Financial Results for the Three Months of the Year Ending December 31, 2012—Consolidated [Japan GAAP]

May 8, 2012

Company name: Tokai Carbon Co., Ltd. Listings: Tokyo Stock Exchange, first section

Security code: 5301

URL: http://www.tokaicarbon.co.jp/

Representative: Yoshinari Kudo, President and CEO

Contact: Kazuhiko Matsubara, General Manager, Accounting Department, Corporate Administration Division

Tel: +81-3-3746-5100

Scheduled dates

Scheduled date for submission of quarterly report: May 9, 2012

Commencement of dividend payments: — Supplementary reference documents to support the quarterly financial statements:

Yes

Explanatory meeting to discuss the quarterly financial statements will be held:

Yes (for institutional investors and analysts only)

1. Consolidated Financial Results for the End of the Three Months of the Year Ending

December 31, 2012 (January 1 to March 31, 2012)

(Amounts rounded down to the nearest millions of yen) (1) Operating Results (Cumulative)

(Percentage figures represent year-on-year changes)

Net sales Operating income Ordinary income Net income

millions of yen % millions of yen % millions of yen % millions of yen %

Three months ended March 31, 2012

24,993 (0.0) 2,148 (11.1) 2,544 2.5 1,489 38.0

Three months ended March 31, 2011

24,994 (0.9) 2,416 15.2 2,483 21.2 1,079 (16.9)

Note: Total comprehensive income

Three months ended March 31, 2012: ¥5,493 million (172.3%)

Three months ended March 31, 2011: ¥2,017 million ( —%)

Net income per

share Net income per

share—fully diluted

yen yen

Three months ended March 31, 2012

6.98 —

Three months ended March 31, 2011

5.06 —

(2) Financial Position

Total assets Net assets Shareholders’

equity ratio Net assets per

share

millions of yen millions of yen % yen

As of March 31, 2012 165,273 111,805 65.7 508.78

As of December 31, 2011 161,563 107,223 64.5 488.30

Note: Shareholders’ equity:

As of March 31, 2012: ¥108,654 million

As of December 31, 2011: ¥104,282 million

2. Dividends

Annual dividend

Record date End of 1st quarter End of 2nd quarter End of 3rd quarter Year-end Full-year

yen yen yen yen yen

Year ended December 31, 2011

— 4.00 — 4.00 8.00

Year ending December 31,

2012 —

Year ending December 31, 2012 (forecast)

4.00 — 4.00 8.00

Note: Amendment of dividend forecast that have been disclosed lastly: None

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2012

(January 1 to December 31, 2012) (% changes as compared with the corresponding

period of the previous fiscal year)

Net sales Operating income Ordinary income Net income Net income per share

millions of yen % millions of yen % millions of yen % millions of yen % yen

First six months

53,000 0.2 4,200 (22.2) 4,200 (22.3) 2,500 35.3 11.71

Full year 114,000 8.6 10,000 (4.5) 10,100 (0.0) 5,800 (5.2) 27.16

Note: Amendment of results forecasts that have been disclosed lastly: None

4. Other Information (1) Changes in significant subsidiaries during the period (that accompanied changes in the

scope of consolidation): None Newly consolidated: __ company (companies) (name of company ) Excluded from consolidation: __ company (companies) (name of company )

(2) Application of accounting principles peculiar to quarterly consolidated financial statement preparation: None

(3) Changes in accounting policies or estimates and retrospective restatement

1) Changes in accounting policies due to revisions of accounting standards, etc.: None 2) Changes in accounting policies other than item 1) above: None 3) Changes in accounting estimates: None 4) Retrospective restatement: None

(4) Number of Shares Issued (Common stock)

1) Number of shares issued at end of the period (including treasury stock):

As of March 31, 2012: 224,943,104 shares As of December 31, 2011: 224,943,104 shares

2) Number of shares held in treasury at end of the period:

As of March 31, 2012: 11,383,232 shares As of December 31, 2011: 11,380,765 shares

3) Average number of shares during the period (quarterly cumulative period):

Three months ended March 31, 2012: 213,561,267 shares Three months ended March 31, 2011: 213,572,834 shares

*Status of conducting the “Quarterly Review”

At the time that these quarterly financial results were released, the review process for disclosing quarterly

consolidated financial statements under the Financial Instruments and Exchange Act had been completed.

*Appropriate use of earnings forecasts and other important information

These materials contain various forward-looking statements and other forecasts regarding performance and

other matters. Such statements are based on information available at the time of preparation as well as certain

reasonable assumptions. Actual results may differ materially from those expressed or implied by

forward-looking statements due to a range of factors. For the assumptions underlying the earnings forecasts

presented and other information regarding the use of such forecasts, please refer to “1. (3) Qualitative

Information Related to Forecasts of Consolidated Results” on page 3 in the “Attachments” section.

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Contents of the “Attachments” Section

1. Qualitative Information Related to Consolidated Quarterly Earnings Results ···························· 2

(1) Qualitative Information Related to Consolidated Operating Results ···································· 2

(2) Qualitative Information Related to Changes in Consolidated Financial Position ···················· 3

(3) Qualitative Information Related to Forecasts of Consolidated Results ································ 3

2. Summary Information (Other) ························································································ 3

(1) Changes in significant subsidiaries during the period under review ···································· 3

(2) Application of specific accounting procedures for preparation of the quarterly consolidated

financial statements ·································································································· 3

(3) Changes in accounting policies and estimates, and retrospective restatements ···················· 3

(4) Additional information ······························································································ 3

3. Quarterly Consolidated Financial Statements ···································································· 4

(1) Quarterly Consolidated Balance Sheets ······································································· 4

(2) Quarterly Consolidated Statements of Operations and Comprehensive Income ···················· 6

Quarterly Consolidated Statements of Operations ·························································· 6

Quarterly Consolidated Statements of Comprehensive Income ········································· 7

(3) Notes on the Going-concern Assumption ····································································· 8

(4) Segment Information ······························································································· 8

(5) Notes When the Amount of Shareholders’ Equity has Changed Significantly ························ 9

*The company intends to conduct an explanatory meeting for investors on the date indicated below.

The documents distributed during that explanatory meeting will be posted on the company website at

the earliest possible opportunity.

- Explanatory meeting for analysts: May 14, 2012 (Monday)

- 2 -

1. Qualitative Information Related to Consolidated Quarterly Earnings Results (1) Qualitative Information Related to Consolidated Operating Results

During the consolidated first quarter under review (from January 1 to March 31, 2012), factors such

as the European financial crisis and rising crude oil prices exerted downward pressure on the

Japanese economy, but capital investment increased and production activity rebounded on various

policy effects, and the economy thus recovered gradually on mainly internal demand.

Under these circumstances, demand in the industries in which the Tokai Carbon Group’s customers

operate (e.g., rubber products, steel, IT hardware, and industrial machinery) generally registered

tones of recovery, but recoveries lagged in some industries.

As a result, consolidated net sales in the first quarter under review were at roughly the same level as

in the corresponding period of the previous fiscal year, amounting to ¥24,993 million.Operating

income decreased by 11.1% year-on-year to ¥2,148 million and ordinary income rose 2.5%

year-on-year to ¥2,544 million. Quarterly net income increased by 38.0% year-on-year to ¥1,489

million.

The performance of our principal business segments is as follows:

Please note that the Group has changed its segmentations since previous accounting period. For

the matters related to business segments as part of the segment information disclosure, please refer

to (4) Segment Information of 3. Quarterly consolidated financial statements. In addition,

year-on-year comparisons are calculated by adjusting data for the previous consolidated first

quarter into the new business segment classifications.

Carbon Black

Reduced automobile production resulting from the Thai flooding followed a recovery trend, and

demand for carbon black generally remained strong both within and outside Japan. The Tokai

Carbon Ishinomaki Plant, whose operations had been suspended because of the earthquake

disaster, restarted some operations. Nonetheless, because shipping started in March and

operations still have not been fully restored, the sales volume fell below the level for the

corresponding period of the previous fiscal year.

As a result of these factors, in the Carbon Black segment, net sales decreased 0.1% year on year to

¥10,100 million, and operating income decreased 0.2% year on year to ¥1,373 million.

Carbon and Ceramics

Graphite Electrodes

With the domestic recovery of electrode demand lacking strength, shipments to North America and

Asia increased on robust production of crude steel, and the sales quantity thus increased. In

addition, to respond to raw material price increases, the Company revised its sales prices for

overseas markets. As a result, although affected by yen appreciation that caused a decline in the

value of net sales, net sales of graphite electrodes increased 7.3% year on year to ¥7,547 million.

Fine Carbon

Although domestic sales remained strong with support from spot demand for semiconductors and

other products, foreign net sales declined on the slumps in markets for solar cells and other

products in China and Korea and on the impact of yen appreciation, which are both factors that have

continued since the fourth quarter of last year. Consequently, net sales of fine carbon products

decreased 13.1% year on year to ¥4,040 million.

As a result of these factors, in the Carbon and Ceramics segment, net sales decreased 0.8% year

on year to ¥11,587 million, and operating income decreased 19.7% year on year to ¥971 million.

Industrial Furnaces and Related Products

Demand from IT- related industries, which are the major demanders, was sluggish, and with other

factors such as deferments and suspensions of capital investment, net sales remained at a low

level.

Consequently, in the Industrial Furnaces and Related Products segment, net sales increased 1.8%

year on year to ¥1,022 million, and operating income decreased 44.0% year on year to ¥85 million.

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Other Operations

Friction Materials

Sales to construction machinery industries, the main demanders, were affected by sluggish demand

in the Chinese market, where sales for infrastructure construction uses had been buoyant last year,

but sales for mining machinery uses increased. As a result, net sales of friction materials increased

5.7% year on year to ¥2,114 million yen.

Others

Net sales from property leasing and other businesses decreased 15.0% year on year to ¥167

million.

As a result, in the Other Operations segment, net sales increased 3.9% year on year to ¥2,282

million, and operating income increased 321.4% year on year to ¥101 million.

(2) Qualitative Information Related to Changes in Consolidated Financial Position

As of March 31, 2012, the end of the first quarter consolidated accounting period, consolidated

assets totaled ¥165,273 million, a ¥3,709 million increase from the end of the previous fiscal year.

Current assets totaled ¥86,372 million, a ¥2,048 million decrease from the end of the previous fiscal

year, reflecting a decrease mainly in securities, despite an increase mainly in notes and accounts

receivable. Fixed assets totaled ¥78,900 million, an increase of ¥5,758 million from the end of the

previous fiscal year, reflecting an increase mainly in investment securities.

Total liabilities were ¥53,468 million, a decrease of ¥872 million from the end of the previous fiscal

year. Current liabilities totaled ¥38,374 million, a decrease of ¥7,065 million from the end of the

previous fiscal year, because of a decrease mainly in the current portion of long-term debt. Fixed

liabilities totaled ¥15,093 million, an increase of ¥6,192 million from the end of the previous fiscal

year, because of an increase mainly in long-term debt.

Total net assets were ¥111,805 million, an increase of ¥4,582 million from the end of the previous

fiscal year, because of increases mainly in net unrealized gains/losses on other securities and

foreign currency translation adjustments.

As a result, the shareholders’ equity ratio increased 1.2 percentage points from the end of the

previous fiscal year, reaching 65.7%.

(3) Qualitative Information Related to Forecasts of Consolidated Results

There is no change in the earnings forecasts announced upon the release (on February 10, 2012)

of the Financial Results for the Year Ended December 31, 2011.

2. Summary Information (Other)

(1) Changes in significant subsidiaries during the period under review

Not applicable

(2) Application of specific accounting procedures for preparation of the quarterly consolidated financial statements

Not applicable

(3) Changes in accounting policies and estimates, and retrospective restatements

Not applicable

(4) Additional information

(Application of the Accounting Standard, Etc., for Accounting Changes and Error Corrections)

For accounting changes and corrections of past errors carried out at the start of and after the first

quarter consolidated accounting period of the fiscal year under consideration, the Company is

applying the Accounting Standard for Accounting Changes and Error Corrections (ASBJ Statement

No. 24; December 4, 2009) and the Guidance on the Accounting Standard for Accounting

Changes and Error Corrections (ASBJ Guidance No. 24; December 4, 2009).

- 4 -

3. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheets (millions of yen)

Summarized Consolidated Balance

Sheet as of the End of the Previous Fiscal Year (December 31, 2011)

As of the End of the First Quarter under Review

(March 31, 2012)

Amount Amount

Assets

Current assets

Cash and cash equivalents 14,572 14,672

Notes and accounts receivable 28,543 29,929

Short-term investment securities 2,000 —

Merchandise and finished goods 10,138 11,809

Work in process 16,621 16,283

Raw materials and supplies 11,219 10,173

Deferred tax assets 884 1,132

Other 4,494 2,422

Allowance for doubtful accounts (53) (50)

Total current assets 88,421 86,372

Fixed assets

Tangible fixed assets

Buildings and structures, net 15,051 15,164

Machinery, equipment and vehicles, net 19,052 19,811

Furnaces, net 2,232 2,144

Land 7,053 7,057

Construction in progress 10,951 12,749

Other, net 824 927

Total tangible fixed assets 55,166 57,854

Intangible fixed assets

Software 359 430

Other 23 23

Total intangible fixed assets 382 453

Investments and other assets

Investment securities 15,712 18,686

Deferred tax assets 344 296

Other 1,593 1,665

Allowance for doubtful accounts (57) (56)

Total investment and other assets 17,593 20,592

Total fixed assets 73,142 78,900

Total assets 161,563 165,273

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(millions of yen)

Summarized Consolidated Balance

Sheet as of the End of the Previous Fiscal Year (December 31, 2011)

As of the End of the First Quarter under Review

(March 31, 2012)

Amount Amount

Liabilities

Current liabilities

Notes and accounts payable 16,059 15,643

Short-term borrowings 9,216 10,957

Current portion of long-term debt 10,255 275

Income taxes payable 1,249 1,360

Consumption taxes payable 49 —

Accrued expenses 2,116 1,542

Reserve for bonuses 180 712

Deferred tax liabilities 0 —

Other 6,311 7,881

Total current liabilities 45,439 38,374

Fixed liabilities

Long-term debt 1,747 6,813

Deferred tax liabilities 2,541 3,563

Provision for retirement benefits 2,341 2,507

Reserve for directors’ retirement benefits 140 133

Reserve for executive officers’ retirement benefits

50 21

Provision for environment and safety measures 871 786

Other 1,209 1,267

Total fixed liabilities 8,901 15,093

Total liabilities 54,340 53,468

Net assets

Shareholders' capital

Common stock 20,436 20,436

Additional paid-in capital 17,502 17,502

Retained earnings 75,798 76,433

Treasury stock (7,130) (7,131)

Total shareholders’ capital 106,606 107,241

Valuation and translation adjustments

Net unrealized gains/losses on other securities 3,539 5,382

Deferred hedge gain/loss 0 —

Foreign currency translation adjustments (5,863) (3,969)

Total other accumulated comprehensive income

(2,323) 1,413

Minority interests 2,940 3,151

Total net assets 107,223 111,805

Total liabilities and net assets 161,563 63 165,273

- 6 -

(2) Quarterly Consolidated Statements of Operations and Comprehensive Income (Quarterly Consolidated Statements of Operations) (Consolidated three months of the year)

(millions of yen)

Previous Consolidated Three Months

(From January 1 to March 31, 2011)

Consolidated Three Months under Review

(From January 1 to March 31, 2012

Amount Amount

Net sales 24,994 24,993

Cost of sales 19,369 19,660

Gross profit 5,625 5,333

Selling, general and administrative expenses 3,208 3,184

Operating income 2,416 2,148

Non-operating income

Interest income 8 38

Dividend income 46 35

Rental income 69 71

Foreign exchange gains 183 410

Other non-operating income 98 169

Total non-operating income 407 725

Non-operating expense

Interest expense 141 125

Equity in loss of non-consolidated subsidiaries and affiliates

70 11

Other non-operating expense 129 192

Total non-operating expense 340 329

Ordinary income 2,483 2,544

Extraordinary income

Reversal of allowance for doubtful accounts 4 —

Total extraordinary income 4 —

Extraordinary losses

Impairment loss 25 62

Loss on disaster 619 —

Loss on adjustment for changes of accounting standard for asset retirement obligations

55 —

Loss on valuation of investment securities 6 —

Loss on valuation of membership 4 —

Total extraordinary losses 710 62

Income before income taxes 1,776 2,482

Income taxes, inhabitants tax, and enterprise taxes 730 1,074

Income taxes adjustments (80) (147)

Total income taxes 649 926

Income before minority interests 1,127 1,555

Minority interests in income (loss) of consolidated subsidiaries

47 65

Net income 1,079 1,489

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(Quarterly Consolidated statements of comprehensive income) (Consolidated three months of the year)

(millions of yen)

Previous Consolidated Three Months

(From January 1 to March 31, 2011)

Consolidated Three Months under Review

(From January 1 to March 31, 2012

Amount Amount

Income before minority interests 1,127 1,555

Other comprehensive income

Valuation difference on available-for-sale securities

(176) 1,843

Deferred gains or losses on hedges (0) (0)

Foreign currency translation adjustment 978 1,969

Share of other comprehensive income of associates accounted for using equity method

88 125

Total other comprehensive income 890 3,938

Comprehensive income 2,017 5,493

(Breakdown)

Comprehensive income attributable to owners of the parent

1,914 5,226

Comprehensive income attributable to minority interests

103 267

- 8 -

(3) Notes on the Going-concern Assumption

Not applicable

(4) Segment Information

i) Previous consolidated three months (From January 1 to March 31, 2011)

Information concerning net sales and income or loss by reporting segment (millions of yen)

Reporting Segment

Other operations (Note 1)

Total Adjustments

(Note 2)

Amounts on

statements of

operations (Note 3)

Carbon Black

Carbon and

Ceramics

Industrial Furnaces and the Related Products Business

Total

Net sales:

External sales 10,105 11,686 1,005 22,797 2,197 24,994 — 24,994

Inter-segment sales

37 106 38 181 3 185 (185) —

Total 10,143 11,792 1,043 22,978 2,200 25,179 (185) 24,994

Segment income 1,376 1,210 151 2,738 24 2,762 (346) 2,416

Notes:

1. “Other operations” is a business segment not included in the reporting segments. It includes businesses

involving friction materials business and property leasing, etc.

2. The amount of adjustment of segment income is -¥346 million, including -¥346 million of the corporate

expenses unallotted to each reporting segment. The corporate expenses consist of research and

development expenses which are not attributed to the reporting segment.

3. Segment income corresponds to operating income in the quarterly consolidated statements of

operations.

ii) Consolidated three months under review (From January 1 to March 31, 2012)

1. Information concerning net sales and income or loss by reporting segment

(millions of yen)

Reporting Segment

Other operations (Note 1)

Total Adjustments

(Note 2)

Amounts on

statements of

operations (Note 3)

Carbon Black

Carbon and

Ceramics

Industrial Furnaces and the Related Products Business

Total

Net sales:

External sales 10,100 11,587 1,022 22,711 2,282 24,993 — 24,993

Inter-segment sales

14 25 131 171 — 171 (171) —

Total 10,115 11,613 1,154 22,882 2,282 25,164 (171) 24,993

Segment income 1,373 971 85 2,430 101 2,532 (383) 2,148

Notes:

1. “Other operations” is a business segment not included in the reporting segments. It includes businesses

involving friction materials and property leasing, etc.

2. The amount of adjustment of segment income is -¥383 million, including -¥381 million of the corporate

expenses unallotted to each reporting segment. The corporate expenses consist of research and

development expenses which are not attributed to the reporting segment.

- 9 -

3. Segment income corresponds to operating income in the quarterly consolidated statements of

operations.

2. Matters Concerning Changes, Etc, of Reportable Segments

Since the quantitative importance of the Industrial Furnaces and Related Products business,

which was included in Other Operations in the first quarter of the previous consolidated

financial year has significantly increased, from the previous consolidated accounting period,

the Company has changed the scope of its reportable segments. Accordingly, the Company

has prepared the reportable segments of the first quarter of the previous consolidate financial

year by adjusting the data into the post-change classifications.

(5) Notes When the Amount of Shareholders’ Equity Has Changed Significantly

Not applicable