Toyo Tire & Rubber Co., Ltd. (President and CEO: Kenji Nakakura) has announced its consolidated business results for the first three quarters of FY 2008 (from April 1, 2008 to December 31, 2008). Compared with the same period of FY 2007, net sales decreased to 269,357 million yen (down 1.0%), operating income decreased to 611 million yen (down 95.3%), and ordinary loss was 1,538 million yen (Ordinary income was 11,266 million yen at the same period of FY2007), due to increases in raw material prices and a sharp appreciation of the yen. However, net loss was 9,990 million yen (Net income was 6,946 million yen), due to an exclusive loss of retirement benefit expenses and cut into deferred income tax assets.

Results by business segment are as follows:

1. Tires
The tire segment posted net sales of 197,443 million yen (up 1.7% over the same period of FY 2007), and accounted for 73.3 % of total sales. Operating income decreased to 1,178 million yen (down 90.5%).
Sales volumes of original equipment tires for the domestic market fell below the previous year’s level, partly due to the drastic reduction of domestic car production after the first three quarters of FY 2008. However, net sales were the same level compared to the same period of the previous year, due to expanded sales of high value-added products.
Sales volumes of replacement tires for the domestic market fell drastically below the level of the same period of the previous year, due to shrinking domestic demand, the recession and lagging sales of winter tires after the first three quarters of FY 2008. However, net sales were the same level as the same period of the previous year as a result of efforts to expand sales of high value-added products with price hiking activities and placing new items on the market.
Overseas, the North American market saw sales volumes and net sales fell below FY2007 levels of the same period, due to the impact of a recession in the U.S.A. On the other hand, in the European market, overall sales volumes and net income grew over the same period of FY2008, while regional results vary depending on the location. Also, in the Middle Eastern and South East Asian markets, sales volumes and net sales significantly exceeded the level of the same period of the previous year, owing to a solid increase in incoming orders. As a result, sales volumes exceeded the level of the same period of FY2007, and net income was the same level as the same period of the previous year in the total overseas markets.

2. DiverTech and other business segments
DiverTech and other business segments posted net sales of 71,913 million yen (down 7.6% over the same period of FY 2007). It accounted for 26.7% of total sales. Operating loss was 563 million yen (Operating income was 569 million yen in the same period of FY 2007). In the transportation machinery field, net sales of anti-vibration rubber parts, which is the flagship product, fell below the previous year’s level, due to sluggish incoming orders in the first three quarters of FY 2008, compared to a steady increase of incoming orders in the first-half of the quarter.
Net sales of seat cushions for automobiles fell below the level of the same period of FY2007, owing to a drastic decrease of incoming orders in the first three quarters of FY 2008. Also, in the fields of anti-vibration rubber and air springs for railway cars, incoming orders increased steadily. However, net sales fell below the level of the same period of FY2007, partly due to the steady growth the previous year.
In the fields of industrial/building materials, net sales of anti-vibration rubber for construction significantly exceeded sales of the same period of the previous year, owing to the steady increases of incoming orders. However, in the fields of standard anti-vibration rubber, hoses, rubber coated fabric and thermal insulation/waterproofing materials, net sales drastically decreased compared to the same period of FY2007, due to flagging orders centering on products related to investment in facilities reflecting market conditions.

【Consolidated Balance Sheets】

(Unit: Millions of yen)

	End of current fiscal year December 31, 2008	End of previous fiscal year March 31, 2008
Assets
Current Asset
Cash on hand and in banks	15,598	10,737
Notes and accounts receivable - trade	81,391	68,175
Short-term investment securities	54	8
Merchandise and finished goods	37,213	35,480
Work in process	3,568	2,976
Raw materials and supplies	9,645	7,638
Other current assets	14,049	30,577
Allowance for doubtful accounts	(435)	(683)
Total current Assets	161,086	154,912
Fixed assets
Property, plant and equipment
Buildings and structures	36,025	38,370
Machinery and transportation equipment	45,100	44,816
Other fixed assets	43,330	36,334
Total property, plant and equipment	124,457	119,520
Intangible Assets
Goodwill	572	935
Other intangible assets	2,329	2,531
Total intangible fixed assets	2,902	3,467
Investments and other assets
Investment securities	29,865	38,514
Other assets	19,589	17,968
Allowance for doubtful accounts	(556)	(491)
Total investments and other assets	48,899	55,992
Total fixed assets	176,258	178,980
Total assets	337,345	333,892

【Consolidated Balance Sheets】

(Unit: Millions of yen)

	End of current fiscal year December 31, 2008	End of previous fiscal year March 31, 2008
Liabilities
Current liabilities
Notes and accounts payable - trade	74,385	82,474
Commercial papers	-	2,000
Short-term bank loans	55,805	44,801
Corporate bonds due within one year	5,000	5,000
Income taxes payable	1,059	1,481
Accounts payable - other	13,788	21,216
Provision for product compensation	1,598	3,262
Other current liabilities	12,006	12,054
Total current liabilities	163,644	172,290
Fixed liabilities
Bonds	23,000	18,000
Long-term debt	49,289	26,464
Reserve for retirement benefits	14,502	13,657
Other provision	482	560
Other fixed liabilities	8,677	10,315
Total fixed liabilities	95,953	68,998
Total liabilities	259,597	241,288
Net assets
Shareholders' equity
Capital stock	27,984	23,974
Capital surplus	26,007	21,998
Retained earnings	18,960	30,952
Treasury stock	(100)	(100)
Total shareholders' equity	72,851	76,825
Accumulated gains (losses) from revaluation and translation adjustments
Net unrealized holding gains on securities	4,563	13,294
Net unrealized gains (losses) on hedging derivatives	(2)	55
Net unrealized gains (losses) on factored receivables	-	(26)
Foreign currency translation adjustments	(1,842)	151
Total accumulated gains (losses) from revaluation and translation adjustments	2,718	13,474
Minority interests	2,177	2,303
Total net assets	77,747	92,604
Total liabilities and net assets	337,345	333,892

【Consolidated Statements of Income】

(Unit: Millions of yen)

	Current fiscal year	Previous fiscal year
	FY2008 (From April 1, 2008 to December 31, 2008)	FY2007 (From April 1, 2007 to December 31, 2007)
Net sales	269,357	272,023
Cost of sales	207,775	196,150
Gross profit	61,581	75,872
Selling, general and administrative expenses	60,970	62,921
Operating income	611	12,951
Non-operating income
Interest income	101	114
Dividend income	790	789
Equity in net income of unconsolidated subsidiaries and affiliates	1,094	1,309
Others	779	640
Total non-operating income	2,765	2,853
Non-operating expenses
Interest expense	2,498	2,344
Exchange loss	1,319	771
Others	1,097	1,422
Total non-operating expenses	4,915	4,538
Ordinary income	(1,538)	11,266
Extraordinary income
Gain on disposal of fixed assets	223	3,692
Gain from sales of investment securities	669	993
Total extraordinary income	893	4,686
Extraordinary losses
Loss on disposal of fixed assets	649	1,111
Unrealized loss on investment securities	660	159
Transfer of provision for product compensation	570	4,035
Loss on valuation of inventories	1,001	-
Retirement allowance expenses	1,237	258
Losses related to lawsuits	147	-
Loss on cancellation of leases	-	208
Loss on business liquidation	-	77
Total extraordinary losses	4,267	5,849
Net income before income taxes	(4,912)	10,103
Income taxes	4,811	3,086
Minority interests in income	265	71
Net income	(9,990)	6,946

【Consolidated Statements of Cash Flows】

(Unit: Millions of yen)

	Current fiscal year	Previous fiscal year
	FY2008 (From April 1, 2008 to December 31, 2008)	FY2007 (From April 1, 2007 to December 31, 2007)
Cash flows from operating activities
Net Income before income taxes	(4,912)	10,103
Depreciation and amortization	14,790	14,059
Increase (decrease) in reserve for retirement allowance	927	-
Increase in provision for product compensation	(1,664)	3,935
Interest and dividend income	(891)	-
Interest expense	2,498	-
Foreign exchange gain (loss)	431	-
Equity in net income of unconsolidated subsidiaries and affiliates	(1,094)	-
Loss on disposal of fixed assets	649	-
Gain on sale of fixed assets	(223)	(3,692)
Gain on valuation of investment securities	660	-
Gain on sale of investment securities	(669)	-
Decrease (increase) in trade notes and accounts receivable	(17,444)	(21,888)
Decrease (increase) in deposits on factored trade receivables	10,649	-
Decrease (increase) in inventory	(7,084)	(1,492)
Increase (decrease) in accounts payable	(3,964)	15,481
Other, net	2,962	(4,947)
Sub-total	(4,378)	11,559
Interest and dividends received	1,302	878
Interest paid	(2,320)	(3,061)
Income taxes paid	(2,767)	(607)
Net cash provided by (used in) operating activities	(8,165)	8,768
Cash flows from investing activities
Acquisition of property, plant and equipment	(22,557)	(13,664)
Proceeds from sale of property, plant and equipment	1,016	4,304
Acquisition of intangible fixed assets	(372)	-
Investment in securities	(8,602)	-
Proceeds from sale and redemption of investment securities	938	-
Proceeds from repayment of investment securities	1,288	-
Acquisition of equity in affiliates	(614)	-
Other, net	(660)	(1,178)
Net cash used in investing activities	(29,564)	(10,538)
Cash flows from financing activities
Net Increase (decrease) in short-term loans payable	18,699	(1,383)
Net Increase in commercial papers	(2,000)	-
Proceeds from long-term debt	22,564	7,094
Repayment of long-term debt	(8,100)	(8,704)
Proceeds from issuance of corporate bonds	9,950	-
Payment for redemption of corporate bonds	(5,000)	-
Proceeds from issuance of common stock	7,977	-
Dividends paid	(1,881)	(1,881)
Dividends paid to minority shareholders	(49)	-
Others, net	(195)	64
Net cash provided by financing activities	41,966	(4,811)
Effect of foreign exchange rate changes on cash and cash equivalents	625	38
Net increase (decrease) in cash and cash equivalents	4,861	(6,542)
Cash and cash equivalents at beginning of year	10,733	16,346
Increase in cash and cash equivalents due to increase in the number of consolidated companies	-	70
Cash and cash equivalents at end of year	15,594	9,874

© TOYO TIRE & RUBBER CO., LTD.

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