Translation

Member of the Financial Accounting Standards Foundation

January 18, 2008

Consolidated Financial Results
for the Six Months Ended November 30, 2007
Listed company name:
Stock exchange listing:Stock code:
Location of headquarters:
Website:Representative:
Contact:

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

TEL:
Scheduled date for submissionof semiannual report:

February 20, 2008

1. Consolidated financial results for the six months ended November 30, 2007
(From June 1, 2007 to November 30, 2007)(1) Operating results(Millions of yen, rounded down)
Percentages indicate changes from the same period in the previous fiscal year.
Net sales

Operating profit

Recurring profit%
Six months ended
November 30, 2007
Six months ended
November 30, 2006
Year ended May 31, 2007%

Net income%%

17,372

16.9

4,343

32.2

4,100

21.7

2,491

23.7

14,866

21.6

3,286

57.9

3,369

47.7

2,014

63.8

31,381

-

6,925

-

7,123

-

4,439

-

Net income per share

Six months ended
November 30, 2007
Six months ended
November 30, 2006
Year ended May 31, 2007

Diluted net income
per share

yen

yen

119.75-151.17-329.65-

Reference: Equity in earnings of affiliates
November 30, 2007
November 30, 2006
May 31, 2007

- million yen- million yen- million yen

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

EquityEquity ratio

Equity per share%yen

As of November 30, 2007

56,431

43,98376.7

2,085.16

As of November 30, 2006

48,16533,41168.7

2,480.67

As of May 31, 2007

54,83041,38674.8

2,964.32

Reference: Shareholders’ equity
November 30, 2007
November 30, 2006
May 31, 2007

43,236 million yen
33,058 million yen
40,986 million yen(3) Cash flows
Cash flows fromoperating activities

Six months ended
November 30, 2007
Six months ended
November 30, 2006
Year ended May 31, 2007

Cash flows frominvesting activities(Millions of yen, rounded down)
Cash and cash
Cash flows fromequivalents at end of
financing activities
period3,007(8,157)

(743)

5,732

2,485

(2,147)(1,078)

4,143

4,993

(1,635)

3,292

11,558

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

Interim-end

Year-end

Year ended May 31, 2007

0.00

12.00

Year ending May 31, 2008 (Actual)
Year ending May 31, 2008 (Forecast)

0.00

-

-

15.00

Total (Full year)
12.00
15.00

Note: Upon the board of directors’ resolution at a meeting held on March 7, 2007, the Company made a 1.5-for-1 split of its common
stock on June 1, 2007. According to the calculation based on the number of shares before the stock split, the expected payment ofdividends per share for the year ending May 31, 2008 will be 22.50 yen, a substantial increase of 10.50 yen from the previous fiscal
year.

3. Consolidated results forecast for the fiscal year ending May 31, 2008
(Millions of yen)
Percentages indicate changes from the same period in the previous fiscal year.
Net income
Operating profit
Recurring profit
Net income
per share

Net sales%Year ending May 31,
2008

34,300

9.3

%
8,200

18.4

2

%
8,100

13.7

5,000

%

yen

12.6

241.12

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

None(2) Changes in accounting policies, procedures, and methods of presentation for preparing theconsolidated interim financial statements(those to be described in the section Changes in Significant Items That Form the Basis of Preparations for
Consolidated Interim Financial Statements)
i. Changes due to amendment of accounting standards:
None
ii. Changes due to other reasons: None
Note: For details, please refer to Changes in Significant Items That Form the Basis of Preparations for Consolidated
Interim Financial Statements (in Japanese only) on page 20.

(3) Number of shares outstanding (common stock)i. Number of shares outstanding and issued at the end of period (including treasury stock)
As of November 30, 2007
20,750,688 shares
As of November 30, 2006
13,333,792 shares
As of May 31, 2007
13,833,792 shares
ii. Number of treasury stock at the end of period
As of November 30, 2007
15,230 shares
As of November 30, 2006
7,224 shares
As of May 31, 2007
7,233 shares
Note: For the number of shares as a basis of calculating interim net income per share (consolidated), please refer toper-share information (in Japanese only) on page 25.

Reference: SUMMARY OF NON-CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Non-consolidated financial results for the six months ended November 30, 2007
(From June 1, 2007 to November 30, 2007)(1) Operating results(Millions of yen, rounded down)
Percentages indicate changes from the same period in the previous fiscal year.
Net sales

Operating profit%

Six months ended
November 30, 2007
Six months ended
November 30, 2006
Year ended May 31, 2007

%

%

%

13.0

2,630

6.2

2,557

(2.1)

1,573

(5.8)

11,502

17.6

2,477

50.6

2,611

36.1

1,669

62.3

23,807

-

4,960

-

5,191

-

3,408

-

yen

Year ended May 31, 2007

Net income

12,993

Net income per share

Six months ended
November 30, 2007
Six months ended
November 30, 2006

Recurring profit

75.88
125.29254.173

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

EquityEquity ratio%

Net assets per shareyen

As of November 30, 2007

47,62438,50780.8

1,857.09

As of November 30, 2006

41,23230,03072.8

2,253.43

As of May 31, 2007

47,21337,15378.7

2,687.12

Reference: Shareholders’ equity
November 30, 2007
November 30, 2006
May 31, 2007

38,507 million yen
30,030 million yen
37,153 million yen

2. Non-consolidated results forecast for the fiscal year ending May 31, 2008
(Millions of yen)
Percentages indicate changes from the same period in the previous fiscal year.
Net income
Operating profit
Recurring profit
Net income
per share

Net sales%Year ending May 31,
2008

26,000

9.2

%
5,200

4.8

%
5,200

0.2

3,200

%

yen

(6.1)

154.32* Disclaimer regarding appropriate use of forecasts and related points of note
The above forecasts are based on information available at the time of the release of this report. Actual results may differ fromthe projected figures due to a variety of factors. For any further information regarding the forecasts, please refer to page 6 of
the attached document.

4

1. Business Results(1) Analysis of Business Results(i) Business Results in the First Half that Ended on November 30, 2007
During the first half that ended on November 30, 2007, the Japanese economy remained ona path of moderate growth, supported by active capital expenditures resultant from strong
corporate earnings and robust exports. On the other hand, concerns grew over the effects of therenewed surge in the prices of crude oil, other fuels and raw materials and volatile exchange rate
movements. Meanwhile, the global economy, led by the Asian economies, generally remainedrobust despite increasing worries about an economic slowdown due to the surging prices ofcrude oil and other fuels and the subprime mortgage loan problem.
Under these circumstances, the Toyo Tanso group expanded its production capacity for
isotropic graphite, its mainstay product, to an annual 11,000 tons by the end of the first half inorder to effectively meet strong demand from domestic and foreign customers, and continued toshift its emphasis to products with high value added and growth sectors. Specifically, in the
rapidly growing Chinese market, the Toyo Tanso group inaugurated full-fledged operation of anew production base specializing in high-function products, thus accelerating its advance into
the global market, in pursuit of further business expansion and higher profits.
As a result, the Toyo Tanso group continued to achieve sharp increases in sales and profits.
Specifically, consolidated sales in the first half that ended on November 30, 2007 grew 16.9%
from the same period in the previous year to 17,372 million yen, and operating profit increased
32.2% to 4,343 million yen. Recurring profit rose 21.7% to 4,100 million yen, while net income
increased 23.7% to 2,491 million yen.
A product-by-product outline of the Company’s business results is provided below.
Products
Special graphite products
Carbon products for generalindustries(for mechanical applications)
Carbon products for generalindustries(for electrical applications)Compound materials and otherproducts
Related goods
Total

Six months ended
November 30, 2007
9,066,882

Six months ended
November 30, 2006
7,426,163(Thousands of yen)
Year ended May 31,
2007
15,916,373

1,453,716

1,266,408

2,682,927

2,487,689

2,005,638

4,257,378

3,780,078

3,728,173

7,555,069

584,589
17,372,957

440,437
14,866,821

969,511
31,381,259

Special Graphite Products
In the electronics sector, demand for products used in the manufacturing of solar cells inparticular grew sharply in China, which is emerging as a global production base for solar cells,
as well as in other regions such as Asia, Europe, the United States and Japan. In addition,
demand for products used in the processing of single crystal silicon continued to expand due
mainly to an increase in the number of production lines for 300mm wafers. Demand for special
graphite used in the processing of polysilicon, which is the essential raw material for theabove-mentioned products, continued to increase. Thus, sales for each of these items were quite
brisk on the back of firm demand.
In the general industries sector, demand for EDM (electrical discharge machining)
electrodes used in the die-making process grew, mainly in overseas markets, thanks to theintroduction in the previous fiscal year of high-function graphite materials with an ultra-fineparticle structure. In addition, demand was strong for products used for continuous casting andother metallurgy applications and those used for industrial furnaces.

5

Carbon Products for General Industries
With regard to carbon products for mechanical applications, demand grew steadily for
products used as bearings and sealing material due to firm capital expenditures. Demand for
products related to environmentally friendly water heating equipment also continued to expand
amid increasing awareness about energy conservation and environmental protection.
Furthermore, sales of pantograph sliders were robust as a whole, supported by replacement
demand arising from the introduction of new train cars by major existing customers, and also
backed by the adoption of our products by some major private railway operators and operatorsof new traffic systems.
Sales of products for electrical applications were firm as our Chinese subsidiaries inparticular enjoyed increased demand for small carbon brushes for home appliance motors. Salesof such products were robust also due to our successful promotion thereof for applications suchas power tools and washing machines and because our new organizational structure, createdwith the intention of facilitating global activities, has been functioning effectively.
Compound Materials and Other Products
Sales of SiC (silicon carbide)-coated graphite products were generally strong, led mainly byincreased demand, especially in Asia, for products related to compound semiconductors such as
susceptors used in the processing of LED devices. In addition, demand for C/C composite
increased for large crucibles used in the processing of 300mm wafers, and for industrial
furnaces, the number of which is increasing. Moreover, sales grew for graphite sheets mainly for
application in heat radiation. Regarding on-site fluorine generators, business expansion
proceeded steadily.
Related Goods
In line with strong demand for the above-mentioned products, sales of insulators,
maintenance equipment and accessory parts were brisk both in Japan and abroad.
(ii) Outlook on the Fiscal Year Ending on May 31, 2008
With regard to the future outlook, the economies of Japan and other countries are generally
expected to remain strong, supported by firm capital expenditures. However, uncertainty is
growing over global economic prospect due to factors such as continued high prices of crude oiland other fuels and materials, exchange rate movements and the spreading impact of the U.S.
subprime mortgage loan problem. Under these circumstances, we expect that businessconditions surrounding the Toyo Tanso group will remain favorable as global demand forhigh-function carbon products is growing in various sectors, led by demand for products used in
the manufacturing of solar cells, which is expected to grow further in the future.
Therefore, despite the above-mentioned external factors that cast doubt on the future outlook,
our projected business results for the fiscal year ending on May 31, 2008 remain unchanged
from the figures announced on July 17, 2007.
(2) Analysis of Financial Position
Cash and cash equivalents (hereinafter referred to as “funds”) in the first half that ended on
November 30, 2007 decreased by 5,826 million yen from the end of the previous fiscal year to
5,732 million yen on a consolidated basis. The status of cash flows from the following activities
in the period was as follows:(Cash Flows from Operating Activities)
Funds obtained as a result of operating activities increased 21.0% from the same period of
the previous fiscal year to 3,007 million yen. Among major cash flow items, profit before
income taxes increased 8.8% from the same period of the previous year to 4,085 million yen,while depreciation costs jumped 70.9% to 1,276 million yen. Meanwhile, income taxes paid
increased 43.9% to 1,874 million yen.
6

(Cash Flows from Investing Activities)
Funds used for investing activities increased 279.9% from the same period of the previous
fiscal year to 8,157 million yen. Among major cash flow items, payments for time deposits
expanded 216.2% to 6,526 million yen and payments for acquisition of tangible fixed assets
grew 56.6% to 2,541 million yen due to an expansion of production facilities for isotropic
graphite materials. Meanwhile, proceeds from time deposits dropped 46.7% to 1,142 million
yen.
(Cash flows from Financing Activities)
Funds used for financing activities decreased 31.0% from the same period of the previous
fiscal year to 743 million yen. Among major cash flow items, the repayment of long-termborrowings decreased 36.4% to 509 million yen.
(3) Basic Policy for Profit Allocation and Dividends for the Fiscal Year Ending on May 31,
2008(i) Basic Policy
Our basic policy for profit allocation is to make strategic investments in order to strengthen
our competitiveness and enhance our value over the long term and return profits to shareholders
in a continuous and stable 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 ourbusiness foundation. We intend to use internal reserves for capital expenditures for production
facilities, development of new products and investment in research and development.
(ii) Dividends for the Fiscal Year Ending on May 31, 2008
Based on the above-mentioned policy, we will maintain our basic approach of using internal
reserves for capital expenditures while taking account of the need to return profits toshareholders in line with the growth of our consolidated earnings. As a result, we plan to pay anannual dividend of 15 yen per share in the fiscal year ending on May 31, 2008.

7

2. Composition of Corporate GroupIn the first half that ended on November 30, 2007, Jiaxiang Toyo Tanso Co., Ltd. was added
as a consolidated subsidiary, as the company’s importance to the Toyo Tanso group (Toyo Tanso
Co., Ltd. and its consolidated subsidiaries) increased. As a result, the Toyo Tanso group now
consists of Toyo Tanso Co., Ltd., ten consolidated subsidiaries including two domestic and eight
foreign ones, one foreign non-consolidated subsidiary, and one overseas affiliated company notaccounted for by the equity method.
[Business Flow Chart]
The business flow chart of the Toyo Tanso group is as follows. Only major business
relations are indicated in this chart.
Customers
Processing and sales companies

TTT(Taiwan)

TTE(Italy)GTI(France)

GTD(Germany)

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

Toyo Tanso Co., Ltd.

KTT
(South Korea)

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

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

Consolidated
subsidiaryNon-consolidated
subsidiary

Affiliatedcompany

The formal names of the companies represented by the acronyms used in the chart
above are as follows:(TTU)…Toyo Tanso USA, Inc.
(TTE)…Toyo Tanso Europe S.p.A.
(GTI)…Graphites Technologie et Industrie S.A.
(GTD)…GTD Graphit Technologie GmbH
(STT)…Shanghai Toyo Tanso Co., Ltd.
(TTT)…Toyo Tanso Taiwan Co., Ltd.
(STI)…Shanghai Toyo Tanso Industrial Co., Ltd.
(JTT)…Jiaxiang Toyo Tanso Co., Ltd.
(KTT)…Toyo Tanso Korea Co., Ltd.
(YTT)…Shanghai Yongxin Toyo Tanso Co., Ltd.

8

3. Management Policy
Since there has been no significant change in management policy announced in the financial
report “tanshin” for the fiscal year that ended on May 31, 2007 (disclosed on July 17, 2007 in
Japanese only), we are omitting disclosure here.
The relevant financial report is available at the following URLs:
http://www.toyotanso.co.jp (Website of Toyo Tanso Co., Ltd.)
http://www.tse.or.jp/listing/compsearch/index.html(“Listed Company Information” section of the Website of the Tokyo Stock Exchange)

94. Consolidated interim financial statements(1) Consolidated balance sheets(Thousands of yen, rounded down)
As of November 30, 2006
AmountAs of November 30, 2007%

AmountChange%AmountAs of May 31, 2007
Amount%AssetsI. Current assets
1. Cash on hand and in banks
2. Trade notes and accounts
receivable
3. Inventory

10,109,352

13,330,272

3,220,919

14,775,343

9,009,937
6,207,581

10,755,568
6,989,577

1,745,630
781,996

9,942,492
6,573,737

4. Other
Allowance for doubtful
accounts
Total current assets

1,704,574

1,216,552(488,022)

1,719,083(45,847)
5,214,676(157,729)
32,852,928(116,641)
26,914,805(162,488)
32,129,481

55.9

56.9

59.9

II. Fixed assets
1. Tangible fixed assets(1) Buildings and structures

11,305,364

10,337,388

10,969,021

Accumulated depreciation

5,312,720

5,024,668

5,742,297

5,563,067

538,399

5,551,891 5,417,130(2) Machinery, equipment, andvehiclesAccumulated depreciation

22,034,058
16,526,235

5,507,823

26,055,175
17,405,904

8,649,270

3,141,447

23,829,994
16,668,094 7,161,900
5,282,468(3) Land

5,330,161

5,276,323(53,838)(4) Construction in progress

2,045,049

664,832(1,380,216)(5) Other
Accumulated depreciation
Total tangible fixed assets
2. Intangible fixed assets

2,478,501

2,160,404
1,768,813

1,895,054

391,591

1,164,853
2,326,252

583,446

191,855

1,719,593

606,658

18,299,294

38.0

20,736,940

36.8

2,437,646

19,633,011

35.8

271,3250.6

362,897

0.6

91,571

287,026

0.5

3. Investments and other assets(1) Investments in securities

213,069

845,603

632,533

405,341(2) Deferred tax assets

528,123450,895(77,228)

560,908

1,942,314

1,910,231(32,082)

1,094,971

Allowance for doubtful
accounts(3,543)(4,272)(729)(3,543)

Total investments andother assets
Total fixed assets

2,679,964
21,250,584

5.5
44.1

3,202,457
24,302,296

5.7
43.1

522,493
3,051,712

2,057,678
21,977,717

Total assets

48,165,389

100.0

56,431,777

100.0

8,266,388

54,830,645 100.0(3) Other

10

3.8
40.1

(Thousands of yen, rounded down)
As of November 30, 2006
AmountAs of November 30, 2007%

Amount%ChangeAs of May 31, 2007

AmountAmount%Liabilities
I. Current liabilities
1
2
3
4
5

Trade notes and accounts payable
Short-term borrowings

2,613,775
2,493,639

2,354,679
1,750,692(259,095)(742,947)

2,338,453
2,064,995

Reserve for employees’ bonuses
Reserve for directors’ andcorporate auditors’ bonuses
Other812,391

876,032

63,641

813,835-

27,27627,27654,5525,807,867

Total current liabilities

11,727,674

5,058,437
24.3

10,067,117

17.8(749,430)

5,589,952(1,660,556)

10,861,789

19.8

II. Long-term liabilities
1.

Long-term borrowings

1,734,382

997,420(736,962)

1,231,020

2.

Reserve for employees’ retirement
benefits

241,810

196,451(45,359)

195,069

3.

Reserve for directors’ retirement
allowances
Other

1,635
1,048,518

1,187,294(1,635)
138,776

2,300
1,153,872

4.

Equity1.

Total long-term liabilities

3,026,346

6.3

2,381,166

4.2(645,180)

2,582,262

4.7

Total liabilities

14,754,021

30.6

12,448,283

22.0(2,305,737)

13,444,052

24.5

Common Stock

5,000,075

10.4

7,692,575

13.6

2,692,500

7,692,575

14.0

2.
3.
4.

Capital surplus
Retained earnings
Treasury stock - at cost

6,842,786
21,097,996(9,205)

14.2
43.8
(0.0)

9,534,686
25,906,046(52,063)

16.9
45.9
(0.0)

2,691,900
4,808,050(42,857)

9,534,686
23,522,911(9,314)

17.4
42.9
(0.0)

5.

Unrealized gains (losses) on
available-for-sale securities

25,5280.1

14,2390.0(11,288)

25,3090.1

6.

Foreign currency translation
adjustments

101,6510.2

141,461

0.3

39,810220,200

0.4

Total
Minority interests

33,058,833

68.7

43,236,947

76.7

10,178,113

40,986,368

74.8

352,535

0.7

746,5461.3

394,011400,224

0.7

Total equity

33,411,368

69.4

43,983,494

78.0

10,572,125

41,386,593

75.5

Total liabilities and equity

48,165,389

100.0

56,431,777 100.0

8,266,388

54,830,645

100.0

11

(2) Consolidated statements of income(Thousands of yen, rounded down)
Six months ended
November 30, 2007

Six months ended
November 30, 2006
AmountI. Net sales
II. Cost of goods sold
Gross profit
III. Selling, general and administrative
expenses
Operating profit
IV. Non-operating income
1. Interest income
2. Net realized gain on crude oilswap contracts
3. Foreign exchange gains
4. OtherV. Non-operating expenses
1. Interest expenses
2. Valuation loss on investment
securities based on method inwhich valuation losses arerecognized as net loss
3. Net realized loss on crude oilswap contracts
4. Foreign exchange loss
5. Stock issuing expenses
6. Other
Recurring profit
VI. Extraordinary profit
1. Gain on sale of fixed assets
2. Subsidies received
3. Gain on transfer to defined
contribution pension plan
4. Other%AmountChangeYear ended
May 31, 2007%

AmountAmount14,866,821
8,980,224

100.0
60.4

17,372,957
10,099,012

100.0
58.1

2,506,135
1,118,788

31,381,259
18,853,152

100.0
60.1

5,886,597

39.6

7,273,945

41.9

1,387,347

12,528,106

39.9

2,599,716
3,286,880

17.5
22.1

2,930,307
4,343,637

16.9
25.0

330,590
1,056,757

5,602,463
6,925,643

17.8
22.1

425,3971.3

227,212
7,123,828

0.7
22.7

586,556

1.8

195,3940.6

7,514,989

23.9

22,461

43,646

48,50344,85590,03835,84550,351
23,20972,326
220,951
83,615

193,200

1.3

117,2070.7(75,993)

56,87844,610111,956-

40,417

7,686

48,198-25,478230,632

72,152--

5,910

110,9883,369,092

0.7
22.7

18,79032,923359,930
4,100,914

2.1
23.6

248,941
731,821

223
8,708

1,093
405,906
2,580%

409,581

2.8

-

2,495

28,236
151,426

8,931

0.0

(400,649)

405,906
987

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

21,396361

19,644
3,630

76,592
3,975

3. Loss on sale of investment
securities

-

-

1,127

4. Valuation loss on investment
securities

-

779

-

5. Special retirement benefit
expenses
6. Other-

1,056

113,698

22,8140.2-

24,0540.1

1,240

3,755,860

25.3

23.5

329,932-

1,699,015

11.4

4,085,792
1,413,651
35,822 1,449,473

8.3(249,541)

2,989,167

9.5

Minority interests

42,1760.3

144,9200.9

102,743

86,2380.3

Net income

2,014,667

13.6

2,491,398

14.3

476,730

4,439,582

14.1

Profit before income taxes
Income taxes – current
Income taxes – deferred

1,412,540
286,475122,746,741
242,426

(3) Consolidated statement of changes in equity(From June 1, 2006 to November 30, 2006)

Balance as of
May 31, 2006

(Thousands of yen, rounded down)

CommonStockCapitalsurplusRetainedearnings

Treasurystock

Unrealized
gains(losses) on
availablefor-salesecurities

5,000,075

6,842,786

19,223,421(9,205)31,830Foreigncurrencytranslation
adjustments(228,547)

Total

Minority
interests

Total
equity30,860,361

317,319

31,177,680

Changes during
the period
Dividends fromretained earnings
Employees’
bonuses fromprofit (*)
Net income(133,265)(133,265)(133,265)(6,826)(6,826)(6,826)2,014,667

2,014,667

2,014,667

Net changes in
items other thanshareholders’equity during theperiod(6,302)

330,199

323,896

35,216359,112

Total changes during
the period--

1,874,575-(6,302)

330,199

2,198,472

35,2162,233,688

Balance as ofNovember 30, 2006

5,000,075

6,842,786

21,097,996(9,205)25,528

101,651

33,058,833

352,535

33,411,368(*)

Employees’ bonuses appropriated upon resolution of profit appropriation by the Company’s subsidiaries in China and Taiwan.

13

(From June 1, 2007 to November 30, 2007)

Balance as of May
31, 2007(Thousands of yen, rounded down)

CommonStockCapitalsurplusRetainedearnings

7,692,575

9,534,686

23,522,911

Treasurystock

Unrealized
gains(losses) on
availablefor-salesecurities

Foreigncurrencytranslation
adjustments(9,314)25,309220,200

Total

Minority
interests

Total
equity40,986,368

400,224

41,386,593

Changes during theperiodIncrease inconsolidated
retained earnings
due to increase in
number of
consolidated
subsidiaries

74,01674,01674,016

Dividends fromretained earnings(165,918)(165,918)(165,918)

Employees’
bonuses fromprofit (*)(16,361)(16,361)(16,361)

Net income

2,491,398

2,491,398

2,491,398(42,748)(42,748)

Acquisition oftreasury stock(42,748)

Net changes in
items other thanshareholders’equity during theperiod(11,069)(78,738)(89,808)346,321

256,513

Total changes during
the period--

2,383,135(42,748)(11,069)(78,738)

2,250,578

346,3212,596,900

Balance as ofNovember 30, 2007

7,692,575

9,534,686

25,906,046(52,063)

14,239141,461

43,236,947

746,546

43,983,494(*)

Employees’ bonuses appropriated upon resolution of profit appropriation by the Company’s subsidiaries in China and Taiwan.

.

14

(From June 1, 2006 to May 31, 2007)

Balance as of May
31, 2006

CommonStockCapitalsurplusRetainedearnings

5,000,075

6,842,786

19,223,421

2,692,500

2,691,900

Treasurystock

Unrealized
gains(losses) on
availablefor-salesecurities

Foreigncurrencytranslation
adjustments(9,205)31,830(228,547)

Total

Minority
interests

Total
equity30,860,361

317,319

31,177,680

Changes during theperiodIssuance of new
stock
Dividends fromretained earnings
Employees’
bonuses fromprofit (*)
Net income

5,384,400

5,384,400(133,265)(133,265)(133,265)(6,826)(6,826)(6,826)4,439,582

4,439,582

4,439,582

(109)

(109)

Acquisition oftreasury stock(109)

Net changes in
items other thanshareholders’equity during theperiod(6,521)

448,748442,226

82,905525,132

Total changes during
the period

2,692,500

2,691,900

4,299,490(109)(6,521)

448,748

10,126,007

82,905

10,208,913

Balance as of May
31, 2007

7,692,575

9,534,686

23,522,911(9,314)25,309220,200

40,986,368

400,224

41,386,593(*)

Employees’ bonuses appropriated upon resolution of profit appropriation by the Company’s subsidiaries in China and Taiwan.

15

(4) Consolidated statements of cash flows(Thousands of yen, rounded down)I.

Six months ended
November 30, 2006

Six months ended
November 30, 2007

ChangeYear ended
May 31, 2007

AmountAmountAmountAmountCash flows from operating activities
3,755,860

4,085,792

329,932

7,514,989

746,986

1,276,773

529,787

1,709,584

-

5,167

5,167

-

(285)

-

285

(571)

(72,137)(3,940)68,197(106,923)(405,906)(2,300)-(2,300)405,906(9,227)(405,906)

1.

Profit before income taxes

2.

Depreciation3.

Amortization of goodwill

4.
5.

7.

Negative goodwill amortization
Decrease in reserve for employees’ retirement
benefits
Decrease in reserve for directors’ retirement
allowancesGain on transfer to defined contribution pension plan

8.

Special retirement benefit expenses

-

-

-

113,698

9.

Increase in reserve for employees’ bonuses

119,573

62,318(57,254)

120,503

10.

Increase (decrease) in reserve for directors’ bonuses(45,860)(27,276)

18,584

8,692

11.

Increase in allowance for doubtful accounts

12.

Interest and dividend income

13.

Interest expenses

56,87844,610(12,268)

111,956

14.

Foreign exchange loss (gain)(90,038)

230,632

320,670(220,951)

15.
16.

Valuation loss on investment securities
Valuation loss on investment securities based on
method in which valuation losses are recognized as
net loss
Gain on sale of tangible fixed assets

-

779

779

-

(1,093)40,417(223)

40,417870

7,686(28,236)

18.

Loss on disposal and sale of tangible fixed assets

21,757

23,275

1,517

80,568

19.

-

-

-

140

(646,715)(529,823)

116,892(1,483,000)(56,015)(356,412)(300,396)(365,414)

23.

Loss on sale of investment securities
Decrease (increase) in notes and accounts receivable trade
Increase in inventories
Increase (decrease) in notes and accounts payable trade
Other481,334(25,510)(112,384)
174,996(593,719)
200,507(56,724)
447,436

Sub-total

3,816,341

4,869,239

1,052,897

7,423,229

24.

Interest and dividend received

25,14449,05823,91453,541

25.

Interest paid

(53,070)(36,037)

17,032(107,901)

26.

Income taxes paid

(1,303,238)(1,874,958)(571,719)(2,375,717)

2,485,177

3,007,302

522,125

4,993,152

6.

17.

20.
21.
22.

Net cash provided by operating activities
II.

3,986

7,404

3,418

39,171(26,472)(50,568)(24,096)(54,240)

Cash flows from investing activities
1.

Payments for time deposits(2,063,872)(6,526,079)(4,462,207)(3,216,783)

2.
3.

2,142,962

1,142,761(1,000,200)

6,834,962(500,000)-

500,000(500,000)

5.

Proceeds from time deposits
Payments for acquisition of mortgage-backed
securities
Proceeds from redemption of mortgage-backed
securities
Payments for acquisition of tangible fixed assets(1,623,530)

500,000(2,541,773)

500,000(918,243)(4,532,248)

4.

865

3,288

2,423

98,172(16,740)(11,100)

5,640(35,410)

Payments for acquisition of investment securities-(500,000)(500,000)(200,325)

46,857-(46,857)

49,968

11.

Proceeds from sale of investment securities
Payments for additional acquisition of subsidiarysharesPayments for investment in capital(133,994)(124,461)(10)(124,461)
133,984(133,994)

12.

Other

-

(99,899)(99,899)-(2,147,452)(8,157,273)(6,009,821)(1,635,659)

6.

Proceeds from sale of tangible fixed assets

7.

Payments for acquisition of intangible fixed assets

8.
9.
10.

Net cash used in investing activities

16

(Thousands of yen, rounded down)

III.

IV.
V.
VI.
VII.
VIII.

Six months ended
November 30, 2006

Six months ended
November 30, 2007

ChangeAmountAmountAmountYear ended
May 31,
2007
Amount(454,459)

Cash flows from financing activities
1.

Net increase (decrease) in short-term borrowings(217,080)(51,929)

165,1512.

Proceeds from long-term borrowings

91,61150,000(41,611)

131,471

3.

Repayment of long-term borrowings(800,774)(509,288)

291,486(1,616,908)
5,384,400

4.

Proceeds from issuance of stock

-

-

-

5.

Payments for acquisition of treasury stock-(42,748)(42,748)

(109)

6.

Payments for dividends(133,265)(165,918)(32,653)(133,265)

7.

Payments for dividends to minority interests(19,090)(23,899)(4,808)(19,090)

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(1,078,600)(743,783)

334,816

3,292,037

17,130(723,744)(9,555)(5,903,310)(26,686)(5,179,565)

41,804
6,691,334

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents
accompanying new consolidation
Cash and cash equivalents at end of period

4,867,225

11,558,559

6,691,334

4,867,225

4,143,480

76,943
5,732,193

76,943
1,588,712

11,558,559

17

(Segment Information)
a. Business Segment Information
From June 1, 2006, to November 30, 2006; From June 1, 2007, to November 30, 2007; From June 1, 2006, toMay 31, 2007
Business segment information has been omitted because the entire business of the Company and its subsidiaries
falls under the single business category of carbon product related business.

18

b. Geographic Segment Information(From June 1, 2006, to November 30, 2006)(Thousands of yen, rounded down)
Japan

North
America

Europe

Asia

Total

(1) Sales to unaffiliated customers

9,409,245

1,899,844

1,326,139

2,231,591(2) Intersegment sales or transfers

2,058,285

4,671

1,353

78,571

11,467,530

1,904,515

1,327,492

Operating Expenses

8,872,323

1,592,488

Operating Profit (Loss)

2,595,207

312,027

Corporateand Elim.

Consolidated

14,866,821-

14,866,821

2,142,881(2,142,881)-

2,310,163

17,009,702(2,142,881)

14,866,821

1,359,509

1,851,772

13,676,093(2,096,153)

11,579,940(32,016)

458,391

3,333,609(46,728)3,286,880

Sales

Total

(Notes)1. Countries or regions are grouped together based on geographic proximity.
2. The major countries or regions included in each geographic segment (except Japan) are listed below.
(1) North America:
United States(2) Europe:
France, Germany, Italy(3) Asia:
China, Taiwan
3. Unallocated amounts for operating expenses for the above period are not included in Corporate and Eliminations.

(From June 1, 2007, to November 30, 2007)(Thousands of yen, rounded down)
Japan

North
America

Europe

Asia

Total

(1) Sales to unaffiliated customers

10,235,581

1,760,130

1,749,590

3,627,655(2) Intersegment sales or transfers

2,753,362

104,7111,226

45,246

Total

12,988,944

1,864,841

1,750,816

Operating Expenses

10,011,206

1,597,291

Operating Profit

2,977,737

267,549

Corporateand Elim.

Consolidated

17,372,957-

17,372,957

2,904,546(2,904,546)-

3,672,901

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

17,372,957

1,514,494

2,781,645

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

13,029,319

236,321891,255

4,372,863(29,225)

4,343,637

Net sales(Notes)1. Countries or regions are grouped together based on geographic proximity.
2. The major countries or regions included in each geographic segment (except Japan) are listed below.
(1) North America:
United States(2) Europe:
France, Germany, Italy(3) Asia:
China, Taiwan
3. Unallocated amounts for operating expenses for the above period are not included in Corporate and Eliminations.

(From June 1, 2006, to May 31, 2007)(Thousands of yen, rounded down)
Japan

North
America

Europe

Asia

Total

(1) Sales to unaffiliated customers

19,371,502

3,957,543

3,009,630

5,042,583

31,381,259-(2) Intersegment sales or transfers

4,419,424

99,8785,815

129,432

4,654,551(4,654,551)

-

Total

23,790,927

4,057,422

3,015,445

5,172,015

36,035,810(4,654,551)

31,381,259

Operating Expenses

18,332,552

3,444,936

2,975,897

4,136,194

28,889,580(4,433,964)

24,455,616

Operating Profit

5,458,375

612,485

39,5481,035,821

7,146,230(220,587)

6,925,643

Corporateand Elim.

Consolidated

Net sales(Notes)31,381,259

1. Countries or regions are grouped together based on geographic proximity.
2. The major countries or regions included in each geographic segment (except Japan) are listed below.
(1) North America:
United States(2) Europe:
France, Germany, Italy(3) Asia:
China, Taiwan
3. Unallocated amounts for operating expenses for the above period are not included in Corporate and Eliminations.

19c. Overseas Sales
Six months ended November 30, 2006 (From June 1, 2006, to November 30, 2006)(Thousands of yen, rounded down)North
AmericaI

Overseas Sales

II

Consolidated Sales

III

Overseas sales as a proportion of consolidated sales (%)(Notes)EuropeRest of
World

Asia

Total

1,863,693

1,747,020

3,195,026

95,463

6,901,204

-

-

-

-

14,866,821

12.5

11.8

21.5

0.6

46.4

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.

Six months ended November 30, 2007 (From June 1, 2007, to November 30, 2007)(Thousands of yen, rounded down)North
AmericaI

Overseas Sales

II

Consolidated Sales

III

Overseas sales as a proportion of consolidated sales (%)(Notes)EuropeRest of
World

Asia

Total

1,657,291

2,093,524

4,855,885

139,229

8,745,931

-

-

-

-

17,372,957

9.5

12.1

27.9

0.8

50.3

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.

Year ended May 31, 2007 (From June 1, 2006, to May 31, 2007)(Thousands of yen, rounded down)North
AmericaI

Overseas Sales

II

Consolidated Sales

III

Overseas sales as a proportion of consolidated sales (%)(Notes)EuropeRest of
World

Asia

Total

3,864,837

3,826,813

7,146,563

229,843

15,068,058

-

-

-

-

31,381,259

12.3

12.2

22.8

0.7

48.0

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.

20