Translation

Member of the Financial Accounting Standards Foundation

July 15, 2011

Consolidated Financial Results for the Fiscal Year Ended May 31, 2011
[Japanese GAAP]
Toyo Tanso Co., Ltd.
Tokyo Stock Exchange, 1st Section
5310
Osaka, Japan
http://www.toyotanso.co.jp
Naotaka Kondo, President
Toshimi Boki, Executive Officer, General Manager,
Finance and Accounting Department
81-6-6451-2114 (from overseas)

Listed company name:
Stock exchange listing:Stock code:
Location of headquarters:
Website:Representative:
Contact:
TEL:
Scheduled date for ordinary general
meeting of shareholders:
Scheduled date for dividend payment:
Scheduled date for submission of
securities report:
Supplementary materials forfinancial summaries:
Financial results briefing:

August 30, 2011
August 31, 2011
August 31, 2011
Yes
Yes (for securities analysts and institutional investors)

1. Consolidated financial results for the fiscal year ended May 31, 2011
(From June 1, 2010 to May 31, 2011)(1) Operating results
Net sales(Millions of yen, rounded down)(Percentages indicate year-on-year changes.)Net
RecurringincomeprofitOperating profit%

Fiscal year ended May 31,
37,5572011
Fiscal year ended May 31,
27,9242010
Note:Comprehensive income:Fiscal 2011
Fiscal 2010

%

%

%

34.5

5,868

160.4

5,614

171.2

3,699

156.5

(9.8)

2,253

(52.5)

2,070(53.8)

1,442(43.8)

3,359 million yen (up 297.2%)
845 million yen (-%)

Net income per share

Diluted net income
per share

Equity ratio

Recurringprofit/total assets

Operatingprofit/net sales

yen

yen

%

%

%

178.43

-

7.5

8.8

15.6

69.56

69.56

3.0

3.4

8.1

Fiscal year ended May 31,
2011
Fiscal year ended May 31,
2010
Reference: Equity in earnings of affiliates
May 31, 2011
May 31, 2010

- million yen- million yen-1-(2) Financial position(Millions of yen, rounded down)
Total assets

EquityEquity ratio

Equity per share%yen

As of May 31, 2011

65,191

51,74877.5

2,436.08

As of May 31, 2010

61,786

48,96077.4

2,306.55

Reference:

Shareholders’ equity
May 31, 2011
May 31, 2010

50,510 million yen
47,825 million yen(3) Cash flows
Cash flows fromoperating activities

Fiscal year ended May 31,
2011
Fiscal year ended May 31,
2010

Cash flows frominvesting activities(Millions of yen, rounded down)
Cash and cash
Cash flows fromequivalents at end of
financing activities
period7,301(5,380)

(550)

7,090

3,377

(4,103)

252

5,802

2. Dividends(Millions of yen, rounded down)Firstquarterend
yen

Dividends per share (yen)
Third
Year
Interimquarter
-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, 2010

-

-

-

20.00

20.00

414

28.8

0.9

Year ended May 31, 2011
Year ending May 31,
2012 (Forecast)

-

-

-

22.00

22.00

456

12.3

0.9

-

-

-

25.00

25.00

15.2

3. Consolidated results forecast for the fiscal year ending May 31, 2012
(From June 1, 2011 to May 31, 2012)(Millions of yen, rounded down)(Percentages indicate changes from the same period in the previous fiscal year.)
Net income
Operating profit
Recurring profit
Net income
per share

Net sales%
Cumulative total for thesix months
Fiscal year ending May
31, 2012

%

%

%

yen

19,0003.2

2,500(17.2)

2,500(10.6)

1,600(16.5)

77.17

39,000

3.8

5,300

(9.7)

5,300

(5.6)

3,400

(8.1)

163.98

4. Others(1) Changes in significant subsidiaries during the period:(Changes in specified subsidiaries accompanying changes in scope of consolidation):
New subsidiaries: ___ (name of company(ies) )Excluded subsidiaries: ___ (name of company(ies)(2) Changes in accounting policies, procedures, and methods of presentation
i. Changes due to amendment of accounting standards: Yes
-2-

None

ii. Changes due to other reasons:None

For details, please refer to "Changes in the significant items that form the basis of preparations for consolidated
financial statements," "Changes in presentation" and "Additional information" on page 32 of the Attached
Documents.

(3) Number of shares outstanding (common stock)i. Number of shares outstanding at the end of period (including treasury stock)
As of May 31, 2011
20,750,688 shares
As of May 31, 2010
20,750,688 shares
ii. Number of treasury stock at the end of period
As of May 31, 201116,265 shares
As of May 31, 2010
16,215 sharesiii. Average number of shares during the period
As of May 31, 2011
20,734,470 shares
As of May 31, 2010
20,734,498 shares
Reference: SUMMARY OF NON-CONSOLIDATED FINANCIAL STATEMENTS

1. Non-consolidated financial results for the fiscal year ended May 31, 2011
(From June 1, 2010 to May 31, 2011)(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,
2011
Fiscal year ended May 31,
2010

%

%

27,707

32.9

2,276

980.6

2,263

439.8

1,331

238.1

20,848(8.0)

210(81.7)

419(76.1)

393(70.3)Net income per share

Diluted net income per
share

yen

yen

64.20

-

18.99

18.99

Fiscal year ended May 31,
2011
Fiscal year ended May 31,
2010%(2) Financial position(Millions of yen, rounded down)
Total assets

EquityEquity ratio%

Net assets per shareyen

As of May 31, 2011

52,14541,74780.0

2,012.46

As of May 31, 2010

50,66040,81680.6

1,968.21

Reference:

Shareholders’ equity
May 31, 2011
May 31, 2010

41,727 million yen
40,809 million yen* Implementation status of auditing proceduresThis financial results report is not subject to the auditing procedures stipulated by the Financial Instruments andExchange Act. The auditing procedures of the consolidated financial statements were not completed at the timeof the release of this report.
* Disclaimer regarding appropriate use of forecasts and related points of note
(We urge you to be cautious in relying on forward-looking statements.)
The forecasts and forward-looking statements contained in this report are based on information currently
available and on certain assumptions deemed rational as of the date of release. Accordingly, actual results
may differ significantly from these forecasts due to various factors. For more information on the-3-preconditions of the forecasts and on precautionary notes concerning the usage of these forecasts, pleaserefer to “1. Business Results, (1) Analysis of Business Results” on page 6 of the Attached
Documents.
(How to acquire supplementary materials for financial summaries and information disclosed at our financial
results briefing.)
We are scheduled to hold a financial results briefing for securities analysts and institutional investors on July 25,
2011. The materials distributed at the briefing are scheduled to be disclosed on TDnet and our homepage on thatsame day.

-4-

○Attached Documents
1. Business Results·········································································································································· 6(1) Analysis of Business Results ············································································································· 6(2) Analysis of Financial Position··········································································································· 7(3) Basic Policy for Profit Allocation and Dividends for the Fiscal Year Ended on May 31,
2011 and the Fiscal Year Ending May 31, 2012 ·············································································· 8(4) Key events related to the assumption of the business as an ongoing concern ···························· 8
2. Composition of Corporate Group ············································································································ 9
3. Management Policy·································································································································· 16(1) Basic Policies for the Management of the Company ··································································· 16(2) Medium to Long-Term Management Strategies and Issues to Address ···································· 16(3) Other important items related to the management of the Company········································· 17
4. Consolidated financial statements·········································································································· 18(1) Consolidated balance sheets············································································································ 18(2) Consolidated income statement and consolidated comprehensive income statement ············· 20(3) Consolidated statements of changes in equity ·············································································· 22(4) Consolidated statements of cash flows··························································································· 24(5) Significant items that form the basis of preparations for consolidated financial
statements·········································································································································· 25(6) Changes in significant items that form the basis of preparations for consolidated
financial statements ························································································································· 32(7) Change in presentation method······································································································ 32(8) Additional information···················································································································· 32(9) Notes regarding the consolidated financial statement ································································· 33(Regarding the consolidated comprehensive income statement)··············································· 33(Segment Information) ··················································································································· 33(Per share information) ·················································································································· 37(Significant subsequent events) ····································································································· 37(Disclosure omissions)····················································································································· 37
5. Others ························································································································································ 38(1) Orders and sales by product category ··························································································· 38(2) Overview ··········································································································································· 39-5-1. Business Results(1) Analysis of Business Results(i) Business Results for the Fiscal Year ended May 31, 2011
During the consolidated fiscal year ended May 31, 2011, the global economy steadily recovered thanks to thestrong economic growth of emerging countries, such as those in Asia, and the effects of economic stimulus
measures in each country. The recovery came in spite of concerns of a slowdown in some areas, including thecontinuing high unemployment rate in the United States and Europe. The Japanese economy also continued its
general recovery trend as a result of the improvement in exports and production and recovery of capital
investment. However, it came to a temporary standstill in the latter half of the year owing to the impact of therising yen and reaction to the reduction of economic stimulus measures. We must add that the impact of the Great
East Japan Earthquake in March is a source of concern.
Amid these circumstances, the Toyo Tanso Group concentrated its efforts on expanding business andimproving performance, by actively absorbing rapidly increasing demands mainly in the environment andenergy sectors and further accelerating global expansion particularly in Asia.
As a result, the Group’s business performance improved dramatically during the consolidated fiscal year
under review, despite the impact of the rising yen and the increased burden of depreciation expenses. Net sales
totaled 37,557 million yen (up 34.5% from the same term last year), operating profit 5,868 million yen (up160.4%), and recurring profit 5,614 million yen (up 171.2%). Net income for the fiscal year was 3,699 million yen(up 156.5%).
The overall performance of each business segment was as follows. (Please refer to “5. Others” for an
overview of each product category.)Japan
Boosted by signs of economic recovery, business performance in Japan turned strongly upward on thewhole. In addition to seeing a further recovery in demand for all products, expanded sales were observed in
SiC (silicon carbide)-coated graphite products, coating products, C/C composite products, and other highvalue-added products and products for new applications and purposes. As a result, net sales for the fiscal year inJapan were 20,062 million yen and operating profit was 2,698 million yen.
United States
Despite the large impact of the strong yen, the recovery of our business performance gained considerable
momentum driven by demand for compound semiconductor and solar cell-related products particularly in thelatter half of the fiscal year. As a result, net sales for the fiscal year in the United States were 2,992 million yen
and operating profit was to 33 million yen.
EuropeAgainst a backdrop of economic recovery in Europe, business in Europe remained strong, mainly in solar cell,industrial furnaces, and brush products. As a result, net sales for the fiscal year in Europe were 3,121 million yen
and operating profit was 421 million yen.
Asia
Demand for products for all applications, particularly those related to solar cells and compound semiconductors,
was extremely brisk owing to the vitalization of the economies of China and other emerging countries. As a result,net sales for the fiscal year in Asia were 11,380 million yen and operating profit was 2,351 million yen.
(ii) Outlook for the Fiscal Year Ending on May 31, 2012
Regarding the domestic and overseas economic environments going forward, we expect the global economy
to remain on a mild recovery path driven by demand from emerging nations. Such demand will likely offset thepersistent uncertainties over the future due partly to concerns over fiscal conditions in Europe and the geopoliticalrisks in the Middle East and other regions. On the domestic front, we cannot be optimistic about the Japanese-6-economy given the repercussions of the earthquake disaster, electrical power shortage issue and continued
strength of the yen.
The conditions surrounding our business group also remain unclear given such factors as the indirect impactof the earthquake disaster. Nevertheless, we project a steady increase, which will undergo temporary adjustments,
in demand on a global basis fueled mainly by sales of LED-, solar cell- and other environmentally friendly orenergy-related products. Under these circumstances, we will continue to actively expand sales, add high value toour products, actively reinforce our production capacity and invest in research and development of our main
products as we look toward the future.
As for our consolidated earnings for the fiscal year ending May 31, 2012, we expect sales of 39 billion yen(up 3.8% from the previous year), operating profit of 5.3 billion yen (down 9.7%), recurring profit of 5.3 billion
yen (down 5.6%) and net profit of 3.4 billion yen (down 8.1%). Our forecasts take into consideration such factors
as the large burden of depreciation costs stemming from active investment in the future and the strong yen.
(Assumed exchange rate: 80 yen/US$, 110 yen/EUR, 12.3 yen/CNY).

(2) Analysis of Financial Position(i) Assets, Liabilities, and Equity
Total assets as of the end of the consolidated fiscal year under review increased by 3,405 million yen fromthe previous consolidated fiscal year. This rise is mainly attributable to the 2,390 million yen rise in trade notes
and accounts receivable resulting from higher sales and an increase of 1,544 million yen in inventories through thesystematic accumulation of intermediate stock, etc. These increases eclipsed the 2,128 million yen decrease intangible fixed assets due chiefly to the posting of depreciation expenses, etc.
Total liabilities increased by 617 million yen from the end of the previous consolidated fiscal year. This was
mainly caused by a 588 million yen increase in trade notes and accounts payable stemming from a rise in the
procurement of raw materials due to an increased number of orders and 1,314 million yen in income tax payable,
etc. This offset the decrease of 809 million yen in accrued amount payable incurred from the payment for thepurchase of tangible fixed assets, etc., and 1,150 million yen in notes payable-equipment.
Total equity increased by 2,788 million yen from the end of the previous consolidated fiscal year. Thisnet increase was primarily driven by an increase of 3,284 million yen in retained earnings from the net income forthe year and came despite a decline of 598 million yen in accumulated other comprehensive income, etc.
(ii) Cash Flows
Cash and cash equivalents (hereinafter referred to as “funds”) in the consolidated fiscal year ended on May
31, 2011 increased by 1,288 million yen from the end of the previous consolidated fiscal year, to 7,090 million
yen on a consolidated basis.
(Cash Flows from Operating Activities)
Funds provided by operating activities increased 116.2% from the previous year to 7,301 million yen. Amongthe main items, profit before income taxes totaled 5,389 million yen (up 142.2%) and depreciation costs totaled
4,999 million yen (up 33.2%), while the increase in notes and accounts receivable-trade came to 2,718 million yen(up 4.6%) and income taxes paid totaled 517 million yen (up 385.7%).
(Cash Flows from Investing Activities)
Funds used in investment activities increased 31.1% from the previous year to 5,380 million yen. Among themain items, expenses for the acquisition of tangible fixed assets decreased to 5,264 million yen (down 42.9%).
(Cash Flows from Financing Activities)
Funds used by financing activities came to 550 million yen (252 million yen in funds were acquired in theprevious year). This is largely attributable to the 697 million yen (up by 382 million yen in the previous year) net
decrease in short-term borrowings.

-7-

(3) Basic Policy for Profit Allocation and Dividends for the Fiscal Year Ended on May 31, 2011 and the
Fiscal Year Ending May 31, 2012(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 Ended on May 31, 2011
Based on the above-mentioned policy, we plan to increase our annual dividend by 2 yen to ¥22 per share forthe fiscal year ended on May 31, 2011 in line with our initial dividend forecast. This amount takes into account theneed to improve shareholders’ returns, the business results in this fiscal year and capital expenditure plans for
future growth.

(iii) Dividends for the Fiscal Year Ending on May 31, 2012
We plan to pay a dividend of 25 yen per share for the fiscal year ending on May 31, 2012 in consideration of
improving shareholders’ returns. Our dividend policy is based on our quest of increasing the Company’s value
through the use of internal reserves for capital expenditures.

(4) Key events regarding the premise of a going 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, four 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 aresult, 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
For the manufacture of
Electronics
compound semiconductors
applications
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 growing furnace
Susceptors for MOCVD systems, boats for LPE
systems
Crucibles and heaters for single crystal and polycrystal
silicon manufacturing furnace, carriers foranti-reflective coating films
Continuous casting dies, EDM electrode, heaters forvarious industrial furnaces, structural material
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 Si-Epi equipment, wall materials fornuclear fusion reactors, automotive gaskets, susceptors
for MOCVD systems, materials for the manufacture ofsolar cells

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 silicon
growing 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, telecommunications devices, powerdevices, etc. are also employed as high efficiency light emitting devices for digital consumer electronics such as
mobile phones, DVDs and LCDs, automotive head lamps and fluorescent tubes, taking advantage of their features,such as a long life 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 are representative of the clean energy technology. Their applications are expected to expand on a
global scale, given the legislations of subsidies for the purchase and installation of residential power generation- 10 -

systems in countries around the world, and other such national policies.
Major consumable parts in heaters and crucibles utilized in the manufacturing process of single crystal andpolycrystal silicon, the core materials of solar cell elements, as well as carriers for PE-CVD equipment and others
used in the manufacturing process of anti-reflective coating films, use our isotropic graphite products. They areused because such components 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 andpowder metallurgical materials, the annealing of automotive parts and other high temperature heating elements forindustrial furnaces, and construction materials inside a furnace.
The Toyo Tanso Group supplies products for these diverse industry applications in Japan and in othercountries such as China, Southeast Asia, South America, which are 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 crystals, diodes,
crystal oscillators, and other advanced process equipment. 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 theCompany 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 of small
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 quartz 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.
For words with an asterisk (*), please refer to the glossary below.
This glossary 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 in this report.

- 12 -

[Glossary][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 a thin film on the surface of wafers.
[Continuous casting dies]
A mold to cool and solidify molten 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 made continuously.
[EDM electrode]An electrode that will make a pair with a processed material. It generates an electrical discharge between theelectrode and the 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 or gas 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. This is used for gaskets and otherproducts because of its bendy nature.
[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. Only major business relations are indicated in thischart.

Customers
Processing and sales companies
TTTh(Thailand)

TTT(Taiwan)

TTE(Italy)TTF(France)

GTD(Germany)

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

Toyo Tanso Co., Ltd.

KTT(Korea)TTS(Singapore)

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

Ohwada Carbon
Industrial Co., Ltd.
(Japan)YTT(China)Manufacturing
and sales
companies

Sales companies
Consolidated
subsidiary

STI(China)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.
(STI) … Shanghai Toyo Tanso Industrial Co., Ltd.
(JTT) … Jiaxiang Toyo Tanso Co., Ltd.
(TTT) … Toyo Tanso Taiwan Co., Ltd.
(YTT) … Shanghai Yongxin Toyo Tanso Co., Ltd.
(KTT) … Toyo Tanso Korea Co., Ltd.
(TTTh) … Toyo Tanso (Thailand) Co., Ltd.
(TTS) … Toyo Tanso Singapore Pte. Ltd.
(TTIn) … Toyo Tanso India Private Limited- 15 -

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.
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 to Long-Term Management Strategies and Issues to Address
In the medium to long-term, as a leader in high-functionality carbons, the Toyo Tanso Group will strive tomaximize corporate value, especially in areas related to the environment and energy, by promoting investment andbusiness 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 Toyo Tanso Group will actively enhance its
production structure and sophistication, both domestic and international, and will take comprehensive action toincrease production efficiency in order to strengthen the Group’s competitiveness.
As for our core product, isotropic graphite, we intend to further improve our production system based on our
cutting-edge Takuma No. 3 plant built in spring 2010. In addition, we will focus on actively developing compoundmaterial products such as coating and C/C composite products. With these products, 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 developments, since 2006 we have established sales subsidiaries in Korea, Shandong
Province in China, and in Thailand, and in recent years such areas as Singapore and India. At the same time, weare pushing forward an active global strategy through our efforts to, for example, reinforce and upgrade 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 needs to be learned about the possibilities of carbon, and the potential applications appear to beunlimited. Carbon is likely to find new uses, especially in the environment and energy, and in other cutting-edge
areas such as atomic power, medicine, next-generation devices and aerospace. It goes without saying that carbon
has potential applications in the renewable energy field related to, for example, solar cells and wind power
generation as well as LED and other energy-saving-related areas.
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- 16 -

further growth.

(3) Other important items related to the management of the Company
Not applicable.

- 17 -

4. Consolidated financial statements(1) Consolidated balance sheets(Thousands of yen, rounded down)
As of May 31, 2010

As of May 31, 2011

AssetsCurrent assets
Cash on hand and in banks

7,921,993

9,283,891

Trade notes and accounts receivable

10,656,152

13,047,069

Merchandise and finished goods

4,218,778

4,761,418

Work in process

5,603,781

6,182,218

Raw materials and stores

1,088,051

1,511,288

Deferred tax assets

643,614707,664

Other

973,993883,757

Allowance for doubtful accounts(106,033)(111,741)

Total current assets

31,000,331

36,265,565

14,085,077

14,707,804(6,826,376)(7,334,386)

Fixed assets
Tangible fixed assets
Buildings and structures
Accumulated depreciation
Buildings and structures (net)7,258,700

7,373,417

Machinery, equipment, and vehicles

36,008,017

37,586,480

Accumulated depreciation(22,379,940)(25,490,350)

Machinery, equipment, and vehicles (net)13,628,077

12,096,129

Land

5,308,552

5,296,473

Construction in progress

1,526,421

655,395

Other

3,070,731

3,393,067(2,501,707)(2,652,267)

569,023

740,800

28,290,775

26,162,216

921,714785,261

Investments in securities

219,511

199,072

Deferred tax assets

36,947316,150

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

1,316,954

1,466,194

Allowance for doubtful accounts

Other

(5)

(2,820)Total investments and other assets

1,573,408

1,978,597

30,785,898

28,926,075

61,786,229

65,191,641

Total fixed assets
Total assets- 18 -

(Thousands of yen, rounded down)
As of May 31, 2010

As of May 31, 2011

Liabilities
Current liabilities
Trade notes and accounts payable

2,362,097

2,950,193

Short-term borrowings

1,682,140

1,406,013

Accrued amount payable

3,348,215

2,538,873

Income tax payable

180,746

1,495,600

Reserve for employees’ bonuses

713,946825,271-

78,480Other

2,633,638

1,788,486

Total current liabilities

10,920,785

11,082,920

Reserve for directors’ and corporate auditors’
bonusesLong-term liabilities
Long-term borrowings

431,074

665,014

Deferred tax liabilities

384,597

266,934

Reserve for employees’ retirement benefits592,593

658,878

Asset retirement obligations
Other
Total long-term liabilities
Total liabilities-

278,121496,923

491,408

1,905,188

2,360,356

12,825,974

13,443,276

EquityShareholder’s equity
Common stock

7,692,575

7,692,575

Capital surplus

9,534,686

9,534,686

Retained earnings

31,884,339

35,169,221

Treasury stock - at cost

(57,408)(57,630)

Total shareholders' equity

49,054,194

52,338,853

1,842

2,941

Foreign currency translation adjustments(1,231,034)(1,831,083)

Total accumulated other comprehensive income(1,229,192)(1,828,141)

Accumulated other comprehensive income
Unrealized gains (losses) on available-for-salesecurities

Share warrants

6,696

20,088

Minority interests

1,128,557

1,217,565

Total equity

48,960,255

51,748,364

61,786,229

65,191,641

Total liabilities and equity- 19 -

(2) Consolidated income statement and consolidated comprehensive income statement(Consolidated statements of income)(Thousands of yen, rounded down)
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

Net sales

27,924,853

37,557,801

Cost of goods sold19,931,546

25,445,901

Gross profit

7,993,307

12,111,899

Selling, general and administrative expenses

5,740,166

6,243,670

Operating profit

2,253,140

5,868,229

45,682

31,599Non-operating income
Interest income
Dividends earned

53,737

5,941

Gain on foreign currency option

95,10063,411

Other

77,83963,516

Total non-operating income

272,359

164,467Interest expenses

38,13747,596

Loss on sale of notes payable

3,262

2,330

Valuation loss on investment securities

63,612

24,032Non-operating expenses

Foreign exchange loss

294,533

289,986

Other

55,66154,033

Total non-operating expenses

455,206

417,979

2,070,293

5,614,718

Gain on sale of fixed assets

34,061

88,317

Reversal of allowance for doubtful accounts

64,160-Subsidies received

30,787

1,450

Gain on reversal of special retirement benefit
expenses for prior year

21,016-

Gain on business transfer

41,000-Total extraordinary profit

191,027

89,767

Recurring profit
Extraordinary profit

Extraordinary losses
Loss on sale of fixed assets
Loss on disposal of fixed assets
Effect of application of the Accounting Standard
for Asset Retirement Obligations
Payment for prior-year custom duties, etc
Loss from disaster

273

4,433

35,95655,431-

216,240-

23,726-

14,82636,230314,658

2,225,091

5,389,826

Income taxes - current

554,891

1,839,077

Prior year income tax, etc.

(28,543)-

Income taxes - deferred

206,087(479,019)

Total income taxes

732,436

1,360,057-

4,029,769

50,414

330,197

1,442,240

3,699,571

Total extraordinary losses
Profit before income taxes

Income before minority interests
Minority interests
Net income- 20 -

(Consolidated comprehensive income statement)(Thousands of yen, rounded down)
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011-

4,029,769

-

1,098

Income before minority interests
Other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Foreign currency translation adjustments-

Total other comprehensive income-*2(670,404)-*1

3,359,364

Comprehensive income(671,503)(Breakdown)Comprehensive income attributable to parent
company shareholders
Comprehensive income attributable to minority
interests- 21 --

3,100,621-

258,743

(3) Consolidated statements of changes in equity(Thousands of yen, rounded down)
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

EquityCommon stock
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

30,856,790

31,884,339(414,691)(414,689)

Net income

1,442,240

3,699,571

Total change in the fiscal year

1,027,549

3,284,881

Balance at end of the fiscal year

31,884,339

35,169,221(56,997)(57,408)

Capital surplus

Retained earnings
Balance at end of previous fiscal year
Change in the fiscal year
Dividends from retained earnings

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

(410)

(222)

Total change in the fiscal year

(410)

(222)

Balance at end of the fiscal year

(57,408)(57,630)

48,027,055

49,054,194

Dividends from retained earnings(414,691)(414,689)

Net income

1,442,240

3,699,571

Total equity
Balance at end of previous fiscal year
Change in the fiscal year

Acquisition of treasury stock

(410)

(222)

Total change in the fiscal year

1,027,138

3,284,659

Balance at end of the fiscal year

49,054,194

52,338,853- 22 -

(Thousands of yen, rounded down)
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

984

1,842

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

857

1,098

Total change in the fiscal year

857

1,098

Balance at end of the fiscal year

1,842

2,941

(623,226)(1,231,034)

Change in the fiscal year in items other thanshareholders’ equity (net)(607,808)(600,048)

Total change in the fiscal year

(607,808)(600,048)

Balance at end of the fiscal year

(1,231,034)(1,831,083)(622,241)(1,229,192)

Change in the fiscal year in items other thanshareholders’ equity (net)(606,950)(598,949)

Total change in the fiscal year

(606,950)(598,949)

Balance at end of the fiscal year

(1,229,192)(1,828,141)

-

6,696

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

6,696

13,392

Total change in the fiscal year

6,696

13,392

Balance at end of the fiscal year

6,696

20,0881,202,030

1,128,557(73,473)

89,008

Accumulated other comprehensive income
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

Accumulated other comprehensive income
Balance at end of previous fiscal year
Change in the fiscal year

Share warrants
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
Change in the fiscal year in items other thanshareholders’ equity (net)Total change in the fiscal year

(73,473)

89,008

Balance at end of the fiscal year

1,128,557

1,217,565

48,606,845

48,960,255

Dividends from retained earnings(414,691)(414,689)

Net income

1,442,240

3,699,571

(410)

(222)

(673,728)(496,549)

Total equity
Balance at end of previous fiscal year
Change in the fiscal year

Acquisition of treasury stock
Change in the fiscal year in items other thanshareholders’ equity (net)Total change in the fiscal year
Balance at end of the fiscal year

- 23 -

353,4092,788,109

48,960,255

51,748,364

(4) Consolidated statements of cash flows(Thousands of yen, rounded down)
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

2,225,091
3,753,073
10,906

5,389,826
4,999,532
10,906

265,92170,429(21,016)--

216,240

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Increase (decrease) in reserve for employees’ retirement
benefits
Gain on reversal of retirement benefit expenses for prioryear
Effect of application of the Accounting Standard for Asset
Retirement Obligations
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
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
Income taxes paid
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
Proceeds from sale of intangible fixed assets
Payments for acquisition of investment securities
Payment for acquisition of subsidiary’s shares
Payment for lease and guarantee deposits
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
Cash and cash equivalents at end of period- 24 -(2,700)-(41,658)(35,840)(103,232)(99,419)
38,137
294,533
63,612(34,061)
36,230112,261
78,48010,801(37,540)
47,596289,986
24,032(88,317)59,865(2,597,843)(2,718,394)(1,643,423)
826,525
472,8123,407,647
112,887(36,689)(106,602)
3,377,242(1,745,793)
784,253
326,010
7,830,177
37,192(48,042)(517,782)
7,301,545(6,325,902)
11,822,295(9,223,112)
147,857(533,324)(1,199)9,694(4,103,690)(2,649,741)
2,549,927(5,264,400)
167,942(30,872)
53,157(1,199)(50,502)(44,365)(110,568)(5,380,622)

382,089
553,594(177,305)(7,516)(410)(414,091)(83,468)
252,891(697,419)
1,187,169(465,740)(23,369)(222)(414,544)(135,923)(550,050)(136,395)(82,306)(609,951)
6,412,364
5,802,412

1,288,565
5,802,412
7,090,978

(5) Significant items that form the basis of preparations for consolidated financial statements
Items

From June 1, 2009 to May 31, 2010

1. Items concerning the scopeof consolidation(1) Number of consolidated subsidiaries:
10
Names of consolidated subsidiaries
Totankako Co., Ltd.
Ohwada Carbon Industrial Co., Ltd.
Toyo Tanso USA, Inc.
Toyo Tanso Europe S.p.A.
Toyo Tanso France S.A.
GTD Graphit Technologie GmBH
Shanghai Toyo Tanso Co., Ltd.
Shanghai Toyo Tanso Industrial Co.,Ltd.
Jiaxiang Toyo Tanso Co., Ltd.
Toyo Tanso Taiwan Co., Ltd.

(1) Same as on the left

(2)
Names
of
significant
non-consolidated subsidiaries
Significant
non-consolidated
subsidiaries
Toyo Tanso Korea Co., Ltd.
Toyo Tanso (Thailand) Co., Ltd.

(2)
Names
of
significant
non-consolidated subsidiaries
Significant
non-consolidated
subsidiaries
Toyo Tanso Korea Co., Ltd.
Toyo Tanso (Thailand) Co., Ltd.
Toyo Tanso Singapore Pte. Ltd.
Toyo Tanso India Private Limited(Reason for exclusion from thescope of consolidation)
Non-consolidated subsidiaries were
not included in the scope of
consolidation because their total
assets, net sales, net income (loss),and retained earnings do not have amaterial impact on the consolidated
financial statements.

(Reason for exclusion from thescope of consolidation)
Same as left column

The equity method has not been applied
to any subsidiaries or affiliates.
Because non-consolidated subsidiaries
and affiliates have very little impact on
the net income (loss) or retained earnings
and have no materiality overall, theequity method has not been applied tothe investment account for thesecompanies, and they have instead beenvalued at cost.
There are three non-consolidated
subsidiaries and affiliates that the equity
method has not been applied to: Toyo
Tanso Korea Co., Ltd., Toyo Tanso(Thailand) Co., Ltd., and Shanghai
Yongxin Toyo Tanso Co., Ltd.

The equity method has not been applied
to any subsidiaries or affiliates.
Because non-consolidated subsidiaries
and affiliates have very little impact on
the net income (loss) or retained earnings
and have no materiality overall, theequity method has not been applied tothe investment account for thesecompanies, and they have instead beenvalued at cost.
There
are
five
non-consolidated
subsidiaries and affiliates that the equity
method has not been applied to: Toyo
Tanso Korea Co., Ltd., Toyo Tanso(Thailand) Co., Ltd., Toyo Tanso
Singapore Pte. Ltd., Toyo Tanso India
Private Limited, and Shanghai Yongxin
Toyo Tanso Co., Ltd.

2. Items concerning theapplication of the equity
method- 25 -

From June 1, 2010 to May 31, 2011

ItemsFrom June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

3. Items concerning thebusiness years of subsidiaries

Excluding Ohwada Carbon IndustrialCo., Ltd., Toyo Tanso Europe S.p.A.,
Shanghai Toyo Tanso Co., Ltd., Shanghai
Toyo Tanso Industrial Co., Ltd., Toyo
Tanso Taiwan Co., Ltd., and Jiaxiang
Toyo Tanso Co., Ltd., the consolidated
closing date for all consolidated
subsidiaries is the same.
Of these above six companies, theclosing date for Ohwada Carbon
Industrial Co., Ltd., Toyo Tanso Europe
S.p.A., and Toyo Tanso Taiwan Co., Ltd.
is March 31, while the closing date for
Shanghai Toyo Tanso Co., Ltd., Shanghai
Toyo Tanso Industrial Co., Ltd., andJiaxiang Toyo Tanso Co., Ltd. is
December 31. However, a provisional
closing date of March 31 has been
assumed for the preparation of thefinancial statements.
For the preparation of the consolidated
financial statements, the current financial
statements from this closing date havebeen used. However, the required
adjustments for consolidation have been
made for material transactions that haveoccurred up until the consolidated
closing date.
Note that the original closing date ofDecember 31 for Toyo Tanso Taiwan
Co., Ltd. has been changed to March 31
from the current consolidated fiscal year.

Excluding Ohwada Carbon IndustrialCo., Ltd., Toyo Tanso Europe S.p.A.,
Shanghai Toyo Tanso Co., Ltd., Shanghai
Toyo Tanso Industrial Co., Ltd., Toyo
Tanso Taiwan Co., Ltd., and Jiaxiang
Toyo Tanso Co., Ltd., the consolidated
closing date for all consolidated
subsidiaries is the same.
Of these above six companies, theclosing date for Ohwada Carbon
Industrial Co., Ltd., Toyo Tanso Europe
S.p.A., and Toyo Tanso Taiwan Co., Ltd.
is March 31, while the closing date for
Shanghai Toyo Tanso Co., Ltd., Shanghai
Toyo Tanso Industrial Co., Ltd., andJiaxiang Toyo Tanso Co., Ltd. is
December 31. However, a provisional
closing date of March 31 has been
assumed for the preparation of thefinancial statements.
For the preparation of the consolidated
financial statements, the current financial
statements from this closing date havebeen used.
However, the required adjustments forconsolidation have been made formaterial transactions that have occurred
up until the consolidated closing date.

a. Securities(a) Shares of subsidiaries and affiliates
Stated at cost using the moving
average method

a. Securities(a) Shares of subsidiaries and affiliates
Same as on the left

4. Items concerning accounting
standards(1) Valuation standards andmethod for significant assets- 26 -

ItemsFrom June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011(b) Other securities
Securities with a readily determinable
fair value
Stated at fair value based on market
price on the consolidated closing
date (valuation differences aretreated through the partial direct net
asset adjustment method and sales
costs are calculated with the moving
average method)(b) Other securities
Securities with a readily determinable
fair value
Same as on the left

Securities
withoutareadily
determinable fair value
Stated at cost using the moving
average method

Securities
without
determinable fair value
Same as on the left

ab. Derivatives
Stated at fair valueb. Derivatives
Same as on the left

c. Inventories(a) Merchandise and raw materials
Mainly stated at cost using themoving average method(The carrying amount on the balance
sheet is reduced for decreases in
profitability)(b) Finished goods and work in process(processed)
Mainly stated at individual cost
(The carrying amount on the balance
sheet is reduced for decreases in
profitability)c. Inventories(a) Merchandise and raw materials
Same as on the left(c) Semi-finished goods and work inprocess (materials)
Mainly stated at cost using themoving average method(The carrying amount on the balance
sheet is reduced for decreases in
profitability)(d) Stores
Mainly stated at cost based on thelast purchase price(The carrying amount on the balance
sheet is reduced for decreases in
profitability)- 27 -

readily(b) Finished goods and work in process(processed)
Same as on the left(c) Semi-finished goods and work inprocess (materials)
Same as on the left(d) Stores
Same as on the left

ItemsFrom June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

(2) Depreciation method forsignificant depreciable assets

a. Tangible fixed assets (excluding leaseassets)
The fixed rate method is used for Toyo
Tanso Co., Ltd. and subsidiaries inJapan. The straight-line method ismainly used for consolidated overseas
subsidiaries.
However, the straight-line method isusedforbuildings(excluding
building-attached facilities) acquired by
Ohwada Carbon Industrial Co., Ltd.
since April 1, 1998.
The main useful lives are as follows.
Buildings and structures 3 to 50
years
Machinery, equipment, and vehicles
2 to 9 years
With the application of the interim
measures in the Practical Guidance on
Accounting Treatments for Research andDevelopment Costs and Software(Accounting Committee Report of theJapanese Institute of Certified Public
Accountants No. 12, March 31, 1999),
use of the fixed rate method formachinery and equipment acquired in
the business years that started before
April 1, 1999 used only for specified
research and development purposes
will be continued.

a. Tangible fixed assets (excluding leaseassets)
The fixed rate method is used for Toyo
Tanso Co., Ltd. and subsidiaries inJapan. The straight-line method ismainly used for consolidated overseas
subsidiaries.
However, the straight-line method isusedforbuildings(excluding
building-attached facilities) acquiredby Ohwada Carbon Industrial Co., Ltd.
since April 1, 1998.
The main useful lives are as follows.
Buildings and structures 3 to 50
years
Machinery, equipment, and vehicles
4 to 9 years

b. Intangible fixed assets (excluding b. Intangible fixed assets (excluding leaseassets)lease assets)
Same as on the left
The straight-line method is used for
Toyo Tanso Co., Ltd. and subsidiaries
in Japan. The straight-line method isused for software (in-house use) basedon the in-house use period (five years).
The straight-line method is mainly
used for consolidated overseas
subsidiaries.

- 28 -

Items(3) Criteria forsignificant reserves

From June 1, 2009 to May 31, 2010

posting

From June 1, 2010 to May 31, 2011

c. Lease assets
Lease assets in financial leasetransactions without transfer ofownership
The straight-line method is applied for
useful lives for the lease period, with aresidual value of zero.
For financial lease transactions withouttransfer of ownership whose lease
period commenced before the firstyear, the Accounting Standards on
Lease
Transactions(Financial
Accounting Standards No. 13, June 17,1993 (Business Accounting Council
Subcommittee No. 1), revised on
March 30, 2007) was applied,accounting treatment based on thetreatment used for conventional rental
transactions shall continue to be
applied.

c. Lease assets
Same as on the left

a. Allowance for doubtful accounts
To make allowance for losses on
uncollectible accounts, the expecteduncollectible amount is posted basedon the loss ratio for general receivables
and individually examining thecollectability of specific doubtful
accounts.

a. Allowance for doubtful accounts
Same as on the left

b. Reserves for employees’ bonuses
Toyo Tanso Co., Ltd. and subsidiaries
in Japan post the liability amount of
expected payments for the current
consolidated fiscal year to provide forbonuses paid to employees.

b. Reserves for employees’ bonuses
Same as on the left

c. Reserve for directors’ bonuses
Toyo Tanso Co., Ltd. posts the
expected payment amount to provide
for bonuses paid to directors (including
executive officers).

c. Reserve for directors’ bonuses
Same as on the left

- 29 -

ItemsFrom June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

d. Reserve for employees’ retirement
benefits
Toyo Tanso Co., Ltd. and subsidiaries
in Japan post the amount recognized at
the end of the current consolidated
fiscal year based on the projected
benefit obligations and expectedpension assets at the end of the current
consolidated fiscal year to provide for
employees’ retirement benefits.
Actuarial differences are treated as a
lump-sum expense in the following
consolidated fiscal year.

d. Reserve for employees’ retirement
benefits
Same as on the left

(4) Standards for converting
significant
foreign-denominated assets
and liabilities to Japanese yen

Foreign currency-denominatedreceivables and payables are converted toyen at the spot exchange rate on the
consolidated closing date and thetranslation adjustment is treated as aprofit or loss. The assets and liabilities ofoverseas subsidiaries are converted toyen at the spot exchange rate on the
consolidated closing date, and revenue
and expenses are converted to yen at the
average annual exchange rate.
Translation differences are then posted aspart of minority interests and foreign
currency translation adjustments in net
assets.

Same as on the left

(5) The amortization method
and amortization period for
goodwill_____

Goodwill and negative goodwill isevenly amortized over five years.

(6) Scope of funds contained
withintheconsolidated
statement of cash flows_____

Cash on hand, deposits that can bewithdrawn at any time, and short-term
investments with high liquidity that caneasily be converted to cash and havematurities within three months ofacquisition that are exposed to only aminimal price fluctuation risk are posted.

(7) Other material items
relating to the preparation of
the consolidated financial
statements

Accounting treatment for consumptiontaxes
The tax-excluded method is used.

Accounting treatment of consumption
taxes.
Same as on the left

- 30 -

ItemsFrom June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

5. Items concerning thevaluation of asset andliabilities of consolidated
subsidiaries
6. Items concerning theamortization of goodwill andnegative goodwill
7. Scope of funds contained
within the consolidated
statement of cash flows

Overall mark-to-market valuation is used
for the valuation of assets and liabilities
of consolidated subsidiaries.

_____

Goodwill and negative goodwill isevenly amortized over five years.

_____

Cash on hand, deposits that can bewithdrawn at any time, and short-term
investments with high liquidity that caneasily be converted to cash and havematurities within three months ofacquisition that are exposed to only aminimal price fluctuation risk are posted.

_____- 31 -

(6) Changes in significant items that form the basis of preparations for consolidated financial
statements
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011

(Application of Partial Revision (No. 3) of AccountingStandards for Retirement Benefits)
The Partial Revision (No. 3) of Accounting Standards for
Retirement Benefits (Financial Accounting Standards No.
19, July 31, 2008) has been applied from the current
consolidated fiscal year. Note that this change did not havean impact on operating profit, recurring profit, or profit
before income taxes.

_____

_____
(Application of the Accounting Standards for Asset
Retirement Obligations)
The Accounting Standards for Asset Retirement
Obligations (Financial Accounting Standards No. 18,
March 31, 2008) and Application Guidance for the
Accounting Standards for Asset Retirement Obligations(Guidance on Financial Accounting Standards No. 21,
March 31, 2008) have been applied from the current
consolidated fiscal year.
As a result, operating profit and recurring profit were both
reduced by 9,256 thousand yen, and profit before income
taxes was reduced by 225,504 thousand yen.

(7) Change in presentation method
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011_____

(Consolidated statements of income)With the application of the Cabinet Office OrdinancePartially Correcting Regulations Concerning Financial
Statement Terminology, Format, and Presentation Method(Cabinet Office Ordinance No. 5, March 24, 2009) basedon the Accounting Standards for Consolidated Financial
Statements (Financial Accounting Standards No. 22,
December 26, 2008), the item ‘Income before minority
interests’ has been stated from the current consolidated
fiscal year.

(8) Additional information
From June 1, 2009 to May 31, 2010

From June 1, 2010 to May 31, 2011_____

The Accounting Standards on the Presentation ofComprehensive Income (Financial Accounting Standards
No. 25, June 30, 2010) has been applied from the current
consolidated fiscal year. Note that the amounts stated in‘Accumulated other comprehensive income’ and ‘Total
accumulated other comprehensive income’ for theprevious consolidated fiscal year are the amounts stated in‘Revaluation and translation gains (losses)’ and ‘Total
revaluation and translation gains (losses).’- 32 -

(9) Notes regarding the consolidated financial statement(Regarding the consolidated comprehensive income statement)
Consolidated fiscal year ended May 31, 2011 (From June 1, 2010 to May 31, 2011)*1. Comprehensive income in the consolidated fiscal year ended May 31, 2010
(Thousands of yen,rounded down)Comprehensive income attributable to parent company shareholders:Comprehensive income attributable to minority interests:
Total

835,290
9,994
845,284*2. Other comprehensive income in the consolidated fiscal year ended May 31, 2010
(Thousands of yen,rounded down)

Unrealized gains (losses) on available-for-sale securities:
Foreign currency translation adjustments:
Total

857
(648,227)(647,370)(Segment Information)
a. Business Segment Information
Previous consolidated fiscal year (from June 1, 2009 to May 31, 2010)
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
Previous consolidated fiscal year (from June 1, 2009 to May 31, 2010)(Thousands of yen, rounded down)

I. Sales and operating profit
Sales(1) Sales to unaffiliated customers

Japan

North
America

Europe

Asia

Total

15,546,466

2,487,339

2,637,299

7,253,748

27,924,853

Corporateand elim.

Consolidated-

27,924,853(2) Intersegment sales or transfers

5,304,695

24,936

2,232

102,492

5,434,356(5,434,356)

-

Total

20,851,162

2,512,275

2,639,531

7,356,240

33,359,210(5,434,356)

27,924,853

Operating Expenses

20,318,244

2,520,261

2,514,971

6,220,756

31,574,234(5,902,521)

25,671,713

Operating Profit (loss)
II. Assets

Notes:

1.
2.

3.
4.

532,917(7,985)124,560

1,135,483

1,784,975

468,164

2,253,140

54,700,185

2,378,375

2,598,410

10,591,361

70,268,333(8,482,103)

61,786,229

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 and Eliminations.
There are no assets that are included in Corporate and Eliminations in the above period.

- 33 -

c. Overseas Sales
Previous consolidated fiscal year (from June 1, 2009 to May 31, 2010)(Thousands of yen, rounded down)

I

Overseas sales

II

Consolidated sales

III

Overseas sales as a proportion of consolidated sales (%)

Notes:

1.
2.

3.

North
America

EuropeAsia

Rest of
world

Total

2,376,858

3,058,813

10,017,593

180,003

15,633,269

8.5

11.0

35.9

0.6

27,924,853
56.0Countries or regions are grouped together based on geographic proximity.
The major countries or regions included in each geographic segment 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 and its consolidated subsidiaries in countries or regions excluding
Japan.

- 34 -

d. Reportable segments
Current consolidated fiscal year (From June 1, 2010 to May 31, 2011)
1. Reportable Segments
The reportable segments of the Toyo Tanso Group are business components for which separate financial
information is available and whose operating results are regularly reviewed by the board of directors in orderto decide on the allocation of management resources and evaluate performance.
The Company primarily engages in the manufacture and sale of carbon products, in Japan through Toyo
Tanso and domestic subsidiaries, and abroad through overseas subsidiaries based in the United States,
Europe, and Asia. All overseas subsidiaries are independently managed companies. They conduct businessby formulating their own comprehensive regional strategies for the products they handle.
For this reason, our business is composed of segments that are based on region-based production and sales
frameworks, and is categorized into the four reportable segments of Japan, United States, Europe, and Asia.
2. Calculation methods of net sales, profits, losses, assets, liabilities and other items per reportable segment
The accounting methods of reportable segments are by and large the same as those described in "Changes in thesignificant items that form the basis of preparations for consolidated financial statements."
Profits of reportable segments are recorded on an operating income basis.
Inter-segment sales are based on prices in arms-lengths transactions.
3. Information on net sales, profits, losses, assets, liabilities and other items per reportable segment
Previous consolidated fiscal year (from June 1, 2009 to May 31, 2010)(Thousands of yen, rounded down)
Reportable segments

Amountrecorded in the
consolidated
incomestatement(Note) 2

Adjusted
amount(Note) 1

Japan

UnitedStatesEuropeAsia(1) Sales to unaffiliated customers

15,546,466

2,487,339

2,637,299

7,253,748

27,924,853-(2) Intersegment sales or transfers

5,304,695

24,936

2,232

102,492

5,434,356(5,434,356)

-

Total

20,851,162

2,512,275

2,639,531

7,356,240

33,359,210(5,434,356)

27,924,853

Total

Sales

Segment profit (loss)
Segment asset

27,924,853

532,917(7,985)124,560

1,135,483

1,784,975

468,164

2,253,140

54,700,185

2,378,375

2,598,410

10,591,361

70,268,333(8,482,103)

61,786,229

3,293,707

142,939

102,318

216,5293,755,494(2,421)

3,753,073

10,906---

10,906-

10,906

8,531,430

142,715

290,982

1,213,002

10,178,131(5,469)10,172,662

Other items(1) Depreciation(2) Amortization of goodwill(3) Increases in tangible andintangible fixed assets(Notes) 1. The adjusted amounts are as follows:(1) Adjusted segment profit (loss) mainly takes into account the elimination of inter-segment transactions and unrealized
income.
(2) Adjusted segment assets mainly take into account the elimination of inter-segment transactions and unrealized income.
(3) Adjusted increases in the amounts of tangible and intangible fixed assets take into account the elimination ofinter-segment unrealized income.
2. Segment profit (loss) has been adjusted to reflect the operating profit recorded in the consolidated statement of income.

- 35 -

Current consolidated fiscal year (From June 1, 2010 to May 31, 2011)(Thousands of yen, rounded down)
Reportable segments

Amountrecorded intheconsolidated
incomestatement(Note) 2

Adjusted
amount(Note) 1

Japan

UnitedStatesEurope

Asia

Total

(1) Sales to unaffiliated customers

20,062,677

2,992,915

3,121,717

11,380,490

37,557,801-(2) Intersegment sales or transfers

7,642,395

127,765

11,756116,166

7,898,084(7,898,084)

-

Total

27,705,072

3,120,681

3,133,473

11,496,656

45,455,885(7,898,084)

37,557,801

Sales
37,557,801

Segment profit

2,698,259

33,717421,005

2,351,516

5,504,498

363,3715,868,229

Segment asset

56,821,560

2,408,571

3,178,242

12,304,908

74,713,282(9,521,641)

65,191,641

4,550,816

137,028

87,180229,4625,004,487(4,955)

4,999,532

10,906---

10,906-

10,906

2,078,868

320,128

85,502

719,967

3,204,467(15,374)

3,189,092

Other items(1) Depreciation(2) Amortization of goodwill(3) Increases in tangible andintangible fixed assets(Notes) 1. The adjusted amounts are as follows:(1) Adjusted segment profit mainly takes into account the elimination of inter-segment transactions and unrealized income.
(2) Adjusted segment assets mainly take into account the elimination of inter-segment transactions and unrealized income.
(3) Adjusted increases in the amounts of tangible and intangible fixed assets take into account the elimination ofinter-segment transactions and unrealized income.
2. Segment profit has been adjusted to reflect the operating profit recorded in the consolidated statement of income.

e. Related information
Current consolidated fiscal year (From June 1, 2010 to May 31, 2011)
1. Information per product and service
This 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.
2. Information per region(1) Sales(Thousands of yen, rounded down)
Asia
Japan

Sales

1.

EuropeRest of world
Asia(including China)

China only

Total

15,230,777

2,819,543

3,464,413

15,719,381

10,866,119

323,685

37,557,801

40.5

7.5

9.2

41.9

28.9

0.9

100.0

Composition (%)(Notes)North America

Sales are based on the locations of our customers, and are categorized into the relevant country or region segment
according to geographical proximity.
The major countries or regions included in each geographic segment are listed below.
(1) North America: United States(2) Europe: France, Germany, Italy(3) Asia: China, Taiwan, South Korea

2.

(2) Tangible fixed assets(Thousands of yen, rounded down)
Japan

United States

21,571,816

Europe1,030,003

Asia
963,742

Total
2,596,654

26,162,216

3. Information per major customer
This information has been omitted because we do not have any unaffiliated customers that have accounted formore than 10% of sales in the consolidated statement of income.
f. Information on impairment loss for fixed assets per reportable segment- 36 -

Current consolidated fiscal year (From June 1, 2010 to May 31, 2011)
Not applicable.
g. Information on the amortization of goodwill and unamortized balance per reportable segment
Current consolidated fiscal year (From June 1, 2010 to May 31, 2011)(Thousands of yen, rounded down)
Japan

United States

Europe

Asia

Total

Corporate and
elim.

Total

Balance at end of
10,906
10,906
10,906the fiscal year
(Note) Our records regarding amortization of goodwill have been omitted because the same information is described in our segment
information.

h. Information regarding gains on negative goodwill by reportable segment
Current consolidated fiscal year (From June 1, 2010 to May 31, 2011)
Not applicable.
(Additional information)
Current consolidated fiscal year (From June 1, 2010 to May 31, 2011)
Effective as of the current consolidated fiscal year under review, the “Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (ASBJ Statement No. 17, March 27, 2009) and the“Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information”(ASBJ Guidance No. 20, March 21, 2008) have been adopted.
(Per share information)
From June 1, 2009 to May 31, 2010

Net assets per share
Net income per share
Diluted net income per share

From June 1, 2010 to May 31, 2011

2,306.55 yen
69.56 yen
69.56 yen

Net assets per share
2,436.8 yen
Net income per share
178.43 yen
Diluted net income per share is not presented as there
are no potential shares with dilutive effects.
(Note) The basis for calculation of net income per share and diluted net income per share is as follows.
From June 1, 2009 to May 31, 2010

Net income per share
Net income (thousands of yen)Amount not attributed to commonshareholders (thousands of yen)
Net income related to common shares(thousands of yen)
Average outstanding shares during the
fiscal year (shares)

From June 1, 2010 to May 31, 2011

1,442,240

3,699,571--

1,442,240

3,699,571

20,734,498

20,734,470

466

-

-

-

Diluted net income per share
Net income adjustment (thousands of yen)
Increase in number of common shares
Overview of potential shares that were notincluded in the calculation of diluted net
income per share because they have no
dilutive effects(Significant subsequent events)
Not applicable(Disclosure omissions)
The disclosure of notes related to lease transactions, financial instruments, securities, derivatives transactions,projected benefit obligations, and tax effect accounting has been omitted from the consolidated financial results as
the necessity of disclosure of these items is not believed to be very high.
- 37 -

5. Others(1) Orders and sales by product categoryi.

OrdersYear ended May 31, 2010

(Unit: millions of yen)
Year ended May 31, 2011
Fiscal
2Q
3Q
4Q
year
total
4,413
5,285
6,158 20,758

4,349

Fiscalyear
total
14,062

4,900

585

630

2,223

628

686

699

841

2,856

598

891

1,216

3,861

1,190

1,003

1,217

967

4,379

1,715

1,297

2,627

4,011

9,652

2,462

2,093

2,144

2,549

9,249

5,885

5,958

7,747

10,207

29,799

9,182

8,197

9,347

10,51637,243

Products

1Q

2Q

3Q

4Q

Special graphite products
Carbon products forgeneral industries(for mechanicalapplications)
Carbon products forgeneral industries(for electrical applications)Compound materials andother products
Total

2,530

3,539

3,643

484

523

1,155

1Q

ii. Outstanding orders(Unit: millions of yen)
Year ended May 31, 2011

Year ended May 31, 2010
Products

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

Special graphite products
Carbon products for general industries(for mechanical applications)
Carbon products for general industries(for electrical applications)Compound materials and other products
Total

1,522

1,686

2,030

2,637

3,336

3,328

3,834

4,787

282

306

344

382

418

464

512

648

613

414

387

616

679

648

947

1,030

1,560
3,978

1,728
4,136

2,789
5,551

3,983
7,620

4,406
8,840

3,865
8,307

3,799
9,094

3,930
10,397iii. Sales performance by product category

4,186

Fiscalyear
total
14,184

4,551(Unit: millions of yen)
Year ended May 31, 2011
Fiscal
2Q
3Q
4Q
year
total
4,681
5,031
5,598 19,863

1,757

2,079

7,057

2,611

2,630

2,983

3,506

11,731

1,495

1,547

1,840

6,190

1,737

1,844

1,810

1,846

7,238

213

235

220

267

936

203

206

237

245

893

537

504

565

663

2,269

625

678

684

741

2,728

884

1,030

970

1,046

3,931

1,128

1,063

955

935

4,082

1,442

1,318

1,456

2,494

6,711

2,423

2,648

2,234

2,427

9,734

1,230
212
163
5,986

1,118
199
292
6,659

1,268
187
206
6,723

2,184
309
164
8,554

5,802
908
827
27,924

2,124
298
325
9,054

2,257
391
287
9,358

1,838
395
270
9,175

2,070
357
265
9,968

8,290
1,443
1,149
37,557

Year ended May 31, 2010
Products

1Q

2Q

3Q

4Q

Special graphite products[Electronics
applications][General industries
applications][Others]
Carbon products forgeneral industries(for mechanicalapplications)
Carbon products forgeneral industries(for electricalapplications)Compound materials andother products[3 major products][Other products]
Related goods
Total

2,958

3,514

3,525

1,437

1,783

1,307

- 38 -

1Q

(2) Overview
Special graphite products
In electronics applications, sales of special graphite products for the manufacture of solar cells rose
dramatically, thanks to the growing trend toward environmentally friendly and energy-saving products,
particularly in the latter half of the fiscal year. Demand sharply expanded in the Asian region, primarily in
China, our mainstay market, and continued to be firm in Japan, Europe and the United States. Current demandremains brisk owing to continued strong motivation for the installation of solar cell manufacturing equipment
among our major customers, especially in China, South Korea and Taiwan. Orders for products for the
manufacture of single crystal silicon were only slightly affected by the earthquake disaster. As a whole, sales
were firm in response to the increase in overseas sales and expansion of the semiconductor market.
Demand for special graphite products for general industries applications remained strong on the whole,primarily due to the increase in overseas demand for our mainstay products for electrical discharge machine(EDM) electrodes and metallurgical applications, in line with the economic recovery. Demand in the domestic
market withstood the impact of the strong yen and other structural problems.
Carbon products for general industries
Overall, sales of carbon products for mechanical applications continued to recover gradually in tandem withthe economic upturn, thanks to our success in meeting reconstruction-related demand and progress incultivating overseas demand. Such sales recovered despite concerns in the domestic market that demand had
peaked out owing to structural issues stemming from the strong yen.
Among carbon products for electrical applications, sales of our core products for small motors intended for
vacuum cleaners and electric power tools were generally firm until the first half of this fiscal year. However, wefaced such obstacles as a slowdown in Chinese demand, stiffer price competition and the effects of the stronger
yen during the second half of the fiscal year. Sales of carbon products for cars, such as fuel pumps, leveled off
owing partly to the repercussions of a decline in domestic auto output.
Compound materials and other products
Orders for SiC (silicon carbide)-coated graphite products sharply increased mainly in the first half of the
fiscal year, bolstered by the high growth in sales of LED-related products primarily in Asia and an upturn insales of semiconductor-related products. Among such graphite products, demand for LED-related products hasentered into a temporary adjustment phase in the latter half of the fiscal year in reaction to the steep rise in thefirst half, but it has clearly recovered now in response to the energy-saving trend.
Orders for C/C composite products had expanded significantly partly as a result of the steady increase indemand for C/C crucibles for the manufacture of single crystal silicon, due in part to the expansion of ourcustomer base. The dramatic increase also stemmed from new orders for products for the manufacture of solar
cells and orders for products for nuclear fusion reactors and other large projects.
Orders for graphite sheet products, chiefly for semiconductor and solar cell-related applications, remained
brisk, while some orders for automobiles were stagnant.

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