On April 29, the European Court of First Instance altered the decision made on July 18, 2001, in which the European Commission levied a surcharge of EUR 24.5 million (approx. ¥3,202 million) on Tokai Carbon Co., Ltd. (TOKAI) In the judgement, the court reduced the surcharge to EUR 12.276 million (approx. ¥1,604 million). After TOKAI receives official delivery of the reasons attached to the judgment, it shall consult with its legal counsel and determine what action should follow.
The incident which led to the original judgment occurred in the early 1990s, but the situation has been rectified and we are now fully compliant. Therefore, we are convinced that there will not be another occasion when the Company`s integrity will be questioned, either domestically or overseas.

Background of the Judgment:

On July 18, 2001, we were ordered to pay a surcharge of EUR 24.5 million by the European Commission of the European Union for engaging in a price fixing cartel in the early 1990s concerning the sale of graphite electrodes.
Upon this, we consulted with our legal counsel and other experts, and the panel of consultants agreed that the European Commission`s decision levied an unjustly high surcharge on TOKAI, and thus hurts the company`s best interest. After making management considerations from the view point of economic reasonableness, we decided to request a re-examination by the court regarding the calculation of the surcharge. Accordingly, on October 1, 2001, we filed our objection to the European Court of First Instance after making a provisional payment in full amount of the surcharge specified in the decision.