Toyo Tire & Rubber Co., Ltd. (President and CEO: Kenji Nakakura) has announced its consolidated business results for FY 2008 (from April 1, 2008 to March 31, 2009).
The management condition of the Company has been extremely severe due to slowdown of capital investment and declining in personal consumption. The first half saw increases of raw material prices including natural rubber and petrified raw materials. Also, the second half saw the economic recession in the world by worsening financial crisis in the U.S.
As a result of these, the consolidated business results for FY 2008 are as follows;
Compared to FY 2007, net sales decreased to 328,371 million yen (down 28,861 million yen or 8.1%), operating loss was 2,964 million yen (Operating income of FY2007 was 13,168 million yen), ordinary loss was 6,179 million yen (Operating income of FY2007 was 9,893 million yen), and net loss was 10,722 million yen (Net income of FY2007 was 6,137 million yen)

Results by business segment are as follows:

1. Tires
The tire segment posted net sales of 242,009 million yen (down 10,410 million yen or 4.1% compared to FY 2007), and accounted for 73.6 % of total sales.
Sales volumes and net sales of original equipment tires for the domestic market fell drastically below the previous year’s level, due to a global recession, especially the sharp reduction of domestic car production in the fourth quarter of FY 2008.
Regarding replacement tires for the domestic market, lineup of eco-friendly products improving CO2 emission control and fuel efficient has been enhanced. However, sales volumes fell drastically below the level of the previous year, due to rapid recession in Japan and a warm winter. On the other hand, net sales were the same level of FY2007, partly due to price hiking activities.
Overseas, the North American market saw sales volumes and net sales fell drastically below FY2007 levels, partly due to a declining in personal consumption because of a recession in the U.S.A. On the other hand, in the European market, sales volumes and net income were the same level of FY2007, partly due to sales expansion activities.
Also, in the Middle Eastern and South East Asian markets, sales volumes and net sales significantly exceeded the level of the previous year, owing to a solid increase in incoming orders. However, sales volumes were the same level of FY2007 and net income fell below compared to FY2007 in the total overseas markets.

2. DiverTech and other business segments
DiverTech and other business segments posted net sales of 86,362 million yen (18, 451 million yen or down 17.6% over FY 2007). It accounted for 26.4% of total sales.
In the fields of industrial/building materials, net sales of the fields of standard anti-vibration rubber and hoses drastically fell below compared to FY2007, due to flagging orders centering on products related to investment in facilities reflecting market conditions. On the other hand, net sales of anti-vibration rubber for construction significantly exceeded sales of the previous year, owing to the steady increases of incoming orders.
In the transportation machinery field, net sales of anti-vibration rubber parts, which is the flagship product, fell drastically below the previous year’s level, due to sluggish incoming orders especially in the fourth quarter of FY 2008, compared to a steady increase of incoming orders in the first half of FY2008.
Net sales of seat cushions for automobiles fell sharply below the level of FY2007, owing to a drastic decrease of incoming orders in the fourth quarter 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 drastically below the level of FY2007, due to sluggish incoming orders in the second half of FY 2008.
Net sales of thermal insulation/waterproofing materials in the fields of thermal insulation/waterproofing materials and rubber coated fabric drastically fell below compared to FY2007.
Also, shares in domestic sales subsidiaries of flexible polyurethane business were sold and make them an equity method affiliate as one of the efforts of structural reform from the second half of FY2008. As a result of this, its consolidated net sales are not included in the second half.

【Consolidated Balance Sheets】

(Unit: Millions of yen)

	End of previous fiscal year March 31, 2008	End of current fiscal year March 31, 2009
Assets
Current Assets
Cash and time deposits	10,737	18,818
Notes and accounts receivable - trade	68,175	49,735
Short-term investment in securities	-	44
Inventories	46,096	-
Merchandise and finished goods	-	38,131
Work in process	-	2,784
Raw materials and supplies	-	8,316
Deferred tax assets	5,151	9,385
Other current assets	25,435	9,910
Allowance for doubtful receivables	(683)	(370)
Total current assets	154,912	136,757
Fixed Assets
Property, plant and equipment
Buildings andstructures	71,858	68,496
Accumulated depreciation	(33,487)	(33,777)
Buildings and structures, net	38,370	34,718
Machinery, equipment and vehicles	177,980	181,047
Accumulated depreciation	(133,163)	(135,511)
Machinery, equipment and vehicles, net	44,816	45,535
Tools, furniture and fixtures	60,736	61,401
Accumulated depreciation	(50,191)	(52,419)
Tools, furniture and fixtures,net	10,545	8,982
Land	21,869	21,497
Lease assets	-	1,739
Accumulated depreciation	-	(309)
Lease assets, net	-	1,429
Construction in progress	3,919	6,455
Total property, plant and equipment	119,520	118,618
Intangible Assets
Software	1,646	1,630
Goodwill	935	467
Other intangible assets	885	743
Total intangible fixed assets	3,467	2,840
Investments and other assets
Investment in securities	38,514	29,727
Long-term loans receivable	891	733
Deferred tax assets	2,626	2,796
Other assets	14,450	13,843
Allowance for doubtful receivables	(491)	(547)
Total investments and other assets	55,992	46,552
Total fixed assets	178,980	168,011
Total assets	333,892	304,769

【Consolidated Balance Sheets】

(Unit: Millions of yen)

	End of previous fiscal year March 31, 2008	End of current fiscal year March 31, 2009
Liabilities
Current liabilities
Notes and accounts payable - trade	82,474	48,458
Commercial papers	2,000	-
Short-term bank loans	44,801	63,951
Bonds due within one year	5,000	5,000
Income and enterprise taxes payable	1,481	1,098
Accounts payable - other	21,216	11,686
Provision for product compensation	3,262	870
Other current liabilities	12,054	11,859
Total current liabilities	172,290	142,924
Long-term liabilities
Bonds	18,000	23,000
Long-term debt	26,464	44,682
Provision for retirement benefits	13,657	14,108
Provision for directors' retirement benefits	55	53
Provision for environmental remediation	505	227
Deferred tax liabilities	9,685	7,003
Other long-term liabilities	629	1,414
Total long-term liabilities	68,998	90,488
Total liabilities	241,288	233,413
Net assets
Shareholders' equity
Common stock	23,974	27,984
Capital surplus	21,998	26,007
Retained earnings	30,952	18,236
Treasury stock	(100)	(100)
Total shareholders' equity	76,825	72,127
Accumulated gains (losses) from revaluation and translation adjustments
Net unrealized holding gains on securities	13,294	4,518
Unrealized gains (losses) on hedging derivatives	55	(236)
Other comprehensive loss	(26)	-
Foreign currency translation adjustments	151	(6,725)
Total accumulated gains (losses) from revaluation and translation adjustments	13,474	(2,442)
Minority interests in consolidated subsidiaries	2,303	1,670
Total net assets	92,604	71,355
Total liabilities and net assets	333,892	304,769

【Consolidated Statements of Income】

(Unit: Millions of yen)

	Previous fiscal year	Current fiscal year
	FY2007 (From April 1, 2007 to March 31, 2008)	FY2008 (From April 1, 2008 to March 31, 2009)
Net sales	357,233	328,371
Cost of sales	259,964	253,186
Gross profit	97,268	75,185
Selling, general and administrative expenses
Freightage and packing expenses	21,612	19,332
Advertising expenses	5,886	5,573
Salaries and allowances	25,746	24,690
Depreciation	3,757	4,038
Other	27,097	24,514
Total selling, general and administrative expenses	84,099	78,149
Operating income (loss)	13,168	(2,964)
Non-operating income
Interest income	181	128
Dividend income	789	841
Equity in net income of unconsolidated subsidiaries and affiliates	1,714	887
Rent income	233	250
Other	594	945
Total non-operating income	3,514	3,053
Non-operating expenses
Interest expense	3,195	3,238
Foreign exchange loss	1,705	1,342
Loss from liquidation of receivables	943	246
Other	946	1,440
Total non-operating expenses	6,790	6,267
Ordinary income (loss)	9,893	(6,179)
Extraordinary income
Gain on disposal of property, plant and equipment	3,737	223
Gain on sale of investment securities	993	669
Gain on sale of a business	-	600
Reversal of provision for environmental remediation	280	-
Total extraordinary income	5,011	1,494
Extraordinary losses
Loss on disposal of property, plant and equipment	1,594	1,207
Unrealized loss on investment securities	213	625
Loss on provision for product compensation	3,262	570
Loss on valuation of inventories	-	1,001
Retirement allowance expenses	311	1,237
Loss on impairment of property, plant and equipment	151	299
Loss related to lawsuits	-	136
Loss on business liquidation	82	635
Loss on cancellation of leases	208	-
Loss on product compensation	772	-
Total extraordinary losses	6,596	5,714
Net income (loss) before income taxes	8,308	(10,399)
Income taxes - current	3,394	1,403
Income taxes - deferred	(1,108)	(1,340)
Total income taxes	2,285	62
Minority interests in loss (income) of consolidated subsidiaries	(114)	260
Net income (loss)	6,137	(10,722)

【Consolidated Statements of Cash Flows】

(Unit: Millions of yen)

	Previous fiscal year	Current fiscal year
	FY2007 (From April 1, 2007 to March 31, 2008)	FY2008 (From April 1, 2008 to March 31, 2009)
Cash flows from operating activities
Income (loss) before income taxes and minority interests	8,308	(10,399)
Depreciation and amortization	18,937	20,093
Loss on impairment of fixed assets	151	299
Increase (decrease) in accrued retirement benefits for employees	(804)	602
Increase in provision for product compensation	3,262	(2,392)
Interest and dividend income	(971)	(969)
Interest expense	3,195	3,238
Foreign exchange loss (gain)	826	(13)
Equity in net income of unconsolidated subsidiaries and affiliates	(1,714)	(887)
Loss on disposal of property, plant and equipment	1,594	1,207
Gain (loss) on sale of property, plant and equipment	(3,737)	(223)
Gain on sale of a business	-	(600)
Gain on valuation of investment securities	-	625
Gain on sale of investment securities	(993)	(669)
Decrease (increase) in notes and accounts receivable	(13,259)	10,855
Decrease (increase) in deposits paid in assignment of receivables	(2,371)	10,464
Decrease (increase) in inventories	(446)	(9,812)
Decrease (increase) in notes and accounts payable	9,985	(26,977)
Other, net	(3,460)	(2,740)
Sub-total	18,502	(8,300)
Interest and dividends received	1,300	1,382
Interest paid	(3,292)	(3,001)
Income taxes paid	(2,015)	(3,246)
Net cash provided by (used in) operating activities	14,494	(13,165)
Cash flows from investing activities
Additions to property, plant and equipment	(18,462)	(27,750)
Proceeds from sales of property, plant and equipment	5,037	1,360
Additions to intangible assets	(1,345)	(601)
Proceeds from sales of intangible assets	45	0
Additions to investments in securities	(1,318)	(8,647)
Proceeds from sale and redemption of investment securities	1,232	943
Proceeds from repayment of investment securities	-	1,274
Proceeds from sale of a business	-	600
Additions to investments unconsolidated subsidiaries	(275)	(614)
Other, net	(951)	(141)
Net cash used in investing activities	(16,037)	(33,576)
Cash flows from financing activities
Net Increase (decrease) in short-term bank loans	5,254	28,695
Net Increase in commercial paper	2,000	(2,000)
Proceeds from long-term debt	7,362	27,931
Payments of long-term debt	(12,328)	(9,429)
Proceeds from issuance of bonds	-	9,950
Payments of redemption of bonds	(5,000)	(5,000)
Proceeds from issuance of common stock	-	7,961
Dividends paid	(1,881)	(1,881)
Dividends paid to minority shareholders	(18)	(49)
Other, net	82	(283)
Net cash provided by (used in) financing activities	(4,530)	55,896
Effect of foreign exchange on cash and cash equivalents	388	(1,071)
Net Increase (decrease) in cash and cash equivalents	(5,683)	8,082
Cash and cash equivalents at beginning of the year	16,346	10,733
Cash and cash equivalents of newly consolidated subsidiaries	70	-
Cash and cash equivalents at end of the year	10,733	18,815

© TOYO TIRE & RUBBER CO., LTD.

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