Translation

Member of the Financial Accounting Standards Foundation

October 11, 2012

Consolidated Financial Results for the Three Months Ended August 31, 2012
[Japanese GAAP]
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
Akira Noami, President
Toshimi Boki, Executive Officer, General Manager,
Finance and Accounting Department
81-6-6451-2114 (from overseas)

TEL:
Scheduled date for submissionof quarterly report:
Scheduled date for dividend payment:
Supplementary materials for quarterly
financial summaries:
Quarterly financial results briefing:

October 12, 2012NoNo

1. Consolidated financial results for the three months ended August 31, 2012
(From June 1, 2012 to August 31, 2012)(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%%

Three months ended
7,509 (31.6)
August 31, 2012
Three months ended
10,97621.2
August 31, 2011
Note:
Comprehensive income:Three months ended August 31, 2012
Three months ended August 31, 2011
Net income per share

Three months ended
August 31, 2012
Three months ended
August 31, 2011

Net income
%

%

751

(70.9)

690(72.3)

403(76.5)

2,583

56.0

2,493

74.8

1,712

59.5

(84) million yen (-%)
1,573 million yen (up 160.4%)

Diluted net income
per share

yen

yen

19.45

-

82.60

-

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

EquityEquity ratio%

As of August 31, 2012

70,53054,46275.1

As of May 31, 2012

71,90055,06474.4

Reference: Shareholders’ equity
August 31, 2012
May 31, 2012

52,947 million yen
53,505 million yen

2. Dividends
Dividends per share (yen)First quarter-end

Second quarter-end Third quarter-end-

Year ended May 31, 2012-

Year-end-

Year ending May 31, 2013

(Actual)Year ending May 31, 2013
(Forecast)(Note) Revisions of projected dividends most recently announced: None

Total (Full year)

25.00

-

-

-

25.00
-

25.00

25.00

3. Consolidated results forecast for the fiscal year ending May 31, 2013
(From June 1, 2012 to May 31, 2013)(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%Interim period(cumulative)
Full year

%

%

%

yen

500 (79.0)

24.11

14,000(35.0)

900(79.6)

800(81.7)

-

-

-

-

-

-

-

-

-

(Note) Revisions of consolidated forecasts most recently announced: Yes
The consolidated forecasts for the second quarter (cumulative) and for the full financial year have been revised on October 11, 2012.
For details, please refer to the “Notice Concerning the Revision of Consolidated Forecast,” issued on October 11, 2012.

* Others(1) Changes in significant subsidiaries during the quarter under review: None
(Changes in specified subsidiaries accompanying changes in scope of consolidation)
New subsidiaries: ___ (name of company(ies))
Excluded subsidiaries: ___ (name of company(ies))(2) Adoption of specific accounting methods for the preparation of quarterly consolidated financial
statements: Yes(Note) For details, please refer to “Adoption of specific accounting methods for the preparation ofquarterly consolidated financial statements” on Page 3 (attached materials)(3) Changes in accounting policies and accounting estimates and restatements
i. Changes in accounting policies due to revisions of accounting standards, etc.: None
ii. Changes in accounting policies other than 1): Yesiii. Changes in accounting estimates: Yes
iv. Restatements: None
(Note) This is considered a “change in accounting policy that is difficult to distinguish from a changein accounting estimates.” For details, please refer to “Changes in accounting policies andaccounting estimates and restatements” on Page 3 (attached materials)(4) Number of shares outstanding (common stock)i. Number of shares outstanding and issued at the end of period (including treasury stock)
As of August 31, 2012
20,750,688 shares
As of May 31, 2012
20,750,688 shares
ii. Number of treasury stock at the end of period
As of August 31, 2012
16,365 shares
As of May 31, 2012
16,365 sharesiii. Average number of shares during the period (quarterly cumulative total)
First quarter ended August 31, 2012
20,734,323 sharesFirst quarter ended August 31, 2011
20,734,423 shares* Implementation status of quarterly review proceduresThis quarterly financial results report is not subject to the quarterly review procedures stipulated by the
Financial Instruments and Exchange Act. The review of quarterly consolidated financial statements has
been completed at the time of release of this report.
* Disclaimer regarding appropriate use of forecasts and related points of note
Forward-looking statements such as the earnings forecasts in this material are based on currently available
information and certain assumptions deemed rational, and are not intended as a guarantee that these
forecasts will be achieved. Accordingly, actual results may differ significantly from these forecasts due tovarious factors. For more information on the preconditions of the forecasts and on precautionary notes
concerning the usage of these forecasts, please refer to “Qualitative Information Regarding Consolidated
Results Forecast” on page 3 of the Attached Documents.

○Attached Documents
1. Qualitative Information Regarding Consolidated Results for the Quarter under Review ·········· 2(1) Qualitative Information Regarding Consolidated Operating Results ······························· 2(2) Qualitative Information Regarding Consolidated Financial Position ······························· 2(3) Qualitative Information Regarding Consolidated Results Forecast·································· 3
2. Items Regarding Summary Information (Others)··························································· 3(1) Changes in significant subsidiaries during the quarter period under review ······················ 3(2) Adoption of specific accounting methods for the preparation of quarterly
consolidated financial statements ··········································································· 3(3) Changes in accounting policies and accounting estimates and restatements ······················· 3
3. Key Event Regarding the Premise of a Going Concern ···················································· 3
4. Quarterly Consolidated Financial Statements ······························································· 4(1) Quarterly consolidated balance sheets ····································································· 4(2) Quarterly consolidated statement of income and quarterly consolidated
statement of comprehensive income ········································································ 6
Quarterly consolidated statements of income ···························································· 6
Quarterly consolidated statement of comprehensive income ·········································· 7(3) Notes regarding the premise of a going concern ························································· 8(4) Notes if the amount of shareholders’ equity has changed significantly ······························ 8(5) Segment information ·························································································· 8
5. Supplementary Information ···················································································· 10(1) Orders and sales by product category ···································································· 10(2) Overview········································································································ 11

11. Qualitative Information Regarding Consolidated Results for the Quarter under Review(1) Qualitative Information Regarding Consolidated Operating Results
During the first quarter of the fiscal year under review, there were more signs of a slowdown overall in the
global economy as a result of Europe’s faltering economy, badly shaken by its debt crisis, and sluggish
growth in China and other emerging countries. The Japanese economy continued to pick up on the back of arecovery in manufacturing activity and reconstruction-related demand, but this recovery is increasingly
threatened by prolonged yen appreciation and a slowdown in the global economy.
Amid these circumstances, the Toyo Tanso Group struggled as a result of the sustained decline in the solar
cell market in particular, but the Group focused on generating earnings by stimulating demand in relatively
solid sectors and regional sectors, as well as refining its current production system.
As a result, the Group’s business performance during the first quarter under review for net sales totaled
7,509 million yen (down 31.6% from the same term in the previous year), operating profit 751 million yen(down 70.9%), and recurring profit 690 million yen (down 72.3%). Net income for the quarter was 403
million yen (down 76.5%).

The overall performance of each business segment was as follows. (Please refer to “5. Supplementary
Information” for an overview of each product category.)Japan
Products for the general industrial sector continued to achieve solid results, thanks to the recovery in theJapanese economy, but products for solar cell and semiconductor applications were sluggish and exports
failed to pick up and earnings fell overall. As a result, net sales for the quarter in Japan were 4,032 million
yen and operating profit was 401 million yen.
United States
Sales of electronics-related products for compound semiconductor and solar cell applications plummeted,and metallurgical applications, a solid performer, could not cover this decline, leading to a heavy decline. As
a result, sales totaled 563 million yen while operating loss came to 78 million yen.
EuropeAlthough some industrial furnace-related products had a good showing, growth fell, particularly in solar
cell applications and products for small motors, as a result of the slowdown in Europe. The strong yen also
ate into earnings, and as a result sales amounted to 672 million yen and operating profit totaled 81 million
yen.
Asia
Metallurgical applications remained a solid performer, but there were no signs of a recovery in solar cellapplications, which has recorded a sharp decline in sales since the third quarter of the previous fiscal year
after driving overall earnings. As a result, growth remained sluggish in the first quarter as well. Net sales forthe quarter in Asia were 2,242 million yen and operating profit was 261 million yen.
(2) Qualitative Information Regarding Consolidated Financial Position
Total assets as of August 31, 2012 decreased by 1,369 million yen from the end of the previous
consolidated fiscal year. This was primarily because cash on hand in banks decreased 1,420 million yen as aresult of spending for the acquisition of tangible fixed assets and trade notes and accounts receivable
decreased 1,306 million yen due to a decline in sales. This surpassed the 958 million yen increase in tangible
fixed assets resulting from the acquisition of manufacturing equipment for the Takuma Division’s production
facility and the 551 million yen increase in inventories through the systematic accumulation of intermediatestock and customers’ inventory adjustments.
Total liabilities decreased by 767 million yen from the end of the previous consolidated fiscal year. Thiscan be attributed primarily to a 259 million yen decrease in trade notes and accounts payable due to a
reduction in raw material procurement and a 525 million yen decrease in income tax payable. This exceeded
the 739 million yen increase in interest-bearing debt.
Total equity decreased by 602 million yen from the end of the previous consolidated fiscal year. This was2primarily due a 445 million yen decrease in foreign currency translation adjustments.
(3) Qualitative Information Regarding Consolidated Results Forecast
The Group has recently been affected by the unexpectedly persistent global slump, which also
encompasses China, one of our main solar cell markets. In addition, the market for LED applications, which
was expected to recover in stages, will continue to correct for some time to come. We do not anticipate arecovery in the near term in either of these areas.
Given these conditions, we will endeavor to attract demand primarily in the relatively robust generalindustrial application sector and will focus on reducing fixed costs. However, we have determined that weare unlikely to meet our initial forecasts, given earnings in the first quarter of this fiscal year and taking into
account the fact that the earnings of our Chinese subsidiary, which has a significant impact on the Group’s
earnings, are almost finalized due to the timing of its fiscal year. Accordingly, we have revised our forecasts
for the first half of the current fiscal year.
Net sales

Operating profit

Recurring profit

Net income

Net income
per share(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Yen)

Previous Forecast (A)(announced on July 13,
2012)

17,000

1,900

1,800

1,100

53.05

Revised Forecast (B)14,000

900

800

500

24.11

Change (B – A)

（3,000）（1,000）（1,000）（600）

Percentage Change（%）（17.6）（52.6）（55.6）（54.5）(Reference) Results forthe six months ended
November 30, 2011

21,535

4,411

4,363

2,383

114.98We plan to release our consolidated earnings forecasts for the full year when we release our first-halfearnings, after carefully reviewing conditions, including the increasingly uncertain outlook for solar cell and
LED applications and the fact that we are reaching a point at which we will have to consider adjustingproduction of isotropic graphite materials.
Please refer to the “Notice of Revisions to Earnings Forecasts,” to be released today, for further details.
2. Items Regarding Summary Information (Others)(1) Changes in significant subsidiaries during the quarter period under review
None(2) Adoption of specific accounting methods for the preparation of quarterly consolidated financial statements
Tax expense calculation
Tax expenses are calculated by multiplying profit before income taxes by an effective tax rate, which isreasonably estimated by applying tax effect accounting to estimated profit before income taxes for the
fiscal year including the first quarter under review.
(3) Changes in accounting policies and accounting estimates and restatements
Changes in accounting policies
Changes in depreciation method
Toyo Tanso and its Japanese subsidiaries have changed their depreciation method for tangible fixed
assets from the fixed rate method to the straight-line method from the fiscal year beginning on June 1,
2012.
This change was motivated by the changes in the structure of Toyo Tanso’s production system with thestart of operations at the No. 3 plant built at the Takuma Division, a state-of-the-art mass-production plant.
Since this plant began operating, optimum allocation at each plant achieved by categorizing according to
product type has leveled out the equipment load, creating a system that enables stable production of all
3

products.
As a result of the change in the structure of the production system, we determined that using thestraight-line method as the depreciation method for tangible fixed assets, primarily manufacturing
equipment, would most accurately reflect the stable use of the tangible fixed assets over their useful life
and the consumption of the equalized economic benefits.
This change will increase operating profit by 92 million yen in the first quarter and ordinary profit andnet income before taxes by 113 million yen each.
3. Key Event Regarding the Premise of a Going Concern
None44. Quarterly Consolidated Financial Statements(1) Quarterly consolidated balance sheets
Previous consolidated
fiscal year
As of May 31, 2012
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 (Net)
Machinery, equipment, and vehicles (Net)Land
Construction in progress
Other (Net)
Total tangible fixed assets
Intangible fixed assets
Investments and other assets
Total fixed assets
Total assets

5(Thousands of yen, rounded down)First quarterly consolidated
fiscal year
As of August 31, 2012
Amount9,136,958
13,124,833
7,315,218
6,351,260
2,022,085
1,741,555(133,107)
39,558,803

7,716,105
11,818,623
7,809,886
6,453,798
1,976,075
1,513,990(109,721)
37,178,757

8,692,597
11,833,591
5,739,970
2,162,921
781,248
29,210,330
894,851
2,236,733
32,341,914
71,900,718

8,573,914
12,755,592
5,723,362
2,281,031
834,849
30,168,750
949,9212,233,358
33,352,029
70,530,787

Previous consolidated
fiscal year
As of May 31, 2012
AmountLiabilities
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
Asset retirement obligations
Other
Total long-term liabilities
Total liabilities
EquityShareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock - at cost
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains (losses) on available-for-sale securities
Foreign currency translation adjustments
Total accumulated other comprehensive income
Share warrants
Minority interests
Total equity
Total liabilities and equity

6(Thousands of yen, rounded down)First quarterly consolidated
fiscal year
As of August 31, 2012
Amount2,328,985
2,267,846
6,159,317
867,101
921,492

2,069,837
1,906,123
6,274,298
342,064
533,71467,420-2,117,588
14,729,751

1,713,645
12,839,683

470,349
602,502
270,946762,219
2,106,018
16,835,770

1,571,422
633,086
271,943
752,447
3,228,900
16,068,583

7,692,575
9,534,686
38,179,893(57,934)
55,349,222

7,692,575
9,534,686
38,064,858(57,934)
55,234,186

5,156(1,848,932)(1,843,775)
27,9001,531,602
55,064,948
71,900,718

7,833(2,294,884)(2,287,050)
27,9001,487,167
54,462,203
70,530,787

(2) Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive income(Quarterly consolidated statements of income)Three months ended August 31, 2012
(Thousands of yen, rounded down)
Three months ended
August 31, 2011
Amount10,976,093
6,888,301
4,087,792
1,503,935
2,583,856

Three months ended
August 31, 2012
Amount7,509,940
5,236,635
2,273,304
1,522,281
751,0228,819
118,013
126,833

8,282
18,95927,241

198,429
18,862
217,291
2,493,398

33,76654,21987,986690,278

67,05067,050

-

748
4,818
5,566

2,149
2,149

Profit before income taxes

2,554,882

688,128

Income taxes
Income before minority interests
Minority interests
Net income

703,582
1,851,300
138,588
1,712,712

258,680
429,447
26,125403,322Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Other
Total non-operating income
Non-operating expenses
Foreign exchange losses
Other
Total non-operating expenses
Recurring profit
Extraordinary profit
Gain on sale of fixed assets
Total extraordinary profit
Extraordinary losses
Loss on sale of fixed assets
Loss on disposal of fixed assets
Total extraordinary losses

7

(Quarterly consolidated statement of comprehensive income)Three months ended August 31, 2012
(Thousands of yen, rounded down)
Three months ended
August 31, 2011
AmountIncome before minority interests
Other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to parent company
shareholders
Comprehensive income attributable to minority interests

8

Three months ended
August 31, 2012
Amount

1,851,300

429,447

7,730

2,676

(285,485)(277,754)
1,573,546(516,510)(513,834)(84,386)

1,451,515
122,030(39,952)(44,434)

(3) Notes regarding the premise of a going concern
Not applicable.
(4) Notes if the amount of shareholders’ equity has changed significantly
Not applicable.

(5) Segment information
I. Three months ended August 31, 2011 (From June 1, 2011 to August 31, 2011)
1. Information on net sales and the amount of profits per reportable segment(Thousands of yen, rounded down)Amountrecorded intheconsolidated
quarterly
incomestatement(Note) 2

Reportable segments
Adjusted
amount(Note) 1

Japan

UnitedStatesEurope

Asia

Total

(1) Sales to unaffiliated customers

5,301,076

744,218

804,949

4,125,849

10,976,093-(2) Intersegment sales or transfers

2,434,864

110,814489

19,6302,565,798(2,565,798)

-

Total

7,735,940

855,032

805,439

4,145,479

13,541,892(2,565,798)

10,976,093

1,268,915

31,966132,671

1,110,586

2,544,140

39,716

2,583,856

Sales

Segment profit

10,976,093(Notes) 1. Adjusted segment profit mainly takes into account the elimination of intersegment transactions and unrealized income.
2. Segment profit has been adjusted to reflect the operating profit recorded in the consolidated quarterly statement ofincome.

2. Regional information(Thousands of yen, rounded down)
Asia
Japan

Sales
Composition (%)

North
America

Europe4,009,861

729,865922,739

Asia(including
China)
5,269,856

36.5

6.7

8.4

48.0

China only

Rest of
world

Total

3,984,786

43,77010,976,093

36.3

0.4

100.0

(Notes) 1. Sales are based on the locations of our customers, and are categorized into the relevant country or region segment
according to geographical 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, South Korea

9II. First quarter under review (from June 1, 2012 to August 31, 2012)

1. Information on net sales and the amount of profits and losses per reportable segment(Thousands of yen, rounded down)Amountrecorded intheconsolidated
quarterly
incomestatement(Note) 2

Reportable segments
Adjusted
amount(Note) 1

Japan

UnitedStatesEurope(1) Sales to unaffiliated customers

4,032,224

563,648

672,028

2,242,038

7,509,940-

7,509,940(2) Intersegment sales or transfers

1,578,126

8,662

47

17,0191,603,855(1,603,855)

-

Total

5,610,351

572,310672,076

2,259,057

9,113,795(1,603,855)

7,509,940

Segment profit (or loss)

401,070(78,665)

81,554

261,307665,266

85,756751,022

Asia

Total

Sales

(Notes) 1. Adjusted segment profit (or loss) mainly takes into account the elimination of intersegment transactions and unrealized
income.
2. Segment profit (or loss) has been adjusted to reflect the operating profit recorded in the consolidated quarterly statementof income.
3. Changes in Reportable Segments(Changes to depreciation method)
As noted in “Changes to Accounting Policy,” Toyo Tanso and its Japanese subsidiaries have changed its depreciation
method for tangible fixed assets from the fixed rate method to the straight-line method from the fiscal year beginning on
June 1, 2012.
As a result, profits for segments in Japan increased 110,190 thousand yen and the “adjusted amount” for segment profits
decreased 17,790 thousand yen in the first quarter of the current fiscal year.

2. Regional information(Thousands of yen, rounded down)
Asia
Japan

Sales
Composition (%)

North
America

Europe3,206,515

565,696

712,517

Asia(including
China)
2,974,825

42.7

7.5

9.5

39.6

China only

Rest of
world

Total

2,153,189

50,385

7,509,940

28.7

0.7

100.0

(Notes) 1. Sales are based on the locations of our customers, and are categorized into the relevant country or region segment
according to geographical 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, South Korea

105. Supplementary Information(1) Orders and sales by product categoryi.

Orders

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

1Q
6,154

(Unit: millions of yen)
Year ending
Year ended May 31, 2012
May 31, 2013
Fiscal year
2Q
3Q
4Q
1Q
total
5,440
3,265
3,261
18,121
2,577

860

740

726

736

3,063

677

1,085

821

1,072

984

3,963

883

2,121
10,221

1,880
8,882

1,749
6,813

1,561
6,544

7,312
32,460

1,635
5,774

ii. Outstanding orders
Year ended May 31, 2012
Products
Special graphite products
Carbon products for general industries(for mechanical applications)
Carbon products for general industries(for electrical applications)Compound materials and other products
Total(Unit: millions of yen)
Year ending
May 31, 2013
4Q
1Q
2,879
1,944

1Q
4,956

2Q
4,494

3Q
3,712

748

731

706

623

572

1,128

1,017

1,176

1,159

1,172

3,508
10,342

3,055
9,299

2,612
8,208

2,009
6,672

1,832
5,521

iii. Sales performance by product category

5,972(Unit: millions of yen)
Year ending
Year ended May 31, 2012
May 31, 2013
Fiscal year
2Q
3Q
4Q
1Q
total
5,795
4,173
4,400
20,341
3,628[Electronics applications]

3,649

3,565

1,855

2,074

11,144

1,508[General industries applications]

2,035

1,946

1,972

1,993

7,947

1,814

[Others]
Carbon products for general industries(for mechanical applications)
Carbon products for general industries(for electrical applications)Compound materials and other products[3 major products][Other products]
Related goods
Total

287

283

346

332

1,249

305

793

796

785

848

3,223

783

1,012

959

953

919

3,845

949

2,961
2,600
361
235
10,976

2,785
2,437
348
222
10,559

2,401
1,977
424
223
8,538

2,274
1,933
341
198
8,640

10,423
8,948
1,475
879
38,714

1,963
1,691
272
183
7,509

Products
Special graphite products

1Q

11

(2) Overview
Special graphite products
In electronics applications, growth remained sluggish for products for solar cells, which entered a major
adjustment phase from the third quarter of the previous fiscal year, and lower prices also had an impact.
These factors weighed heavily on overall performance. Moreover, products for the manufacture of single
crystal silicon continued to flag, reflecting the faltering semiconductor industry.
General industrial applications were solid performers, particularly products for electrical dischargemachines (EDM) electrodes and continuous casting, due to the strong automotive sector on the back of theJapanese economic recovery and growth in emerging economies.
Carbon products for general industries
Sales of carbon products for mechanical applications expanded, thanks largely to increased demand forsuch products as bearings and seals partly bolstered by the economic upturn as well as our progress inmeeting reconstruction-related demand.
Among carbon products for electrical applications, sales of products for small motors intended for
vacuum cleaners and electric power tools leveled off owing to intensified competition mainly in China,
our core market, and the effect of the stronger yen.
Compound materials and other products
Orders for SiC (silicon carbide)-coated graphite products leveled off as a whole, primarily because ourmainstay LED products are still in the midst of an adjustment, and demand for semiconductor products
continues to fluctuate. Orders for C/C composite products fell sharply due to sluggish demand for solar
cell products and a drop-off in large projects, which cancelled out strong demand for industrial furnace
products. Orders for graphite sheet products remained solid overall, despite a decline in electronics-related
products, due to a boost from mainstay automotive applications.

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