Translation

Member of the Financial Accounting Standards Foundation

July 15, 2009

Consolidated Financial Results
for the Fiscal Year Ended May 31, 2009
Listed company name:
Stock exchange listing:Stock code:
Location of headquarters:
Website:Representative:
Contact:

Toyo Tanso Co., Ltd.
Tokyo Stock Exchange, 1st Section
5310
Osaka, Japan
http://www.toyotanso.co.jp
Junko Kondo, President & Chief Operating Officer
Toshimi Boki, Executive Officer, General Manager,
Accounting Department
81-6-6451-2114 (from overseas)

TEL:
Scheduled date for ordinary general
meeting of shareholders:
Scheduled date for dividend payment:
Scheduled date for submission of
securities report:

August 28, 2009
August 31, 2009
August 31, 2009

1. Consolidated financial results for the fiscal year ended May 31, 2009
(From June 1, 2008 to May 31, 2009)(1) Operating results(Millions of yen, rounded down)(Percentages indicate changes from the same period in the previous fiscal year.)Net sales

Operating profit

Recurring profit%
Fiscal year ended May 31,
2009
Fiscal year ended May 31,
2008

Net income

%

%

%

30,974(10.3)

4,741(41.0)

4,483(42.5)

2,566(50.1)

34,531

10.0

8,031

16.0

7,795

9.4

5,143

15.9

Net income per share

Diluted net income
per share

Equity ratio

Recurringprofit/total assets

Operatingprofit/net sales

yen

yen

%

%

%

Fiscal year ended May 31,
2009
Fiscal year ended May 31,
2008
Reference: Equity in earnings of affiliates
May 31, 2009
May 31, 2008

123.80

-

5.5

7.7

15.3

247.33

-

11.9

13.9

23.3

- million yen- million yen(2) Financial position(Millions of yen, rounded down)
Total assets

EquityEquity ratio

Equity per share%yen

As of May 31, 2009

58,821

48,60680.6

2,286.27

As of May 31, 2008

57,706

46,52379.0

2,198.73

Reference:

Shareholders’ equity
May 31, 2009
May 31, 2008

47,404 million yen
45,606 million yen-1-(3) Cash flows
Cash flows fromoperating activities

Fiscal year ended May 31,
2009
Fiscal year ended May 31,
2008

Cash flows frominvesting activities(Millions of yen, rounded down)
Cash and cash
Cash flows fromequivalents at end of
financing activities
period5,105(8,420)

(568)

6,412

6,635

(5,924)

1,753

10,491

2. Dividends(Millions of yen, rounded down)(Record date)First
quarterend
yen

Dividends per share (yen)ThirdInterimYearquarter
-end
-end
end
yen
yen
yen

Total
(Full
year)
yen

Total
dividends(annual)Payout ratio(consolidated)

Ratio ofdividends tototal assets(consolidated)%%Year ended May 31, 2008

-

0.00

-

15.00

15.00

311

6.1

0.7

Year ended May 31, 2009
Fiscal year ending May
31, 2010 (Forecast)

-

0.00

-

20.00

20.00

414

16.2

0.9

-

0.00

-

20.00

20.00

27.6

3. Consolidated results forecast for the fiscal year ending May 31, 2010
(From June 1, 2009 to May 31, 2010)

Net sales

Operating profit%

Cumulative total for thesix months
Fiscal year ending May
31, 2010(Millions of yen, rounded down)(Percentages indicate year-on-year changes.)
Net income
Recurring profit
Net income
per share

%

%

%

yen

12,000(33.3)

300(92.8)

300(92.0)

50(97.9)

2.41

28,000

(9.6)

2,500

(47.3)

2,500(44.2)

1,500(41.6)

72.34

4. Others(1) Changes in significant subsidiaries during the period(changes in specified subsidiaries accompanying changes in scope of consolidation):

None(2) Changes in accounting policies, procedures, and methods of presentation for preparing theconsolidated financial statements(those to be described in “Changes in Significant Items That Form the Basis of Preparations for
Consolidated Financial Statements”)
i. Changes due to amendment of accounting standards: Yes
ii. Changes due to other reasons:Yes
Note: For more details, please refer to “Changes in Significant Items That Form the Basis of Preparations for
Consolidated Financial Statements” (in Japanese only) on page 24.

-2-(3) Number of shares outstanding (common stock)i. Number of shares outstanding and issued at the end of period (including treasury stock)
As of May 31, 2009
20,750,688 shares
As of May 31, 2008
20,750,688 shares
ii. Number of treasury stock at the end of period
As of May 31, 2009
16,115 shares
As of May 31, 2008
15,430 shares
Note: For the number of shares as a basis of calculating net income per share (consolidated), please refer toper-share information (in Japanese only) on page 28.

Reference: SUMMARY OF NON-CONSOLIDATED FINANCIAL STATEMENTS

1. Non-consolidated financial results for the fiscal year ended May 31, 2009
(From June 1, 2008 to May 31, 2009)(1) Operating results
Net sales(Millions of yen, rounded down)(Percentages indicate year-on-year changes.)
Recurring
Net income
profitOperating profit%

Fiscal year ended May 31,
2009
Fiscal year ended May 31,
2008

%

%

22,658(13.6)

1,151(74.1)

1,756(59.2)

1,323(54.4)

26,222

10.1

4,448

(10.3)

4,306(17.0)

2,902(14.9)Net income per share

Diluted net income per
share

yen

yen

63.82

-

139.96-

Fiscal year ended May 31,
2009
Fiscal year ended May 31,
2008%(2) Financial position(Millions of yen, rounded down)
Total assets

EquityEquity ratio%

Net assets per shareyen

As of May 31, 2009

49,457

40,83082.6

1,969.19

As of May 31, 2008

48,71339,85081.8

1,921.85

Reference:

Shareholders’ equity
May 31, 2009
May 31, 2008

40,830 million yen
39,850 million yen* Disclaimer regarding appropriate use of forecasts and related points of note
The above forecasts are based on information available at the time of the release of this report. Actual results
may differ from the projected figures due to a variety of factors. For any further information regarding theforecasts, please refer to “1. Business Results, (1) Analysis of Business Results” on page 4.

-3-

1. Business Results(1) Analysis of Business Results(i) Business Results for the Fiscal Year ended May 31, 2009
During this fiscal year, the Japanese economy rapidly deteriorated, particularly in the second half of the year.
The increased effects of the financial crisis, originally triggered by the US economy, on the real economy andrapid declines in capital investment and exports compounded the effect of fluctuations in raw materials prices andexchange rates. Worsening conditions in Western economies led to a major slowdown demand on a global level,
including in newly emerging economies such as China, and a worldwide recession appears to have taken root.
Under these circumstances, the Toyo Tanso Group focused its efforts on the environment and energy-related
fields, including solar cells, and produced good results during the first half of the year. However, in the second
half of the year, the impact of rapid and large-scale production and inventory adjustments across all products,
regions and companies impacted significantly upon the Group’s results.
As a result of the above performance, consolidated sales for the fiscal year ended May 31, 2009 fell 10.3%
year on year to 30,974 million yen due to the effect of rising raw material prices and a strengthening yen in
addition to falling sales and production caused particularly by a rapid decline in demand in the second half of theyear. Operating profit fell 41.0% to 4,741 million yen, recurring profit declined 42.5% to 4,483 million yen, andnet income slipped 50.1% to 2,566 million yen.
The table below shows sales by product category in this fiscal year.
(Thousands of yen)
Products
Special graphite products
Carbon products for general industries(for mechanical applications)
Carbon products for general industries(for electrical applications)Compound materials and other products
Related goods
Total

Year ended May 31, 2008
17,968,881

Year ended May 31, 2009
16,184,952

Year-on-year change (%)(9.9)

2,991,151

2,735,542(8.5)

4,598,688

4,081,854(11.2)

7,924,683
1,047,720
34,531,125

7,295,542
676,41430,974,306(7.9)(35.4)(10.3)

Special Graphite Products
In the electronics sector, a certain level of adjustments were required for products used in the processing of
single crystal silicon (centered on 300-mm wafers), which had already experienced a downward trend in the firsthalf of the year, in response to a rapid slowdown in the semi-conductor market. Furthermore, Chinese demandfor products used in the manufacture of solar cells, which had continued to drive high growth in the first half ofthe year, fell rapidly in the second half of the year, and overall demand decreased monthly, with the exception ofpolysilicon, which was the only product to increase sales.
In the general industries sector, there was an increase in production adjustments both within Japan andabroad for products used for electrical discharge machining (EDM) electrodes and metallurgical products as aresult of the global economic slowdown across a broad spectrum of industries, including the auto, consumer
electronics and construction industries, leading to sluggish performance across all products.
Carbon Products for General Industries
With regard to carbon products for mechanical applications, despite robust sales of pantograph sliders whichhave a small effect of fluctuating economic conditions, cutbacks in general capital expenditure resulted in asluggish growth in the mainstay products of bearings and sealing materials, leading to a downward trend overall.

-4-

Regarding products for electrical applications, it became necessary to make adjustments, particularly in themain center of the Chinese market, in small carbon brushes for home appliance motors, the leading product, in
response to the slowdown in Western economies.
Compound Materials and Other Products
Regarding SiC (silicon carbide)-coated graphite products, despite underlying strength from optoelectrics
devices such as LED devices in the face of tough conditions, the major slowdown in semi-conductor products led
to a deterioration overall. Regarding C/C composite, major adjustments became necessary, particularly in thesecond half of the year, for large crucibles used in the processing of 300 mm wafers. However, success was seen
with the development of markets for solar cells, leading to underlying strength overall. Demand for graphite
sheets fell in the second half of the year as a result of the slowdown in the auto and semi-conductor industries.
(ii) Outlook on the Fiscal Year Ending on May 31, 2010
With regard to future economic conditions, despite a trend towards recovery in some areas as a result of theeconomic stimulus measures being implemented around the world, it is expected that more time is required for areal recovery supported by capital expenditure and personal consumption and that, given unstable factors such as
employment conditions, crude oil prices and exchange rate fluctuations, difficult economic conditions willcontinue for the immediate future.
Regarding the business environment surrounding the Group, it is expected that an adjustment phase willcontinue for demand for at least the first half of the year, particularly in the leading products of solar cells andsemi-conductors. In the medium to long-term, it is expected that solar cells will begin to see new growth, given
the sustained growth in the environment and energy-related sectors. It is also expected that high-function
graphite materials will see steady growth, including an expansion in the nuclear and LED sectors, and it isexpected that this trend will gradually begin to emerge from the second half of the year onwards. In the light ofthe market environment, the Group plans to work hard on reducing underlying expenses and costs at the sametime as carrying out thorough preparations for expansions in production capacity in growth fields and regions,with a view to a future recovery in economic conditions.
Regarding the outlook for operating results in the fiscal year ending May 31, 2010, we expect that
consolidated net sales will decrease 9.6% year on year to 28 billion yen, take consideration of the increase indepreciation costs associated with a high level of investments and the impact of a strengthening yen. We expectthat operating profit will decline 47.3% to 2.5 billion yen, ordinary profit will decrease 44.2% to 2.5 billion yen,and net income is set to decline 41.6% to 1.5 billion yen. We assume that the exchange rates of the yen against
the US dollar and the euro will be 93 yen and 130 yen, respectively.

-5-(2) Analysis of Financial Position
Cash and cash equivalents (hereinafter referred to as “funds”) in the fiscal year ended on May 31, 2009
decreased by 4,079 million yen from the end of the previous fiscal year, to 6,412 million yen on a consolidated
basis. The status of cash flows from the following activities in the period was as follows:(Cash Flows from Operating Activities)
Funds obtained as a result of operating activities decreased 23.1% from the previous fiscal year to 5,105
million yen. Among major cash flow items, profit before income taxes decreased 43.5% from the previous year to
4,615 million yen and depreciation costs increased 19.4% to 3,291 million yen. Meanwhile, income taxes paiddecreased 27.6% to 2,398 million yen.
(Cash Flows from Investing Activities)
Funds used for investing activities increased 42.1% from the previous fiscal year to 8,420 million yen.
Among major cash flow items, payments for time deposits decreased 15.6% to 8,054 million yen and payments
for the acquisition of tangible fixed assets associated with the expansion of production facilities for isotropic
graphite materials, etc, decreased 7.1% to 4,379 million yen. Meanwhile, proceeds from time deposits decreased
59.1% to 3,558 million yen.
(Cash flows from Financing Activities)
Funds used for financing activities totaled 568 million yen.
long-term borrowings decreased 57.3% to 530 million yen.

Among major cash flow items, payments for(3) Basic Policy for Profit Allocation and Dividends for the Fiscal Year Ended on May 31, 2009 and the
Fiscal Year Ending May 31, 2010(i) Basic Policy
Our basic policy for profit allocation is to make strategic investments in order to strengthen ourcompetitiveness and enhance our value over the long term and return profits to shareholders in a continuous andstable fashion with due consideration of both business results for the fiscal year, funding needs for the future
expansion of our business operations and consolidation of our business foundation. We intend to use internal
reserves for capital expenditures for production facilities, development of new products and investment inresearch and development.
(ii) Dividends for the Fiscal Year Ending on May 31, 2009
Based on the above-mentioned policy, we plan to increase the annual dividend for the fiscal year ended on
May 31, 2009 by 5 yen from the previous year to 20 yen per share in line with our initial dividend forecast in
consideration of the need to improve shareholders’ returns, at the same time as taking into account capital
expenditure plans aimed at future growth.
(iii) Dividends for the Fiscal Year Ending on May 31, 2010
Concerning dividends for the fiscal year ending on May 31, 2010, from the perspective of continuing with asteady return of profits in an expected difficult economic environment, we forecast an unchanged dividend of 20
yen per share.

-6-(4) Business and other risks
Below are matters that are deemed to have the potential to become risk factors and to have a significant
effect on the judgment of investors among those relating to the business and accounting conditions of the Toyo
Tanso Group.
Although the Toyo Tanso Group is aware of the possibility that these risks could occur and takes steps to
avoid the occurrence of these risks and responds to them if they have occurred, we believe that a decision to invest
in the securities of Toyo Tanso needs to be made by carefully considering the description in this section and details
described in other sections of this report.
Forward-looking statements made on the following matters reflect the judgment of the Toyo Tanso Group asof the date of releasing this report and contain uncertainties. Therefore, forecasts and projections contained inthese statements may differ from actual results.
(i) Effect of market conditions on operating results
Special graphite products, core products of the Toyo Tanso Group, are used for a broad array of areas,
including electronics, dies, metallurgy, chemical and atomic reactors. Sales have been growing, particularly inelectronics applications accompanying the expansion of the markets for the manufacturing of silicon
semiconductors, solar cells and compound semiconductors (LED and laser diodes). A number of compoundmaterials and other products are also used for electronics applications.
The Toyo Tanso Group works to diversify business risks by securing a market share in carbon products formechanical applications and electrical applications other than special graphite products and by developing new
applications such as metallurgy applications. We also strive to make appropriate business judgments byanalyzing and projecting movements in the electronics industry. However, if the electronics industry weakens
contrary to our expectations, it could have an impact on the business performance of the Toyo Tanso Group.
(ii) Competition
Although the Toyo Tanso Group provides carbon products to a broad array of customers, companies in the
carbon product industry compete on technologies and prices. The Toyo Tanso Group aims to early develop highvalue-added products that meet diverse customer needs and products that could stimulate demand based oncooperation between its production and sales divisions. We also strive to reduce costs and expenses. However,developments at our competitors and price competition could have an impact on the operating results of the Toyo
Tanso Group.
(iii) Effect of prices of raw materials and fuels on operating results
Although the Toyo Tanso Group takes measures to control the effect of rising prices of raw materials andfuels in such a way as purchasing from two suppliers and passing costs onto prices, a rise in prices of raw
materials and fuels more than expected could have an impact on operating results of the Toyo Tanso Group.
(iv) Inventories
Although the Toyo Tanso Group manufactures processed products to order, it produces isotropic graphite
materials based on a make-to-stock production system, since it takes about five months to manufacture isotropic
graphite materials. The Toyo Tanso Group endeavors to avoid excess inventory by projecting demand for
isotropic graphite materials every month and preparing a production plan. However, if demand for isotropic
graphite materials declines more than expected, it could lead to excess inventories temporarily, even if they do notundergo a temporal change.
The Toyo Tanso Group obtains information directly from customers based on its direct marketing and works
to reflect this on joint research and development with customers and in-house product development andimprovements. As a result, the inventory turnover period was 3.7 months in the fiscal year under review.

-7-

(v) Concentration of production bases
Since the production facilities of the Toyo Tanso Group are concentrated in Kagawa Prefecture, it could havean effect on the financial conditions and operating results of the Group if a large-scale disaster, etc. occurs in theprefecture.
(vi) Effect of legal regulations
The carbon products of the Toyo Tanso Group are subject to export-related laws and regulations, such as theForeign Exchange and Foreign Trade Control Law and the Regulations pertaining to the Export of Nuclear
Equipment by the International Atomic Energy Agency (IAEA). In this environment, the Toyo Tanso Groupseeks to comply with laws and regulations but could receive guidance under these legal regulations. Also, if an
unexpected statutory regulation is set up in the future, it could have an impact on the business performance of the
Toyo Tanso Group.
(vii) Effect of overseas business activities on operating results
The Toyo Tanso Group is proactive in expanding its production and sales bases to increase its ability torespond to customer needs quickly and to supply its products in a timely manner. Although the ratio of overseas
sales to consolidated net sales was 56.7% in the fiscal year under review, it could further rise in the future
depending on progress in our global operations. Also, changes in exchange rates, political conditions and legal
regulations in overseas markets could have an impact on the operating results and financial position of the Toyo
Tanso Group. In particular, changes in the political and foreign exchange policies in China could have an effecton the business performance of the Toyo Tanso Group, since we make active investments in China throughmeasures such as establishing subsidiaries in response to increasing demand in China.
(viii) Capital expenditures in the future
In the Toyo Tanso Group, materials production and other divisions make capital investments to increase theirproduction capacity. These investments could have an impact on the business performance of the Group if
market conditions change rapidly or if the payback period is prolonged.
(5) Key events related to the assumption of the business as an ongoing concern
None

-8-

2. Composition of Corporate GroupThe Toyo Tanso Group consists of Toyo Tanso Co., Ltd., ten consolidated subsidiaries, including two
domestic and eight foreign companies, two foreign non-consolidated subsidiaries, and one overseas affiliatedcompany not accounted for by the equity method. The main businesses of the Toyo Tanso Group are the
manufacture, processing and sale of carbon products for high function applications using isotropic graphite
materials (Note). Carbon products of the Toyo Tanso Group are used in a broad array of areas, and we need to
manufacture a range of products in small quantities since the specifications our customers require range over abroad spectrum.
The Toyo Tanso Group succeeded in pioneering the high-volume production of isotropic graphite materials
in 1974 ahead of competitors in Japan and overseas. This was followed by achievements in growth in size.
The Group has been expanding the applications of these products. We efficiently manufacture carbon materials
centering on these isotropic graphite materials by concentrating production on bases in Japan, and we haveconstructed a system to directly sell these products to local customers by supplying them to processing and sales
bases located in Japan and other countries in North America, Europe and Asia. We have established a stableproduct supply system with a short delivery time through this integrated production and sales system, whichranges from materials to products, and we develop products by promptly absorbing customer needs in acooperative relationship with customers based on our direct sales system.
The Toyo Tanso Group also conducts basic and applied studies based on customer needs and the analysis
data of carbon products, which we have been accumulating for many years as a carbon-specialized producer. As
a result, the applications of our products have been expanding into a wide spectrum of areas from industrial andcommercial applications such as industrial machinery, automobiles, and consumer electronics to cutting-edge
areas such as atomic power, aerospace, medical and energy.
Note:

Isotropic graphite materials
Carbon materials are categorized into graphite materials that are manufactured by high temperatureprocessing and other carbon materials. Of graphite materials, isotropic graphite materials arecharacterized by the fact that their nature is the same in all three dimensional directions.
To manufacture isotropic graphite materials, it is necessary to apply equal pressure from all directions in
the molding process, and we have established a production method using a hydrostatic molding method(a molding method that put pressure under water), ahead of competitors in Japan and overseas.
The main characteristics of graphite materials are as follows:(i) High thermal conductivity (*) and electronic conductivity(ii) High resistance to heat and chemicals(iii) Light and workable(iv) Resistant to friction and attrition
In addition to the above, isotropic graphite materials have the following characteristics:(i) Traits such as thermal expansion (*) are the same in all directions.
(ii) High strength with an ultra-fine particle structure and very small material dispersion.
Materials, applications, items, examples and characteristics of each product are as follows.

-9-Special graphite
products

Materials/applications/items
For the manufacture of single
crystal silicon
Electronics
For the manufacture ofapplications
compound semiconductors
For the manufacture of solar
cells
General industries applications
For the manufacture ofadvanced process equipment
OthersCarbon products
for generalindustries

For atomic power, aerospaceand medical

Carbon products formechanicalapplications

General industries
applications
For transportation

Carbon products forelectricalapplications

For small motors

Product examples
Crucibles and heaters for single crystal pulling-up
furnace
Susceptors for MOCVD systems, boats for LPE
systems
Crucibles and heaters for single crystal and polycrystal
silicon manufacturing furnace
Continuous casting dies, EDM electrode, heaters forvarious industrial furnaces
Electrodes for ion implantation equipment, glass sealing
jigs
Cores for high-temperature gas reactors, wall materials
for nuclear fusion reactors, rocket parts, parts for CT
scans
Bearings and seals for pumps and compressors
Pantograph sliders, automotive parts
Carbon brushes for vacuum cleaners and wind-power
generators
Large brushes, carbon brushes for wind-power
generators
Susceptors for semiconductor production, wallmaterials for nuclear fusion reactors, gaskets forautomotive engines, susceptors for MOCVD systems

For large motors

Compound materials and other products(1) Special graphite products
For special graphite products, isotropic graphite materials are mainly used.
(i) Electronics applications(a) For the manufacture of single crystal silicon
Silicon wafers that are manufactured by slicing single crystal silicon are basic materials that help drive thedevelopment of the electronics industry, as a semiconductor substrate such as a high integrated memory device.
Major consumable parts inside a furnace such as crucibles (*) and heaters that are used in a single crystal siliconpulling-up furnace rely on isotropic graphite products, since these parts require high purity and high thermal
resistance.
With the diameter of single crystal silicon increasing, the shift to a manufacturing process using 300 mm
wafers has been progressing. The Company has the capacity to produce the world’s largest isotropic graphite
materials and to meet demand from customers in Japan and overseas by using its processing and high purity
production facilities.
(b) For the manufacture of compound semiconductors
Compound semiconductors (*), which are used as light emitting devices and telecommunications devices,
are also employed as high efficiency light emitting devices for digital consumer electronics such as mobile phones,
DVDs and LCDs, automotive head lumps and fluorescent tubes, taking advantage of their features, such as a longlife and electric power saving.
In Japan and overseas, major consumable parts such as heating elements and susceptors for MOCVD
systems (*), which are used in the manufacturing process of these compound semiconductors, rely on the isotropic
graphite products of the Company, as these parts require high purity and high processing accuracy.
(c)

For the manufacture of solar cells
Solar cells, the king of clean energy, represent an area expected to grow globally, given that the adoption andgrowth in use of solar cells is becoming national policy, as demonstrated by the legislation on the purchase of adomestic power generation system in European countries.

- 10 -

Major consumable parts inside furnaces, such as heaters and crucibles used in the manufacturing process of
single crystal and polycrystal silicon, the major materials of a solar cell element, use our isotropic graphite
products, as these parts require high thermal resistance and high durability.
(ii) General industries applications
Isotropic graphite materials have high thermal and chemical resistance and electrical conductivity evenamong graphite materials. Taking advantage of these features, they are used for applications such as metal
melting crucibles, continuous casting dies (*), EDM electrode (*) for manufacturing dies, the sinter of ceramics
and powder metallurgical materials, the annealing of automotive parts and other high temperature heating
elements for industrial furnaces, and construction materials inside a furnace.
The Toyo Tanso Group supplies products for these diverse industries applications in Japan and in othercountries such as China, which is enjoying high economic growth.
(iii) Others(a) For advanced process equipment
A range of isotropic graphite materials are applied for the manufacture of electrodes for ion implantationequipment, used for microfabrication in the manufacturing process of semiconductors and liquid crystal, diodes,
crystal oscillators, and sealing jigs for terminals of liquid crystal panel back lights and other advanced processequipment. Since the above equipment requires features such as high thermal resistance, thermal conductivity,
purity and strength and processing accuracy, the Company’s products are widely used by large equipment makers
and other customers.
(b) For atomic power, aerospace and medical
The atomic power applications such as cores for high-temperature gas reactors and wall materials for nuclear
fusion reactors require high credibility and quality. The Company’s products are used for these atomic power
applications, as high resistance to radiation and plasma is required, in addition to high thermal resistance and otherfeatures of graphite. Our products are also used for the aerospace applications such as rocket parts and the
medical applications including CT scans.
(2) Carbon products for general industries applications
Carbon materials that are manufactured by a conventional molding method are primarily used for carbon
products for general industries applications. Isotropic graphite materials are also used for some applications.
(i) Carbon products for mechanical applications(a) For general industries
Taking advantage of such features as abrasion resistance, thermal and chemical resistance and theirself-lubricating nature, we sell a variety of products including sliding parts such as bearings for pumps andcompressors as well as seals for gaseous and liquid bodies such as piston rings (*) and mechanical seals (*) tomachinery manufacturers in Japan and overseas. The Company operates overseas with strong costcompetitiveness by improving the homogeneity of materials and optimizing the material size through theintroduction of a new molding method.
(b) For transportation
We sell pantograph sliders (*) with high self-lubricating nature, electrical conductivity and abrasion
resistance to railroad companies by impregnating copper into carbon with high pressure. Pantograph sliders of
the Company have reduced the abrasion of overhead wires and achieved lower noise compared with conventional
metal sliders.
We also manufacture and sell compressor parts of brakes for the automotive industry.

- 11 -

(ii) Carbon products for electrical applications(a) For small motors
We sell carbon brushes for small motors for commercial uses, such as vacuum cleaners and power tools, toconsumer electronics, tool makers, and other customers. The Company’s products are characterized by long life,
high durability and a rectifying property against high-speed rotation. We are also responding to the needs ofsmall motor manufacturers who have shifted their production to China, by establishing production subsidiaries in
China.
(b) For large motors
Our products are used by steel and paper manufacturing companies as carbon brushes for large motors forindustrial applications, taking advantage of high self-lubricating nature, electrical conductivity and workability.
A carbon brush is a device that enables a stable and sustained supply of electricity while sliding on rotating bodies
and has come to be used for the environment and energy, such as the power collection facilities of wind-power
generation.
(3) Compound materials and other products
In compound materials and other products, we manufacture and sell compound materials coated by othermaterials with isotropic graphite as the base material (SiC coated graphite (*), etc.), materials compounded withcarbon and carbon fiber (C/C composite products), and natural graphite materials (graphite sheets (*)).
(i) SiC coated graphite products
SiC coated graphite products have high thermal and etching resistance (*) and high purity that reduces thegeneration of organic pollutants. Taking advantage of these features, we sell these products to the semiconductor
industry in Japan and overseas as susceptor materials for the thin film manufacturing process in the production
process of silicon and compound semiconductors.
(ii) C/C composite products
C/C composite products are advanced materials that are light and strong and retain a high carbon thermal
quality, and that are used for a wide spectrum of applications in Japan and overseas, such as the manufacturing
process of solar cells and silicon single crystal, materials for vacuum furnaces as well as special applications
including the wall materials of nuclear fusion reactors.
(iii) Graphite sheet products
Graphite sheet products are light sheeted products and are used for automotive parts such as gaskets andmufflers, given their characteristics of being insensitive to other substances even under high temperatures.
Demand for graphite sheet products is also rising for the protection of carbon members in the manufacturing
process of quarts and silicon single crystal. Going forward, applications in areas that require dealing with heatsuch as a heat sink are also expected, leveraging their high thermal conductivity in the face direction. Graphite
sheet products are also seen as a promising alternative product for asbestos in petroleum and chemical plants.
For words with an asterisk (*), please refer to the glossary below.
This glossary (including Glossary 1 and Glossary 2 and 3 later) is prepared by the Company based on its
understanding and judgment as a reference to enable investors to have a better understanding of the description inthis report.

- 12 -

[Glossary 1][Thermal conductivity]
Conductivity of heat that a substance has.
[Thermal expansion]
The expansion of a substance associated with a rise in temperature.
[Crucible]
A pot-like container for holding heat-temperature liquid.
[Compound semiconductor]
A semiconductor that consists of substances composed of multiple elements. Examples of a compound
semiconductor include gallium arsenide, gallium nitride and silicon carbide. Features which silicon
semiconductors do not have are used.
[Susceptor]
A platform used to develop single crystal silicon on the surface of a silicon wafer.
[Continuous casting dies]
A mold to cool and solidify dissolving metal by touching it in a continuous casting process that casts dissolving
metal by continuously cooling it. Metal products that have the cross-section of this mold will be madecontinuously.
[EDM electrode]An electrode that will make a pair with a processed material. It generates discharge between the electrode andthe processed material and transcribes the shape of the electrode on the processed material.
[Self-lubricating nature]
Property in which adhesion barely occurs because of a layered crystal structure and a low friction coefficient.
[Piston ring]
A sealing ring that prevents leakages from a space between a piston and the inner wall of a cylinder in areciprocating compressor.
[Mechanical seal]
A machine part to control leaks from a rotating shaft of fluid equipment, a sidewall due to a reciprocating motion,
or a pressure container, etc. and prevent the intrusion of a different liquid from outside.
[Pantograph slider]
A power collection body that collects electricity by touching an overhead wire and sliding on it to supply power toa train.
[SiC coated graphite]
A product that generates a precise thin film of silicon carbide on the surface of isotropic graphite. This can curb
the generation and reaction of a small amount of gases from graphite.
[C/C composite product]
Graphite reinforced by carbon fibers with features of light weight and high strength.

- 13 -

[Graphite sheet]
Graphite that is formed into a sheet-like shape by a special production method.
other products because of its bendy nature.

This is used for gaskets and[Etching resistance]
Degree of lack of attrition by gaseous and liquid bodies with high reactive property.

- 14 -

[Business Flow Chart]
The business flow chart of the Toyo Tanso Group is as follows.
this chart.

Only major business relations are indicated in

Customers
Processing and sales companies

TTT(Taiwan)

TTE(Italy)TTF(France)

GTD(Germany)

STT(China)JTT(China)TTU(U.S.A.)

Toyo Tanso Co., Ltd.

TTTh(Thailand)

KTT(South Korea)
Sales companies

Consolidated
subsidiary

Totan Kako Co.,Ltd.
(Japan)Manufacturing
companies

Ohwada Carbon
Industrial Co., Ltd(Japan)YTT(China)STI(China)Manufacturing
and sales
companies
Non-consolidated
subsidiary

Affiliated company

The formal names of the companies represented by the acronyms used in the chart above are as follows:
Company name
(TTU) … Toyo Tanso USA, Inc.
(TTE) … Toyo Tanso Europe S.p.A.
(TTF) … Toyo Tanso France S.A.
(GTD) … GTD Graphit Technologie GmbH
(STT) … Shanghai Toyo Tanso Co., Ltd.
(TTT) … Toyo Tanso Taiwan Co., Ltd.
(STI) … Shanghai Toyo Tanso Industrial Co., Ltd.
(JTT) … Jiaxiang Toyo Tanso Co., Ltd.
(YTT) … Shanghai Yongxin Toyo Tanso Co., Ltd.
(KTT) … Toyo Tanso Korea Co., Ltd.
(TTTh) … Toyo Tanso (Thailand) Co., Ltd.
3. Management Policy(1) Basic Policies for the Management of the Company
The fundamental management philosophy of Toyo Tanso Company Group is “Contribute to the world
through the pursuit of the possibilities inherent in carbon (C),” and based on the pioneering spirit of “Creating
things that cannot be found elsewhere” that we have embodied since our founding, our basic policy has been toprovide the world with unique, revolutionary, high functionality and specialty products, with carbon as the axis.

- 15 -

As a global industry leader with a high growth rate and robust earnings, we will continue to improve on ourworld-class quality, technology and cost competitiveness, and act to fulfill our responsibilities and make acontribution, as a company that can meet the expectations and justify the trust of its customers, stockholders,
employees and society.
(2) Medium-Term Management Strategies and Issues to Address
The business environment surrounding the Group has seen difficult underlying conditions continue, and theGroup has made every effort to secure profitability by promoting thorough cuts in costs and expenses andstreamlining. In the medium to long-term, however, as a leader in high functionality carbons, the Group will
strive to maximize corporate value, especially in areas related to the environment and energy, by promoting
investment and business strategies with a view to the future. We will focus specifically on the following issues.
(i) Actively expanding the core business and achieving overwhelming superiority
Within an increasingly sophisticated industry, applications and domains that require high quality carbon withhigh functionality are expanding on a global basis, and we expect increasingly challenging requirements to bemade of the Group’s high functionality carbon products. The Group will actively enhance its production
structure and sophistication, both domestic and international, and will take comprehensive action to increase
production efficiency in order to strengthen the Group’s competitiveness.
Specifically for our main product, isotropic graphite, we are currently constructing a new 4,000 tons/year
plant in Takuma, and plan for the plant to become operational in the spring of 2010. The Company intends tomaintain its unchallenged superiority in both quality and quantity in the industry, armed with overwhelming
deployment capabilities and cost competitiveness, as well as products with high value addition and differentiation.
(ii) Accelerating global deployment.
The increased demand and expansion of high functional carbon is becoming noticeable, not only in Japan,
but even more so in overseas markets. In addition to the European, U.S. and Asian markets, where the Company
already operates, demand is growing rapidly in emerging economies such as India, Russia and Eastern Europe.
In order to respond to these changes, since 2006 we have established sales subsidiaries in Korea, Shandong
Province in China, and Thailand, at the same time as aggressively pursuing a global strategy by strengthening ourexisting bases.
Our plans are to accelerate global expansion, with a focus on China, which continues to be a huge andattractive market, and on emerging economies, while bolstering coordination among each local entity in terms of
production and sales, to achieve our policy of promoting group management that responds to the global market.
(iii) Promoting new products and new business development
Much still has to be learned about the possibilities of carbon, and potential applications appear to beunlimited. Carbon is likely to find new uses, especially in the environment, energy and other cutting-edge areas,in addition to its application in nuclear power, medicine, and next-generation devices. One recent example canbe seen in the large orders made for use in Chinese high-temperature gas reactors.
In addition to developing new products by utilizing our strong partnerships with customers, the Group will
combine products with new materials and new technologies through its far-reaching government and academic
partnerships based on the Group’s advanced and abundant knowledge of elemental technology built up as pioneers
in the industry. In this way, the Group will promote unique new products and business for the future, as it seeks
further growth.
(3) Other important items related to the management of the Company.
Not applicable- 16 -

4. Consolidated financial statements(Consolidated balance sheets)(Thousands of yen, rounded down)
As of May 31, 2008

As of May 31, 2009

AssetsCurrent assets
Cash on hand and in banks

13,642,899

14,035,952

Trade notes and accounts receivable

10,992,382

8,257,709

Inventory

7,224,568-

Merchandise and finished goods inventory-

4,747,244

Work in process-

3,476,873

Raw materials and stores-

1,296,308

Deferred tax assets

916,352

819,840

Other

345,618

1,160,496

Allowance for doubtful accounts(139,261)(185,780)

Total current assets

32,982,561

33,608,646

12,083,068

12,482,046(5,906,193)(6,355,316)

Fixed assets
Tangible fixed assets
Buildings and structures
Accumulated depreciation
Buildings and structures (net)6,176,874

6,126,730

Machinery, equipment, and vehicles

26,871,007

28,572,017(18,115,340)(19,982,877)

8,755,666

8,589,139

5,380,948

5,353,520

475,397

2,699,487

Accumulated depreciation
Machinery, equipment, and vehicles (net)Land
Construction in progress
Other

2,503,879

2,725,704(2,022,961)(2,286,240)

480,917439,463

21,269,806

23,208,341

376,647

379,167

Investments in securities

958,547

280,901

Long-term loans receivable

13,2008,640

Accumulated depreciation
Other (net)Total tangible fixed assets
Intangible fixed assets
Investments and other assets

Deferred tax assets
Other

333,270

33,9331,800,866

1,334,071

Allowance for doubtful accounts(28,342)(32,640)

Total investments and other assets

3,077,541

1,624,906

24,723,995

25,212,415

57,706,556

58,821,061

Total fixed assets
Total assets- 17 -

(Thousands of yen, rounded down)
As of May 31, 2008

As of May 31, 2009

Liabilities
Current liabilities
Trade notes and accounts payable

2,309,322

1,725,878

Short-term borrowings

1,277,401

1,323,950

Other account payable

2,694,254

3,420,334

Accrued income taxes

969,107

290,192

Reserve for employees’ bonuses

880,309756,470

Reserve for directors’ and corporate auditors’
bonuses

51,84235,840Other

1,279,782

1,595,887

Total current liabilities

9,462,020

9,148,554

Long-term liabilities
Long-term borrowings

423,980

70,740

Deferred tax liabilities

197,080

351,606

Reserve for employees’ retirement benefits

147,111

329,736

Other

952,766

313,578

1,720,938

1,065,661

11,182,958

10,214,216

Common Stock

7,692,575

7,692,575

Capital surplus

9,534,686

9,534,686

Retained earnings

Total long-term liabilities
Total liabilities
Equity28,558,305

30,856,790

Treasury stock - at cost

(53,599)(56,997)

Unrealized gains (losses) on available-for-salesecurities

29,684984

Foreign currency translation adjustments(155,283)(623,226)

Total

45,606,368

47,404,814

917,228

1,202,030

46,523,598

48,606,845

57,706,556

58,821,061

Minority interests
Total equity
Total liabilities and equity- 18 -

(Consolidated statements of income)(Thousands of yen, rounded down)
From June 1, 2007 to May 31, 2008

From June 1, 2008 to May 31, 2009

Net sales

34,531,125

30,974,306

Cost of goods sold

20,315,595

20,057,671

Gross profit

14,215,530

10,916,634

Selling, general and administrative expenses

6,183,597

6,175,405

Operating profit

8,031,932

4,741,228

Interest income

86,21199,755

Dividends income

9,747

7,852

Non-operating income

Gain on foreign currency option-

99,695

Net realized gain on crude oil swap contracts

89,919-Sundry income

63,57860,381

Total non-operating income

249,456

267,684

69,59433,193Non-operating expenses
Interest expenses
Loss on sale of notes

1,997

1,876

Valuation loss on investment securities

65,782

129,621

Net realized loss on crude oil swap contracts

72,612-Foreign exchange loss

254,897

347,811Sundry losses

20,846

13,013

Total non-operating expenses
Recurring profit

485,729525,515

7,795,659

4,483,397

Extraordinary profit
Gain on sale of fixed assets
Subsidies received
Insurance benefits received

1,226

1,051

427,974

42,981-

138,641

Other

13,500100

Total extraordinary profit

442,701

182,773

Loss on disposal of fixed assets

72,066

48,579Loss on sale of fixed assets

3,052

1,851

Extraordinary losses

Valuation loss on investment securities

779-

75,89850,430

Profit before income taxes

8,162,461

4,615,740

Income taxes - current

2,558,886

1,137,750

Income taxes - deferred

103,687

556,882

Total income taxes

2,662,573

1,694,632

Minority interests

356,231354,221

5,143,656

2,566,886

Total extraordinary losses

Net income- 19 -

(Consolidated statements of changes in equity)(Thousands of yen, rounded down)
From June 1, 2007 to May 31, 2008

From June 1, 2008 to May 31, 2009

Balance at end of previous fiscal year

7,692,575

7,692,575

Balance at end of the fiscal year

7,692,575

7,692,575

Balance at end of previous fiscal year

9,534,686

9,534,686

Balance at end of the fiscal year

9,534,686

9,534,686

23,522,911

28,558,305-

42,62774,016-EquityCommon stock

Capital surplus

Retained earnings
Balance at end of previous fiscal year
Change resulting from changes in accounting
methods at foreign subsidiaries
Change in the fiscal year
Increase in consolidated earnings resulting
from increase in consolidated subsidiaries
Dividends from retained earnings(165,918)(311,028)

Employees’ bonuses from profit(16,361)-

Net income

5,143,656

2,566,886

Total change in the fiscal year

5,035,394

2,255,858

Balance at end of the fiscal year

28,558,305

30,856,790(9,314)(53,599)(44,284)(3,397)

Treasury stock
Balance at end of previous fiscal year
Balance at end of the fiscal year
Acquisition of treasury stock
Total change in the fiscal year

(44,284)(3,397)

Balance at end of the fiscal year

(53,599)(56,997)

40,740,858

45,731,968-

42,62774,016-(165,918)(311,028)

Total equity
Balance at end of previous fiscal year
Change resulting from changes in accounting
methods at foreign subsidiaries
Change in the fiscal year
Increase in consolidated earnings resulting
from increase in consolidated subsidiaries
Dividends from retained earnings
Employees’ bonuses from profit(16,361)-

Net income

5,143,656

2,566,886

Acquisition of treasury stock(44,284)(3,397)

Total change in the fiscal year

4,991,109

2,252,459

Balance at end of the fiscal year

45,731,968

48,027,055- 20 -

(Thousands of yen, rounded down)
From June 1, 2007 to May 31, 2008

From June 1, 2008 to May 31, 2009

25,30929,684

Change in the fiscal year in items other thanshareholders’ equity (net)

4,375(28,699)

Total change in the fiscal year

4,375

(28,699)

Balance at end of the fiscal year

29,684984

220,200(155,283)

Change in the fiscal year in items other thanshareholders’ equity (net)(375,484)(467,943)

Total change in the fiscal year

(375,484)(467,943)

Balance at end of the fiscal year

(155,283)(623,226)

245,509(125,598)

Change in the fiscal year in items other thanshareholders’ equity (net)(371,108)(496,643)

Total change in the fiscal year

(371,108)(496,643)

Balance at end of the fiscal year

(125,598)(622,241)400,224

917,228

Change in the fiscal year in items other thanshareholders’ equity (net)517,003284,802

Total change in the fiscal year

517,003284,802

Balance at end of the fiscal year

917,228

1,202,030

41,386,593

46,523,598-

42,62774,016-

Dividends from retained earnings(165,918)(311,028)

Employees’ bonuses from profit(16,361)-

Revaluation and translation gains (losses)
Unrealized gains (losses) on available-for-salesecurities
Balance at end of previous fiscal year
Change in the fiscal year

Foreign currency translation adjustments
Balance at end of previous fiscal year
Change in the fiscal year

Total revaluation and translation gains (losses)
Balance at end of previous fiscal year
Change in the fiscal year

Minority interests
Balance at end of previous fiscal year
Change in the fiscal year

Total equity
Balance at end of previous fiscal year
Change resulting from changes in accounting
methods at foreign subsidiaries
Change in the fiscal year
Increase in consolidated earnings resulting fromincrease in consolidated subsidiaries

Net income

5,143,656

2,566,886

Acquisition of treasury stock(44,284)(3,397)

Change in fiscal year under review in items
other than shareholders’ equity (net)145,895(211,840)

5,137,004

2,040,618

46,523,598

48,606,845

Total change in the fiscal year
Balance at end of the fiscal year

- 21 -

Notes on consolidated statements of changes in equity(*) Resulting from payment resolution for appropriation of earnings made by subsidiaries in China and Taiwan.

- 22 -

(Consolidated statements of cash flows)(Thousands of yen, rounded down)
From June 1, 2007 to May 31, 2008

From June 1, 2008 to May 31, 2009

8,162,461
2,755,975
10,6204,615,740
3,291,319
10,906(48,731)

178,414

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Increase (decrease) in reserve for employees’ retirement
benefits
Insurance benefits received
Decrease in long-term accrued amount payable (directors’
retirement benefits)
Increase (decrease) in reserve for employees’ bonuses
Increase (decrease) in reserve for directors’ bonuses
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Foreign exchange loss (gain)
Valuation loss (gain) on investment securities
Gain on sale of tangible fixed assets
Loss on disposal and sale of tangible fixed assets
Loss (gain) on sale of investment securities
Decrease (increase) in notes and accounts receivable trade
Decrease (Increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Other
Sub-totalInterest and dividend received
Interest paid
Insurance benefits received
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for time deposits
Proceeds from time deposits
Proceeds from redemption of mortgage-backed securities
Payments for acquisition of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payments for acquisition of intangible fixed assets
Payments for acquisition of investment securities
Proceeds from sale of investment securities
Proceeds on redemption of investment securities
Payments for additional acquisitions of shares insubsidiary companies
Payments for investment in capital
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayment of long-term borrowings
Repayment of finance lease payables
Payments for acquisition of treasury stock
Payments for dividends
Payments for dividends to minority interests
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents accompanying new
consolidation
Cash and cash equivalents at end of period- 23 --(138,641)(2,300)(699,000)

70,473(2,710)13,710(95,958)
69,594
254,897
66,561(1,226)75,119(13,500)(70,296)(16,002)69,714(107,607)
33,193
347,811
129,621(1,051)50,430(100)(941,331)

2,771,573(691,603)(153,772)
398,084
9,926,364
94,969(73,263)(3,312,827)
6,635,243(2,680,205)(381,308)(572,414)
6,832,097
94,682(31,590)
608,509(2,398,245)
5,105,453(9,539,120)
8,703,570
500,000(4,712,423)
4,353(62,386)(718,825)
113,500-(8,054,331)
3,558,326(4,379,292)
5,285(54,186)(99)
500,000(124,461)-(10)(88,298)(5,924,101)

4,281(8,420,016)(327,297)
50,000(1,242,173)(44,284)(165,918)(23,899)(1,753,573)(101,182)(1,143,613)
11,558,559

302,011(530,825)(2,870)(3,397)(311,028)(22,196)(568,307)(196,656)(4,079,525)
10,491,890

76,943-

10,491,890

6,412,364

(Segment Information)
a. Business Segment Information
Previous fiscal year (from June 1, 2007 to May 31, 2008) and the fiscal year under review (from June 1,
2008 to May 31, 2009)
Business segment information has been omitted because the entire business of the Company and its
subsidiaries falls under the single business category of carbon product related business.
b.

Geographic Segment Information(From June 1, 2007, to May 31, 2008)(Thousands of yen, rounded down)

Japan

North
America

Europe

Asia

Total

Corporateand Elim.

Consolidated(1) Sales to unaffiliatedcustomers

20,491,470

3,399,081

3,468,075

7,172,498

34,531,125-

34,531,125(2) Intersegment sales ortransfers

5,722,470

198,449

16,456

95,677

6,033,053(6,033,053)

-

Total

26,213,940

3,597,530

3,484,532

7,268,176

40,564,179(6,033,053)

34,531,125

21,132,575

2,988,625

3,020,131

5,296,244

32,437,577(5,938,384)

26,499,193

I. Sales and operating profit

Operating Expenses
Operating Profit
II. Assets

Notes:

1.
2.

3.
4.

5,081,364

608,905

464,400

1,971,931

8,126,602(94,669)

8,031,932

52,200,223

2,386,756

3,320,372

7,441,485

65,348,836(7,642,280)

57,706,556

Countries or regions are grouped together based on geographic proximity.
The major countries or regions included in each geographic segment (except Japan) are listed
below.
(1) North America:·······United States(2) Europe:···················France, Germany, Italy(3) Asia:·······················China, Taiwan
Unallocated amounts for operating expenses for the above period are not included in Corporate andEliminations.
There are no assets that are included in Corporate and Eliminations in the above period.

(From June 1, 2008 to May 31, 2009)(Thousands of yen, rounded down)

Japan

North
America

Europe

Asia

Total

Corporateand Elim.

Consolidated(1) Sales to unaffiliatedcustomers

16,528,392

3,457,257

2,977,092

8,011,563

30,974,306-

30,974,306(2) Intersegment sales ortransfers

6,162,566

106,146

5,088

101,968

6,375,769(6,375,769)

-

Total

22,690,959

3,563,403

2,982,181

8,113,531

37,350,075(6,375,769)

30,974,306

Operating Expenses

21,004,357

2,936,539

2,652,005

6,032,702

32,625,605(6,392,527)

26,233,077

Operating Profit

1,686,601

626,864

330,176

2,080,828

4,724,470

16,757

4,741,228

53,418,565

2,634,384

3,066,646

8,641,737

67,761,334(8,940,272)

58,821,061

I. Sales and operating profit

II. Assets

Notes:

1.
2.

3.
4.

Countries or regions are grouped together based on geographic proximity.
The major countries or regions included in each geographic segment (except Japan) are listed
below.
(1) North America:·······United States(2) Europe:···················France, Germany, Italy(3) Asia:·······················China, Taiwan
Unallocated amounts for operating expenses for the above period are not included in Corporate andEliminations.
There are no assets that are included in Corporate and Eliminations in the above period.
- 24 -

c.

5.

Changes in the methods of converting the revenues and expenditure of foreign subsidiaries:
The revenue and expenditure of foreign subsidiaries were previously converted into yen basedon the spot exchange rate on the closing date. However, commencing the first quarter of thisfiscal year, they are converted into yen based on the average exchange rate for the period. In
accordance with this change, sales in the regions of “North America”, “Europe” and “Asia”
increased in this consolidated fiscal year by 111,289 thousand yen, 146,086 thousand yen and
171,035 thousand yen, respectively, and operating profit increased by 19,173 thousand yen, 10,771
thousand yen and 45,686 thousand yen, respectively, in comparison with the previous method.

6.

Changes in durable years of tangible fixed assets:
The Company and its domestic consolidated subsidiaries reviewed and shortened the durable
years of tangible fixed assets for this consolidated fiscal year, in the wake of the revision of thelegal durable years of machinery and equipment in the tax system revision for fiscal 2008. . As aresult of this change, the operating profit in the “Japan” region decreased 379,635 thousand yen inthis consolidated fiscal year.

Overseas Sales
From June 1, 2007 to May 31, 2008

(Thousands of yen, rounded down)

North America
I Overseas Sales
II Consolidated Sales
III Overseas sales as a proportion of
consolidated sales (%)

Notes:

1.
2.

3.

EuropeAsia

3,324,025

4,158,134

9,867,579

Rest of World
254,258

17,603,998

-

-

-

-

34,531,125

9.6

12.0

28.6

0.8

51.0

Countries or regions are grouped together based on geographic proximity.
The major countries or regions included in each geographic segment (except Japan) are listed
below.
(1) North America:·······United States(2) Europe:···················France, Germany, Italy(3) Asia:·······················China, Taiwan
The overseas sales are the sales of the Company or its consolidated subsidiaries in countries orregions excluding Japan.

From June 1, 2008 to May 31, 2009

(Thousands of yen, rounded down)

North America
I Overseas Sales
II Consolidated Sales
III Overseas sales as a proportion of
consolidated sales (%)

Notes:

1.
2.

3.

Total

EuropeAsia

Rest of World

Total

3,295,845

3,561,262

10,392,514

298,532

17,548,154

-

-

-

-

30,974,306

10.6

11.5

33.6

1.0

56.7

Countries or regions are grouped together based on geographic proximity.
The major countries or regions included in each geographic segment (except Japan) are listed
below.
(1) North America:·······United States(2) Europe:···················France, Germany, Italy(3) Asia:·······················China, Taiwan
The overseas sales are the sales of the Company or its consolidated subsidiaries in countries orregions excluding Japan.

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