August 13, 2008

Accounts Settlement for the First Quarter of Fiscal 2008
(on a consolidated basis)
1. Outline of business operations for the first quarter (April 1 to June 30, 2008)(1) Operating results(Amounts less than ¥1 million are omitted.)
OperatingprofitNet sales(YoYchange)(¥ million)

First quarter offiscal 2008
First quarter offiscal 2007

Recurringprofit(YoYchange)(¥ million)

Net income(YoYchange)(¥ million)(YoYchange)(¥ million)

124,843-

9,152-

9,428-

5,163-

119,316

12.0%

9,638

11.3%

9,795

4.2%

5,222

5.9%

Earnings pershare(Yen)
12.83
12.97

First quarter of fiscal 2008
First quarter of fiscal 2007

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

Net assets(¥ million)

Equity ratio (%)

Net assets
per share (¥)

548,451

210,34535.8

487.63547,237

217,81337.2

506.02

2. Forecasts for business operations for the fiscal 2008 full term (April 1, 2008 – March31, 2009)(Amounts less than ¥1 million are omitted.)
Operatingprofit

Net sales(¥ million)

First half offiscal 2008
Reference:FY2008 full term

(YoYchange)(¥ million)

Recurringprofit(YoYchange)(¥ million)

Earnings pershare

Net income(YoYchange)(¥ million)(YoYchange)(Yen)

250,000-

18,000-18,000-

10,200-25.34

527,000

3.8%

38,400(1.0%)

37,500(2.6%)

21,000(4.2%)

52.17

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3. Business Performance and Financial Results(1)Business Performance for the First Quarter of Fiscal 2008
During the first quarter (April 1 to June 30) of fiscal 2008, the prospects for the Japanese
economy became increasingly cloudy against the backdrop of a slowdown in global economic
activity as a result of financial market instability stemming from the U.S. subprime mortgage
loan crisis, fears of worldwide inflation due to the sharply rising prices of crude oil and raw
materials, and the steep appreciation of the yen against the dollar, which had started in theprevious year. The U.S. economy, meanwhile, continued to grow at a moderate pace in spiteof the financial sector crisis, thanks to a firm undertone in consumer spending and good
growth in exports, fueled by the weakening of the dollar’s exchange rate.
In the principal industrial sector in which the Taiyo Nippon Sanso Group is engaged,
demand for industrial gases by customers in the electronics sector remained firm, but the highmarket prices of raw materials, including naphtha, acted as a dampener on demand by the steeland chemicals industries.
Under these circumstances, the Group posted business results for the first quarter offiscal 2008 as follows: sales of ¥124,843 million (up 4.6% over the same period of theprevious fiscal term), operating income of ¥9,152 million (down 5.0% year-on-year), recurring
profit of ¥9,428 million (down 3.7%), and net income of ¥5,163 million (down 1.1%). Owing
partially to changes in the useful lives of assets accompanying revisions to the taxation system,
depreciation expenses increased, leading to increased revenues and decreased earnings incomparison with the previous first quarter.
To raise its performance targets still further and make progress in developing toward a
truly global player, the Taiyo Nippon Sanso Group has drawn up the “Stage 10” a new
medium-term business plan, of which fiscal 2008 is the first year, and the management andstaff are currently working to raise the Group’s enterprise value.
2(2) Breakdown of business performance by operational segment

Gas BusinessIn the Gas Business, demand remained firm from the Group’s principal customer industries inJapan, and as a result, sales of mainline gases in the Japanese market followed a favorable
trend. In the United States, as a result of the sharp increase in the yen’s exchange ratecompared with the previous term, sales posted a year-on-year decrease. Specialty gases posted
sales increases both in Japan and overseas, thanks to brisk shipments to users in the electronics
sector. As a result of changes to the useful lives of equipment, accompanying revisions to thetax code, the Company posted increased depreciation expenses on a consolidated basis, whichcaused operating income to fall below the level of the first quarter of the previous term.
As a result of the foregoing, sales of the Gas Business rose 8.1% year-on-year, to¥87,114 million, while operating income fell 10.8% to ¥7,228 million.

The Machinery & Equipment BusinessIn the Machinery & Equipment Business, progress in and completions of major contracts forthe construction of air separation plants – for which incoming orders had been following afavorable trend – were generally on schedule during the reporting first-quarter period, andfigures exceeded those of the previous year’s first quarter. On the other hand, sales ofelectronic equipment and piping installation work registered a sharp year-on-year decline inreaction to the high level of sales for the same period of 2007. As a result, total sales of thissegment were down from the previous first quarter.
Sales of machinery and equipment posted a year-on-year fall of 4.8% to ¥32,195million, while operating income was down 2.3% at ¥2,203 million.

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Housewares Business and Others
New products launched this spring made a strong contribution to sales pushing up total salesof the Housewares Business and Others segment sharply over the previous year. Total salesrose 13.1% year-on-year, to ¥5,533 million, while operating income was up sharply, by48.9%, at ¥1,098 million.

(3)Breakdown of business performance by geographical segment
Japan
The economy has been weakened by the rising prices of raw materials, but the Group’s gas
business operations posted firm results. In machinery and equipment, revenues received frommajor construction projects in which progress was made kept sales as a whole at a robust level,
but sales of electronic equipment posted a year-on-year drop in a reaction to the large sales
figure posted in the same quarter of 2007. Cutting and welding equipment held firm. In thehousewares segment, shipments of sports-use vacuum flasks maintained the previous year’s
strong pace. Operating income rose over the previous first quarter in spite of an increase indepreciation expenses due to a change in the useful lives of certain assets accompanying arevision of the tax code in 2008.
Total sales in the Japanese market reached ¥97,332 million, up 5.6%, while operating
income came to ¥7,404 million, up 3.9%.

North America
Sales of oxygen, nitrogen, and argon held roughly flat at the previous-year level, while sales ofspecialty gases for semiconductor manufacturing posted growth. On a local currency basis,
sales were up year-on-year, but as a result of the yen’s appreciation, the sales figure was downfrom the first quarter of fiscal 2007 after translation into yen.

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Sales in the North American market were down 2.2% at ¥20,829 million, and operating
income was down 26.1% at ¥1,992 million.

Other Regions
Sales of mainline gases were firm thanks to strong demand in Southeast Asia. Sales ofspecialty gases in Taiwan maintained a favorable trend. As a result, sales recorded strong
growth on a local currency basis. Although the yen’s appreciation against all the East Asiancurrencies had some effect, sales as a whole were still up year-on-year after translation intoyen.
Sales rose 15.2% to ¥6,680 million, while operating income was up 3.4% at ¥458
million.

5(4) Results by operating segment
First quarter of fiscal 2008 (April 1 to June 30, 2008)(Millions of yen)
Machinery
Housewaresand
Gas
Business andBusiness Equipment
OthersBusinessSales(1) Sales toexternal customers(2) Sales frominter-segment
transactions andtransfers
Total
Operating profit

Total

Eliminations orCorporateConsolidated

87,11432,195

5,533

124,843-

124,843

7

4,916

31

4,954

(4,954)-

87,122
7,228

37,111
2,203

5,564
1,098

129,797
10,530(4,954)(1,377)

124,843
9,152

Notes
1. Segmentation method
Products (whether developed and/or made in-house or by other companies [i.e. bought-inmerchandise]) are allocated to one of the three segments of the Gas Business, the Machinery andEquipment 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 gases (semiconductor materials
Gas Businessgases, 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, ultra-low-temperature equipment, highMachinery andvacuum equipment, pressure swing adsorption (PSA) gas
Equipment Businessgenerators, hydrogen generators, gas compressors, gas
expanders, liquefied gas storage/pumps, vacuum brazing,atomic power/space development equipment and other related
equipment, air-conditioning equipment, drainage treatment
systems
Stainless steel vacuum bottles(household, laboratory), vacuum
Housewares Business thermal insulation cooking pans, assembly, processing andand Others
inspection of electronic components, maintenance of facilities,
other outsourced business3. Changes in accounting policies
6Accounting standards for inventory valuation
For the reporting first quarter, 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
For the reporting first quarter, 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 decreased¥358 million for Gas Business, compared with amounts calculated using the previous method.
Application of accounting standards for lease transactions
For the reporting first quarter, the Company applied the Accounting Standard for Lease Transactions(ASBJ Statement No. 13 (June 17, 1993 (Business Accounting Council, First Subcommittee) 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 reporting first quarter, the Company and its consolidated subsidiaries in Japan
have changed 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 decreased ¥533 million for Gas Business, ¥11 million for
Machinery and Equipment Business, and ¥2 million for Housewares Business and Others,
respectively, compared with amounts calculated using the previous method.

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

OtherAmerica

countries

Total

Eliminations orConsolidated

CorporateSales(1) Sales to97,332

20,8296,680

124,843-124,843

2,253

2,805

875

5,934

(5,934)-Total

99,586

23,635

7,555

130,777(5,934)

124,843

Operating profit

7,404

1,992

458

9,856(704)9,152external customers(2) Sales frominter-segment
transactions

Notes
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
For the reporting first quarter, 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
For the reporting first quarter, 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 on business
operations in North America decreased ¥358 million, compared with amounts calculated using theprevious method.
Application of accounting standards for lease transactions

8For the reporting first quarter, the Company applied the Accounting Standard for Lease Transactions(ASBJ Statement No. 13 (June 17, 1993 (Business Accounting Council, First Subcommittee) 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.

3. Additional information
Changes in useful life of machinery and equipment
Effective from the reporting first quarter, the Company and its consolidated subsidiaries in Japan
have changed 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 on business operations in Japan decreased ¥546 million,compared with amounts calculated using the previous method.

6. Notification regarding significant change in owners’ equity
Downward adjustment of start-of-term retained earnings
Effective from the first quarter reporting, the Company applied the Practical Solution
on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements (ASBJ Practical Issues Task Force No. 18 on May 17, 2006), and madeadjustments necessary for the preparation of consolidated financial statements. As a result of
these adjustments, the start-of-term retained earnings amount was reduced by ¥4,506 million
to ¥119,886 million.

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