At the company board meeting held on January 31, 2007 Tokai Carbon Co., Ltd. ("Tokai Carbon") resolved to absorb
and merge its wholly owned subsidiary TC Finance Co., Ltd. ("TC Finance") into Tokai Carbon, and we hereby provide
the following report.
| 1. Objective of the Merger |
| Our subsidiary TC Finance has mainly been involved in leasing activities and non-life insurance agency
business for our corporate group companies. However, we have determined that it would be more beneficial
to outsource these activities and concentrate our managerial resources on our core business activities in
order to enhance the efficiency and competitiveness of our operations, and we have therefore decided to absorb
and merge this entity into Tokai Carbon. |
 |
| 2. Details of the Merger |
|
| (1) Merger Schedule |
|
| January 31, 2007 |
Approval of the merger agreement at the board meeting |
| January 31, 2007 |
Conclusion of the merger agreement |
| February 9, 2007 |
Announcement of the merger |
| April 1, 2007 |
Scheduled merger date (effective date) |
|
|
| Tokai Carbon |
| |
The merger is a simplified merger pursuant to Article 796, Paragraph 3 of the
Japanese Company Law and will be conducted without the approval of the merger agreement by a
resolution of a general meeting of shareholders. |
| TC Finance |
| |
The merger is a short-form merger pursuant to Article 784, Paragraph 1 of the
Japanese Company Law and will be conducted without the approval of the merger agreement by a
resolution of a general meeting of shareholders. |
|
| (2) Merger Process |
| |
TC Finance will be dissolved as part of the merger process and absorbed into Tokai Carbon,
which will be the sole surviving entity. |
|
| (3) Merger Ratio |
| |
Since the parent company Tokai Carbon owns all of the shares of TC Finance on
issue, no new shares will be issued and a merger ratio has therefore not been calculated. There
will also be no increase in capital in conjunction with the merger. |
|
| (4) Treatment of Stock Acquisition Rights and Bonds with Stock Acquisition
Rights |
| |
There are no relevant matters to report in relation to the treatment of stock
acquisition rights, and so forth, for Tokai Carbon or TC Finance. |
|
| (5) Summary of Accounting Treatment |
| |
The merger constitutes a transaction under common control under consolidated corporate
accounting. |
|
|
|
| 3. Profile of the Companies involved in the Merger (December 31, 2005) |
| (1) Company name |
Tokai Carbon Co., Ltd.
(acquiring company) |
TC Finance Co., Ltd.
(acquired company) |
| (2) Business activities |
Carbon black, artificial graphite electrodes, fine carbon, friction materials, other business activities |
Leasing activities, etc. *2 |
| (3) Date established |
April 8, 1918 |
December 1, 1988 |
| (4) Location of head office |
2-3, Kita-Aoyama 1-Chome, Minato-ku, Tokyo |
2-3, Kita-Aoyama 1-Chome, Minato-ku, Tokyo |
| (5) Representative |
Yoshinari Kudo, President and CEO *1 |
Katsuhiko Namba, President and CEO |
| (6) Capital |
¥ 15,436 million |
¥ 50 million |
| (7) Shares of common stock issued and outstanding |
204,089,000 shares |
1,000 shares |
| (8) Net Assets |
¥ 80,439 million |
¥ 445 million |
| (9) Total assets |
¥ 123,669 million |
¥ 714 million |
| (10) Fiscal year end |
December 31 |
December 31 |
(11) Number of full-time employees
(temporary employees) |
673
(322) |
1
(5) |
| (12) Major customers |
Mitsubishi Corporation
Sumitomo Corporation
Bridgestone Corporation
Others |
Tokai Carbon Co., Ltd.
Tokai Unyu Co., Ltd.
Oshima Kensetsu Co., Ltd.
Others |
| (13) Major shareholders and percentage of ownership |
Japan Trustee Services Bank, Ltd. (10.73%) (trust account)
The Master Trust Bank of Japan, Ltd. (6.72%) (trust account)
Mitsubishi UFJ Trust and Banking Corporation (3.43%)
The Master Trust Bank of Japan, Ltd. (2.89%) (Mitsubishi Chemical Corporation retirement
benefit trust account)
Mitsubishi Corporation (2.86%) |
Tokai Carbon Co., Ltd. (100%) |
| (14) Major banks |
The Bank of Tokyo-Mitsubishi UFJ
Mitsubishi UFJ Trust and Banking Corporation
The Bank of Yokohama
Others |
The Bank of Tokyo-Mitsubishi UFJ |
| (15) Relationship between companies involved in the merger |
Capital |
The acquired company is a wholly owned subsidiary of Tokai Carbon. |
| Personnel |
Personnel are dispatched from Tokai Carbon to work at the acquired company. |
| Transactions |
The acquired entity has concluded lease agreements mainly with companies from our corporate
group. *2 |
|
*1 Yoshinari Kudo was appointed as President and CEO of Tokai Carbon on January 1,
2007. |
*2 Non-life insurance agency business and other activities were disposed of by sale
on October 2, 2006. |
|
(16) Three-Year Summary of Consolidated Results (non-consolidated results only are reported for the
acquired company)
(millions of yen)
| |
Tokai Carbon Co., Ltd.
(acquiring company) |
TC Finance Co., Ltd.
(acquired company) |
| Fiscal year end |
December
2003 |
December
2004 |
December
2005 |
December
2003 |
December
2004 |
December
2005 |
| Net sales |
59,852 |
67,034 |
77,760 |
- |
- |
- |
| Operating income |
6,155 |
9,414 |
10,777 |
- |
- |
- |
| Ordinary income |
5,163 |
9,591 |
11,069 |
- |
- |
- |
| Net income |
3,321 |
2,558 |
5,296 |
- |
- |
- |
| Net income per share (yen) |
16.04 |
12.22 |
26.20 |
- |
- |
- |
| Shareholders' equity per share (yen) |
347.43 |
369.35 |
436.11 |
- |
- |
- |
|
|
(17)Three-Year Summary of Non-Consolidated Results
(millions of yen)
| |
Tokai Carbon Co., Ltd.
(acquiring company) |
TC Finance Co., Ltd.
(acquired company) |
| Fiscal year end |
December
2003 |
December
2004 |
December
2005 |
December
2003 |
December
2004 |
December
2005 |
| Net sales |
45,852 |
49,375 |
52,488 |
468 |
535 |
372 |
| Operating income |
4,584 |
6,414 |
7,986 |
60 |
83 |
77 |
| Ordinary income |
4,177 |
6,873 |
8,758 |
63 |
83 |
81 |
| Net income |
2,880 |
972 |
4,926 |
62 |
75 |
65 |
| Net income per share (yen) |
13.99 |
4.61 |
24.52 |
60,924 |
74,230 |
63,830 |
| Dividend per share (yen) |
5.00 |
5.00 |
6.00 |
7,500 |
7,500 |
7,500 |
| Shareholders' equity per share (yen) |
333.23 |
348.04 |
408.93 |
322,408 |
389,208 |
445,118 |
|
Note: Results for fiscal year 2006 are currently being prepared and will be announced
according to the specified procedures as soon as they become available. |
|
| 4. Company Status after the Merger |
|
| (1) |
Company name, business activities, location of head office, representative
Unchanged from the details given in section 3, Profile of the Companies involved in the Merger. |
|
| (2) |
Capital
Unchanged. |
|
| (3) |
Total assets
The merger's effect on total assets is negligible. |
|
| (4) |
Fiscal year end
Unchanged |
|
| (5) |
Effect on results
The merger will have a negligible effect on full-year consolidated and non-consolidated financial
results for the fiscal year ending in December 2007. |
|
|
