November 14, 2008

Business Performance for the First Two Quarters of Fiscal 2008
(on a consolidated basis)
1. Outline of business operations for the first two quarters (April 1 to September 30, 2008)(1) Operating results(Amounts less than ¥1 million are omitted.)
Net sales(¥ million)

First two quartersof fiscal 2008
First two quartersof fiscal 2007

(YoYchange)

Operating income

Recurring income(YoYchange)(YoYchange)(¥ million)(¥ million)

Net income(YoYchange)(¥ million)

255,990-

18,143-18,308-9,936-

244,289

13.4%

19,91010.3%

20,2787.8%

11,16717.0%

Earnings pershare (Yen)
24.69
27.74

First two quarters of fiscal 2008
First two quarters of fiscal 2007

(2) Financial position(As of end of terms; amounts less than ¥1 million are omitted.)
Total assets(¥ million)
First two quarters of fiscal
2008 (Sept. 30, 2008)
Reference: FY2007 full term
(March 31, 2008)

Net assets(¥ million)

Equity ratio (%)

Net assets
per share (¥)

546,093

211,10236.0

489.00547,237

217,81337.2

506.02

Notes:
EquityFirst two quarters of fiscal 2008: ¥196,814 million
FY2007 full term: ¥203,696 million

2. Forecasts for business operations for the fiscal 2008 full term (April 1, 2008 – March 31, 2009)(Amounts less than ¥1 million are omitted.)
Net sales(YoYchange)
516,000
1.6%(¥ million)

FY2008 full term

Operating income

Recurring income(YoYchange)
35,500(8.5%)(YoYchange)
34,700(9.9%)(¥ million)(¥ million)

Net income(YoYchange)
19,200 (12.5%)(¥ million)

Earnings pershare(Yen)

47.85

Note:
Changes in forecasts for business operations made during the first two quarters: Revised as of November 14, 20081

3. Business performance and financial results(1) Business performance for the first two quarters of fiscal 2008
During the first two quarters (April 1 to September 30) of fiscal 2008, the Japanese economy
showed a marked deceleration. This came in response to the global economic slowdown that has
resulted from financial market instability caused by the U.S. subprime mortgage loan crisis, as wellas the rapid appreciation of the yen against the dollar.
Under these circumstances, the Group posted business results for the first two quarters offiscal 2008 as follows: sales of ¥255,990 million (up 4.8% over the same period of the previous
fiscal term), operating income of ¥18,143 million (down 8.9%), recurring income of ¥18,308
million (down 9.7%), and net income of ¥9,936 million (down 11.0%). In spite of an increase inrevenues, higher depreciation expenses resulting from changes in the useful lives of long-lived
assets accompanying revisions to the taxation system, as well as the impact of foreign currency
exchange adjustments, contributed to a year-on-year decline in earnings.
(2) Breakdown of business performance by operational segment
Gas BusinessIn the Gas Business, sales of specialty gases rose on strong demand from users in the electronics
sector, which more than offset a decline in demand among some of our customers, principally inthe chemical industry.
As a result, sales of the Gas Business increased 7.2% year-on-year to ¥175,019 million.
However, operating income fell 13.0% to ¥14,028 million, due primarily to a rise in depreciation
expenses resulting from changes in the useful lives of long-lived assets accompanying revisions tothe taxation system.
The Machinery & Equipment BusinessIn the Machinery & Equipment Business, sales of air separation plants and equipment exceeded
previous-year levels due to posting of revenue from large-scale projects (primary for Japanese steelmakers) under the percentage-of-completion method. On the other hand, revenue from the sale ofelectronic equipment showed a year-on-year decline owing to a smaller number of large-scale
projects compared with the previous first half.
As a result, sales of machinery and equipment posted a year-on-year decline of 1.5% to¥70,535 million, while operating income rose 5.1% to ¥5,034 million.
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Housewares Business and Others
In the Housewares Business, Thermos K.K. reported steady sales of sports bottles and portablemugs. Consequently, sales in this segment rose 11.4% year-on-year to ¥10,436 million, while
operating income was up 46.8%, at ¥1,670 million.
(3) Breakdown of business performance by geographical segment
Japan
Despite production cuts in customer industries and a growing trend among certain industrial
sectors to curb plant and equipment investments, demand remained generally firm in the first half.
Sales increased 6.7% to ¥200,280 million. Higher depreciation expenses as a result of changes in
the useful lives of long-lived assets accompanying revisions to the taxation system led operating
income to decline 3.0% to ¥13,884 million.
North America
In the first-half period under review, our North American affiliate Matheson Tri-Gas reported ayear-on-year increase in sales on a dollar basis, with the economic slowdown in the U.S. having noobvious impact on the company’s performance. On a yen basis, however, sales declined 4.8% to¥41,715 million as a result of the yen’s sharp appreciation against the dollar. Operating income
decreased 21.0% to ¥4,746 million, which is primarily attributable to the posting of substantial
losses as a result of foreign currency exchange in the wake of the yen’s appreciation. In addition,changes in accounting standards for the amortization of goodwill in line with new accounting
procedures that are mandatorily applied to foreign subsidiaries caused expenses to increase.
Other Regions
In Southeast Asia, our mainstay gas business showed a strong performance thanks to the expansionof production facilities in the previous term to meet the robust demand for industrial gases. As aresult, sales increased 9.4% to ¥13,994 million, while operating income rose 20.8% to ¥1,151
million.

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4. Results by operating segment
First two quarters of fiscal 2008 (April 1 to September 30, 2008)(Millions of yen)
MachineryandEquipment
Business

Housewares
Business andOthers

175,019

70,535

10,436

255,990-

255,990

11

9,910

41

9,963

(9,963)-

175,031
14,02880,445
5,034

10,477
1,670

265,954
20,733(9,963)(2,589)255,990
18,143Gas
Business
Sales(1) Sales toexternal customers(2) Sales frominter-segment
transactions andtransfers
Total
Operating income

Total

Eliminations orCorporate

Consolidated

Notes
1. Segmentation method
Products (whether developed and/or made in-house or by other companies [i.e. bought-in merchandise])are allocated to one of the three segments of the Gas Business, the Machinery and Equipment Business,and the Housewares Business and Others.
2. The principal products and services included in the three segments are shown in the table below.
Business segment

Main products
Oxygen, nitrogen, argon, carbon dioxide, helium, rare gases such as xenon
and neon, hydrogen, medical gases(oxygen, dinitrogen monoxide), specialty
Gas Businessgases (semiconductor materials gases, standard reference gas), dissolved
acetylene, liquid petroleum gas (LPG), other gases, stable isotopes,
equipment lease
Cutting and welding equipment, welding materials, cylinders,
semiconductor related engineering/equipment, semiconductor
manufacturing equipment, medical equipment, air separation plants(oxygen, nitrogen, argon, rare gases), cryogenic air separation plants, ultraMachinery andEquipment
low-temperature equipment, high-vacuum equipment, pressure swing
Business
adsorption (PSA) gas generators, hydrogen generators, gas compressors,
gas expanders, liquefied gas storage/pumps, vacuum brazing, atomic
power/space development equipment and other related equipment, airconditioning equipment, drainage treatment systems
Housewares
Stainless steel vacuum bottles(household, laboratory), vacuum thermal
Business andinsulation cooking pans, assembly, processing and inspection of electronic
Otherscomponents, maintenance of facilities, other outsourced business3. Changes in accounting policies
Accounting standards for inventory valuation
From the first quarter of the term, the Company applied the “Accounting Standards for Measurement ofInventories” (Accounting Standards Board of Japan (ASBJ) Statement No. 9 on July 5, 2006). Thechanges in the accounting standards have no material effect on the income statement.
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Unification of Accounting Policies Applied to Foreign Subsidiaries
From the first quarter of the term, the Company applied the “Practical Solution on Unification ofAccounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
Practical Issues Task Force No. 18 on May 17, 2006). As a result, operating income for the first half offiscal 2008 decreased ¥715 million for Gas Business.
Application of accounting standards for lease transactions
From the first quarter of the term, the Company applied the Accounting Standard for Lease
Transactions (ASBJ Statement No. 13 (June 17, 1993 (Business Accounting Council, FirstSubcommittee) revised March 30, 2007) and the Implementation Guidance on the Accounting Standard
for Lease Transactions (ASBJ Guidance No. 16 (January 18, 1994 (Japanese Institute of Certified
Public Accountants, Accounting System Committee) revised March 30, 2007). The changes in theaccounting standards have no material effect on the income statement.
4. Additional information
Changes in useful life of machinery and equipment
Effective from the first quarter of the term, the Company and its consolidated subsidiaries in Japan havechanged their accounting policy for the depreciation of machinery and equipment in line withamendments to the Income Tax Law effective from fiscal 2008.
Accordingly, the useful life of machinery and equipment has been changed to more effectively reflect
the actual useful lives.
As a result, operating income for the first two qurters of fiscal 2008 decreased ¥1,102 million for
Gas Business, ¥25 million for Machinery and Equipment Business, and ¥7 million for Housewares
Business and Others, respectively.

55. Results by geographical segment
First two quarters of fiscal 2008 (April 1 to September 30, 2008)(Millions of yen)JapanNorth

OtherAmerica

countries

Total

Eliminations orConsolidated

CorporateSales(1) Sales toexternal

200,280

41,715

13,994

255,990-

255,990

3,949

5,749

1,870

11,569(11,569)-

204,229

47,465

15,864

267,559(11,569)

255,990

13,884

4,7461,151

19,781(1,637)

18,143customers(2) Sales frominter-segment
transactions
Total
OperatingincomeNotes
1. Principal countries in the North America and Other Countries segments are as follows:(1) North America: The United States of America(2) Other countries: Singapore, Malaysia, Philippines, China, Taiwan etc.
2. Changes in accounting policies
Accounting standards for inventory valuation
From the first quarter of the term, the Company applied the “Accounting Standards for Measurement ofInventories” (Accounting Standards Board of Japan (ASBJ) Statement No. 9 on July 5, 2006). Thechanges in the accounting standards have no material effect on the income statement.
Unification of Accounting Policies Applied to Foreign Subsidiaries
From the first quarter of the term, the Company applied the “Practical Solution on Unification ofAccounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
Practical Issues Task Force No. 18 on May 17, 2006). As a result, operating income for the first twoquarters of fiscal 2008 on business operations in North America decreased ¥715 million.

6Application of accounting standards for lease transactions
From the first quarter of the term, the Company applied the Accounting Standard for Lease
Transactions (ASBJ Statement No. 13 (June 17, 1993 (Business Accounting Council, FirstSubcommittee) revised March 30, 2007) and the Implementation Guidance on the Accounting Standardfor Lease Transactions (ASBJ Guidance No. 16 (January 18, 1994 (Japanese Institute of Certified
Public Accountants, Accounting System Committee) revised March 30, 2007). The changes in theaccounting standards have no material effect on the income statement.
3. Additional information
Changes in useful life of machinery and equipment
Effective from the first quarter of the term, the Company and its consolidated subsidiaries in Japan havechanged their accounting policy for the depreciation of machinery and equipment in line with
amendments to the Income Tax Law effective from fiscal 2008.
Accordingly, the useful life of machinery and equipment has been changed to more effectively reflect
the actual useful lives.
As a result, operating income for the first two quarters of fiscal 2008 on business operations inJapan decreased ¥1,135 million.

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