Consolidated Settlement of Accounts for the Nine Months Ended December 31, 2009

Transcription

1 The figures for these Financial Statements are prepared in accordance with the accounting principles based on Japanese law. Accordingly, they do not necessarily match the figures in the Annual Report issued by the Company, which present the same statements in a form that is more familiar to foreign readers through certain reclassifications or summarization of accounts. Consolidated Settlement of Accounts for the December 31, 2009 Shiseido Company, Limited Listing: Tokyo Stock Exchange, First Section (Code Number: 4911) URL: Representative: Shinzo Maeda, President/CEO & Representative Director Contact: Yukihiro Saito, General Manager of Investor Relations Department Tel Filing of Quarterly Financial Report: February 12, 2010 * Amounts under one million yen have been rounded down. 1. Performance in the December 31, 2009 (April 1 December 31, 2009) (1) Consolidated Operating Results (Millions of yen; percentage figures denote year-on-year change) Net Sales Operating Income Ordinary Income Net Income Dec. 31, ,638 [ 10.4%] 32,629 [ 12.6%] 33,501 [ 15.3%] 23,695 [+11.2%] Dec. 31, ,500 [ ] 37,316 [ ] 39,550 [ ] 21,308 [ ] Net Income per Share (Yen) Fully Diluted Net Income per Share (Yen) Dec. 31, Dec. 31, (2) Consolidated Financial Position (Millions of yen; except for per share figures) Net Assets Total Assets Net Assets Equity Ratio (%) per Share (Yen) Dec. 31, , , Fiscal Year Ended March 31, , , [Reference] Equity: Nine Months ended Dec. 31, 2009: 335,810 million Fiscal Year ended March 31, 2009: 337,224 million 1

2 2. Cash Dividends (Cut-off Date) First Quarter Cash Dividends per Share (Yen) Second Third Year-End Quarter Quarter Full Year Fiscal Year Ended March 31, Fiscal Year Ending March 31, Fiscal Year Ending March 31, 2010 (plan) Note: Revision to quarterly dividend forecast: None 3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2010 (April 1, 2009 March 31, 2010) (Millions of yen; percentage figures denote year-on-year change) Net Income Net Sales Operating Income Ordinary Income Net Income per Share (Yen) Full Year 650,000 [-5.8%] 50,000 [0.2%] 51,000 [-2.0%] 31,000 [60.0%] Note: Revision to consolidated earnings forecast during period under review: Yes 4. Other (1) Significant changes in subsidiaries (scope of consolidation) during period: No (2) Simplified accounting treatment or special accounting treatment for preparation of quarterly consolidated financial statements: Yes Note: For more details, refer to 4. Other Information (page 4). (3) Changes in accounting principles, procedures, disclosure methods, etc., pertaining to preparation of quarterly consolidated financial statements (Those to be stated as changes in Basis of Presenting quarterly Consolidated Financial Statements): 1. Changes associated with revision in accounting standards: No 2. Other changes: No (4) Shares outstanding (common stock) at term-end 1. Number of shares outstanding (including treasury stock) Dec. 31, 2009: 410,000,000 Fiscal Year Ended Mar. 31, 2009: 410,000, Number of treasury shares outstanding Dec. 31, 2009: 12,412,687 Fiscal Year Ended Mar. 31, 2009: 8,489, Average shares outstanding over period (cumulative; consolidated) Dec. 31, 2009: 397,951,302 Dec. 31, 2008: 403,806,153 Appropriate use of business forecasts; other special items In this document, statements other than historical facts are forward-looking statements that reflect the Company s plans and expectations. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results and achievements to differ from those anticipated in these statements. Please refer to page 4 for information on preconditions underlying the above outlook and other related information. 2

3 [Operating Results] 1. Analysis of Operating Results Consolidated Performance Dec. 31, 2009 Year-on-Year Increase/Decrease Dec. 31, 2008 Amount % change Domestic Cosmetics Overseas Cosmetics Others 294, ,130 7, , ,601 13,502 17,469 30,470 5, % 15.8% 43.9% Net Sales 464, ,500 53, % Domestic Sales 301, ,120 23, % Overseas Sales 162, ,380 30, % Operating Income 32,629 37,316 4, % Ordinary Income 33,501 39,550 6, % Net Income 23,695 21,308 +2, % In the first three quarters under review (the nine-month period from April 1 to December 31, 2009), both Japan and overseas nations faced continued economic stagnation, while conditions surrounding the consumer goods market remained difficult. In Japan, there were no signs of a recovery in consumer sentiment, causing the cosmetics market to contract. Overseas, the cosmetics markets in developed countries were generally weak. However, some emerging markets performed well, highlighted by continued growth of the cosmetics market in China. (The nine-month period ended September 30, 2009, is used for overseas subsidiaries.) Facing these challenges, the Shiseido Group sought to become a global player representing Asia with its origins in Japan. To this end, we are implementing a three-year plan, the aims of which are to create a brand loved by customers throughout the world and establish unsurpassed, world-class quality of business management. For the period, consolidated net sales totaled billion, down 10.4% from the previous corresponding period. In the Domestic Cosmetics business, we sought to step up our distinction and concentration strategy by taking measures such as narrowing down the brands/lines and stores in each sales channel we want to concentrate on bolstering. Due to the effects of intensified competition and weakening consumer sentiment, however, sales in this segment declined 5.6% year-on-year. In the Overseas Cosmetics business, we reported a year-on-year sales increase in the Asia/Oceania region on a local-currency basis. This was driven by China, where we focused on expanding our network of cosmetics specialty stores and strove to attract new types of customer by strengthening our makeup line. In the Americas and Europe, we sought to renew the global brand SHISEIDO, which led to a sales turnaround in the third quarter, and the percentage of the sales decline in those regions diminished on a local-currency basis. As a result, total sales in the Overseas Cosmetics business fell 0.9% on a local-currency basis and 15.8% after translation into yen. Operating income declined 12.6%, to 32.6 billion, due primarily to marginal losses stemming from the revenue decline. Ordinary income fell 15.3%, to 33.5 billion. However, net income increased 11.2%, to 23.7 billion, thanks to a year-on-year decline in tax expenses. On January 15, 2010, the Company announced that it has entered into a definitive agreement with Bare 3

4 Escentuals, Inc., a U.S. mineral-based cosmetics company listed on the NASDAQ stock exchange, pursuant to which Shiseido offered to acquire Bare Escentuals through a tender offer by a subsidiary of Shiseido and a subsequent second-step merger. The tender offer of shares in Bare Escentuals commenced on January 25, Consolidated Financial Position Compared with the previous financial year-end (March 31, 2009), total assets increased 26.8 billion and net assets grew 0.3 billion. Accordingly, the equity ratio at the end of the period was 53.0%, compared with 55.6% at previous fiscal year-end. [Consolidated Cash Flows] Net cash provided by operating activities amounted to 36 billion. Major reasons included 30.2 billion in income before income taxes and 19.5 billion in depreciation, which covered our working capital requirements and income tax payments. Net cash used in investing activities totaled 19.2 billion, due mainly to capital expenditures centering on construction of a new factory in Vietnam scheduled for completion in February Net cash provided by financing activities was 22.9 billion, due to the issuance of unsecured corporate bonds totaling 50 billion in December This was despite dividends paid amounting to 19.4 billion. As a result, cash and cash equivalents at end of period stood at billion, up 40.1 billion from March 31, Consolidated Forecasts The Company has not revised its consolidated forecasts for net sales, operating income, ordinary income, and net income for the fiscal year ending March 31, 2010 (previous forecasts announced on October 29, 2009). 4. Other Information (1) Significant changes among subsidiaries (scope of consolidation) during period Not applicable. (2) Simplified accounting method or special method for preparing quarterly consolidated financial statements adopted (Simplified Accounting Method) 1) Valuation of inventory assets The value of inventories at the end of the three-quarter period under review is calculated using a rational method, based on physical inventories at the end of the previous fiscal year, rather than physical inventories at the end of the three-quarter period under review. The Company has reduced the book price of certain inventory assets that were clearly deemed to be declining in profitability, after estimating the net selling value of such assets. 2) Depreciation of fixed assets For fixed assets that are depreciated using the declining-balance method, the depreciation expense is computed by the proportional distribution of the depreciation expense for the fiscal year. (Special accounting treatment for preparing quarterly consolidated financial statements) Not applicable. (3) Differences in accounting methods compared with most recent fiscal year Not applicable. 4

5 5. Consolidated Financial Statements (1) Consolidated Balance Sheets December 2009 Fiscal Year Ended March 2009 ASSETS Current Assets: Cash and Time Deposits 70,115 57,411 Notes and Accounts Receivable 94, ,019 Short-Term Investments in Securities 77,258 47,343 Inventories 70,503 68,330 Deferred Tax Assets 25,895 26,228 Other Current Assets 12,252 16,696 Less: Allowance for Doubtful Accounts (998) (1,034) Total Current Assets 349, ,995 Fixed Assets: Property, Plant and Equipment: Buildings and Structures 158, ,018 Accumulated depreciation (94,796) (92,670) Buildings and Structures (net of depreciation) 63,981 68,348 Machinery, Equipment and Vehicles 82,431 81,888 Accumulated Depreciation (71,827) (70,287) Machinery, Equipment and Vehicles (net of depreciation) 10,603 11,601 Fixtures and Fittings 49,578 47,002 Accumulated Depreciation (35,908) (33,333) Fixtures and Fittings (net of depreciation) 13,670 13,668 Land 37,296 38,184 Leased Assets 11,250 10,839 Accumulated Depreciation (4,994) (5,545) Leased Assets (net of depreciation) 6,256 5,294 Construction in Progress 3,085 1,136 Total Property, Plant and Equipment 134, ,232 Intangible Assets: Goodwill 11,986 12,197 Leased Assets Other Intangible Assets 22,854 22,999 Total Intangible Assets 35,235 35,405 Investments and Other Assets: Investments in Securities 34,953 33,929 Prepaid Pension Expenses 30,144 34,359 Long-Term Prepaid Expenses 10,272 11,313 Deferred Tax Assets 14,621 12,092 Other Investments 24,079 24,466 Less: Allowance for Doubtful Accounts (192) (227) Total Investments and Other Assets 113, ,934 Total Fixed Assets 284, ,572 Total Assets 633, ,568 5

6 December 2009 Fiscal Year Ended March 2009 LIABILITIES Current Liabilities: Notes and Accounts Payable 44,170 52,713 Short-Term Debt 5,883 3,709 Commercial Paper 1, Bonds Redeemable within One Year 20,000 20,000 Current Portion of Long-Term Borrowings Lease Obligations 2,526 2,273 Accrued Amount Payable 36,866 47,005 Accrued Income Taxes 5,620 5,306 Reserve for Sales Returns 8,677 11,061 Accrued Bonuses for Employees 4,365 9,563 Accrued Bonuses for Directors and Corporate Auditors Provision for Liabilities and Charges Deferred Tax Liabilities 3 8 Other Current Liabilities 18,753 20,082 Total Current Liabilities 150, ,097 Long-Term Liabilities: Bonds 50,000 Long-Term Borrowings 30,701 31,110 Lease Obligations 4,276 3,340 Accrued Retirement Benefits 39,842 39,271 Allowance for Loss on Guaranties Deferred Tax Liabilities 3,046 3,821 Other Long-Term Liabilities 2,602 2,625 Total Long-Term Liabilities 130,818 80,519 Total Liabilities 281, ,617 NET ASSETS Shareholders Equity: Common Stock 64,506 64,506 Capital Surplus 70,258 70,258 Retained Earnings 249, ,544 Less: Treasury Stock (23,434) (16,839) Total Shareholders Equity 360, ,469 Valuation, Translation Adjustments and Others: Unrealized Gains on Available-for- Sale Securities, Net of Taxes Foreign Currency Translation Adjustments (24,926) (26,599) Total Valuation, Translation Adjustments and Others (24,716) (26,245) Stock Acquisition Rights Minority Interests in Consolidated Subsidiaries 16,078 14,471 Total Net Assets 352, ,951 Total Liabilities and Net Assets 633, ,568 6

7 (2) Consolidated Statements of Income (First Three Quarters) December 2008 December 2009 Net Sales 518, ,638 Cost of Sales 128, ,030 Gross Profit 390, ,608 Selling, General and Administrative Expenses 353, ,978 Operating Income 37,316 32,629 Other Income Interest Income 1, Dividend Income Equity in Earnings of Affiliates Foreign Exchange Gain 59 Others 2,102 1,688 Total Other Income 4,612 3,066 Other Expenses Interest Expense 1,328 1,111 Sales Discounts Foreign Exchange Loss 136 Other Total Other Expenses 2,378 2,195 Ordinary Income 39,550 33,501 Extraordinary Income Gain on Sales of Property, Plant and Equipment Gain on Sales of Shares in Affiliates 71 Gain on Sales of Investments in Securities Total Extraordinary Income Extraordinary Losses Impairment loss 1,082 2,835 Loss on Disposal of Property, Plant and Equipment Loss on Revaluation of Investments in Securities Loss on Sales of Investments in Securities 12 7 Loss on Revaluation of Capital Subscriptions 16 Restructuring Expense 4,300 Effect of Application of Accounting Standards for Leased Assets 215 Loss on Cancellation of Lease Obligations Total Extraordinary Losses 6,888 3,528 Income before Income Taxes 33,188 30,248 Income Taxes Current 11,214 7,925 Income Tax Deferred (1,659) (3,323) Total Income Taxes 9,555 4,602 Minority Interests in Earnings of Consolidated Subsidiaries 2,324 1,950 Net Income 21,308 23,695 7

8 (Third Quarter) Third Quarter Ended December 2008 Third Quarter Ended December 2009 Net Sales 159, ,369 Cost of Sales 41,641 34,892 Gross Profit 117, ,477 Selling, General and Administrative Expenses 114, ,587 Operating Income 3,438 9,889 Other Income Interest Income Dividend Income Equity in Earnings of Affiliates Others Total Other Income 1, Other Expenses Interest Expense Sales Discounts Foreign Exchange Loss Other Total Other Expenses 1, Ordinary Income 3,228 9,820 Extraordinary Income Gain on Sales of Property, Plant and Equipment Gain on Sales of Shares in Affiliates 71 Gain on Sales of Investments in Securities 35 Total Extraordinary Income Extraordinary Losses Impairment loss Loss on Disposal of Property, Plant and Equipment Loss on Revaluation of Investments in Securities 11 9 Loss on Sales of Investments in Securities 12 Restructuring Expense 2,326 Loss on Cancellation of Lease Obligations Total Extraordinary Losses 3, Income before Income Taxes 554 9,728 Income Taxes Current 119 4,335 Income Tax Deferred (826) (670) Total Income Taxes (706) 3,665 Minority Interests in Earnings of Consolidated Subsidiaries Net Income 1,219 5,906 8

9 (3) Consolidated Statements of Cash Flows December 2008 December 2009 Cash Flows from Operating Activities Income before Income Taxes 33,188 30,248 Depreciation 21,364 19,467 Amortization of Goodwill 1, Impairment Loss 1,082 2,835 (Gain) Loss on Sales and Disposal of Property, Plant and Equipment (Gain) Loss on Sales of Shares in Affiliates (71) (Gain) Loss on Sales of Investments in Securities (23) (22) Valuation (Gain) Loss on Investments in Securities Valuation Loss on Investments 16 Business Restructuring Expense 4,300 Effect of Application of Accounting Standards for Leased Assets 215 Loss on Cancellation of Lease Obligations Increase (Decrease) in Allowance for Doubtful Accounts (316) (92) Increase (Decrease) in Reserve for Sales Returns (199) (2,421) Increase (Decrease) in Accrued Bonuses for Employees (8,148) (5,174) Increase (Decrease) in Accrued Bonuses for Directors and Corporate Auditors Increase (Decrease) in Provision for Liabilities and Charges Increase (Decrease) in Accrued Retirement Benefits 1, (Increase) Decrease in Prepaid Pension Expenses 365 4,215 Interest and Dividend Income (2,373) (1,325) Interest Expense 1,328 1,111 Equity in Earnings (Losses) of Affiliates (75) (52) (Increase) Decrease in Notes and Accounts Receivable 5,426 8,477 (Increase) Decrease in Inventories (10,241) (1,917) Increase (Decrease) in Notes and Accounts Payable (7,037) (17,450) Other (6,910) 1,251 Subtotal 35,592 41,191 Interest and Dividends Received 2,467 1,389 Interest Paid (1,290) (1,008) Income Tax Paid (15,310) (5,558) Net Cash Provided by Operating Activities 21,459 36,014 9

10 December 2008 December 2009 Cash Flows from Investing Activities Transfers to Time Deposits (21,852) (26,235) Proceeds from Maturity of Time Deposits 18,310 23,898 Acquisition of Short-Term Investments in Securities (809) (849) Proceeds from Sales of Short-term Investments in Securities 1, Acquisition of Investments in Securities (3,763) (331) Proceeds from Sales of Investments in Securities 3, Proceeds from Sales of Shares in Subsidiaries Due to Change in Scope of Consolidation 342 Acquisition of Property, Plant and Equipment (11,908) (10,636) Proceeds from Sales of Property, Plant and Equipment Acquisition of Intangible Assets (3,817) (2,878) Payments of Long-Term Prepaid Expenses (5,057) (3,881) Other 1, Net cash Used in Investing Activities (20,881) (19,176) Cash Flows from Financing Activities Net Increase (Decrease) in Short-Term Debt 2,284 2,228 Net Increase (Decrease) in Commercial Paper 1, Proceeds from Long-Term Debt 28, Repayment of Long-Term Debt (27,100) (401) Proceeds from Issuance of Bonds 50,000 Redemption of Bonds (6,350) Repayment of Lease Obligations (2,450) (2,277) Acquisition of Treasury Stock (6,500) (6,822) Sales of Treasury Stock Cash Dividends Paid (16,374) (19,354) Cash Dividends Paid to Minority Shareholders (1,584) (1,603) Other Net Cash Used in Financial Activities (27,787) 22,904 Effect of Exchange Rate Changes on Cash and Cash Equivalents (4,149) 336 Net Change in Cash and Cash Equivalents (31,359) 40,080 Cash and Cash Equivalents at Beginning of Term 120,393 91,857 Charge in Cash and Cash Equivalents Due to Change in Scope of Consolidation (114) Cash and Cash Equivalents at End of Term 88, ,937 10

11 (4) Note on assumptions for going concern Not applicable (5) Segment Information [Business Segment Information] Third Quarter Ended December 31, 2008 Domestic Overseas Elimination/ Others Subtotal Consolidation Cosmetics Cosmetics Corporate Net Sales (1) Sales to Outside Customers 94,365 60,315 4, , ,112 (2) Intersegment Sales or Transfers 1, ,686 4,257 (4,257) Total 95,629 60,622 7, ,370 (4,257) 159,112 Operating Income 2, , ,438 Notes: 1. Shiseido s business is segmented by categories for control of its in-house organization. 2. Business segments and main products/services included in each segment: Domestic Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Healthcare division (Production and sale of health & beauty foods and over-the-counter drugs) Other (Production and sale of non-shiseido-brand products, mail-order products, etc.) Overseas Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Others Frontier Sciences division (Production and sale of cosmetic raw materials, medical-use drugs, beauty care cosmetics, etc.) Others (Sale of clothing and accessories; operation of restaurants; etc.) Third Quarter Ended December 31, 2009 Domestic Overseas Elimination/ Others Subtotal Consolidation Cosmetics Cosmetics Corporate Net Sales (1) Sales to Outside Customers 91,558 53,015 2, , ,369 (2) Intersegment Sales or Transfers ,592 2,557 (2,557) Total 92,116 53,423 4, ,927 (2,557) 147,369 Operating Income 9, , ,889 Notes: 1. Shiseido s business is segmented by categories for control of its in-house organization. 2. Business segments and main products/services included in each segment: Domestic Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Healthcare division (Production and sale of health & beauty foods and over-the-counter drugs) Other (Production and sale of non-shiseido-brand products, mail-order products, etc.) Overseas Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Others Frontier Sciences division (Production and sale of cosmetic raw materials, medical-use drugs, beauty care cosmetics, etc.) Others (Operation of restaurants, etc.) 11

12 December 31, 2008 Domestic Overseas Elimination/ Others Subtotal Consolidation Cosmetics Cosmetics Corporate Net Sales (1) Sales to Outside Customers 312, ,601 13, , ,500 (2) Intersegment Sales or Transfers 4,146 1,267 9,440 14,855 (14,855) Total 316, ,868 22, ,355 (14,855) 518,500 Operating Income 26,998 8,615 1,351 36, ,316 Notes: 1. Shiseido s business is segmented by categories for control of its in-house organization. 2. Business segments and main products/services included in each segment: Domestic Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Healthcare division (Production and sale of health & beauty foods and over-the-counter drugs) Other (Production and sale of non-shiseido-brand products, mail-order products, etc.) Overseas Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Others Frontier Sciences division (Production and sale of cosmetic raw materials, medical-use drugs, beauty care cosmetics, etc.) Others (Sale of clothing and accessories; operation of restaurants; etc.) 3. As stated in the Changes in accounting principles, procedures, disclosure methods, etc., pertaining to preparation of quarterly consolidated financial statements section, from the first quarter ended June 2008 the Company has applied Temporary Accounting Treatment for Overseas Subsidiaries for Preparing Consolidated Financial Statements. As a result of this change, in the period under review, consolidated operating income in the Overseas Cosmetics business segment declined 737 million compared with the previous corresponding period. 4. As stated in the Changes in accounting principles, procedures, disclosure methods, etc., pertaining to preparation of quarterly consolidated financial statements section, from first quarter ended June 2008 the Company has applied Accounting Standard for Lease Transactions and Guidance on Accounting Standard for Lease Transactions. As a result of this change, in the period under review, consolidated operating income in the Domestic Cosmetics business segment increased 160 million, consolidated operating income in the Overseas Cosmetics business segment increased 49 million and consolidated operating income in others segment increased 10 million compared with the previous corresponding period. December 31, 2009 Domestic Overseas Elimination/ Others Subtotal Consolidation Cosmetics Cosmetics Corporate Net Sales (1) Sales to Outside Customers 294, ,130 7, , ,638 (2) Intersegment Sales or Transfers 1,645 1,259 4,597 7,501 (7,501) Total 296, ,390 12, ,140 (7,501) 464,638 Operating Income 30,092 1,132 1,286 32, ,629 Notes: 1. Shiseido s business is segmented by categories for control of its in-house organization. 2. Business segments and main products/services included in each segment: Domestic Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Healthcare division (Production and sale of health & beauty foods and over-the-counter drugs) Other (Production and sale of non-shiseido-brand products, mail-order products, etc.) Overseas Cosmetics Cosmetics division (Production and sale of cosmetics, cosmetic accessories, toiletries) Professional division (Production and sale of beauty salon products, etc.) Others Frontier Sciences division (Production and sale of cosmetic raw materials, medical-use drugs, beauty care cosmetics, etc.) Others (Operation of restaurants, etc.) 12

13 [Geographic Segment Information] Third Quarter Ended December 31, 2008 Japan Americas Europe Asia/ Oceania Subtotal Elimination/ Corporate Consolidation Net Sales (1) Sales to Outside Customers 98,929 13,101 25,342 21, , ,112 (2) Intersegment Sales or Transfer 5,632 1,845 1, ,210 (9,210) Total 104,562 14,947 27,044 21, ,323 (9,210) 159,112 Operating Income (674) 693 2, , ,438 Third Quarter Ended December 31, 2009 Japan Americas Europe Asia/ Subtotal Elimination/ Oceania Corporate Consolidation Net Sales (1) Sales to Outside Customers 94,509 11,895 20,811 20, , ,369 (2) Intersegment Sales or Transfer 5,814 1,831 1, ,899 (8,899) Total 100,324 13,727 22,030 20, ,269 (8,899) 147,369 Operating Income 5,734 1,034 2,532 (293) 9, ,889 Notes: 1. Segmentation of countries and regions is based on geographic proximity. 2. Major countries and regions are as follows: Americas: United States, Canada, Brazil Europe: France, Italy, Germany, Spain Asia/Oceania: China (including Hong Kong), Taiwan, South Korea, Southeast Asia, Australia 13

14 December 31, 2008 Japan Americas Europe Asia/ Subtotal Elimination/ Oceania Corporate Consolidation Net Sales (1) Sales to Outside Customers 326,379 38,662 78,480 74, , ,500 (2) Intersegment Sales or Transfer 18,968 6,006 4, ,985 (29,985) Total 345,348 44,668 83,409 75, ,486 (29,985) 518,500 Operating Income 16,662 2,213 8,778 7,700 35,354 1,962 37,316 Notes: 1. Segmentation of countries and regions is based on geographic proximity. 2. Major countries and regions are as follows: Americas: United States, Canada, Brazil Europe: France, Italy, Germany, Spain Asia/Oceania: China (including Hong Kong), Taiwan, South Korea, Southeast Asia, Australia 3. As stated in the Changes in accounting principles, procedures, disclosure methods, etc., pertaining to preparation of quarterly consolidated financial statements section, from the first quarter ended June 2008 the Company has applied Temporary Accounting Treatment for Overseas Subsidiaries for Preparing Consolidated Financial Statements. As a result of this change, in the period under review, consolidated operating income in the Americas declined 567 million and operating income in Asia/Oceania declined 169 million compared with the previous corresponding period. 4. As stated in the Changes in accounting principles, procedures, disclosure methods, etc., pertaining to preparation of quarterly consolidated financial statements section, from the first quarter ended June 2008 the Company has applied Accounting Standard for Lease Transactions and Guidance on Accounting Standard for Lease Transactions. As a result of this change, in the period under review, consolidated operating income in Japan increased 220 million compared with the previous corresponding period. December 31, 2009 Japan Americas Europe Asia/ Subtotal Elimination/ Oceania Corporate Consolidation Net Sales (1) Sales to Outside Customers 302,886 32,572 58,566 70, , ,638 (2) Intersegment Sales or Transfer 18,319 5,430 3, ,254 (27,254) Total 321,205 38,003 61,988 70, ,892 (27,254) 464,638 Operating Income 18,904 1,539 4,539 5,889 30,873 1,756 32,629 Notes: 1. Segmentation of countries and regions is based on geographic proximity. 2. Major countries and regions are as follows: Americas: United States, Canada, Brazil Europe: France, Italy, Germany, Spain Asia/Oceania: China (including Hong Kong), Taiwan, South Korea, Southeast Asia, Australia 14

15 [Overseas Sales] Third Quarter Ended December 31, 2008 Americas Europe Asia/Oceania Total I. Overseas Sales 14,357 22,109 24,063 60,531 II. Consolidated Net Sales 159,112 III. Percentage of Overseas Sales against Consolidated Net Sales (%) Third Quarter Ended December 31, Americas Europe Asia/Oceania Total I. Overseas Sales 12,413 18,235 22,643 53,292 II. Consolidated Net Sales 147,369 III. Percentage of Overseas Sales against Consolidated Net Sales (%) December 31, 2008 Americas Europe Asia/Oceania Total I. Overseas Sales 41,954 68,026 83, ,380 II. Consolidated Net Sales 518,500 III. Percentage of Overseas Sales against Consolidated Net Sales (%) December 31, 2009 Americas Europe Asia/Oceania Total I. Overseas Sales 34,499 51,546 76, ,843 II. Consolidated Net Sales 464,638 III. Percentage of Overseas Sales against Consolidated Net Sales (%) Notes: 1. Segmentation of countries and regions is based on geographic proximity. 2. Major countries and regions are as follows: Americas: United States, Canada, Brazil Europe: France, Italy, Germany, Spain Asia/Oceania: China (including Hong Kong), Taiwan, South Korea, Southeast Asia, Australia 3. Overseas sales consist of exports from the Company and domestic consolidated subsidiaries and sales of overseas consolidated subsidiaries, excluding those from transactions with Japan. Sales from intersegment transactions among the Companies are not included. 15

16 (6) Notes in the event of major changes in shareholders equity At its meeting held on April 30, 2009, the Board of Directors approved a resolution to buy back shares. The Company subsequently undertook a share buyback on May 12, 2009, leading to a 6,752 million increase in treasury stock. Due mainly to the buyback, the balance of treasury stock at the end of the period under review rose to 23,434 million. (7) Other (Important subsequent event) Tender Offer to Acquire Bare Escentuals, Inc. As disclosed on January 15, 2010, at its meeting held on the same day, the Company s Board of Directors approved a resolution to offer to acquire Bare Escentuals, Inc., a U.S. mineral-based cosmetics company, through an all cash tender offer by a subsidiary of the Company and a subsequent second-step merger. The Company then formed a merger agreement and other related agreements with Bare Escentuals, details of which are shown below. Objectives of Acquisition Overview of Target of the Tender Offer Tender Offer Period Tender Offer Price Minimum Number of Shares to Be Purchased Percentage of Shares Held after Tender Offer Financing Required for the Tender Offer To attain new brand value; build a strong complementary relationship for distribution, sales, and R&D; and strengthen our operation bases in the North American region (1) Corporate name: Bare Escentuals, Inc. (2) Business description: Production and sales of cosmetics (3) Location: California, USA (4) Paid-in Capital: US$92,000 (as of September 30, 2009) (5) Number of shares outstanding: 92,019,902 shares (as of September 30, 2009) (6) Performance in most recent fiscal year (consolidated; year ended December 31, 2008): Net sales: US$556,165 thousand Total assets: US$299,781 thousand (7) Exchange listings: NASDAQ Stock Market The tender offer is scheduled to commence within 10 business days following the date of the definitive agreement with Bare Escentuals (January 14, 2010 US time) and to remain open for 30 business days. Subject to the terms of the agreement, the tender offer period may be extended in the event that the conditions to the tender offer are not satisfied. The tender offer of shares in Bare Escentuals commenced on January 25, US$18.20 per share, totaling US$1.7 billion (estimate) At least 50% of shares outstanding (fully diluted basis) 100% (in the event that all of Bare Escentuals shares are tendered into the tender offer) Cash in hand and/or bank borrowings 16