Translation

Member of the Financial Accounting Standards Foundation

October 15, 2009

Consolidated Financial Results
for the Three Months Ended August 31, 2009
Listed company name:
Stock exchange listing:Stock code:
Location of headquarters:
Website:Representative:
Contact:

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

TEL:
Scheduled date for submissionof quarterly report:
Schedule date for dividend payment:

October 15, 2009-

1. Consolidated financial results for the three months ended August 31, 2009
(From June 1, 2009 to August 31, 2009)(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
August 31, 2009
Three months ended
August 31, 2008

%

%

%

429 (77.0)

150 (87.6)

5,986(31.7)

481(73.4)

8,762

-

1,812

-

Net income per share

Three months ended
August 31, 2009
Three months ended
August 31, 2008

(2) Financial position

Net income

1,871

-

1,212

Diluted net income
per share

yen

yen

7.28

-

58.50

-

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

EquityEquity ratio

Equity per share%yen

As of August 31, 2009

58,68948,07380.0

2,264.05

As of May 31, 2009

58,821

48,60680.6

2,286.27

Reference: Shareholders’ equity
August 31, 2009
May 31, 2009

46,943 million yen
47,404 million yen

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

Year ended May 31, 2009

Second quarter
Third quarter end
end
0.00
-

Year ending May 31, 2010

(Actual)Year ending May 31, 2010
0.00
(Forecast)
Note: Revision of projected dividends in the quarter under review: None

Year-end

Total (Full year)

20.00

-

20.00
-

-

20.00

20.00

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

Net sales

Operating profit%

Interim period

12,000(33.3)

Full year

28,000(9.6)(Millions of yen)
Percentages indicate changes on a year-on-year basis.
Net income
Recurring profit
Net income
per share

%
700

%

%

yen

(83.1)

600(84.0)

350(85.3)

16.88

2,500 (47.3)

2,500(44.2)

1,500(41.6)

72.34

Note: Revision of consolidated results forecast in the quarter under review: Yes
In light of trends in the external environment, we plan to revise the consolidated results forecast for the full year when reporting the second
quarter accounts settlement.

4. Others(1) Changes in significant subsidiaries during the period(changes in specified subsidiaries accompanying changes in scope of consolidation): None
(2) Adoption of simple accounting methods and accounting methods specific to the preparation ofquarterly consolidated financial statements: Yes
Note: For details, please refer to ‘4. Others’ in Qualitative Information and Financial Statements on page6.
(3) Changes in accounting policies, procedures, and methods of presentation for preparing theconsolidated quarterly financial statements(those to be described in the section Changes in Significant Items That Form the Basis of Preparations for
Consolidated Quarterly Financial Statements)
i. Changes due to amendment of accounting standards: None
ii. Changes due to other reasons: None
(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, 2009
20,750,688 shares
As of May 31, 2009
20,750,688 shares
ii. Number of treasury stock at the end of period
As of August 31, 2009
16,165 shares
As of May 31, 2009
16,115 sharesiii. Average number of shares during the period (quarter)
First quarter ended August 31, 2009
20,734,543 sharesFirst quarter ended August 31, 2008
20,735,140 shares

2

* Disclaimer regarding appropriate use of forecasts and related points of note
The results forecast has been prepared based on information that was available on the date of release ofthis document. Actual results may differ from the forecast depending on various factors. For further
information on the results forecast, please refer to ‘3. Qualitative Information Regarding Consolidated
Results Forecast’ in Qualitative Information and Financial Statements on page 5.

3

[Qualitative Information and Financial Statements]
1. Qualitative Information Regarding Consolidated Operating Results
During the first quarter under review, despite a pickup in some parts of the global economy,
particularly in Asian countries such as China, thanks to the effects of economic stimulus policies
around the world and progress in stock inventory adjustments, weak global economy conditions havecontinued since the autumn of last year and overall conditions were sluggish. For the Japanese
economy, despite a bottoming out in exports and production, difficult conditions have continued.
Under these circumstances, the Toyo Tanso Group has focused its efforts on stimulating demand,
particularly in the environment and energy fields, at the same time as promoting self-supporting
efforts such as reductions in costs and expenses and investment restrictions. However, underlying
conditions have continued to be challenging.
As a result of the above performance, as well as the impact of slow demand in all fields and theimpact of efforts to cut costs and expenses, consolidated sales in the first quarter under review fell
31.7% year on year to 5,986 million yen. Operating profit fell 73.4% to 481 million yen, recurring
profit fell 77.0% to 429 million yen, and net income dropped 87.6% to 150 million yen.
The table below shows sales by product category in the three months under review.
Products
Special graphite products
Carbon products for generalindustries(for mechanical applications)
Carbon products for generalindustries(for electrical applications)Compound materials andother products
Related goods
Total

Three months ended
August 31, 2008
(thousand yen)
4,561,752

Three months ended
August 31, 2009
(thousand yen)
2,958,190

732,929

537,477(26.7)

1,198,225

884,141(26.2)

2,075,334

1,442,953(30.5)

193,845

163,600(15.6)

8,762,088

5,986,362(31.7)

Year on year (%)(35.2)

Special graphite products
In the electronics sector, despite a battling performance from products used in compound
semiconductors, mainly LED products, weak conditions continued for products used in theprocessing of single crystal silicon (centered on 300-mm wafers), because customer's inventory
adjustment was prolonged. Furthermore, demand for products used in the production of solar cells
shrank further as a result of weak market conditions in the Chinese and European markets, making
an overall slowdown inevitable. In the general industries sector, despite continued weak conditionsin products used for electrical discharge machining (EDM) electrodes (a mainstay field) andmetallurgical products, there was a very small increase in demand as a result of a bottoming out of
economic conditions.
Carbon products for general industries
Weak conditions continued for carbon products for mechanical applications and electricalapplications as a result of the global economic slowdown, but signs of a recovery were seen in thelatter half of the period in carbon products for electrical applications, particularly in the Chinese
market.

4

Compound materials and other products
Despite an expansion both within Japan and overseas in products used in compound
semiconductors, there was a weak performance in both mainstay products used in the manufacture ofsemi-conductors and in solar cells, making a weak performance by SiC (silicon carbide)-coatedgraphite products and C/C composite products inevitable. There was an increase in demand forgraphite sheet products as a result of a recovery in products for use in automobiles.

2. Qualitative Information Regarding Consolidated Financial Position
Total assets as of August 31, 2009 decreased by 131 million yen from the end of the previous
fiscal year. This was caused by a decrease in cash on hand and in banks of 1,810 million yen due tothe acquisition of tangible and intangible fixed assets and a decrease of 390 million yen in notes andaccounts receivable-trade due to falling sales, despite an increase in inventory assets of 979 million
yen resulting from systematic transshipments of intermediate stock, an increase of 549 million yen intangible fixed assets resulting from capital investments on upgrades and improvements, and anincrease in intangible fixed assets of 443 million yen resulting from new land acquisition in
Shanghai, China (land lease rights).
Total liabilities rose 402 million yen from the end of the previous fiscal year. This came largely
as a result of an increase in notes and account payable-equipment of 308 million yen.
Equity fell 533 million yen from the end of the previous fiscal year. This was caused by
dividend payments of 414 million yen, etc.
3. Qualitative Information Regarding Consolidated Results Forecast
Regarding the future economic environment, despite signs of a gentle recovery in underlying
conditions both in Japan and overseas, we have not seen a real recovery backed up by capital
expenditure and personal consumption, and the focus is gradually turning towards the sustainabilityof the recovery, as well as causes of instability such as employment conditions, crude oil prices andexchange rates, and fears that the effects of economic stimulus measures are beginning to run out ofsteam.
The environment surrounding the Toyo Tanso Group has seen a gradual if weak recovery inunderlying demand, and in the light of performance in the first quarter we have revised as follows
our forecast for the consolidated results for the interim period of the fiscal year as announced on July
15, 2009.
We plan to revise the consolidated results forecast for the full year when reporting the interim
accounts because of current uncertainty about future conditions including economic trends both at
the company and in the economy at large.
Revision to consolidated results forecast for interim period (June 1, 2009 – November 30, 2009)
Sales

Previously announced forecast (A)Current revised forecast (B)Change – amount (B-A)
Change (%)(Reference)
Performance in first half of previous
fiscal year
(June 1, 2008 – November 30, 2008)

OperatingprofitRecurringprofit12,00012,000
-

300
700
400
133.3

300
600
300
100.0

17,979

4,154

3,754

5

(Millions of yen)
Quarterly net Quarterly net
incomeincome per
share
yen
50
2.41
350
16.88
300
600.0
2,379

114.76

4. Others(1) Changes in significant subsidiaries during the period(changes in specified subsidiaries accompanying changes in scope of consolidation)
None(2) Adoption of simple accounting methods and accounting methods specific to the
preparation of quarterly consolidated financial statements(i) Inventory valuation method
In calculating inventory at the end of the first quarter under review, the Company has
omitted physical stocktaking and has calculated inventory in a reasonable manner based on
the physical inventory at the end of the previous fiscal year.
(ii) Tax expense calculation
Tax expenses are calculated by multiplying profit before income taxes by an effective tax
rate, which is reasonably estimated by applying tax effect accounting to estimated profit
before income taxes for the fiscal year including the first quarter under review.
The income taxes-deferred is included in income taxes.
(3) Changes in accounting policies, procedures, and methods of presentation for preparing
the consolidated quarterly financial statements
None65. Consolidated Quarterly Financial Statements(1) Consolidated quarterly balance sheets(Thousands of yen, rounded down)
As of August 31, 2009

As of May 31, 2009

AmountAmountAssetsCurrent 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

7

12,225,114
7,867,160
5,405,765
3,858,974
1,235,169
2,039,375(136,987)
32,494,574

14,035,952
8,257,709
4,747,244
3,476,873
1,296,308
1,980,337(185,780)
33,608,646

6,000,778

6,126,730

8,880,831

8,589,139

5,350,075
3,059,905
466,134
23,757,725
822,876
1,614,273
26,194,875
58,689,449

5,353,520
2,699,487
439,463
23,208,341
379,167
1,624,906
25,212,415
58,821,061

(Thousands of yen, rounded down)
As of August 31, 2009

As of May 31, 2009

AmountAmountLiabilities
Current liabilities
Trade notes and accounts payable
Short-term borrowings
Accrued amount payable
Income taxes payable
Reserve for employees’ bonuses
Reserve for directors’ and corporate
auditors’ bonuses
Other
Total current liabilities
Long-term liabilities
Long-term borrowings
Reserve for employees’ retirement
benefits
Other
Total long-term liabilities
Total liabilities
EquitySareholders’ Equity
Common Stock
Capital surplus
Retained earnings
Treasury stock - at cost
Unrealized gains (losses) on
available-for-sale securities
Foreign currency translation adjustments
Total shareholders’ equity
Minority interests
Total equity
Total liabilities and equity

8

2,117,432
900,050
3,331,389
178,064
403,155

1,725,878
1,323,950
3,420,334
290,192
756,470-

35,8401,910,594
8,840,686

1,595,887
9,148,554

480,338

70,740393,910

329,736

901,462
1,775,711
10,616,397

665,184
1,065,661
10,214,216

7,692,575
9,534,686
30,593,057(57,172)

7,692,575
9,534,686
30,856,790(56,997)

15,529984(834,684)
46,943,992(623,226)
47,404,814

1,129,059
48,073,051
58,689,449

1,202,030
48,606,845
58,821,061

(2) Consolidated quarterly statements of income
Three months ended August 31, 2009
(Thousands of yen, rounded down)
Three months ended August Three months ended August
31, 2008
31, 2009
AmountAmount
8,762,088
5,986,362
5,394,052
4,176,204
3,368,036
1,810,158
1,555,945
1,328,527
1,812,090
481,630

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

34,384
5,947
79,74415,302
135,379

14,982
15,05225,073
15,38770,496

10,24939,21422,7494,011
76,224
1,871,244

5,337
95,665
3,933
17,270122,207429,919

680
680

689
45,396
18,93065,016

1,213
2,565
3,779

283
2,260
2,543

Profit before income taxes

1,868,146

492,392

Income taxes
Minority interests
Net income

547,056
108,146
1,212,942

314,329
27,105150,9579

(3) Consolidated quarterly statements of cash flows(Thousands of yen, rounded down)

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Increase (decrease) in reserve for employees’ retirement benefits
Increase (decrease) in reserve for employees’ bonuses
Increase (decrease) in reserve for directors’ bonuses
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Foreign exchange loss (gain)
Valuation loss (gain) on investment securities
Gain on sale of tangible fixed assets
Loss on disposal and sale of tangible fixed assets
Decrease (increase) in notes and accounts receivable - trade
Decrease (Increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Other

Three months ended August
31, 2008
AmountThree months ended August
31, 2009
Amount

1,868,146
753,234
2,726
36,510492,392
773,363
2,726
60,768(336,412)(38,882)(9,512)(40,332)
10,249(79,744)
39,214(680)
3,779
186,373(879,793)
476,138
315,475(352,882)(35,840)(71,950)(30,034)
5,337
95,665
3,933
(689)
2,543
352,916(1,054,085)
442,931(165,376)

Sub-total

2,306,488

521,719

Interest and dividend received
Interest paid
Income taxes paid

40,332(8,839)(962,858)

37,928(3,331)(299,560)

Net cash provided by operating activities

1,375,122

256,756

Cash flows from investing activities
Payments for time deposits
Proceeds from time deposits
Payments for acquisition of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payments for acquisition of intangible fixed assets
Other
Net cash used in investing activities(4,333,661)
830,058(592,075)
1,001(19,001)
15,950(4,097,728)(3,737,507)
4,391,203(1,127,493)
780(472,600)
11,365(934,252)

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

276,954(119,517)(1,259)(1,914)(311,028)(22,196)(385,354)
427,500(56,461)
(554)
(175)
(327,969)(83,468)

Net cash provided by (used in) financing activities(178,963)(426,483)

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

146,892(2,754,675)
10,491,890
7,737,214(50,100)(1,154,080)
6,412,364
5,258,283

10

(4) Notes regarding the premise of a going concern
Not applicable.
(5) Segment information
a. Business Segment Information
From June 1, 2008 to August 31, 2008, and from June 1, 2009 to August 31, 2009
Business segment information has been omitted because the entire business of the Company and its
subsidiaries falls under the single business category of carbon product related business.
b. Geographic Segment Information(From June 1, 2008 to August 31, 2008)(Thousands of yen, rounded down)
Japan

North
America

EuropeAsia(1) Sales to unaffiliated customers

4,675,938

871,993855,759

2,358,397(2) Intersegment sales or transfers

1,364,089

38,042

2,750

42,655

Total

6,040,028

910,035

858,5102,401,053

852,997

125,541

119,573

756,989

Corporateand Elim.

Consolidated

8,762,088-

8,762,088

1,447,538(1,447,538)-

10,209,627(1,447,538)

8,762,088

1,855,102(43,011)

1,812,090

Total

Sales

Operating Profit(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. The major countries or regions included in each geographic segment (except Japan) are listed below.
(1) North America: United States(2) Europe: France, Germany, Italy(3) Asia: China, Taiwan
3. Change in method of translating the revenues and expenses of foreign subsidiaries
The revenue and expenditure of foreign subsidiaries were previously converted into yen based on the spot exchange
rate on the closing date. However, commencing the first quarter under review, they are converted into yen based on
the average exchange rate for the period. As a result of the change, net sales fell 13,942 thousand yen in North
America, rose 8,408 thousand yen in Europe, and declined 72,853 thousand yen in Asia. Operating profit dropped
1,923 thousand yen in North America, increased 2,536 thousand yen in Europe, and slipped 23,067 thousand yen in
Asia.
4. Change in the durable years of tangible fixed assets
The Company and its domestic consolidated subsidiaries revised and shortened the durable years of tangible fixed
assets for the first quarter under review in the wake of the revision of the legal durable years of machinery andequipment in the tax system revision for fiscal 2008. In association with the change, operating profit fell 87,479
thousand yen in Japan.
(From June 1, 2009 to August 31, 2009)(Thousands of yen, rounded down)
Japan

North
America

Europe

Asia

Total

3,258,955

691,766

624,647

1,410,993

5,986,362

Corporateand Elim.

Consolidated-

5,986,362

Sales(1) Sales to unaffiliated customers(2) Intersegment sales or transfers

993,860

6,492

390

13,535

1,014,277(1,014,277)

-

Total

4,252,815

698,258

625,037

1,424,528

7,000,640(1,014,277)

5,986,362

73,951

31,60236,322

281,064

422,941

58,688481,630

Operating Profit(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. The major countries or regions included in each geographic segment (except Japan) are listed below.
(1) North America: United States(2) Europe: France, Germany, Italy(3) Asia: China, Taiwan

11c. Overseas Sales
Three months ended August 31, 2008 (From June 1, 2008 to August 31, 2008)(Thousands of yen, rounded down)

I

Overseas Sales

II

Consolidated Sales

III

Overseas sales as a proportion of consolidated sales (%)

North
America

EuropeAsia

Rest ofWorld

879,820

1,007,368

3,037,326

46,370

10.0

11.5

34.7

0.5

Total
4,970,885
8,762,088
56.7(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. The major countries or regions included in each geographic segment (except Japan) are listed below.
(1) North America: United States(2) Europe: France, Germany, Italy(3) Asia: China, Taiwan
3. The overseas sales are the sales of the Company or its consolidated subsidiaries in countries or regions excluding Japan.
Three months ended August 31, 2009 (From June 1, 2009 to August 31, 2009)(Thousands of yen, rounded down)

I

Overseas Sales

II

Consolidated Sales

III

Overseas sales as a proportion of consolidated sales (%)

North
America

EuropeAsia

678,607746,644

1,913,052

30,048

11.3

12.5

32.0

0.5

Rest of
World

Total
3,368,353
5,986,362
56.3(Notes) 1. Countries or regions are grouped together based on geographic proximity.
2. The major countries or regions included in each geographic segment (except Japan) are listed below.
(1) North America: United States(2) Europe: France, Germany, Italy(3) Asia: China, Taiwan
3. The overseas sales are the sales of the Company or its consolidated subsidiaries in countries or regions excluding Japan.

(6) Notes if the amount of shareholders’ equity has changed significantly
Not applicable.

12