Consolidated Statements of Income Millions of yen Thousands of U.S. dollars (Note 3) Years ended December 31 2008 2007 2008 Net sales .................................................................................................................. \162,615 \162,729 $1,786,395 Cost of sales ............................................................................................................ 121,309 118,643 1,332,631 Gross profit .............................................................................................................. 41,306 44,086 453,763 Selling, general and administrative expenses (Notes 9 and 12) .................................. 29,637 31,367 325,583 Operating income .................................................................................................... 11,668 12,719 128,179 Other income (expenses): Interest and dividend income ............................................................................... 607 208 6,673 Interest expense .................................................................................................. (313) (442) (3,439) Equity in earnings of affiliates .............................................................................. 265 523 2,911 Impairment loss on property, plant and equipment .............................................. (674) (2,394) (7,410) Gain on sales and disposal of property, plant and equipment .............................. 15 30 168 Gain on sales of investment securities .................................................................. 36 2,568 402 Loss on disposal of property, plant and equipment .............................................. (837) (636) (9,195) Provision for doubtful receivables ........................................................................ (2,006) (194) (22,042) Loss on valuation of investment in securities ........................................................ (777) (64) (8,545) Foreign currency exchange loss ........................................................................... (914) . (10,040) Other, net ........................................................................................................... (200) 978 (2,202) Income before income taxes and minority interests .................................................. 6,869 13,295 75,458 Income taxes (Note 10): Current ............................................................................................................... 3,469 5,307 38,118 Prior year ............................................................................................................. . 920 . Deferred .............................................................................................................. 814 (247) 8,943 4,284 5,980 47,061 Minority interests ..................................................................................................... 689 (911) 7,570 Net income (Note 19) ............................................................................................... \ 1,895 \ 6,403 $ 20,826 See accompanying notes to consolidated financial statements. Toagosei Co., Ltd. and Consolidated Subsidiaries 28 Annual Report 2008