1,960
2,956
1,125
45
11,420(20,518)
10,70538,91532,522
48,76529,574——
12,722
4,378
3,482
3,358
1,620
—
—
(116)
6,097
10,085
10,148
6,543
1,578
3,288
1,658
20
14,996(8,584)(4,758)380,253367,222458,352
355,882
198,320
157,561
103,078
6,497
57,36727,08324,893
13,553
11,339(12,787)
17,763
174,717
116,559
61,80823,51827,898
10,378—
147,755(172,393)
4,501¥186,223
88,55456,683¥181,753
89,50054,885¥184,623
96,82247,969¥182,224
97,07544,033¥187,349
104,582
32,040$2,265,762
1,077,430
689,658

KUREHA CORPORATION

Yen

16

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

¥

8.77
538.1
10

U.S. dollars

¥

18.75
533.4510¥ 3 3.39
572.24
10

6.6%
2.3
3.4
4.7
52.4

8.5%
4.1
5.8
6.6
55.2

$0.106.20
0.12

Percent

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

6.6%
1.1
1.7
4.3
47.0

4.8%
0.5
0.7
3.1
48.9

4.2%
1.2
1.6
3.0
52.2

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥82.19 to US$1, the rate of exchange prevailing on the Tokyo Foreign
Exchange Market on March 30, 2012.
2. For amounts per share, see Note 23 of the Notes to Consolidated Financial Statements.

Management Discussion and Analysis
Business Environment

Net Sales(Millions of yen)
150,000

Analysis of business results

125,000

Sales in the subject fiscal year declined ¥3,950 million year-on-year to ¥128,358 million.
This was due mainly to revenue declines in the mainstay business divisions of Advanced
Materials, Specialty Plastics, and Specialty Chemicals, offsetting considerable gains inConstruction and Other Operations divisions. Gross profit, however, rose ¥1,355 million to¥34,990 million, with the gross profit margin improving from 25.4% in the previous fiscal
year to 27.3%.
Sales and general administrative expenses declined ¥766 million from the previous fiscal
year to ¥26,518 million. Operating profit increased ¥2,122 million year-on-year to ¥8,472
million, while the operating income ratio rose from 4.8% in the previous fiscal year to 6.6%.
Non-operating profit/loss amounted to a non-operating loss of ¥605 million, with losses
shrinking by ¥106 million from the previous fiscal year, due mainly to a decrease in foreignexchange losses. In extraordinary gain/loss, the Company recorded an extraordinary loss on
disposal of property and equipment stemming from damage during the Great East Japan
Earthquake. As a result, income before taxes increased ¥1,431 million to ¥3,188 million.
The total of corporate, residence and business taxes amounted to ¥1,501 million.
Minority interests in income decreased ¥42 million to ¥226 million. As a result, net income
increased ¥768 million from previous fiscal year to ¥1,460 million.

100,000
75,00050,00025,00002008 2009 2010 2011 2012
Domestic
Overseas

Operating Income(Millions of yen) (Left scale)Operating Income to
Net Sales(%) (Right scale)
15,00010

The balance of cash and cash equivalents at the end of the subject fiscal year (March 31,2012) amounted to ¥8,857 million, a decrease of ¥1,888 million from the end of theprevious fiscal year (March 31, 2011). An outline of individual cash flows and the main
factors affecting each is as follows:

12,000

8

9,000

6

Cash flow from operating activities
Net cash provided by operating activities amounted to ¥12,144 million, a decrease of ¥364
million from the previous fiscal year. This was due mainly to an increase in expenditure fromthe reversal of the allowance for disaster losses, offsetting the increase in income before
income taxes.

6,000

4

3,000

2

0

Cash flow from investment activities
Net cash used in investment activities amounted to ¥14,169 million, an increase of ¥2,737
million from the previous fiscal year. This was due mainly to an increase in expenditure forthe acquisition of tangible and intangible assets.
Cash flow from financing activities
Net cash provided by financing activities amounted to ¥370 million, a decrease of ¥2,349
million from the previous fiscal year. This was due mainly to a decrease in proceeds fromlong-term borrowings compared to the previous fiscal year, and redemption of commercial
paper.

Financial policy
The Kureha Group’s basic policy is to maximize operating cash flow by securing earnings inline with its business plan and by enhancing asset efficiency, and to allocate cash withpriority given to capital expenditure for new businesses and expansion of existing businesses,
investments and loans, research and development, and dividend payments to investors. Inline with this policy, Kureha procures required capital with priority given to securing longterm funding, and in consideration of the balance between long- and short-term borrowings.

Balance sheet analysis
As of March 31, 2012, total assets amounted to ¥186,223 million, an increase of ¥4,470
million from the end of the previous fiscal year (March 31, 2011). Current assets totaled¥66,821 million, an increase of ¥2,660 million from a year earlier. This was mainly due toan increase in receivables and inventories resulting from a falloff in sales and production

2008 2009 2010 2011 2012

0
BUSINESS REPORT 2012

Cash flow

Net Income(Millions of yen) (Left scale)

Net Income to Net Sales(%) (Right scale)
7,000

7

6,000

6

5,000

5

4,000

4

3,000

3

2,000

2

1,000

1

0

2008 2009 2010 2011 2012

KUREHA CORPORATION

During the fiscal year ended March 2012, the Japanese economy benefited from major
rebuilding initiatives following the Great East Japan Earthquake, with signs of
economic recovery being seen towards the end of the fiscal period. At the same time,
however, the negative impact of the Fukushima nuclear power plant accident lingered,
while the widening European debt crisis, financial tightening in emerging economies,sluggish exports due to the flooding in Thailand, and the historically high level of theyen were all factors.

017following the Great East Japan Earthquake, offset by a decrease in cash and time deposits
stemming from the dissolution of emergency liquidity secured at the end of the previous
fiscal year. Property and equipment totaled ¥87,118 million, up ¥32 million from a year
earlier, due mainly to a high level of capital expenditure, including in overseas production
facilities, which exceeded depreciation expenses. Investment and other assets totaled ¥31,443
million, a decrease of ¥1,361 million, due mainly to a falloff in the market value ofinvestment securities from the end of the previous fiscal year.
Total liabilities at the end of the subject fiscal year amounted to ¥97,669 million, an
increase of ¥5,416 million from the end of the previous fiscal year. This was due mainly to a
¥1,799 million increase in interest-bearing debt to ¥56,683 million following an increase incorporate bonds and decline in borrowings; an increase in trade payables with the operational
recovery; and a decrease in the allowance for losses due to disaster, as a result of the progresswith post-disaster restoration work.
Total net assets for the subject fiscal year amounted to ¥88,554 million, a decline of¥946 million from the previous fiscal year. This was due mainly to the balance of net incomeof ¥1,460 million; a ¥1,760 million dividend payout from retained earnings; a decrease invaluation and translation adjustments on investment securities and currency exchange; andan increase in minority interests.
The changes in total assets were due mainly to business development measures, including
the procurement of additional financing for capital expenditure in overseas operations andelsewhere, and the startup of certain equipment; and excluding such external factors asfluctuations in receivables and payables due to the earthquake disaster, and stock prices.

Cash Flows fromOperating Activities
Cash Flows from
Investing Activities(Millions of yen)
20,00015,00010,0005,000
0-5,000-10,000-15,000-20,000-25,000

2008 2009 2010 2011 2012

Overview of capital expenditure

KUREHA CORPORATION

BUSINESS REPORT 2012

The Kureha Group has designated advanced materials, pharmaceuticals and agrochemicals,and environment-related businesses as core businesses that drive earnings, and as suchactively invests in these areas. Total capital expenditure during the fiscal year ended March
31, 2012, amounted to ¥14,360 million.

18

Capital expenditure by business division:
The Advanced Materials Division invested ¥8,711 million, mainly for PVDF (polyvinylidene
fluoride) resin production facilities (Kureha), carbon product manufacturing facilities(Kureha and Kureha Battery Materials Japan Co., Ltd. Group), and PGA (polyglycolic acid)resin production facilities (Kureha PGA LLC).
The Specialty Chemicals Division invested ¥1,285 million, primarily on production
facilities for chlorine / caustic soda (Kureha).
The Specialty Plastics Division invested ¥1,817 million, primarily for manufacturing
facilities for food packaging materials (Kureha and Kureha Vietnam Co., Ltd.).
The Construction Division invested ¥112 million, mainly for the renovation ofbuildings.
The Other Operations Division invested ¥1,072 million, mainly on industrial waste
processing facilities (Kureha Ecology Management Co., Ltd.).
In addition, as a joint initiative, the Advanced Materials, Specialty Chemicals, andSpecialty Plastics divisions invested ¥1,359 million in such areas as environmental
conservation projects (Kureha), and private power plant facilities (Kureha).
Capital required for these investments was procured from cash-at-hand, corporate bonds,
and borrowings.

Total Assets(Millions of yen)
200,000

150,000

100,000

50,0000

Net Assets(Millions of yen) (Left scale)

Equity Ratio

Business and other risks
The Kureha Group’s business operations are diverse, comprising the Advanced Materials
Division focused on PPS resin, PVDF resin and carbon products; the Specialty Chemicals
Division focused on industrial chemicals, pharmaceuticals and agrochemicals; the Specialty
Plastics Division focused on food packaging and household products; the Construction
Division focused on construction and engineering; and the Other Operations Division
including environmental businesses and logistics. By region, the Group conducts business inJapan as well as Europe, North America, and Asia.
The main factors that could affect the operating results, stock price, financial positionand other aspects of the Kureha Group are as follows.
Forward-looking statements in this text are based on evaluations made at the time of theCompany’s securities report filing (June 26, 2012).
(1) Changes in the business environment in Japan and overseas; changes in the market price of
products
The Kureha Group’s business is exposed to external factors such as changes in markets orcustomers, and intensification of competition with competing companies. Accordingly,
changes such as a decrease in demand for the Group’s principle products, customers shifting

2008 2009 2010 2011 2012(%) (Right scale)
120,000

60

100,000

55

80,00050

60,00045

40,00040

20,00035

02008 2009 2010 2011 201230

production overseas, and an increase in production capacity by competing firms, could
therefore influence the Group’s operating results and financial position.

(4) The Specialty Chemicals Division’s pharmaceutical businessOne of the Kureha Group’s core businesses is the manufacture and sale of pharmaceuticals.
Accordingly, revisions to drug prices under Japan’s medical insurance system could have anegative effect on the Group’s operating results.
(5) Country risks for overseas businesses
The Kureha Group conducts business in Europe, North America and Asia. Accordingly,
changes such as deterioration in the political or economic situation in these regions, theenactment or abolishment of laws and regulations, international tax practice risks such astransfer price taxation, and deterioration in public safety, as well as unforeseen circumstancessuch as terrorism, armed conflict or natural disaster, could have a negative effect on theGroup’s operating results and financial position.
(6) Currency fluctuations
The items in Kureha Group’s financial statements not denominated in yen are susceptible tofluctuations in exchange rates when converted into yen. The Group concludes exchange
contracts and takes other steps to minimize the effects of fluctuations in exchange rates.
However, fluctuations in exchange rates beyond those predicted could have a negative effecton the Group’s operating results and financial position.
(7) Investment securities
The Kureha Group held a total of ¥16,882 million in investment securities and other
instruments (9.1% of total assets on a consolidated basis) as of the end of the subject fiscal
year, for the purpose of long-term holdings. Significant changes in market prices, or in thefinancial position of the issuing companies, could have a negative effect on the Group’s
operating results and financial position.
(8) Occurrence of natural disasters or accidents
Manufacturing for the Kureha Group’s principal products is concentrated in the production
division of the Iwaki Factory (Iwaki, Fukushima Prefecture), and as such the Company
makes continual efforts focused on this facility for environmental conservation and to ensure
safety. However, damage to production facilities as a result of natural disasters such as major
earthquakes or typhoons, or due to accidents, could have a negative effect on the Group’s
operating results and financial position.
(9) Litigation
The Kureha Group has established the “Kureha Group Ethical Charter,” “Compliance Rules”
and “Compliance Standards,” and strives to ensure that the Group strictly complies with alllaws, regulations and societal norms. However, there is a risk that the Group’s domestic oroverseas businesses could be the target of lawsuits, administrative measures or other action. A
major lawsuit or other action be taken filed against Kureha could have a negative effect on
the Group’s operating results and financial position.

(%)
7
6
5
4
3
2
1
0

2008 2009 2010 2011 2012

Interest-Bearing Debt
(Millions of yen)
60,00050,00040,00030,00020,00010,00002008 2009 2010 2011 2012

Capital Expenditure
Depreciation(Millions of yen)
18,00015,00012,000

BUSINESS REPORT 2012(3) Product liability
The Kureha Group’s core business is chemical manufacturing. The Group is acutely aware of
the risks connected with its products and the manufacturing process, and is careful tocontinually exercise Responsible Care (autonomous management for environmental
conservation, disaster safety and other measures). However, should a significant, unforeseen
quality issue arise, there could be a negative effect on the Group’s operating results andfinancial position.

Return on Assets
Return on Equity

KUREHA CORPORATION(2) Changes in fuel and raw material prices
Raw materials such as naphtha and coal used by the Kureha Group, as well as fuel, aresusceptible to changes in market conditions. As a result, changes such as an increase in theprice of these raw materials, or the inability to shift the additional cost to product prices in atimely and appropriate manner, could have a negative effect on the Group’s operating results
and financial position.

9,000
6,000
3,000
0

2008 2009 2010 2011 201219

Consolidated Balance Sheets
Kureha Corporation and its Consolidated Subsidiaries
As of March 31, 2012 and 2011
Thousands of
U.S. dollars(Note 2)

KUREHA CORPORATION

BUSINESS REPORT 2012

Millions of yen

2012

2011

2012

ASSETS
Current assets:
Cash and time deposits (Note 5)
Trade notes and accounts receivable
Inventories (Note 7)
Deferred tax assets (Note 14)
OthersLess: Allowance for doubtful accounts
Total current assets¥8,857
29,58622,151
2,630
3,665
(69)
66,821¥10,746
27,29519,196
3,375
3,648
(99)
64,161$107,762
359,970
269,509
31,99944,591(839)
813,006

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

29,89733,387
13,4548,537
1,841
87,11828,51922,711
13,026
17,886
1,775
83,917363,754406,217
163,693
103,869
22,3991,059,958

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

23,720
2,209
839
5,836
(322)
32,28324,607
1,977
1,021
6,186
(116)
33,675288,599
26,876
10,20871,006(3,917)392,785¥186,223¥181,753$2,265,762

Total assets
The accompanying notes are an integral part of these statements.

20

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

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

2012

2011

2012

¥19,262¥14,156$234,359

16,049
6,123
576
4,665
2,126
579
7,933
57,316

13,455
6,378
674
4,536
2,005
1,823
6,025
49,052

195,267
74,498
7,008
56,75825,866
7,044
96,520697,359

35,6341,827
650

37,4292,843
769

433,556
22,228
7,908

336
785
163
953
40,352
97,669

365
775
164
856
43,201
92,253

4,088
9,551
1,983
11,595490,959
1,188,331

12,4609,149
71,988(4,546)89,051

12,4609,457
71,935(4,542)89,310151,599
111,315875,872(55,310)
1,083,477

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

3,723
(37)
(4,164)
(478)
64
604
89,500¥181,753

43,910(60)(61,418)(17,569)997
10,512
1,077,430$2,265,762

KUREHA CORPORATION

Net assets:
Shareholders’ equity (Note 16):
Capital, non par value
Authorized: 2012 and 2011 – 600,000,000 shares
Issued: 181,683,909 shares in 2012 and 2011
Capital surplus
Earned surplus
Less: Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities(Note 9)Deferred loss on hedges
Translation adjustments
Total accumulated other comprehensive income
Stock subscription rights
Minority interests
Total net assets
Total liabilities and net assets

BUSINESS REPORT 2012

Commitments and contingent liabilities (Note 15)21

Consolidated Statements of Income
Kureha Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011

Millions of yen

2012¥128,358
93,36834,9902011¥132,309
98,674
33,63526,518
8,472

27,2856,350

322,642
103,078

683
(787)
700
132
80
24
—
(3,797)

651
(690)
—
4
210
236
242
(3,373)

8,310(9,575)
8,516
1,606
973
292
—
(46,197)(1,529)(334)(18,603)—(790)(5,284)(184)(1,355)(4,593)—(9,611)(64,290)

Income before income taxes and minority interests

3,188

1,757

38,788

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

1,018
483
1,501

1,290
(494)
796

12,385
5,876
18,262

1,686
226¥1,460

961
269
¥692

20,5132,749$17,763

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses (Note 19)
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Gain on business transfer
Gain on sale of property and equipment (Note 20)
Gain on sale of investments in securities (Note 9)
Gain on insurance claim
Reversal of allowance for doubtful accounts
Loss due to disaster (Note 25)
Loss on disposal and sale of property and equipment(Note 20)
Impact of application of accounting standard for asset
retirement obligations
Other, net
Other expenses, net

Net income before minority interests
Minority interests
Net income

KUREHA CORPORATION

BUSINESS REPORT 2012

The accompanying notes are an integral part of these statements.

22

Thousands of
U.S. dollars(Note 2)

2012
$1,561,722
1,136,001
425,720

Consolidated Statements of Comprehensive Income
Kureha Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2012 and 20112012
Income before minority interests (Note 22)
Other comprehensive income
Unrealized loss on available-for-sale securities
Deferred loss on hedges
Translation adjustments
Share of other comprehensive income in affiliates
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to (Note 22):
Owners of the parent
Minority interests

The accompanying notes are an integral part of these statements.

Millions of yen

Thousands of
U.S. dollars(Note 2)

¥1,686

2011
¥961

(116)
30
(890)
6
(969)
716

(1,272)(37)(1,952)—(3,261)(2,299)(1,411)365(10,828)73(11,789)
8,711

493
¥223

(2,550)
¥251

5,998
$2,7132012$20,513

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

BALANCE-MARCH 31, 2011
¥181,683,909
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Decrease resulting from the change in scope of
consolidation
Offset against deficit
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2012
¥181,683,909¥12,460————

Earnedsurplus¥9,456———(0)¥71,935(1,716)
1,460——¥(4,542)
—
—
(7)
2

—

—

(0)

—

(0)

—
—
—
¥12,460(306)——¥9,149

306
3

—
—
—
¥(4,546)—
3¥89,051

Minority
interests

Total net
assets—¥71,988

Accumulated other comprehensive income
Total
accumulated
Unrealized gain
Stock
other
(loss) on
Deferredavailable-forloss
Translation comprehensive subscription
rightsincomesale securities
on hedges
adjustments

BALANCE-MARCH 31, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Decrease resulting from the change in scope of
consolidation
Offset against deficit
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2012

BALANCE-MARCH 31, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Decrease resulting from the change in scope of
consolidation
Offset against deficit
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2012

¥3,723————¥89,310(1,716)
1,460
(7)
2

¥(36)
—
—
—
—

¥(4,164)————¥(477)
—
—
—
—

¥64
—
—
—
—

¥603
—
—
—
—

—

¥89,500(1,716)
1,460
(7)
2

—

—

—

—

—

—

(0)

—
—
(113)
¥3,609

—
—
30
¥(5)

—
—
(884)
¥(5,048)——(967)¥(1,444)

—
—
18
¥82

—
—
260
¥864

—
3
(687)
¥88,554

Treasurystock,
at costMillions of dollars
Shareholders’ equity
Total
shareholders’equityCapitalCapitalsurplus

Earnedsurplus$151,599————$115,050———(1)$875,228(20,878)
17,763——$(55,262)
—
—
(85)
24

$1,086,628(20,878)
17,763
(85)
24

—

—

(1)

—

(1)

—
—
—
$151,599(3,723)——$111,315

3,723
36
—
$875,872———$(55,310)—
36—$1,083,477

Accumulated other comprehensive income

Unrealized gain
(loss) on
available-forsale securities

BALANCE-MARCH 31, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Disposal of treasury stock
Decrease resulting from the change in scope of
consolidation
Offset against deficit
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2012
The accompanying notes are an integral part of these statements.

$45,297
—
—
—
—
—
—
—
(1,374)$43,910Deferredloss
on hedges

Total
accumulated
Stock
other
Translation comprehensive subscription
rightsincomeadjustments$(438) $(50,663) $(5,803)
—
—
—
—
—
—
—
—
—
—
—
—
—

—

$778
—
—
—
—

—

—

—
—
—
—
—
—
365
(10,755) (11,765)$(60) $(61,418) $(17,569)

—
—
219
$997

Minority
interests

Total net
assets$7,336 $1,088,940—(20,878)—
17,763
—
(85)
—
24
—

BUSINESS REPORT 2012

CapitalsurplusCapital

KUREHA CORPORATION

Number ofcommon stock

Millions of yen
Shareholders’ equity
TreasuryTotalstock,
shareholders’at costequity

(1)

—
—
—
36
3,163
(8,358)$10,512 $1,077,430

23

Consolidated Statements of Cash Flows
Kureha Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011
Thousands of
U.S. dollars(Note 2)Millions of yen

KUREHA CORPORATION

BUSINESS REPORT 2012

2012

24

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

2011

2012

¥3,188¥1,757$38,788

9,580
98
186
85
(113)

10,266
76
(206)
167
(444)

116,559
1,192
2,263
1,034
(1,374)(28)(1,242)
(684)
787
1,396
88
(79)
(2,481)(3,133)
(88)
5,237
1,217
(1,162)
12,854
968
(773)
(903)
12,144

4
1,822
(651)
690
330
49
(210)
6,339
1,161
44
(4,579)(1,975)(23)
14,617898(697)(2,309)12,509(340)(15,111)(8,322)
9,575
16,9851,070(961)(30,186)(38,118)(1,070)63,71814,807(14,137)
156,393
11,777(9,405)(10,986)
147,755(14,454)
214
(906)
(18)
581
(426)
144
—
—
694
(14,169)(12,058)
54
(245)
(18)
1,059
(60)
91
(50)
(14)
(191)
(11,432)(175,860)
2,603(11,023)
(219)
7,068
(5,183)
1,752
—
—
8,443
(172,393)(4,000)2,962
3,399(5,179)(7)(1,716)
(13)
4,966
50
(91)
370
(285)
(1,938)
10,7464,000(1,017)
4,794(4,883)(3,302)(1,754)
(8)
4,965
—
(76)
2,720
(264)
3,533
7,213

(48,667)
36,03841,355(63,012)(1,107)4,501(3,467)(23,579)
130,74550¥8,857—¥10,746608$107,762(85)(20,878)(158)

60,420608

Notes to Consolidated Financial Statements
Kureha Corporation and its Consolidated Subsidiaries
Years ended March 31, 2012 and 2011

1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated financial statements have been prepared based on the accounts maintained by Kureha
Corporation (the “Company”) and its consolidated subsidiaries (collectively the “Group”) in accordance with the provisions set
forth in the Companies Act and the Financial Instruments and Exchange Act of Japan, and in conformity with accounting
principles generally accepted in Japan, which are different, in certain respects, from the application and disclosure requirementsof International Financial Reporting Standards.
As permitted by the Financial Instruments and Exchange Act, for the fiscal year ended March 31, 2012, amounts of less than
one million yen have been omitted. Consequently, totals shown in the accompanying consolidated financial statements for the
fiscal year ended March 31, 2012 do not necessarily agree with the sums of the individual amounts.
For the fiscal year ended March 31, 2011, amounts of less than one million yen have been rounded to the closest million.
Additionally, totals shown for the fiscal year ended March 31, 2011 will agree with the sums of the individual amounts.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theCompany’s consolidated financial statements issued domestically in order to present them in a format which is more familiar toreaders outside Japan.

2. U.S. Dollar Amounts

The accounts of consolidated financial statements presented herein are originally expressed in Japanese yen. The U.S. dollar
amounts shown in the accompanying consolidated financial statements and notes thereto have been translated from Japanese yen
into U.S. dollars on the basis of ¥82.19 to U.S. $1, the rate of exchange prevailing as of March 30, 2012. And, for translation of
millions of Japanese yen to thousands of U.S. dollars, amounts of less than one thousand dollar have been omitted. These U.S.
dollar amounts are not intended to imply that the Japanese yen amounts have been or could be converted, realized or settled in
U.S. dollars at this or any other rate.

3. Principles of Consolidation(1) Scope of consolidation
The Company has consolidated 38 (32 in 2011) subsidiaries by the full consolidation method and one affiliate (one in 2011) by
the equity method as of March 31, 2012 (and 2011). The accounts of three subsidiaries (four in 2011) and three affiliates (three
in 2011) were not consolidated and not applied to equity method as of March 31, 2012 (and 2011), as they would not have amaterial effect on the accompanying consolidated financial statements.

(4) Goodwill on consolidation
In preparing the consolidated financial statements, positive or negative difference between the cost of investment and theamount of the underlying equity in net assets of the consolidated subsidiary was deferred and amortized over an estimated usefulperiod or 5 years on a straight-line basis.

4. Summary of Significant Accounting Policies(1) Securities
Securities included in marketable securities and investments in securities consisted of investments in unconsolidated subsidiaries
and affiliate and available-for-sale securities and are stated as follows:
Investments in unconsolidated subsidiaries and affiliates are stated at acquisition cost.
Available-for-sale securities with market quotations are stated at the average market price during the month before the balance
sheet date.
Valuation difference on these securities is reported at net of taxes as a separate component of net assets.
The cost of securities sold is determined based on the moving average cost at the time of sale.
Available-for-sale securities without market quotations are stated at cost by the moving average method.
(2) Inventories
Inventories are stated at cost in principle determined by the gross average method. Inventories held for sale in the ordinary courseof business are measured at the lower of cost or net selling value, which is defined as the selling price less incremental estimatedmanufacturing costs and estimated direct selling expenses.

KUREHA CORPORATION(3) Valuation of assets and liabilities of consolidated subsidiaries
The Company adopted the “full fair value method” so that the full portion of the assets and liabilities of the consolidated
subsidiaries was measured at their fair value at the time of acquisition of the control.

BUSINESS REPORT 2012

(2) Fiscal terms of consolidated subsidiaries
The fiscal terms of 14 consolidated subsidiaries close their accounts at December 31. In preparing the consolidated financial
statements, those accounts at December 31, 2011 are used, but major transactions which were executed during the three months
between December 31 and March 31 are adjusted as necessary for consolidation.

25

(3) Depreciation and amortization of fixed assets
Property and equipment except for leased assets
Property and equipment are principally stated at cost. Depreciation except for buildings is computed in accordance with the
declining balance method based on the useful lives and residual value prescribed by the Japanese tax laws. The depreciation ofbuildings is computed on the straight-line method. Accumulated depreciation which were directly deducted from property andequipment as of March 31, 2012 and 2011 was ¥162,961 million ($1,982,735 thousand) and ¥163,339 million, respectively.
The useful lives of major property and equipment are summarized as follows:
Buildings and structures
Machinery, equipment and vehicles
Other (tools, furniture and fixtures)

10 to 50 years
7 to 15 years
4 to 10 years

Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.
Intangible fixed assets except for leased assets
Intangible fixed assets except for software are amortized by the straight-line method based on the useful lives prescribed by theJapanese tax laws.
Software for in-house use is amortized by the straight-line method based on the estimated useful lives (5 years).
Leased assets
Leased assets under finance lease arrangements which do not transfer ownership of the leased assets to the lessee are depreciatedby the straight-line method over respective lease periods without salvage value.

KUREHA CORPORATION

BUSINESS REPORT 2012

(4) Accounting for impairment of fixed assets
In accordance with the accounting standard for impairment of fixed assets, the Company and its consolidated subsidiaries
periodically review their fixed assets for impairment by grouping the assets in income generating units whenever there is any
indication of a significant decline in the fair value against its carrying amount based on an independent appraisal, and when theexistence of any impairment for the group of the assets is identified, an impairment loss will be recognized and such amount isdirectly deducted from the related assets.
(5) Allowance for doubtful accounts
Allowance for doubtful accounts of general receivables was established to provide for future losses, which are estimated based on
the past credit loss experience.
In addition, uncollectible amount is estimated individually for doubtful receivables.
(6) Reserve for employees’ retirement benefits
The reserve for employees’ retirement benefits is recorded based on the estimated present value of projected benefit obligations
in excess of the fair value of the plan assets at the end of the fiscal year. However, certain domestic consolidated subsidiaries
calculate their retirement benefit obligations using the liability which would be paid if all the employees voluntarily retired ateach consolidated balance sheet date or liability reserve for pension financing calculation purpose.
The unrecognized transition amount which arose from adopting a new standard has been fully amortized when incurred.
Past service cost is fully amortized when incurred. Actuarial gain or loss is amortized in the year following the year in which thegain or loss is recognized, on a straight-line basis over certain periods within the employees’ average remaining service years.
(7) Retirement allowance for directors and corporate auditors
The retirement allowance for directors and statutory auditors is recorded based on the amount that would be required inaccordance with the internal rule at the balance sheet date to provide for the payment for the retirement benefits.
(8) Treasury stock
Treasury stocks owned by the Group are recorded at acquisition cost as a component under the shareholders’ equity. The
numbers of treasury stocks held by the Group as of March 31, 2012 and 2011 were 10,031,300 and 10,017,010
common shares, respectively.

26(9) Appropriations of retained earnings
Appropriations of retained earnings are accounted for and reflected in the accompanying consolidated financial statements whenapproved by the shareholders.

(10) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows consist of cash on hand, bank deposits payable on
demand and short-term investments due within three months from acquisition with minor value fluctuation risk.
(11) Income taxes
The Group is generally subject to national corporate income tax, local inhabitant tax and enterprise tax which are principally
based on income.
Deferred income taxes are determined using the asset and liability approach, whereby deferred tax assets and liabilities arerecognized in respect of temporary differences between the tax basis of assets and liabilities and those as reported in the financial
statements.
(12) Allowance for loss due to disaster
The Company’s facilities were damaged by Great East Japan earthquake. Thus, to provide for the expected expenses for recovery
effort in the next fiscal year, the Company has estimated the amount of losses in question.
(13) Changes in presentation
Loss on business withdrawal (¥29 million ($352 thousand) for the year ended March 31, 2012) separately presented for the year
ended March 31, 2011 is included in “other, net” under other income (expenses) from the year ended March 31, 2012 as it
became immaterial in amount. To reflect the change in presentation, the consolidated statements for the year ended March 31,
2011 are reclassified.
As a result, loss on business withdrawal of ¥422 million under the consolidated statements of income for the year ended
March 31, 2011 is reclassified as “other, net” under other income (expenses).
(14) Accounting changes and error corrections
The Company is applying the “Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Statement No. 24,
December 4, 2009) and “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance
No. 24, December 4, 2009) for the accounting changes and corrections of prior period errors which are made on and after the
beginning of the fiscal year ended March 31, 2012.

5. Cash and Cash Equivalents

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2012 and 2011:2012¥8,857¥8,857

2011¥10,746¥10,746

2012$107,762$107,762

6. Trade Notes

Trade notes due at the end of the fiscal year are settled on the date of clearing.
As the end of the year ended March 31, 2012 fell on a bank holiday, the following trade notes due at the end of the fiscal year
are included in the balance at the end of the year.
Thousands of
U.S. dollars

Millions of yen

2011

2012
Trade notes receivable
Trade notes payable

¥399
¥519

¥—
¥—

2012
$4,854$6,314

KUREHA CORPORATIONCash and time deposits
Cash and cash equivalents

BUSINESS REPORT 2012

Thousands of
U.S. dollars

Millions of yen

7. Inventories
Inventories as of March 31, 2012 and 2011, respectively, consisted of the following:
Millions of yen

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

2012
¥15,540
1,118
5,493¥22,151

2011¥12,801
1,382
5,013¥19,196

Thousands of
U.S. dollars

2012$189,074
13,602
66,832$269,50927

8. Financial Instruments and Related Disclosures(1) Group policy for financial instruments
The Group uses financial instruments, mainly bank loans and bonds for the purpose of raising its necessary fund for equipment
investment plan. Cash surpluses, if any, are invested only in short-term deposits, etc. Working capital for short-term ongoing
operations is procured from short-term bank loans. Derivatives are used, not for speculative purposes, but to manage exposure tofinancial risks as described below.
(2) Nature and extent of risks arising from financial instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies
are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign
currencies, is hedged by using forward foreign currency contracts. Investments in securities, equity instruments of customers andsuppliers of the Group, are exposed to the risk of market price fluctuations. And long-term receivables are made to the employees.
Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign
currencies, partly accompanied by the export of materials, are exposed to the market risk of fluctuation in foreign currency
exchange rates, those risks are almost netted against the balance of receivables denominated in the same foreign currency as noted
above. And, the payables in Euro are always within the balance of receivables in Euro.
Although a part of such bank loans, bonds and lease obligation, which are mainly for the purpose of equipment investment,
are exposed to market risks from changes in variable interest rates; those risks are mitigated by using mostly derivatives of interestrate swaps.
Derivatives mainly include forward foreign currency contracts and interest-rate swaps, which are used to manage exposure tomarket risks from changes in foreign currency exchange rates of receivables and payables, and from changes in interest rates ofbank loans. Please see Note 21 for more detail about derivatives.

KUREHA CORPORATION

BUSINESS REPORT 2012

(3) Risk management for financial instruments
Credit risk management (risk of counterparty’s failure to repay)
Credit risk is the risk of economic loss arising from counterparty’s failure to repay or service debt according to the contractual
terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include setting up an
individual credit limit and monitoring of payment terms and balances of major customers by each business administration
department to identify the default risk of customers at an early stage. A credit limit is changed, if necessary, based on a periodic
monitoring of customers’ financial positions. And the Group manages to mitigate the risk of receivable collection due todeteriorating financial position by utilizing such facilities as credit insurance or factoring. In using derivatives, the Group chooses
highly creditworthy financial institutions to avoid counterparty risk.

28

Market risk management (foreign exchange risk and interest rate risk)
The Company and certain consolidated subsidiaries manage market risk resulting from fluctuations in foreign currency exchange
rates of foreign currency trade receivables and payables, which are to be identified through management per month and per
currency. Such foreign exchange risk is hedged principally by forward foreign currency contracts. Interest-rate swaps are used to
manage exposure to market risks from changes in interest rates of bank loans.
Investments in securities are managed by monitoring market values and financial position of issuers on a regular basis.
Basic principles of derivative transactions have been based on the internal guidelines which prescribe the authority and thelimit for each transaction. The same principles are applicable to the consolidated subsidiaries.
Liquidity risk management (risk of the Group’s failure to pay at maturity)
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Groupmanages its liquidity risk by controlling a monthly cash flow plan, and the Company manages it by using commitment line.

(4) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are not available, other rational
valuation techniques are used instead. The fair values hereof may vary upon applying various procedures, as the valuation
techniques include variable factors. Also please note that the contract amounts themselves shown in Note 21 Derivatives andHedging Activities do not imply the market risk exposure regarding derivative transactions.
(a) Fair value of financial instruments
Carrying amount, fair value and the differences as of March 31, 2012 and 2011 are as follows:(This information excludes financial instruments whose fair value cannot be reliably determined)

March 31, 2012

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

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

16,103
2,262¥56,741
19,262
11,234
6,123
25,00020,449¥82,069

16,103
2,379¥56,858
19,262
11,234
6,123
25,69920,823¥83,143

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

(24)
(6)

(24)
(6)

—
—

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

Fair value$107,762
359,970(839)
359,131$107,762$—359,131—

195,924
27,521$690,363
234,359
136,683
74,498304,173
248,801$998,527

195,924
28,945$691,787
234,359
136,683
74,498
312,677
253,351$1,011,595—
1,423$1,423———(8,504)(4,538)$(13,055)

(292)
(73)

(292)
(73)

—
—

BUSINESS REPORT 2012

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

Millions of yen
Unrealized
gain/loss

KUREHA CORPORATIONMarch 31, 2012

Carrying
amount29

March 31, 2011

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

Millions of yen
Unrealized
gain/loss

Fair value¥10,746
27,295(99)
27,196¥10,746¥—27,196—

17,347
2,035¥57,324
14,1568,363
6,378
20,00022,522¥71,419

17,3472,101¥57,390
14,1568,363
6,378
20,641
22,772¥72,310

—
66
¥66
—
—
—
(641)
(250)
¥(891)

(25)
(59)

(25)
(59)

—
—

Asset
Cash and time deposits, and trade notes and accounts receivable
The carrying amounts of these accounts approximate fair value because of their short maturities.

KUREHA CORPORATION

BUSINESS REPORT 2012

Investments in securities
The fair values of investments in securities are measured at the quoted market price of the stock exchange for the equity
instruments.
Long-term receivables
The fair values of long-term receivables are measured at the present value of the future cash flows discounted by a rate of return,an appropriate rate such as government bond rate added to a credit spread, with respect to each credit risk segment of credit
control.
Liability
Trade notes and accounts payable, short-term loans, and accrued expenses
The carrying amounts of these accounts approximate fair value because of their short maturities.
Bonds
The fair values of the bonds issued by the Company are measured based on the market price.
Long-term debt
The fair values of long-term debt are measured by discounting the principal and interest discounted by an assumed new
borrowing rate. As a part of long-term debt with floating interest rates are subject to deferral method of interest rate swaps, thefair values of the said interest rate swaps are included in the long-term debt.
Derivatives
The information of the fair value for derivatives is included in Note 21.

30

(b) Carrying amount of financial instruments whose fair value cannot be reliably determined as of March 31, 2012 and 2011
Carrying amountThousands of
U.S. dollars

Millions of yen

2011

2012
Investments in equity instruments that do not have aquoted market price in an active market

2012
¥126

¥117

$1,423

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

March 31, 2012

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

March 31, 2011

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

Due after one year
through five years

Due after five years
through ten years

Millions of yen
Due after
ten years

¥—
—
632
¥632

¥—
—
709
¥709

¥—
—
867
¥867

Due after one year
through five years

Due after five years
through ten years

Thousands of U.S. dollars
Due after
ten years

$—
—
7,689
$7,689$——
8,626$8,626$——
10,548$10,548

Due after one year
through five years

Due after five years
through ten years

Millions of yen
Due after
ten years

¥—
—
494
¥494

¥—
—
601
¥601

¥—
—
882
¥882

¥ 8,857
29,586
53¥38,497
Due in one
year or less$107,762
359,970644$468,390
Due in one
year or less

¥10,746
27,295
57¥38,098(6) The aggregate annual maturities of bonds and long-term debt as of March 31, 2012 and 2011
Millions of yen
March 31, 2012

Due in one
year or less

Bonds
Long-term debt
Total

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

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

Thousands of U.S. dollars
March 31, 2012

Due in one
year or less

Bonds
Long-term debt
Total

$ 60,834
58,571$119,406

Due after one Due after two Due after three Due after four
year through years through years through years through Due after five
two years
three years
four years
five years
years

$—
65,263$65,263$—40,941$40,941$121,669
34,979$156,649$—26,499$26,499

KUREHA CORPORATIONMarch 31, 2012

Due in one
year or less

BUSINESS REPORT 2012

(5) The aggregate annual maturities of financial assets as of March 31, 2012 and 2011

$121,669
22,496$144,165
Millions of yen

March 31, 2011

Due in one
year or less

Bonds
Long-term debt
Total

¥—
5,092
¥5,092

Due after one Due after two Due after three Due after four
year through years through years through years through Due after five
two years
three years
four years
five years
years¥5,0004,870¥9,870¥—
4,934¥4,934¥—
2,805¥2,805¥10,000
2,369¥12,369¥5,0002,452¥7,45231

9. Securities
Investments in unconsolidated subsidiaries and affiliates amount to ¥2,712 million ($32,996 thousand) and ¥2,827 million as ofMarch 31, 2012 and 2011, respectively.
The acquisition cost and carrying amount of available-for-sale securities whose fair value were available as of March 31, 2012 and2011 were as follows:
March 31, 2012

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

March 31, 2012

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

KUREHA CORPORATION

BUSINESS REPORT 2012

March 31, 2011

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

Acquisitioncost¥ 6,355
6,355¥13,101
13,101¥6,745
6,745

4,028
4,028
¥10,384

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

Thousands of U.S. dollars
Unrealized gain
(loss)

Carrying
amount$ 77,320
77,320$159,398
159,398$82,065
82,06549,00849,008$126,341

36,52536,525$195,924(12,483)(12,483)$69,570

Acquisition
cost

Millions of yen
Unrealized gain
(loss)

Carrying
amount¥ 6,773
6,773¥14,298
14,298¥7,525
7,525

4,176
4,176
¥10,949

3,049
3,049
¥17,347(1,127)(1,127)¥6,398Proceeds from sales of available-for-sale securities and related gross realized gain and loss on those sales for the years ended March
31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2011

2012
Proceeds from sales
Gross realized gain
Gross realized loss

32

Millions of yen
Unrealized gain
(loss)

Carrying
amount

¥582
80
0

¥0
0
—

2012
$7,081973
010. Short-term Loans, Long-term Debt and Lease Obligations
Short-term loans and long-term debt as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Short-term loans with average interest rate of 0.85%
Current portion of long-term debt with averageinterest rate of 1.59%
Sub-total
Unsecured bonds maturing on March 8, 2013 with theinterest rate of 1.60%
Unsecured bonds maturing on June 17, 2015 with theInterest rate of 2.06%
Unsecured bonds maturing on September 15, 2017 with theInterest rate of 0.95%
Long-term debt maturing in 2013 through 2028 with averageinterest rate of 1.59%
Total

2012
¥11,2342011¥ 8,363

2012$136,683

4,814
16,048

5,092
13,45558,571
195,254

5,000

5,000

60,83410,00010,000121,669

5,000

5,000

60,834

15,634¥51,682

17,430¥50,885

190,217$628,811

The aggregate annual maturities of long-term debt as of March 31, 2012 were as follows:Year ending
March 31

Millions of Yen

2014
2015
2016
2017

¥5,364
3,365
2,875
2,178

Thousands of
U.S. Dollars$65,263
40,941
34,97926,499The aggregate annual maturities of lease obligations as of March 31, 2012 were as follows:

2013
2014
2015
2016
2017 and thereafter

¥151
131
88
61
29

Thousands of
U.S. Dollars$1,837
1,593
1,070
742
352

Average interest rate on lease obligations is omitted since above lease obligations recorded in the consolidated balance sheets as ofMarch 31, 2012 include interest equivalent amounts.

11. Assets Pledged as Collateral
The following assets of the Group are pledged as collateral for trade notes and accounts payable, short-term loans and long-term
debt in the amount of ¥1,795 million ($21,839 thousand) and ¥2,511 million as of March 31, 2012 and 2011, respectively:
Thousands of
U.S. Dollars

Millions of Yen

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

2012
¥16,702
13,2293,897
4,434¥38,264

BUSINESS REPORT 2012

Millions of Yen

KUREHA CORPORATION

Year ending
March 312011
¥13,330
9,729
4,257
4,698
¥32,0142012$203,212
160,956
47,41453,948$465,555

33

12. Loan Commitment Agreements
The Company and its consolidated subsidiaries entered into loan commitment agreements and overdraft agreements with thefinancial institutions. The outstanding balance as of March 31, 2012 and 2011 was as follows:
Thousands of
U.S. dollars

Millions of yen

Total commitment available
Amount utilized
Balance available

2012¥11,237390¥10,846

2011¥11,388
1,167¥10,2212012$136,719
4,745$131,962

13. Reserve for Employees’ Retirement Benefits
The Company and certain consolidated subsidiaries have principally tax qualified pension plans and lump-sum retirement benefit
plans. In addition, in some cases, merit allowances which are not included in the actuarial calculation of projected benefit
obligations may be paid upon the retirement of certain employees.
The reserve for employees’ retirement benefits as of March 31, 2012 and 2011 consisted of the following:
Millions of yen

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

2012¥(21,337)
17,402(3,935)
5,342
1,406
2,057
¥(650)2011¥(22,206)
17,959(4,247)
5,620
1,373
2,142
¥(769)Thousands of
U.S. dollars

2012$(259,605)
211,728(47,876)
64,995
17,10625,027$(7,908)

Net pension expenses related to the retirement benefits for the years ended March 31, 2012 and 2011 were as follows:

KUREHA CORPORATION

BUSINESS REPORT 2012

Millions of yen

34

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

2012
¥925
386
(311)
620
—
¥1,620

2011
¥937
396
(327)
597
(347)
¥1,256

Thousands of
U.S. dollars

2012$11,254
4,696(3,783)
7,543—$19,710

Note: 	In addition to above expenses, the Company and its domestic consolidated subsidiaries recorded merit allowances
amounting to ¥15 million ($182 thousand) and ¥25 million for the years ended March 31, 2012 and 2011, respectively.

Assumptions used in calculation of the above information for the years ended March 31, 2012 and 2011 were as follows:
2012
2011
Discount rate
1.736%
1.736%
Expected rate of return on plan assets
1.736%
1.736%
Method of attributing the projected benefits to periods of services
Straight-line basis
Straight-line basis
Amortization period of past service liabilities
Fully amortized
Fully amortizedwhen incurred
when incurred
Amortization period of actuarial differences**
Amortization period of transitional differences
Fully amortized
Fully amortized
resulting from a change in accounting standards
when incurred
when incurred* 	The actuarial differences are amortized on a straight-line method over certain years within the employees’ average remaining
service years when incurred and charged to income from the subsequent year.

14. Income Taxes
The Group is subject to certain different income taxes in Japan, which in the aggregate resulted in a normal statutory income tax
rate of approximately 40.44%.
The significant components of deferred tax assets and liabilities as of March 31, 2012 and 2011 were as follows:
Thousands of
U.S. dollars

2011

2012

¥812
981
215
781
417
349
249
530
251
194
379
114
122
410
377
109
1,324
7,623
(1,646)
5,976¥1,403
944
886
795
524
519
461
316
314
287
269
171
147
—
—
30
880
7,946
(1,397)6,549$9,879
11,935
2,615
9,502
5,073
4,246
3,029
6,448
3,053
2,360
4,611
1,387
1,484
4,988
4,586
1,326
16,10992,748(20,026)
72,709(2,018)
(961)
(719)
(356)
(175)
(117)
(4,348)¥1,627(2,583)
(856)
(850)
(310)
(218)
(179)
(4,996)¥1,553(24,552)(11,692)(8,748)(4,331)(2,129)(1,423)(52,901)$19,795

BUSINESS REPORT 2012

2012
Deferred tax assets:
Tax loss carried forward
Unrealized gain on fixed assets
Casualty loss
Accrued bonuses
Accrued expenses
Loss on impairment
Write-down of inventories
Loss on disposal and sale of fixed assets
Asset retirement obligations
Reserve for employees’ retirement benefits
Research and development costs
Loss on business withdrawal
Retirement allowance for directors and corporate auditors
Tax credit for research and development costs
Settlement package
Allowance for doubtful accounts
OthersSub-total
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Net unrealized gain on available-for-sale securities
Shortfall in depreciation
Prepaid pension expenses
Retained earnings of subsidiaries
Asset retirement obligations
OthersTotal deferred tax liabilities
Net deferred tax assets

KUREHA CORPORATION

Millions of yen

35

Reconciliations of the difference between the statutory income tax rate and the effective income tax rate for the years ended
March 31, 2012 and 2011 were as follows:

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

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

2011
40.44%
7.74(7.63)(8.34)
6.89(11.14)
15.29
—
2.04
45.29%

Following the promulgation of the “Act for Partial Amendment of the Income Tax Act, etc. for the Purpose of Creating a
Taxation System Responding to Changes in Economic and Social Structures” (Act No. 114, 2011) and the “Act on Special
Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great East Japan
Earthquake” (Act No. 117, 2011) on December 2, 2011, the corporate income tax rate will be lowered and special restoration
corporation tax will be imposed from the fiscal years beginning on and after April 1, 2012. In conjunction with these changes,
the effective statutory tax rate used to measure deferred tax assets and deferred tax liabilities will change for the temporary
differences expected to be resolved from the fiscal year beginning on April 1, 2012 to the fiscal year beginning on April 1, 2014,
and for the temporary differences expected to be resolved from the fiscal year beginning on April 1, 2015, from the former
40.44% to 37.75% and 35.38%, respectively.
As a result of this change, the amounts of deferred tax assets and deferred tax liabilities have decreased by ¥329 million($4,002 thousand) and ¥424 million ($5,158 thousand), respectively, and the amounts of income taxes-deferred and unrealized
gain on available-for-sale securities have increased by ¥193 million ($2,348 thousand) and ¥288 million ($3,504 thousand),
respectively.

KUREHA CORPORATION

BUSINESS REPORT 2012

15. Commitments and Guarantee Liabilities
The Group guarantees employees’ bank loans to the amounts of ¥189 million ($2,299 thousand) and ¥244 million as of March
31, 2012 and 2011, respectively.

16. Shareholders’ Equity
The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as distributions of capitalsurplus (other than the capital reserve) and earned surplus (other than the legal reserve) be transferred to the capital reserve andthe legal reserve, respectively, until the sum of the capital reserve and legal reserve equals 25% of the stated capital. Such
distributions can be made at any time by resolution of the shareholders or by the Board of Directors if certain conditions are met.
The above mentioned legal reserve is included in earned surplus in the accompanying consolidated balance sheets.

17. Stock Option Plan
The Company issued stock subscription rights (stock options) in accordance with the provisions of the Companies Act based on
the resolution of the general shareholders’ meeting and the Board of Directors’ meeting held on June 27, 2007 as follows:(1) Accounting for stock option related expenses for the years ended March 31, 2012 and 2011
Thousands of
U.S. dollars

Millions of yen

2011

2012

36

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

¥20

2012
¥24

$243

(2) Details of stock options, volume and activity
a. Detail of stock options

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

Eligible service period
Exercise period

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

BUSINESS REPORT 2012

Eligible service period
Exercise period

KUREHA CORPORATION

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

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

37

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

Eligible service period
Exercise period

KUREHA CORPORATION

BUSINESS REPORT 2012

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

38

Eligible service period
Exercise period

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

Eligible service period
Exercise period

3rd Stock Option Plan
8 directors of the Company
Common stock 55,500 shares
July 22, 2009
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 25, 2009 to June 24, 2010
From July 22, 2009 to July 21, 2039
4th Stock Option Plan
8 directors of the Company
Common stock 55,300 shares
July 21, 2010
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 25, 2010 to June 24, 2011
From July 21, 2010 to July 20, 2040
5th Stock Option Plan
7 directors of the Company
Common stock 56,600 shares
July 20, 2011
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the subscription rights, he or
she cannot exercise the stock options given up.
From June 24, 2011 to June 23, 2012
From July 20, 2011 to July 19, 2041

b. Volume and activity of stock options for the year ended March 31, 2012:
Volume of stock options:
Before vesting:
As of March 31, 2011
GrantedForfeited
VestedOutstanding
After vesting;
As of March 31, 2011
VestedExercised
Forfeited
Outstanding

146,200
56,600—5,800
197,000
—
5,800
5,800
—
—

Price information:

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

Yen
Exercised Outstanding
¥  1
¥  1
374
—
—
446

U.S. dollars
Exercised Outstanding
$0.01
$0.01
4.55
—
—
5.42

d. Estimation method for the vested number of stock options
Since it is difficult to make a reasonable estimate on future forfeited stock options, the actual number of forfeited stock options
is reflected in the estimation.

18. Leases
Finance leases which commenced prior to April 1, 2008 and do not transfer ownership of the leased assets to the lessee areaccounted for as operating lease transactions as permitted by the revised accounting standard.
Information on finance leases other than those deemed to transfer ownership of the leased assets to the lessee for the years
ended March 31, 2012 and 2011 is not included herein, as it would have no material effect on the accompanying consolidated
financial statements.

KUREHA CORPORATION

Stock price volatility
Expected years to expiration
Expected dividends
Risk-free interest rate

5th Stock Option Plan
38.9%
3.0 years¥10 ($0.12) per share
0.21%

BUSINESS REPORT 2012

c. Valuation method for fair value of stock options:
The valuation method for fair value of 2011 stock options granted during the year ended March 31, 2012 is as follows:
Valuation method: Black-Scholes formula
Major basic numerical values and valuation method:39

19. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2012 and 2011 are as follows:
Millions of yen

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

2012¥7,712
721
645
5,080

2011
¥7,277
692
644
5,502

Thousands of
U.S. dollars

2012$93,8318,772
7,847
61,80820. Gain or Loss on Property and Equipment
Gain on sale of property and equipment and loss on disposal and sale of property and equipment for the years ended March 31,
2012 and 2011 were as follows:
Thousands of
U.S. dollars

Millions of yen

2012
Gain on sale of property and equipment:Land
Machinery, equipment and vehicles
Total
Loss on disposal of property and equipment:
Buildings and structures
Machinery, equipment and vehicles
Others (tools, furniture and fixtures)
Total
Loss on sale of property and equipment:
Machinery, equipment and vehicles
Total

KUREHA CORPORATION

BUSINESS REPORT 2012

21. Derivatives and Hedging Activities

40

2011

2012

¥126
6
¥132

¥—
4
¥4

$1,53373$1,606

¥975
453
91
¥1,520

¥165
130
38
¥333

$11,8625,511
1,107$18,493

¥8
¥8

¥0
¥0

$97
$97

The Company and its consolidated subsidiaries utilize foreign exchange forward contracts to avoid the risk from future exchange
rate fluctuations in connection with the foreign currency denominated receivables and payables and also interest rate swaps toreduce the financing costs related to long-term debt and short-term borrowings as a means to manage the interest rate risk.
Certain foreign exchange forward contracts utilized by the Company and certain consolidated subsidiaries are exposed to an
exchange rate fluctuation risk and interest rate risk from the movement of the interest rates is mitigated by converting floatinginterest rates to fixed interest rates using interest rate swap agreements. Interest rate swaps are accounted for in principle by thedeferral method, under which the revaluation gain or loss on the hedging instruments are deferred as assets or liabilities until thegain or loss on hedged items will be recognized. However, certain interest swap agreements which qualify for hedge accounting
and meet specific matching criteria are not revaluated at market value, but the differential paid or received under the swap
agreements are recognized and included in interest expenses or income.
Counterparties which the Company and its consolidated subsidiaries enter into derivative financial instruments with are
limited to highly creditworthy financial institutions that have normal banking transactions in the normal course of business andtherefore, the Company does not expect any losses to be incurred due to the defaults by these counterparties.
The Company and its consolidated subsidiaries have established internal rules regarding the authorization limits and theexecution and control of the derivative transactions are done by the Finance Division. The execution of derivative transactions
are exclusively authorized by the Finance Director and the status of outstanding position balances and revaluation profit and loss
are periodically reported to the Finance Director.

Derivative contracts to which hedge accounting is not applied as of March 31, 2012 and 2011 are as follows:
Millions of yen

2011

2012
Contract
amountForeign exchange forward contracts:
Selling:
U.S. dollars
Euro
Buying:U.S. dollars
Euro
Total

Fair value

Unrealized
gain (loss)

Contract
amountUnrealized
gain (loss)

Fair value

¥835
346

¥ (8)
(14)

¥ (8)
(14)

¥507
547

¥ (6)
(20)

¥ (6)
(20)

77
118
¥ —

0
(2)
¥(26)

0
(2)
¥(26)

47
82
¥ —

1
0
¥(25)

1
0
¥(25)

Thousands of U.S. dollars

2012
Contract
amountForeign exchange forward contracts:
Selling:
U.S. dollars
Euro
Buying:U.S. dollars
Euro
Total

Fair value

Unrealized
gain (loss)$10,159
4,209$ (97)(170)$ (97)
(170)

936
1,435
—
$

0
(24)
$(316)

0(24)$(316)

Millions of yen

As of March 31, 2012
Hedge accounting
methodClassification of derivative
contracts

Major hedged items

Principle processing
methodForeign exchange
contract (selling) inEuroAccounts receivable

Contract
amount¥873

Contract
amountover one year

Fair value

¥—

¥34

Thousands of U.S. dollars

As of March 31, 2012
Hedge accounting
methodClassification of derivative
contracts

Major hedged items

Principle processing
methodForeign exchange
contract (selling) inEuroAccounts receivable

Contract
amount$10,621

Contract
amountover one year$—

Fair value

KUREHA CORPORATION

Derivative contracts to which hedge accounting is applied as of March 31, 2011 and 2012 are as follows:(1) Currency related

BUSINESS REPORT 2012

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

$413

41

As of March 31, 2011

Millions of yen

Hedge accounting
methodClassification of derivative
contracts

Major hedged items

Principle processing
methodForeign exchange
contract (selling) inEuroAccounts receivable

Contract
amount¥725

Contract
amountover one year

Fair value

¥—

¥(27)

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

As of March 31, 2012
Hedge accounting
methodMajor hedged items

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

Long-term debt

¥777

¥777

Interest rate swaps
meeting certain
conditions

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

Long-term debt

2,003

1,899

¥2,780¥2,676

Total

Contract
amountContract
amountover one year

Classification of derivative
contracts

BUSINESS REPORT 2012
KUREHA CORPORATION

Contract
amountContract
amountover one year

Classification of derivative
contracts

Major hedged items

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

Long-term debt

$9,453$9,453

Interest rate swaps
meeting certain
conditions

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

Long-term debt

24,37023,105$33,824$32,558

Total

42

¥(40)

(Note 2)¥(40)

Thousands of U.S. dollars

As of March 31, 2012
Hedge accounting
methodFair value

Fair value$(486)(Note 2)$(486)

As of March 31, 2011
Hedge accounting
methodMillions of yen
Contract
amountover one year

Classification of derivative
contracts

Contract
amountMajor hedged items

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

Long-term debt

¥815

¥815

Interest rate swaps
meeting certain
conditions

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

Long-term debt

3,443

2,003

Fair value¥(32)(Note 2)

Total
¥4,258¥2,818¥(32)
Notes: 1. Fair value is calculated using prices quoted by financial institutions.
2.	With respect to interest rate swap contracts which meet certain conditions, fair values of the interest rate swap contracts
are included in the fair values of the relevant long-term debt, since they are used for recording long-term debt as hedged
items.

22. Comprehensive Income

Reclassification adjustments and tax effect amounts of other comprehensive income for the year ended March 31, 2012 were as
follows:

2012¥(682)
2
(680)
546
(116)

$ (8,297)
24(8,273)
6,643(1,411)

95
(45)
49
(18)
30

1,155
(547)
596
(219)
365

(890)

(10,828)6¥(969)

73$(11,789)

23. Per Share Information
Net assets per share as of March 31, 2012 and 2011 and net income per share for the years then ended were as follows:Yen

Net assets per share
Basic net income per share
Diluted net income per share2012¥510.37
8.51
8.50

BUSINESS REPORT 2012

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

Thousands of
U.S. dollars

KUREHA CORPORATION

Millions of yen

U.S. dollars

2011¥517.47
3.97
3.97

2012
$6.20
0.10
0.10

43

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

Millions of yen or shares

Net assets per share:
Total net assets per consolidated balance sheets
Net assets attributed to common stock
Differences – Minority interests– Stock subscription rights
Number of outstanding shares of common stock
Number of treasury stock
Number of common stock used in computing net assets
per share
Basic net income per share:
Net income per consolidated income statements
Net income attributed to common stock
Weighted average number of common stock during theperiodDiluted net income per share:
Number of increased common stock used in computing
diluted net income per share (stock subscription rights)

2012

2011

¥88,554
87,608864
82
181,683,909
10,031,300¥89,501
88,832604
64
181,683,909
10,017,010$1,077,430
1,065,920
10,512997——

171,652,609

171,666,899—¥1,460
1,460

¥692
692

$17,763
17,763

171,664,943

174,390,413—

170,971

135,442—2012

24. Segment Information

BUSINESS REPORT 2012

Segment
Advanced materials

KUREHA CORPORATION(1) Overview of the reportable segments
The Company’s reportable segments are determined on the basis that separate financial information of such segments areavailable and examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and assess the business performances of such segments within the Group. The Company has separate divisions byproduct, and each division formulates a comprehensive strategy for business activities in domestic and overseas markets.
Major products and services for each segment are as follows:

Specialty plastics

Specialty chemicals

Construction related
Other operations

44

Products and services
PPS resin, PVDF resin, antistatic resin
Carbon fiber, bead-shaped activated carbon, anode materials for lithium ion batteries,
PGA (polyglycolic acid) resin
Therapeutic agent for chronic renal failure, anti cancer agent, agricultural andhorticultural fungicide, Caustic soda, hydrochloric acid, liquid chlorine, sodium
hypochlorite Monochlorobenzene, para-dichlorobenzene, ortho-dichlorobenzene
Household plastic wrap, garbage bags for kitchen sink, cooking sheet, plastic containers,
PVDF fishing line, PVDC film, PVDC compound
Multilayer shrinkable film, multilayer bottle, Machinery for auto-seal food packaging
Civil engineering and construction contracting business, industrial facility design,
construction and management service
Environmental engineering and industrial waste treatment business, transport andwarehousing business, laboratory tests, analysis, measurement, and inspection service

(2) Valuation method for reportable segment profit (loss) and asset amounts
The accounting method for reportable business segments is presented in accordance with “Summary of Significant Accounting
Policies.” The reportable segment profit figures are based on operating profit. Inter-segment internal rates of return and theamounts transferred are presented based on the current market prices at the time of this report.
(3) Segment information by type of business¥31,253
1,516
32,769534¥60,884
2,943¥30,182
347
30,530
4,715¥21,629
1,735¥37,672
957
38,6302,226¥27,214
1,775¥16,300
10,781
27,081
1,114¥11,815
113¥12,950
6,878
19,828932¥12,548912¥128,358
20,481
148,840
9,523¥134,093
7,480

8,711

1,285

1,817

112

1,072

13,000

Advancedmaterials

Specialty
chemicals

Thousands of U.S. dollars
2012
Reportable segment
Specialty
Construction
plastics
relatedOther$ 380,253
18,445
398,698
6,497$740,771
35,807$367,222
4,221
371,456
57,367$263,158
21,109$458,352
11,643470,008
27,083$331,110
21,596$198,320
131,171329,492
13,553$143,752
1,374

105,986

15,634

22,107

1,362

Advancedmaterials

Specialty
chemicals

Total

Total

$157,561 $1,561,722
83,684249,190
241,245 1,810,925
11,339115,865$152,670 $1,631,500
11,09691,00813,042Millions of yen
2011
Reportable segment
Specialty
Construction
plastics
relatedOther

158,170

Total

Adjustment(Note 1)

Consolidated(Note 2)

¥— ¥128,358(20,481)—(20,481) 128,358(1,051)
8,472¥52,130 ¥186,223
2,099
9,580
1,359

14,360Adjustment(Note 1)

Consolidated(Note 2)

$
— $1,561,722(249,190)—(249,190) 1,561,722(12,787) 103,078$634,262 $2,265,762
25,538
116,559
16,534

174,717

Adjustment(Note 1)

Consolidated(Note 2)

Net sales:
Outside customers¥33,391¥33,552¥41,092¥12,760¥11,514 ¥132,309¥— ¥132,309
343
1,018
6,951
7,507
16,700(16,700)—
Inter-segment
881
Total
34,27233,895
42,11019,711
19,021
149,009(16,700) 132,309
Operating income (loss)
363
5,203
1,790
(387)
39
7,008
(658)
6,350
Assets¥54,394¥21,884¥27,648¥ 9,747¥56,012 ¥181,753¥12,068 ¥125,741
Depreciation
3,382
1,897
1,876
121
845
8,121
2,145
10,266
Adjustment for increase
7,815
1,442
1,986
25
1,268
12,537
1,539
14,076in fixed assets
Notes: 1. Adjustment for segment operating income (loss) is due to inter-segment elimination.
		Adjustment for segment assets includes corporate assets such as cash and cash equivalents, investments in securities, andother corporate shared facilities that are not allocated to each reportable segment.
2. Segment operating income (loss) is adjusted with operating income on the consolidated statements of income.

BUSINESS REPORT 2012

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

Specialty
chemicals

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

Advancedmaterials

Millions of yen
2012
Reportable segment
Specialty
Construction
plastics
relatedOther

45

Geographical segment information of the Company for the year ended March 31, 2012 and 2011 is summarized as follows:
Millions of yen
2012

Sales

Japan

EuropeAsia¥97,461¥12,311¥12,411

Other¥6,174

Total¥128,358

Thousands of U.S. dollars
2012
Japan

Sales

$1,185,801

Europe

Asia

Other

$149,787$151,003$75,118

Total$1,561,722

Millions of yen
2011
Japan

Sales

Europe¥101,696

Asia¥12,028

Other¥13,036¥5,549Total¥132,309

Notes: Sales is categorized by country and regions based on customer’s location.
Millions of yen
2012
Japan

Property and equipment¥66,641

United States

Other¥15,554¥4,922

Total¥87,118

Thousands of U.S. dollars
2012
Japan

Property and equipment$810,816

United States

Other$189,244$59,885

Total$1,059,958

Millions of yen
2011
Japan

KUREHA CORPORATION

BUSINESS REPORT 2012

Property and equipment

46¥65,358

United States

Other¥13,697¥4,862

Total¥83,917

Major customers segment information
Major customers segment information is not shown since there is no customer accounting for more than 10% of the sales tocustomers in the consolidated statements of income.
Information on impairment of fixed assets for each reportable segment
There is no information to be reported on impairment of fixed assets for each reportable segment.
Information on amortization of goodwill and its remaining balance for each reportable segment
There is no information to be reported on amortization of goodwill and its remaining balance.
Information on gain in negative goodwill for each reportable segment
There is no information to be reported on gain in negative goodwill.

25. Loss Due to Disaster
Loss recorded due to the Great East Japan Earthquake for the year ended March 31, 2012 and 2011 is as follows:
Thousands of
U.S. dollars

Millions of yen

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

2012
¥1,565
1,842
389¥3,7972011¥1,821
1,330
222¥3,373

2012$19,041
22,411
4,732$46,197

26. Subsequent Events
The following appropriation of retained earnings has been approved by the general meeting of shareholders held on April 17,
2012.

¥858

$10,439

BUSINESS REPORT 2012

Cash dividends at ¥5.00 ($0.06) per share

Thousands of
U.S. dollars

KUREHA CORPORATION

Millions of yen

47

Main Group Companies by Segment(As of March 31, 2012)

The Kureha Group consists of Kureha Corporation, 41 subsidiaries (of which 38 are consolidated), and 4 affiliates (of which 1
applies the equity method). The group is engaged in the manufacture and sales of products in three main business segments:
Advanced Materials, Specialty Chemicals, and Specialty Plastics. In addition, it undertakes construction and maintenance
operations associated with each main business segment, transport operations, environmental management services, and otherservice operations.

Advanced Materials
Kureha Corporation
Manufactures and sells advanced plastics and carbon products.
Resinous Kasei Co., Ltd.
A subsidiary of Kureha Trading Co., Ltd., the company
manufactures and sells advanced materials.
Kureha Extech Co., Ltd.
Manufactures and sells advanced materials. Sells some products
to Kureha.
Nihon Extron Co., Ltd.
Manufactures and sells advanced materials. Sells some products
to Kureha.
Kureha Battery Materials Japan Co., Ltd.
Sells anode material and binder for lithium-ion batteries.
Kureha GmbH
Sells Kureha’s advanced materials and other products in
Europe.

KUREHA CORPORATION

BUSINESS REPORT 2012

Kureha America, Inc.
Holds controlling stakes in Kureha America LLC, Kureha PGA
LLC, Kureha Advanced Materials, Inc., and Fortron Industries
LLC, which manufactures and sells PPS resin in the UnitedStates.
Kureha PGA LLC
Established to manufacture and sell PGA (polyglycolic acid)resin. Construction of the US manufacturing facility has been
completed.
Kureha Advanced Materials, Inc.
Manufactures and sells carbon products in the U.S.
Kureha Chemicals Shanghai Co., Ltd.
Manufactures and sells carbon products. Purchases raw
materials from and sells products to Kureha.

Specialty Chemicals
Kureha Corporation
Manufactures and sells inorganic chemicals, organic chemicals,
pharmaceuticals, pharmaceuticals for animals, andagrochemicals.

Specialty Plastics
48

Kureha Corporation
Manufactures and sells food packaging materials, householdproducts, and synthetic fiber products and sells the raw
materials used to make these products.

Kureha Gosen Co., Ltd.
Manufactures and sells synthetic fibers. Purchases raw
materials from and sells some products to Kureha.
Kureha Europe B.V.
Holds controlling stakes in Krehalon Industrie B.V. and threesubsidiaries engaged in making food packaging materials.
Krehalon Industrie B.V.
Manufactures and sells food packaging materials in the
Netherlands. Receives raw materials from Kureha.
Kureha Vietnam Co., Ltd.
Manufactures and sells food packaging materials. Purchases
raw materials from and sells produces to Kureha.
Nantong SKT New Material Co., Ltd.
Manufactures and sells food packaging materials. Receives
technology under license from Kureha.

Construction Related & Others
Kurehanishiki Construction Group(Kurehanishiki Construction Co., Ltd., and threesubsidiaries)
Undertakes engineering and construction work.
Kureha Engineering Co., Ltd.
Undertakes plant engineering and management operations,safety-related operations, and environmental protection
services.
Kureha Trading Co., Ltd.
Sells and supplies advanced materials, specialty chemicals,
specialty plastics, and other products.
Kureha Unyu Group(Kureha Unyu Co., Ltd., and six subsidiaries)
Undertakes transportation and storage operations.
Kureha Service Co., Ltd.
Conducts real estate transactions, leasing and management,
and other services. Performs certain operations for Kureha.
Kureha Ecology Management Co., Ltd.
Undertakes industrial waste and medical waste processing.
Kureha Special Laboratory Co., Ltd.
Analyzes, measures, and performs environmental assessmentsfor various substances. Performs tests for some Kureha
products.
Kureha Staff Service Co., Ltd.
Undertakes temporary support operations and contracting
services for manufacturing and logistics businesses. Kureha
outsources part of its business to Kureha Staff Service.

Kureha is a leading diversified chemical products manufacturer that has applied its technological development expertise to
create original products in fields including advanced products, pharmaceuticals, agrochemicals, and packaging materials.
Since its establishment in 1944, Kureha’s growth and development has come exclusively from producing innovative
products developed in-house rather than from using outside technology.
Since 2001, Kureha has undergone a major transformation to enable it to constantly develop products to meet theever-changing needs of customers. As part of this transformation, it moved away from manufacturing commodity
chemicals to focus on key strategic business areas–including advanced products, pharmaceuticals and agrochemicals, andhigh-barrier packaging materials–where the company can benefit from its original technology and marketing strengths tosecure steady growth.
To support its transformation, Kureha developed a new mission, “the pursuit of excellence,” with the aim of
becoming a leading global specialty products company. Kureha also changed its name from Kureha Chemical Industry
Co., Ltd., to Kureha Corporation on October 1, 2005.
These moves have already reaped rewards, with Kureha displaying significant development, production, and marketing
abilities. Kureha’s goal is to foster future growth by advancing a model that takes a global perspective and focuses on
winnable markets in each of its business areas, including those that are still in the developmental phase.

Corporate Identity
MissionCorporatephilosophy

The pursuit of excellence•We treasure people and the natural environment•We constantly evolve through innovation•We contribute to society by developing beneficial products

Investor Information(As of June 26, 2012)(As of March 31, 2012)

Board Of Directors

Corporate Data

Takao IWASAKI
Yutaka KOBAYASHI
Naoya SUZUKI
Keikichi MUNAKATA
Norikazu SUNOU
Tadashi SAGAWA
Shusuke MATSUO
Kunihiko SAITO
Takeshi TAKAHASHI

President & CEO
Senior Executive Vice President
Executive Vice President
Executive Vice President & CFO
Executive Vice President
Senior Vice President
Senior Vice President
Independent Outside Director
Independent Outside Director

Employeecode ofconduct

Contents
Consolidated Financial Highlights
President’s Message
The Year’s Highlights
Review of Operations
Research & Development
Responsible Care
Corporate GovernanceConsolidated Five-Year Summary
Management Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Main Group Companies by Segment
Executives
Investor Information

1
2
6
8
12
13
14
16
17
20
22
22
23
24
25
48
49
49

Forward-looking statements
This report contains forward-looking statements thatare based on management’s assumptions and beliefs inlight of the information currently available to it. Thesestatements are subject to risks and uncertainties that
could cause actual results to differ materially fromthose discussed in this report. Such risks include but
are not limited to market trends and economic
conditions.

Date of Establishment
Paid-in Capital
Number of Employees
Independent Auditor

Board Of Corporate Auditors

Stock Information

Youichi KIYOSUKEHaruki YAMAGUCHI
Mitsuo SATOH
Masaru KITAMURA

Number of Shares ofCommon Stock Issued

Corporate Auditor
Corporate Auditor
Corporate Auditor
Corporate Auditor

Takao IWASAKI
Yutaka KOBAYASHI
Naoya SUZUKI
Keikichi MUNAKATA
Norikazu SUNOU
Koji HAGINO
Hideo NAKATANI
Tadashi SAGAWA
Shusuke MATSUO
Yoshiki SHIGAKI
Naoki FUKUZAWA
Takashi YAMAMOTO
Yoshiharu OGUCHI
Yoshio NODA
Toru YOSHIDA
Hiroshi SAKABE
Futoshi SAITOKUREHA CORPORATION
3-3-2, Nihonbashi-Hamacho,
Chuo-ku, Tokyo 103-8552, Japan
Tel: 81-3-3249-4666
Fax: 81-3-3249-4744
June 21, 1944
¥12,460 million
4,032 (consolidated)
1,628 (non-consolidated)
Nihombashi Corporation

181,683,909 shares

Number of Shareholders 15,533
Number of Shares Heldby Foreign Shareholders

35,876 (19.8% of total)

Stock Exchange Listings Tokyo Stock Exchange

Executive Officers
We always act as global corporate citizens, recognizing our corporate social responsibilities.
•In relation to our clients:
Customer satisfaction is our prime priority•In relation to our work:
We will always pursue progress and innovation
We will maintain a global perspective as we respond to change•In relation to our colleagues: Mutual respect and teamwork will always be fundamental tosound employee relationships

Corporate Name
Headquarters

President & CEO
Senior Executive Vice President
Executive Vice President
Executive Vice President & CFO
Executive Vice President
Executive Vice President
Executive Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Vice President
Vice President
Vice President
Vice President
Vice President

Transfer Agent

Mizuho Trust & Banking
Co., Ltd.

Major Stockholders
Meiji Yasuda Life Insurance Company
Tokio Marine & Nichido Fire Insurance Co., Ltd.
The Master Trust Bank of Japan, Ltd.
Japan Trustee Service Bank, Ltd.(trust account)
Daiichi Sankyo Co., Ltd.
The Nomura Trust and Banking Co., Ltd.(trust account)
Mizuho Corporate Bank, Ltd.
Juniper
The Chase Manhattan Bank,
N.A. London S.L. Omnibus Account

BUSINESS REPORT 2012

Kureha takes pride in its history of developing original, innovative technology

Executives

KUREHA CORPORATION

ProfileMizuho Trust & Banking Co., Ltd.

49

BUSINESS REPORT 2012
Year ended March 31, 2012

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