News Releases 2006

Notice Concerning Withdrawal from the RPTV Screen Business

August 25, 2006
Kuraray Co., Ltd.

Kuraray Co., Ltd. resolved at the Board of Directors' Meeting on August 25, 2006 to withdraw from the rear projection television (RPTV) screen business. The details are described as follows.

1. Rationale

Kuraray's RPTV Screen Business has been in operation as the Company's methacrylic resin-related optical materials business since the commencement of Fresnel lens production in 1988.

As a large-screen television offering high cost-effectiveness, RPTVs achieved market expansion mainly in North America and China. Cathode-ray tube (CRT) TVs had been mainstream in the market until 2003. In recent years, however, CRT TVs came under competition with LCD TVs and plasma TVs, whereby a rapid shift to higher-precision micro displays (MD) ensued. As a result, demand sharply declined for CRT-type screens.

Responding to this shift, Kuraray developed and released MD-type screens, striving to establish a supply system to successfully meet customer demands for quality and price. Despite these efforts, Kuraray has concluded that given severe competition the Company would be unable to assure profitability while responding to increasingly sophisticated market demands. As a result, Kuraray decided to withdraw from the CRT and MD screen business.

The Company will concentrate its management resources on the optical materials business including the business expansion of LCD materials and the development of new materials for the next-generation RPTV.

2. Overview

(1) Main activities for withdrawal

Manufacturing and sales of opto-screens incorporating lenticular and Fresnel lenses for RPTV (CRT and MD types)

(2) Scale of withdrawal (based on fiscal 2005)

Net sales Approximately 11 billion yen (3% of consolidated net sales)
Ordinary loss Approximately 1.8 billion yen (-6% of consolidated ordinary income)

(3) Impact on employees and assets (facilities)

Kuraray principally plans to relocate the approximately 120 employees engaged in this business among Group companies. Part of the production facilities are scheduled for diversion to opto-related business.

(4) Schedule

Kuraray plans to continue production for present customers until December 2006, and cease operations.

3. Outlook

Kuraray anticipates posting an approximately 3.5 billion yen loss in fiscal 2006 due to the withdrawal. As of August 25, 2006, this is not expected to change the Company's announced business forecast (April 28, 2006) for the fiscal year ending March 31, 2007.

Reference: RPTV Structure

RPTVs enlarge images from small displays, such as CRTs and LCDs, and project those images by means of a lamp and lens to the mirror which reflects them onto the rear of the projection screen. RPTVs are distinguished by large screen capability with relatively low cost.

There are two prevalent types of RPTV. The micro display (MD) type employs LCDs or DLPs that are smaller than one inch for the image source, while CRT type RPTVs utilizes three primary colors of red, green and blue in a several-inch image source.

Kuraray's screens are equipped with optical functions to boost color and resolution while equalizing the image brightness projected from the rear of the screen to the audience seated in front of the RPTV.

RPTV Structure (MD type)