Translation

Member of the Financial Accounting Standards Foundation

January 13, 2009

Consolidated Financial Results
for the Six Months ended November 30, 2008
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 submissionof quarterly report:

January 14, 2009

1. Consolidated financial results for the six months ended November 30, 2008
(From June 1, 2008 to November 30, 2008)(1) Operating results (cumulative total)(Millions of yen, rounded down)
Percentages indicate changes from the same period in the previous fiscal year.

Net sales

Operating profit

Recurring profit%
Six months ended
November 30, 2008
Six months ended
November 30, 2007

Net income

%

%

%

17,979

-

4,154

-

3,754

-

2,379

-

17,372

16.9

4,343

32.2

4,100

21.7

2,491

23.7

Net income per share

Six months ended
November 30, 2008
Six months ended
November 30, 2007

Diluted net income
per share

yen

yen

114.76-

119.75-(2) Financial position(Millions of yen, rounded down)
Percentages indicate changes from the same period in the previous fiscal year.
Total assets

EquityEquity ratio

Equity per share%yen

As of November 30, 2008

60,097

48,64179.0

2,288.55

As of May 31, 2008

57,706

46,52379.0

2,198.73

Reference: Shareholders’ equity
November 30, 2008
May 31, 2008

47,452 million yen
45,606 million yen

12. Dividends
Dividends per share (yen)(Record date)

First quarter end

Interim-end-

Third quarter end

Year-end

Total (Full year)

0.00

-

15.00

15.00

0.00
(Actual)Year ending May 31, 2009
(Forecast)
Note: Revision of projected dividends in the quarter under review: None

-

-

-

-

20.00

20.00

Year ended May 31, 2008
Year ending May 31, 2009

3. Consolidated results forecast for the fiscal year ending May 31, 2009
(From June 1, 2008 to May 31, 2009)

Net sales

Full year

33,000Operating profit
%

%

(4.4)

6,400 (20.3)(Millions of yen)
Percentages indicate changes on a year-on-year basis.
Net income
Recurring profit
Net income
per share%
6,000(23.0)

3,700

%

yen

(28.1)

178.44

Note: Revision of consolidated results forecast in the quarter under review: Yes

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

None(2) Adoption of simple accounting methods and accounting methods specific to the preparation ofquarterly consolidated financial statements: Yes
Note: For details, please refer to ‘4. Others’ in Qualitative Information and Financial Statements on page6.
(3) Changes in accounting policies, procedures, and methods of presentation for preparing theconsolidated quarterly financial statements(those to be described in the section Changes in Significant Items That Form the Basis of Preparations for
Consolidated Quarterly Financial Statements)
i. Changes due to amendment of accounting standards: Yes
ii. Changes due to other reasons: Yes
Note: For details, please refer to ‘4. Others’ in Qualitative Information and Financial Statements on
page 6.
(4) Number of shares outstanding (common stock)i. Number of shares outstanding and issued at the end of period (including treasury stock)
As of November 30, 2008
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 November 30, 2008
15,870 shares
As of May 31, 2008
15,430 sharesiii. Average number of shares during the period (quarter; cumulative period)
Second quarter ended November 30, 2008 20,734,980 shares
Second quarter ended November 30, 2007 20,736,514 shares

2

* Disclaimer regarding appropriate use of forecasts and related points of note
1. Commencing the current fiscal year, the Company is applying the Accounting Standard for
Quarterly Financial Reporting (Accounting Standards Board of Japan Statement No. 12 issued on
March 14, 2007) and the Guidance on Accounting Standard for Quarterly Financial Reporting(ASBJ Guidance No. 14 issued on March 14, 2007). Quarterly consolidated financial statements areprepared according to the Rules for Quarterly Consolidated Financial Statements.
2. The results forecast has been prepared based on information that was available on the date of releaseof this document. Actual results may differ from the forecast depending on various factors. For
further information on the results forecast, please refer to ‘3. Qualitative Information Regarding
Consolidated Results Forecast’ in Qualitative Information and Financial Statements on page 5.
(Reference)Non-consolidated results forecast for the fiscal year ending May 31, 2009
(From June 1, 2008 to May 31, 2009)

Net sales

Full year

25,000Operating profit
%

%

(4.7)

2,400 (46.1)(Millions of yen)
Percentages indicate changes on a year-on-year basis.
Net income
Recurring profit
Net income
per share%
2,900(Note) Revision of non-consolidated results forecast in the quarter under review: Yes

3(32.7)

2,000

%

yen

(31.1)

96.46

[Qualitative Information and Financial Statements]
1. Qualitative Information Regarding Consolidated Operating Results
During the six months ended November 30, 2008, the slowdown in the Japanese economy
accelerated, and capital expenditure and exports weakened on the back of a steep rise in theprices of fuel and raw materials, drastic exchange rate fluctuations, and the worsening financial
crisis, triggered by the US economy, spreading to the real economy in Japan. Downside risks inoverseas economies increased globally as signs of a slowdown in the economies of emerging
countries such as China began to appear, along with concern over the downturn in the US andEuropean economies.
In these circumstances, the Toyo Tanso group, even under the considerable influence ofeconomic fluctuations, has vigorously promoted a shift to fast-growing sectors/regions and tohigh value-added products, focusing especially on environmental and energy-related products
including solar cells, on which the group has focused since its early days. Meanwhile, the groupeffectively met the demand from domestic and foreign customers by expanding the sales ofcompound material products, including C/C composites, in addition to isotropic graphite
products, the group’s mainstay.
With regard to these special graphite products, the electronics sector has continued to growconsiderably, mainly due to a substantial expansion in domestic and foreign demand for
products used in manufacturing solar cells, as well as polysilicon, against a backdrop of global
energy innovation. However, sales of products used in the processing of single crystal silicon,
including 300-mm wafers, were weak due to the slowdown in the semiconductor market. In thegeneral industries sector, sales of products used for electrical discharge machining (EDM)
electrodes were weak due to the effects of the sluggish auto industry. Regarding otherspecial-purpose products, we won large-scale orders for high-temperature gas reactors in China.
For carbon products for general industries, carbon products for mechanical applications
achieved steady sales, especially for products used as bearings, sealing materials, and sliders forpantographs, while sales of carbon products for electrical applications saw sluggish growth as aresult of the slump in the US and European economies.
For compound materials and other products, overall sales grew steadily, especially those of
C/C composites, owing to an increase in the use of solar cells and the shift to high value-added
products. However, the stagnant semiconductor market forced us to make certain adjustments.
As a result of the above performance, including the effect of increased costs arising from thesoaring prices of raw materials and fuel, and a significant rise in depreciation costs,
consolidated sales for the six months ended November 30, 2008 rose 3.5% year on year to
17,979 million yen. Operating profit fell 4.4% to 4,154 million yen, recurring profit declined
8.4% to 3,754 million yen, and net income slipped 4.5% to 2,379 million yen.
The table below shows sales by product category in the six months under review.
(Thousands of yen)
Products
Special graphite products
Carbon products for generalindustries(for mechanical applications)
Carbon products for generalindustries(for electrical applications)Compound materials andother products
Related goods
Total

Six months ended
November 30, 2008
(thousand yen)
9,451,205

Six months ended
November 30, 2007
(thousand yen)
9,066,882

1,502,467

1,453,716

3.4

2,377,008

2,487,689(4.4)

4,198,950

3,780,078

11.1

450,211584,589(23.0)

17,979,844

17,372,957

3.5

4Year on year (%)
4.2

2. Qualitative Information Regarding Consolidated Financial Position
Total assets as of November 30, 2008 increased by 2,390 million yen from the end of theprevious fiscal year. This was mainly because of a 1,061 million yen rise in cash on hand andcash in banks, due to an easing of the debt service burden, in addition to the collection of notes
and accounts receivable-trade, and an increase of 1,271 million yen in inventory due to a
production increase.
Total liabilities rose 272 million yen from the end of the previous fiscal year. This was caused
by a 486-million-yen increase in notes and accounts payable-trade due to an increase in thepurchase of raw materials following a production increase.
Equity increased by 2,117 million yen from the end of the previous fiscal year following arise in retained earnings as a result of a net income of 2,379 million yen.
3. Qualitative Information Regarding Consolidated Results Forecast
For the future economic environment, the downside risks in the global economy continue toincrease against a backdrop of the expanding influence of the worsening financial crisis on thereal economy. Although the prices of raw materials and fuel seem to have stabilized, the effecton the Japanese economy is also expected to be increasingly severe, and there is concern about
the sharp appreciation of the yen.
With regard to the environment surrounding the Toyo Tanso group, uncertainty about the
future is heightened by concern about declining demand coupled with the appreciation of the
yen and the worldwide recession, and we have been forced to make adjustments in someproducts. On the other hand, given our expectation of a demand increase in the nuclear power
sector, we expect to see an increase in demand in the medium and long term, especially in theenvironment and energy-related sector, for high-performance carbon products such as thoseused in manufacturing solar cells, for which we expect global demand growth. Based on thesechanges in the market environment, the Toyo Tanso group will steadily implement a shift to
fast-growing sectors/regions, and the development of high value-added products for the future.
We will also endeavor to sustain our corporate performance.
Based on the above situation, we have altered our forecasts for the full fiscal year ending May
31, 2009, as announced on July 15, 2008, including a revision of the assumed exchange rate.
(Assumed exchange rate used from the third quarter: 100 yen/US$ → 90 yen/US$, 150
yen/EUR → 120 yen/EUR)
Revision of consolidated results forecast
Net sales
37,400Operating profit
7,800

Recurring profit
7,900(Millions of yen)
Net income
4,900

33,000

6,400

6,000

3,700

Change (B-A)(4,400)(1,400)(1,900)(1,200)

Ratio of Change (%)(Reference)
Fiscal year ended May 31, 2008

(11.8)(17.9)(24.1)(24.5)

34,531

8,031

7,795

5,143

Forecast previously announced (A)Forecast newly revised (B)54. Others(1) Changes in significant subsidiaries during the period(changes in specified subsidiaries accompanying changes in scope of consolidation)
None(2) Adoption of simple accounting methods and accounting methods specific to the
preparation of quarterly consolidated financial statements(i) Tax expense calculation
Tax expenses are calculated by multiplying profit before income taxes by the effective tax
rate, which is reasonably estimated by applying tax-effect accounting to the estimated profit
before income taxes for the fiscal year, including the second quarter under review.
The income taxes-deferred is included in income taxes.
(3) Changes in accounting policies, procedures, and methods of presentation for preparing
the consolidated quarterly financial statements(i) Commencing the current fiscal year, the Company is applying the Accounting Standard for
Quarterly Financial Reporting (Accounting Standards Board of Japan Statement No. 12
issued on March 14, 2007) and the Guidance on Accounting Standard for Quarterly Financial
Reporting (ASBJ Guidance No. 14 issued on March 14, 2007). Quarterly consolidated
financial statements are prepared according to the Rules for Quarterly Consolidated Financial
Statements.
(ii) Changes in evaluation criteria and evaluation method for inventories
Commencing the first quarter under review, the Company is applying the AccountingStandard for Measurement of Inventories (ASBJ Statement No. 9 issued on July 5, 2006). The
evaluation method has been changed from the cost method to the cost method where the bookvalue (balance sheet value) is reduced in accordance with decreases in profitability.
The effect of the changes on operating profit, recurring profit, and profit before income
taxes is minor.
(iii) Commencing the first quarter under review, the Company is applying the Practical
Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements (Practical Issues Task Force No. 18 issued on May 17,2006) and is making the necessary adjustments for consolidated accounting.
In association with this, retained earnings at the beginning of the quarter increased by 42
million yen. The impact on operating profit, recurring profit, and profit before income taxes isminor.
(iv) Change in the method of converting the revenue and expenditure of foreign subsidiaries
The revenue and expenditure of foreign subsidiaries were previously converted into yen
based on the spot exchange rate on the closing date. However, commencing the first quarter
under review, they are converted into yen based on the average exchange rate for the period.
The change was made to eliminate the influence of short-term exchange rate fluctuations,and to calculate earnings for the quarter more appropriately in line with the increasing
importance of foreign subsidiaries’ production and sales transactions.
Accordingly, sales increased by 487 million yen, operating profit by 96 million yen,recurring profit by 97 million yen and net income before taxes and other adjustments by 97
million yen compared to those under the traditional method.
The effects of the change are described in ‘(5) Segment information’ under Consolidated
Quarterly Financial Statements on page 12.
(v) Application of Accounting Standard for Lease Transactions
Finance lease transactions that do not transfer ownership were previously accounted for ina manner similar to accounting for ordinary operating lease transactions. Commencing thefirst quarter under review, however, finance lease transactions are accounted for in a manner
similar to the accounting treatment for ordinary sale and purchase transactions under the6Accounting Standard for Lease Transactions (ASBJ Statement No. 13 issued by the First
Subcommittee of the Business Accounting Council on June 17, 1993 and revised on March 30,2007) and the Guidance on Accounting Standard for Lease Transactions (ASBJ Guidance No.
16 issued by the Accounting Committee of the Japanese Institute of Certified Public
Accountants on January 18, 1994 and revised on March 30, 2007). This is because theaccounting standard and guidance are now applicable to quarterly consolidated financial
statements related to consolidated accounting periods commencing on or after April 1, 2008.
In depreciating the leased assets related to finance lease transactions that do not transfer
ownership, we consider the lease period to be durable years and use the straight-line method,
setting the residual value to zero.
The change has no effect on operating profit, recurring profit, or profit before income
taxes.
Finance lease transactions that do not transfer ownership, which commenced prior to thebeginning of the first fiscal year in which the standard and guidance are applied, continue tobe accounted for in a manner similar to accounting for ordinary lease transactions.
(4) Additional information
Changes in the durable years of tangible fixed assets
Commencing the first quarter under review, the Company and its domestic consolidated
subsidiaries reviewed and shortened the durable years of tangible fixed assets in the wake of therevision of the legal durable years of machinery and equipment in the tax system revision forfiscal 2008.
Accordingly, operating profit, recurring profit and net income before taxes and otheradjustments decreased by 177 million yen respectively.
The effects of the changes are also described in ‘(5) Segment information’ under Consolidated
Quarterly Financial Statements on page 12.

7

5. Consolidated Quarterly Financial Statements(1) Consolidated balance sheets(Thousands of yen, rounded down)
As of November 30, 2008
AmountAssetsCurrent assets
Cash on hand and in banks
Trade notes and accounts receivable
Merchandise and finished goods
Work in process
Raw materials and stores
Other
Allowance for doubtful accounts
Total current assets
Fixed assets. Tangible fixed assets
Buildings and structures
Machinery, equipment, and vehicles
Land
Construction in progress
Other
Total tangible fixed assets
Intangible fixed assets
Investments and other assets
Total fixed assets
Total assets

8

As of May 31, 2008
Amount

14,704,083
10,731,019
3,322,789
3,737,786
1,435,959
1,442,412(110,384)
35,263,667

13,642,899
10,992,382
2,915,957
3,276,681
1,031,929
1,261,971(139,261)
32,982,561

5,984,110
8,775,896
5,341,094
886,036
560,040
21,547,177
390,1442,896,011
24,833,333
60,097,001

6,176,874
8,755,666
5,380,948
475,397
480,917
21,269,806
376,647
3,077,541
24,723,995
57,706,556

(Thousands of yen, rounded down)
As of November 30, 2008

As of May 31, 2008

AmountAmountLiabilities
Current liabilities
Trade notes and accounts payable
Short-term borrowings
Accrued amount payable
Income taxes payable
Reserve for employees’ bonuses
Reserve for directors’ and corporate
auditors’ bonuses
Other
Total current liabilities
Long-term liabilities
Long-term borrowings
Reserve for employees’ retirement
benefits
Other
Total long-term liabilities
Total liabilities

2,795,699
1,426,519
2,509,487
761,954862,315

2,309,322
1,277,401
2,694,254
969,107880,30925,92051,842

1,486,767
9,868,664

1,279,782
9,462,020

177,623

423,980

272,850

147,111

1,136,513
1,586,987
11,455,652

1,149,846
1,720,938
11,182,958

7,692,575
9,534,686
30,669,454(56,176)
47,840,539

7,692,575
9,534,686
28,558,305(53,599)
45,731,968

603

29,684(388,510)
47,452,633(155,283)
45,606,368

1,188,715
48,641,349
60,097,001

917,228
46,523,598
57,706,556

EquityCommon Stock
Capital surplus
Retained earnings
Treasury stock - at cost
Total Shareholders’ Equity
Unrealized gains (losses) on
available-for-sale securities
Foreign currency translation adjustments
Total
Minority interests
Total equity
Total liabilities and equity9(2) Consolidated quarterly statements of income
Six months ended November 30, 2008
(Thousands of yen, rounded down)
Six months ended November 30, 2008
Amount17,979,844
10,683,472
7,296,372
3,142,243
4,154,128

Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Dividend income
Dividends earned
Gain on foreign currency option
Other
Total non-operating income
Non-operating expenses
Interest expenses
Valuation loss on investment securities
Foreign exchange loss
Other
Total non-operating expenses
Recurring profit
Extraordinary profit
Gain on sale of fixed assets
Reversal of allowance for doubtful accounts
Gain on sale of investment securities
Total extraordinary profit
Extraordinary losses
Loss on sale of fixed assets
Loss on disposal of fixed assets
Valuation loss on investment securities

37,6106,081
103,662
25,603
172,957
20,524
106,636437,350
8,281
572,7933,754,292
770
7,240
100
8,110
1,210
11,903
1,703

Total extraordinary losses

14,818

Profit before income taxes

3,747,585

Income taxes
Minority interests
Net income

1,097,866
270,169
2,379,54910

(3) Consolidated quarterly statements of cash flows(Thousands of yen, rounded down)
Six months ended November 30, 2008
AmountCash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill

3,747,585
1,561,562
5,453
94,306

Increase (decrease) in reserve for employees’ 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
Decrease (increase) in notes and accounts receivable - trade
Decrease (Increase) in inventories
Increase (decrease) in notes and accounts payable - tradeOther(15,433)
25,920(15,694)(43,691)
20,524437,350
108,339(770)
13,114225,489(1,388,831)
556,163
191,419

Sub-total

5,522,809

Interest and dividend received
Interest paid
Income taxes paid

43,556(17,774)(1,163,863)

Net cash provided by operating activities
Cash flows from investing activities
Payments for time deposits
Proceeds from time deposits
Payments for acquisition of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payments for acquisition of intangible fixed assets
Other
Net cash used in investing activities

4,384,727(4,665,505)
830,419(2,834,153)
974(32,441)
12,969(6,687,737)

Cash flows from financing activities
Net increase (decrease) in short-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

322,646(354,710)(1,177)(2,577)(311,028)(22,196)(369,043)(49,706)(2,721,759)
10,491,890
7,770,130

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
Cash and cash equivalents at end of period

11Starting the current fiscal year, the Company applies the Accounting Standard for Quarterly Financial Reporting(Accounting Standards Board of Japan Statement No. 12 issued on March 14, 2007) and the Guidance on
Accounting Standard for Quarterly Financial Reporting (ASBJ Guidance No. 14 issued on March 14, 2007).
Quarterly consolidated financial statements are prepared under the Rules for Quarterly Consolidated Financial
Statements.

(4) Notes regarding the premise of a going concern
Not applicable.
(5) Segment information
a. Business Segment Information
From June 1, 2008 to November 30, 2008
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, 2008 to November 30, 2008)(Thousands of yen, rounded down)
Japan

North
America

Europe

Asia

Total

(1) Sales to unaffiliated customers

9,641,142

1,846,671

1,696,019

4,796,010(2) Intersegment sales or transfers

3,107,911

63,372

4,548

67,532

Total

12,749,053

1,910,043

1,700,568

1,806,331

353,064

240,360

Corporateand Elim.

Consolidated

17,979,844-

17,979,844

3,243,364(3,243,364)-

4,863,542

21,223,208(3,243,364)

17,979,844

1,585,405

3,985,161

168,967

4,154,128

Sales

Operating Profit(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. 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
3. Unallocated amounts for operating expenses for the above period are not included in Corporate and Eliminations.
4. Change in the method of converting the revenues and expenditure of foreign subsidiaries:
The revenue and expenditure of foreign subsidiaries were previously converted into yen based on the spot exchange
rate on the closing date. However, commencing the first quarter under review, they are converted into yen based on the
average exchange rate for the period. In accordance with this change, sales in “North America,” “Europe,” and “Asia,”
for the six months ended November 30, 2008 increased by 164,240 thousand yen, 256,562 thousand yen, and 66,743
thousand yen, respectively, compared to those under the traditional method. Operating profit also increased by 30,215
thousand yen, 42,545 thousand yen, and 23,552 thousand yen, respectively.
5. Change in the durable years of tangible fixed assets:
As stated in Additional Information, the Company and its domestic consolidated subsidiaries reviewed and shortened
the durable years of tangible fixed assets for the first quarter under review, in the wake of the revision of the legal
durable years of machinery and equipment in the tax system revision for fiscal 2008. Accordingly, the operating profit of“Japan” for the six months ended November 30, 2008 decreased by 177,779 thousand yen.

c. Overseas Sales
Six months ended November 30, 2008 (From June 1, 2008 to November 30, 2008)(Thousands of yen, rounded down)

I

Overseas Sales

II

Consolidated Sales

III

Overseas sales as a proportion of consolidated sales (%)

North
America

EuropeAsia

Rest of
World

Total

1,675,316

2,021,439

6,253,531

255,130

10,205,418

-

-

-

-

17,979,844

9.3

11.3

34.8

1.4

56.8

(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. 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
3. The overseas sales are the sales of the Company or its consolidated subsidiaries in countries or regions excluding Japan.

(6) Notes if the amount of shareholders’ equity has changed significantly
Not applicable.
12Reference materials
Financial Statements for the Previous Second Quarter(1) Interim Consolidated Statements of Income(thousands of yen, rounded down)
Six months ended November 30, 2007
AmountI.

Net sales%
17,372,957

100.0

II. Cost of goods sold10,099,012

58.1

Gross profit

7,273,945

41.9

2,930,307

16.9

4,343,637

25.0

117,2070.7

359,930

2.1

4,100,914

23.6

8,931

0.0

24,0540.1

4,085,792

23.5

1,449,473

8.3

Minority interests

144,920

0.9

Interim net income

2,491,398

14.3

III. Selling, general and administrative expenses
Operating profit
IV. Non-operating income

V.

1. Interest income

43,646

2. Net realized gain on crude oil swap contracts

50,351

3. Other

23,209Non-operating expenses
1. Interest expenses

44,6102. Valuation loss on investment securities based on method inwhich valuation losses are recognized as net loss

40,417

3. Net realized loss on crude oil swap contracts

25,478

4. Foreign exchange loss

230,632

5. Other

18,790Recurring profit
VI. Extraordinary profit
1. Gain on sale of fixed assets

223

2. Subsidies received

8,708

VII. Extraordinary losses
1. Loss on disposal of fixed assets

19,644

2. Loss on sale of fixed assets

3,630

3. Loss on revaluation of investments in securities

779

Interim net income before taxes and other adjustments
Income tax, residence tax and enterprise tax

1,413,651

Income taxes-deferred

35,82213

(2) Interim Consolidated Statements of Cash Flows(thousands of yen, rounded down)
Six months ended November 30, 2007
AmountI.

Cash flows from operating activities
1. Interim net income before taxes and other adjustments

4,085,792

2. Depreciation

1,276,773

3. Amortization of goodwill

5,167

4. Decrease in reserve for employees’ retirement benefits
5. Decrease in reserve for retirement benefits for directors andcorporate auditors
6. Decrease in reserve for employees’ bonuses(3,940)(2,300)7. Decrease in reserve for directors’ bonuses(27,276)

8. Increase in allowance for doubtful accounts

7,404

62,3189. Interest and dividend income(50,568)

10. Interest expenses

44,61011. Foreign exchange loss

230,632

12. Loss on revaluation of investments in securities
13. Valuation loss on investment securities based on method inwhich valuation losses are recognized as net loss
14. Gain on sale of tangible fixed assets

779
40,417

15. Loss on disposal and sale of tangible fixed assets

23,275

16. Decrease in notes and accounts receivable-trade(529,823)

17. Increase in inventories(356,412)

18. Decrease in notes and accounts payable-trade(112,384)

19. Other

174,996(223)

Sub-total

4,869,239

20. Interest and dividend received

49,058

21. Interest paid

(36,037)

22. Income taxes paid

(1,874,958)

Net cash provided by operating activities

3,007,302

II. Cash flows from investing activities
1. Payments for time deposits(6,526,079)

2. Proceeds from time deposits

1,142,761

3. Proceeds from redemption of mortgage-backed securities

500,000

4. Payments for acquisition of tangible fixed assets(2,541,773)

5. Proceeds from sale of tangible fixed assets

3,228

6. Payments for acquisition of intangible fixed assets(11,100)

7. Payments for acquisition of investment securities(500,000)

8. Payments for additional acquisition of subsidiary’s stocks(124,461)

9. Payments for contribution to capital(10)

10. Other(99,899)

Net cash used in investing activities(8,157,273)

14

Six months ended November 30, 2007
Amount (thousands of yen, rounded down)
III. Cash flows from financing activities
1. Net increase (decrease) in short-term borrowings(51,929)

2. Proceeds from long-term borrowings

50,0003. Repayment of long-term borrowings(509,288)

4. Payments for acquisition of treasury stock(42,748)

5. Payments for dividends(165,918)

6. Payments for dividends to minority interests(23,899)

Net cash provided by (used in) financing activities(743,783)

IV. Effect of exchange rate changes on cash and cash equivalents(9,555)

V. Decrease in cash and cash equivalents(5,903,310)

VI. Cash and cash equivalents at beginning of period

11,558,559

VII. Increase in cash and cash equivalents accompanying new
consolidation

76,943

VIII. Cash and cash equivalents at end of interim period

5,732,193

15

(3) Segment Information
a. Business Segment Information
From June 1, 2007 to November 30, 2007
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 November 30, 2007)(Thousands of yen, rounded down)
Japan

North
America

Europe

Asia

Total

10,235,581

1,760,130

1,749,590

3,627,655

17,372,957

Corporateand Elim.

Consolidated-

17,372,957

Sales(1) Sales to unaffiliated customers

2,753,362

104,7111,226

45,2462,904,546(2,904,546)

-

Total

(2) Intersegment sales or transfers

12,988,944

1,864,841

1,750,816

3,672,901

20,277,503(2,904,546)

17,372,957

Operating Expenses

10,011,206

1,597,291

1,514,494

2,781,645

15,904,639(2,875,320)

13,029,319

Operating Profit

2,977,737

267,549

236,321891,255

4,372,863(29,225)

4,343,637(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. 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
3. Unallocated amounts for operating expenses for the above period are not included in Corporate and Eliminations.

c. Overseas Sales
Six months ended November 30, 2007 (From June 1, 2007 to November 30, 2007)(Thousands of yen, rounded down)

I

Overseas Sales

II

Consolidated Sales

III

Overseas sales as a proportion of consolidated sales (%)

North
America

EuropeAsia

Rest of
World

Total

1,657,291

2,093,524

4,855,885

139,229

8,745,931

-

-

-

-

17,372,957

9.5

12.1

27.9

0.8

50.3

(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. 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
3. The overseas sales are the sales of the Company or its consolidated subsidiaries in countries or regions excluding Japan.

16