September 28, 2012
Taiyo Nippon Sanso Corporation

Notice Concerning the Posting of Extraordinary Losses as a result of the terminationof joint activities for the manufacturing of specialty gas

At the Board meeting held on September 28, 2012, Taiyo Nippon Sanso Corporation (“TaiyoNippon Sanso“ or “the Company”) resolved to terminate the joint activities with Evonik Degussa
Japan (“EDJ”) for the manufacturing of monosilane gas. As a result of the termination of the joint
activities, the Company will post extraordinary losses to its consolidated statements of income forthe second quarter of fiscal year 2013.
1. The Posting of Extraordinary Losses1) Background and Details
In April 2009, Taiyo Nippon Sanso entered into an agreement for collaboration with EDJ toproduce monosilane gas. The Company’s objective of this collaboration was to capture thegrowing global demand of monosilane gas and to expand its business in the markets of liquid
crystal display (LCD), solar cells, and semiconductor devices. The joint activities were
projected to realize high quality production, cost competitiveness, and a reliable supply chainof monosilane gas. As part of the joint activities, a manufacturing plant was constructed in
Yokkaichi city, Mie Pref. and the products were started shipping in September 2011.
During the time the joint activities were being established and the Yokkaichi plant was being
constructed, the US financial crisis accelerated and soon thereafter spread to a global economic
downturn which resulted in the continual decrease in demand from all of the Electronics
related markets. Furthermore, both power supply concerns after the Great East Japan
Earthquake and the excessive appreciation of Japanese Yen compounded the situation tofurther shrink the production of thin-film silicon solar cells and LCD, both of which were
expected to increase in demand in Japan. These unfavorable circumstances caused a dramatic
decrease to the original plan of the joint activities for both the production and sale ofmonosilane gas.
Faced with the global recession, Taiyo Nippon Sanso has made great efforts to attempt toaccomplish the reductions in manufacturing costs and expenses, and has worked tirelessly toexpand the sales in China and other Asian markets. However, market conditions have not
improved due to the stagnant demand in the global market and the drop of selling price causedby the oversupply. The Company has now recognized that the business of producing andselling monosilane gas will not recover for some time and that it is forced to terminate the joint
activities for manufacturing monosilane gas.

12) Outline of Extraordinary Losses
Taiyo Nippon Sanso and EDJ have agreed to terminate the agreement of joint activities,
effective on September 30, 2012, for the production and sale of monosilane gas and, as aresult, the Company will post the following extraordinary losses to its consolidated statements
of income for the second quarter of fiscal year 2013.
A) Penalty for the early termination of theagreement of joint activities
B) Losses for the liquidation of the joint venture(operation for refinery and quality control) andother related costs
Total

Approx.

JPY 19.8 billion

Approx.

JPY 3.5 billion

Approx.

JPY 23.3 billion

2. Reduction of Executive Compensation
In response to the financial impact from the extraordinary losses, the Company will reduce theexecutive compensation for those board of directors who are newly assigned today.
1) Details of Executive Compensation Reduction
Chairman, President
Executive Vice President, Senior Managing Directors
Executive Advisor, Vice Chairman,
Managing Directors, Executive Directors

20% of Compensation
15% of Compensation
10% of Compensation

2) Period of Reduction
The reduction in executive compensation shall continue for one year starting in October 2012.
3. Revised Forecast
The extraordinary losses are reflected in the financial results forecasts announced today,
which is located in the document titled “Notice of Revision to the Consolidated Financial
Forecasts, and Announcement of the Non-consolidated Financial Results”.
4. Cash dividends of fiscal year 2013
The Company is not changing its projection of cash dividends (JPY6.00 semi-annually) for
the fiscal year 2013 as previously announced on May 9, 2012.

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